John Royall: Yeah. That’s helpful. Thank you, Andrew. And just wanted to go back to the fuel volume side, you have maintained a very healthy same-store comps on the fuel side and I think you noted when you are looking sort of midyear last year, you picked up some market share from people trading down to lower price players. In the 4Q comps would suggest and I think, Andrew, mentioned it in her comments that, you haven’t given that share back as steel prices have come back down. So maybe you can talk about those dynamics at holding on to that share and strengthen the fuel comp?
Andrew Clyde: Yeah. Look, I mean, one of the things that we pay very close attention to is our consumer and we are just blessed through Murphy Drive Reward to have great insights into them and we have talked about this panel of close to 100,000 consumers who have bought something from us every month since 2019. Their basket of goods that they buy at Murphy USA doesn’t cost as much as it did during the peak, which is good. And we are not seeing any significant changes in their behavior in terms of buying from us and as we noted that the fact that we are holding them steady and growing volume means we are bringing on new consumers. I think we have a target consumer that continues to be under pressure. They feel inflation more so than higher income consumers.
They feel the gap between the wages they earn and inflation more than the higher end consumer and these are the consumers that really don’t have a lot of alternatives for how they get to work, et cetera. So I think as we think about the economic outlook, we feel very confident that, we are going to be there from an affordability standpoint for both these current consumers, but continue to grow them like we did in January, even with the lower prices, because John, while prices are lower versus the peak, they are still significantly elevated from the low price environments we saw in 2015, 2016 and 2017. So I think you raised all those factors in, higher interest rates that are impacting rents and the like. This consumer is going to need us more than ever and I think there are going to be more consumers like that out there that we are going to be having the opportunity to serve with our affordable model.
John Royall: Thank you.
Operator: Your next question is from the line of Rob Dickerson with Jefferies. Your line is open.
Rob Dickerson: Great. Thanks so much. I just have kind of, I guess, a follow-up question just in terms of the competitive activity component and kind of how that might flow through into the CPG rate this year. I remember you had said this was maybe a year or so ago, right, where we had costs were materially inflating, is trying to feel like coming out of COVID, maybe at some of these other independent players on a national basis, we are increasing prices maybe at a kind of an accelerated rate maybe relative to history. Now you are seeing prices come down a little bit, but I guess some of the data that we see, it also looks like RAC has maybe gone up a little bit more quickly than some of the retail prices have gone up over the past month or so.
So I am just curious like if you think about the competitive dynamic right now kind of vis-Ã -vis a year ago, right, would you say maybe the market isn’t as quick to move those prices back up if wholesale goes back up, because everybody kind of wants to try to hold some share and the consumer obviously is not maybe in the best spot? Thanks.
Andrew Clyde: Yeah. Look, there’s always a lot of moving pieces. There’s also a lot of different markets and different actors out there. So it’s kind of hard to generalize. I would say one and we have talked about it from the very first question, the rate of cost inflation, the rate of the industry breakeven requirement for the marginal player it’s gone up significantly. The rate of increase probably isn’t going to go up at the same rate you wouldn’t expect it to. But all the pressures on that retailers are still there and so it continues to go up, but at a more normal pace. And we have lower prices, but the consumer health isn’t really that much better, at least the consumer that we serve. One of the things that you do see is versus, say, the peak prices is credit card fees are down and that’s largely a pass-through.
I would say that we have got some advantage there, because of the debit routing investments the team have made over the last three years where we saved several million dollars as a result of that and there’s more work that we are doing on that front that our scale affords us versus the other player, but that’s largely a pass-through. So if you say, well, margins are down a little bit, compare the year-over-year pricing and the credit card fee impact of that. There’s always some competitive promotional activity out there where someone may wake up and say, hey, I have lost some share. Let me try to go grab it. What I would say is, if I look at January, we are up 4% year-over-year margins all in from a contribution basis is higher and so while you might see that episodically, I think, you continue to see rational behavior across the Board.
Mindy West: And Rob, something else
Rob Dickerson: Okay.
Mindy West: I would add to Andrew’s comments, particularly with January from a retail pricing perspective, not only has the pricing environment been relentlessly upward with essentially the market’s been in restoration mode for five weeks, but it’s also similar to what we saw in May of 2022. So it’s also a function of when prices are rising during the week. So if you start with the last week of December and go through January, in those five weeks, three weeks of the five weeks had price jumps of double digits heading into the weekend and that essentially trolls your intended margining position and freezes a lower margin in place, sometimes multiple days until the following week when the market begins to restore and you can get back on the right track.
So we saw that same dynamic occur last May, leading many to worry that margins have peaked and structural pressures we are alleviating versus what it really was, which was just end-of-week price jumps. So our May margin, for example, on the retail side was below $0.20 a gallon that month, but it rebounded to above 30% in June. So as Andrew said, ironically, it’s Groundhog Day and we have seen this pattern before. So we are not really concerned with the January results or even the rest of the year as it’s really a logical function of the pricing and timing dynamic that’s just occurring right now.
Rob Dickerson: Okay. That’s extremely helpful. That’s kind of where I was headed. We summed it up. And then I guess just kind of for clarification and maybe my own thinking . I think you had said kind of so far in January, you are seeing kind of the all-in fuel margin do a little bit better than last year despite the retail coming down because PS&W and RINs kind of have a different relationship and maybe they go up some. So like maybe just simplistically, just kind of explain quickly kind of how PS&W and kind of RINs might be a little bit higher, which is obviously a separate piece and you just explained. That’s still helpful. Thank you. That’s it.
Mindy West: Yeah. So, the timing impact on PS&W in a rising price environment is typically positive. So we would expect any pressure that we are seeing on the margin side to be made up for within product supply. Also, RIN prices are elevated over what they were at least at the end of the fourth quarter. So we would expect on balance that our first quarter results, again, we are just looking at January, but we would expect those first quarter results to be comparable to what it was last year.
Rob Dickerson: Got it.
Mindy West: And certainly, January’s results should be comparable to what they were last year or a little higher.
Rob Dickerson: Perfect. Thank you, guys.
Andrew Clyde: And the retail-only margin is slightly higher than a year ago as well.
Rob Dickerson: Yeah. Yeah. Got it. Perfect. Thank you.
