Greetings. Welcome to ARKO's first quarter 2022 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Ross Parman, Vice President, Investor Relations. You may begin. Thank you. Good morning, and welcome to ARKO's first quarter fiscal year 2022 earnings conference call and webcast. On today's call are Arie Kotler, Chairman, President, and Chief Executive Officer, and Don Bassell, Chief Financial Officer. Our earnings press release, quarterly report that was filed with the SEC, and earnings presentation are available on ARKO's website at arkocorp.com. Before we begin, please note that all first quarter 2022 financial information is unaudited. During the course of this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words such as will, may, expect, plan, intend, could, estimate, project, and similar references to future periods. These statements speak only as of today and are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release, our quarterly report on Form 10-Q for the quarter ended March 31, 2022, and our other filings with the SEC, including our annual report on Form 10-K, for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note that on today's call, management will refer to non-GAAP financial measures, including same-store measures, EBITDA, and adjusted EBITDA. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for reconciliations of our non-GAAP measures to the most directly comparable GAAP measures. I would also like to note that we are conducting our call today from our respective remote locations. As such, there may be brief delays, crosstalk, or other minor technical issues during this call. We thank you in advance for your patience and understanding. Now, I would like to turn the call over to Arie. Thank you, Ross, and good morning, everyone. We are pleased to report strong results for the first quarter of 2022. On today's call, I will briefly review our financial highlights for the quarter ended March 31, 2022. I will also provide an update on our business and key trends. Don will review our financial results in more detail, and we will take your questions. Our first quarter adjusted EBITDA was $50.1 million. This is an increase of 18.4% versus the prior year period. We have achieved double-digit adjusted EBITDA growth in each of the 5 full quarters since we became publicly listed on NASDAQ. We are comparing these strong results to a better first quarter in 2021. Both quarters had their challenges, but they were much different from a consumer and business perspective. In the first quarter of 2021, COVID vaccines were rolling out, consumers had significant spending power, fuel prices were approximately $1 less. This year, rapid inflation and issues created by the tragic war in Ukraine led to completely different market conditions and a considerably different consumer environment than in the first quarter of 2021. We believe that we are well-positioned for an economic environment characterized by increased price sensitivity. For example, we are expanding our offering of lower-priced pizza, food, and fresh coffee. Even with much higher inflation and rising fuel prices in the first quarter of 2022, we had a very strong quarter. On a two-year stack basis, same-store merchandise sales, excluding cigarettes, increased 9.3%. We see a promising sales trajectory and velocity heading into the second quarter. Merchandise gross margin increased to 29.5% or 210 basis points compared to the prior year quarter. Same-store merchandise gross profit increased by $3.8 million compared to the prior year quarter. We strive to price our fuel competitively. Retail fuel gallons sold grew by 5.9% compared to the prior year quarter. Retail fuel margin increased to 37.5 cents per gallon from 32.1 cents per gallon in the prior year quarter. This resulted in an increase in same-store fuel gross profit of $9.7 million, excluding intercompany charges, compared to the prior year quarter. We remain committed to our organic growth initiative. We are enhancing our store base with these strategic long-term programs to ensure that our offering is competitive for both our loyal customers and attract new customers. In quick serve restaurants, we opened 2 Sbarro franchises in Q1. Bearing any supply chain difficulties with equipment, we are on track and expect to open a total of 50 Sbarro this year. We believe these partnerships add value to our stores and resonate with price-conscious consumers. In the first quarter, we installed bean-to-cup coffee at 75 stores. As of today, we have installed bean-to-cup in more than 270 stores. These stores are now in the coffee business 24/7. We remain on track to deliver on this initiative, and like we said in Q4, we plan to install machines in 525 stores in 2022. This quarter, we also completed 1 remodel, an E-Z Mart in Broken Bow, Oklahoma. As of today, we have completed 6 remodels in 2022, including 1 being completed this week. Turning to raze and rebuild. I want to walk you through early results from a recent raze and rebuild. Store 3894 is located on Interstate 77, close to the border of North and South Carolina. The following numbers reflect the first quarter of 2022 compared to the same period in 2021. Customer count increased by 50%. Gallons sold increased 112.7%. Same-store sales increased 66%. Importantly, same-store sales excluding cigarettes increased 94%. We are pleased with these results. We are continuing to assess raze and rebuild, remodels, and new-to-industry stores as part of our organic growth strategy. We continue to advance our loyalty program. We are pleased with key metrics of this program, which posted nearly 600,000 opt-in members as of the end of the first quarter. This represents a large base of loyalty members consumers with whom we can directly communicate and provide special offers. Two metrics I'd like to share show the value of our loyalty program. Enrolled customers have made 7 more trips per month, and these customers have spent about an additional $90 per month, more than non-enrolled customers. We consider this to be excellent numbers. We believe continuing investment in this program is essential. We remain on track to deliver our announced loyalty app this year. Moving to other business updates. We announced the Quarles Petroleum acquisition in late February. We expect the closing to occur late second quarter, early third quarter of 