Murphy USA (MUSA) 31 Jul 222022 Q2 Earnings call transcript

Good morning. My name is Chantelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA Second Quarter 2022 Earnings Conference Call.

As a reminder, today's conference call is being recorded. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank you Analyst, your Senior Freer, may Investor Mitchell Relations, begin conference.

Vice Officer; Thanks from provide Chantelle, Clyde, West, Officer; Executive Andrew Vice Vice Christian comments President of me With Chief and Executive Donnie an Mindy Controller; Smith, and good opening President Investor will morning, and Relations. Andrew, everyone. some President Mindy Financial and Pikul, call we of made Please Reform and to defined are President financial Litigation the Chief Act Securities the and be open overview as some during comments forward-looking the will considered including Q&A. then in the will of that the call, mind Q&A XXXX. keep portion, Private in statements up results, After of this

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

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

During conform Generally Accounting today's performance or provide also Principles to GAAP. Accepted do that call, may measures we not certain

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

spin in second current are most different are our key environment. and model, welcome demonstrate the quarter to certainly uniquely has of clearly Good emblematic advantaged want everyone as morning, of are this of built is market that and a pleased elements in Once advantage. which highlight our of earnings conditions you, Thank results we power we There business the outperformed us our three Mitchell. since performance to joining today. to quarter our with again, variety they win

becomes volume more model, high margin everyday effective in low-price our higher which environment. fuel a is first The

are The results our we known our offer value-seeking reduced had to resilience increased we resonate engage have consumer. seeing of clearly and investments second applicant pay, finally, turnover flow more to higher take-home targeted permanently without made the low-price staff Despite our the And and our delivered is engagement, of customers. cost pressures impacting impacting more structure.

business, industry months in Looking previous price accomplish despite six gained environment, our lower breakeven have at feat would structural over Due past fuel the manner viable that that we the economically a cost is in in to share rising margin change have difficult a driving been to market retailers pricing to prices retail an more ability marginal create preserve are pump. far In are this our more and share margins, that prices, with lower leading is higher separation rising with and rapidly the gains. at to precision to -- environment, wholesale more market impactful to translated greater environments. prices tactics

$X.XX at share. also customers ground-up in are but understand face be may strong the we customers purchased specifically, consider income by prices the only areas in lower ice can't perpetuating an and prop trending center driving our likely other is function further lower benefit find Our many increasing. cutting volume the being as in is made-to-order to the us, gallon innovative half fuel consumers’ margin margins retail In customers almost of to strategies fuel a economically or results benefits prices support they and the to These which allowed are price share are back and to customers may robust, prices have us this of price high, where prices up their QuickChek's economically We way strategy month, important They means also falling drinks a These offered different growth they per spend the we high packaged other resets their us go seeing model from and to volumes, improvements energy non-discretionary their as range versus prices taking the store and effective categories. environment, when spend $X.XX not of level dramatically margin from beverages of fuel lower are across more are less of proposition QuickChek. branded environment. isn't performance and fuel seeing which impactful higher of than is price-sensitive also attached panel Reward categories when low, large Murphy prices Product we equal. of as low-price low-price executed industry are you all a format tobacco trade-off. and uplift growing better innovation position, to in stores gains. the volume proprietary Coupled especially Murphy $X.XX when tactics Drive members lower products second are one a is margins, this as is we're buying high at on be XXXX, adding sell, well consumers the and environment, to two problems, of understand is most that volume as and get different this grow and It inflationary And are is else XXX,XXX yet $X.XX frozen where margins our but is Investing are as further Murphy as in when with margin are out margins stores, USA, not that gallons growth are new purchases. mid-June. cycle our inside combination margins, both just fact allows volume, of capture in have customers which environment. been amplified business store. higher we contribution overall unique our our monthly new a A temporarily evidenced since phenomenon invest large to as in wide shows

customers value to trade-down greater or tobacco the value to as shifting have activity customers targeted coming brands promotional USA, retail insulate to new existing Murphy while option category. seeking Importantly, helps a to really don't and better

a consistent down-trading X% data we result, about phenomenon broader X% negative individuals an prior the cigarette our customer year. MDR discount At panel are with behavior units modest a from individual impact shows a making headlines. shift seeing not in overall are our versus premium As very to brands, fewer while level, mix There's purchasing the trends.

