Murphy USA (MUSA) 28 Oct 222022 Q3 Earnings call transcript

Good morning, my name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA Third Quarter Earnings Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. of you President conference. begin Vice Pikul, Investor may Relations, your Christian

some keep considered of portion open Mindy President Thank everyone. the comments Donnie up then opening President from the Act Andrew Officer; morning, in Emma. Smith, financial mind brief and us the some Q&A. to Andrew, Executive me, will as Executive Great. of Controller. Good comments are Vice With President of this you that After overview during Reform in we'll Please the Q&A Officer; Chief made Securities call, and forward-looking Financial results call the Litigation as and Private XXXX. usual, Chief Mindy defined West, and and give Vice including statements some Clyde, will be

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

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

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

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

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

sustained business variety different quarter our to we power will business a of clearly has of the be and that and expect conditions. earnings environments Third been continue macroeconomic results demonstrate throughout

advantage pandemic. pressures. the we past three performed and of wage the onset during widened in of recovery challenges early during the Looking most our period supply-chain inflationary higher-cost of navigated recent well back and over Successfully the period years, the COVID-XX

environments, can strong spending quarter and the have to thrive by if or We that remain most we economic threaten of varied consumer of challenges recovery. prices delivered sharp characterized our period ability worsens rose. the financial confident prices If if interest fell economy a across during macroeconomic product and results, embarked advantage broader unique perform and rates these upon periods we each business prospered as recent opportunities, rising in our

tobacco and well quarter Our the same-store distinct have X%, across believe no X% offer and of basis, we strategy future offer up to continues different a margins growth clearly model proof and points QX benefits resulting that the low-price our in resonating and low-price were will in are any it results. customers be resonate strategy with high-quality Affordability delivers up On to up enduring The USA. as non-tobacco served shareholders powerful items X%, our reason Murphy food categories, also and everyday volume third our gallons nearly prices. market-share convenience gains. were our value and margins were we QuickChek seeing in nearly is matters, see at

occasion. uncertain for trip represents that that solidifies seeing a view to into a challenging A consumers fourth-quarter. largely has Murphy it customer in in The where base valuable recognition. We loyal and value continue performance brand and proposition in-store QuickChek the earned already invest grow backdrop the and economic most a our our at USA markets we're non-discretionary further admits continue a to customer trend strong

DNA by our operating of affordable efficient and continues be our to the Our low-cost organization offer underpinned model.

We impacts the labor and was be targeted comparisons OpEx our associates. million last to allow impacted them store-level $X inflationary industry roughly our and the merchandise they wage engagement operating other of store like-minded more costs business pleased from associates new not customers, this our lap could continue While appreciation sales, best, over drive to to beginning as we X.X% including for what the which at the the associates. up of expense we program, XX some The quarter, adjustments a higher and recruit special increased perspective. be advantaged moderate do operators, have of impact and start with other to the months. are do both to incentives serve of

our long-term we and store-level we recent prioritize impact disciplined the investments. model remains a maintained capital As applicant we operating flow-in challenge recruiting about investments continue think exited and as summer a the positive months. at these engagement a short-term for on high-level has while in staffing affordable seen in offer to allocation we industry, Alongside have

the per share. be XXXX on-track continues long-term activity level in report EBITDA and to pleased that to of sustainable driver growth XX to growth and organic between in Our stores deliver similar I'm of a single most expect XX impactful XXXX. earnings in program new and we're

the of all and averages sales internal APSM fuel categories. network non-tobacco the to by stores as stronger Importantly incrementally positive our are in versus same-store exceeding new and expectations are the figures evidenced

XX merchandise, grab-and-go experience. to a store In a kiosks which complete and replace square-foot more a better raze-and-rebuilds, on-track margin with addition, higher offer features X,XXX of we high-performing larger assortment that food broader are customer favorable

organic In remains our element a broader addition share key of our and creation to strategy capital repurchase pledge to investors. value underpins allocation growth,

believe outlook. of term a view current both earnings this Given offers value recent of performance on, stock sustainability compelling we in our the based long and our performance,

use continue free the most We flow, capital organic of repurchase to investors share growth. impactful believe represents for beyond to allocated cash long-term

progress back represents XXX,XXX five $XXX continue we in share per to of December This currently on-track active approved program our at repurchase, and billion against of price year for well-ahead quarter that program Board third in complete to an million be during XXXX the $XXX nearly are such, the we average schedule. of $X buying amount shares significant As share.