2022. Also, we'll then add the following operating segment in addition to GPMP. Our retail business, one of the largest convenience store operators in America, our national wholesale operation, and Quarles, the largest cardlock fuel operation on the East Coast of the United States. Importantly, day-to-day operations of each operating segment are overseen by highly skilled leadership with decades of diverse experience. This includes employees who are expert in convenience stores, fuel ops, multi-unit retailing, merchandising, fuel, environmental, human resources, and sales. We plan to continue to report results of each operating unit and GPMP separately. Our goal is to provide investors visibility into our finances and operations. We believe there are long-term growth opportunities in each operating segment. Our in-store initiative and merchandising strategy, combined with our scale at wholesale, are an advantage when pursuing these opportunities. Our priority continues to be deploying capital at attractive returns. We believe our program agreement with Oak Street Real Estate Capital is a unique competitive advantage. On April 13, we announced an amendment to our agreement with Oak Street, including a one-year extension to the agreement and a $1.15 billion real property commitment from Oak Street that then may be used during the extended term of the agreement. This is in addition to approximately $253 million, which has already been utilized under the original Oak Street agreement, and to the $130 million in real estate they have agreed to purchase in the Quarles acquisition. We have an aggressive growth strategy. Working with Oak Street is giving us significant deal-making flexibility and the ability to close deals at highly attractive multiples. As a result of our cash generation ability and our strong financial position, we have continued to return capital to our loyal stockholders. Our board of directors has declared our second quarterly dividend, and we continue our publicly announced share repurchase program up to an aggregate of $50 million. Our excellent results demonstrate our strength and capabilities. We continue to execute our differentiated strategy. We believe our liquidity, deal-making ability, and other strategic partnerships put us in a very good place as deal-making velocity increase in the market. Importantly, we believe that our scale and strategy allow us to succeed while remaining highly competitive, both on fuel and merchandise. We strive to put our customer first, particularly in uncertain times. I would like now to turn the call over to Don, who will walk you through our financial results. Thanks, Arie. I look forward to detailing our strong first quarter 2022 results. In an increasing interest rate environment, we believe we acted with foresight when we issued our senior unsecured notes at a competitive rate of 5.125%. As a reminder, this was a private offering of $450 million aggregate principal due in 2029. Our balance sheet remains strong. On March 31, total liquidity was approximately $744 million, consisting of cash, short-term investments of approximately $300 million and approximately $444 million of unused availability under our lines of credit. In total, we believe that we have many methods to continue our growth strategy. We believe we have flexibility to make acquisitions at an attractive ROI. We plan to continue to invest in our business, and we intend to continue to reward stockholders by returning capital as determined by our board of directors. Total revenue, excluding fuel, was $389.3 million, a 2% increase from the prior year period. Merchandise margin dollars increased by $9.7 million versus the prior year, while margin percent increased to 29.5% from 27.4%. Retail fuel profitability, excluding intercompany charges, for the quarter increased $17.3 million or 24%. We saw a strong year-over-year increase in fuel margin to 37.5 cents per gallon from 32.1 cents per gallon. Same-store fuel volumes decreased 3.1%. For the first quarter of 2022, wholesale fuel profitability, excluding intercompany charges, increased approximately $5.4 million compared to the prior year period. Fuel contribution from fuel supply locations increased by $3.3 million compared to the prior year period due to greater prompt pay discounts related to higher fuel costs and greater fuel rebates. Fuel margin cents per gallon for these locations increased to 7.0 cents per gallon versus 5.1 cents in the first quarter of 2021. Fuel contribution from consignment agent locations grew $2.1 million compared to the prior year period. Fuel margin cents per gallon was 29 cents, primarily due to greater prompt pay discounts related to higher fuel costs, greater fuel rebates and improved rack-to-retail margins. Although volumes sold through consignment locations aggregated 17% of the combined total, fuel margin dollars realized accounted for approximately 45% of the total fuel margin dollar contribution from wholesale. First quarter store operating expenses increased $21.6 million or 14.9% versus the prior year due to incremental expenses as a result of the acquisitions completed in 2021 and an increase in expenses at same-store stores, including higher personnel costs and credit card fees. General and administrative expenses increased $5.1 million or 19% for the quarter as compared to prior year, primarily due to annual wage increases and share-based compensation expense. Net interest and other financial expenses decreased by $12.6 million to $16 million in the quarter. This is primarily related to several factors. A reduction of $9.9 million for expenses related to fair value adjustments for our public warrants, private warrants and deferred shares. $4.5 million of additional interest expense recorded in the first quarter of 2021 related to the early redemption of the Series C bonds, which were partially offset by lower rate debt outstanding in 2021 and a net period-over-period decrease in foreign currency gains recorded of $1.1 million. Adjusted EBITDA was $50.1 million, an increase of $7.8 million or 18.4% compared to the first quarter of 2021. Our net income was $2.3 million, an improvement of almost 17 million dollars compared to a loss of $14.7 million in Q1 2021. Outstanding debt, excluding capital leases, was approximately $717 million, resulting in net debt of $417 million. For the