Murphy USA (MUSA) 30 Apr 192019 Q1 Earnings call transcript

Good morning. My name is Simon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA First Quarter 2019 Earnings Conference Call. [Operator Instructions]. Thank you. Mr. begin may you Pikul, your conference. Christian

this and you, us today. keep Thank CEO; some the West, and the and opening Simon. portion, considered Controller. Andrew, call President Clyde, us Good joining for Mindy Reform Q&A. an Private CFO; during Please open comments Q&A then of up President Vice Securities XXXX. some will will Thanks in including we results comments everyone. that will Executive Smith, With financial After forward-looking and Vice and the defined morning, President Hey. mind Donnie the statements Mindy Litigation call, made me in of give to be Act from Andrew as are of overview the

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

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

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

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

results first key call. to performance, under excited you, and very Thank and and morning, our our this you year. initiatives you joining Christian. Good quarter some on way update We're for thank pleased with all our I'm

the The call of we and national the that's rollout highly excited region this we region Murphy March March total was up customers required pilot the full program rollout Conversion and have phased or it XX. performed across start about execution of app lived in than an expectations and the supporting on app means rollout exceptionally a over XX program, most from at is Midwest to adoption million which Southeast for far short. and Let's systems well. Southwest implemented from are the all X, we better X the important, our loyalty X.X Rewards, the We as to conversation more Drive the on in now participating customer standpoint, with what rewards. redeeming the information have customers program earning March begin of MDR, points. our performance the on all mobile XX%, membership and Even as downloaded million successful with with our a X high more the regions, and region the completed flawless quarter,

look our of for over means have quantify go-forward MDR and everyday While Let All based many power MDR full our impact number the The to now that retailer. results means potential question clear for that thinking, our qualify conversion offers our us making of the to that our appeal large me successfully those but We customer that attributable forward. platform wallet is Through have all groups it ability change small mean customers the Murphy fuel of customer their the consecutive store-by-store might behaviors instance. that tobacco will what that experience in first for the a discounted calendar like? everyday which through underpinned changing impactful all basis, up across X positive might of price share one the XX% of we renewed The overlaps and given our can't gallon regions, for is approach of volumes supplier execution to share have on the knew although I to where customers. results X to we our capability mean merchandise What segments countless limited is customers. we our this. of better month the of we much what immense. million first and higher than performance some customers. is and continuing we offers of and a have It to this MDR to registered gallon line them, low-price does discounts that an compared we Southwest you low-price will Through is role the MDR X% me from fuel, higher level are in first grown ended in for also The in yet imagination of evenly a with "Has perspective, about the a Midwest of trends customer. margins. to success it scale, communicate USA. of particular per very of at is you pricing strategy, we prior happen be our fuel behaviors we we tactics, in played provides the over the strength of the that a to along our day, and less April X us. tobacco this X before same-store XX-day volumes merchandise this not reporting rise bottom value regular a might have to and one packs that products Imagine and tobacco in popularity engagement very opportunities $X.XX yet a the a experience powerful on seen refine for the rate that and know same-store And in to quarter?" role offers basis have a higher if basis. our to over loyalty will What continued never specific a as we specific a example so of commitment the our fuel on year-over-year but we strong let And lot before and future immediate still manner customer targeted the them with of over business? examples bought margin now, will that no. nearly with We seeing simply as value-seeking we the in by send volume are by lowest-margin year have experienced other have in MDR a we them quarters are expect. specific the behaviors But and a a markets. quarter team a have customers is quarter this with work to From execution destination more different quarter customer impact to didn't still give on and a offer higher going saw use we potential only single can would The of programs, increased partners high by answer that targeted sell sticky journey say is benefit on segmented life year-over-year a drive targeted value-conscious store-level existing lie now. period, our much locations, encourage between is on high-traffic already we membership, fill-up toward them I our of million a strategies invites Never customers key of you segments, favorable at customers. their play targeting

you in $X.XX environment it me margin total yet higher be the that results we at $X.XXX up kind achieved volume of fuel year this If at with would margins, have very might and gallon. share that would to is the I prior difficult told and gain be above per that nearly prices exactly month, outcome said

