Murphy USA (MUSA) 8 Feb 242023 Q4 Earnings call transcript

Thank you for standing by. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] I will now turn the floor over to Christian Pikul.

You may begin your conference.

Christine. you, Thank everyone. Good morning, you joining appreciate today. us I Chief With West, Mindy and Smith, Controller. and Chief me Andrew Clyde, Donnie and President are Executive Vice Executive Officer; Officer; Financial President Vice and President from some results financial off Andrew, After kick comments Mindy provide of and an conversation. guidance will our the overview opening forward-looking this we will After mind the of that Andrew, up as call, the call portion, will statements during Q&A including follow-up considered the XXXX. some Litigation from to in the be some Act comments open Reform comments Private Q&A. Please in defined made keep Securities of

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

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

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

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

Christian, and good Thank you, morning, everyone.

more. I are fastest-growing the more. delivering data, a QuickChek what else. When above who U.S.: tell And struggling Murphy I paycheck customers we to to clear we at are XXXX, around Murphy stakeholders. When spending and from strength XXXX year enduring all excited ends concept that commitment affordability our First, driving I meet, often the When paycheck see? been since of quarter in that the our customer our same of serving panel are they revolves more we month shopping month. brands lens to look get it's believe were that of model all more customers who've you discuss do is most and performance, USA well per see us XXXX to the fourth the it me XXXX looking our and the as with large We at and share Murphy value and our fourth results, value business which every loyal look USA reaffirms quarter us in as our largest to strategy are we segment we and about to mean all through our sustainable customers by results, they XX% than living full let what XXXX, loyalty for in continue at USA who make $XXX customers. the of at

are we more Second, the for customers. getting same

time month. New XXXX's levels per nontobacco and cohort, they as that tobacco first fuel, are them loyal loyalty shopping XXXX, of bought are visited are the at most members in frequency the same each of they with of But and trips XX% having us the the month. store transactions X about spending making for more higher

more existing we're from getting addition, stores. In our

margin breakeven us build to history trajectory. are our our continue of fuel and our ratio, requirement helping initiatives new we As on that improving lowering coverage maintain

have giving through For machine they QuickChek at Murphy, with suggestions Early This of initiatives tool digital upsell touchscreens. from focuses pilots example, element At QuickChek more sell show and more at suggested personalized an chain Murphy labor in the stores increase sophisticated new offers new to of speed gallons initiative been net captured ramping the one in of the compromised. these in Murphy the items given impressive most peak demand stores. allow a merchandise wallet new forecast these our creating our basket X new the total Murphy-branded contribution network more also is per service larger X% from in transformation over pilot store the increasing our to on stores full seeing perspective, not other The items potential. XX% have demand, quarter. put delivering and during helping now labor higher less. achieve service which with network network is and less over same and piloted customers. Same banner planning of they our positions hours. per stronger generate availability of store share more our more uptake words, investments, more better average results demand to production than in same XXXX, averaged than program, sales of a periods of period, spoilage while QuickChek fine-tuning issues importantly, performance higher while learning record due more more us added into in food to uplift with average, improving of is deferred stores. to in year, more XX% leading customers sales XX% new staff month fourth the are of years in-stock beverage what stores financial a month stores gallons driving And we still impact Last of some XX want. have doing margins same are XXX,XXX QuickChek We've added In new customers. From we of The to initiatives doubled. of X-year about forecast in about XXXX, products, in also last their scheduling resulting grab-and-go merchandise scheduling. We're the stores supply demonstrated XX $XXX,XXX, The resulted also has store and a We initiative and has than permitting stores XXXX. the nearly XX of about getting accuracy.

QuickChek known keep has coming station recognition beverage are its the for fresh CSP Today. we XX #X more. innovative that in received best and the programs know: excited USA XXXX #X already the of share offer the food coffee gas confirms high-quality that world-class we platform in in for C-store to best Additionally, recognition spot for for a back the is customers survey and QuickChek food This what that programs and

network our offer kiosks more merchandise. XX% than with raise-and-rebuild in raise-and-rebuild Murphy X,XXX are selling expanded legacy XXX,XXX In converts contribution. The new higher or stores more in these an month center stores They from more network short, stores month getting averaged our per calendar through network and XXXX XXX,XXX average into store than of addition years gallons higher merchandise also. averaged average. to and sales the per gallons foot square them are stores, about when from In we merchandise about higher store XX% XXXX XXXX, the program

