Murphy USA Inc.

Thank you for standing by. My name is Alex and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA first quarter 2024 earnings conference call. All lines have been placed and muted to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. I would now like to turn the call over to Christian Paykel, Vice President of Investor Relations. Please go ahead.

Hey, thank you, Alex. Good morning, everyone. Thanks for joining us today. With me are Andrew Clyde, Chief Executive Officer, Mindy West, Chief Operating Officer, Gallagher Jeff, our Chief Financial Officer, and Donnie Smith, Chief Accounting Officer. After some opening comments from Andrew, Gallagher is going to provide some additional color commentary, and then we will open up the call to Q&A. Please keep in mind that some of the comments made during this call, including the Q&A portion, will be considered forward-looking statements as defined in the Private Securities Litigational Reform Act of 1995. As such, no assurances can be given that these events will occur or that the projections will be attained. A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, please see the latest MurphyUSA forms 10-K, 10-Q, 8-K, and other recent SEC filings. MurphyUSA takes no duty to publicly update or revise any forward-looking statements. During today's call, we may also provide certain performance measures that do not conform to generally accepted accounting principles, or GAAP. We have provided schedules to reconcile these non-GAAP measures with the reported results on a GAAP basis as part of our earnings press release, which can be found on the investor section of our website. With that, I will turn the call over to Andrew.