quarter, net cash provided by operating activities was $30.1 million versus $11.3 million for the first quarter of 2021. Capital expenditures were $20.7 million for the quarter compared to $17.5 million in the prior year. On April 29th, our board of directors declared a quarterly dividend of $0.02 per share of common stock to be paid on June 15th, with a record date of May 31st, 2022. We continue our publicly announced share repurchase program for up to an aggregate of $50 million of our outstanding shares of common stock. During the three months ended March 31, 2022, the company repurchased approximately 1.4 million shares of common stock under the repurchase program for approximately $12 million at an average price per share of $8.49, which we believe represented an opportunistic use of capital. With our current cash flow and operating results, we expect to continue this program while investing appropriately in our business. As of March 31, 2022, there were 123.2 million shares of ARKO common stock outstanding. We ended the quarter with 1,396 resale sites and 1,625 wholesale sites. I am pleased that we have demonstrated our strength and capabilities with yet another quarter of solid financial results. We continue to execute as we navigate through a very turbulent environment. We believe we are well positioned for long-term success. With that, I will turn it back over to Arie. Thanks, Don. We believe we are primed for continued growth. I'd like to thank our over 11,000 team members for their continued efforts to exceed our customers' expectations. We believe that we are a unique business and a differentiated market leader. We've made significant progress as our company has grown. We think execute, drive growth, and increase stockholder value over the long term. Thank you for joining the call today and your interest in ARKO. I will now turn it over to the operator for questions. Operator? At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Bobby Griffin with Raymond James. Please proceed with your question. Good morning, everybody. Thank you for taking my questions. Arie and Don, I was hoping, could you maybe give a little bit more detail on the one remodel that you referenced? Not particularly the lift, but just what type of remodel was that? Was it a complete tear down to the, land and rebuild a store, or was it one of the lighter capital ones? How long did it take to do? What type of capital did you have to spend in that remodel, for example? Just anything like that to help us put some context around those impressive results for the store. Sure. Absolutely. Good morning, Bobby. This is store 3894, the store that Arie mentioned. We opened the store just in November of last year. The results that we're actually seeing over here, which are absolutely great results, are results for the first quarter of 2022. That was a full raze and rebuild. Store before was a 3,500 sq ft store. Today, it's close to 5,700, 5,600 sq ft stores. We added additional diesel canopy at the back. I mean, this is the store that you see in our presentation, the full picture in our presentation, sitting on 6.4 acres. F rom start to finish, it took us a little bit less than a year. That was just because we had to basically, you know, work on, you know, major plans over here given, you know, the size of the store and given where the store is located. As I mentioned, I mean, you see the results over here. I mean, the results are just, absolutely great. I mean, the sales in the store, the ex-cigarettes almost exceed 100% from prior year. Yeah. Is that a remodel that's over and above compared to what we're gonna target? I guess the second part of the question is, you know, when do we get into a time period where we'll have the pace of remodels being a little bit more faster than they are now? G iven those results, investors would like to see more remodels happen, obviously, because the lift is pretty impressive. Sure. Absolutely. I just wanna go back to what I said in a quarter. As you remember, we state that we're gonna do 10 stores. We basically completed the first two stores last year. That was basically putting a prototype together. Since then, we finished our first raze and rebuild at the end of November. This quarter, we completed 5 stores. As we see it over here, when I say this quarter, I mean Q2, we completed 5 store remodels, and we are just completing number 6 this week. We're gonna have a total of 9 stores all together. So far from early results and, you know, early remodel, as you can see over here and appreciate, we see that the best results are coming from raze and rebuild, and this is something that we are concentrating at the moment, while we're learning, from the others. The other six that just opened in the last, I'll call it, anywhere from 30 days to this week, we're gonna continue to, you know, to carry information, to learn from those results. Again, those are much smaller remodels. This is around $650,000 remodels. Based on the information that we learned so far, as I said, I mean, we're gonna continue to increase our pace. I will say, will probably take us another quarter to learn a little bit more, and then we're gonna make a decision. As I said, so far it looks like concentration going towards the raze and rebuild that we just completed and see those double-digit increases, high double-digit increases. Bobby, I just wanna- But- Oh, sorry. I just want one more thing I want to say, Bobby. While we're waiting for those results, as you can imagine, we're not stopping. I mean, I don't need to tell you that price increase, given what is happening in the marketplace from a construction standpoint. Wh ile we're waiting for those results, we are doing other things in between not to just wait for a full remodel. I mean, for example, the fifth Sbarro that we have decided to open this year was, while we're actually waiting for those results, we want to make sure that we're not waiting and stopping, we're actually moving forward. As I said, we opened three Sbarros already. Basically, number four is actually opened this month. We have another 5 in the pipeline that are already, you know, in process, are in the works. We do some other initiative. For example, that's the reason we decided not to wait in the bean-to-cup. You know? Usually, we put bean-to-cup only in remodeled stores. We have decided not to wait and