over respect and excess long-term being (ph) to of and enduring continue that the baseline to real represents Finally. margins, I long-term outstanding enjoy note of percentage that to with significant allocated throughout the I period. over we investors, would future than who shares generated shareholder Mindy. capital the have Investors while shares more With earnings appreciation, the USA held past and has greater having price expect new to the can not over that, turn a will more three this value but distributions XX% only [Biden] Murphy years the to without for period buy-back to fuel cash repurchased call enjoyed exist Investment. used uncertainty with to

Average of compared good $X.XX prices $X.X $X.X Thank morning, per And you per gasoline year-ago to were quarter the Andrew. gallon retail was gallon versus Revenue third XXXX. in quarter the, everyone. for billion period. third the $X.XX billion in

for was XXXX approximately $XXX.X net million was obligations. of in in declined quarter Total resulting the quarter in of a remainder $XXX million million million $XXX versus expenditures share debt was $XXX.X in Net term-loan $XXX in the long-term roughly the capital from and million business the $X.XX versus EBITDA and quarter is remained XX, X% free-cash $XX total generate on balances slightly as annum reduction lease in representing second-quarter, decrease million shareholder tax-rate the Third approximately versus amortization that year-ago of income roughly Andrew the $XXX liabilities, despite captured XX.X%. of repurchases the, in of $XX of million And million, $XXX earnings XXXX, period. The $X.XX in mentioned Cash per year-ago third flow current reported period. effective and is $XXX reflected at the in million million in including to significant position. the did continues approximately to our of sheet share per third the quarter. of balance or of distributions, $X.X September the million billion, which our cash $XX

credit revolving X.X in adjusted times. of at it These we turn a over will And facility million had is still that to our report Andrew. outstanding balance currently with gross that, approximately quarter-end to back and $XXX Our figures zero undrawn. lenders result I leverage

Thanks, Mindy.

month. related down $X.XX note, in volumes prices. third volumes, is to questions, Before strongest taking $X.XX and high-single-digits of to the but year-over-year. not we that and It taking the and note per from were I Current any growing volatility this only the to reflective average which reactive recent to are swings up continues XXXX important up since see quarter margins quarter levels, typical share XXXX. most trend product of approximately October exceeded would per gallon performance start third store margins gallon, about up of the per

reflects this convenience store and may prices higher-cost to So while, label may that higher doing can industry operator, be simply up outlier, some for the the retailer. reflective what indicative tempted industry of level of be marginal to call of the of future an With falling let's structure equilibrium business open margins questions. a periods that retail the third in as quarter expect

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

now is open. line Your

thanks. Good morning, everybody. Hey,

Good morning, Ben.

the to versus extent in what go also, and this environment that in new growth the share you're substantially volume the ask saw maybe the industry. of attracted the lower to the then because repeat do now curious, And rate visibility, sense slightly than your where that from? think up come side want maybe about I'm have seeing taking that we you you it's prices at seen stuck higher around kind business, I have down, one, the what's that fuel market customers back -- on of we're you summer? price of a then peak we've And

we helpful hold what significant in we differential terms we're And off kind price So the over our investment faster, period. saw job I is, in our last maintain during to last rising period years were think, prices to made quarter Mandy and this. did price of rising really three able price what a really to the gain and run around volume as We playbooks great pricing our of refining was environment. explaining that two on capabilities seeing the

deal prices and average Prices able since differentials as really the $X.XX, up marketplace. that uncertainty that are caused were down Ukrainian we the up or widen just to we've our in to or back the are, tomorrow's And creates fell, to $X.XX, certainly, uncertainty not. volatility going whether run a continued of on going up see prices when great So invasion to appropriately. has

stickiness So challenges. two it's know is And for things. are this our for non-discretionary just purchase. consumers facing lower us. been customers, One, environment a we very The Murphy from favorable income USA comes a

