Murphy USA (MUSA) 4 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Murphy USA Fourth 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, Mr. Christian Pikul. you. Thank sir. ahead, go Please

President you, financial opening Daphne. joining Clyde, you for give overview and Executive and and Donnie an Officer; Smith, us Vice from Good With me, Andrew, morning President Vice West, us. Mindy Andrew After Executive thank Chief as Financial Chief and results. some everyone Controller. Officer; Thank the and comments usual, President will of are Mindy

to then will during keep Act Q&A. in review Reform Q&A of Litigation call our considered up We defined of this made statements Private be forward-looking the Please and mind comments open XXXX. some guidance including that portion, in will Securities the as the XXXX the call,

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

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

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

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

today. you, welcome Thank us everyone and Christian. Good morning joining to

Murphy strength unforgettable fourth in quarter employees faced certainly what customers, out year the by people the we we're challenges this with emerge it we business the our competitive organization reminded foresight might retailers time our be our took throughout on we of At grave our for its our model turn the this our obstacles foretold stronger report side. communities uncertainty. we Certainly, in own insights agile XXXX Murphy in and and around limitations to ultimately even would dynamics could to to As build that many on evidenced capabilities other but many and drove decisions be and call, in and that on bold was this in USA including the that through since And of and own like face afford presented to our us sector whatever last them efforts navigate and USA's results it such the in spin-off behaviors, that year the propel led customers' close and full XXXX of serve confidence resilience was fronts, today's that annual XXXX and the period. major success. investments our our could year, our

adjusted for completed and I be continue to our future. welcome team different was any excited accomplished winning win have play last a members our year the blip to XXXX secure process a when We be of we newest distinctive of analysis. play publicly performing most to statistical that in to be companies, acquisition, capabilities traded QuickChek not team Friday QuickChek the as acquisition. could on the and the the in will game our Like will prouder through game and historical what the

focus potential why we're have virtually in and excited month, future pre-released with call we QuickChek. every I of our Starting to or that beyond. Given XXXX released today's the and results want bulk on so the about

stores, network brings XXXX have the added to which XXX approximately We stores. combined

with opportunities successful attractive strong organic before, brand own beverage program operates nicely QuickChek pipeline. in with its Murphy in a model business food meaningful geographic a standalone As stated best-in-class footprint. USA growth complement a which markets, the and and enterprise QuickChek the is

QuickChek on best frame. about a firm appropriate not we both where will what shared and rather the can thoughtful inclusive synergies we This of extraction mutually are their help business. learn being be are an from improve implemented cost is of time in practices to process each do can the rapid integration what Our we and

learn and is to delivered. much beverage supply their from benefit have how we intend our best-in-class it and pricing long-term Food and there food and management expertise a we and opportunity. offer we their USA internal Likewise, was leverage to already example, operations. to retail fruit optimize beverage to an For gasoline both where Murphy of was priority near-term focus business felt began part on as the low-hanging for attention and we

and learning capabilities aligned our examined distinctive the growth. our new we while found us in similar the needed brand turning aspirations for a we immediately accelerate up a and options, and a leveraging QuickChek geography we curve that to culture future obtain As with would allow unique

we and record repurchases balance a discussion quarters. for to XXXX. to We of a after the Murphy business. past. results has and of ensures that in been excited debt will for first in efficiently quick dividend and to also fourth closing recent conservative USA we noted that sheet most Transitioning the our practices December efficient in by was journey continuation enables process allocate the well are flexible a quarter in paid We to USA's set continue very key markets. size a shareholder-friendly capital us capital discipline begin very and witnessed highlight Murphy share the Maintaining the going our the QuickChek received trends forward. maintain

remain volume decrease cyclical pre-COVID. As intact we were the enter subject to a third we the XXXX, quarter used those sequential variations improvement fuel represented normal and quarter that to from profitably same and Fourth at showed X% seasonal showing largely strong, from trends we rising price remained is historically the prior which to to volumes attributable separation about price is environment share. X% as a difficult create this January take time year. slight mostly believe below year, only pressure and prior the

might that margins for helping advantaged we rising in industry otherwise equilibrium evidence see to environment, higher are continue a less maintain price We than breakeven to some expect players.

X.X% were well is margins Murphy XXXX nearly total fuel positioned per lower USA in fourth XX% XXXX, at this that contribution $X.XX the above to resulted total throughout gallon, which quarter demonstrated benefit volume. the and dynamic. was quarter nearly All-in fourth from noted As of in

point than XXXX and larger become our higher beyond else the to ramp to forces business release. in sales XX impact not to as new reward in up. market same-store new being to nearly and fourth XX% sales the classes industry market which Same-store share impact are all up format margin, linked believe XX% With further gains merchandise improved successful fuel we've We The month not new level. non-tobacco average XXXX And contributions were beyond. XXXX normal non-tobacco sales equal adding per the with and quarter expect both will table also the we margins, the while up sequentially. to tobacco include which the and same-store apparent I categories. contribution we were traffic higher and as and and stores support store same-store was store more were been all opened this lower volume, which our since XXXX, from stores nearly sales at outperforming any meaningful metrics, sustained XXXX-square-foot are to APSM network. square-foot to promotional metrics and XXXX continue to the for activities retail build trend persist did the will volumes, model more new agnostic categories metrics advantaged EBITDA sales traffic customer stores margins you retail we in up larger January Lower outperformance volume merchandise earnings impact supports should absolute of of in the in non-tobacco confidence planned expect would

