Core Insights - Murphy USA Inc. (MUSA) reported second-quarter 2025 earnings per share of $7.36, exceeding the Zacks Consensus Estimate of $6.82 and slightly down from the previous year's profit of $6.92, primarily driven by higher fuel margins [1][10] - The company's operating revenues totaled $5 billion, reflecting an 8.2% year-over-year decline and missing the consensus estimate by $468 million due to lower petroleum product sales [1][10] Revenue Breakdown - Revenues from petroleum product sales were $3.9 billion, significantly below the estimated $4.2 billion and down 11.3% from the second quarter of 2024 [2] - Merchandise sales reached $1.1 billion, marking a 1.1% increase year over year [2] Fuel Contribution Analysis - Total fuel contribution increased by 0.7% year over year to $393 million, attributed to higher retail contributions and margin expansion, with total fuel contribution at 32 cents per gallon, up 1% from the previous year [3] - Retail fuel contribution decreased by 1.7% year over year to $359.1 million, with margins narrowing to 29.2 cents per gallon from 29.7 cents in the same period of 2024 [4] Merchandise Performance - Contribution from merchandise rose by 1% to $218.7 million, despite flat unit margins at 20% year over year [5] - On a same-store sales (SSS) basis, total merchandise contribution fell by 0.9% year over year, primarily due to a 2.4% decline in non-nicotine margins [5] Operational Metrics - Monthly fuel gallons sold decreased by 2.3% compared to the prior year, while merchandise sales saw a 0.7% decline on an average per-store monthly basis [6] - As of June 30, Murphy USA operated 1,766 retail locations, having opened six new stores and closed one [7] Financial Position - The company reported cash and cash equivalents of $54.1 million and long-term debt of $2.1 billion, resulting in a debt-to-capitalization ratio of 76.2% [7] - During the quarter, MUSA repurchased shares worth $211.9 million [7]

[Part I – Financial Information](index=3&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited statements detail the company's financial position, performance, and cash flows for the three and six months ended June 30, 2025 [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) The statements show stable performance with total assets growing to $4.62 billion and Q2 2025 net income at $145.6 million Consolidated Balance Sheets | Financial Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $4,622.2 million | $4,541.6 million | | **Total Liabilities** | $3,976.1 million | $3,701.5 million | | **Total Stockholders' Equity** | $646.1 million | $840.1 million | Consolidated Statements of Income | Metric (in millions, except EPS) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $5,005.0 | $5,451.7 | $9,530.4 | $10,295.4 | | **Net Income** | $145.6 | $144.8 | $198.8 | $210.8 | | **Diluted EPS** | $7.36 | $6.92 | $9.95 | $10.02 | Consolidated Statements of Cash Flows | Cash Flow Activity (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $383.6 | $396.8 | | **Net cash used in investing activities** | $(204.3) | $(189.4) | | **Net cash used in financing activities** | $(172.2) | $(245.4) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail business operations, revenue sources, debt structure, legal contingencies, and segment reporting - The company markets refined products through a network of **1,766 retail stores** under the Murphy USA, Murphy Express, and QuickChek brands as of June 30, 2025[23](index=23&type=chunk) Revenue by Source | Revenue Source (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Petroleum product sales | $3,851.4 | $4,340.5 | $7,341.2 | $8,152.2 | | Merchandise sales | $1,092.4 | $1,080.4 | $2,091.8 | $2,081.1 | | Other operating revenues (incl. RINs) | $61.2 | $30.8 | $97.4 | $62.1 | - Total long-term debt, net of current maturities, increased to **$2,066.7 million** at June 30, 2025, from $1,832.7 million at December 31, 2024, primarily due to a refinancing that included a new term loan[56](index=56&type=chunk) - Under a share repurchase authorization of up to **$1.5 billion** (expiring Dec 31, 2028), approximately **$578.0 million remained available** as of June 30, 2025[93](index=93&type=chunk) - The company is a defendant in lawsuits filed by the City of Charleston, South Carolina, and the State of Delaware, which allege damages as a result of **climate change**[117](index=117&type=chunk) - The company's operations are managed as a **single reportable segment, "Marketing,"** which includes retail motor fuel and convenience merchandise sales, as well as wholesale operations[130](index=130&type=chunk) [Management's