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].

Financial Data and Key Metrics Changes - The first quarter results reflect a same-store gallon decline of 4.2%, impacted by temporal factors such as the non-repeating leap year and storms, accounting for almost half of the decline [10][11] - Retail margins were $0.02 per gallon higher in the first quarter compared to the prior year, with margins not compressed during the normal cycle of rising prices [12][13] - Cash flow from operations was $129 million in Q1, with total cash capital expenditure of $88 million, resulting in free cash flow of $41 million [26] Business Line Data and Key Metrics Changes - In the nicotine category, same-store sales for non-combustible products were up over 7% for the quarter, while total nicotine contribution margin increased by 2.8% on a same-store basis [17] - Merchandise sales were negatively impacted by a 30 basis point headwind due to the absence of a $1 billion jackpot from the previous year [15] - Sales in the candy category were up 15% year-over-year, indicating strong performance in certain center store categories [15][18] Market Data and Key Metrics Changes - The retail price of fuel averaged between $2.75 and $2.80 per gallon, significantly lower than previous years, affecting customer behavior and loyalty [11][12] - The company noted an increase in middle to high-income customers, now representing almost half of the loyalty program membership base, indicating a shift in consumer demographics [21][42] Company Strategy and Development Direction - The company is focused on enhancing store productivity and growth through new store openings, raze and rebuilds, and remodeling activities [31] - The strategy includes targeted promotions and loyalty programs to drive customer engagement and sales, particularly in the food and beverage categories [18][19] - The company plans for supply margins to normalize in the second half of 2025, anticipating a return to a more balanced supply-demand environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, stating it is inflation-proof and recession-resistant, with a focus on value-oriented customers [6][28] - The management highlighted that they are not pulling back on second-half guidance due to tariffs or supply chain uncertainties, indicating a stable outlook [30] - The company is optimistic about the impact of return-to-office mandates and sensible fuel economy regulations on long-term fuel demand [12] Other Important Information - The company added eight new stores in Q1, with ongoing construction of 18 new stores and 20 raze and rebuilds [24] - The effective income tax rate for Q1 was 14.1%, lower than the previous year's rate, due to recognition of energy tax credits [26] Q&A Session Summary Question: Trends in inside sales - Management noted that non-nicotine categories showed improvement due to digital pricing and promotional effectiveness, with expectations for better performance in Q2 due to Easter [33][34] Question: Update on retail margins - Retail margins in April were $0.28 per gallon, with the marginal retailer facing similar cost headwinds, indicating a structural advantage for the company [36][37] Question: Growth in middle and high-income customers - The increase in higher-income customers is attributed to a broader recognition of value, with similar purchasing behavior across income cohorts [40][42] Question: Traffic trends and consumer behavior - Traffic was impacted by weather-related store closures, but management is focused on maintaining competitive pricing to drive traffic [59][60] Question: Store build pace - The company expects to remain second-half weighted for store openings this year, with plans for a more even pace in the following year [64] Question: Operating expenses and staffing - The company is seeing a record number of applications for staff positions, which is positively impacting wage rates and overtime costs [74][75]

Financial Data and Key Metrics Changes - The first quarter results reflected a same store gallon decline of 4.2%, impacted by temporal factors such as the non-repeating leap year and storms, accounting for almost half of the decline [8][10] - Retail margins were $0.02 per gallon higher in Q1 compared to the prior year, with retail margins in the Northeast Region up about $0.45 [10][11] - Cash flow from operations was $129 million in Q1, with total cash capital expenditure of $88 million, resulting in free cash flow of $41 million [24] Business Line Data and Key Metrics Changes - Inside store sales were impacted by a 30 basis point headwind due to the absence of a $1 billion jackpot from the previous year, but candy sales were up 15% year-on-year [13][15] - The nicotine category saw a total nicotine contribution margin increase of 2.8% on a same store basis in Q1, with non-combustible nicotine products up over 7% [15][16] - Food and beverage sales at QuickChek were up nearly 1% in the quarter, driven by menu innovation and targeted promotions [16] Market Data and Key Metrics Changes - The company noted a shift in customer demographics, with growth in middle to high-income customers now representing almost half of the loyalty program membership base [19] - The loyalty programs, Murphy Drive Rewards and QuickChek Rewards, saw membership growth of 1130% in Q1, indicating a shift towards value-seeking behavior among consumers [18][19] Company Strategy and Development Direction - The company is focused on enhancing store productivity and growth through new store openings, raze and rebuilds, and remodeling activities [28] - The capital structure was strengthened with an increase in the revolving credit facility from $350 million to $750 million, allowing for greater flexibility in executing long-term strategies [23] - The company plans for supply margins to normalize in the second half of 2025, anticipating a return to a more balanced supply-demand environment [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, stating it is inflation-proof and recession-resistant, with a focus on value-oriented customers [5][28] - The company does not foresee pulling back on second-half guidance due to tariffs or supply chain uncertainties, indicating a stable outlook [27] - Management highlighted that the hard data shows a resilient customer base, with lower-income consumers still spending on non-discretionary products [20] Other Important Information - The effective income tax rate for Q1 was 14.1%, lower than the previous year's 19.4%, due to energy tax credits and share-based compensation benefits [24] - The company added eight new stores in Q1, with ongoing construction of 18 new stores and 20 raze and rebuilds [22] Q&A Session Summary Question: Trends in Inside Sales - Management noted that non-nicotine categories showed improvement due to digital pricing and promotional effectiveness, while nicotine sales were impacted by a lighter promotional cycle in Q1 [32] Question: Update on Retail Margins - Retail margins in April were $0.28 per gallon, with the marginal retailer facing similar cost headwinds, indicating a structural increase in margins [34] Question: Growth in Middle and High-Income Customers - The increase in higher-income customers is attributed to a broader recognition of the need for value, with similar purchasing behavior across income cohorts [40] Question: In-Store Sales Momentum - QuickChek's food and beverage sales momentum is expected to continue, with promotional intensity remaining competitive throughout the year [44] Question: Operating Expenses and Store Performance - The company is seeing a record number of applications for staff positions, which is positively impacting operating expenses and store performance [72]