Murphy USA Inc.

Thank you for standing by. My name is Freda and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA first quarter 2026 earnings Q&A call. All lines have been placed on mute to prevent any background noise. 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 one again. Thank you. I would now like to turn the call over to Christian Pikul. Please go ahead.

Hey, thank you, Freda. Welcome, everybody. Thanks for joining us this morning for this Q&A session. With me are Mindy West, President and Chief Executive Officer, and Donnie Smith, Chief Financial Officer. As Freda said, we're happy to welcome more analysts to the research community covering MurphyUSA. We're going to ask that you limit your initial questions to one and then get back in the queue afterwards. Please keep in mind that some of the comments discussed in today's Q&A session may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Please refer to the forward-looking statement section of either the earnings release or the management commentary document. for further details. And with that, I'm happy to open up the call.

Thank you. Please limit yourself to one question. You may re-enter the queue for any follow-ups. As a reminder, if you would like to ask a question, please press star 1 on your keypad. Please stand by while we compile the Q&A roster. Our first question from Irene Nettel, RBC Capital Markets. Your line is now open. Please go ahead.

Thanks, and good morning, everyone. I was just wanting some more color on the updated 2026 outlook, notably around two elements. The first being the fuel margin guidance, and the second being sort of the, relatively speaking, the slightly sort of the low-end guidance on merch. And so I was looking for more color on confidence and drivers of both of those. Please.

Good morning, Irene. Welcome to the call. Thank you for your question. When thinking about retail margins for the rest of the year, it's very difficult to predict where we're going to land because we're in the middle of a lot of heightened volatility with a crisis that continues to ebb and flow and don't know where that will end. While we can't predict the macro environment, we are seeing a higher floor for retail margins, so competitors are remaining rational. Pricing is reflective of those needs of the marginal retailer to maintain their required returns. So still reflecting that virtuous cycle that we've seen. What we haven't seen so far is a pronounced decline in price, which would gather incremental volumes for us as well as expand the retail margin. So at this point, we are not baking that into the forecast at all. So you could call our margin forecast somewhat conservative. I would agree with that. But I would also say that that's intentional on our part because we don't know what it's going to be. And we manage our business to try to outperform our commitments. So what we are saying is reflective of what we have high confidence that we can deliver at this point. With regard to the merch, you know, obviously our consumer is experiencing some budget pressures, which are putting some pressures on the non-discretionary pieces of our merch business. Although we have been very pleased with how resilient the customer has been year to date. But I will tell you that target when we originally set it at the beginning of the year was a bit of a stretch target anyway. You know, it was going to be very hard to get to the high end range of that target. and in the face of all the weather impact that we had in the first quarter, excuse me, while we had the winter storms and at one point had half our network closed, that results in just a loss of demand there for those time periods along with what we think are still gonna be some pressures on our customers' wallets as we go through the rest of the year. That gives us confidence that yes, we will be in the range, but towards the low end of the range.

Thank you, that's really helpful. Can I ask a follow-up question?

We're just going to move on, Irene. Please get back in the queue.

Okay, will do. Thank you.

Thank you, Irene. Your next question from the line of Puran Sharma with Stevens Inc. Your line is now open.

Good morning. Thanks for the question and congrats on posting the strong results. I wanted to get your sense on supply normalization. If current peace talks ultimately result in a durable resolution, how quickly do you think physical supplies could take to normalize, given depleted inventories, the need to rebuilt strategic reserves, disrupted shipping flows, potentially shuttered upstream and downstream assets. How long should investors expect supply tightness and volatility to persist even after the geopolitical situation improves?

A very good question, Parham. Wish that I had the answer to that because all the things that you mention are great uncertainties in the market and very unlike what we saw in 2022. where COVID did produce a demand shock and then the rest of Ukraine created a lot of volatility, but really had no impact on domestic supply at all. When you look at the current conflict, it obviously as a supply shock is having a material impact on domestic inventories and flows essentially globally. So our belief is a return to normal. is not likely at all in the near term. And then yet to be seen is how much damage to infrastructure is there overseas? How long does that take to recover? And then you mentioned if this conflict resolves, I don't know that we have any line of sight to think that it's going to resolve quickly. And so that in and of itself may take a prolonged period. So I think we're looking at well into next year before this thing even begins to unwind.

Thank you for the call.

Thanks.

Your next question from the line of Bonnie Herzog with Goldman Sachs. Thank you.