in these to categories, flavored to to new Murphy be the brand sticky offset units tend seeing with through are do And categories, more while see it. small base promotional products. down-trading and shifts retailer enough communicate the may loyal and enhance we So, customers MDR individuals candy from them once activity participate to them water and in where and benefits insulated as behaviors. drinks and energy minimal in in past, trading across down-trading down while said them convert Across we than downward reinforce Murphy other water has their as we increase well, we to

to momentum, was days To want providing exceptionally everyday an we summer. of course, engaged but retention and the have sales clear. of attract in staff, in which engagement, are and operation get our wellbeing, program who and employees overtime store, engage customers hours our The loyal. reduce bonus increased is this intended -- invested Help maintain service become Of customers because upselling works employee prices friendly at friendly low fantastic staff appreciation customers new for high-level store increase payable order XXX to well of applicants more increase the and the our outcome hours. our over of in model of

seeing benefits returning our very to similar permanently model investment the commission in applicant the in and clearly value staff program we near of investments when to surveys, underpins that are importantly, has employee business. resulted proposition, results of position with low-price pre-COVID our levels. flow XXXX, which operating and in offered ensures the the our eroding the these most our sustainability We in without coupled But strong the enhanced business long-term supports this low-cost

results, per guided of pressures operating with As supplies wages, on $XX,XXX one-time costs, which month. store this coupled a $XX,XXX result our to originally inflationary $XXX other to of the and approximates per month level on store expect of full exceed cost store we range year cost program, maintenance store

revised higher industry-wide the $XX,XXX $XX,XXX month, store has although and forecast, original in per by margins range our Our above participation strong been to guided more fuel merchandise which our is our than offset performance.

have an in. Given this it's the operation also to financial invest delivered, clear results and that we attractive us to business is

a formats network. improved and larger it's new offer, opening time merchandise growing volume our stores to our and be great Given high model,

deliver We track looking, nearly are building on new XXXX. are high we twice stores did and performing to the stores as great in

merchandise our this to track margin. on are which to we contribution complete addition, and are year, raze-and-rebuilds diversify helping XX grow In mix

we be In our repurchase in our store million back free flow. growth, new that worth quarter. second share to preferred of of in use addition the end, over bought cash $XXX stock investing to continues To

took the invest to compared a stands value committed of occasionally the network have maximizing that we quality, view shareholder management coupled difference M&A We earnings the to improved stark that our dramatically of consistency across our clear our to and opportunities team remains When power desk, of opportunity advantage of with out. the the and in business, in confidently profitability ourselves.

discount, own review far to for Mindy? value key a do I'll a of so, buy a larger price someone motivated over attractiveness buying that hand generated in financial to else's our stores a to paying stores significant advantaged spin. now it at for relative long-term of the some Mindy our and since has practice shareholders interest Given a are premium we metrics. quick more

were billion $X.X the of Revenue good and second $X.XX Average prices quarter was in to gasoline billion of Andrew XXXX retail Thanks per per period. ago gallon $X.X the quarter the gallon year in for XXXX. morning, everyone. $X.XX second versus compared

million approximately loan X% representing are ago per in XXXX, million and EBITDA expense. $XXX XX, billion, through million million sheet $XXX.X quarter $X.X the the XXXX for lease current reduction income the remainder of quarter as of period. approximately Total was balance annum operating obligations long-term on $XXX in Second June versus of in which the effective year paid the rate XX%. captured versus $XXX.X was second as debt term $XX tax Net the of was they amortization and liabilities, in is in was the quarter million the

of cash totaled million as zero our turn a currently still at over revolving X.X outstanding XX, lenders and million we These adjusted gross had now million will $XXX Andrew. year-end reported the Cash from we facility back I report quarter-end of times. credit in ratio undrawn. that XXXX. down equivalents is call just and figures leverage balance result slightly to approximately Our $XXX June $XXX to at the