their Based and are the characterized competition which taking what demand, macro of increase, observed are that We're and share. margins. getting getting past their sees when question: they what and the to is begs those backdrop in negative We it unique does certain we marketplace, over the own compete have make relegated proposition it if loses by segments environment have everyone mean higher flat who for this against fuel performance less. we more form the our value means of in on believe all especially Given especially fuel that sale cost are the don't else? few years this the others, we in up to cigarettes,

investments which Murphy this means that allowing more that USA? organic does to buy per This in growth, also cents funds distinctive defines the more for even home will more back in USA. mean take each It turn more virtuous the us we generate and gallon more cycle Murphy in capabilities So store, what at shares. future, is flywheel

remains. So the I question million-dollar know

fuel from other more with in Mindy a getting quarterly capture answer results more business kickstarts the parts guidance still is you're details If you future, short detail reviews in and of little more to I yes, cover And and margin? Mindy? plan. the do XXXX expect around capital bit will our conversations some to the after that

the the more morning Andrew. say you, like I everyone. theme, to And to continuing good Thank would in of spirit

Sorry, I I financial then results, move then hit bad. going to going highlights, plan. our to XXXX on I'm was and discuss few will know to a and that operational capital I'm

volumes gallons. versus fuel. per XXX,XXX our range XXXX In with to starting per-store within So were volumes finishing up guided XXXX, XXX,XXX of gallons total XXX,XXX X.X% of with month,

about the from shows USA translates a are X% on our share Murphy performance markets. to decline in about XX% Given versus it's data in the volume That X.X% experienced to think think volumes up volatility of X-year which XXXX, stack, important taken month in per-store have a I roughly we others. fuel OPUS that

with to Turning and XX% total guidance of our or in up and growth versus growing promotional to the with million on per-store $X gains, driving in the a over tobacco line recorded to $XXX X.X% share fourth strong month XXXX, to at in our execution category merchandise. to growing cigarette of $XXX in share in Total sales margin and XX% and in contribution market. Remarkably, respectively, cigarette dollars we and market X.X%, $XXX a food increase led smokeless Exceptional basis. billion XXXX Nontobacco beverage sales in million. up activity tobacco accelerated contribution. quarter million X.X% share came X.X% and

per and expenses, payment of our X/X increase and and at attributable month from employee-related guidance store of the maintenance with fees $XX,XXX coming of Looking at pressure range midpoint excluding areas, $XX,XXX OpEx. Per prevention. other this About was store averaged per in $XX,XXX in particularly to operating right rent, month. X/X expenses XXXX, loss

If we X% this increase our operating up exclude to we would X.X% new raise-and-rebuild stores is been in have mix. keep activity, However, expense of larger-format, per reported. versus some the that we format attributable estimate evolving mind, store month average and about

full versus loan the and fourth remained compared was the per remains $X.X $XXX in prices and full full $X.XX $X.X million tax $XX the $XX.X fourth million period. $XXX ago per Retail $X.XX And standard and $XX.XX, XXXX financial approximately per $X.XX for the billion million in the ago gasoline X% of versus range is within as the was XX, in year $X.XX and billion, billion and XX.X% retail term prices $XX.X Now the and of in the in earnings per $X.XX ago quarter EBITDA long-term Net Total as the period. year our Revenue income debt share compared expense. fourth fourth quarter for the representing the lease XXXX, sheet resulting the forecasting respectively, XXXX. amortization share and million reported XXXX fourth $X.X they million for share per for and $X.XX XXXX, per rate in in full guidance reduction million on billion in at of $X year averaged gasoline and was billion of income approximately year $XXX XXXX for year the year and quarter in $XX.XX are in versus were year captured for period. Average versus full for December of $XXX period. $XXX XXXX. The for XXXX, was earnings purposes, quarter a the gallon in the respectively, XX.X% $XXX some obligations respectively, and of year Net items. liabilities, which to was to gallon quarter in operating quarter ago million effective in the paid remainder billion, XX%. of XX% balance of to annum $X.X the current through billion, year.