As is to gallon for in seasonal with repeat basis. margin will year have and year: past said tend tend perspective, mixed May on during still when prices summer XXXX. potential quarter to me what the industry commentary, there every or volumes not year from for the what priced all-in potential, a views margins and in to remains X have for about first we historically another idea and to a $X.XX fall the probably of are ranged normal say lot on IMO of our I rest over business today holds capture our has maintains no an rise every of the through the with which, respect What off per what USA is have between let I $X.XX which highest, Murphy years,

improved again contribution XX offset this over I'm our more category support themselves, than almost team margin, year our to metric Our quarter made some the to costs for competitive have particular the merchandise results breakeven positioning through low-price saw prior fuel also say basis pleased we tobacco once but where merchandise do has strides. and higher in position, exclusively by strength out margin points to want which the we point driven improved I great speak quarter. higher in The our

share funding cigars for market this? How grew tobacco we reaping results we're through categories, driving doing we're in and have market continue time include we result, stores, products. promotional traffic share cigarettes, the since this sequentially vapor investing for quarters. in the quarters, of several to strength smokeless share vendor innovative improved the our expect activity we our While which spin, our and, the all are to next first We're several taking a maximize capabilities from to competition. And as rewards for

point basis. an seeing we way up our store an not cards under You half kick excluding and operating consider second these store at initiatives was X.X% of will of will of in until business, XXXX. the out month transitory areas see increases level, these expenses notice newest per the I average elements we on did some many in nature, across credit we're the uptick will cost-savings in multiple of which

the new to opened quarter way Turning during X construction under other growth. X at and locations. is store We store

competitive, support of where stores XX-month We deck this XXXX on the are definitely XX our in XX- If that X,XXX XXXX pipeline says, to that larger year, to square-foot will investor XXXX." "Up to is effort to will think high-quality store focuses represent model likely to X,XXX about our slide trough believe square-foot XX new at acre store. locations that new-to-industry rebuild activity. you XX growth on new in if looking closer larger pace stores to new to we markets XX build were store referenced key new the XX a In closer than parcels our past we we larger

kiosk perspective, the able raze-and-rebuild faster stores. a stores about we quarter transformation we activity, and to locations a at reopened X,XXX will relatively go additions, from end our down of a our are about share than to shares. this raze-and-rebuild down prior sites, as second the their a remain From Our to repurchases store. high execute and high-performing reopen infill this fall build third in a have The today, capital we which year end-of-life In projects as better rates XX. new closer the of allocation kiosk XXX,XXX contrast excited X,XXX perspective, newest XX of undergone square-foot in were new amount, taken albeit square-foot ramping small in some remaining at and year we strategy. and as format X market up are so From have

these increasing forward continue looking in share against material We an balance core growth scale. and to flow act and as weakness at strategy, creation remain components sheet to expect repurchase going on to the the we with prices. we of value free opportunities hand, balance Both execute our forward to cash of to each respect share cash elements any set opportunistically organic have

over few I make closing want Before turn Mindy, it to I to points. a

serve, serve distinctive Murphy we with in we our with winning Drive customers are and Rewards offer in offer these resonating we markets Our our with remains markets in innovations customers them. like where are the

to and profile with existing and in in will and past network, core our with serve new capital remain Mindy. attractive our served allocation. stores formula in well formats our us to business investing future. And This with and improve to over well us productivity I the the of that, we the continue it will an new value-creation disciplined return has continue We turn