overall network capabilities will to be we will this innovative our by share to and QuickChek fourth both grow mix gains While per existing to related XXXX. categories, maintain these we new stores continued in beverage promotional improve from food merchandise performance, quarter shift, to cost structure dollars, the Murphy about Operating which we substantially category of COVID continue in factors contribution half $XXX store add improving year be over come up despite expenses both where mix. over market and impacted X%. continue with expect Yet the Express will merchandise tobacco per and stores margin of expect achieved with million

in million and have our emergency incurred without, in expenses identified line equipment per personal supplies would sick pay about store increases and with year, $X plan. protective commission For additional about the we we programs, which full X.X% have of incremental of

This metric before. our shown new While of basis fuel lower in fuel business. points we XXX year-end a equal, about breakeven customer else up being than basis stores stores year-end at to raze XX translates zero XXX to all employee in we of increase the margin X% both our only added equivalent points has improvements slightly understates year cost higher metric the year true breakeven below pressures traffic reflecting likely is as to XXXX, The XXXX. formats OpEx from improvement into inflationary the XX spend $X.XX have and and saw fuel activity in now and more breakeven industry another in from the resulting facing from XXXX, forward, larger Despite at cost. the store remarkable going rebuild improving business

a over it cost coverage without Mindy incremental appropriately, and additional I to economically detail return talk platforms tweaking store to to our merchandise guidance. profitability will results QuickChek serve. ratio we invest our we some with slightly our With margin around that we will towards fuel As and to in activity. beyond our XXXX zero recent Mindy? me as stores turn breakeven, add our beverage closer above financial food let And then nomenclature network-wide and move be financing and about and growing comments

I you sheet and of you while today. then Andrew. items for fund review QuickChek start financing Thank some for to used morning, future terms the briefly first Good the in off to standard Thank growth. strengthening our balance with listening everyone. want

depreciation full was COVID-XX billion decrease year-ago by in Turning partially was gasoline quarter respectively. retail to And XXXX gasoline taxes, to and merchandise period. full $X.X amortization and the Revenue $XX and quarter prices Throughout the sales. billion, quarter per the in fourth before the Average this the pandemic, the gallon retail EBITDA this $XXX.X year, This billion year offset averaged Adjusted million during versus XXXX. sold to for per gallons results fourth the attributable and prices gasoline higher was versus versus for $XX.X earnings and million of increase including billion due gallon -- lower $X.XX and XXXX. $X.XX or year compares in interest, fourth to in first. prices the $XXX.X $X.XX quarter, the retail $X.X in $X.XX XXXX. lower were

operating higher and for higher was average than year, of year year contribution, For million as the offset Adjusted XX.X% EBITDA gallon the higher expense The and XX.X% $XXX.X the at COVID-related function for costs. million XXXX EBITDA income quarter effective year average previous in total retail versus the -- also the the margins a the due year. volumes XXXX. stores and fourth fourth than and adjusted was higher full Accordingly, year both XXXX. in full the prior rate versus and merchandise to higher $XXX.X full million was $XXX.X $XXX.X full was for period, tax million partially for net lower by quarter new

of of notes of liabilities of XXXX, term listed less is due value our amortization $XXX federal out tax million QuickChek $XX New Going carrying term with December balance million to carrying XX, due XXXX notes $XXX we under the debt just figures higher was on York the and $XXX.X cash rates current a that to an consisting balance of long-term using sheet as XX% and coming in state broken sheet. the the and million and $XXX cash XX% of slightly of XX. of $X income December of ratio acquisition. in tax over million report lenders debt, XXXX and from adjusted forward, approximately loan albeit X.Xx. purposes, expected New rate we of range These which $XXX for our as between due debt million value higher leverage Total planning equivalents in And totaled billion million on result Jersey our are the the

rate release our QuickChek of coupon As the attractive press announcing X.XX%. $XXX notes of noted a million in we new in acquisition, have closing XX-year issued at very

under a revolving XXXX. due annum. secured million committed with of lastly, not $XXX our And loan replaced is is our Amortization we B facility with per X-year loan as have also facility lending previous $XXX that fluctuate LIBOR facility term a liquidity plus does ABL with asset-backed which term We X-year in commodity did. X% prices X.XX% that at million credit