So as in and by more more we customers stay with gain price a are consumers And the trends. inflationary new they high us. impacted environment,

to higher remain as seeing think So we're going they're I as sticky. prices, long

the the the marketplace. price think of stickiness the that that that. is we've second with trust And that of because the there's be I brand the discipline and great pricing compound then will enhance, of program that deal you with our a it comes loyalty thing in lowest they established

as well the that So well. outlook I think bodes future for

that's high everything price of price the Yes. just it's That And is is good Okay. sense. of a high. fuel not the I guess, makes point. as

if away a prices go So doesn't necessarily roll bit. fuel over from that value been the consumer little

kind you on new you just we've if we is will margin Andrew, insinuated Maybe about think this as as in for comments, level earnings your in of the think sure kind You that forward. fuel a I looks there's elevated your fuel of margin this continue we go to your year-to-date like away we'll performance of mean, forward? that your year-to-date. what go margins I'm basis? go-forward Do some could seen revisit paradigm topic going

Sure.

done periods breakeven year. And You at periods, margin average we we're the third falling to period and then of you margins to falling rise Ben, XXXX analysis the But environment that so in this the some saw at unprecedented, but off in margins of between margins somewhat pretty time of there. what and of faster data And price in during at those periods, look typical those your see just in prices, look rising well, the first relative like correlates could margins over similar the our industry in the then earned costs earned now. you've margin. look fall I'd for effect suggest right? compare doing can was and steeply requirements the supply analysis, seeing back differentials could is and And as that the just go argue the it you and we go XXXX, similar back a periods the the quarter retail the price fall just where price than a any see same time OPIS half of environment whether

share difference half to who question is from. second the And as so be taking enduring. that's really structural I a more going ago missed of while to your that we're it

I retailers break-even. find who to think being to broadly up price marginal themselves it is forced maintain the to their continue

is, XX% the average retailers we're If largely it’s bottom to and low-priced of top half quartile, XX% down my high-volume is OPIS XX,XXX the you that represents of data, survey to suggests versus look XXXX, industry, the at not retailers. kind that guess of to guess just the XX,XXX that a

I of the competitive it so cost, And similarly from certainly a And the little higher creates taking suspect from lose with the more the it or may more $X.XX current lose little these ones along that And levels, share bit supports maintaining a lost be where inches up. market. but then breakeven cycle are that Murphy associated vicious bit time. peers growing and USA the indeed, just as bottom half volume, incur little $X.XX with bit over that traffic a volume, levels that only they

Yes.

so Thanks much. Great. Okay.

of comes Anthony the from Your with question line next Bonadio Fargo. Wells

Your line open. now is

for questions. Thanks my taking Good morning, guys.

and were looks more drivers just about be have you less doing the PS&W to wanted there obviously risen to guided a just any know RINs is? about shouldn't current then, I underlying talk and line over prices remain but to ask levels what elevated. persist? reason if But RINs quickly. Can contribution the considerably more higher think you've before run. now So price RINs how gallon Number you long there that And pandemic, selling you little with or that $X.X in of from per sustainable $X.XX is the you're I to about think that

Yes, values we RIN I'll question, to continue month-to-month. sell take to ratably Anthony. that remain continue but elevated, Yes,

other runs continues $X.XX income gallon. the explain based the we piece there's movements. price The $X.XX that of fluctuating values rest And an the that for PS&W, can so is of of say on that price the make why to fluctuate in what we do, the primarily regardless spot-to-rack business. And to fact is which our and we in through time that over account impact quarter-to-quarter a category, expect of also, our way offsetting it, a it RIN we direction to be

we are of falling, environment the because quarter like barrels. disadvantaged And the saw we this of prices that's so one and supply where impact the a product just our in a more continuing, way timing or for for account of wholesale

up, over will But those that running and $X.XX. which prices over we continue in periods, instances maybe optimize the are a you're PS&W in something balance, in still to to PS&W expect So see But you $X.XX we going decline on see should our time. that be a little it more bit land $X.XX on think able where and earn $X.XX, sweep to leverage to that's to as of scale. balance, we should

past, to Anthony, going less tighter the that discounting the you're is pressure that environments you so racks, when more complex saw add, I'd thing the that the reflective at One net we see of on was put often refinery refinery and discounting to at it see supply-demand longer rack. the and a balance, in balances, The number. supply-demand

term. gets equilibrium. But is benefit the that into the short said, term, as Mindy so market And something that in over back us can long

is to years was probably other tighter bit the of supply-demand the with things it's one a challenges how just it than is little the of that's So a energy given balance. our policy. couple tight And look ago, at