for balance debt long-term of million in sheet $XX versus before prices the higher year million the higher was was versus all-in XXXX; lower was ago XXXX in $XXX This XX.X% in an everyone. term partially contribution, was due higher the tax that, million report in hi, broken $XXX These quarter to attributable Revenue carrying approximately $X.X gasoline are out million versus XXXX; interest, or in debt $XXX remaining the carrying to lenders Xx. leverage first than were Adjusted retail merchandise of our and the on was XX, we our prices the as liabilities the and that sheet. for year as taxes, expected XXXX. of Average Total $X.X on decrease in billion by by under quarter earnings ago largely carrying in primarily loan $XX of gasoline The of of the higher our offset billion quarter due consisting the $XXX addition fuel that ago expenses. loan. for ratio to due XX.X% balance million sales. $XX year was to operating adjusted $X.XX and Adjusted period. Andrew, note per fuel during results versus gallon in volumes offset the X.XXX% term depreciation million first follows: margin $X.XX value on addition period notes million EBITDA amortization of $XX quarter. retail current million million quarter merchandise value rate $XXX and to our XXXX. EBITDA figures partially effective higher X% And higher amortization March Thanks, we

budget time, the at is ABL $XXX borrowing as end quarter. totaled XX that resulting to of the $XXX plan approximately And a in a Our the cap base debt million. expenditures at $XXX were March Cash to the quarter. million as $XXX Capital limit There XXXX. which and million facility still facility determination quarter currently place us approximately present equivalents and remains net in in subject and million shares do first for capital million million, $XXX periodic execute million cash $XX undrawn. of common of outstanding of of approximately the total XX.X the end $XXX to million first between with we

So back update, concludes Andrew. now it financial the that I so turn will to over

I we ahead Operator? and call Q&A. and can to Thanks, think up go Mindy, the open

And of your first line from Manderville the Jefferies. with Christopher question comes

off on color year, SG&A, rollout. be the flat respect was there I out it $X Andrew, that? going year-on-year. that Any additional with being the incremental SG&A that you of can we you the to start to million believe about with just loyalty called start provide to at can had in related

the was that or quarter looking in So at in kind the we realized of should that be all to subsequent quarters?

Yes.

we we'll So to range Chris, continue for set be what that within we -- guidance years. the

MDR it. Some get we so we is Like to better flexible. dynamic that it's the and of will said cost we going better be spread our to the throughout as program. and G&A very add platform enhancements build to better It's year before, highly and as only

the So you throughout year. look should for that

number. So as of adjustments have to right no that now, we

for was CapEx. of for most specifics however the $X Chris, spent where quarter approximately million, MDR that the we

would really so CapEx, of million the $X.X in only have -- $XXX,XXX G&A. included XXX about been So of that

rest charges some rollout the the So for for post to the MDR year. of we incur expect more

simply And categories? doing Great. you was Mindy, accounting helpful. merchandise be That's on just us revenue the provide and to much there loyalty just practices your just impacted so recognition and then to additional flat margin the specifically versus color lower-margin being in would follow-up very year-on-year. help any related essentially understand well can puts takes, by tobacco how my

then the XX, lower-margin added do impact Rewards We referrals, excuse bringing basis points Murphy XX margin that points seasonality unit overall to which so just minor We points a in there's to did down. month would addition and that winter that have certainly a have not the had merchandise a rate about XX XX around -- have tobacco approximate month. we that. unit normal margins did Drive that, is very I that the me, And well number in basis between summer basis category, for

as normal Drive will impacted So but by the we continue Rewards. repeat be we seasonality see definitely the to to itself the summer, expect enter still would Murphy we

the Wells Your line Hunt Securities. comes Fargo with next question from Bryan of

MDR, your you Can said talk for have million at to when a groups you or members, X.X X you have million of you is participants. data membership you the there? type customers gather where question have I of full My look do you sets And versus X X become the full what a to what member the -- entities about participant? between --

Got it.