Good morning, everyone. Okay, thank you. Hi, good morning. I had a question on NTIs. You mentioned in the press release that you expect your NTI delivery to come in closer to the 45 new stores as opposed to, I guess, the upper end of guidance. So I was hoping to hear what changed. You know, is construction taking longer this year and or did your original guidance maybe imply some M&A that now isn't happening? And then you also mentioned that you're pulling forward construction of new stores scheduled to open in 27. So should we assume a faster ramp of NTIs next year? And ultimately, I guess, Mindy, how does this change the pace of growth and profitability? Since I think you You said in the past it takes a few years to reach run rate profitability on new stores. Thank you.

Thanks, Bonnie. And yes, this year we are going to be at the lower end of our stated range, but that is without the tuck-in acquisitions that we said would take us to the high end of the range. Those may come up. We don't know. But we are only commenting now as to what we have in the pipeline, in the organic pipeline currently as we continue to invest heavily in our team and in our new store pipeline. So we think we are well positioned to grow at this rate and above per year going forward. Pulling some stores forward earlier in the year, that will certainly be helpful to get them to ramp starting sooner. But it does take, as a reminder, about three years for a store to get to full ramp. So it's not an indication that our activity is taking longer or we're doing less. It's just indicative of what we felt we could deliver from an organic standpoint and absent any tuck-in acquisitions. And the ramp we think is going to go as expected. And as for M&A, large-scale M&A, that's certainly not something that's on the radar for us and does not need to be given the health of our organic pipeline. All right, thank you. I'll pass it on. Thanks, Monique. Thanks, Monique.

Your next question from the line of Ed Kelly with Wells Fargo. Your line is now open. Please go ahead.

Hey, good morning. This is John Park. I'm for Ed. Thanks for taking my question. I guess, can you talk about some of the puts and takes for nicotine margin dynamics in Q2 and just kind of the outlook for Q3, just given the ZIN lab here?

Yeah, the ZynLab is going to be a big one. We do believe that nicotine is going to continue to be a tailwind for us in the second half. And excitingly, we're actually seeing strength in combustibles, especially with the new value price cowboy cut cigarette that did really well. It was well received by our customers. We actually had a hard time keeping that product on the shelf. And as we look forward, we think that that's going to continue to be a source of strength. We also see some emerging other tobacco product opportunities in the second half. Some new gen pouches are going to come online. We expect some flavored baked products back in the market. But again, as you reminded us, we do have a tough third quarter comp as we lap that Zim promotion. Our margins this quarter were reflective of growth in the pouch category of other tobacco products, but continued resurgence in that cigarette category, which again, as a reminder, carries a lower margin and those other tobacco products. So Q3 is gonna be a tough comp, but we think overall the category is gonna continue to be promotion heavy and we'll be a major participant in that.

Great, thank you.

Thank you.

Your next question with JP Morgan. Your line is now open, please go ahead.

Good morning and thanks for the question. I wanted to ask on what you're seeing with rewards. Last quarter, you discussed elevated signups in the program when fuel prices moved higher. How has the conversion of those signups been in terms of driving more consistent customer visits by those new members and then also converting those customers from the pump into the inside of the store? Thanks.

Yeah, that is a great question. As we said last quarter, our signups had elevated to 600,000 a month, up from around 400,000 a month. Happy to report that during the second quarter, signups were even over that 600,000 mark every month during the quarter. Also, what we said was in the first quarter, what we were seeing was 40% of those new signees were either new or lapsed customers. That number is also ticked up in the second quarter to approaching 46% is new or lapsed customers. And so we love the MDR platform. It's making it easier for us to communicate with our customers, to encourage full membership, which we know translates into durable and loyal behavior. So we're taking those new members on an automated journey with a series of offers to increase their engagement, building mechanisms that are very personal, to the customers as they onboard, engage, and we retain them. You mentioned driving business inside the store. Just to give you a specific example, one of the ways that we are encouraging pump-to-store conversion is we were offering spend $5 inside the store, save 5 cents on gas as part of that new customer journey. What we're seeing is that has been very successful. We're also encouraged that those new members are engaging more with the program more often, and we know that they're going to be able to exhibit those loyal behaviors even sooner. So we're thrilled with what we're seeing with the higher signups. That's obviously expanding the top of the loyalty funnel, and we are enhancing our ability to create positive customer relationships that we know is going to help drive for future growth. And we are continuing to refine the platform, by the way, continuing to upgrade it, make it better for our customer. So thanks for the question.