Thanks, Christian, and thank you, everyone, for joining us today. In addition to discussing our first quarter results, I'd like to welcome our new CFO, Gallagher Jeff, to the call. Gallagher hit the ground running at our March investor conference and is already having a tremendous impact with the team. And likewise, Mindy has fully embraced her broader COO role, and with Gallagher's support, she is standing up the productivity improvement initiative we introduced at the conference. I continue to be very grateful for the incredible leadership team supporting the business here at MRF USA. In addition to the benefit of having great leaders on your team, another thing I've learned about this business is that every quarter is a little bit different. And when it comes to evaluating performance and measuring wins and losses, understanding that context is absolutely critical, especially when your efforts and energy are focused on long-term value creation. Q1 2024 had a few unique factors that separated it from its year-ago counterpart. Product prices were up 50 cents compared to 8 cents in the prior year. We also didn't see a repeat of the beneficial fall-off in prices mid-quarter and overall saw less volatility. In addition, severe weather events were abnormally higher, especially those concentrated on the Atlantic coast from Florida to New Jersey. In that setting, our core fuel and tobacco businesses performed exceptionally well. APSM fuel gallons were essentially flat year over year, and up 2% on a two-year stack on comparable retail margins of 22 cents per gallon, with January retail margins the highest on record. This level of performance in what would historically be a very challenging environment strongly supports our view of the sustainability of the structural industry dynamics that continue to favor MRF USA. And while the Opus industry volume data may not fully represent all the competitors in the market, It certainly highlights that Murphy and QC are taking share in our respective markets. Similarly, the tobacco category saw very strong sales and margin growth of 6% and 4.5% respectively, and units remained healthy across all nicotine categories. Looking at broader industry data, we continue to take share profitably. The stickiness and share gains in fuel and tobacco are two largest categories. reinforced the non-discretionary nature of these categories for our value-seeking consumers. Indeed, we saw a comparable year-over-year purchase behavior across all income cohorts, and we continue to see consumers stock up on fuel and tobacco around major weather events. We also continue to see new to Murphy customers behave the same as they trade down from higher-priced retailers. The bottom line is that the fundamental drivers of our largest and most EBITDA accretive categories continue to grow despite a more acute set of conditions in Q124 relative to the benign conditions of Q123. That said, these same conditions impacted the more discretionary center of store categories due to fewer trips reflecting lower absolute fuel prices and less stocking up behavior for these categories. We also witnessed a lag in lotto lottery as it took longer to build up to similar jackpots, and we believe there is some switching to new and newly legalized online betting sites, which saw significant growth in some of our states. While below our Q1 expectations, there were still bright spots. Murphy-branded stores grew non-tobacco margin dollars by 3.6% APSM, led by innovative dispensed beverage offers with sales up 19% APSM. Packaged beverage sales were up 1.8% APSM, yet contribution margin dollars for the category grew 3% due to pricing and promotionally driven product mix changes. Overall, the two-year stacks for Murphy stores provide a more fulsome view of our performance, indicating APSM non-tobacco sales and margin growth of 12% and 17.2% respectively. At QuickCheck, food and beverage sales were up 3.7% APSM, and contribution margin dollars were up 1.2 percent. This is despite fuel gallons down 1.2 percent APSM. Having seen the recently reported earnings for a number of QSRs where same-store sales results were mixed, we believe our prior decision to stay focused on value pricing amidst some of the increasing food cost inflation is paying off. A recent brand survey further updates and reinforces our strong positioning with consumers. And with more innovative offers to come alongside the enhancements from our digital initiatives, we believe we are very well positioned in the current environment compared to the food brands that are having to make a sharp pivot towards value. Looking ahead to the rest of the year, our core innovation, growth, and productivity initiatives that largely focus on food and beverage and center of store opportunities remain on track with benefits weighted to the second half of the year. coupled with softer Q3 and Q4 2023 comps, we remain confident about the trajectory of this part of the business. The PS&W and RENs component performed in line with our Q1 plan, which accounted for not repeating the higher Q1 2023 REN sales, which were a carryover from Q4 2022 when the EPA announced a proposed rule to establish RFS volumes for 2023, 24, and 2025 which created uncertainty as the market absorbed that information. Moreover, we anticipated tight supply in Q1-23 in a few markets, and our supply model enabled us to capture an advantage in supply-constrained markets that did not repeat in Q1-2024. We continue to believe our supply model provides an advantage that differentiates us from some of our competitors and expect it will continue to provide value within the historical range of 2 to 3 plus cents per gallon. OPEX was also favorable to our internal plan as higher labor costs for specific cohort investments were implemented as planned. We are closely watching the proposed FLSA changes and believe the 2024 impact to be minimal. We are running scenarios and have developed options to address what would be a larger impact in 2025 if the changes go through as proposed. Of note, though, to the extent that the marginal retailers have salaried managers impacted by the regulation, the impact to their business on a cents per gallon basis would be three to six times higher due to their lower volumes. As discussed before, MurphyUSA is certainly not immune to the headwinds that arise from inflation or regulations. It's just that our hyper-focused, everyday low price and everyday low cost model is ensures we are not only not disadvantaged from the changes, but that the vicious cycle experienced by some retailers results in a virtuous cycle for Murphy if the changes ultimately result in higher unit costs being passed through at the gas pump. Looking ahead, with steady momentum from the January through March months, we expect to capitalize on key promotional opportunities around our primary traffic drivers and fully expect to see results improving in the second half. To add a little color to the anticipated lift in merchandise performance, we expect to see continued strength in tobacco, center of store improvement as new pricing and promotional initiatives take hold. As it is still very early in the year, and given all the initiatives underway and their expected second half impact, we remain confident in delivering merchandise results within our guided range, albeit probably something closer to the lower end of the range, as we are unlikely to be able to claw back some of the first quarter headwinds versus our plan. Nevertheless, the run rate impact on next year's merchandise results remains significant and reflects the hard work and highly impactful digital transformation initiatives underway, including a relaunch of the QuickCheck loyalty program, which is underway and should be rolled out in the fourth quarter. In summary, the entire team and I are really excited about all the activity we have going on to build upon the underlying strength of the business, and we look forward to updating you on our progress next quarter. And with that, I'll turn it over to Gallagher.

