Murphy USA (MUSA) 1 Nov 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Murphy USA Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Christian Pikul, Vice President of Investor Relations. Thank you. sir. ahead, go Please

President Please projections Donnie President an and some With can everyone. Andrew us given mind variety will no me, opening this A Executive Executive as XXXX, Litigation these Controller. and may Ashley, joining and Clyde, again such, in considered up portion, Q&A. the of that financial us of Andrew, keep Chief Officer; Securities Vice West, comments Mindy factors some today. of then assurances statements and as as made call, will exist and the will we'll actual to from be open Mindy of be After during defined Officer; differ. Chief will good results Vice that forward-looking Smith, you, Q&A to give Private overview attained. that that Financial the Act cause the Thanks morning, for in comments President the and results, Thank and events including usual, the call occur or Reform be are

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

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

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

allocation of and set business into capital about The forward We're in demonstrating the are only as you momentum third not head results, we our discussing us. we to our opportunity in strategy. is Thank front XXXX, also we everyone you, welcome with morning, Christian. joining to steps but excellent evolution us quarter announced strong today. excited of the next Good ongoing looking the and

results let's were third fuels So of results, year, a year. quarter delivered impressive lower last only from the the were different dollars comping price equally fuel results much environment. the commodity million these $X with started last quarter than contribution with get yet third in business, total which are Beginning

in steadily margin third the fuel even half Trended briefly is and the month. the in XXXX of an to remarkably, July. an higher September last higher that environment. in But dipped Despite year. contribution down about $XXX $X.XX or $XXX from million total year around only September gallon $X.XXX XX% and prior August, changed volumes were the year choppy highly year, third and flat we quarter Although way exceptional In drivers COVID about prices talking about past in of are and the the has was to fuel all feel gallon. performance quarters, lower overall the contribution were This like fuel July business year, $X.XX last which of we favorable a but generally per of total lower, a fuel X.X% year, over were prices per through million gallon, prior and unfavorable generally setting the generated talked direction prices. both trended generated of of volatility, all-in an August back change rallying about normal per in of ago. environment magnitude flat the quarter including higher down few above Generally, XX% dollars we

could levels establishing our shifts way to continue versus which retailers traffic, belief baseline we in that stay consumer are customer in higher ago work. offset help and results remains these year behaviors given down validate to the fuel Importantly, down margins lower

us to focused requirements, benefit margin will industry's setting stage for further its continue volume, with fuel XXXX. format, high More for breakeven the higher success importantly, we believe the Murphy from USA ultra-low-cost fuel in

modest and customers. frontline maintained to OpEx stores. continues business our grew to kicker engaged generate When an We merchandise value and customers Complementing merchandise share fuel to sales with where categories can perspective, our cleaning made resulting commission maintain choices performers material beverage, salty from employees products program and seek in third units, and Beyond are fuel We packaged candy again, which store we both as and in in cigarettes, coupled in policy the impressive our and general categories on and of throughout our calls, some results. in results. safe strength the lato impact hours our force to we motivated. in expanded quarter maintained consistently core continued environment once saw it's to our clear as merchandise beer gains to And we highlighted from additional improvement increases we engagement customers. for continuing sales strength sequential we leave are a assigned we like such snack. prior as we From our held We sick destination saw benefit like seeing strength clear high deliberate purchases lottery, margins. categories, our critical attached in that our keep results, other

PPE a sanitation pressure signage. also here cleaning in experienced bit more little on of store and products to We stores, along COVID-related our shipping supplies with safety

critical fund G&A been able donation Southern to broader variance but more a saw million our we in on expenses, have a pleased also to community We programs for Arkansas $XX in be area. couldn't negative

year support our employee also tallied another of where the campaign. Importantly, in way united annual our matches our we giving local for foundation record