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

Hey, Mindy and team. Thanks for taking the time. Hi, Bobby. Appreciate all the detail and the volumes given in your script. And I think it's interesting, you're getting more and more states flipping the positive volume with really two kind of as the drag, big ones, Colorado and Florida. So when you look at the numbers you gave us in that prepared remarks, where do you think you are on that competitive curve? I know that's almost impossible probably to answer, but is that drag getting better or worse sequentially from those two states? Is there any gleanings from other states that kind of tell you you're getting towards the bottom of that competitive drag and we might be starting to lap it?

I would hate to call the bottom because I might be surprised with new competitive intensity in other areas. I like that you mentioned Colorado because that does represent, you know, at least some hope while volumes are down. Our total volume is down much less than that as we are continuing to open new stores and grab share as well and margins just like last quarter showed improvement actually up over 20% just like they were in the first quarter. So competitive entry even there does remain high, but we're seeing improvement to margins as volumes are redistributing across the new stores. We've seen some of that in Florida, too, where volume continues to be down, but margins are actually healthier, so that may indicate kind of a turn in things. And in Texas, as we referenced, which is a large market for us, our volumes are up as that represents a more mature, steady market where we've had a lot of competitive entry, but that entry has normalized and everybody now has their share and knows their place and how to play the game. Not ready to call the thing and say it's over because I think we're still going to have competitive pressures, whether it be in Colorado, Florida, or some new location. But the recipe continues to endure over time where it's painful in the beginning when those competitors come in, same as it is when we come in because everybody's competing for that share and we're going to fight to retain our share of that too, which results in lower margins for us as those volumes get redistributed. But over the course of time, as the competitive entry happens and volume gets reallocated, things get to a new normal with margins actually stabilizing at a higher level than they were before the competitive entry. So hopefully you're right, but I do appreciate your question. But we are seeing some green shoots at least to be able to talk about.

Your next question from the line of Jacob Iken Phillips with Mellius Research. Your line is now open. Please go ahead.

Hey, good morning. Congrats on the strong results. Bonnie kind of touched on the NTI cadence, but I wanted to reconcile it with the capital spending. So like NTI is down 45 and R&R is approximately 10, but you moved CapEx up. So Can you quantify what that additional capex is going to, like land, construction pool forward, et cetera, and how much of it is timing versus others? And then just as a corollary, how should we think about share buybacks in that context?

Okay, so great dual questions. Yes, CapEx is trending to the high end of the range as we want to make sure that we deliver on our NTI program and we will pull forward stores if we need to, so that's part of the estimate in case we're able to do that. We're also making some very proactive lifecycle investments in our existing stores, so proactively replacing dispensers, HVAC units, safes, things like that, rather than fixing a dispenser four times. We're going ahead at a dispenser that we know is nearing the end of life and going ahead and replacing those. So we are deliberately refunneling some of our CapEx to those activities. And we're also intent on ensuring that we have future growth by investing in our land bank. So that is a clear priority for us going forward too, which again is taking us towards the high end of the range, even absent the raise and rebuild activities. When we think about capital allocation and in particular share repurchase, we are definitely going to lean into share repurchase as our capital allocation strategy has not changed. We're going to deliver capital for growth and we have a slate of opportunities to do that. But share repurchase does remain one of our main levers and we will continue to emphasize that as well. And the good news is this is a business that throws off enough cash flow for us to be balanced at that. over the sweep of time, and we can easily afford to continue to grow and accelerate growth with new to industry sites while at the same time maintaining disciplined share repurchases.

Your next question from the line of Brad Thomas with KeyBank Capital Markets. Your line is now open. Please go ahead.

Good morning. Thanks for taking the question, and congrats on the quarter here. I had a couple of things I wanted to ask about the same store fuel volumes, Mindy. So hate to make this a multi-parter, but I'm wondering if you'd give us a little color on, for one, sort of how that trended through the quarter and has been tracking as we've gotten into August, how you think about retaining these incremental customers that you're bringing in if you are seeing incremental customers as a part of that higher volume? and then maybe what efforts might be new to retain those customers that perhaps didn't exist in the past when you sometimes saw benefit from these spikes in gas that led to incremental customers for you.