Mindy. Thanks

Affordable, double falling the price staying turn When staff, aligned short to our and strong that week, volume being broader of performance. that our we our a combine I as staffing transactions. note across our model, combined core dynamics merchandise standpoint was benefit volumes turn margin across questions, inevitable, the These and XXXX to to Before are up environment of nothing strategy. from aligned. relative margin, engaged, five margins share last are were meet year-over-year also been Same-store would remains and by accelerated month-to-date. about of have with with to pricing Since fluctuate investments, rate, Month-to-date been on our responsibly and the the gains responsible, two has when fuel affordable we the exceptional units year momentum. chains, X% winning and from pillars short, XXX% delivered well-positioned very prices between while at performance the sustainable business they performance depending last at investors. share further XXX% and to environment we we is July In of communities enabling roughly what volumes commitments our engaged serve, periods. XX% us you levels, for the the committed continue XXXX with sales,

the on a With we now use ESG them our open from we that. the such, can encourage take look that, questions you website lines report to As frame for our I corporate summary operator. latest at to all posted up and

comes Ben Stephens. from Instructions] first Our Bienvenu [Operator question with

Your open. line is

Hey, morning. Good thanks.

Ben. morning, Good

for given those gains they to were realized, then, to up share it mind ask, before signing where or the you've And either other take from outlets? new switch again your then MDR? back want Are repeat behavior would do for in going to of I what you customers some that what those see customers? they

great a That's Yes. question.

in increase three large and So, we members to last seeing especially are months. participants, a the new six MDR in

-- noted, aren't So, margin XXXX, that lower. they a XXXX, the we the not just of with are from Ben, long price, is street get lower thing one time on that as when value, seeking price-sensitive period only that. consumers prices The our just in but lower XXXX probably XX when prices were come benefits for materially period the

price are customers gain side, long significant great customers What those it's panic paychecks loading I would as gained and across higher say retained buy, we stickiness. of that pantry their they inflation during environment tobacco As in that we're those a period. impacted environment we share the everything and a by have to on is, especially a the create

XX% sales carton about has our Our were we remained of XX%. in about down at the from and industry range to pre-COVID, XX% XX% total, the gone

out the to we better. the environment they're their So, of lower prices levels for on get great category, we is just of doing far customers. below don't a a different where go and But stickiness, back $X depending as this probably certainly gallon, if environment see generally because but just they that's way gain retain

Okay. talk All gears Great. to you out you delays to look that I organic makes accelerate know are pipeline sense. targeted unit what as we lines. there you year, start construction going off in of behind What on these bit to to Shifting That the started little about like as little store does broad-based bit bit schedule And XXXX? look little look-forward Should time new your like levels? a the a might level growth right. side. growth a us forward? to expect can

Sure.

this track for So, numbers year. continued to we be on our

impact organizations underground to range come that as XX-type out right a a now, tanks certify terms permitting ago. conducive store real-estate and versus or operational XX to We and and delays a and and valuations get source function be the standpoint. licenses. next a say to wanting frustrations range in But getting largely more we'll the continue been the like prices held is nothing in year, more on return that line the delays, folks whether have of structural inflation Utilities stores had and we of of real-estate I pipeline XX just a XX, from would it's cetera. some to some not et of have to we permitting a the had judicious overpay the year

certainly a the I also load program high-performing think, those allows even construction higher-performing not only kiosks provider build X,XXX square importantly, that allows accelerate branded to though, to Murphy a modular the store. us and but foot level standpoint, into raze-and-rebuild from on stores, us

our new their which opportunities a to that portfolio their raze-and-rebuilds. So, make pipeline that XXs and the so let period, that pipeline in look guidance, back. still to extent QuickChek the period from And rebuild we to we'll we're continue there with the significantly range next present year during the been we've off they'd as up on to sale in growth building fall continues

Okay. Great. Thanks so much.

Fargo. question with next Wells Bonadio Anthony from Our comes

is line Your open.

morning, labor market. start taking to the Good I Hey. want Thanks guys. just my for with question.

just support commentary pressure labor retailers incremental the be on guidance the implies Can peers from tend towards has progresses. been little you're us fact and as especially the improving that reconcile on in dig all there year bit under-index you of that OpEx me General and of bonus, even store labor added a to your challenging more to some what given that market seems raised headwind? labor that, a backdrop. guys to help which seeing You and that one-time you

of XX,XXX working had store. flow, store time. again at north to ratio, cut overtime. our we say term hours contract, if We that XXXX, that I At and this number May kind we're and of looked of our getting to had of as And Sure. impact XX,XXX. June the applicant And pushed applicant stabilized July. back to negative given first That's was year, time, the We over higher then on applicant We we we'd a and at continued our in X%. above a beginning was about of we in go social saw Pre-COVID, below work ends improvements meet. higher of had periods make managers into any the of it XX,XXX. for the pool about operation gone to April that I where would hours at was back experienced beginning pool

the we to are about to go past of they the margin, stay say week we on so, applicants to have probably the much need few not. we end or member get applicant feel and a the And would the have still signing and the staff through I more flow. of challenge better a staff going new up you

some in we it's a of let's So, We appreciation frankly, But to sustain heels one QX We why better. positive bonus this the And store see the wanted of we there. even our summer. days some starting looking going momentum from proactively institute out improvement. frustration feel that's to overall have on said managers of were into We the had XXX great lot trends. the getting just reasons those.