Discussion and Analysis (MD&A)](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, highlighting volatile fuel margins, capital allocation, and liquidity [Executive Overview and Business Trends](index=31&type=section&id=Executive%20Overview%20and%20Business%20Trends) The business is heavily influenced by volatile fuel margins, with a 2025 capital plan of $450-$500 million - Total fuel contribution (retail fuel margin plus product supply & wholesale results including RINs) was **32.0 cents per gallon (cpg)** in Q2 2025, compared to 31.7 cpg in Q2 2024[150](index=150&type=chunk) - The company anticipates total capital expenditures for the full year 2025 to range from approximately **$450 million to $500 million**[153](index=153&type=chunk) - The ongoing effective tax rate for the remainder of 2025 is estimated to be between **23% and 25%**[155](index=155&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q2 2025 revenues fell 8.2% to $5.0 billion, though net income rose slightly due to higher fuel contributions Key Performance Indicators | Metric (in millions) | Q2 2025 | Q2 2024 | Change | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $145.6 | $144.8 | +0.6% | $198.8 | $210.8 | -5.7% | | **Diluted EPS** | $7.36 | $6.92 | +6.4% | $9.95 | $10.02 | -0.7% | - Q2 2025 revenues **decreased by $0.5 billion (8.2%)** compared to Q2 2024, primarily due to a 12.2% reduction in the average retail fuel sales price[160](index=160&type=chunk) - Selling, general and administrative (SG&A) expenses for Q2 2025 **decreased by $8.2 million (13.9%)** versus Q2 2024, mainly due to lower professional fees and incentive costs[163](index=163&type=chunk) Contribution Analysis | Key Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Fuel Contribution** | $393.0M | $390.3M | $680.3M | $676.4M | | **Retail Fuel Volume (Million gal)** | 1,229.3 | 1,231.6 | 2,360.5 | 2,384.7 | | **Total Merchandise Contribution** | $218.7M | $216.5M | $414.6M | $408.1M | [Capital Resources and Liquidity](index=40&type=section&id=Capital%20Resources%20and%20Liquidity) The company managed liquidity through a recent refinancing and continued share repurchases of $363.8 million in H1 2025 - Net cash provided by operating activities **decreased by $13.2 million (3.3%)** to $383.6 million for the six months ended June 30, 2025, compared to the same period in 2024[197](index=197&type=chunk) - During the six months ended June 30, 2025, the company **repurchased 791,827 common shares for approximately $363.8 million**[200](index=200&type=chunk)[202](index=202&type=chunk) - A refinancing effective April 7, 2025, provided a **new $600 million senior secured term loan** due 2032 and a **$750 million revolving credit facility**[209](index=209&type=chunk) Capital Spending Breakdown | Capital Spending (in millions) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Company stores** | $140.3 | $156.5 | | **Maintenance capital** | $28.3 | $32.4 | | **Total** | $176.6 | $205.2 | [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity price volatility and interest rate fluctuations on its debt - The company has market risk exposure related to the **volatility in the price of refined products**, which affects revenues and costs[224](index=224&type=chunk) - Interest rate risk exists due to a **$600 million floating-rate term loan** and **$88.0 million of outstanding borrowings** under the revolving credit facility, both tied to variable rates like SOFR[226](index=226&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective - Management concluded that **disclosure controls and procedures were effective** as of June 30, 2025[228](index=228&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[229](index=229&type=chunk) [Part II – Other Information](index=47&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal matters, including climate change lawsuits not expected to be material - The company is a defendant in lawsuits filed by the City of Charleston, SC, and the State of Delaware alleging **damages from climate change**[231](index=231&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes or additions to risk factors were identified since the last annual report - **No additional risk factors** were identified beyond those disclosed in the most recent Form 10-K[232](index=232&type=chunk) [Issuer Purchases of Equity Securities](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 470,708 shares for approximately $209.9 million during the second quarter of 2025 Quarterly Share Repurchase Activity | Period (2025) | Total Shares Purchased | Average Price Paid | Value Remaining in Plan | | :--- | :--- | :--- | :--- | | April | 93,952 | $488.67 | $741.9M | | May | 274,583 | $442.99 | $620.3M | | June | 102,173 | $413.99 | $578.0M | | **Q2 Total** | **470,708** | **$445.81** | **$578.0M** |