Thanks. Okay. That's a very clever way of turning one question into three. So, I hope I remember all that you wanted me to cover here, but I think your first question was to talk about same store volumes look we view what we did in the second quarter volume performance of a positive 0.5 percent is very encouraging especially given the pricing environment because while our bob prices finished the quarter down two percent the quarter itself was characterized by a lot of extreme offsetting movements so we saw a run up in April down in May versus a flat June and we know that Absolute price level matters. We saw stores above $4, though, only 18% of the time during the quarter, which we call that on our script. But also price direction matters just as much as the absolute price level, if not more, because, as you know, in a rising environment, competitors move higher in response. That compresses spreads across the market, limits our ability to create that important separation. We saw that in April volume for same store, whereas we were essentially flattish to slightly down with that upward increase in prices. Then, you know, when prices fall, competitors are going to react at different speeds. That gives us the opportunity to create separation and drive incremental volume. That's exactly what we saw in May. Our above declined 16%. Our same store volume increased 1.6. which was even more pronounced during the last half of May. RBOB fell actually 18%, same sort of volume. It ticked up over 2% versus prior year. When we look at July, again, July itself started a bit soft with 4th of July holiday impacted by rain throughout a lot of our network, but the run-up in price that you saw during the month impacted our ability to differentiate based on price analogous to two out of the three months that we saw in the second quarter. But as we look into August, which granted we only have five days of results, volume is actually up 1.5% as the market has dropped some. So key point here is I think volume is performing exactly as we would expect. And we opened today, by the way, also in the high 30s, so the margin isn't bad either. I think May demonstrated and so far August has as well our ability to capture volume when falling wholesale allows us to differentiate on price and meaningfully drive it. And then when we think about our capabilities versus prior year, I go back again to the MDR that we just talked about. We just have an increased ability to be able to communicate with our customer. know our customer, understand the frequency of the trips, where we may be leaking a trip or two with that customer, and be able to drive more targeted promotions to that customer to drive that incremental behavior that we want to see. So I think we're in much better shape now that we've got these new customers here. And yes, we do have evidence that customers are trading down to a Murphy platform. We now have the greater ability to keep them and make them more sticky to us than what we have ever had in the past. So hopefully that answered all that you wanted me to.

The queue is open for additional questions and follow-ups. If you would like to ask a question, please press star 1 on your keypad to ask a question. To withdraw your question, press star 1 again. Our next question is from Corey Tarlow with Jefferies. Your line is now open. Please go ahead.

Great. Thanks. Mindy, I have one question and then just a quick follow-up to the question that was just asked, if that's okay. First, I think you said August, I just wanted to clarify, was in the high 30s. But our Bob, I think, started to gap down pretty materially with the start of August. So I'm wondering what changed versus the second quarter. And then also, as my broader question, During periods of prior volatility, fuel supply does tend to be a pretty meaningful earnings benefit and it would just be helpful to kind of get your perspective on what you saw in the quarter and then any commentary on how we might be able to think about that versus what you've seen quarter to date. Thanks so much.

Thanks, Corey. And yes, your question about August, yes, you're correct. Opening today with margins in the high 30s, which is actually higher than what it was when we began the month, because remember, margins are a function not just of the direction of prices, but reflective of what is the competition doing and how is the market restoring and how quickly is that happening, which can vary from week to week or month to month and also dependent on when that price increase or decrease happens. because if it happens close to a weekend, people are already positioned where they're going to be. So you really don't see any incremental new behavior until you begin the next week. So that just gives you an example of what August is doing. But I do think it's important that as we're seeing this fall off in price, we are getting that separation and our volumes are ticking up just exactly as we would expect given those conditions. And asking about fuel supply, yeah, we do know that we're advantaged in this environment. Again, this is a crisis that actually has impacted supply of movement and availability. So what we're seeing is this is exactly the type of environment that underlines why we value the assets and capabilities that we have. because our ability to acquire at the ship channel direct from refineries, ship it up the pipe, hold it either in our terminals or in the 100 terminals where we have access from third parties is something that gets magnified during periods like this versus a time period when you think about last year when product was It was everywhere. You could buy at the rack and not be really that much disadvantaged versus us having these assets. So I think what you saw in the second quarter was identifies that because what we call the controllables piece of the business, which is our ability to acquire a product and do all these various mechanisms, what it would be versus buying at the rack was advantaged. during this quarter versus what you saw same time last year where product was long and loose. We were returning from the controllables part of our business only about two and a half cents versus the over seven cents that we posted this quarter. And then uncontrollables, as we went into great detail to explain during the last quarter, that's going to be a function of is the market rising or falling. But it's that controllables piece that really tells you A lot about what's going on in the fuel supply market and whether product is plentiful or scarce. And when product is scarce, again, that really underlines why we value the assets and the capabilities that we have.