put, you know, 525 stores bean-to-cup coffee machine to make sure that we actually avoid the delay over here while we're learning and, getting more information over here. Yeah, Bobby, that's exactly what I was about to add in, you know, but exactly what Ari said, that there's many features of these remodels we don't wanna wait in. Ari just said it. We wanna take the low-hanging fruit and take advantage of those opportunities without waiting for the remodel to happen. Okay. Just last comment on that, Bobby, because you know, you mentioned, you asked the question, and I understand the question about you know, keeping the pace or actually increase the pace. That's exactly the reason why we're actually putting those initiative in place. While we're waiting for results, we are basically getting the other initiative in place, which of course, all of those initiative that I mentioned, as you can imagine, will continue to increase store profitability while we're actually learning from you know, from the ones that we just completed. Okay. Understand. I guess second part, second question for me, and I'll jump back in, is just, you know, we get a lot of questions over rising gas prices. Is there any change in customer behavior in terms of trips or amount of items they're buying in the store, basket size? Maybe just curious, throughout the quarter when you saw prices move up, did you notice any changes in your customers around any of those metrics that, would be helpful in us knowing and understanding? Sure. First of all, you know, this is something that we see almost every time, every few years when we actually see a huge price increase, you know, going from, you know, $60, $70 last year to over $100, $120 at some point in the Q. Y ou always, see that people have less disposable income in their pocket. And because of that, of course, we see customers coming in more often to fill gas. You know, if last year, you know, in order to fill your car, it took $30, $40, we might see you once a week, once a week and a half, given that people are not driving as they used to drive in the past. I mean, right now, all of a sudden, with $80-$90, I mean, you know, people coming more often. We see people coming more often to fill their cars. There are actually, of course, there is more trips. At the same time, as I kept, mentioning before, we are in such different market. We are in rural and secondary markets, that the correlation between people coming for gas people coming, inside the stores are very, very little. That's but there is no question that you see an increase in customers coming to actually to fill their car versus what we saw last year. No question about that. Okay. I appreciate the details. Best of luck going forward. Thank you very much. Our next question is from Kelly Bania with BMO Capital. Please proceed with your question. Hi. Good morning, Arie and Don. Thanks for taking our questions. Wanted to just start with gallons and curious how gallons are tracking relative to your expectation both within wholesale and retail. If you can, maybe help us understand where retail and wholesale gallons are on a same-store basis or same site basis, I guess, relative to 2019. Not a problem. Don, would you like to take it? Yeah. I mean, as far as same-store, you know, we're down 3.5%. In terms of, you know, wholesale, we actually don't have a same-store record. We have not tracked it against 2019, but we're obviously not back to 2019 levels, nor do we project any time soon that we're coming back to 2019 levels. This is one of the reasons, Kelly, I think we've talked about before, why we're seeing some of the expanded margin in the market. W ith a lot of businesses doing the hybrid work from home, we don't expect that to happen. The philosophies that we basically go after is that we're gonna be competitive out there in the marketplace, and you know, do the best we can to optimize fuel margin dollars. Yes, fuel gallons are important, and we keep adding fuel gallons through our acquisitions, but we don't ever see, at least our belief is we don't think we'll see a real return to 2019 levels. Okay. That's helpful. Can you just help us understand a little bit on the expense line where same-store wages are tracking? Any color on what that is looking like, how that compares to your expectation, and just any color on what you're seeing from credit card fees and how that impacted the quarter? Yeah. I can give you a sort of a number on same-store credit cards. It's about $3 million higher than what we had in Q1. That number I have. On personnel, we expected it to be higher. We're in a little bit under our expectations for the quarter, but we'd already planned for this to be higher, so it's not a surprise to us. O bviously the surprise for the quarter was the credit card piece. Obviously that's somewhat offset by two things. Number one, prompt pay, and also by higher fuel margin. We absolutely expected the personnel expense to be higher, but it is not as high as what our expectations were. Okay. Do you see is it stabilizing or is it accelerating? Just any color on the direction you're seeing in terms of labor and wages? I think 2021 was a really kind of a volatile year for wages. We see it stabilizing. We see, you know, open positions lowering, and we see it's like setting to a new level. It's not as volatile as it was in 2021. It's definitely not where it was back to pre-pandemic, and we all know that's a new level we're set at. I don't believe we're gonna see wages take the same pace up that we saw in 2021, although we will in certain pockets, you know, as everybody's competing for labor. Again, our expectations that we set for ourselves, that it's running slightly below. Quite frankly, I'd like to see that number come up because that means we're, you know. While we're much better off from a staffing perspective, like every other retail business, we still have open positions, and open positions while they save money on labor costs, they also, you know, we would do better to have the stores fully staffed. With that said, our stores are open, they're staffed, but obviously the more staffing you can have and the more customer-facing labor you can have, the better it is for us. Okay. Kelly, I would like to jump just with your prior question regarding gallons between retail and wholesale. I wanna point to something that I think is