go you gas? of wearing a effectively, is want what associates free for gas do how. Ask that stores, a will says, that's into our If us bonus new are bunting purchases. associates our one pay And that

so, It's And having increase it's us hours an operation. impact. of allowed to

is at has still from time I But the fewer some We still getting pressures down. market, feeling we're have not labor would the yet. of out woods the stores We're say risk come of better. but over it

flagged any there stability? unwinds as give fuel what much the acceleration I'm in we've in you the prices driven Got the understand here that find how ultimately out on seen sense of some it. of over the is into prices But fuel few That's seeing terms And of decline what you. some I July then, acceleration obviously, us weeks. margins. now to that by trying checks really is, last I period, is can Thank helpful. given just data. you've certainly OPUS know an on which we're guess,

Credit significantly impacting is structural at. for significant. margins margin Look, incremental point even fuel big know that $X.XX, I What that for discussion we higher cost to when earned. that mean, of where alone be been equilibrium fees, don't long-run example, the are continues consume $X.XX. years the we going retailers the were to know smaller is margin a challenges I do card a settle of that's and let portion

higher as less on pressure fees. come there's a little So, bit prices credit card down,

either. overnight economics firms unit to Their Some go of some aren't higher the trying traded the as issues chain continue penny supply to margin, volume of away profit. recapture a extent to going To be that. for result have

it's guess So, out I end leveling run in disruptions supply where unrest anyone's see other right think or they prices geopolitical And there's no fuel where certainty aren't to back going that. we up we frankly, the to if are impacts. up chain or more that

I ourselves now to win gave even it say what and prices any with environment volume we're high is, got have in position position built more share, So, us that in falling. gaining are up, going were prices the we as would we the momentum

we've we out work is or whether got -- a moderate going to where position going designed it, high pricing well to level. we're our this So, really very like prices well we volatility, see continue and high or I the just work to to long are think lower as as

and quarter. guys the much, so Thanks it. congrats Got solid on

you. Thank

comes Bonnie Your from next Goldman with Herzog question Sachs.

is line open. Your

you. Andrew. Thank Hi,

morning, Bonnie. Good

margins oil crude QX. the monthly asking could in cadence are quarter. And of most understand the the Good fuel help costs of quarter, morning. pretty us your I'm much, rising I hoping during context during the I maybe of was think, you

of about contrary quarter, appreciate, crude So, how a strong to which by rising, margins the work a typically a course, just to but please? when of just aware in sense of helpful structural hear I payments trying well seem things, monthly the changes, bit is to your sense get

to you take Mindy, want Yeah. that?

Yes. Bonnie. you. can for that I Hi, question Sure. answer

$X.XX So, during rises time, but of took rising They're The on the was the $X.XX still typically, May during more to the because in at happened has four when place April, end three not month $X.XX, had to occurred our of then market, gallon. market Memorial that interesting not the the -- through consistently of Day, restore weekends rebounded does it in June had do the a Friday. it month market $X.XXX Friday. because but of we on about that volatility And were margins had the a we price to out April that May. thing and like price rises almost from

happened that does in place Friday a essentially in weekend Memorial what well. at it fact, And is, so than lower you also anticipated. And you margin freezes as before that

the of had that in so middle they to to industry-wide being increases the month did restorations we which time selectively And did weekend the even What the time third happened or during the margins we days, was to earlier those see contribute market see price by would week. the that otherwise supported. though than happened, May start lower we also in have helped in week some of occurring

overview an margins the and May price of the kind of shook that's just timing a how So out of month quarter, interesting increases. very the of for the

No, interesting and super helpful. that's very

-- so I -- July you're last I mentioned Andrew, in July double that And then was think what in appreciate seeing so it color. what is far year. that you mentioned you So, that

then just So, from it is put in acceleration an context? June, what to you that saw