Hello, everyone, and good morning. Thanks for the introduction, Andrew. It's been an amazing experience for me so far here at Murphy. I'm extremely impressed by the team and the commitment to creating shareholder value through our advantage business model and focus strategy. I've spent my first few months learning our business and meeting our team members and customers, and I'm very much looking forward to getting to know our shareholders and invest in building these long-term relationships. I also wanted to thank Mindy for building such a solid foundation and strong team that I've come into here at Murphy. This morning, I'm going to switch up the content a bit versus prior calls. Most of the financial information typically discussed is already provided in our earnings release. So to avoid redundancy, going forward, I'm going to focus my comments on incremental elements of the business, adding clarity where it may be needed to better understand our financial and operational results, as well as our overall financial health and capital allocation strategy. First, I wanted to add some perspective on our new to industry store, our NTI program. which we have stated previously, remains a significant driver of EBITDA growth over time. As mentioned in the earnings release, we have opened three new stores, including one QuickCheck store during the quarter. We closed three QuickCheck stores that did not have a fuel offer and were not materially additive to our EBITDA. Since quarter end, we have opened one new Murphy Banner store, with two more scheduled to open in the next few weeks. Current construction activity is accelerating, with 22 raise and rebuilds underway, as well as nine new to industry stores, including three new QuickCheck branded stores. Expected new construction starts in May and June, but is on track to deliver the 30 to 35 new stores this year, which is in line with our guidance, and a projected increase versus the 28 new stores that were open last year. The new store pipeline is also in great shape, and right now stands at the highest level it has been since COVID, which means we're getting line of sight to a more robust 2025 opening pace. I'll update you more on our progress for new store openings later in the year. From a capital spending perspective, we spent $82 million in the first quarter, with $61 million of that for new store growth and the rest going to maintenance capital and the digital transformation initiatives that we have discussed in prior quarters. These initiatives are on track, and we expect to stay within our guided range of $400 to $450 million of spending for the full year 2024. I'd also like to talk a bit about our share repurchase activity. Per the release, we repurchased 216,000 shares in the quarter and remain committed to our goal of buying back around 1 million shares annually. We intend to continue our repurchase activity utilizing cash on hand and other available means of liquidity, particularly if we feel the market price of our stock does not accurately reflect our ability to grow and improve the business. We maintain a high level of confidence in our ability to execute against our multi-year plans, and we think this is a great opportunity to be buyers of our stock. We continue to operate under the Board authorization to repurchase up to $1.5 billion of our stock, which extends through 2028. With that, I will turn the call back over to Andrew.

Thank you, Gallagher. Let me close with some comments on the preliminary April fuel performance, where prices have trended higher throughout most of the month. Nevertheless, APSM fuel volumes approximated just over 100% of prior year levels. and retail margins look to be roughly three pennies above Q1 results, or about 24.5 cents per gallon. The continued run-up in price sets us up nicely for an eventual fall-off in prices during the higher-volume summer months, which is a win, not an if event. To that point, we have seen a recent drop in prices over the past week, and we are currently sitting on retail margins in the low-to-mid 30-cent range. I'll now turn the call back to the operator and we'll open up the call to questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your please pick up your handset and ensure that your phone is not a mute when asking your question. Again, press star one to join the queue. And your first question comes from the line of Anthony Bonadio with Wells Fargo. Please go ahead.

Yeah, hey, good morning, guys. So I realize you're not explicitly updating guidance this quarter, but I guess at a higher level, just how are you thinking about your confidence level in that $1 to $1.2 billion EBITDA range that you gave just in the context of what we saw this quarter and what we're seeing from the consumer.

Yeah, good question, Anthony. Look, we don't historically update at this quarter, but if you kind of read through the script, I think we pretty much updated you on everything. You know, PS&W plus RENV was in line with our, you know, Q1 plan. OPEX is in line with our Q1 plan. Volumes are right on track and continue to be as we go into April. merchandise, you know, we talked about the Q1 headwinds, but still believe that's going to be in the guided range, maybe on the lower end. And as Geller noted, our CapEx and store growth is there. So the only thing we don't guide on is retail margins. And, you know, we discussed the retail margins and the setup in Q1 at 22 cents versus a little bit higher in Q1 last year. we've got a lot of quarters to go and there's nothing better than a big run up in prices because you know you're going to have a more positive opposite effect when prices fall. So I think we actually provided insight on all of those elements. And I think the thing we have to remind folks is we give annual guidance. We don't give quarterly guidance. We have an annual plan that aligns with that guidance and we do break that out monthly and quarterly. So when we say this is aligned with our plan, it translates into our view for the whole year. So I hope that's helpful.

Got it. Yep, that is helpful. And then just drilling in a little bit on the inside store guidance, can you just help us better understand your comment around results being weighted to the back half? I know comparisons are a factor, but maybe just a little more color on the cadence of some of the initiatives that you're working on and what's giving you confidence in that inflection to get to the contribution guidance.

Absolutely. There's promotional initiatives. There's the digital transformation initiatives, you know, that we have that, you know, as we move from pilot sites to rolling it out across the network, things that impact center of store, food and beverage, personalization, and the like. Our ISX remodels, you know, will start having an impact later in the year as well. So, You know, on top of resets and other things with the planograms that we have scheduled, you know, we feel strong about that cadence. And you're right. You know, if you look at the two-year comps, which are pretty incredible, you do get to some softer comps in Q3 and Q4, which allows for that higher year-over-year total number.

Thanks, guys.

Your next question comes from the line of Ben Bienvenu with Stevens. Please go ahead.

