Murphy USA Inc. (NYSE:MUSA) Q2 2023 Earnings Conference Call August 3, 2023 11:00 AM ET Company Participants Christian Pikul - Vice President of Investor Relations Andrew Clyde - President and Chief Executive Officer Mindy West - Executive Vice President and Chief Financial Officer Conference Call Participants Anthony Bonadio - Wells Fargo Securities Benjamin Bienvenu - Stephens Inc. Bobby Griffin - Raymond James Bonnie Herzog - Goldman Sachs Operator Good morning, and welcome to the Murphy USA Second Quart ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 001-35914 MURPHY USA INC. (Exact name of registrant as specified in its charter) Delaware 46-2279221 ...

Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $5.1 billion, consistent with the previous year [67] - Adjusted EBITDA decreased to $220 million from $277 million in 2022 [67] - Net income fell to $106.3 million or $4.80 per share, down from $152.4 million or $6.08 per share in Q1 2022 [67] Business Line Data and Key Metrics Changes - Retail fuel margins remained stable, averaging around $0.29 per gallon, with same-store gallons increasing by 1.4% year-over-year [32][33] - Merchandise sales and margins increased by 6% and 5% respectively, driven by strong performance in non-tobacco categories [33] - QuickChek's fuel gallons were down 0.4% on an APSM basis, while merchandise sales increased by 2.4% [34] Market Data and Key Metrics Changes - Average retail prices were $3.15 per gallon compared to $3.43 in the same period last year [38] - Same-store sales and margins at QuickChek faced challenges but showed mid-single-digit growth due to product innovation and price increases [62] - Customer traffic remained robust, contributing to strong merchandise performance despite lower fuel prices [114] Company Strategy and Development Direction - The company announced a new share repurchase authorization of up to $1.5 billion through 2028, aligning with long-term shareholder return expectations [23][66] - Investments in new stores and capabilities are expected to drive sustainable earnings growth and free cash flow generation over the next decade [23] - The company is focused on maintaining an everyday low-price strategy to attract and retain customers, especially in a potentially weaker consumer backdrop [49][78] Management's Comments on Operating Environment and Future Outlook - Management noted that the current quarter's results reflect strong fundamentals despite being a historically shoulder quarter [24] - The company is optimistic about future performance, citing ongoing investments and improvements in operational capabilities [41][42] - Management acknowledged the challenges posed by inflation and commodity price volatility but emphasized the company's resilience and strategic positioning [60][116] Other Important Information - Cash and cash equivalents totaled $102 million as of March 31, up about $40 million since year-end [39] - The company plans to open 35 to 40 new stores in 2023, including six new QuickChek stores [36] - The integration of QuickChek is largely complete, with synergies being captured and innovations being leveraged across both brands [80] Q&A Session Summary Question: Insights on Q1 fuel margins and market dynamics - Management explained that the stability in retail margins was due to a lack of volatility compared to the previous year, which saw significant price fluctuations [45][46] Question: Impact of a potential recession on the business - Management highlighted that their focus on affordability positions them well to attract customers who feel the effects of economic downturns [49][78] Question: Integration progress of QuickChek and its impact - Management noted that the integration is in the later stages, with significant learnings and innovations being shared between the two brands [80] Question: RIN sales performance and its impact on margins - Management clarified that RIN sales were up due to higher pricing, with a significant increase in average sale price compared to the previous year [92] Question: Guidance outlook in light of strong Q1 results - Management emphasized the importance of focusing on long-term growth potential rather than making short-term adjustments based on quarterly performance [88][116]