and way acquisition that I to guys, part that for business to consumer power more XX% number the step it. And a expansion Got you it. quarter? back, what then bit then secondly, behavior? we're starting the think this just lap you margins. forward? of And really looks just ask earnings going all of like bps see I taking talk a you've know gross XX of is That's wanted a helpful. about in about to a that record Can the the drove merchandise more got the the better stable little Got about

is. It

the that's upside the non-tobacco So quarter attached the the was to merchandise transactions. during fuel big

that's the some, higher-margin so center all the with not packaged And your beverage, of certainly of dispensed your like fuel the and beverage, that store, trips. grab-and-go associated items, but is

long business I QuickChek as remain fuel with et naturally sustain the resets So of up categories think cetera and volumes, the with to fuel attached to fuel those higher-margin being as attached to well. gallons mix. And really now performed XX% that being kind so categories added we higher will continue though

good Got it. so and much Thanks guys luck.

you. Thank

from next Rob with Jefferies. question comes line the of Dickerson Your

Your line is now open.

Great. Thanks much. so

it's of of a know margins more of There's obviously had general OPIS kind some that's doesn't data. basic seven look we to of kind back, strong, still October, we kind would better at that I kind time, when like little not kind and you seem what correlation got of you into realize you be kind the I in go that decently performance, we look know, the over I But than stated suggested your speak of question, just of all seemed So did quarter. specifically a look marginal the for if even years. mean, does all I have come down volatility as don't bit correlation kind obviously. to at -- pretty maybe It a it and that

dislocation any you of as is something average? got to say historical that competitive relative of kind that just of of kind that Thanks. advantage? quarter you you would there was because the near-term should And that So kind saw continue through

they a could Yes, results Rob, I you every doing goes we're the data are, our bank. don't and because mean time I day I we correlations looking wish lot cash at that spend OPIS to of there. and into know help the what

I did. in what's related difference probably When we And pressure business movements, that cost big trying volumes to margin estimate the the the hours. up, So significant sales, XX, on to there's price some changed. uncertainty XX say the XX, seen us. just as of we've given seeing model the doesn't fundamentals would seeing serve as it going third-party we're volatility to haven't given prices merchandise happen the for basic and is as purpose that run daily greater as and we're fall, much compression not prices

of dynamic And the so you there. bit see a little different

and the or can't how creates market a weaker speak of to so ourselves. or a I correlation, the look difference the And explain to we just to explanation correlation, that's better if that And OPIS, that.

right. Fair All enough.

I Let me way. ask, guess, a different

advantaged assuming you're retain say Or here? relative that comes from decelerated you if gas in should the on profitability actually go of cost able price volume. like forward, now, could gas, taking gas on let's share near right some sounds theory up to rate margin because price in be price an of term to So down, just going if high, going the stays of forward kind also margin there's

So but kind in of I that's a all there, have. lot

going Look, as mean, an be price rise, this an going on I to they're aren't and margins to higher, simple are in, they're Yes. consumers we're prices brands. from for a you're more is environment absolute retailers prices high, as fall, are $X more a price And when business. elsewhere, similarly sensitive. cut like greater. USA going and Murphy margins just real below consumers as not When be like prices they're basis gallon, look are value to to back If sensitive. having other to everyday purchase low-price prices flush, going low-price If get inflationary competitive are be in

and historically. get margin we environments to the associated seen price whole down up I to at volatility in So back share continue just levels, that expect we've and levels, movement current gain normal will that the then typical of we'll these

in look some difference what continues than is different more hold past lags similar continue may up. think the and big I if compression of volatility to the to the and

Got much. it. Thank you so

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

open. now is line Your

the you when underlying If math my credit fees. strip running inflation, of things about for to you Thanks relatively the the card XQ Hey talk taking station you guys, right, when I good strip question. think morning. onetime bonuses the I flat OpEx were you out on did out and OpEx like trend that's how bonuses. Can

point? move of So that at you're have inflation actually starting a slowing even this you seen or sideways to

Yes.