Thanks. Good morning. Andrew, you noted in your commentary that adverse weather during the quarter, it provided some benefits to tobacco, particularly kind of maybe pantry loading effects across your stores. There were some headwinds as well. To what degree did that impact your ability to realize margin during the quarter in what would otherwise be kind of a rising price market? And is there any kind of nuance associated with what we saw in the first quarter that we should be mindful of as we think about future quarters?

And when you say about realizing margin, are you talking about retail fuel margins?

I'd be interested in hearing you talk about retail and product supply and wholesale. From our perspective, the product supply and wholesale plus RINs in such a steeply rising price market, I would have thought there would have been a little bit better cent per gallon contribution there, even considering kind of the excess RIN sales you would have had a year ago. So maybe kind of dissecting what happened in both retail and product supply and wholesale would be helpful.

So look, on the retail side, certainly when you have that run-up in prices, it was a much steeper run-up than the year before. And you didn't have the fall-off that we had in mid-February, which is always a benefit from the retail side. So it ended up running up more steeply in an absolute level without the fall-off. And that's going to be the biggest driver there. If you have a nice fall-off in any period, it's just like we're seeing now in April. You go from $0.25 to $0.35 in a very quick period. On the PS&W side, there was a couple of factors there. We got the benefit from the accounting, trading, inventory timing variance that you would normally see it's just offset by two factors one is we had some tight supply markets uh last year we anticipated those we took advantage of those and that's when our supply chain really provides an advantage to us so that offsets some of that and then you know look as we talked about the ren market occasionally gets distorted when the epa updates rfs targets and that's what happened in late 2022 so we just carried over some ren's into q1 2023 which led to some of that outsized margin for that quarter. And, you know, for PS&W and RINS together, it was largely in line with our plan for the year.

And then just to add to that some other headwinds in the retail side of the business, we did have, because of the weather, some state of emergencies declared, which hampered our ability to pass through increases very quickly. And then, as you know, on the product supply and wholesale business, it's very complicated. There are multiple factors working in tandem that influence everything. And so, yes, given the lineup in the quarter, we may have had lower results than you would have expected. But things like we had a significant drop in RIN value during the quarter. They were essentially cut in half. And the magnitude of that drop ended up producing a bit of a lag in the spot to rack normalization. So the way to think about that is we were receiving less per ren immediately, but without that on-pour corresponding benefit in the product price. And additionally, we had refiners pricing really aggressively at the rack to clear their winter-grade gasoline. As you know, most of our barrels are proprietary. They're not rack. And so those factors contributed to the lower product supply results than you might have expected. But we do continue to believe our supply model provides an advantage that differentiates this. And in fact, as we look into this quarter, that spot to rack has normalized across the system. Rins are accurately priced in. And as Andrew already mentioned, retail is performing well for the quarter as well. So hopefully that kind of explains why the results may differ from what you would have modeled.

That's great. That's super helpful. Maybe shifting a little bit to inside the store, the tobacco trends that you've continue to deliver. What causes that dynamic to change? Recognizing there's some company-specific issues, there's strategic pricing and your pricing differentials relative to your competitors, and prices continue to rise, which I think probably highlights the value proposition you bring to the market. Is it simply getting to the end of initiatives and lull of large numbers that causes the growth and market share gains to slow? or something else because the performance has been noteworthy there.

Yeah, look, Ben, I think it's like any other commodity category, you know, where you've got everyday low price retailers and you've got those that, you know, price higher because, as you know, being somewhere stuck in the middle is the worst place to price commodity. As a retailer, you know, it's just similar to that vicious cycle. As you see more retailers taking price with the price increases on the margin, there's just one more customer that chooses low price over convenience. And given our unique positioning, the word of mouth, the additional value provided through the Murphy Drive Rewards Loyalty Program, and the value that we're creating, you know, across the supply chain, you know, I do feel like it's something that's, you know, sustainable. And, you know, there will be ups and downs, you know, with the comps. But I think we have an advantage here. And, you know, we remain very focused on the category and do it in a responsible way, but also giving that value to the customer.

Yep. Okay, great. Thanks. Best of luck.

Your next question comes from the line of Bonnie Herzog. Please go ahead. All right.