Your next question from the line of Irene Nuttall with RBC Capital Markets. Your line is now open.

Thanks, and thanks for the additional questions. So listening to everything that you're saying and taking into consideration that we're likely going to be in a tight supply environment into some point next year, recognizing we don't know when, and then recognizing it's early. But the $0.35 all-in margin that you're conservatively guiding to in the back half of the year I think is higher than what many of us would have expected. Should we be thinking about a similar kind of level next year as potential, as a floor? How should we be thinking about that?

Yeah, great question. Irene, thank you for your patience getting back in the queue when you could have asked a multiple part question from the beginning. So thank you for getting back in line. I think what we're seeing is we're getting good margins absent a sustained price fall off. and what we're seeing is margins are stabilizing at higher levels when they find where the bottom is, more so than what we've seen previously. So I think us saying that 35 cents is doable for the back half of the year, it's because we're seeing that we have a very stable margin structure. Restoration activity has been very rational. So while we may see margins fall more quickly from the peaks, They are stabilizing at much higher levels, so that's raising the floor. So when we think about peak to peak, you know, we've seen higher margins before. We saw them in 2022. And then we're seeing them higher than what they were in 2022. And then when we think about last year, I know a lot of people think that over time results are going to conform to the mean. returned to normal. I would remind everyone that 2025 was not normal. It was an abnormal year, just the opposite that this one is, but there was nothing normal about it. It just was abnormal in the opposite direction. But I think that the fuel margin story continues to be those marginal retailers whose costs are increasing, who are passing that on through the form of higher margin. That's why we're seeing the floor continue to rise every year, giving us at least some confidence that through the back half of this year that 35 cents is achievable. And if you ask me could we outperform that and where would we do it, it would probably be on the fuel margin side and maybe even the volume side if we saw a pronounced price fall off during that time.

That's very helpful. And do you think, Mindy, that it's sustainable as we look ahead to 2026, 2027? Do you think that this is another sustainable leveling up?

That's a great question. I think we're just continuing to see that virtuous cycle that we've talked to about breakeven equilibrium continuing to move higher. I think, yes, we will continue to see that happen. We don't see any evidence while that would not happen. Obviously, we're not ready to come out with next year's guidance. We're going to have a lot of factors that we need to work in, but I think the support we're seeing in retail margins is incrementally positive to our long-term view of the business, all else being equal. Can't predict the macro, but I can also speak to the health of our business. We're executing well, and we're seeing the margin even without that price fall off, so I think that is significant.

That's really helpful. Thank you.

Thank you, Irene.

Your next question from the line of Daniel Guglielmo from Capital One Securities. Your line is now open. Please go ahead.

Hi, everyone. Thank you for taking my question. On the organic growth, have there been any noticeable changes in construction costs that you've seen at NTIs or raise and rebuilds this year?

I mean, not on that order of magnitude, not huge. I mean, inflation continues to tick out, but that's been the case over the last several years. But that has been more than over, more than compensated for by what we just talked about, what's going on with the retail fuel margins. So the returns that we're generating versus what you would have seen us have five years ago, while the stores are costing more, they're actually higher returning just due to this fuel margin impact that we're talking about. So, yes, they're trending higher, but certainly, you know, not at an alarming pace and certainly well within the boundaries of what we're seeing on the overall return profile with the field margin.

Great. Thank you. Appreciate it.

Thank you.

Your next question from the line of Brad Thomas with KeyBank Capital Markets. Your line is now open. Please go ahead.

Hi, Mindy. I'll try and make this an easy one here after my multi-parter earlier. Hi, Brad. Just hoping for an update on QuickCheck, its performance, and how you're thinking about their EBITDA in the second half. Thanks.

Yeah, great question, Brad. Thank you. What I would say is QC performance is stabilizing. We're seeing food and beverage sales and margin turning positive. and we're doing some deliberate things to cause that. We're growing the sandwich category. That's critical to improving performance. We're also seeing higher margins as we are intentionally focusing on the economics of those offers. We're seeing growth in bakery, employing some new recipe engineering for our buttered roll. We had a line extension. We now offer croissants. Hot and Iced Coffee results are improving. We've relaunched Free Coffee Friday. So we're seeing sales and units up while the broader market struggles. And then we're continuing to evolve. I mentioned that some first quarter evolved QC into a sales first culture similar to Murphy. And we're seeing stronger promotional response as a result of that. during the second quarter QC had a fantastic candy contest. They executed a BOGO and it was truly Murphy-like performance. So super proud of them for that. And our leadership structure continues to make positive changes from both a culture and store performance perspective. So we're focused on improving the basics of the business, labor shrink, improving margins, simplifying the operating model, deliberate things that we're doing, Is it back to where we want it to be? No, but I think we're turning and headed in the right direction, focused on the right things with the right leadership in place. So I'm happy with what we're seeing so far.