do we some range out strip year up in that see that certain we much that a you increases ago little costs continue for of So plan seen pressure complete our salary We XXXX. hourly we range. that but bit contracts bonus. will not a lapping on sideways, to the that to X% moderating, to down, only that we're as haven't if long-term We're be X% certainly had closer There the as are next year. probably made and we picked X% that further maybe cost appreciation

certainly So type going but X%, cost looking forward, X%, range. percent at not in probably X% X-plus we're that more X%,

down, view or So I of kind don't we're what know of a if seeing. but that sideways that's near-term

Great. on then Andrew. a you, buyback. And the so Thank question just

it This doing were of that long-term targets. I guys was steadily, put And quarter. annually. couple $X talking a you $XXX,XXX per ago you're you had think shares pacing the years out time, about million some I think at pretty $XXX,XXX, year,

annually, with, do think flows about think number? go-forward cash this kind kind buyback how million a $X as about So you we persisting. of $X.X of to the much Is should the rate obviously, better million today that

Yes.

the to and essentially we shares the growth the view drivers, long generate And is have outstanding, continue run EBITDA to given chart to price right, to multiple believe do every to XX% bar that the look, compounded XX%? of present the you question. What the share three annual So that year posing business. of what of growth, just our kind raise

million to a said, shareholder new multiple. get free us et turn first very half business, to get EBITDA organic priority cetera, cash Above it then repurchase. with been and that sustainable associated to our clear, often assigned of we've shares, That the gets and to And is if adding not flow. fuel or a beyond share is a look, kind margin. And Buy achieve our going achieve objectives. on growth allows a return so we've improving back you the given $X level you just certain stated stores, the

we've doing be just we've cash is will flow I so share repurchases. investors additional that And free pretty been pledged what much returned via to think shareholders

do growth continue margins to fuel free priority, elevated flow above we that see to that. our continue we first if generate So will cash

how absolutely we will in so commitment be to of And will a shareholders. flow that the we margins the terms of we can return future free but what excess predict provide cash can't

Understood. Okay.

[$X So $X more is million] the like a maybe (ph). sounds it like million year per

thanks Appreciate it. Okay, very much.

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

is open. now line Your

talk strength an for in the of several or food of of consumer Thanks of We've there about consumer the heard impact -- how taking our -- the XQ some question. mobility. was companies And much I'm wondering or out strength have mobility you if QX have been can just parsed into parse more greater how your trading consumers versus of out other down from might consumer value greater alternatives.

you say are you to speaking when And mobility, to back work?

think then traveling. a that gone commented I out. anything seeing But people no, They've so normalcy. to more have return they're were they're reopened, they done have actually out people at of starting summer, consumer schools typically kind as as sell that during less Oh, the traveling, was home,

So saw I'm pickup as during have as travel the guys wondering the same similar of mobility you reopened. if summer, schools kind travel in that the in slowdown seeing you're

relative is probably can't best industry or to decline. this which there. greater, front our price, higher of But at traffic volume the But if Walmart. into effect, growth down underpinning isolate isolate versus seeing stores our normal not. stores all Stores, are because based or purchases. is people people to going out exactly XX% of know consumer We're We it's are know value travel in we typical is from are to the the our a summer reflected trip can't their we Walmart in a trade on which We our we Carla, seasonality. the lowest trading travel down of

that's discretionary factor a getting more around the say the brand. is that of probably there, value would that of these sensitivity our a greater and whether than just the I travel in share we're driving So reflection is performance fair And have non-discretionary being consumers there's biggest purchases. some price

about And on like it thinking your overall and Okay. Great. construction, then any we cost in raze-and-rebuild to cost follow-up that as change new how in? just model should build, the we on one of be

Yes.

or is great at I costs $XXX,XXX build. have The returns then very, even significantly. new margins. the we're up that noticed to consumer concrete when the traffic And stores with come mean, there's achieving as margin We they're good seeing example very total higher a before. increase on capital where online, about $XXX,XXX we those as the volume we're of higher conservative same exceeding achieving is assumptions, look at or expectations, news returns cost in are a then

flowing a our even but through, margin we returns look in just very with attractive to continue capital are So very is that enhancements projections. seeing cost conservative increase