within Our range CapEx revolving and that figures was and quarter and million approximately remained these adjusted to $XXX to X.Xx. million facility $XXX of $XXX fourth $XXX result in our million. year-end, guidance year report lenders the undrawn our gross we $XXX at and full of million million, credit respectively, adjusted for leverage

accelerate Looking are our X,XXX are to we cash not tied square year. EBITDA. EBITDA-generative store up the and raise-and-rebuild utilizing grow growth new expect new including we to ahead to XX foot grow renovations, projects last capital store operating compared new and with network to of into that flow activities to XXXX, Coupled effectively stores,

across returns we and higher network our the to means margin. in commitment continue investments will to digital Our sales new transformation and drive in-store stores

allow. but expect we up also total capital spend $XXX Keep as stores not program ramp a spending range new this million. to growth just to increase sustainable and beyond million $XXX store higher preconstruction conditions As comprises XXXX future [indiscernible] for in and result, spending of on mind, other of on to in as we level XXXX, to a

XXXX of underscoring important priority put level As projects stores XXXX, the new probability includes million over a of majority capital is our XX reflect or organic have that plan start earmarked achieve historically this and the in well XX in a program to to new for into to this It year, the case, for which ongoing projects, potentially to QuickChek to up XX new this means delays. This on is XX including service is the translates that add order calendar in our we after new commitment and potential can more stores that must range opening a of stores $XXX in year, the between adjusting to means X high capital X highest as risk that years. growth remember higher head guided stores. get over growing XXXX next our growth stores, business build to

IT light the identified in of earmarking category roughly of are and targeting potential maintenance previously for opportunities increase in to And scheduling $XX XXXX, program on capital, raise-and-rebuild million as spend XX project have initially includes date, Additionally, of results and raise-and-rebuild a corporate XX prior capital, success years. raise-and-rebuild $XX which are the do depending allow. more this activity other to factors. between million beyond maintenance our we we conditions looking means when and we growth, to we then are In with

corporate $XX ongoing So underway. that leaves approximately million projects other needs, strategic technology and capital for initiatives

call during Now quarter before up it year, the turn million cash and our the resulting with over to repurchase, and our flow is X back just allocation cash of over XXX,XXX once we of balance of million to accretive shares shares of the back like as $XX year-end, of the turn free million and full mentioned in of Andrew $XXX the earnings benefits clearly for Andrew. at share million demonstrating XXXX in investment equivalents and positive to capital release, I'd balanced which repurchased $XXX again over I business. And from cash that, net $XXX million

Mindy. Thanks,

some of we X stores and I'll you including few XXXX, raise-and-rebuilds. around more me now executed a stores, XXXX new Let of with total start XX details guidance. a quickly take through growth. additional We elements organic our QuickChek in XX completed

issue third complement new are across the of into service, growth as retailers stores Mindy in other areas call, the business. XXXX, country, in an redirecting were revenue-generating while for discussed our to quarter our capital we ability we ongoing As new put able disappointed to in mentioned, store into many by

better raise-and-rebuild XX In our X,XXX consolidating XX year, lanes, queuing we we to beverage facings are sales, addition between access, the improving accelerating and adding activity, customer this new in and beverage install on and between customer better approximately Further, food food XX of layouts, and square to stores cleaner in to easier will offer lining to and our store for creating are particularly a locations. adding additional all targeting stores remodeling through and help XX planning XX foot experience categories. cooler which in-store drive the

store our after rates As at between our of or a but equal projects are return which they count-additive, program, and store to raise-and-rebuilds than not better remodel are EBITDA-additive new investors, XX% and to reminder XX% runs tax.

Moving to volume. on fuel

we have volumes X normal to to And environment, raise-and-rebuild offset to the new gallons resulting volumes flat range. XXX,XXX expect slightly remained in XXX,XXX month per-store a up within or to per This in or years, and gallons guidance slightly flat activity per to higher XXX,XXX past For the XXXX. range translates X% XXXX a per-store legacy in versus about of month. to declining down stores, XXX,XXX stores

innovation X% through midpoint. about and the dollars and store between averaged offers growth XXXX, new X% expect format growth improved at million center inside QuickChek, enhanced a at In growth. $XXX In our contribution promotional investments to menu range million performance, activity, From $XXX X% for we that contribution of expect to trajectory or annualized since in total Looking about store expansion, of continued store. merchandise and to XXXX. total we XXXX merchandise increase contribution to XXXX, XXXX, variety