very, very important for you to pay attention and for everybody, of course. If you remember, we mentioned of course that profit dollars is very, very important to us when it comes to our fuel, and you saw this quarter, $9.7 million above prior year. Something very importantly to take a note over here is historically on wholesale, our average was five cents per gallon. That was, you know, what we actually kept talking about, you know, stores, wholesale business, it's at the five cents. What happened is that since we actually bought Empire and continued to renegotiate contracts with prices of fuel at such level, we receive actually a greater prompt pay discount related to, of course, our fuel costs. We are today at around $0.07. Again, given those two things that I just mentioned, we believe that $0.05 actually will stick right now at $0.07 during this period. I think this is something very, very important to note from that. Perfect. That's very, very helpful. Don, just to follow up on the labor, where are you from a staffing perspective? How much more do you need to get to where you would like to be in terms of fully staffed position? I don't have that exact number, of where it is, you know, from a percentage basis. I will tell you it's better. I know we are planning on. We've done a lot of initiatives from a hiring spree. I mean, our focus has been on making sure that we have, making sure the key positions like managers, district managers, and things like that, we've done a great job on closing that gap. As you know, the hourly retail employee is a very tough employee to get. You know, turnover, you know, since we launched a lot of our programs, like we did a lot of the $500 for 500 hours, and we've tracked them, and we've seen their turnover is much less. I know Arie is considering several programs to do, coming out, and there'll be more information about that in the future. T hat's obviously one of the key things on our numbers. The numbers are better, and obviously, the other thing that's better is with Omicron, which really hit us really hard in January, 'cause once somebody has it's not just the person that's out, but it's the crew that has it as well. Omicron really hit us hard in January with a lot of openings, and now we're down to 0-3 cases a week. That's been a real help in helping our staffing. I know there's other initiatives that Arie will be talking about, in the future about things that we're doing to really not only to bring on staffing, but also to retentions for our existing staffing too. Yeah. I wanna mention something just to one more comment on this one. You know, we are no different than any other retailer. Let's put it this way. I mean, everybody is competing on the hourly associates. I can tell you, Kelly, that where we are today versus where we were in 2021, it's an absolutely different basically world when you know if you compare it to last year. As Don mentioned, Q1 was tough, beginning of January. That's when things actually were tough for everybody, I mean, with Omicron. Don't forget, last year people had more money to spend. People received a lot of money from the government, so you know the labor market was a little bit more tougher. I think we're very, very pleased with where we stand today. I mean, we have very little amount of stores that we had to change hours basically in Q1. Again, most of it was really because of COVID, nothing related to labor. J just to give you maybe just one more point for reference is, you know, since we launched the $500 for 500 hours, I can tell you that the turnover decreased by almost 50%. Again, we have a lot more initiatives like this coming in, especially now heading towards the summer. W e are starting a big hiring campaign to hire up to 5,000 employees during the summer. Of course, all of those initiatives, you know, of course, helping every retailer in the marketplace. Okay. This is very helpful. Thank you. Just one last one for me, and then I'll pass it on. Ari, just the comment that you made about, you know, increasingly or being positioned for an increasingly price-sensitive consumer environment, can you just elaborate a little bit more on what you are seeing? When did it start, inside the store, at the pump? And do you anticipate making any adjustments to your strategy in terms of pricing or otherwise as a result of what sounds like a changing environment? Sure. I don't think anything changed since last year. I mean, you know, price increase is taking place, especially now when you know, most of the issues that you see with a lot of shipment is that, A, you don't have driver. If you have finally drivers, you know, the price of shipping actually increased dramatically. You know, what we're trying to do, we're really trying to concentrate on items that the consumers are looking for. I mean, there is no question that, given that we are going into recession right now, we are in recession already, and people have less money to spend, we need to concentrate on items that people can afford. That's the reason I mentioned the pizza, for example. I mean, there is a reason why, you know, we relaunched 210 stores with pizza. You know, we are selling pizza to, for example, loyal customers, we are selling pizza for $0.99. W e concentrate on things that we can actually lower costs, like the bean-to-cup coffee, for example. T hat gives us the opportunity for very little waste, less labor intense, and, you know, by doing that, we can be more competitive and offer better pricing, you know, to our consumers. But again, it's really across the board. It's not, one item. G iven that you have price increases, we need to find ways how to decrease prices or how to actually provide more attractive prices to our consumers. That's where we actually had our marketing team and our merchandising team, you know, following, you know, basically going after all of those initiatives and making sure that we have the right offering in place. I don't think we're gonna change, or we will change any strategy. As I mentioned, the grab and go that we actually initiate last year is very, very successful. This is again, one of the items that we did when we actually felt that, you know, there's going to be an opportunity given where we're heading. J ust for your reference, we are right now, this is the first year that we're gonna have a full year of grab and go and