Murphy USA (US:MUSA)2024-05-02 19:01Financial Data and Key Metrics Changes - Q1 2024 saw product prices increase by $0.50 compared to $0.08 in the prior year, with overall less volatility in prices [13] - Retail margins for January reached the highest on record at $0.22 per gallon, although overall performance was impacted by severe weather events [13][14] - The company reported a favorable operating expense (OpEx) performance, aligning with internal plans despite higher labor costs [22] Business Line Data and Key Metrics Changes - The fuel and tobacco businesses performed exceptionally well, with tobacco sales up 6% and margin growth of 4.5% [15] - Non-tobacco margin dollars at Murphy branded stores grew by 3.6% APSM, driven by innovative beverage offers [18] - QuickChek's food and beverage sales increased by 3.7% APSM, despite a 1.2% decline in fuel gallons [19] Market Data and Key Metrics Changes - The company continues to gain market share in both fuel and tobacco categories, reinforcing the nondiscretionary nature of these products for value-seeking consumers [15][16] - Consumer behavior showed a trend of stocking up on fuel and tobacco around major weather events, indicating resilience in these categories [15] Company Strategy and Development Direction - The company is focused on core innovation, growth, and productivity initiatives, particularly in food and beverage and center store opportunities, with benefits expected to be weighted towards the second half of the year [20][24] - Capital spending for 2024 is projected to be between $400 million and $450 million, with $82 million spent in Q1, primarily for new store growth [30] - The company is committed to share repurchase activities, aiming to buy back around one million shares annually [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the EBITDA guidance of $1 billion to $1.2 billion, despite Q1 headwinds [38][56] - The company anticipates a positive impact from promotional opportunities and expects to see improvements in merchandise performance in the second half of the year [24][25] - Management acknowledged the challenges posed by inflation and regulatory changes but emphasized the company's low-cost model as a competitive advantage [23] Other Important Information - The company is experiencing a robust pipeline for new store openings, with 22 raze-and-rebuild projects and nine new-to-industry stores planned [29][33] - The digital transformation initiatives are on track, with a relaunch of the QuickChek loyalty program expected in Q4 [25][30] Q&A Session Summary Question: Confidence in EBITDA guidance - Management reiterated that Q1 results were aligned with their plan and expressed confidence in achieving the annual EBITDA guidance [38][39] Question: Inside store business performance - Management discussed the impact of weather on sales and noted that severe weather had a significant effect on consumer behavior [43][44] Question: Retail fuel margins and product supply - Management explained that the steep rise in fuel prices without a corresponding fall-off impacted retail margins, and they anticipate normalization in the upcoming quarters [48][49] Question: Tobacco trends and market share - Management highlighted the competitive advantage in the tobacco category due to everyday low pricing and effective loyalty programs [52][53] Question: Total fuel contribution and EBITDA growth - Management confirmed that the PS&W plus RINs performance was in line with their plan and reiterated confidence in the overall EBITDA guidance [56]