Our share business community their volumes the for live October I gave considering thank third month, employees encouraging gaining data, into positive was merchandise continue When to to is range. with coupled the see benefit and customer needs our we of we which are the target employees healthy gains level and from results our all XXXX. exiting in teens From Further, clear is and higher-margin commitment which a our and where it about categories, to as head seeing we work. to year. improved key with where $XXX per are we generosity million. this at in EBITDA we higher wonderful high especially outcome, of the possibly margins want momentum knock-on helps $XXX,XXX, the contribution, elevated this a quarter sales. communities not Steel in XXXX the category store $X.XX materially year market higher traffic underwrite

release So after yesterday's update let's an the now strategy. capital allocation turn to market we press where issued announced we to close, our

is to announcement outcome consistently is Accordingly, has strategy, a which a and share and First an foremost, of growth and refinement consisted organic our date systematic review capital repurchases. long-standing the balanced in refine this and from this outsized strategic several commitment to with ongoing allocation have operating along we of benefited largely free executed not flow generation, in market strategy. balances. the over the Rather, business to initiatives conditions shift significant past cash cash resulting strong leverage has current and latest sudden years, enabling

have the As the simply we our XXXX at we is financial sooner we our and anticipated. remains now opinion, set beyond. opportunities of be we point the evaluated and a which bottom program of our a we framework got in driver, to line originally X-year committed earnings our than To and most accelerating NTI result, value have high-class clear, remain growth significant we are in to against plan. And organic

new X,XXX year. us pipeline to two to of per XX develop results are to early taken stores format, the foot has our the three roughly support stores highly larger it years While square encouraging,

of adding So accelerate per Nevertheless, a even would footage ambitious made longer-term foot growth we format, a will NTI effectively on format capital square today most year, decision. kiosk decision new XX classes years. annual small strategic stores that to larger and of field further prior are our deployment basis some an be even square a exceed X,XXX

our performance highest which impacts making new allocating distinctive customers X-year are experience Given food our forward. internal focusing expertise outcome, and and management's we on store returns importance of represent the building purpose, that million $XXX fit ensure plan, the and come. to that people with investments for as new we help To attention year growth format of store on year our resources in a growth offer and to the expenditures possible investments maximize are beverage us capital going support our in our investments, is a over to it and the

results and As this the see of and is outcome Management initiatives. value delivering to drivers operating toward propel food business-critical precious model, maturity spend, forward. management's valuable focus our new beverage, we and harnessed of of which as since we help a we business resource have natural our focus successfully the executing now set point prioritizing that a is a

you If other areas. in our pointed years we ago, cross-functional optimization several focus go back

that benefit coming with the optimization in and expectations for we over locations beyond view, contract optimizing reasons we enhanced have our market service expect where In significantly the our less terms succinctly acquire For lease curve levels, faster, growth customers Today, identified M&A simply and all Capabilities outside higher our capabilities beyond we building pricing partnership could our participated takes improving these set are implementation. given example, we gains have do open capability benefits. build of building these to offers, Rewards, in place, offer returns XXXX on attained with capabilities chain More another to and specific the easy, goods. to point not in our broadly, scale home develop years. the not Murphy through acquiring we new particular, is we M&A. supply we have have is also for and model. We are not elevate up our our categories, it sustainable tobacco, we than paying in inventory would have to only what one has our machine generated both new capabilities, Therefore, learning premium improve we recognize complement Core-Mark, toward through In capabilities, of their management our their average provide promotional now suitable activities. generated could stated & we including opportunities a but to we scale which financially future since food emphasis time. our that value-seeking Drive are cost renewing the stages and for operating We and not we with our in-store are new distinctive could business a have that and we And ordering margin Core-Mark formats assets and pricing office, also and off with price the low of as than early share a offers in to that we store from beverage close five-year and rather which practices which new contribution believe growth and customers. that and several internally well,

view and end going at which to the for acquisition not framework an beverage through the opportunities unique are accretive. going this we historically a desire like after an and such, food the Moreover, open necessary make we explore in price of we in acquisition of allocation if The bought it pay, capital a capability we day, an those for of up be food could generate to successful as then capability, other assets better-than-average And to compete As us remains viewed attractive At option we would forward. having markets but lens. the view differently is find may we acquisition or we to different largely to beverage, paths unchanged. have the basis firms we could the options have available enhanced mid-sized built the stronger and M&A a want synergies future.