Financial Data and Key Metrics Changes - The second quarter results reflect a 3.2% decline in same-store fuel volumes, with July volumes rebounding to 100% of prior year levels [6][14] - Retail fuel margins improved by 50 basis points in 2024, with an 80 basis point year-to-date improvement and an additional 13 basis points from lower credit card fees [11][12] - The effective tax rate for the first half was 22%, with expectations for the second half to be within the guided range of 24% to 26% [17][18] Business Line Data and Key Metrics Changes - Non-combustible nicotine categories are growing at a rate that offsets the decline in cigarette margins, which represent only 30% of total nicotine margin contribution [8] - Merchandise contribution increased by 8.9% for the quarter, excluding cigarettes and lottery, driven by strength in candy and packaged beverages [10][15] - Average per store month food and beverage sales at QuickChek have been positive for three consecutive quarters, indicating strong traffic [9] Market Data and Key Metrics Changes - Fuel prices remain range-bound despite geopolitical events, contributing to a lower price and less volatile environment [6] - The company outpaced OPUS volumes in each of its markets for the full quarter, despite a deceleration in June [33] Company Strategy and Development Direction - The company is focused on maintaining store profitability through operational cost improvements and a robust new store pipeline, with plans to deliver 50 new stores over the next twelve months [12][19] - The capital allocation strategy remains a fifty-fifty approach, balancing growth investments and shareholder returns [90][91] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, particularly regarding nicotine contributions and the impact of FDA crackdowns on illicit products [8][63] - The company is well-positioned to weather lower demand cycles while maintaining a focus on long-term growth and operational efficiencies [49][51] Other Important Information - The company repurchased 471,000 shares in the second quarter, with year-to-date repurchases nearing 900,000 shares [20] - The new store construction pipeline is robust, with over 45 new stores in construction for Q3, indicating strong future growth potential [19] Q&A Session Summary Question: Trends in gallons and market share - Management noted that trends worsened partly due to a different same-store base and that margins improved despite lower volumes [31][32] Question: Guidance on EBITDA - Management reiterated that while they do not provide EBITDA guidance, operational efficiencies are expected to offset merchandise pressures [34][36] Question: Store build confidence - Management highlighted that bottlenecks have been addressed, leading to confidence in meeting store build targets [40][41] Question: Demand environment and cost flexibility - Management discussed the importance of consumer price sensitivity and the ability to optimize costs in a lower demand environment [45][48] Question: Merchandise contribution growth - Management expressed confidence in achieving guidance due to strong performance in non-cigarette categories and initiatives to drive customer engagement [55][59] Question: Share repurchases and capital allocation - Management clarified that leverage is balanced between growth and shareholder returns, maintaining a focus on their fifty-fifty capital allocation strategy [89][91] Question: Competitive landscape and fuel volume trends - Management indicated no significant differences in customer behavior between Walmart and non-Walmart locations, with competitive pressures being consistent across markets [96][97]

Financial Data and Key Metrics Changes - In Q2 2025, same store fuel volumes decreased by 3.2%, but July volumes rebounded to 100% of prior year levels [6][14] - The company expects to be at or slightly below the low end of its annual guidance range of 240,000 to 245,000 average per store month for fuel volumes [14] - Merchandise contribution margin is projected to be within the low end of the guided range of $855 million to $875 million, with Q2 merchandising contribution at Murphy USA branded stores up 8.9% excluding cigarettes and lottery [15][17] Business Line Data and Key Metrics Changes - Non-combustible nicotine categories are growing at a rate that offsets the decline in cigarette margins, which represent only 30% of total nicotine margin contribution [7] - Average per store month food and beverage sales