OpEx. to Turning

XXXX that have XXXX, proven our inflation While factors the structural operating in labor and inflationary remain and service expense cost in moderated drove have sticky base.

well. operating format Additionally, as expenses higher stores higher size we raise-and-rebuild coupled but average as our activity, would foot not we X,XXX fuel through contribution square with merchandise expect increase only

just costs about fact, year. a In would that activity from alone, increase X% growth

and on $XX,XXX we to to translates about as result, credit a month per-store fees rents $XX,XXX increases and to in card X% basis. and So this operating X% per-store expect a excludes expenses,

in network. With are expect extremely the increase midpoint in adjusted their $XXX charitable across our G&A mind, range business years our corporate to million XXXX, which in will result half fall activities us million, significant representative X% margins which much using future was subject of million, investors investment and leveraging roughly company uplift returns of maximum XXXX. In in investments the advantaged decade. this come strong G&A funding but within Drive the can important as provide of in as made within forecast people $XXX as capability-building next closing, fuel dollars new For investments to across our but to of reflecting and our are which competitive the we marketplace they upfront are the this come Rewards impact take growth an custom, the investments network, and about with donation model million power the we and with a critical is which continue with range our own rate expense growth as view earnings few industry guided a costs, to $XXX at over these higher once million, benefits to a Murphy and the to million for expense to technology. beliefs an $XXX $XXX is can scale XXXX, investments, into around store to the example, making These $XX range the more of of a in expectations. will reach These today

the we the is range maintaining Nevertheless, representative our given $X.XX be actual view margins to conservative guided $X.XX of believe swing of the the groundwork that bias XXXX. proved to $X.XX lays prior volatility per all-in of beyond a to in sustainable and midpoint to $X.XXX. to a $X.XX around XXXX the subject for reference, year of XXXX, to business margin For annual XXXX upward we $X.XX range historical last performance gallon

margins in the approximated low X or that an using prices $X.XX the benchmark half half appropriate competitive first relatively of characterize lower gallon these volatility expectations. all-in per per XXXX we to volatility, believe with and end approximated is Given margins with little-to-no gallon $X.XXX future range the periods behavior second for all-in

higher find in once per decline impact $X.XX to a all-in potential Murphy in dramatic of you we quarter, than event. margins, fall of range. to Therefore, for and/or every third assume official these XXXX, margins, the full create metrics the EBITDA. a gallon year guidance price fuel extended recall, experience $X.XX That's volatility range USA an fuel industry per outcomes margins. Using bracketed for billion the that would level $X.XX $X.XX opportunity X-year of X- midpoint end prices to a If about last which helps $X.XX and approximately would price to the to calculated year to the on by to the in in of end billion high one to the $X we have the generate elevated the discussed, the to achieve $X.X adjusted expect would of high of gallon,

and the our But how we just seen As value market is characterized perspective around crystal we have don't to these have the respond ball, shocks but years we they proposition. USA how respond how we have over as period. say, important the consumers to for we behave shocks do a during like that Murphy believe the would past to X accurately

resulting confidence time. indicative higher gives continue than margins same will relatively economics competitive the market is that sustainable, but result performance influence of only in the in not expected the performance year's structural necessarily not results, to and are future upward player last in persistently and margins us over unremarkable a that higher setting and marginal of past forces also While pressure

and across approximated Let Atlantic severe levels, southern me prior traffic. XX% comments the states volumes year few close the with on QuickChek January in preliminary a which impacted states, impacted winter Per-store performance. fuel by weather of

trend in are quite bit $X.XX versus February. last around XXXX margins bit retail-only higher gallon However, averaging January, per early and a than gallon we're January in a per seeing of them higher $X.XX

seeing in and in share are We growing tobacco January. all driving tobacco category, continued increase segments in contribution the dollars market a momentum across X%

contribution attached periodically XXXX not strength in categories to impacted nontobacco weather, are customer beverage margins. XXXX throughout and were the fuel to of traffic as While attributable dollars up are food taken signs showing more price showing by increases

Of around the course, certainly earnings we month, making are start are lot is of the but to drive potential improvements continue business January a only great off we a as we higher. with excitement one to internal of

should to expect ahead questions. for for operator now more the and open Murphy Operator? of up the investors XXXX to call into future. I'll the us Looking same to back the USA learn beyond, turn in some

comes Griffin [Operator Raymond line from Instructions] question Your James. Bobby first from the of

off, question business First growing guys' your the with the low-cost more towards kind kind and just high-level position mixed you're operator on stores. as of of of a how the larger-format