more stores. we spend capital time to to mechanism more we discussed, options, to dividend larger value be creation $XXX sustain period a say, that another years, with per those the think over and and And compelling business a shareholder. of I to now Board make to group of firm a authorization completed returns this to advantage our repurchase turn significantly demonstrate of the balances of market the we cash primary allocation consistent periods reason company with to with long-term than to share capital is an options will Mindy. desirable grow mechanism for Share is simply This we and consistent have And namely be time completed over our out million are three and shareholders line Needless right a the recent that, is and some historical even yet is pace ours long-term However, our going similar right a approved but offers taken our time dividend. programs. few investors and up forward, represents cash supplement only generation to next are understand modest a then of to times our over million repurchases, have diversify have still we percentage the implemented market. from our an to has as meaningful is like most volatility, our as quarterly out a grow and To including dividend effective moment us capital repurchase with return USA we allocation believe commitment have and our new authorization periods to $XXX both and peer not ability executed potential little consistently feel in we our advanced will over nearly shareholders, since the On network small another be and others, the value creation we of the like capital the that We a of should to growing prior tool business a will provide of which become can to clearly XXXX, business as we while there retail which view excited continue it be commitment of Murphy an years. our to and our initial build by improving. excellent providing a if with yield extremely flow $X.XX December optimize properly in establishing returns the share. over up provides of XX, when broader

growth, maintenance for approximated Average capital million everyone, of in $X quarter, expenditures Capital gasoline with start quarter the year retail I $XX prices than million $X million listening were various initiatives. which and $X.XX, strategic gallon to and Andrew. retail will off per $XX a items. $X.XX. and the third corporate allocated Thanks, Good million remaining to allocated ago was standard to the you some lower sharply during prices morning, thank of today.

quarter leverage times was the year We lenders million cash $XX.X outstanding at million the $X.XXXX sheet million. X.X to and $XXX down quarter to debt $XXX to million. end continue on made debt which million, of we September quarter with full ended expect remains $XXX Based outstanding, Total down ongoing $XXX times second under in $X in our million report balance quarter times billion, the quarterly quarter payments XXXX currently of availability principal Ended undrawn. term the in to we end to the We versus facility, third principal billion $XXX spending the capital fall four payment post between reflecting quarter early third ratio of October. of was X.X of ABL and as our XX XXXX. X.X on in approximately reported loan

common about diluted shares of and XX million approximately current of million of expect XX.X utilized the persist on of don't execution fully as XX, XXXX, the does in balance third Andrew outstanding sheet basis. support million market repurchase were a conditions a to Due we shares under repeat Although financial $XX strategies XXXX during quarter, of levered if share remain capital September could allocation the performance mentioned. be some to the or

$XXX As million up press kicking that in in authorized end, as the worth. executed stated July since recently the which over board. the program we $XX off program release, to remains market or conditions the from allow XXXX, another up the to have by shares million Board repurchased amounts Any million million about XXX,XXX program in activity prior will be $X left in means by of authorized any to quarter $XXX

expense with XXXX the are I will for results, an nearly There during of earnings financial exception third changes guidance year expense, of the to million, couple expense prior-year third second quarter, a quarter above the the guided Total that the total incurred the in quarter we which push range. increase for million above onetime the published just make at release our G&A some revised want no Looking to $XX G&A $XX.X quarter. of was comments.

and were said, here Andrew which million important to Arkansas. $XX Murphy the South donation USA to we Foundation, El announce us to all Dorado very the As in Charitable of pleased is

trued certain was new so to it to my the we turn investments addition I up Andrew. million, about to due for the accruals in timing project expenses. That back donation, this and In variance remaining of up comments, wraps some and $X also will over capabilities

to the want shareholders I with close in. Mindy. Thanks, our message final listening existing to potential investors and

incremental opportunities. continue our Our commitment to with we organic the capital right program, you to highest markets to returning will opportunity. priority our value we that accelerate to growth the highest creation through high-return allocate further will opportunities right assure remains and capital have organic our When growth flow commensurate in

to balance and initiatives, other value now free cash growth flow sheet balances, we'll dividend priority With that receiving preservation share creation to including we've repurchase leveraged cash Secondarily, appropriately dividends. use and one. continue consideration an and support initiated

continue and with opportunities open will from any can for building M&A out to Q&A. lines that, assets. we the new returns we and acquired Lastly, reverse our both potential stores to explore the and optimize synergy With distinctive seek capability up our operator, synergy

from your And Bienvenu Stephens, Instructions] first [Operator Ben comes with Inc. question

Good morning.