Thank you. Hi, everyone. I wanted to follow up on Anthony's question, but maybe ask a different way considering, you know, a key question we're hearing from investors is on your total fuel contribution in the quarter, which was quite a bit below your, you know, for modeling purposes only target of the 30 to 34 cents per gallon. So I guess I wanted to understand if that range maybe is, I don't know, no longer seems achievable, and if it's more likely you'll be below, and therefore, you know, will you see your adjusted EBITDA below the $1 to $1.2 billion range? Or, Andrew, you know, are there other levers that we should just really be thinking about, you know, for you to have So to pull essentially to drive EBITDA growth. Thank you.

Bonnie, as I stated before, PS&W plus RENs was the biggest driver in the year-over-year variance. And PS&W plus RENs is aligned with our plan. And so there's nothing that changes our view of our plan for the year and the range. Q1 was a little bit lighter on the retail side. than the prior year. And Mindy talked about the factors there that contributed to that. We didn't have the fall off mid-February. Guess what? We're starting to see it now. And I can't remember exactly what happened on May 1st a year ago, but we're going to have rising prices and falling prices. And when they happen, not if they happen, is something that we don't have a crystal ball and project. You know, I think the Q1 number, you know, is fully aligned with our plan, and we've articulated why it varies from a year ago, and we don't provide quarterly guidance. And so, you know, that's, you know, probably the best way to sum it up.

I completely appreciate that. And if you can imagine on our side, too, to try and predict this, it's incredibly challenging. honestly, to hear that Q1 came in sort of as expected. So we'll see how the rest of the year plays out just in terms of volatility. But maybe my second question to switch gears is just on your merch contribution. I guess you had modest merch contribution growth in the quarter of 2.4%. But thinking about this in the context of the midpoint of your guidance, because you do guide that, I think, for the year at that 8%. So it does imply

know pretty significant acceleration the rest of the year so just if you could provide a little bit more color on the drivers of this and you know maybe you're confident that that is still achievable that would be helpful thanks again oh you're welcome um as i said look the two-year comps of sales and margin growth on non-tobacco of 12 and 17 and a half uh percent uh you know really you know reflect this the strength of you know 23 over 22 and continuing and holding that. So part of the 8% is just the math, right? We're not going to have the same 23 over 22 comp to go up against. But we don't run our business based on the comps. We run a business based on the initiatives. And so as articulated for Anthony, there's promotional activities, there's resets, there's new offers that we're rolling out, there's ISX remodels, there's our digital transformation, pricing, personalization, and other offers as well. Some of the things are even further back in loaded like quick check, loyalty, relaunch, etc. But there's a whole suite of initiatives that we've invested in that are going to have significant returns on the invested SG&A and capital that we're putting into those.

Okay, thank you.

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

Good morning, everybody. Thanks for taking the questions. I guess first question for me is on inside the store business. And I know there's a lot of moving parts for the quarter. Can you talk about in some of the regions, if you saw anything materially different that weren't impacted by the weather that you called out? Just trying to really kind of gather on what is going on on the center store and how big of a deal was the weather versus maybe the consumer just being actually a little weaker today than it was six months ago across just areas of this country?

Bobby, it's a great question. We look at that really, really hard and, you know, we try to correlate, you know, things to the weather. In fact, our demand forecasting tool that does our production planning and labor scheduling that we've rolled out a quick check absolutely factors in the wetting of the weather. Look, when we have a foot of snow on the ground in New Jersey for a few days, you can expect sales to be down 30 plus percent. I mean, it's just absolutely horrible for our business and everyone else's business. If you look at the daily sales report for the last four or five days, we've had great weather. Sales are up 6% year over year, week over week, right? Strong fuel volumes, et cetera. So it's been difficult for us to identify anything that is statistically significant beyond the weather factor. We do know that you've seen lower food inflation from take-home groceries than eating away from home, but at the same time, I believe you continue to see trading down from QSRs to convenience stores. The one thing we have noted is that for not our full-size subs, but our six-inch subs, some trade down, you know, from six-inch subs to some of the snacking categories as people are just trying to stretch their dollar a little bit. You know, one of the other things we've looked at is with lower absolute prices, you know, we're not seeing 100% of that windfall being spent in the store, but if you look at where uh you know other consumer headwinds are people are spending eight percent more on car maintenance they're spending 22 percent more on car insurance and so i do think the you know average consumer is looking for ways to save money uh fortunately we are one of those ways for them to save money and on 12-inch subs and uh you know tobacco products and and fuel you know we're definitely a winner so we saw a little bit of the trade down in a few of the categories, but largely we would attribute big sales gaps on a day-over-day, week-over-week, year-over-year basis to severe weather events. And look, we hate blaming anything on the weather, and so we've been real happy this last week when sales have rebounded the other way. And I think that gives us confidence also that the value pricing position we've put ourselves in where we consciously made the decision to not take price early has really positioned us well in the eyes of the consumer. And you see a lot of QSRs now making a sharp pivot to value because their coffee prices just got way too high per cup and their food prices got way too high. And I think we're just in a better position not having to make that sharp pivot, but just committing to everyday low price.