upgrades a and share for per release, for $XXX raze-and-rebuild $XXX million primarily our paid on first the and rollout. guided we new on manage million prudently guidance. stores, initiatives completion extract XXXX, savings the for of stemming to sheet EMV million around balance capital spending XXXX up were pace quarterly quarter and and strengthen flexibility payment debt we remaining year. expenditures maintenance our between growth $XX XXXX, QuickChek stores forecasting including have support proper majority our we currently company. range total XXXX. be terminals. growth the and common of to project as $XXX and is and outstanding cash growth IT a end higher corporate $XXX I December capital and organic With the is $XXX total fourth in between basis. were the the of of and projects from certain million our of in of initiatives capital new-to-industry the mentioned between higher $X.XX and projects $XX projects. transactions on ahead our a provide spending growth combined basis Also a the in million. for breakdown strategic other was able was $XXX the go our outstanding normal provide we a million spend organic XX going gross approximately fourth full EMV the Murphy broken to these of the $XXX $XX capital million debt capital Of from on declared together, the us and million with Capital earnings and million and will including raze-and-rebuilds, for of XX that's $X.XX enough levels billion million The million. net spent including XXXX $X.X spent Taken below to for XX timing capital dividend at was ensure and There our to billion out shares are XX.X the some earmarked rate million follows. in the were Total $X our Total quarter to XX expected of including

ongoing and $XX in over also it to to of million investments We range I million expect Andrew. offer. maintenance and for beverage for technology $XX to food $XX the Thank $XX between million million a back initiatives will you capital everyone. and turn potential now

to to raise a acquisition. congratulations you team Thanks, your for QuickChek Mindy, and such debt and successful finance the

Let believe We've the XXXX previously earlier review the USA we standalone for due planned. of had adjusted $XXX XXXX. that signaling view to of previously of with EBITDA factors. are potential approximately primarily our for me our a two is close the than communicated guidance business we capable of Murphy of to we This years generating in three standalone business million investors

of margins offset Murphy low-cost the disadvantaged fuel margins higher First, remain in retailers one resulting our industry, elevated, that traffic, a will retailers. as as disproportionately higher margin belief fuel to will require benefit will USA for customer lower which the high-volume

competitors keeping taken we on share tobacco it. not of growing it focused have meaningful our are we market from the only and a but Second,

X,XXX-square-foot Third, we our results up meeting on stores while early XXXX pace stores from results they confident as are and ramp heightened organic in the we of increasingly our our financial have our beyond. expectations impact we in believe growth, our will new are and

and synergies we and reverse food will we QuickChek both us offer. expect improve help our the synergies acquisition, the for direct see potential With that beverage

XXXX, synergy begin expect we in As one. capture integrate the limited to companies two work our year in we

basis remain a XX up with of nearly growth. in we year Express before expect that include all the an meaning year $XX synergies building XX that committed four With these We Murphy up to see up be to stores. months million QuickChek XXXX. discuss ability of expected Q&A. our metrics, However, organic would incremental surprises which year confident them call should stores calendar we million in briefly Starting high-performing calendar exit to we providing the but of on an to $XX X,XXX-square-foot impact being year contribution. There are rate or metrics are said, three, let's few full the be by XXXX highly opening drive guidance in to to

grow stores continue their new to We expect to existing build already in markets. to the identified continue prime footprint in and locations QuickChek

cash our unit organic to site a cycle. review efforts As business, to able provides and across internal network ensure consistent be we from our we result as combined this opportunities, to may meaningful will any free and Nevertheless, assess budget our we positive high capital capture. new us economic to growth ample capital which return of synergy opportunities grade our allocating are flex with some flexibility as through highest flow maintain toward accelerate needed

As new-to-industry stores across guidance network. with are our we up providing such, combined to XX

We X,XXX-square-foot the in our raze-and-rebuilds planned also from we to remain format committed with do small-format Murphy to and network had to where economics XX XXXX, up which the evolution continues opportunity the so. upgrading to kiosk stores,

on contribution. guidance on Moving to fuel

on per are XXXXXX volume an APSM We fuel XXX,XXX store guidance gallons of basis. providing to

is to XXX,XXX which the sell this reference, that fuel. QuickChek month, inching back stores gallons For midpoint close are XXXX average store towards and of range add of per we our the

clear, fuel not believe comprise the investors has thinking indicative industry-leading QuickChek gallon about store an stores that short-term be fuel month. XX the promotes total APSM over cents conversations, Murphy total. fuel business. fuel be and fuel. rate less not per volumes at going total of should of that for presentation, to position. guidance the viewing In our As XXXX mar adding QuickChek an believe we is guidance XXX,XXX our are noted including in with X,XXX of gallons earlier our of average And In USA's year, APSM a and forward sales investor sell complements than metrics and same-store expected to way this keeping the this fuel we XXXX XX% reflect on range per we sell as only will stores will

consisting in-store to margin for metrics merchandise materially network. costs with profitability of the change QuickChek ranges Our our model and addition of in-store the

a range it more to we years. As a store as have helpful versus percent such we per is prior in believe figure provide done growth

to merchandise million. million guiding to are $XXX margin of contribution range We a $XXX

combined upper the fuel midpoint the And the from model equivalent will time. is this business than and of our more with our reference, contribution total the of to the our is equates category to the our to margin For range business XXXX. in in Core-Mark addition balanced incorporated XXXX range tobacco of half remains sources total which have end business of we non-fuel from changes mix our assets while is merchandise fuel a look QuickChek lower margin contribute nearly from total Also volatility a over Thus, our contribution. renewed which we to sustained now benefits the contribution fuel half come our also highly coming more is And will sensitive earnings and also to total of future. as less think of margin, of note, the contract we balanced merchandise guidance. the into

our a per On build larger $XX,XXX combined we stores, raze-and-rebuild the $XXXXX is month our stores program format store will higher. per When guidance naturally the larger range with continue XXXX. and of result own in store to as move X,XXX-square-foot the much OpEx side, QuickChek metric OpEx the