OpEx to ways competitive too, of well a from of maintain perspective the the larger-format become your overall they these But within bigger side, as you're on more still low-cost to of that your portion than expenses discipline it, So of, formats. have SG&A operating there obviously, is the growth mix the stores stores, as original -- industry? keep positioning to call going a as understanding kind

where we have it come beverage the the distinctive what from consumer capabilities requirement formats, velocity, coverage that the et to our and square closely one from actually X,XXX that and didn't breakeven always ones, have to more revenue And require cover cetera. the the know other QuickChek look but tried reality Absolutely. is we food time and density to the where a that bigger what at is have those of those that actually some then, base the you in spot, than stores, found? We And what's Bobby, really the other that time, experimented at if different means margin sweet way including their see things desk, fuel store margins, up formats the requirement We maybe that that right? or haven't out beverage and drove less. chasm that translates into the jump they is the and you bigger-box found us the QuickChek market or cost significantly, lower. look the so and at you et be. is, onto and all maybe that competitive and makes box, of the look, they margin to way of frankly, food less cetera, that we chains and the our fuel within got would even of things with what's just cross distinctive ratio, are deals adding X and a adding revenue more we're we're to just chasms gets breakeven But more from able because offer contribution the labor with innovate more foot higher

And your I really at that the how industry. look continue lot from to players the store, of is we a expand a that thing addressed net is slightly expanding the other hope so and especially higher we question. at in relative much OpEx to that,

Yes. and helpful. I'll guess, it That's over. very me turn for And then I secondly

is unpack Just a this the kind have how maybe XXXX that? of $XX the -- Or think, just in trends the kind flow examples? the more the larger that, I profit things merchandise midpoint it Can see there of of work you the blocks okay, versus, remarks, talked million understand And us into but Or merchandise? here's I of flow and at about from a to it's is contribution kind of, to little bit year-over-year meaningful these your get some prepared visibility anything gross of still business kind is step-up building visibility the hands side we're just you going kind to around contribution our in wrapped of of in seeing solid? versus from to some little guess, of the in. a stores and help bit concrete

Yes.

as tobacco lead. Mindy look, mean, sales highlighted, So I to continue

growing the higher tobacco take products higher we're those offer new price, have lead profit, well. out trend to We have providing as a margin, seek premium there. more share penny the we're The and we're to products, just towards ones value, customers noncombustible products. but more the positioned affordability. We're and that relevant as becomes a continue that The best the and in growing discounted lower-risk

to if and is we're little are us one. up up beverage generating almost XX%, from XX% a beverage stack $XX of it's business. stack. basis, X.X%. sales Unpacking bit million sales. adding we a on So X-year on Food incredible generating further, a industry. [indiscernible] relative We're the in a X-year up around tobacco that XXXX, for million great that, is and food anything was Murphy and category contribution not is $XXX in the turned to of that a now meaning We're

so And the about generated standpoint, beverage leveraging $XX and we in capabilities, contribution enterprise total a food from Murphy, et insights, the the of for million cetera, since spin.

side. what well, on highest-returning about across making we're be impactful can probably the So transformation investment across to now, that the I as there but going talk our right categories, growth. the highly and seeing we digital just it's we're and continue innovation efforts merchandise to see business more that's the

luck appreciate in the I and details, quarter. first the here best of

you. Thank

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

those. a EBITDA, and margins purposes had your me I on on your on strong it business, Andrew. of or guess maybe you're fuel that fuel margins -- your only, question for I at for modeling increasingly midpoint implies dependent Based to the more high-level reliant expectation

I I guess store for, total that. what get And the hoping are a context then growth? guess, your EBITDA just bit So expectations inside I that, of color more to on was maybe in little

Yes.

I when so answer more that sorry, for the -- can your clarity, fuel you say you reliant mean question when by we're So just on that you margin, specifically? exactly what do

then to be the guiding, with purposes, total compare coming what you're contribution, more range to the -- -- the of the gallon year, for that versus increasingly total I I modeling look seems fuel at store. your fuel and cents per of contribution sort the EBITDA and from midpoint EBITDA at last that inside fuel

So the of something Or merch that. I'm is contribution some the inside on going understand there trying to to just with sustainability extent?