Okay. That's helpful. And then, Andrew, I think in your comments, you mentioned some pricing initiatives, I think, rolling on the back half of the year as one of the building blocks to help kind of drive to a faster merchandise gross profit contribution. What exactly are those pricing initiatives? Because it seems like you guys are holding your price, you know, tough for some of your QSR peers. So is it just going to more regional pricing on a local basis, you know, region by region? And what exactly is going to be changing on pricing that's going to be favorable for the business?

Yeah, so we have really developed enhanced capabilities on fuel pricing and tobacco pricing. What we've done less on from a capability standpoint is the broader center of store pricing. And so some of the analytical work we've done basically involves segmenting stores, understanding the price elasticity by different segments of stores, and honestly just seeing where you can take price. And we've left money on the table. Alternatively, where we could actually give some additional price and pick up some volume. There's some other specific categories like candy, for example, that with super inflated cocoa prices, consumers are seeing a pinch. And so as we think about the elasticity of some of those products, where can we take some pricing and promotional activity to the next level? And on a contribution margin dollar basis, come out ahead. So a lot of those activities, Bobby, relate to center of the store, but just build on kind of the know-how and analytical prowess that we have in fuel and tobacco.

Okay. I appreciate the details. Best of luck here in the second quarter. Thanks, Bobby.

Your next question comes from the line of Kylie Cole with Jefferies. Please go ahead.

Hey, good morning. This is Kylie Cole. You're on for Corey Tarlow. Nice to chat with some of you again, and thank you for taking my question. Kind of starting at a higher level, there seems to be a lot of consolidation in this space, especially with the small multi-unit chains. So let's say like one to, or I'm sorry, like two to 100 units, as opposed to like, you know, these one-off guys. Has that significantly changed the overall operating environment? And if so, like how are you responding?

So, first of all, I don't think it's going to change, you know, the environment. We've seen consolidation in this industry at a steady pace since, you know, the late 90s when some of the majors, you know, merged and then they divested their company-owned chains, and we've just seen, you know, a steady state of consolidation. You know, the challenge with the majority of these stores being consolidated is they're old. They have old underground tanks. They often... In rare cases like QuickCheck, they have exceptional brands that you can leverage. Many of the ones being consolidated have undifferentiated brands. If a franchise-focused consolidator picks them up and applies their brand to them, it helps and certainly gets some value to that operator, but you know, for the most part, it's not changing the fundamental positioning of those stores. Are they going to become high-volume, everyday, low-priced retailers that compete with us? Or are they going to main, you know, lower-volume, convenience-oriented, top-of-the-market-priced retailers? And, you know, we really just don't see that changing. I think you can look at the economics of some of the, you know, bigger public consolidators and you know, on a same store basis, you know, you're not seeing sort of material changes there that indicate, you know, it's changing the fundamental industry dynamics.

Gotcha. No, that's super helpful, Culler. And then a quick one for Gallagher. I know it's still early days, but I was wondering what has surprised you most about the C-store industry or Musa specifically since joining?

Really good question, so thank you for that. And I just hit my two months here with the company, so a lot of good surprises. I think one surprise, or most of my background is retail, is the volatility that you see in the fuel. And we are executing a strategy that we are very confident in. And just like we saw in Q1, we execute the strategy, but the dynamics in the industry, the volatility of fuel prices can impact our results. That's something that we are managing, but we're very confident that over any horizon, we'll continue to deliver the strong results that everyone's accustomed to. So that's a learning for me as I get into this business. But I think we're extremely confident in our initiatives. We love our strategy. Our customers are responding. And we're continuing to deliver some really good results.

Awesome. Great. Super helpful, Collin.

That concludes our Q&A session. I will now turn the conference back over to Andrew Clive, CEO, for closing remarks.

Great. Well, thank you, everyone, for joining in. As always, direct any follow-ups to Christian and Ash, and we'll look forward to updating you in the very near term. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.