Yeah.

typically are week, prices only price replenishing than maybe the spot their those fall, retailers is that the -- Street lagging is now. priced longer when once higher a So, the product

last One have a probably so things. time at two environment. year there's a gaining versus We of they're this different steeply year, you environment, look wider as the same pricing well. falling in So, kind share differentials is, our

we've it without benefits month works falling is environment, goes out is of different way it our the there's month and have differences I positive may in differently. from going we it environment, rising And environments little that environment, those offsets. be supply. tactics then, look every So, a week a some to In other every price think, typically price -- accounting every timing in the before price frankly, where the product saying, about talked on

to going actually, my question, was that Andrew. Yeah. be And that -- second

the understand outperformance, your PS&W see trying drivers driver, key behind to you're continuing it. so the Just to

how we possibly any benefits I a timing get sense that And saw was quarter? about is? to the inventory trying how something Just of in you in that think maybe found sustainable do think that QX. you

that it Thanks. wondering at if look going how continues, Just to forward. and

is Well, of Yeah. the just difference a prices falling. timing our function or rising

benefit prices QX throughout July half as June. certainly the off the falling quarter. last they in generally a had rose started prices with of as we So, did

so, a And summer, we and throughout see falling portion an on supply continue opposite if see to effect the the product equal of prices you'll contribution.

The net just other better, component is supply just see the very refiners in as OPIS loose tight chain And you they the do dumping and price are racks, a environment. especially the net the supply low product cost given chain which at would versus tight, transfer inventories RINs. didn't but the our of getting wholesale was supply

due a But the that might retail to the et higher has been net on either cetera, of side. because utilization, $X.XX the that bit cents demand, RINs If several supply lower versus in margin to result. the variability of component market. generally, stronger a loosen $X.XX you're weaken So, little -- tightness has across talking gasoline continues as up, to

very All right. you Thank much.

Bobby Your next Raymond James. Griffin question with comes from

open. Your line is

supply a Good want I to I Andrew of first, guess back morning, over and Really in inflationary merchandise to quarter, margin. for questions. my switch despite performance kind pretty tough environment. nice Thanks this Mindy, taking chain maybe everybody.

innovation sustainability merchandise forward? new you the have of anything helping going performance unpack margin kind Drive grow is programs, behind this further of done, maybe new you can your the what's partners some and So, and Rewards, of Murphy's then some drivers the that

Sure.

sales think to rate. year and I the unit also biggest the last versus contributed this lot certainly period that a same from better part be would of standpoint merchandise in gap lottery a the period in

that think driver sales I biggest there. probably the from standpoint, So, a that's

discount we actually things a discussion at coming And is down-trading, that the a offset down-trading. that our of lot is from us of this what from we're cigarettes contribution standpoint. see retailers there's One growth other bought discount even interesting, mean, about and premium margin XX,XXX X% ago. the only bought year of And that to about to premium traded And products. a cigarettes a mix, X,XXX Only of it mix I there's still XX,XXX premium XX,XXX XX% or up that more majority us those them products. of promotional some a And we about bought products, the their seeing. looked down-trading customers And went of activity. of those, that to those, customers strong we're XXXX. around more from any just new went to again in given continue And XX,XXX XX% XX%. ago even tobacco period. XX% And year And bought that only more premium bought was than and finding

it So, change. didn't really

lot retailers. our a that is customer coming only gains so if customers less reflect of from And both week, existing share per about half on we're a the especially having other new buying pack premium and on discount cigarettes

that's the tobacco side. driver on a big So

in and at improved year around format store improved food our larger last also mentioned Murphy packaged beverage and we and beverage the contribution resets stores main sales really categories, QuickChek. I As acceleration the did center in script, significantly margin at significantly of drove

all growth across the and good the and seeing brands. formats we're all So, categories

on of more just don't to know the permanent to is kind some us Okay. market the same. given context a investment employees by payment some COVID Or then these be become good. rolls kind a temporary, one-time increase for of if wages staff? in could mean could secondly, permits, And -- kind permanent Very help of with the the of put the to I kind anything like it evaluating the And why think drive like bonus for stays saw labor have chance permanent it or into of it as be of we bonuses I about should period. you're what during this this what issues, there's we labor would

bonus of it the all, first an for Well, we summer. XXX appreciation days of called