Okay, great. Thank very much. you

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

line now open. is Your

going price, the up of kind and business picking drives non-cigarette it place seems Good the could It more you tobacco taking manufacturer the guess, there. we've on you Thanks support the for here about be I flywheel that morning, taking guys share, everybody. same forward Andrew, there flywheel. of the past talked effect as first, my low gained still that in kind potential, the others things from question. start away business that have go

likely in as your stuff, curious, from the versus your for and So the with support industry opportunities is just conversations them growing given suppliers non-tobacco going there much? in forward into strength like not is nearly XXXX, of rest more what

two brands, to And with same in can and attached you imagine others that categories seeing type the growth And there they seeing through Murphy are goods consumer think USA. One declines. things down look I And for. both not see fuel, manufacturers all growing them Look, are are of if I these growing is think Murphy non-tobacco about in packaged Yes. disproportionately you that other traffic the they the of USA. think business. are

one thing. that's So

supply that been formats. doesn't consumers brands tighter for best that their trust. work standpoint. our The their Murphy have may those there's is C-stores regional they have trust just stores for going lowest given, two, come we're smaller that they USA, because And us a prices us own on chains products. of chain national among bigger it that commissary necessarily and concentration own have second to But makes the the movement some network this especially sense towards and to value well from And distribution, best a model that the those those one, private and of have label

And committed contracts flywheel the growing to the that provide for and so is brands, to can support you're I and do it. more the committed. think same say, you are the And you're ways brand extent margin, allow, Bobby, where going various look you're on they effect manufacturers the there we the to in if the potential, at

a in these good we So the that's I have it it's think and great how, we with think certainly, question, partnerships about brands.

on kind when helpful. look high then market. been there's at And just it just wholesale volatility of level of the I about secondly, we talked guess, that. business, the And lot, side a you've a the like prices, the in very Appreciate daily fuel of

to as think some that So geopolitical be maybe you? like driving go guys, peers be something reverse events, to Or you parts. would we that, would and could two view would it's that obviously, better could -- in One, with If a normal, something like looks compete but sticky structurally, it seems was it two, I back going do like that account much? not just what that? do then else And forward? you what advantaged back could it be business spot. pretty hurt the guess it that this, the puts for you give of It should that

second lower that a the it's on volatility? Sorry, question, part to of of back reverting level

you've as and because have you with a market the PS&W we that advantage wholesale tight, had to sizable pretty back peers lower up even about volatility that day. not Yes. are on smaller go a to it's about side level guys puts versus changing how fuel really higher is the we've a more market does players the advantaged fact even like run the given volatility taking if the Like optimization in talked maybe worried the that next price if away recently supply and probably MUSA done the going in here correspond place

Just kind go as something end of market back haven't we in though normal seen happens if yet? the quite even normal to curious we what

Yes.

understand. I So I think

there's think end at. I So you kind at things of look, the that look the three day, of

levels lower seeing And is we're are or Our low, price volatility. or or sensitive price up of our down, is where or not. going more high then customers higher

we around expect maybe kind to if or level so are days lower of to would waiting what price risk movements, two a volatility do. much greater people a see And extra where going in some of much certainty premium three I that saw prices are of

then some go that things drive going seen just advantage back geopolitical around global are that the start the we've seen the at pre-COVID, we've actually levels What utilization. refinery being the and And versus production, month what more of higher the Some all of before unrest, refineries with supply-demand service. of away. changes that of complex it, to with running cuts balances, U.S., the out way taken recently could Refineries you increases, think to OPEC in

down planned they they outages. refineries come on to just those outages, unplanned we given the when other have outages unplanned see take continue side their turnarounds. And for the So then all challenges, of

that challenges I continue a we're how the have and the to supply-demand as past geopolitics to can a play certainly, anytime quickly. bottlenecks with local crude in volatility. create The but resolved going are see something So logistics global for in balance that not don't crystal country seen out, those get position to we've a is to ball that respect

are all And are be of I So term. play of suspect to going to them most for the there near medium at -- many of sources volatility.

Perfect. luck quarter. was Andrew. That's best the to exactly the for, and fourth in you I of appreciate what I looking details

Thank you.