Very helpful. Thanks so much.

Thank you. Your next question from the line of Corey Tarlow with Jeffries. Your line is now open. Please go ahead.

Great, thanks. Mindy, I had one more, and it was just as related to merchandise performance, specifically if you talk about Murphy's stores. I recall the performance, I believe, last quarter was a bit better than what you had seen versus the overall fleet, and QuickCheck was curious if you could highlight any trends there for us. Thanks so much.

Are you talking nicotine, non-nicotine?

It would be non-nicotine would be ideal.

Yeah, non-nicotine, you know, it's reflecting strength in our core center of the store categories, but being offset by pressures and things like lottery and beer, which are not unique to Murphy USA, by the way. So we managed to hold or gain share across all our major merchandise categories. And I think that is enormously important. We were able to also grow overall merchandise contribution dollars, deliver positive margin growth, all that within a customer environment that is under pressure and that customer is remaining selective. When you peel under the apple a little bit, we saw strength in packaged beverage anchored primarily in energy. Candy faced a tough comp and we are creatively finding ways to boost that category, finding success in chocolate and also non-chocolate promotions had a high two promotion in the second quarter that was hugely successful following a really successful Mamba promotion last year. Lotto lottery remains a challenge as consumers' wallets are pinched. They're not spending as much on that typical product. They also have other ways in which they can gamble online. Beer remains a challenge and major suppliers are saying that too. Consumer preferences are just moving. away from alcohol. That's an industry trend, not just for us. But overall, I think our results, you know, both at Moosa Center of Store and QuickCheck Center of Store are strong. And remember, nicotine is merchandise too, and we are continuing to take share and drive that category. And so I think our momentum in the second quarter demonstrated improved cigarette performance, exceptional pouch momentum, and reinforces our ability to continue to grow share and hold share across the entire store, not just nicotine. So I think it demonstrates the strength of our offer and the consistency of demand from that customer for whom price matters and we do identify with them as being low cost.

Great. Thank you so much and best of luck.

Thank you. Your next question from the line of Ed Kelly with Wells Fargo. Your line is now open. Please go ahead.

Hey, it's John Park on again. I guess, can you talk about the unchanged gallon guide? I mean, you clearly did better in the first half. I guess, anything that suggests you, would it be towards like the higher end of that range here in 2.8 or for the year?

I'm sorry, you cut out which guidance piece were you talking about when you say unchanged down?

The gallon guide of down one to down three. Okay. .

Oh, the retail margin. Yeah. And we've kind of already addressed cents per gallon or margin? Cents per gallon, I'm sorry, or volume?

Sorry. It was just the volume.

Okay. Volume, because again, we don't know what's going to happen in the second half of the year. If we continue to have upward swings in price, again, that's not conducive to us creating separation versus our competitors. What we are not baking in at all is any prolonged decrease in prices where we would have the ability to attract both volume and margin. So, again, you can call the results conservative, and that's fair, because if prices do fall for an extended period, we would expect our volume performance to outperform these assumptions. We would also likely think our margin performance would outperform these assumptions. We would rather guide to the conservative side and hit it or beat it versus disappoint. So happy with first half performance and we will see total volumes grow as we add new stores to the network in the fourth quarter. But again, just don't want to get ahead of ourselves and bank on super high volumes or even extended volumes from what we're seeing. Let's just have something that we feel credible about and know that we can deliver, and hopefully we're in a great position two calls from now to tell you about how we dramatically beat what we said that we would do here on August the 6th. Awesome.

Thank you.

Thank you.

We have reached the end of the Q&A session. I will now turn the call back to Mindy West for closing remarks.

Thank you guys for your time on the call. We do believe that our second quarter performance demonstrates the resilience of our model. Fuels highlighted the strength of our competitive advantages while merchandise contribution dollars grew despite category pressures. So those results reinforce our confidence in the business, our ability to continue creating value for our customers and our shareholders for the long term. And our go-forward guidance may seem conservative, but that is intentional. Thank you for your interest in MurphyUSA and thanks for joining our call. Look forward to talking to you next time.

This concludes today's call. Thank you for attending. You may now disconnect.