frozen food. I kept talking about this last year. Just for your benefit, Q1, gross profit dollars in grab and go increased by 18.9%, while sales increased by 20.1%. Frozen food, it's another item, you know, to help consumers because at the end of the day, consumers need to, you know, feed their families. Our frozen food, since this is the first year that we have full year initiative, frozen food increased, gross profit dollars increased 65%, while sales increased this quarter by 88.7%. It just show you that all of those initiatives that we put in place last year, thinking, where we're heading, are actually working right now and working very, very well. Thank you. Of course. Our next question is from Mark Astrachan with Stifel. Please proceed with your question. Yeah, thanks, morning, everyone. I guess maybe building on the last set of questions, maybe talking a bit about the same-store sales or, you know, in-store sales. Any impact there from staffing? It sounds like it's still obviously not where you want it to be. Do you see anything from that or perhaps any sort of impact from all of the pricing that we hear from your suppliers, the consumer staples companies? Is that having any impact on it? Is the volatility on the fuel prices having an impact on it? You know, just sort of directional color on how you think about the correlation in those things or maybe other items which are correlated, which I didn't mention would be helpful. Thank you. Sure. Let's start with staffing. Of course, everybody would like to be 100% staffed in their stores, but that's not going to happen anytime soon for any retailer. I don't think from a staffing standpoint there is any issue. Remember, our food service business, as you can see, is adding pizza, grab and go sandwiches. We are less labor intense when it comes to our inside sales, and that's probably why we are not being impacted like some of the others that are heavily involved in food service. I think from a staffing standpoint, we are in a good place. From a cost standpoint, you know, basically. If you're really looking on our sales ex cigarettes, I mean, we had a terrific quarter. We really had a terrific quarter. If you're really looking, that's by the way, you're looking on margin, you see an increase in margin. I think what we see over here is that the top performers during the quarter were really, and that's where you see that the business is going in the right direction. Packaged Beverages, for example. Packaged Beverages, even though this is first quarter, you know, which is the lowest quarter, Packaged Beverages was up in terms of sales by 1.6%, but margins, the margin basis point, basically, we were up 310 basis points, for example. The same thing you see on candy. I mean, candy was up 3.9% with 6.4% increase in basically in margin. That's what drove the margin, by the way, over here. You see a big decline in cigarettes. However, on the other side, you see a huge increase in OTP. If you're really looking on total nicotine, total nicotine was basically up, especially on margin. I mean, our margin on basically on total nicotine was up dramatically. Our same-store margin on OTP was up 660 basis points, which mean that you see that, you know, people are just shifting from one category to another. We actually see I mean, the business continues to be very healthy, very healthy while we are able to increase margin, which means that the sales of cigarettes continue to grow over here. I don't think there is any issue. You know, inflation doesn't actually create any issues over here. I actually think it's created some opportunities in terms of the mix that we would be able to actually change over here, and offer to our consumers. Got it. Okay. Then shifting over to M&A opportunities, could you remind us or maybe talk to, you know, your comments on the macro environment as well as volatility of fuel? How does that potentially impact or how has that historically impacted opportunities in M&A? I assume it helps from a smaller mom-and-pop type place that just doesn't wanna deal with it, and does that make it more or less opportunistic relative to where you'd be in a normal world, whenever that is? I keep talking about, you know, CPG, and, you know, we actually believe CPG increased just because, gallons are actually gallons driven are down. There's some other challenges within the box. Y ou mentioned mom-and-pop and smaller, basically, chains. I think you know, the issues that they're seeing between or inside the box, that would actually drive CPG up, and, you know, if one day, CPG decrease, I'm assuming that, you know, we're gonna see an increase inside the box with everything going on over here. With that being said, the pipeline is very, very active right now, especially, you know, Q1 is always the slowest quarter. I can tell you that, as the year continues to ramp up, I mean, we see a lot of opportunities. I mean, just in the last, you know, basically couple of months, we see a lot of opportunities coming into markets. I think actually this year it's more active than last year same time. I think given where we stand from a liquidity standpoint, the agreement with Oak Street that we just signed, you know, for $1.15 billion, I just think that give us great opportunity to continue to actually grow through those acquisitions. I think, as I said, I think that we're gonna continue to see more activity in the marketplace as, you know, as people actually continue to see those challenges. We keep talking about the inside sales. We keep talking about inflation, supply chain interruption. I just wanna remind you, I mean, we are number 60 in the country, and if number 60 in the country, we are, dealing with supply chain interruption. You can't even imagine, you know, what the small guys are actually dealing with right now. Like you said, I mean, when they start to see all of those issues that they run into, I think that's basically what, change their mind and say, "You know what? This is maybe an opportunity for us to get out. It's not going to get better anytime soon. Yeah. Understood. Thank you. Appreciate the color. Sure. Thank you. Thank you. Our next question is from Karru Martinson with Jefferies. Please proceed with your question. Good morning. When you talk about pricing competitively in these rural and secondary markets, who are you going up against? Well, we