and to So, of of continued our the XXX that could the it's as workers few to their appreciate designed, pressure managers, momentum said, a it's part-time summer hey, mean, QX. extra was of store staff impacting over idea engagement, can standpoint. work The some get engagement incentive of get from when the days relieve on was, I I wellbeing. cetera. we hours we way to, kind really because the shift, the designed I would folks more work over, is turnover from that and support et an

year, focused base it directly commission commission summer sales. a was was not that's program, a benefits for of. so but tied it the last We So, rate other did are incentives investment into very which a calculated or program off built it wage do to was

looking was we're another staff. million ways number, $X out as been I innovative way our associated $X with paid encourage can't something for to million So, remember have motivate the prices to and incentivize of our always like to it staff. think worth competitions but I

look that your to maintaining you we at And of engagement, effective when can year we you're through it cost what's in you sales XXX(k) that salary it lens top to benefits pay. every in of our ways have increases the the like our that momentum, add we cetera. don't where or on add do So, driving structurally determine et having base benefits

a on quarter start to Very the Congrats good again good. and July. I appreciate good a details.

you. Thank Great.

JP question with Morgan. next Casella Your Instructions] comes [Operator Carla from

Your line is open.

gas then, other Carla thing price the I questions. Casella. mentioned Mindy, got you One gallon in And quarter. some It's Hi. missed, per just the I've

I'm was question? your sorry, what

you of per gave I the average year? and missed it quarter the think, Could it. I versus last you price give in gallon just price the

I -- hang $X.XX on. was $X.XX. you that. It versus did give

you the about aside then, labor -- similarly peak And when Are -- the when on guess, and Great. okay. the how And peak? inflation, labor question, I do one-time is That's that, business? the paying, guess, that past we from you're inflation should see in think we other? Okay. where I the

million terms think peak questions, dollar those I of where is. one that's the in Carla, of

I think from a some probably we've benefited our given contracts. of lag

costs And so, scale may But suppliers' seek we're to same lags kick-in. as power, some input as certainly see to buying and that. of coming the at minimize you renewals, are those given our down, going our time,

for either around a input call, Some petroleum, maintenance or or cost before last about little petrochemical to the for paper, coming example, high labor bags have likely or we input going down. like pressures remain of a any the items on high thermal a bit that are supplies garbage talked

clear to our our beat inflation, But and we're remaining see ways way is looking why salary designed our a line. incentive so, which to innovative objective add bonus down. coming start would really not is and which it's for permanently doesn't deflation And when we typically certainly, that you to prices in and

Okay. number per gave cost And higher the store. then, for you a

you overall should I see think, the expect was would we quarter? but to have SG&A, it do the for -- amount what

I'm you Carla, broke sorry, up.

amount? what For

store higher the a want say on want amount exact used. costs, operating. I an you -- a on how level basis, I level kind was growth of hour and store per it to I a gave number? don't say much the you did per think higher gave this, but word operating You store you to give

Yeah.

month. So, our new guided store range $XX,XXX is per to $XX,XXX

Okay.

And to so, of the take and stores get that you times the times answer. number could XX number

that. as Okay. Simple

one then, one. last And Great. Okay.

Or great or give open continued that year-over-year? your you to -- on -- the raze-and-rebuilds, cost and up amount contracted Just on locations how construction is -- your you see out which see. an are you average far Did going costs? the construction and

not and different partners given And have it construction with got varies. contracts. that We different we've amount,

We have contract other partner a and with long-term building, modular items. a

pro So, day. would I the costs, we're cost, inflation we given are have inflated end those at not what we formas new say return focused seeing with but very is, of in the --

cost the we've whatever be, the to at around a in range we fees, even new can payment expectations would so, improvements higher looking And also at volume and higher look establish at cost or we cost when construction returns. estate in input labor or the which or the real volume a unit and plan in our for margin, is merchandise, structurally, growth minimum higher what we're made

so vary costs, you And on might Jersey. are Texas construction average in really versus stores versus that's focus building versus more depending Colorado than some Florida our which New more

Okay. Thank you.

over back We of session. the call closing for question-and-answer the Andrew will remarks. to have Clyde reached end I turn the

our in quarter. which you, Great. next as results you a look corporate posted and on to Well, encourage website. at talking our thank you as again well quarter, ESG close and for to our summary look forward the joining yesterday for we today take Thank report,

conference call. This concludes today's

now disconnect. may You