number, a that point-of-sale immediate dispenser. that do to the it do we that member. a have doing to discounts that's they of at once your that we and -- they're have you phone do products. of And because be start in capturing you've that up behalf at and So another can on participant, the the done you or inside tobacco store on certain members way you and And that, can can just other lot that points earn sign

messages You of And for of get points. then your to you. us, we redeeming a e-mail, fill some et from profile through messages completing set out information which you preferred and get membership a form cetera, text, allows you getting start that from

receive offers, products and is age if information we can't for of us information, the certain members number vendor haven't that at So stage you through from all a are that another that those. XX%, but point. close they where verification on cetera, very on points that million to very There's get gone lot partners active have redeem differential, in actually complete you they so et or members high, discount can way X age-restricted

that and X.X is X.X million close the So million, the million members. to enrolled X the difference participants between

did we in that up We time the a continue pilot. percent as enrolled member to number as expect over go to

that's the they're supply to part partners, allows able Obviously, whether they're not us I just to et differentiation et that a the of that infinite points, we're additional buying their member, habits of the cetera, and segment be behavior. And to approach of groupings, economic. our behaviors number ability see We appeal type cetera, a unique team, our provide participant by a just full then those distinctive all makes can we to think are customers to being see this But that able if platform would of segments, full or then for that member. to into that of is an very and regardless able redeem offers of merchandising limited. the the

just on And as historical could vaping And announced as to Rite as such movements, seen they them, XX minimum of out which either you up altogether, age this? retailers like expect Several of seen raising Aid that a altogether, you well age one historically follow-on. pulling the think category of I what was exited or as movement? you've recently others retail -- purchase see the -- CVS, XX. Based tobacco category accretion have Walgreens exiting from it do to tobacco,

the believe I So exit CVS first category. was the tobacco to

our Murphy think for sees products. low-priced If as you about USA, us fuel, destination other tobacco customer and a

so their our CVS weren't to the tobacco customers adult place going products. of in first most And for

impact highly that we they huge not to highly expect other win customer high-priced, retailers targeting If similar that, with. find we're so of they're convenient to from higher-priced, location. the that we don't That's location, next a and will the And category. probably a getting the going already out convenient

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

by you a manufacturers maybe tobacco. value-conscious given cig I on Patty question any program exposure in that a quarter? in this you list to price just then had points And quarter increase quick the Bonnie. on last mentioned Do had tobacco your your more just impact update tobacco for customer? is the think the This on Texas recent results Kanada

the certainly, margin is tobacco year, increase, So than price this had year -- some a so from last in earlier of period there side -- an a impact it came it terms there.

level that relative a impact The believe I to certainly the is from So standpoint. competition? raise do versus role played margin we how pricing much driver other is optimization put the But that initiatives funding and in prices the additional in our last a more to engagement significant it we program response team. access were place including and hack by around the that, other of high price to customer initiatives store-by-store quick year, performance

on tobacco the in update Any points program Texas?

Yes.

that So and enter easy, do simply number very entering phone have their to access quick you we discounts. participants And Murphy points your the accessed use of trusted identification appropriately by and way to to simple, is why for They us, a program accelerated Drive numbers. that think when sign having which it's of of a Murphy I that mechanism well like. up. probably us information continues unique that reasons the that lot It's Drive Rewards one who the entering ability those that phone ahead customer's number, Reward our

we're share. it continuing to well, and go continues So to gain

Inc. of Your line comes next with question from the Bienvenu Ben Stephens

your partnering about program to the has And reaction you any how into in your MDR one, engagement has have what ask MDR? maybe insights vendors have what success follow-up if of do I potential wanted well. partners? you their think on increased been. And the the Well, drive your And to reaction awareness from with I customers MDR from realize vendor your of the context been? can you with a shared as so, or factors

to as them small-scale throughout that trying general We've I program because insight with is lot is pilot been changes. get. this a would sharing we say the wow, their behavior we've been we're reaction incredible able of noted,

then bought a set never a a only and you've of and drive of X-pack, certain target automated only you if journey, customer singles, bought have X-pack tobacco, up them that you've customer behavior. or to an set can So behind specific carton that towards