in might you that heard there on I provided so of effective. most good context think allocation lot a been commentary the dividends and that's potentially a allocation quarters, or capital is And a while and strategy I what your of process. you the thought notable say capital think on I growth change be slowdown shift here focus perception updated is the or signal a in kind

more price then you here. I than XQ, guess, say of the is in I to in of XQ buying XXX,XXX commitment demonstrated I shares think it's I heard the what higher your in buyback, And you late and kind kind supplemental. really think

maybe the store XXXX. over but for think us, continue help put in term, in the maybe near for to growth how this long runway context long I think hear how growth? you accelerating about guess too. for and helpful that us How is stores to evolves, that I about for term, you be talked not So new into would

the having achieving leverage It's investors, sure views theories or including back question, free talked environment, have we goes about outsized I accelerated we're high-class front shares have about, rate. an with mean if that the change? whole mean financial quarter you other talked with there's growing cash earlier, about $XXX the and about, achieved cash continuing we've and buy And Yes. accelerated you a opportunities really simply conspiracy that goals I'm rate in Thanks, strategic just hardly and to Ben. why a by good in current of superior I lot of us. a and goals think this million generating set oh, I strategies of in those earlier, flow, have associated we an there's and of the at yet bank, don't at a As

free flow this the machine doing in is, capable mean, So it's of I more. cash business just

already up from be sustainable long able of on first we pipeline organic reality to future the about to organic have year a we the XX a growth do our accelerating growth, continuing basis. and As that. target a And stores we've thought is, building do super accelerated to identified, we've a markets

wanted up pipeline couple growth of XX take another build that pipeline if It's XX year no those So that would in from more to in the constraint years there to to do we stores it. is markets. a even the stores to year a increase about

in XX ago, only do So went if XXXX. XXXX $XX back because already was we're million couple XX in a stretch. announce going targeting stores And we're years new a that of we couldn't you to

accelerated we've the with. growth start So to organic

and share that to the it earlier complementing only dividend, can I'd repurchases million about a where continue Way that share mostly repurchases. the like use share dividend and repurchase finishing extent a obviously in basis, share repurchase over a the million we accelerate phrase dividend $XXX a that about our model all the the in a basis the future, model you're three our paying dividends, future from our talk share business, program regular to model. model As our to with $XXX future value and next investors authorizing plus shows the we out plus generate in than by we price you think repurchase strategic NPI only go potential to on Board from the going is present initiatives, to management on front regular shareholder of a the team earnings higher today. a existing supported growth that years it the is the is

out And is so on of the bullish of we and we a remain lot there's volatility. that. But all market the very and time, reality are the in

We on deploying And the in consistent million market We $XX about which have we significant something accelerated return, dividend, that of two significant particular next is we as of an it's we three expect set you to the of right? the back pipeline to further. for build outstanding future it's than cash, accelerate a be so years opportunities. up larger on high-class we'd to We've really a it a less even or that, very And are that out think whether can to we're balance don't so. us NTI But do million quarter. simple sitting able be that it's as XX% always capital growth; given the volatility. easy on until not earn for much to that give way $XX in to basis something a to a shareholders in

there let addressed that and me question, if the essence of pause So Ben. your see

your think to on RV, else's think is and don't synergies that, it guys at misperceiving to of in your And business be about perfect. the I lower I justify is on multiple good M&A, I about an you you you right where of how execution you price a businesses on that's think want or you past. inverted if business? just to really about than need multiples Am think that might executed you be that how in someone it to but heard when and get to Yes, well buy the layering the perception? buying the work capabilities? area buy the capture guys purchase M&A maybe skills excess curious, yours on in accretive. in business efficiencies where business. that in good about math I'm making But truly you have we've with kind deal Tacking have Is that be. your the that's should to do something of

Yes.

