Murphy USA (US:MUSA)2021-10-29 01:40Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $4.6 billion, up from $2.8 billion in Q3 2020, which did not include QuickChek [14] - Adjusted EBITDA was $202.5 million in Q3 2021 compared to $141.5 million in the same period in 2020 [14] - Net income for Q3 2021 was $104 million, an increase from $66.9 million in 2020 [14] - Average retail gasoline prices rose to $2.89 per gallon in Q3 2021 from $1.90 in the prior year [14] Business Line Data and Key Metrics Changes - Merchandise contribution was $187 million, approximately $0.17 per gallon on 1.1 billion gallons sold [9] - Fuel margin was $26.06 per gallon, with an EBITDA of roughly $212 million for the quarter [9][10] - Capital expenditures for Q3 were approximately $74 million, with $13 million attributed to QuickChek [15] Market Data and Key Metrics Changes - The company opened 4 new Murphy Express and 3 new QuickChek stores during the quarter, with 18 new sites under construction [15] - The company expects capital spending to be closer to the lower end of the guided range of $325 million to $375 million due to supply chain pressures [16] Company Strategy and Development Direction - The company aims to expand merchandise contribution efficiently and sustain fuel market share profitably [11] - Strategic priorities include growing EBITDA and free cash flow through organic growth and the integration of QuickChek assets [11] - The company is committed to share repurchase programs and growing dividend distributions [11] Management's Comments on Operating Environment and Future Outlook - Management noted that headwinds in the industry are translating to tailwinds for the company, with higher breakeven fuel margins expected [7][12] - The company believes its business model is uniquely positioned to thrive in the current environment, with a focus on maintaining competitive advantages [12][48] - Management highlighted the importance of adapting to rising prices and maintaining an everyday low price position to capture market share [31] Other Important Information - Total long-term debt was approximately $1.8 billion, with a cash balance of $301.3 million as of September 30 [15] - The company is experiencing labor challenges and supply chain issues but continues to deliver strong financial results [6][7] Q&A Session Summary Question: Outlook for store pipeline in 2022 - Management confirmed a robust pipeline for 2022 with 56 Murphy stores and 7 QuickChek stores planned [21][22] Question: Operating expenses and QuickChek integration - Management indicated that the current operating expense rate of $221 million is a good base case, with some cost increases noted [23] Question: Impact of supply chain on inside store sales - Management acknowledged supply chain challenges but emphasized strong year-over-year sales growth in tobacco and non-tobacco categories [24][25] Question: Fuel margins trend during the quarter - Fuel margins were consistent across the months, with a slight increase in retail margins noted [30][31] Question: Beverage sales trends - Management reported strong growth in beverage sales, driven by innovation and consumer demand [33] Question: Merchandise margin sustainability - Management noted improvements in merchandise mix and pricing, indicating a sustainable margin outlook [37] Question: Capital allocation and M&A opportunities - Management stated that while M&A is not a primary focus, they remain open to strategic opportunities that align with their business model [40][41] Question: Same-store fuel volumes and demand recovery - Management reported that same-store fuel volumes are recovering, currently around 91% of pre-COVID levels, with margins significantly higher [44][46] Question: Operating expenses outlook for next year - Management suggested that merchandise contribution growth will offset labor and operating cost increases, making it easier to estimate EBITDA [51]