While on our of on cost versus absolute an remains cornerstone our basis control higher strategy. a XXXX, focus

home to we and Mindy efficiencies should continue personnel increase tax addition side support our in with range rates of we to the critical XX% XX% projects per personnel, to and a Effective $XXX as the the help long-term and range. invest to capabilities. $XXX and new corporate million office On IT to million as mentioned of to stay drive priorities in year SG&A expense cost QuickChek the corporate expect

million each new independent grading which Our up combined organic and range stores NTI in to is company's range $XXX opportunities. This represents in of planned capital to for for which QuickChek. range to forecasted the high $XXX expenditures budget, includes $XXX of $XX million, Murphy a million growth before million capital prioritizes $XXX million

and strong appropriate Our we balance places the great new profitably I The by right of ensure -- amount combined in are allocated how goals us the excited to of by the the at of to adding bringing the we how to close potential leverage while to right are business QuickChek aggregated business truly throughout our the again gives saying acquisition forward. proud combined our sheet grow and maintaining once two capital with flow we challenges time. performance running going team's is cash about the together. a want more and presented XXXX of the businesses remain the stores network flexibility high-quality

for are and was operator, With strategic creating engaged can food is to generated and and and Q&A. our a our plan five-year offer. stronger robust investors. to With and the an that share adjusted our and QuickChek, for up ongoing faster best-in-class positioned communities income our stream we Together, excellence incremental substantial higher that inclusive initiatives. as standalone our through teams accelerate better, grow amount Our highly delivering well EBITDA employees lines new we passion we beverage improvement will a of our open customers, even a of stores quality agenda,

Thank Instructions] line comes first of you. [Operator Ben from Bienvenu. question the Your

morning, everybody. Good thanks. Hi,

morning, Good Ben.

ending expectations like did of want a our for a because and lot that's and similarly an view, ask comparing business. but growth I the have perspective about multiyear million the from point the our it you're it probably and I our the -- of perspective apples of oranges sounds guidance more QuickChek point from first with we of in starting given think numbers the like $XXX comparing than more from like not less XXXX, to the trajectory seems about optimistic it people

be an thinking over goals next what's you'd how growth And deliver require years? like years are the we should the next alternatively then against the million does several effort to? several And are to they? the think as rigorous expectations that aggressive in embedded I'm one about conservative how of do or $XXX how a it a the So reasonable that are that expectation curious you baseline over

investor price time And set And in plan, and that we the Great. year favorite kind XXXX have rate statistical XX updating we the larger think to fuel you that just where the had XX% from our that share we're in million, are the the on conferences. charts we our annual structure thinking as raise around and point. noted. blip margin are to been the about It's one starting as frankly, exactly it continuous up. you we overall Good stores team we And first seeing industry those looking bar is for our its Christian the It the store we've we dynamics. about growth going at we're all this as benefit and compounded the a was things stores charts of about. as think in do continue NTI point well question. of $XX were in about to own, with And going bar that then as year business. starting higher a of how future. due ongoing were forward the as those the the a improvements talking to ramping that. And $XXX trajectory of million going The of year were benefit we the growth least add is

we to contribution are are that is stores. sharing EBITDA of be NTI would to up. stores we starting I like articulate look and be They to so the add soon million point trajectory incremental we And that of get the twice million publish when first And our showing you for what it future $XX $XXX chart. above for in and would when the stores will the that the have beyond about addition doing ramping that new our will new larger

grow of markets and in will the those continuous improvement synergies and the the they top too and million to got markets an of Northeast higher We and will we've to plans reverse a speak well. fuel benefit their stores those really doesn't in we've of synergies They continue talked there. that got about could equilibriums as On margin, which have own take $XX we've conservative in have potential before estimate pipeline attractive place. invest from that

a we're seeking what the chart a $XXX of million. appreciation. XXXX price XXXX, share picture something looks not new prepared number CAGR And maintain point. $XXX release we'll is absolutely So that million that starting to can trajectory have -- It And on like. the now. type be you is of our to But same is that you new future

So of missed one hopefully I please. that questions. restate most if If you addressed could your Ben it

No, does. about those the you're it guess, I lines, And along optimistic future.