at QuickChek have been positive for three consecutive quarters, indicating strong performance despite industry challenges [8] - Merchandise contribution increased by 8.9% for the quarter, driven by strength in candy and packaged beverages [10] Market Data and Key Metrics Changes - Retail fuel margins improved by 50 basis points in 2024 and are seeing an 80 basis point improvement year-to-date in 2025 [11] - The company outpaced OPUS volumes in each of its markets for the full quarter, indicating a competitive position despite overall market challenges [33] Company Strategy and Development Direction - The company is focused on maintaining store profitability through operational cost improvements and is excited about the quality of its new store pipeline, with plans to deliver 50 new stores over the next twelve months [12][19] - The capital allocation strategy remains a fifty-fifty approach, balancing growth investments and shareholder returns, with a commitment to share repurchases [20][91] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term potential of the business, particularly in connection with a $1.3 billion EBITDA target for 2028, despite some metrics being slower than anticipated [21][22] - The company is managing costs effectively in a challenging demand environment, with a focus on maintaining a low-cost operating model [54] Other Important Information - The company repurchased 471,000 shares in Q2, bringing year-to-date repurchases to nearly 900,000 shares, indicating a strong commitment to returning value to shareholders [20] - The effective tax rate for the first half was 22%, with expectations for the second half to be within the guided range of 24% to 26% [17] Q&A Session Summary Question: Trends in gallons and market share - Management noted that trends worsened partly due to a different same store base and that margins improved despite lower volumes [30][31] Question: Guidance reiteration - Management confirmed that while they do not provide EBITDA guidance, they are managing offsets between merchandise pressure and operational expenses effectively [34] Question: Store build confidence - Management highlighted that bottlenecks have been addressed, and the pipeline for new stores is robust, with confidence in meeting the target of 40 new stores in 2025 [38][42] Question: Demand environment and cost flexibility - Management discussed the importance of consumer price sensitivity and the ability to optimize costs in response to lower demand [46][49] Question: Merchandise contribution growth - Management expressed confidence in achieving growth in merchandise contribution, driven by strong performance in specific categories and initiatives to increase customer loyalty [58][60] Question: Fuel volume trends and competitive landscape - Management indicated no significant differences in customer behavior between Walmart and non-Walmart locations and noted competitive pressures in certain markets [96][98]

Core Insights - Murphy USA reported $5.01 billion in revenue for the quarter ended June 2025, reflecting an 8.2% year-over-year decline, while EPS increased to $7.36 from $6.92 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $5.47 billion, resulting in a surprise of -8.55%, whereas the EPS exceeded the consensus estimate of $6.82 by 7.92% [1] Revenue Breakdown - Petroleum product sales generated $3.85 billion, which is 11.3% lower year-over-year and below the average estimate of $4.23 billion [4] - Other operating revenues reached $61.2 million, significantly exceeding the average estimate of $45.95 million, marking a 98.7% year-over-year increase [4] - Merchandise sales totaled $1.09 billion, slightly below the average estimate of $1.11 billion, with a year-over-year increase of 1.1% [4] Stock Performance - Over the past month, Murphy USA's shares have returned -1.5%, contrasting with the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]

[Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) Murphy USA reported resilient second-quarter 2025 results, with net income and diluted EPS slightly increasing year-over-year to $145.6 million and $7.36, respectively, driven by stronger all-in fuel margins and continued momentum in its new-to-industry (NTI) store program - CEO Andrew Clyde emphasized the company's resilient business model, which delivered stronger financial results despite low fuel price volatility and weaker traffic[5](index=5&type=chunk) Key focuses include store profitability, cost control, and **EBITDA growth** driven by the NTI store program[5](index=5&type=chunk) Q2 2025 Consolidated Results Highlights | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income ($ Millions) | $145.6 | $144.8 | | Earnings per share (diluted) | $7.36 | $6.92 | | Adjusted EBITDA ($ Millions) | $286.0 | $278.6 | - **Fuel Contribution:** Total fuel contribution was **32.0 cpg**, up from 31.7 cpg in Q2 2024[7](index=7&type=chunk) - **Retail Gallons:** Total retail gallons decreased by **0.2%** (3.2% on a same-store sales basis)[7](index=7&type=chunk) - **Merchandise:** Merchandise contribution increased **1.0%** to **$218.7 million** with stable unit margins at **20.0%**[7](index=7&type=chunk) - **Share Repurchases:** Repurchased **470.7 thousand common shares** for **$211.9 million**[7](index=7&type=chunk) - **Dividends:** Paid a quarterly dividend of **$0.50 per share**, a **2.0% increase** from March 2025[7](index=7&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) For Q2 2025, both Net Income and Adjusted EBITDA improved compared to the prior-year quarter, driven by higher contributions from fuel and merchandise, alongside lower general and administrative expenses, partially offset by increased depreciation, store operating expenses, and interest expenses Consolidated Results (Three & Six Months) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | **Key Operating Metrics** | **2025** | **2024** | **2025** | **2024** | | Net income ($ Millions) | $145.6 | $144.8 | $198.8 | $210.8 | | Earnings per share (diluted) | $7.36 | $6.92 | $9.95 | $10.02 | | Adjusted EBITDA ($ Millions) | $286.0 | $278.6 | $443.4 | $442.9 | - Higher net income in Q2 2025 was a result of increased fuel and merchandise contributions and reduced G&A expenses, which more than compensated for higher depreciation, store operating costs, and interest expense[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) The company's segment performance in Q2 2025 was characterized by a slight increase in total fuel contribution, driven by improved margins that offset lower volumes, while the merchandise segment also saw growth with a 1.0% increase in contribution dollars supported by higher sales and stable margins [Fuel](index=2&type=section&id=Fuel) Total fuel contribution in Q2 2025 rose by 0.7% to $393.0 million, primarily due to a higher total fuel contribution margin of 32.0 cpg, despite a 0.2% decrease in overall retail volumes and a 1.7% decline in retail fuel contribution dollars, as improved PS&W contribution (including RINs) offset the retail weakness Q2 2025 Fuel Operating Metrics | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total fuel contribution ($ Millions) | $393.0 | $390.3 | | Retail fuel volume (Million gal) | 1,229.3 | 1,231.6 | | Total fuel contribution (cpg) | 32.0 | 31.7 | | Retail fuel margin (cpg) | 29.2 | 29.7 | - The increase in total fuel contribution was driven by higher margins and an **$8.8 million increase** in PS&W contribution (including RINs), which compensated for a **$6.1 million decrease** in retail fuel contribution dollars caused by lower margins and volumes[9](index=9&type=chunk) [Merchandise](index=2&type=section&id=Merchandise) Merchandise contribution increased by 1.0% to $218.7 million in Q2 2025, driven by higher overall sales volumes, with unit margins remaining flat year-over-year at 20.0%, and both nicotine and non-nicotine categories contributing to the growth Q2 2025 Merchandise Operating Metrics | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total merchandise contribution ($ Millions) | $218.7 | $216.5 | | Total merchandise sales ($ Millions) | $1,092.4 | $1,080.4 | | Merchandise unit margin (%) | 20.0% | 20.0% | - The growth in merchandise contribution was attributed to higher sales volumes, with both nicotine and non-nicotine categories showing increased contribution dollars compared to Q2 2024[11](index=11&type=chunk) [Operating Expenses and Other Areas](index=3&type=section&id=Operating%20Expenses%20and%20Other%20Areas) In Q2 2025, total store and other operating expenses increased by $5.3 million year-over-year, driven by new store openings and higher employee and maintenance costs, while total SG&A costs saw a significant decrease of $8.2 million, primarily due to lower professional fees and incentive costs Q2 2025 Expense Summary | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total store and other operating expenses ($ Millions) | $275.2 | $269.9 | | Store OPEX excl. payment fees & rent ($K APSM) | $36.1 | $35.5 | | Total SG&A cost ($ Millions) | $50.9 | $59.1 | - The rise in store operating expenses was mainly due to new stores and increased employee-related and maintenance costs[12](index=12&type=chunk) The decline in SG&A was attributed to lower professional fees, incentive costs, and