are competing with, the large national players, and at the same time, we are competing with, you know, basically the local chains that are in town. I mean, it's, you know, every market is different. In some of them you are dealing with the mom-and-pop across the street, and some of them you're dealing with, as I said, large chains that are out there. W e basically keep being competitive. I mean, that's really what you have to be. You have to be competitive in the marketplace that you are actually operating. That's the reason the loyalty program, c ome into play. That's why loyalty program is very, very important for us, and especially in those markets. Because as I mentioned, I mean, if you're really looking on those small town and small markets, our customers, I keep telling everybody, our customers are probably the same customers that's coming in on a daily basis. As we continue to grow our loyalty base, it just show you, I mean, loyal customers that's actually coming to our stores are coming 7 times more to our stores and spending $90 more than, I'll call it, the non, you know, engaged, loyal customers. W e are talking about registered customers that we can talk to, and we can offer, you know, provide them those offerings. Again, those are really the customers that, increase their basket and coming more often. As I said, you have to be competitive across basically from a cigarette standpoint to beer standpoint to everything else in the store over there. You know, there's no question that the number one item that you need to be competitive is of course nicotine. G iven that nicotine represent, you know, a high, basically percentage within our, basically within our stores. Even though numbers keep going down, I mean, at the beginning of the pandemic, just for your benefit, we were at around 40%, you know, cigarettes as, basically percentage, of sales. Today, we are at 35%, which means that as you can see, we keep increasing, the base over here, which mean that, we're either selling the right product or customers like us and they're coming more often. Okay. When we look at the you know holding the fuel margin at the level we are and seeing the merchandise margin, just wanted to reconcile that with the drop in the overall EBITDA margin that we saw as this% of sales. Is that just 'cause of the wholesale impact this quarter, or just trying to reconcile that? What was driving that? Don, would you like to answer that? If you're looking at EBITDA margin as a% of sales, I mean, that's gonna drop just because if you've got fuel sales in there, naturally sales have gone up. I mean, the price of fuel has gone up, and obviously the revenue of fuel has gone up. So naturally with, taking the big increases that we've had in fuel, that margin will come down. I mean, that's just a matter of math. Okay. If we go down into the $2 range, you know, it would show a better margin, but our focus really is on cents per gallon and what that overall fuel GP is. I just want to make sure I wasn't missing anything there. Then as you look at those tuck-ins in that M&A strategy, I mean, any change to, you know, what you would consider a target leverage of where you wanna run this business? No, I don't think anything changed in terms of leverage. As I said, I mean, we keep having, you know, liquidity. We keep spending and doing acquisition. A s you remember, we just signed a new acquisition, a nice one at the beginning, you know, just last quarter in February. We signed the Quarles acquisition that we are planning on closing. A s you can see, we continue to be consistent. You know, we are looking to deploy our capital, you know, very attractively. I don't think anything is gonna change. I mean, we, you know, this is gonna be acquisition number 21 already. I don't think we have to change anything other than, continue to be competitive. I think given where our liquidity is sitting right now in the marketplace, and given that, you know, we were able to fix our interest rate, for example. As Don mentioned, I mean, last year, when we actually raised our bonds, $450 million, for 5.125% interest rate for the next 8 years or for the next 7.5 years fixed. You know, given that, given the amount of, you know, cash that we actually carry and the agreement with Oak Street, I think, you know, give us the opportunity to go after larger deals, and not compete on, you know, basically on increase in interest rates, for example. Right. Two comments on that. I mean, if you look at our liquidity for year-end versus where we're in Q1, we're only $6 million lower, and that's after, you know, doing share repurchases of $14 million, paying dividends, putting a $5 million deposit down on the Quarles acquisition. You know, Q1 is usually a lower cash generation. We spent a lot of cash in Q1, and yet our liquidity only went down by roughly $6 million. We will lever up like we did for the Empire deal. We will lever up, but then we can see a clear pathway to bring it down, which it has come down. As long as we can see the, you know, what the opportunities or synergies are for us going forward. Thank you very much, guys. Appreciate it. Thank you. Our final question comes from William Reuter with Bank of America. Please proceed with your question. Good morning. Following up on the last question, Karru's question, in terms of how high you would take leverage, given you mentioned the M&A pipeline is strong, is there a number for the maximum that you would go up to before we start delevering? I mean our target internally is 2.5, and leverage is measured several ways. We look at it as net leverage, and we don't look at capital leases because those are mostly real estate capital leases, you know, as defined in GAAP. I mean, our target is 2.5, but we will go up, you know, we will go up to a 4 or 5 leverage as long as we can see that coming down. An example of that is the Empire acquisition, because that wasn't just what we could do for Empire, but what that did for us as a total company. Look, every deal stands on its own. There's no magic number that we stand on. If we see a deal where it has a much higher leverage and we see a pathway down, we're not committed to any number. I think we're committed to a certain leverage target, you know, long term, but there's not a magic number that we look at, for any one deal. Yeah. Just to be clear. That's helpful. Just