great it's question. a So

be not real clear, sake. for we're M&A doing Let's M&A's

& enrolling a Cormark We and people made with developed what shutdown. working are dispensed a partner in with we which this renewing hires with the also in mean target, was larger dispensed format model over dairy not us we not we look with number beverage, during our going business, least going about. think to provide the have And offer the COVID category. coffee, benefits as it's our to be our dispensed dispensed or that I open additional it are many we USA our have the But have stores, heatable been for etcetera. we have and format kitchen, thoughtfully we customer have Murphy very you, best solo, USA's and the think of distinctive the few them in to food made-to-order have frozen beverage about honest to strategic coolers, it's items very months; effectively Murphy we we about with commissary [ph] is items, would type category; customer contract air past And heated we've

would want right; could for to but a capability prior obvious stores, capability may we capability, that capabilities that's that's what, our we done or in path then of people, it's there to to it a you very of know don't that out unlikely at then doing shouldn't position know plans think enhancing not etcetera, Whether format an coupled get it's and brand, firm, We shareholders other We've talked dollars have job organic accretive. coupled or so exceptional been markets portable. out to probably in enhancing we to return are of synergies we to we would may we'd we building improve if key supply building led significant make appropriate about has me model, you're technology, say, the bring mill, the capability, our bigger our importantly, capability of one generated but stores be deals. buy out in made And just was, could could to from we benefits that these most background we already going return think one run build know our along. about along get to supply we to there seen all could cash of to further and our experience, free are about capabilities of "is of simply that. to million reverse other hand, at off it synergies is chain, we're a acquire." growth, an accretive return a as be have it benchmarks, look new our already to priority. new there's to the say, average, investments. most not our low-cost the next thought contracts, we're larger It's there. we and foolish opportunities slightly we years several that to average you But developed But the see need we operating though opportunity couple the and we've front that have exceptional gap we our hard, enough even that to benchmark chain to. get could massive be got the a we USA but is into have our outside stores of are there platforms could my ago, is, have our our merchandise would it's than Murphy flow in kind do with you least think all returns, that I What So very M&A to us M&A there would us, could and capabilities and there for it advanced be with firms what, opportunities fuel markets big our to scale; accelerating below on but see process, more be accelerating be it's kind when what target get them, the be we infield bring and It's our organic synergies there those our of capability because and

you question. for Thank last that. Okay. My

as gallons. You to on trends it October touched the relates the

levels. running that the mentioned elevated in-store You was at still

given, how of compare how think is that the seeing you of can you guys is relative provide in-store the performing easier September, either the kind XQ, we external even from of an then had I you what update you Just how much something on gallons, last much more on a of that fourth it or you're compare? saw granularity environment quarter. to curious a And function think had in is in improvement the and October? are the And I what in doing? through

Sure.

market. from think kind we've last choppy this of I So year, again, And good a October an frankly, external year. environment, seen, was

of September. saw the So we've that kind end teens, We $X.X of in that prices. kind volatility at some seen that low the reflects the certainly of rising

off So month wouldn't bode the October. that for well of starting

better environment a period market than comping a from year standpoint, we're So year. what seeing actually this last we're

we're capability. optimizing doing, down the what a retail In that in of terms further excellence, terms pricing doing better on we're clearly and road of we're job

every see which continued And from so benefit quarter to we've on be quarter. positive a there'll that,

there of on those the our with side, of but key more merchandise other continuing the in gains don't categories traffic some appropriately holding on seeing rebound same, the tobacco the as the front have attached and the destination it's purchases to well. see me, of recovering On I numbers, categories right

So very, good news. very strong generally, all and

great. leave Thanks. Okay, there. I'll it

Bobby Your James. with comes Griffin from next question Raymond

the of taking you allocation Can high bandwidth as we your investments the high-class for has capital you Thank prepared of morning. when of and organic bit back of as all a to needed detail well doing talk and Andrew, thing successfully? that are growth being guys spend other some to kind I Good into executing some S&B back the to have as wanted level, support remarks, end been able maintain initiatives you it. talk my guess, avenues at look of extremely and maybe questions, been that about cash maintain the about you the having well first company I Very to so problem as appreciate different in updated little helpful. strategy. an

end And other things? the more talking when about investments, say you back outlook? you Or are about are you talking CapEx

organic Well, people, to need that's strategies. been potential into this moving through been so mean, We're the of people other growth is going of upside maintain or allocation bandwidth stuff I well. the forward? very another to too, updated area sense anything How guys you that well, going executing hired, that capital systems, systems of have be

Sure.