other employee-related costs[12](index=12&type=chunk) [Store Portfolio Update](index=3&type=section&id=Store%20Portfolio%20Update) During Q2 2025, Murphy USA expanded its network with a net addition of 5 stores, bringing the total count to 1,766, having opened 6 new-to-industry (NTI) stores and reopened 9 raze-and-rebuild locations, with 39 stores under construction supporting the goal of opening 50 new stores in the next year Store Count Changes as of June 30, 2025 | Category | Q2 2025 Net Change | YTD 2025 Net Change | Total Stores | | :--- | :--- | :--- | :--- | | New-to-industry (NTI) | 6 | 14 | - | | Closed | (1) | (5) | - | | **Net Change** | **5** | **9** | - | | Raze-and-rebuilds reopened | 9 | 9 | - | | **Total Store Count** | - | - | **1,766** | | **Total Under Construction** | - | - | **39** | - The company is poised to deliver **50 new stores** over the next 12-month period, which is expected to drive future EBITDA growth[5](index=5&type=chunk) [Financial Position and Capital Allocation](index=4&type=section&id=Financial%20Position%20and%20Capital%20Allocation) The company maintained a solid financial position while actively returning capital to shareholders, with cash and cash equivalents at $54.1 million, long-term debt increasing to $2,066.7 million, and key capital allocation activities including $211.9 million in share repurchases and a $9.8 million dividend payment [Financial Resources](index=4&type=section&id=Financial%20Resources) As of June 30, 2025, Murphy USA's cash balance was $54.1 million, with long-term debt totaling $2,066.7 million, composed of various senior notes, term debt, finance leases, and $88.0 million in borrowings under its revolving credit facility, and an effective income tax rate of 24.4% for the quarter Key Financial Metrics | Key Financial Metrics ($ Millions) | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $54.1 | $79.8 | | Long-term debt, including finance lease obligations | $2,066.7 | $1,781.4 | - Long-term debt includes senior notes due in 2027, 2029, and 2031, term debt due in 2032, finance leases, and **$88.0 million** outstanding on the revolving credit facility[14](index=14&type=chunk) [Share Repurchases & Dividends](index=4&type=section&id=Share%20Repurchases%20%26%20Dividends) In Q2 2025, the company repurchased 470.7 thousand shares for $211.9 million, leaving $578.0 million available under its current authorization, and paid a quarterly cash dividend of $0.50 per share, representing a 2.0% increase from the prior quarter and totaling a $9.8 million cash payment - During Q2 2025, the company repurchased approximately **470.7 thousand common shares** for **$211.9 million**[15](index=15&type=chunk) Approximately **$578.0 million** remained available for repurchase under the existing authorization[15](index=15&type=chunk) - A quarterly cash dividend of **$0.50 per share** was paid on June 2, 2025, a **2.0% increase** from March 2025, for a total cash payment of **$9.8 million**[16](index=16&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) The unaudited consolidated financial statements for Q2 2025, encompassing income, balance sheets, and cash flows, detail the company's financial performance and position [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, total operating revenues were $5.0 billion, a decrease from $5.5 billion in Q2 2024, driven by lower petroleum product sales, yet income from operations was slightly higher at $219.2 million, with net income at $145.6 million, or $7.36 per diluted share, compared to $144.8 million, or $6.92 per diluted share, in the prior-year quarter Q2 2025 Statement of Income Summary | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total operating revenues | $5,005.0 | $5,451.7 | | Total operating expenses | $4,785.8 | $5,233.2 | | Income from operations | $219.2 | $217.1 | | Net Income | $145.6 | $144.8 | | Diluted EPS | $7.36 | $6.92 | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets stood at $4.62 billion, up from $4.54 billion at year-end 2024, while total liabilities increased to $3.98 billion from $3.70 billion, primarily due to a rise in long-term debt, consequently decreasing total stockholders' equity from $840.1 million to $646.1 million, largely impacted by treasury stock repurchases Balance Sheet Summary | (Millions of dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $776.4 | $748.1 | | Total assets | $4,622.2 | $4,541.6 | | Total current liabilities | $976.1 | $947.9 | | Long-term debt | $2,066.7 | $1,832.7 | | Total liabilities | $3,976.1 | $3,701.5 | | Total stockholders' equity | $646.1 | $840.1 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, the