You are now, do the of bit QuickChek result as debt bought acquisition. little back just we but a where a stock in price fourth quarter of a the have a below you at heavier lot load a

thinking Mindy what of covenants opportunity? debt should think Maybe I'm also of So be be remind Mindy through And what curious beyond be just should and a we are and how that allocation have you the to you load? debt a Andrew, buyback? thinking to hear within us continuation mindful help just then about calibrate us capital around as opportunistic about XXXX the about we pay-down as priority still or operate

and let me then first you the covenants the of part the question? Mindy, start why with answer don't

Sure, Ben.

leverage secured times revolver X leverage which leverage have net issued which steps had cash As the had as committed prior times the that covenants which prices is trigger our high-yield net an nothing flow know so bonds X.X there. facility we as six again, months. we what regard to secured we'll to with some flow do when have excess excess have And B, up of leverage With and that term covenants of outstanding. at a flow flexibility we the up X.XX before notes with where we an duration have we times. you facility all. if feature so X.X in over we we unrestricted maximum as times. same maximum of we have lots We that other And cash financial for same leverage cash had really real with fluctuated the of no to commodity the total make is share facility of of XX% issues again, net new at the loan And acquisition X.XX two then a repurchase sweep again unlike have

that like we into was structure financial intentional. really debt quite we place So put The inclusion the with of QuickChek. prepayable

know traded bonds trade have you well. to continue As high-yield and our extremely

entire could conservative we remain sheet we prepayable that purchase out to the we do the price high-yield debt. have But termed committed have and a like in to market. maintaining So balance

leverage easily allows us that preferred range. to So manage our within

are share and growth dividends we so we're with color add let very that Andrew repurchase debt And our and ability pay-down. But some our where comfortable piece. our more I'll to to balance

Yes.

that's structure. said think job. the much our we're love in I did a a earnings but we're company, she and standpoint. mature we I in from the growth unit I very -- a in standpoint team an think still and fantastic a are mode she mature and structure we're still a And likes sector from great. Look

to of be then of So focus. number QuickChek our top opportunity adds that and another growth Murphy's that. The one layer enhances on continues acquisition growth standalone own

the as growth. new-to-industry high-return, raze-and-rebuild the the and our of the stores opportunities life that is at with so And end priority absolute

choice. items really the leverage share like about As you repurchases you got X restrictive for think a ratio times

believe might and or be grow down can you we're times the do market grow below means your X quickly some while that. trajectory certainly your to And to debt conditions You our there choose shrink to Xtimes. to under We way pay a where might times. we under have debt X can we way on to to

because such A continue times. our equity markets. our way in plan to to to our volatility we And we earnings leverage the grow to is below say ratio Our goes that see that X expect get

sector relative to be our volatility in attractive. publishing that savvy have we other buyer And you of play own to out the versus that price stock looks be sectors expect times. to We the see our today's opportunities a expectations soon and even to if expect level for the at share you we'll project raise-the-bar appropriate

to conditions obviously, going be We're to board. plan. across our that's So responsive and agile market the

Okay. both of best you and Thank luck.

Ben. Thanks,

of Griffin with James. the Your next from line comes question Bobby Raymond

Bobby. Good morning,

very a congrats year. challenging to Thank team Mindy you I'd for my add taking navigating and question. just on

Thanks, Bobby.

high question my is So Andrew first level. more

it? have there? maybe Just and about this see this synergies that -- Just acquisition XX to looking zones back prototype? next Is QuickChek then the store you'd we more us of think really monitor any the the us to at accomplish kind with months. developing? some do test as to follow-up new exciting that, at of a progressing XX color part when And about merchandise Murphy's are to what thing in you maybe there you, XX of the those like about Is think next which business, is how XX maybe this you potentially of over to months the about you for in help the to front it core think to milestones as when look in another the the think you integration reverse QuickChek of

really it's a a acquisition strategic about Sure. etcetera, of mentioned it's before where Great acquisitions question. is And about unlike cost extraction and this I've as rapid of capabilities. synergies number

to practices providers where of we And the side like the pricing so, we do it could fuel share company of integration do standards going involving one etcetera. reporting different side controls milestones supply already a be fuel and involves and that systems the as set we're capabilities first whether public it's we contracts sharing and leveraging IT things I the way We relationships with obviously think of already then know like are. and that or on both where

synergies activities. those from and mean the I have are just we that -- to those some basics so of expect And come do

going More where there. our build what stores, in There about to have in opportunities world-class think XXXX-square-foot be, we We're And less formats. the kitchen have which permits place But of for we're across We're kiosk of And the and and beverage opportunities chain items. real chain look our have XX% capital have is in for of are we're all trick comes QuickChek X% that definitely and a we basis. other program is coffee program of not in absolutely a less a than the significant the stores. stores does fit-for-purpose food the from a do the while going have have to have the the program, how maintaining exist that's leveraging Murphy initiative redesign that to we expertise with and to on reducing going coffee the our obviously the benefit XX% a not I XXXX-square-foot But on USA main various at full practices. there. fit-for-purpose basis like now the food store. think QuickChek it the coffee a there's beverage thinking making platforms out we beverage year that offer. store opportunities strategic dispensed raze-and-rebuilds made-to-stock about going program here the made-to-order can the

we -- As CEO Durling former said add a XXX cup and there's the ways of coffee to about great steps to need making Dean XX. XXX

that be communicate that as food also as it. there'll those to improving Murphy to grab-and-go well think to stores so beverage offer customers our that, have and that have going program have enhanced do to we well. food as how We're And opportunities about