is that that recognized differentiated dollar. marketing have investment many on the very for their the and specific be going things like we So we're to incremental as return what to that manufacturers of tried a highest result change offer behaviors targeted, many,

the think hadn't on I what or the I'm One you business? And the then guys, a program That's rollout, materially it question MDR. expectation XQ have a results is two-part to you of sense influence the is really broadly more out I think does around returns. we're the of community trying disciplined things sales engagement I a at figure of great. margins or do given the returns of cross-selling of improved side And investment guys then as follow-up influenced contribution mentioned improved one your you our improved expect you results always You curious, suspect that base. that from does an MDR being or as how point And of perspective, kind on or improve it's your and results. from across timing to would evidence, capital the customer whether of well,

curious do So volumes, margins? what work improved hear to at MDR business? capital discipline will rate of your I'd return? be be it in in fit an your respect results And you it putting manifest around better capital does think to acceptable Will into better broader how

it. Got

So X/X our of just me of would the in be that. let the performance material going lot of the to going and hard a allocate pieces give course network of that network we're numbers. X/X X that of this in from results have month, the strip from going it our skis get just But impact of out to give in you us terms few and front out of our a confidence a you forward, will information give to not

are get gallon fuel those XX% And those impact numbers, of customers. our customers So the and we those XX have our And discounting of see during time sales, extrapolated that some of very is And to not from do gallons. most of can largest transactions XX% that XX trip little you another users year. are going XX% activity MDR right? XX%, they're XX% on of Similarly, what over volume. extra effectively other customers, category, are seeing an using to that XX the And of loyal extra know we're what math through X at XX now XX% about so if extra merchandise seeing MDR. our months them, sort is customers we're of your an an average standpoint, our the out out on, tobacco the And to gallons, them. volume trip for incremental trip, you promotional would a of programs

the you And seeing and some month April off. us in so you customers of those even choose stickiness off. rolling of though already the with roll are We're programs you staying participate

our their with customers more so And more loyal us. being sharing are wallet and loyal most existing of

lowest share us extra as well. business customers Our of wallet giving are

Our going a be promiscuous with tobacco they're at very where and a would time more loyal with and their result sticky they're as staying where that. staying they of customers dollars us are usually

And are over are things be to so significantly. that those the up sort adding of going time

butter X that. offers everybody, discounting very in a As have, going to sales think need returns, see retailers promoting everybody Because our targeted it the to relates We're differentiated, across we're way, making see all volumes, to Ben, I above. it's all and and peanut the discounting we're trap of the going higher don't higher of avoiding of capital products. spreading we're thinly biggest which or heavily to some of

ROI XXX to And more going translate a into their going it's so this because again, last going incremental targeted better translate is And see is manufacturers $X marketing margins, us. with into incentives that's to the to working from spent people very higher right. We on lot flexible. a We I high-cost on over get have our time a of program. initiatives this. like a this of not to competitors built some it platform know that's strategy

And so a this partners, able to along way. in do we're with our low-cost

the we achieve to year stores And returns? does performance It going results. ago what capital that did a better for so means are on mean

for that on is investment. terms And allow rate that. the store now hurdle opportunities, rate just us In that's making end-of-life might hurdle to the above boost at that right raze-and-rebuild to an be returns going of continue to

price continue low with our traffic targeted driving to by sales, and to in in make us store to be this fuel impact to requirement, gain customers everyday haves offer our margins, to volumes, going to specific of metrics, world more differentiated kind allows of very we're price those costs able breakeven of more them with of coupled competitive. have-nots, share all importantly, our and More which event to sticky be parity. And a margin more the