company generated $383.6 million in cash from operating activities, used $204.3 million in investing activities primarily for property additions, and used $172.2 million in financing activities driven by $363.8 million in treasury stock purchases, partially offset by net debt borrowings, resulting in a $7.1 million increase in cash position year-to-date Six Months 2025 Cash Flow Summary | (Millions of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $383.6 | $396.8 | | Net cash used in investing activities | ($204.3) | ($189.4) | | Net cash used in financing activities | ($172.2) | ($245.4) | | Net increase (decrease) in cash | $7.1 | ($38.0) | [Supplemental Information](index=5&type=section&id=Supplemental%20Information) Supplemental disclosures include a reconciliation of GAAP to non-GAAP financial measures, detailing adjustments to Net Income for Adjusted EBITDA, and forward-looking statements outlining potential risks impacting future performance [Non-GAAP Reconciliation](index=11&type=section&id=Non-GAAP%20Reconciliation) The company reconciles Net Income to the non-GAAP measure of Adjusted EBITDA, with Q2 2025 Net Income of $145.6 million adjusted for income tax, interest, and depreciation & amortization to arrive at EBITDA of $286.2 million, and further minor adjustments resulting in an Adjusted EBITDA of $286.0 million, compared to $278.6 million in Q2 2024 Reconciliation of Net Income to Adjusted EBITDA | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $145.6 | $144.8 | | Income tax expense | $46.9 | $48.4 | | Interest expense, net | $27.7 | $24.0 | | Depreciation and amortization | $66.0 | $59.3 | | **EBITDA** | **$286.2** | **$276.5** | | Other adjustments | ($0.2) | $2.1 | | **Adjusted EBITDA** | **$286.0** | **$278.6** | [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) Forward-looking statements address M&A, store openings, margins, dividends, and share repurchases, with actual results potentially differing due to risks such as the Walmart relationship, supply chain disruptions, geopolitical events, cybersecurity, EV adoption, and nicotine legislation - Key risks that could cause actual results to differ from expectations include: ability to maintain a good relationship with Walmart, successful execution of growth strategy, supply chain disruptions, geopolitical events impacting oil prices, cybersecurity breaches, and future legislation on nicotine products[19](index=19&type=chunk)

Group 1 - The primary focus is on identifying high-quality companies with a market capitalization of less than $10 billion that can reinvest capital for impressive returns [1] - The ideal companies should demonstrate a long-term capability of capital compounding with a high compound annual growth rate, potentially delivering tenfold returns or greater [1] - A long-term investment perspective is emphasized to generate higher returns compared to market indices, especially in a rapidly evolving investment landscape [1] Group 2 - A conservative investment strategy is primarily adopted, with occasional pursuit of opportunities that present a favorable risk-reward ratio [1] - Careful consideration is given to ventures with substantial upside potential and limited downside, ensuring overall portfolio stability [1]

Group 1 - Murphy USA's shares have declined by 15% over the past year due to concerns regarding consumer spending at its convenience stores [1] - The company has been a disappointing performer in the market, reflecting broader economic challenges [1] Group 2 - The analysis indicates a contrarian investment approach based on macroeconomic views and stock-specific turnaround stories [1]

Core Insights - Murphy USA Inc. reported first-quarter 2025 earnings per share of $2.63, missing the Zacks Consensus Estimate of $3.87 and down from $3.12 in the previous year, primarily due to lower petroleum product sales [1] - The company's operating revenues were $4.5 billion, a decrease of 6.6% year over year, and fell short of the consensus estimate by $241 million [1] Revenue Breakdown - Revenues from petroleum product sales were $3.5 billion, below the estimate of $3.7 billion and down 8.4% from Q1 2024 [2] - Merchandise sales remained unchanged year over year at $999.4 million [2] Fuel Contribution - Total fuel contribution increased by 0.4% year over year to $287.3 million, driven by higher retail contribution and margin expansion, with total fuel contribution at 25.4 cents per gallon, up 2.4% from Q1 2024 [3] - Retail fuel contribution rose 7.1% year over year to $267.7 million, with margins widening to 23.7 cents per gallon from 21.7 cents in the same period