to be clear, I just wanna maybe finalize the comment over here. Just to be clear, I think the target continues to be around 2.5 times. That's just for your benefit, the target. Remember, we closed Empire just a year and a half ago. Yeah, we lever, but look how we came all the way down back. I mean, when we lever, we actually lever when we're buying businesses that, you know, generating a lot of cash flow, and we know that in a very short order we'll get back to. That's what we did on Empire. That's just a great example. You know, nothing really changed from a strategy standpoint or from a leverage standpoint. You know, given, as I said, given our liquidity and given our agreement with Oak Street, I don't think it'll take a long time for us to actually lever highly. It has to actually be very, very, you know, to do that. Got it. That makes sense. Then, Arie, on the increase in your merchandise offerings with some lower prices, you mentioned pizza and coffee, grab-and-go sandwiches. You know, a lot of supermarkets have mentioned they're still seeing strength at relatively high priced items. Are you already seeing a trade down from higher priced items, or are you just positioning yourself for what you anticipate? You know, first of all, we are always, you know, the things that people are buying in our stores. I would call it lower priced items anyway. You know, they're buying candy, they're buying drinks, so, you know, we are not really competing, you know, with supermarkets. I don't think anything changed. As I said, I think the only thing that changed is with our initiative. I think the increase in margin is really because of the initiative that we're actually able to put in place. I mean, that's really the story. I mean, there is a big change in basically consumer behavior. You know, the basket that we are selling right now, you know, of course, decreased cigarettes and increased other items that got a much higher margin. Just to remind everybody, we are at 29.5, 210 basis points on the lowest quarter of the year. You know, my belief that we're gonna continue to see margin keep increasing. You know, we finished the year last year in the 2021, at 30% margin with, you know, margin at first quarter at 27.5. I mean, we are right now at 29. We're already 210 basis points above prior years, so I believe the trend will continue. We actually see increase in margin here to stay. Okay. On the strong retail fuel margin, I think throughout history, rising fuel prices have contributed to lower margins. However, greater periods of volatility I think lead to higher margins. Is it the volatility that has led your margins to be so strong, or what would be the other contributing factors? Well, volatility is always, you know, good, given our business. Volatility is absolutely good. But I think what happened since the beginning of COVID, just as I said, consumer behavior changed dramatically. Customers, you know, a lot of competitors, you know, competition lost their morning traffic and lunch traffic, and given that they're relying heavily on, you know, the morning, breakfast and the lunch, traffic over here, you know, that's what drove margin, you know, outside the box, higher. I think until we see a shift, a big shift, it has to be a very big shift, inside, you know, inside the stores, I think until then, you know, my belief is that margin is here to stay. That's just my belief. It's really trading dollars from one side to another, you know. You know, we were fortunate enough that you know, unfortunately we were not heavily involved in food service back then, so we were not, you know, basically, you know, got impacted like some of the others. That's probably the reason for that. I really believe that based on trend and based on what I see in the marketplace, that you know, the gallon is gonna continue to decrease while margin is gonna continue to increase. That's my belief. Okay. Just lastly from me on the strong wholesale fuel margins of $0.07. Is this, you know, you referenced that there was some purchasing scale of getting bigger. Is this related to your purchasing scale, or is this related to I guess a better competitive position with your customers? I guess, what would be the couple contributing factors there? Yeah, sure. All right. I think this is two parts. Okay? Number one, there is the better margin piece of this, which we should continue to keep. There is also a factor of higher fuel costs. Okay? As fuel costs come down, we will lose that piece of it, but we will maintain the higher rebate portion of it. It is kind of a hedge against credit card fees, which go up, because credit card fees obviously are cost of fuel. Prompt pay discount, you know, affects both our retail business and our wholesale business. The piece of it that is related to the prompt pay, obviously, if wholesale costs, fuel costs come down, that will come down somewhat. Obviously that will translate into more gallons. There's a piece that will stay, and that's related to better negotiations with rebates that we're realizing. Just to add one more comment on this one. As Don mentioned, remember, right now we are enjoying the prompt pay discount on $100, basically a barrel versus in the past was lower. Remember, when those prices come down, the credit card fees will come down as well. It was a hedge that was, you know, obviously created, not intentionally, but that's basically a hedge that actually was created over here. I think that will be the trade-off. When you see the wholesale, basically, gross profit goes down a little bit, you're gonna see an increase in gross profit, basically on the retail piece, which, you know, represent of course the bigger piece of our business. Perfect. Thanks for taking all the questions. Of course. Thank you. We have reached the end of the question and answer session, and I'll now turn the call over to Arie Kotler for closing remarks. Thank you very much, Kyle. Thank you, everybody. It's been pleasure, you know, being with all of you guys today here. I wanna thank you for joining the call and, you know, I can only wish you a great summer. You know, this is, we're heading into our 100 day of summer. This is our, you know, that's basically our biggest business is through a 100 day of summer, and I wish everybody success over here. Thank you again. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.