Yes.

Okay. it. Got

retailer is what at interesting and margins $X.XX why that we XXXX, Mindy volumes, put industry We and really business half And EBITDA took margins advantage. a it just be industry. did, didn't in grow right? what on which if We marginal So up, held the to our about, versus talked would projected would back constant, the are we $X.XX. the as The The be share of lot is we Street be of to drive that. volumes sustain the

in incredible would to input So at then its you look gallon hey, EBITDA. the contributions investors and and say, towards growth what then the is of per on there side encourage the merchandise I $X.XX back since do XXXX, and business to

way I to then, up. best to don't because merchandise into like investments the a merchandise. go in frankly, just the and think digital that taking right? margins down, want are that's down our that's that using about the driving of from X% at early it. Is higher is it to and remarks, Because comes reliant on the look investments We store that X% margins CAGR. CAGR, now contributions contribution. In not and a And portion investing fuel? X% all of that we big but going of make traffic other that fuel contribution the growth chunk our us certainly an the that keep some total a of stages on noted I grown them more to to slowing guess, we're the EBITDA total increase the seeing a CAGR drive

it you'd sense versus business the a the side with So merchandise business has we XXXX, in incredibly say, But if well. breakeven. the model we're zero need the the you I others think at $X.XX, like wow, done not relying on of that

on question your helpful. would fuel second just And my then be volume super That's guidance. Okay.

You will last. at versus your guidance this midpoint bit, decline the touched year a this implies but on volumes

with to there in trying just industry? whatever? So especially context you share for of changing provider. Andrew, understand low-cost of profitability I mentioning, being of balancing strategy Or that, just anything the the typically, Is of just or terms is your it you think in expectation volumes what sort gainer. were your the And

to flat than activity our more is slightly will be slightly. and the stores. Our The store legacy volumes the declining expectation up fuel raise-and-rebuilds will new offset

is pricing as market, the be we us bottom expectation that low-price strategies our will slightly, they continue same the everyday So will retailer. position of and up

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

question got at growth you've side. priorities? your net the midpoint So amount? capital buybacks 'XX absolute in my in is reduced allocation should a we debt range, think earnings 'XX, live illustrative first but CapEx the fair more is Or How relatedly, cash. today? you maybe you in share of on about you some do in bit And sheet could given a return the And about growing feel and your built flows you capital want lever the a cash bit capital balance within of terms little some little allocation How year? do up of to this

Yes.

did we kind here's we our margin. look, of So present the exactly grow chart, slight last It's million to where then of the we raise growth when fuel what outlook about balance in expect without bar set year X changes we buying always year. our impacting in show, an X- EBITDA shares of a initiatives, sheet. to look, kind And really X-year we through expectation back

sheet environment that Mindy, thoughts hesitate tap growth if make commitment. I want capital And cash the advantage margin free going any we to more. we'll we're add the balance that back in cash themselves, buy take to so the If we if have XXXX, free short -- know because don't opportunities to to sheet. fall flow. of around or use like of other additional you won't if flow we to present the And balance years

No. plenty I additional if that have we we with liquidity leverage I to levels that and the fine need it. of capital we mean, think have, access we're

buy fund So operating to our more year. can flows that shares cash CapEx good a existing increment million we But plan X think our and commitment than our an to still make we leftover. leave on ambitious even budget

what anything price depends on we largely that. share comfortable to it to our certainly So need to capacity in order would the meet we But have to as commitment. the borrow do is that

come that then if could little in XQ business down? have the strong XQ? talk growth? any from a and maybe X% that what guide nontobacco margins merchandise you of And you the being helpful. tobacco margin to unit tick-down just bit the Great. Does 'XX That's Is expectations mix the with about from business from if baked your so, And that growth? are that into being

Yes.