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

now is line Your open.

circle you. Thank marginal Andrew. small something and Hi, the to back I about on operators. wanted

margins. in their context them the ask Just breakeven about wanted of to

You structural this they've pressures industry disproportional these facing. cost large the operators small given considerably clearly, in and talked seeing other benefiting this margins been you up but operators the breakeven, change as from have gone about a are we're bit,

just some thinking in where So cost yourself how inflation to come margins breakeven start this small you pressures for as down for of and how might peaks these maybe do you margins about are these and through to think a scenario cost result that? start to Isn't ease, some your peers, there operators. which as pressures ease operators pressure

Yes.

stop inflation suggesting think down. going cost annual actually don't cost going means increasing. peaks, But deflation their if massive you're I where come rate So is increases to we're to that of their see

they to even and about years than change. think have had whether don't or it's stuck not how going a they're you to they higher marginal about fundamental going traffic-driving ago. structure cost get So decisions tobacco into made retailers. five That's be They've categories, with the to fuel

You quartile a get raise everyday profitability. maintain to don't of level low-price and contracts, established they invest accepted, volume in tobacco on to lose scale second can prices more but the into aren't some platforms, of that chains have the differentiated continue loyalty have

and goes so maintenance stores, You you in the your sustaining quality goes perception or in it don't up at it, either don't store that your it invest down. of invest if erodes

don't moderating of long-run going to cost their So at inflation going even back change that structure. and to X%, X% think I X.X% the are goals

there this I step the we've change have is structural past. a that been and think in changes seen, structural step

in they're suspect or we high consumers think as we're closer inflationary period remain prices are out and continue to time higher have out than value. to an of see to environment, prices going going and pressured, the seek to going shorter if come continue $X I $X, prices I we to in to below

disproportionately So the versus I low-price that's the going to retailers. retailers think benefit higher-priced

think much thing than taken other kind the their you to to change is breakeven smaller place, increase change going the structural think step this we've that's I be the of about annual that level seen. if is

large a to it's by to changes. because for $X.XX running per $X the in the spectrum ability price you prices that going falling they're is so something not when And pass going year an to of through to hesitate consumers or barely up extra retailer or $X.XX noticed $X.XX or by be see do gallon

pretty capture we got also The it on to so and anyway, painful that about problem try because volume low back. maintained it. those to to get that price up that that get they have And position down fight to points to everyday have to going much has go price that give it, that. off margin keep is everyday that feel of anyone confident are extremely to who ever volume just price finds expensive low so So to

we're a see deflation But brings the be forward. going I step breakeven for in just I going lower structure think with more industry. So the change We've a or seen don't to new increases to anything modest lower. going equilibrium. much we're in The that are a significantly think inflation, cost

yes, permanent all mean, I just could your way you to seems not in like of will point, I'm Not expecting the there's back like as even that terms the a on margin. it to or go helpful. agree. dynamic And support. help was I the should certainly It the to pre-COVID highlighted, change, of But margin behaviors? even slight which potentially, of change their breakeven easing because

Yes.

even So by to real future is faster that go than And simple. then got rate the going inflation increase. lower of to volume. contribution The cost is formula at up divide merchandise a increases to have the you

So are going going their gallons? back they their tobacco going Are you their to transactions? the to share? they Are are merchandise Those gain they believe. fuel gain attached to gain to things to back have back

on or but then was for it touch guidance, update my That just left your may, the I just in quarter, months you, Okay. super helpful. And question there's really two this on only year. it if didn't final you

you how ranges. hear of some your feel about to curious So

color you're QX? meaningful looks guess, the helpful. might ranges conservative For instance, unless would slowdown it a on guidance of be like your be some in any year I for Just expecting, contribution merchandise your

projects that of project be close out. next would our merchandise end close Absolutely probably on CapEx end probably adjusted fuel, higher is probably the range just a I to to being middle end and on year. probably some of in little the bit SG&A above that pushed around cost. We're can say Yes. we're high that closer you the of as end below the the to get range. low the the low range towards will

Thanks again. All right.

you. Thank

Q&A. the back Clyde. Andrew to turn I This will today's now call concludes

joining thanks in. Well, for everyone Great.

follow-up of confident the We you, in. any in I predict think team themselves and will taken model, move ones this well the resilience seen certainly our the in macro in regardless and stakeholders. we than a the we that business all third prepared we capabilities, will forward on decision-making this But represented business look steps Thank agility is, are quarter the for we've in environment surrounding the recognize to of prepared the I can't advantaged the drive different the take that past. forward the it that we've think to our both to are in the and future of business, as said remarks, that environment find our questions. to environment and the past pattern continue business be, what is we but the forward

This attending. concludes call. today's Thank you conference for

You many now disconnect.