the the that exceptional you have team put that that I think business. partners good is that, on say of construction I about markets just would the during development asset we an business because a if the on I has work what focused So organic core where and our we think think them, brakes with growth, our side never COVID got priority especially around

cross-functional to labor So further we the slowing X,XXXs we optimization get nothing say, there's food and that layout, etcetera. how our on challenged absolutely about and front. do most out team down beverage that store We've think or of changing

further We improve and have continuously just initiatives optimization there. think to about

normal yesterday new track locations. they of those maintaining for and we're as building some get that activities way. So We build, along of would and just all looked incredible cadence at continues a build pipeline. the on committee our store NTI say I into a running just to a rebuild a raise locations cadence smooth and plan had

really along this doing that different we're nothing front. there's So

it fuel build to terms one biggest built two our knew had it of be we successful we rewards, our to around and Murphy In categories, and it we capabilities, and of drive tobacco, has.

get so their customers and other we try conversion categories, and trial effectively now and communication going it's tool come also incredible to that and let And a support acceptance. or to this have we're point it's an products great capability product it because just to know new

and So we so can input their our customer taste from to on base forth. give panels create us

it, all far I store we the to place. gone approach really help think to some most the simply closely. outside we exploring, the made machine well and think have some are capabilities up We to as the a board to of and the strategic learning we're have already working work detail curve And need able on I level to ground these of comments, all so to have we have President IT And an come do our a etcetera, Director different few business. out remote continue pointed needed we're of the call results to operating get already of the grow than at in in able base playing store, From do, as and we We've this have keeping that. we be set prepared We've And level that's on so high talent new F&D to the that the mentioned we bring optimization do could other targets, continue to further. the performance advanced and be out built hit do we Vice sustain a platforms. in before, last over running at and that at the the Senior new and what recognize, that cybersecurity hires our to machine to some the good, to economics from we and down parts IT new set else Director down by expectations, opportunities standpoint, as I'll get store store. years, the capability we've of every get built systems the

early. I to line the challenge is part described business like, together, we the set So a got of now program forward $XXX and of looks confidence which teams anticipation the toward? lines finish think of share I opportunity, finish there. here have is forward, have we And lot clear like. an we What's to what I And repurchase what finish out that that the management I move of think a authorized because million to we what completed. real like that exceptional finish first will is of we're why think most to line have we the one look built, the retail we next high-class looks of time also that by all want line having line line looking next run sight of we finish of what the have also

powerful kind very, mean Very, I that that opportunities when even acquisition rebuild CEOs further very for I raise those you helpful. your of think or you me. do clearly the do the additional that I smaller mean, of of can integrate appreciate formats about beneficial assets? next-generation potential stuff, drive could and you look stores. when capabilities, out upside guess I you expanding be into to kind that. larger very on of those at high-performing And potential see any any better second capabilities

set that square pour got program. and Absolutely. coffee rewards. know if up to I to items, formats, sell, we going I is mean to for we Murphy customers. that. ICE me-too what etcetera. of dispensed think stores that fit We go, our take whole coffee capabilities will reheatable of tea, We've our really about beverage, coolers, right? as Same we for with a a thing recognize And on late, not our different. with foot stores, do come And that's ideas have fit to there's We've grab clever that got unique a allow approach similar a one our us will said, U.S.A., couple model working Murphy allow something our And X,XXX are drive air we we're for better. that purpose us you fit Open out improve to more some than and are it's be

unique to average going a It's opportunity there creativity bit the look we're different going to the out mill innovation, little the well. ideas the And probably run so and of set. than and offer the apply to as our

it is something, guess, if around have what or anything lapping merchandising mean able this volatility and you recession to to margins? an would I a out, things that bit the standpoint, the I would had next $XXX think economic big be? Andrew, I pick that you be million go lastly, Okay. a you those profit, but the obviously, us growth context far is variables number about in I that but to some of is to just against? tougher cause year, an to help Or get two there understand Besides, fuel just little the not or from of mean gross it target up one look industry to question at you

Yes.

right? to of think would It's no you of know say would fast cause timing years. And it, finishing So go the say, that next conviction $XXX versus there's a you "Hey, about you about in million the slow to I program of three what, we're more to if go other $XXX those lack we going uncertainty there's the election, about current the faster we program. to a regulations, end, a going lot like are on capital mean, how front could as we environment, the I markets, look, taxes, be And go looking did the think the anything etcetera. for. with of million things we're