of 2024 [4] - Retail gallons sold decreased by 1.9% year over year to 1,131.2 million, missing the estimate of 1,152 million [4] Merchandise Contribution - Contribution from merchandise increased by 2.2% to $195.9 million, despite flat sales, as unit margins rose from 19.2% a year ago to 19.6% [5] - On a same-store sales (SSS) basis, total merchandise contribution increased by 1% year over year, mainly due to a 2.8% rise in nicotine margins, although total merchandise sales decreased by 1.6% on an SSS basis [5] Balance Sheet and Share Buyback - As of March 31, Murphy USA had cash and cash equivalents of $49.4 million and long-term debt of $2 billion, with a debt-to-capitalization ratio of 73.3% [7] - The company repurchased shares worth $151.2 million during the quarter [7]

Financial Performance - For Q1 2025, the company reported net income of $53.2 million, or $2.63 per diluted share, on revenue of $4.5 billion, compared to net income of $66.0 million, or $3.12 per diluted share, on revenue of $4.8 billion in Q1 2024[155]. - Revenues for Q1 2025 decreased by $0.3 billion, or 6.6%, primarily due to a 6.0% decline in retail fuel sales prices and a decrease in fuel sales volumes[156]. - Net income in Q1 2025 decreased by $6.4 million to $79.1 million compared to Q1 2024, primarily due to higher store operating expenses and depreciation[170]. - EBITDA for Q1 2025 was $155.6 million, down from $164.3 million in Q1 2024, reflecting the decrease in net income and increased depreciation[178]. Fuel and Merchandise Sales - Total fuel contribution was 25.4 cents per gallon in Q1 2025, up from 24.8 cents per gallon in Q1 2024, while retail fuel volumes decreased by 1.9%[146]. - Total fuel contribution for Q1 2025 was $287.3 million, an increase of $1.2 million or 0.4% from Q1 2024, driven by higher retail fuel contribution despite lower fuel volumes sold[171]. - Total merchandise sales were approximately $999.4 million in Q1 2025, a decrease of $1.3 million compared to Q1 2024, while total merchandise contribution improved by 2.2%[172]. - Retail fuel margins increased by 9.2% to 23.7 cents per gallon in Q1 2025 compared to 21.7 cents per gallon in Q1 2024[171]. Operating Expenses - Store and other operating expenses increased by $14.0 million, or 5.6%, in Q1 2025, primarily due to higher employee-related expenses and maintenance costs[157]. - SG&A expenses in Q1 2025 were $2.0 million lower than in Q1 2024, mainly due to reduced professional fees and employee-related costs[174]. Capital Expenditures and Financing - The company anticipates total capital expenditures for the full year 2025 to range from approximately $450 million to $500 million, primarily funded through operating cash flow[149]. - Cash required by investing activities increased to $87.7 million in Q1 2025 from $74.9 million in Q1 2024, primarily due to higher capital expenditures[183]. - Financing activities in Q1 2025 required cash of $38.4 million, a decrease of $83.8 million from $122.2 million in Q1 2024, with share repurchases increasing to $150.0 million from $86.4 million[184]. Debt and Interest Rates - As of March 31, 2025, total long-term debt was $1,974.2 million, up from $1,832.7 million at December 31, 2024[188]. - The company has a senior secured term loan of $600 million and a revolving credit facility of $750 million as part of its credit agreement[194]. - The effective interest rate for the term loan was 6.21% as of March 31, 2025, down from 6.44% at December 31, 2024[188]. - A 10% increase or decrease in interest rates would have an immaterial impact on the company's financial statements as of March 31, 2025[209]. Dividends - Cash dividend payments increased to $0.49 per share totaling $9.8 million in Q1 2025, up from $0.42 per share totaling $8.8 million in Q1 2024, with a targeted double-digit growth in dividends over time[185]. - The Board of Directors declared a quarterly cash dividend of $0.50 per share, annualized to $2.00, payable on June 2, 2025[186]. Market Risks and Hedging - The company is exposed to market risks related to the volatility in the price of refined products, which can affect revenues and operating costs[207]. - As of March 31, 2025, the company had short-term commodity derivative contracts in place to hedge the purchase price of refined products, with a 10% change in benchmark prices being immaterial to the company[208]. - The company utilizes limited interest rate swaps to hedge a portion of its exposure to interest rate fluctuations[209]. - The acquisition of interest rate derivatives is managed by senior management with delegated authority from the Board level committee[209].