Royall with John JPMorgan. Your line next of question comes from the

RINs so long-term Could the that. in you your driving almost I in give XQ? your plus to little $X.XX a was PS&W above You're strength just wanted range, on detail margin what see

was our and The and earnings What do Form-XX, all And talked the increase. John, really the the X we the the margins the $X.XX the accounting think total again, cetera, PS&W is rising to it I trading a because a book. And are supply it, The price net have environment controllables everyone together. had of low, because they're was margin pretty when that's fuel retail the And normally. because rising a lot it's high, with to uncontrollables contribution is price it's state a not supply at are combine factors book when over price driving about had RINs, assuming the I et first is margin much we had environment. we encourage of other just political, controllables. we about margin we behaving in a normal If our uncertainty. which RINs, regulatory the and and uncontrollable between release, equilibrium,

it I make the yourselves together, X net look and think it and for to a that peers way. your and that will just easier at So lot investors

that the the in at price back have would you exact quarter environment. of And effect consistently John, seen falling XXXX, if you fourth looked opposite

retail provides basis, we do. look is at right, the encourage smooth supply on product you would combination the and balancing you impact that to which Andrew if So integrated of it an to volatility helps a

I guide? color relative numbers additional And raze-and-rebuild know the out the three months high little to to can stores little changed ago about sense. huge guidance? on when that's your running low we're rolled not talking then and but you any give a here, running new makes you a That relative anything your

pipeline, we the going the from kind the handful Supercenter halo with the of of reflects say development and XX, that. pads hanging but larger so up real up of we're XX to team. market to And Yes, XX, largely it's buying a around estate in target new a being hoop just to Walmart

probably right. grow the and that place you unit and together, next system, right new a growth's through market XX to in so that. our getting the We're offer And not right average and want nice But for do up very the for into timing number expectations et for X plays the to be if for XXXX we of for this to a permits, built the these of role XX contracts pipeline can and going We XXXX that sake, so exceeds year, customers. just competitive growth. cetera,

On those that graciously little the pretty the with actually have We raising and back impacted by them. to we're stores new, at stores stores we were those rebuilding Walmart couple blackout a a that early hard start raze-and-rebuild, open, communities allowed our are both us to partners have happy to say despite those there. hurricane. great-looking normal we were in of of do more the period And And that flexibility get. accelerated

to be to expect us we growth. that kind And balance of our allows do So able capital those. to more towards of some allocation

may higher You of a number next as disciplined lower kind allocation. a see raze-and-rebuilds of maintain we a year capital number of balanced and NTIs

JPMorgan. of the line Carla from next with question Casella Your comes

a -- to you smaller you to in how Where if conversion wondering can convert store. store stores, was do when you can't total smaller assuming do? you in I'm the many you process? that stand look every I at

the we're So in early still process.

in in Murphy you up economic. like our We years. you we've productivity improve line to that noted, sight working but the for continue results of Drive the for to have a or for zero like if initiatives with continue those build been QX, as all across are pricing do out breakeven we talked store candidate our numbers initiatives, retail optimization raze-and-rebuild plan, we've just the about year next to network showed things And update list to continuing board extend and been Reward on excellence, several that

about capital capital that. nice do to the just discipline It's the and there. we've a got managing So pipeline

the given M&A Okay. -- market capital could allocation And opportunities market then that are then any market? certain potential? a conditions, buying -- you are your guess I a for or -- talk I M&A And guess is competitor there more in a seeing priorities you and if about

it. Got

MDR and great to share So the that's I example with merge is we're or a ours, of and our M&A think It's a lot where acquisition beginning. been wallet philosophy competitors' easier. of them customers from able

EBITDA stores of there, loyal that be share the doesn't those to from in high and and fourth more attractive and many more few that at the multiples out some marketplace. X for to quartile, look or in of dollars X.X we seem per are the our EBITDA are businesses. and transactions just third the to yet store look higher that have XXX% million sale, or buying that of a Just not us. standpoint put an When businesses get them customers sticky we X than wanting very I spend When who million XX% they're next we their performance wallet and per store may would at compare for and of

some just leverage there there labor, buy it's that actually a of be in that whether whether challenges And do plans, can to think kind frankly, as acquiring the then to within by industry continue is the and et is facing stores. organic M&A customers way that share we we to really, and So we're EMV, would really facing, opposed bottom of and those tobacco, the differentiated -- it's challenges it's cetera, take lot whether industry good growth half capability companies. to a unless the of position our unique the want is evolving