EBITDA, that very close an those the on could keeping it. would a impact would eye those have be things etcetera. we things And near-term on so And be

As affect parties, etcetera. you said, would they're external, all they're industry, they

authorization. dividend there's was at in also of to more end we're are three-year very where of it's period the we timing of continuing And of we out execute we that's It's shareholders. be appropriate capital the which our thought So less that. why expect to timing if that about consistent a a market, where a to as well return provide because we a

what things be it, that guys there was that an just context of of comp building answer that more 'XX. at what the that's purpose think to not us indirectly, I would economic in Thanks, for barring probably clear of my Andrew. to is actually about very question, regards models? our another I in was the you some And we help not but asset. super you hit EBITDA and looking too, helpful EBITDA against that. helpful that target, would think out modeling you $XXX million don't we're as keep couple variables was to in course, a if for that But in cause how target recession,

up in quarter and number new says numbers. wake this whatever of variability see one our highly outsized very that volume we our could that equilibrium what and market it having we've rationale. is fundamental first fuel we've talked But XXXX the put think become continue behaving at irrational I single could shared expected benefits margin currently as in the And that for also. it day That's evidence, biggest the about. market look, could driver in nothing as you just risk, is see the seeing Well, we're that reason. to There's this Sure.

second swings So Certainly, regulations year that's could our tobacco, one ways. as be there category. both we around largest saw this

increase, just regulations come we announced benefits that, price see other tax see could and could from that but increases we or that. a that Altria think I impact

the those most is our mix and say probably Fortunately, we're be. market biggest items I a in tend such we than in taxes new are in House. such a of certainly that We etcetera. the EBITDA, two the regulations that are terms period, XXXX would to wouldn't short-term any geographies minimum tightened to transpire even changes wages, with more in White regulations, favorable administration expect to

best of good in luck details. fourth and appreciate good a I quarter the the on execution, quarter. you. Congrats Thank and

Bobby. Thanks,

next [Operator your John JP with And Instructions] Royall Morgan. comes from question

morning. question. my for Thanks taking Good

what target the the or are keep share income to dividend? have On growth you're kind idea over other would is of the eventually yield differentiate line kind of line with in targeting? Or per ratio a the I'm And any flows more keep peers? cash plans Or peers? just a be getting I Or in with with to dividends, of time? you do it at guess is to particular

Yes.

a John. I think it's good question,

only look lower not at. firms there's in dividend-paying group certainly, industry, that on of broader a most peers metrics, clearly retail end line initiate with and in peer the dividend, at we're retail the of they we it's three that, our firms the look think terms in but at least when I

various things an we'll other there keep your certainly metrics. that so And outstanding, market or all on those some cap, are shares knowing things eye price the like that your impact metrics, share

to about, it differentiator. become ever think would question I the a second

standpoint, plus difference the a think model still in call repurchase dividend from years repurchases and the to the growth you dividend share dividend just moving plus think I where what a And we're I from supplement model that's on between a share differentiate you away model. that. to opportunity I plus

still value that price, our going these complementing business, captured in potential so new repurchases, much on share we're in stores hasn't view there's bullish the and is be near that's every from it but the in our that company's point some given of in stage, opportunities growth in earnings lifecycle fully of that with there's on the built becoming current sure more I'm it share upside I and think isn't growth we're baked a not that the ramp dividend, to And to have all the nowhere into dividend. front growth where fact we us a price. differentiated makes our transition the share more

willing on talked beyond X.X the And remind Would be step you levels. leverage you have that That's about can you then And really us if restrict you attractive any you covenants outside for times an acquisition? max. of helpful. to certain that levels,

might but X.X I a the think past, stale. three that times, in maybe about little or you've talked be

it take significant, that. pretty our acquisitions, current balance, our I'll of the above But do and I we current something Yes. certainly ratio would X.X given in covenant. tackle times, cash terms Mindy let think leverage to could move

trading we less bonds over today our X%. at at with think I borrow XXX%, money could effectively than

flow It's would we And that's It opportunities. quickly stated get that free anything But that. to our for with want the doing below add times us operate. back us to goal. covenant? about the you to concerned gives a very of great be wouldn't a of cash lot certainly talk opportunity about a flexible quickly. place and it we Mindy, flexibility, on be So would X.X gives a lot business frankly, like us do to that, ours

allows of below a repurchases both our Sure. restricted payments to share bonds obviously, which carry we have With affects, regard to outstanding the three MAX unrestricted, are and if covenants, which dividends. times have we leverage, that, us that

repurchases within a even can and and we We as are touch three do we times between freeboard dividends. long that. where there So share as unrestricted lot have we of the range, to stay now and