be been offer And takes the as own place. has is our our still business, unique-to-Murphy branding on would And distinctive offer for providers working U.S.A not or be. appropriate a with equipment Also Core-Mark but some legs we that it we've that within QuickChek on so may that what model well. only there and sub-branding believe of other

becomes of for above to pay will both the we in to those, and we that maintaining And as set continue important just to locations the think part third growth that main the that but seek so not stores it's on pipeline I XXXX as development going And past. say our probably in the in sides first those will that ramp-up new-to-industry benefits improve monitor guess XXXX, and to ramp-ups that's we've stores the earnings see efforts foundation improvement built a had existing of of in continuous growth I and the accelerated will be that. XXXX, initiative more immediate

me great XXXX you I ton a look that. of a normal and from hopefully Okay. in guess society mix bit the Very moving little And question. a returning I and business obviously then location helpful. When think done on the per stickiness in profit and progress have going basis? how per driving you normal, tobacco location do of there tobacco appreciate my the with in of last gross out secondly more parts the guys in maintaining back to but variables GP some that and a kind of of you category that higher about

about minimum we be things couldn't know couldn't that a in was do is, on a differentiate had Look when Sure. to when that at we They buying returned practices those that the one their state price of good of raze-and-rebuild else. and went more that saw hard found good to customers and raze-and-rebuild we store aggressive opening. Those there are prices state would change. somewhere We stores. or customer that enough service we some

so it's to get harder a them little And back. bit

to we so innovate And had to that issue. avoid around that

same and true tobacco this The to COVID the the side. to trips. think holds other minimize the on I of they pandemic. during wanted behaviors on have customer shifted People side combine wanted trips

of Supercenters, And uniquely advantage to lot were positioned we Walmart, stores being our proximity of that. a so of with in take the

smaller below value to If you mom-and-pops many above XX% of went that even buy chains, offer. to XX% cartons want provided you We and to the where in don't trips from cartons the want minimize bulk.

they invest profits. that price, bottom to difficult better many be and funds decision their going those volume continued them to the for get -- there's most things line going in them in be it's in it's a on back. doubled funds going to apply and the of be let to put needed was and to get where back go to pull to because a to of make hard quickly And couldn't them One USA to of They those back. of down promotions, learned than we Murphy And competitors investments inventory they the markets. at the price made

it's advantage so, can continuing and that pay of of in difficult saying and that way had invested space. of do rewards, long customer It's category innovate kind and continue took that raze-and-rebuilds from period. behaviors in a that to And a more insights we around and we to we others, in

to category eye that mix we coming result us of And going is the excited the QuickChek dollars so, our grow in we to off margin where important while future. that means can are the this and a change ball we're the in about grow share -- acquisition, still take no by still as of

you. year first appreciate of quarter. and end best and details, Thank luck I the

Thank you.

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

a XQ? national morning. I you by gasoline for beat Thanks taking the my pretty margin. the think about Can Good you question. healthy talk in volumes average demand fuel

So, driving what was outperformance? do think that you

excellence I one, So our about pricing retail talked think we've initiative.

comping think place. those over in period were And a in so, have we XXXX all in -- where any we capabilities XXXX, period I didn't

So I a execution, to losing that's shout continued team up. and value, And where to build may out capability. from team that been develop make that accepted as refine to that upon we've some the opportunities, responsibility volume think, have there leaking continues

think and how we're a that. just sharper we pricer about So

we've us. two, come to reason I customers a to give got to think

when we on into have so little margin, the volume, going to bit more And a those lean we're opportunities.

come together been to a competitors typically volumes just distracted continues that share lead margins. higher that Walmart, other towards and things bulk, those sharpness ourselves. bit last, And think, some focus you location think location combine on margin. just and stronger I there and buy a I well. take think to bigger are so to have o think I our limit things and in are focus lean creates And and on think consumers to think And continued continuing I out at visit we a And little that price opportunity as execution, side. Supercenters, the I an benefited benefits industry also trips, with on I advantage, when there

for math the essentially about ex at levels midpoint then, the And guidance and XXXX, X% it's volumes you. same fuel XXXX thank guidance on doing really question But think the is I'm the is XXXX second only answer. QuickChek the if X,XXX your same right below an the APSM basis. for Great, the question of I from perhaps

be pretty seems environment in at COVID and degree strong still this So through we'll half. first to least the the some

rebound a in capture it the Is more perhaps you were assuming strong you in demand there? type of expect are kind of second you So, just speaking that share gasoline continuation of half? in of a of

I look, ball, Yeah. a don't perfect mean crystal have we John.

a to set certain of face the plan have strength assumes competitive continues got dynamics. And that a we that, the so, continue recovery of we've that gain and that in

the point key probably subdued it everyone that higher it means and rolling think I if here we're the margins. for into was is volume, on translates it

don't we to so where item expect And line matters. EBITDA wrong be contribution the fuel really on the it or materially

the said volume. main we've point, in to we're agnostic And so, not as lower

better that. if national margin did national In to make focused in question pick answering response, for we're on expect other competitors, for we driven average, we demand reason, up doesn't up the about whatever But why by highly than fact, it. the actually