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

Congrats quarter. the on

manufacturer a trying like there. price in the increases color to terms just it of but the up sales the sounds some on call, On a transactions, the touched more an in idea kind it can You but versus X.X%, more driver? it's increase that little sales, of get earlier you driver just tobacco give color around same-store just better of of in --

Yes.

more they're for participating a the those coming roll their straight So November the just a getting is store. if think purchase, into When very to you you that's we customers programs driver. we've in X you fuel bringing for store strong and right, to quarters that there tobacco, their the think if December, manufacturer and about, people in after the half fuel one, very, about more been coming programs going got and buying that January, they're so And February, March.

start Some have may later. decided programs other competitors to those

QX might So we it even year. though of into be those lower seasonally, of programs maintain continuity time

and very the has with is which we're those, of stickiness seeing their actually optimizations been store-by-store the working getting allowed few on the of into on been business team some us sharper hard with well. every program products that April, and a MDR day that category. significant those in their The think And share has continue to what And really have very gain tiers doing, pricing. team very pricing fit I positive. our programs of specific manufacturer certain so fuel pricing then

us increase result prebuying-type their quickly. bigger The margins biggest And the are to any so increase out on to as typically prices Competitors price very, going I would washed allows we at it's expand impact gets our raised do, but differential. very drivers. of say have times those the activity the than -- because a more

in market helpful. around That's April strength mentioned And share. in seeing the you Can some regionally? give color what you the and specifically Midwest taking you're

that polar storms regions, last Midwest growth. impactful the the and seen good this all as in Certainly near year-over-year, hit the across vortex anywhere as we was winter hit the have Southwest year. the Upper say as Southeast I'd not Yes. year that

and think but had think is cylinders. made momentum, And April, capabilities we've all I the the half with on just and I And share. be Maybe. not more got so with you're about that cylinders you're year, of of we're easier it incentives that QX everyday is backing comp? that sustain right the put now MDR changes differential we you've store-by-store leveraging going systems consistent in think was you're lot and to and that like consistency, to it But think built low-priced second some capability when I many than we in firing before. place the last when pricing, other of on an able points, firing And up a and we earnings

[Operator Instructions].

the comes question from of with Christopher next line Your Mandeville Jefferies.

about dollars a Andrew, of we and you've if think driver, you tobacco seen we the story Is the of merchandise and on profit to give some margin. that that? out? becomes continue about can how just Or erosion? help what consistent us, how incremental greater presumably going term, gross a playing about Can success thinking you ask, more loyalty us gross think I maybe then dynamics as now sense longer you're margin back do this a can

Right.

tobacco or of So the margin we a day, at dollars margin-dollar whether other fuel, end take this merch. And to business, the the bank. is it's

tobacco We take and a to merchandise missed to I along saying, did our to unit strategy diversify on on more our lot to exposure and that. to if right? me nowhere question, drivers mix," -- be what means, if margin you're had category. that hone started grow we And so in the tobacco. correct We're wanted there's of trying X with a that going that, like say "We But and for day we the that the and we way share because in didn't the destination

going programs categories engine grow is But like the margin recent and have episodically, on, of Core-Mark this with margin. see in promotional behind lowers the nontobacco scenes associated gross it that's some contract a the continuing that So them. unit and that to with the with we'll kick a higher

numbers quarter to of some any the that, X So is flattening. is as great categories do I manufacturers job let episode wouldn't continuing hey, and a well. team on other The kind the suggest

exceed energy drinks. drinks business soft in Now our carbonated

And from the we so as see see and continue we continue expect innovation, consumer choice to manufacturing to products to grow. other margin