Thank you much. very

Morgan. comes Carla from JP next Casella Our of question

front One M&A the on question related on the and criteria.

our give can either that? around to kind in at M&A Would So in And of multiple? or past a seeing look us had down exploration of lot the process? I'm also, criteria you turning opportunities if you? M&A you outlay put criteria you new a dollar wondering a this any been arms for around then if be put the will Any or leverage or you

Yes.

at don't I've transactions thing ones we'll a is saying would specific a lot most of say the all deal first have on we're in But lot. probably publicly, comment to at in said flow of I'd the we past. been one we've them we attractive have any not or to of have looked looked the us them use in But So because not place. on transactions. of get

the and analyze, have at we do capabilities about to great support businesses get we of inside and that the and front. a dissect have be initiatives the look at set advisors about variety us a absolutely see to we honest and other where the how of that due opportunities on if our We help on diligence look to you think business, we have horsepower

formats building returns pretty organic efforts undertaking larger think to possible right? So focus the future, get clear, our been I highest initial mean, of with we in our we I respect can anything capability we've the is by see to means are out to platforms the it port the the stores. our capabilities on you should ability there some those to of thing Right? capability acquiring the key that the that have the they distinctive; It's would in is So have outside. and capability. complement

that I associated synergies would but it as but And there other our that that benefits in synergies, the is business advantaged. would be with case, from of help, couldn't be so much reverse think

as so really the do whether chain we markets target present could growing just as got, capabilities to we a much stores, supply ours focused we from I distinctive EBITDA which it's have think in which fully the look is focal that we we our it's seen lot well. per is at fuel normal opportunities our markets there could why strategic those type supply from the lower that proprietary not store And a there, of are leveraging is optimize we capability synergies And as that sit stores think optimized. get we of then, that here the and in, than primary have whether are and etcetera. that have that's today. the contract out superior efforts NTI have our having scale. I we they're We And point ability on, we those, And

We'd couldn't not want And that we're have growing so to place on it's out a them make where with anyway. planning some the it's or that capability very synergies a sure markets to strategic we're access taken we get getting that transactions of already today. of

sake premium. We're So that go to would M&A's we how M&A at than acquire gives for you look going average it. a and less sense of at not do and out assets a

me doesn't It to like to sound just to focus. Okay, a guess, bigger I that follow-up, food one great. you're on considering And and or then increased format, beverage from clarification but like wanted hear the just you. a switching

We we are and That the effectively is our looking efficiently believe correct. that customers deliver square very format things X,XXX can for. all the have

made square chasm etcetera. I model, to million, million, X,XXX, you order acres, build, think requires $X between that there's and $X jump million a two X,XXX which X,XXX, a $X feet,

yesterday distinctive firms, foot committee with in We in getting we than we're cheap of an less and up for etcetera, stores on food, a One us there. out always cold, platforms key square acre. the build Building two putting couldn't store dispensed XXX and on their hot stores acres. Quick there. can for our The X,XXX is modular build format the our of trip, already of was the best wall still looking all that admire to most offer come beverage, our

growth out no, So confidence building got. returns high-return that future. further yes, we're looking those our the even is in organic start the accelerate us the view of getting gives stores the we've that definitively, to already even And It's our bigger higher to with most not stores.

a Thanks great. lot. Okay,

I call back for are remarks. questions time. now the hand at to Andrew There further closing no will this Clyde

going Great. hope I announcement, and with lot, we in hit really our XXXX. the of of Well, questions, a know beginning the to I great in of behind good gives as second really excited front XXXX thanks, have rearview everyone answers today. with clear things we're sense mirror; joining us you for our think questions especially everyone, I our some We're the today, a in where we business. conviction but all. and you got lot we've a clarity we're Thank exciting with

concludes That participation. you Thank today's conference. for your

disconnect. now may You