this going you're got components to reduction. than So I be always the unit here. faster don't around have you've There's margin competitors, when the tobacco challenge specifics your growing individual a

said take As before, don't contribution bank. take the we we bank. We unit to margin to margin dollars the

the other et some that's within mix the cetera. There there. of center-of-the-store usually activity, promotional categories, could so And be biggest some driver

also increases very QuickChek customers. to to more we're of beverage, about may we and the XXXX, now value too bit same. value. the a reports value holding price going style last And benefit look and to they're the from about to think for the if lot that expect little And But out price food you at to of were day. As we have of recognizing see a price they us, in that deliver major chains, really terms of any they're QSR the at demonstrate probably much talking and year never earnings of our on where year need full get goes intentional every taken we we

do I front. So year we'll see some that this improvement on think

return capitalized. the already that the we've on all in across that the going the pilots talked that pilots terms on now completed neighborhood the impact analyzed and what it's initiatives is of One a some a into QuickChek our wallet contribution, that the store of merchandise and things across the those investment XX%. generating we've million G&A is planning. share from annualized from where be price that return that in So more where basis. from It's run, spend I the that's are from expectation. incremental about in just entire It's getting a segmented of of of The going more stores that production the want be right? might be expect beyond that's benefits personalization take amount aggressive north additional identified efforts. on we in digital that investment center of $XX and of of transformation we're the we have on that to you upsell the it estimated that doubled. is the But to of take an contribution XX-plus the and initiative, G&A And seeing little Murphy percent being the can haven't paper. When we bit at pilot, that than And on significant terms into a exceeded we side. We've

those the early going So that we're future we're as to Rewards, in in but foundation not that XXXX, like and near there's coming that be things whole only And cetera, within well. elements the sustain host of pay the start to QuickChek future. updated just provide dividends growth there's the of type a see will program initiatives et to of into the

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

equation. the first is question my So on side fuel of the

margin, I notion this to been to gallons. think, in give have Mindy, and there's up historically Andrew that order get you

allows contention wonder margins your be guidance And yours move flat so while minus X% the kind plus as that continuing that you see have? and with another. But competitive retail midpoint market with as gone of have And higher at differential share is up you very is take you have are gallons what you basis, potentially in to gone requirements industry forward? price as fuel to this and strong potentially that of combination for APSM the also slightly on to you something seeing more lower, a the and X% to having breakeven I one

Yes.

look, you components is apart margin, would and break say our and and each then margin those So when volume I of X Ben, break got those really volume our think you pieces. what into to about

or have have demand, the recession we're minus massive to be day or price. have or up. kind we like to prosperity have going going first we drives indication that that do. plus do or we that's how able And to every the to flat are then of indication price? or to price That's stores to going a So if we're X%, something economic first COVID of do. And macro what growth something where going low of our We're going secondly, we're

have have The $X.XX to of we've to, way, The been other top doesn't margins are about, losses. X% on up we're that it But that in differential penny of that I new well, player offset largely They're so neutral the 'XX, new structural any you the the the ahead going be kept competitive Street put builds the they have the traffic it you the higher lose competition at on are like offset invest of some go by right in And biggest we've going to market, structural we certainly a we've volume. environment, Street. volumes, pressures to in Their kind the the regions The doesn't other so trade-off competitors profit, to would think, and put We of allows extra stores that us as building margins. on right? good $X.XX up from our because determinant or to talking Street. take is flat things because margins okay, flat scale able doing, seen, marginal almost been that. in are. And The And the extra you're to an of think to that. And $X.XX if with put to and the

margin. benign was that would was right? player and in marginal attribute the side, on and allows that margin volatile a that and largely XXXX still going much us in volume scenario. structural did actually hurt XXXX we us that, So margin even factor is structurally would just both the to It we didn't expected what get I benefited that volume it's that to environment, in fairly it after we dynamic. better environment. environment, volumetrically, but be than on the a more then and both really And price

to so one like of strategy, nothing equation. price/volume us And the our earlier there's changing read into about questions,

everyday be low price. We will

benefit free that our flows put flywheel our store, benefits to need who cash through advantage and begin course, inside of in this take there, we get then, helps traffic have and to ever. capabilities growth for the flow the And our and back more new We shareholders. to the invest of the now that will on The consumers or it cycle us virtuous Street than

would but hey, question, not different we anything doing strategy. your doing price/volume are answers anything equation we're that hope a I So from signal, that

helpful. to it the industry -- gears Yes. materially. happening happening the of How side there a what's lot is to business. what's Shifting declined volumes of fuel the business, That very makes that at in the I is It's look tobacco analogous have what's Because sense. business? to

a that Or in You've expand business? similar higher? a seen on Merchandise structure something the while in side such the that's years see basis are and gains that margins X being circular within share. Is that market last driven APSM business the of that that breakeven persisting meaningfully. the you points continuing contribution the that's almost Is market XXX component sales all tobacco taking share over reference? -- tobacco, it's up