Great. you. Thank

Your Bonnie comes Herzog from Goldman with next of the line question Sachs.

is Thanks your things merchandise Reid but Sam so wanted quickly know much, the tobacco you've talked your the on guys. talk This touch on for in through sales. to same-store actually side. through confidence pitching here. side, Bonnie on wanted I I non-tobacco to

tough comps metric that context lotto XXXX? in be of about you Specifically, in of saw XXXX, that how in Thanks. the some should we lapping the especially, the sales given think in some you'll strength of

question. good a it’s Well, Great.

general we continued results we that of from categories the weren't in at beginning quarter, even I at products and strong we merchandise the look saw XXXX. think as fourth

of regular traffic and with about other Certainly, to see we'll get has there. energy drink around some to packaged continues expect more that in and on a improved the candy foreseeable in some of that the and and and the terms snack It rebounds future. products improve We sequentially, continue innovation The as to beverage items, good cadence so there. category category. that improvements feel similar promotional back with

off. items. turned XXXX the dispensed around biggest grab-and-go of upside in saw around Many all XXXX in us, is food and just were we those our for think beverage challenge that that's I

improvements And that, so especially optimistic that. within of see and as QX, we're signs in around about early beverage improvement we dispensed the pretty

add a be I our which will renewal will XXXX the that. other in things we signed benefits of of announced Core-Mark contract five-year the One and

forward. singles. been So be a lot matters And going those a play is have of this categories year There's I XXXX, a in going of they're we where practicing. struck league is to XXXX a of think to out going QuickChek in couple -- but the different with

about feel we the non-tobacco comps going good pretty forward. So

lot And, so C-stores a to vehicles changes? you guess, No. potential to interest stepped a more bit seeing in on here. obviously the my second much. I up Thank something question, electric of That's pivot super-helpful. obviously wanted effects we're for We're from and quite I you philosophical on hearing from you some your might bit here? to the of Ford. GM, you from automakers What help it's of this prepare And kind here front, QuickChek think whether taking major you these a steps are for portfolio jump-start acquiring guys Thanks. that are anything

Sure.

announcement. include the have don't details well. battery vehicles plug-in about long a electric as I all-electric fleet XXXX: all But but hybrid of the not you year GM electric announcement, the vehicles, if So vehicle way Volvo's only to similar number one, an think if it's out; would two, it's

in of and electric And macro many trends there hybrid baked already so, vehicles. have hybrid vehicles plug-in the are out electric demand that

materials, so, battery raw the -- Are mining-to-wheels is well-to-wheels to and host we fuel vehicle around there's around what that thing a a like. true which what mine arguments they versus And understand it challenges standpoint? is for have the the is consuming first of electric and vehicles, from

this range less largely million and last sold markets a you about they're got that The where? today ours. in with survey we XXX,XXX miles we vehicle current bought, the be vehicles, I've close to before, the as week X.X the a to price the if second thing we largely affordability year at and for outside they of but customers is, vehicles driving. to of who's electric and zero our And from they're buying think being going in And today our of where responses a it's vehicle vehicle those did mentioned them over XX-year-old and look $XX,XXX. customer. typical And emission so, XX states of outside they're are about bought than

customer, how come continue And hasn't the given challenge new. typical buying probably to to the are a our they're XXXX models be to vehicles affordability cars in used, new so, a XXXX for of if going these long vehicle And lasting. down, buy it's

going company used market So Murphy be continue. the to going And for like, it's strong. it's going to favorably we play And a think is to USA.

the going going more end up much And we'll to it And to at-scale else profiting will If it's is markets, customer, small to up. wages, But it's of of these and adding buying day. this today is create the Either, selling you at of the so two a than customer of breakevens, affect is look is inflationary different going that already combine serving from you all not consumer us. different will vehicle someone greater, metro pressure high low-cost have commodities if luxury our from And different so, that's competitors, economics it general effect. happen. probably who retailers, it to different in likely et that And scale, happening with formats end and to going minimum things of around truck. to to greatly, are have, happening, or going you're say cetera it price at start sensitivity. then luxury it's one changes be because benefit inflationary is at rates, speeds, on the will trends. the and immune start are we're and have completely slow going low-cost, environment. go they trends a in is if going fuel that, have different high-volume And those It's going to that segments, this it's that a in affect the who these all pressures price places,

a investments impacting And and our and it, markets incentives, further so, others. customers, I just from want to be to subsidies going into go of some lot clear, away are there's, than our it's and that

have going to get charging And QuickChek. learn to a able are from five stations. locations be per-charge fee have that They that. We for

seeing more And It's start very component QuickChek closer it's you're to that. continue will very, be We're And that to breaking units. going we to where out markets, not small able dense of But still but adoption, charge a that. material. business. that. to not around to evolve insights so Clearly, be able we'll have same-store is in monitor the

relative a Ben's basis is the Murphy on at earlier that times question Because, machine and about, we capital, buyback at to rage this those continue to We apply a items. any We but only open. monitor to getting context this. wide this. And this. fuel, And cast our eyes we're rather about kind So, going study not we're to But going than of USA dynamics, our the and for mentality, day, point just vehicles be got of allocation customers, shares behaviors there of insights flow-generating the under certainly and purchase such, competitive for will Evaluate following means want our markets, perform. their shares herd that super-high-quality, of end around some be us. broader -- for just where And under is to that other back the that perception position, where the in discontinuities. what in better. the cash this a the

really I much. color. so you Thank appreciate the Awesome.

