Murphy USA (US:MUSA)2022-02-03 22:30Financial Data and Key Metrics Changes - Revenue for Q4 2021 was $4.8 billion, and for the full year, it was $17.4 billion, compared to $2.9 billion and $11.2 billion in the previous year [16] - Adjusted EBITDA for Q4 was $216.2 million, up from $136.3 million in Q4 2020, and for the full year, it was $828 million compared to $723 million in the prior year [17] - Cash and cash equivalents totaled $256.4 million as of December 31, 2021, with total debt approximately $1.8 billion, resulting in an adjusted gross leverage ratio of about 2.2x [17] Business Line Data and Key Metrics Changes - Fuel contribution reached a record $1.1 billion, with merchandise contribution exceeding $700 million [7] - Merchandise contribution for 2021 was $702 million, slightly above the guided range, with expectations to grow to between $740 million and $760 million in 2022 [25] - Fuel volumes averaged 229,000 gallons per store per month in 2021, below the adjusted guidance range, with expectations for 2022 to increase to between 235,000 and 245,000 gallons [24] Market Data and Key Metrics Changes - Average retail gasoline prices per gallon during Q4 were $3.05, compared to $1.87 in the prior year, and for the full year, prices averaged $2.77 versus $1.91 in 2020 [16] - Cost inflation was evident across the supply chain, impacting operational costs and necessitating adjustments in workforce management [10] Company Strategy and Development Direction - The company is committed to accelerating new store growth, targeting up to 45 new stores and 35 raze-and-rebuilds in 2022 [12][23] - The acquisition of QuickChek is seen as a strategic move to enhance food and beverage capabilities, with synergy capture ahead of schedule, targeting $28 million over three years [13][14] - The company emphasizes its low-price model as a competitive advantage, particularly in an inflationary environment [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the low-price positioning is expected to attract value-conscious customers amid rising inflation [9] - The company remains vigilant in cost discipline to support its everyday low-price model, which is critical in the current economic environment [10] - Management expressed confidence in generating strong operating cash flows and returning capital to shareholders through dividends and share repurchases [11][12] Other Important Information - Capital expenditures for 2021 totaled $278 million, with a focus on growth capital, including new store openings and maintenance projects [18] - The company plans to continue its capital allocation strategy, prioritizing growth while also returning excess capital to shareholders [12][28] Q&A Session Summary Question: Impact of inflation on consumer behavior - Management indicated that while consumers are becoming more price-sensitive, the company expects to gain market share as customers seek value [35] Question: Fuel margin assumptions for EBITDA guidance - Management noted that the previous assumption for fuel margin was around $0.16 per gallon, while the current planning assumes $0.21 per gallon, reflecting a structural change in the market [37][42] Question: CapEx guidance and M&A opportunities - Management clarified that while they are open to M&A, the focus remains on organic growth and integrating QuickChek, with no immediate plans for further acquisitions [49][50] Question: QuickChek synergy targets - Management stated that they are not ready to announce specific year two synergy numbers but emphasized continuous improvement opportunities from the integration [55] Question: Same-store margin performance - Management highlighted strong performance in non-tobacco categories, driven by packaged beverages and promotional activities [59][60] Question: Stability of fuel margins - Management noted that fuel margins have been more stable due to a consistent rising price environment, contrasting with historical volatility [66]