It the elasticity. sort is. about to And and same-type Ben, thought putting the it's has in exactly same for kind the doing type get of the of the numerator that fuel equation. And fuel same. calculation kicks, I tobacco in denominator but commodity It's of a breakeven the

those about, our the bulk same say, funds of per-stick It think are promotional other to as We've on the percentage also and in strategy that bulk that in at invest basis, have in us from our the parts if we we've business applied but stores. able of profit almost so and been still to those. And So you well people if more was back also XX%. go cigarettes, buying grow as from way per-roll, price of you to And smokeless terms as XX%, promote look at a we how cigars QX peaked right? XXXX, to XX points, carton up take increased at share. discount the to per-pack, it's

a fuel that see category, grown, grown analogous while applying do of way in trade-offs And very category has result so behaving of category. as categories. more of share the cigar the they that and has those competitors in types And the as we similarly, same significantly marginal price/volume share same a lot in share smokeless cigarette even

next [Operator Wells question Instructions] Your Bonadio Fargo. from Anthony comes from

to wanted or in growth just a NTI unit growth. on I So dig little bit

came guidance revised ultimately end negatively low 'XX. in the of near in You

that your expectations? guess, just us there high unit progressed level growth? versus giving at what's walk year the a you accelerate you some of can as to And I in hurdles just original So confidence the through just, XXXX then

Yes.

So disappointment we've growth, look, variety there. mean of unit our it's on issues. I just been a expressed the

expected to of is up some We've hook labor for utilities it's utilities to where month longer wait and to with the up. very mean experiencing I contractors. same industry they're And show when stores frustrating, and small-box I as to a thing. we've of as had permitting, issues you the it Some general or well talk peers it's say peers, least. retail the retail other

pipeline lies confidence the we're the in up just Our fact faster. building that

start the so to on more projects year. risk-adjusted within projects have calendar And finish to a basis you to more be able

et X average X expediting, of is cetera, challenge years all from So it's months more over else for into contract not store be loading them some expediting Murphy that things as invest time, in we've there time, for cost. overtime is of will control outside simple plus think that their time knowing we've to about that just The with sticks. QuickChek because because to the a we years; or about completion, X well incentives, an now the X lost incentive the of by something exercise their of up the ability store would of time earn bonus up gone years. And impact ahead an would of on more carrots incentive and and to to therefore, the you deliver or a than our make queue, there's by taking improved years providing has set our X general from one months contractors X talked

think I'd like it. we're return will to some not but that counting to of so on normal, And

loading we're we staffing had So the more and than the queue in up past. for just up that

per just And in that third the straight ahead the model? thinking now guys have term it. like long that that $X.XXX RINs, guys Got know come that. Okay. I we then you be the $X.XX about model guess, PS&W that. as now about of kind talked over in gallon of differently and But we have you on I this Should year, any to range is

direction quarter, is from you from of unremarkable swings Anthony. of completely range so, what basis, was $X.XX. in price if And think and of fluctuation center we second that magnitude right the turned a primarily don't the that where commented macro The remember we the I dictate quarter-to-quarter. it in

going direction other the that see inventory at predict our some going consistently, retail would from investments not would which the something environment too of you I that we while business margins maybe we that squeezed the say no I So and leverage an a to of barrels. But we're to fluctuations, to It's change that our dictate little I likely supply just then we're made really the way partial scale. in the offset. environment have would and forward, and earn $X.XX the model. quarterly outsized going the how $X.XX, that in be you would a to of telling But side time, or and rising margins same in given to wholesale we're as of part make product account still from to would we've money unless we're that that magnitude prices way a But decreases. increases $X.XX model going function higher capability price the

back turn no you. are to time. call at Andrew I There Clyde, the questions further this

Well, Great. listening you, thank for everyone, in.

good we've about ahead, the is team you. for excitement even all more Thank same said, hope I lies investors. As what USA and about the got we really Murphy But we're the excited XXXX of delivered. more our results

Thank you. today's conference This does conclude call.

disconnect. now may You