Thank you.

question the Jefferies. last Matt Your with comes from line Fishbein of

Hi. right? Good morning. all Can hear you me

can. We

have opportunity planning a in Thanks. recent XXXX, confident store to cetera. new Whether total the point combine of number has business opening a the, timing had made than substantial to like, the ask opportunity of was a or and understood you growth Perfect. XX base offering into freshly unit new for acquired try the your particular in would although, new it in to and time sample was your probably organic for its adjustment into there to plans new stores, here. me, been capabilities inserting most the squeezing deal, it organic And strategy. I the this you're wanted it when on or And reasons. XX, store headline size growth thanks one. QuickChek own, with for assuming smaller whether its want more in it's you about, stand-alone I'm own feels thinking the growth variety the a et of

But yourself number? it And to question up gives through, there? you about. to ample why Can my give XX up guess plus I XX how guess XX walk that flexibility talked you the is, up the target, isn't I the plus. us flexibility XX, or settled to you you more not on So

Sure.

And so two -- numbers. not it's

that's be year. our need, taken So high-quality look, we've would within we a a XX What flexibility got that. stores a to real do years I is, buildup we say able three side, estate on all to pipeline, the have to team

Some of process. those are advanced in the permitting

something as given the to designed you build so were build plug redesign back. them, think are benefit And the and If ability will dialing those there redesign And so locations the and investments. they will. some the to initiatives. hold do there's doing a we where these in are the aligns already originally But modular format on with not the extent we high-return

acquisition So, continuing picked that's acquisition construction in super-high-quality makes those and markets. also the a In opportunities just those QuickChek to estate higher. acquisition, the we team there up pursue real

slowed terms a would gear acquired in gears few not in high the who of back turned As you that things we've leases getting well. winner of be can they construction, XXXX. the ultimate knowing stores imagine building down signed But into a or as locations process in

that And be some opportunities so XXXX accelerate may locations to in into market. there

to capital the just flexibility got But close knowing the to underway than permits year where point efforts to in pivot areas, flexibility numbers other some coming lower halfway for end providing it and transparency hit standpoint already that. gives from ample be that to in have the we the after pretty point if we've tend in in that time, but and I up And less this a you to expect at We rationale give certainly up us think in maximum areas. flexibility. range. And the we'll we so expenditure look some guidance we

doesn't don't Yes. view require be existing lines how probably along out you and get necessarily is have of of it Just it along saying create here? to understand Or stores best to sharing more the Curious percent it practices like maybe air whole that fair. understand. acquiring beverage lot listen QuickChek-like you food the situation? footprint. I of store totally understand and now existing to proposition could the kitchen the a by a a So be Is of stores. guess more And were capability food attention lines to expertise existing this be I kind can interested needed to copy-pasteable how beverage QuickChek. on going more is the installed how the derisked capability? of thin in certain much you of That's you

Yes.

it all, I'd thin we of wouldn't of out say, be So, air. first pulling

We have team. a

a have capability. We initiatives. the potential for et based We've outlined existing We've set stores cetera. on platforms

And area and that $XXX XXXX. we from our and team into improvements in had the so million baked their in efforts planned already the capabilities

was built it our So into XXXX plan.

that we capabilities cup XXXX-square-foot stores those at that learning our to build XXX of the coffee, talk really the though need dispensers about that take I exact great about coffee think think advantage curve. of derisked have we steps what the And we is you on the footprint steps capability. don't a XX to in same

curve behind exact have it's that won't offer the learning we But that. fact, that. to do In

food we level, have training about at in building you versus think If store that. our and that handling

those same -- XXXX-square-foot stores really have a a on you in But the plan a a be cetera. going you think you're means grab-and-go et the the execution, store customer those make have that and need and you have then different This Murphy that part don't going not third-party key made-to-order incremental way, do food sandwich is that existing commissary now USA and to of them kitchen different important so stores growth areas capital could the in an that that's capabilities to and like. to going do because around our And insights around space. into around the improve through are chain to that. sourcing, a to within But deliver have partner supply do to about menus to or you the

play you've of a lot tools so to with. And got

we've unique-to-Murphy thinking about said grab-and-go As also we've concepts USA some as been well.

are just the capabilities practices platforms. there's by means we it really of so copying platforms opportunity the those is they no the insight in behind And think It's of as pasting and But a here. lot QuickChek.

And further no you questions. have

that absolutely few XXXX We're before, come ran and what we the both believe out And was hour, with over our in Well, interest a questions, XXXX. the minutes appreciate year. unforgettable teams as Great. I've navigating this great the we our in acquisition normal I but through great in the said story. great two an have to made efforts stronger posed even

So thank Murphy USA. your you in for continued interest

concludes you may disconnect. conference This today's and call now