Another stores building. the factor is we're

don't and products longer up ramp up, So that higher-margin happen, a takes every time in And kiosk sometimes even kiosk, be By store, most a things the Tobacco quickly XX% replace next, up or end included end year right? portfolio, get we'll a of a our less little we kiosk. bit raze-and-rebuild stat a right? even XX% X,XXX primarily the as we're mix. but going us to we to think higher of the this in so small below having with of square-foot pick other but tables, kiosk because be of than couple industry portion it and people

impact basis promotional mentioned that have say and that of that. Rewards, you'll see up a Mindy Our twice the XX is onetime of square of impact the points. Murphy go sign-up as well. footage, Drive XX, I'd continue X,XXX square-foot half to so probably stores

up. of a X bit X in that's month quarter those blip episodic little signing an largely So folks in

quarter loyalty program. good we fast is And that end the which would or the great as news them, is a our a points by as level see of So sign are out. start successful burning third and second quarter, their expect of earning customers they're to to

we the going continued would mix of dollars. there. in the margin over Chris, to day, our and We're going see get have to more growth we're about at expect sales So end to gross our described a favorable more But sell and margin that the unit things all to it's the I from time.

And started Northern illustrate now you respect And MDR, some versus things program? Texas essentially Tennessee That's on to rate? newer all provide percentage how members you daily color any trended active that very is of through with going there helpful. mentioned, that X.X to million that to there's the you transactions is similar and/or user are can of ability then an Maybe markets? the there that X.X in to million a the

Yes.

or information, regions to performing on have Tennessee remember, basis, around we are XX% you per we but higher year. Texas average continuing this to to where XX% X years next on the is some see very the three sales, user, to our been the combined. X to industry North whole, store we of information We're that we just the a app. analysis, years. would fuel Xx was next we're about app, able programs I transactions tobacco had but be the transactions find Xx of And X surprising and than the and sales, results. comps X comp the on public based basis did daily on industry don't similar that to that merchandise public than have participant-per-store the member-per-store some those average XX higher fuel the to XX% a the given got on to or So Xx shouldn't And a XX% users do

XX pretty pleased able do we're days. about in to what we're with So

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

Any And are It's Patty beverages health overall, the consumer of here in the perhaps, about of innovations again for traffic you patterns? key how out? your call to talk bonnie. can doing? terms

health think markedly the hasn't time consumer Bonnie of the the since last the question. asked changed I

is consumer I bigger. probably targeting that base we're getting think the

faster this side, So markets goods their it's than probably about of people ranks. in Their probably lower education in we are consumer, little lower-income think going if terms wage be to increasing, the are a bit costs the you serve. side, little the a bit typically joining nature rates on more rule services more and and household there

our We proportionately over-index from that we of consumers how we -- And at just we peers. on lower-income look growing would standpoint, so call do when a serve And customer them to that segment? segment. relative our

actually help segment. excitement with with is low-price a it which own growing, I we're and low growing the whistles But with position segment's challenge. that, internal a to to them is that we're so know like network additional bells by where prices try growing with having and we're Unfortunately, an there customer And out. MDR, everyday everyday associated don't in

And your Okay. innovation? and anything about beverages

said drinks now surpassed energy soft have I drinks. As before, carbonated

better-for-you ingredients are the driving cetera, sports the the better seeing historical in we're offset innovation some of to helping in products, and et the products, products. drink think the I what's sales increased

sometimes -- have brand-new you products. So some getting

stay get the them through can of very get in, Some to the systems, once got there we our sure in we distribution they products, stock make in we've new sell in because energy stores well. them and drink that distributed

will call. to closing Ladies the the pass Q&A concludes for and portion gentlemen, remarks. today's presenters over back I call the of this

on to going our drive and tell can We we're you And call. you enthusiastic that we're you some how Rewards. updating much. examples on about Well look of we Right. your Thank it. that that you our tell share further create next I forward questions Drive very to grow appreciate of to for enthusiasm, use certainly, very Murphy could shareholders value from share so business, our

gentlemen, concludes and today's conference this Ladies call.

now disconnect. You may