Financial Performance - For Q1 2023, the company reported net income of $106.3 million, or $4.80 per diluted share, on revenue of $5.1 billion, compared to net income of $152.4 million, or $6.08 per diluted share, on the same revenue in Q1 2022[147]. - Revenues for Q1 2023 decreased by $41.2 million, or 0.8%, due to an 8.2% decline in retail fuel sales prices, partially offset by a 4.9% increase in fuel sales volumes[148]. - Total fuel contribution for Q1 2023 was 28.9 cents per gallon, down from 34.0 cents per gallon in Q1 2022, while retail fuel margin dollars increased by 4.4%[138]. - Adjusted EBITDA for Q1 2023 was $220.2 million, down from $277.0 million in Q1 2022, reflecting a decrease of 20.5%[172]. - Cash provided by operating activities decreased by $189.5 million to $149.7 million in Q1 2023 compared to $339.2 million in Q1 2022[175]. - Net income for the Marketing segment decreased by $43.2 million to $125.9 million in Q1 2023, attributed to lower fuel contribution and increased operating expenses[159]. - Total revenues for the Marketing segment remained flat at approximately $5.1 billion for both Q1 2023 and Q1 2022, with excise taxes collected of $544.8 million in Q1 2023[160]. Expenses and Costs - Store and other operating expenses increased by $15.6 million, or 7.0%, in Q1 2023, primarily due to higher employee-related expenses and store maintenance costs[149]. - SG&A expenses for Q1 2023 increased by $12.8 million, or 27.7%, driven by higher professional and technology fees from business improvement initiatives[150]. - Total PS&W margin dollars, including RINs, decreased by $51.0 million from Q1 2022, despite an increase in RINs revenue of $38.7 million[162]. Capital Expenditures and Debt - The company anticipates total capital expenditures for the full year 2023 to range from approximately $375 million to $425 million, primarily funded through operating cash flow[141]. - Capital expenditures for the three months ended March 31, 2023, totaled $73.4 million, an increase from $69.1 million in the same period of 2022[203]. - As of March 31, 2023, total long-term debt net of current maturities was $1,789.4 million, a slight decrease from $1,791.9 million as of December 31, 2022[184]. - The outstanding balance of the term loan was $392.3 million at March 31, 2023, compared to $393.3 million at December 31, 2022[190]. - The company issued $300 million of 5.625% Senior Notes due 2027, $500 million of 4.75% Senior Notes due 2029, and $500 million of 3.75% Senior Notes due 2031, all fully guaranteed by Murphy USA[185][186][187]. Market Conditions and Risks - The average price of crude oil in Q1 2023 was $76 per barrel, compared to $95 per barrel in Q1 2022, indicating a more stable pricing environment[138]. - The company is exposed to market risks related to the volatility in the price of refined products, primarily gasoline and diesel, which can affect revenues and operating costs[208]. - The company faces risks from geopolitical events, severe weather, and global health pandemics that could impact supply and demand[206]. - Future tobacco or e-cigarette legislation could negatively affect revenues and gross margins[206]. - The company’s financial results may differ materially from expectations due to various factors, including inventory management and supply chain disruptions[206]. Operational Overview - The company operates a total of 1,720 stores across 27 states, with 1,562 under the Murphy brand and 158 under the QuickChek brand as of March 31, 2023[133]. - Total merchandise sales increased by 8.3% to approximately $966.2 million in Q1 2023 compared to $892.0 million in Q1 2022[159]. - Retail fuel margin dollars increased by 4.4% year-over-year, with total fuel volumes up by 4.9% and a retail fuel margin of 23.2 cents per gallon[161]. Financial Management and Strategy - The company has a committed cash flow revolving credit facility of $350 million, which was undrawn as of March 31, 2023, to support working capital and corporate purposes[173]. - The company utilizes limited derivative instruments for risk management, which are monitored by senior management[208]. - The company’s growth strategy includes anticipated store openings and maintaining good business relationships, particularly with Walmart[206]. - The company undertakes no obligation to update or revise any forward-looking statements based on new information or future circumstances[207].

Part I [Business](index=4&type=section&id=Item%201.%20Business) Murphy USA operates 1,712 retail stores across 27 states, primarily marketing motor fuel and convenience merchandise - The company's competitive strengths are built around five key pillars: - **Strategic Proximity to Walmart:** The majority of stores are near Walmart locations, generating significant customer traffic and leveraging fuel discount programs like Walmart+[15](index=15&type=chunk) - **Value Proposition:** Competitively priced fuel and low-priced tobacco products appeal to value-conscious consumers[17](index=17&type=chunk) - **Low-Cost Operating Model:** Smaller store footprints and a high percentage of owned properties (**76%**) contribute to lower overhead and operating costs[18](index=18&type=chunk) - **Distinctive Fuel Supply Chain:** Diverse sourcing options, shipper status on major pipelines, and a strong distribution system ensure reliable, low-cost fuel supply[19](index=19&type=chunk) - **Resilient Financial Profile:** A strong asset base and conservative financial structure enable the company to weather market volatility and return capital to shareholders[20](index=20&type=chunk) - Murphy USA's business strategy focuses on several key initiatives: - **Organic Growth:** Plans to build up to **45 new-to-industry (NTI) locations** and **30 raze-and-rebuilds** in 2023, with a target of up to **55 NTI stores annually** in the future[24](index=24&type=chunk) - **Merchandise Diversification:** Leveraging QuickChek's expertise to enhance food and beverage offerings across the network[25](index=25&type=chunk) - **Cost Leadership:** Implementing efficiency initiatives to control operating and overhead costs[26](index=26&type=chunk) - **Market Volatility Advantage:** Utilizing its supply chain to maintain low prices and consistent margins during fuel price volatility[27](index=27&type=chunk) - **Long-Term Investment:** Maintaining a strong financial position to support growth, dividends, and share repurchases[28](index=28&type=chunk) - As of December 31, 2022, the company had over **15,100 employees**, comprising **6,000 full-time** and **9,100 part-time** workers, guided by core principles of Integrity, Respect, Citizenship, and Spirit[59](index=59&type=chunk)[61](index=61&type=chunk) Store Network Overview (as of Dec 31, 2022) | Brand | Number of Stores | | :--- | :--- | | Murphy USA | 1,151 | | Murphy Express | 404 | | QuickChek | 157 | | **Total** | **1,712** | Key Operating and Financial Indicators (2018-2022) | Indicator | 2022 | 2021 | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Stores | 1,712 | 1,679 | 1,503 | 1,489 | 1,472 | | Total Fuel Contribution (cpg) | 34.3 | 26.3 | 25.2 | 16.1 | 16.2 | | Retail Fuel Margin (cpg) | 29.6 | 21.9 | 22.9 | 13.8 | 14.7 | | Gallons Sold/Store Month (thousands) | 244.6 | 229.4 | 219.5 | 248.3 | 244.0 | | Merchandise Sales/Store Month ($ thousands) | $193.5 | $186.7 | $166.3 | $148.7 | $139.7 | | Merchandise Margin (%) | 19.7% | 19.1% | 15.6% | 16.0% | 16.5% | [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company identifies numerous risks to its business, operations, and financial condition, notably commodity price volatility and Walmart reliance - **Business and Financial Risks:** - **Commodity Price Volatility:** Net income is significantly affected by volatile oil and gasoline prices, which can compress gross margins[85](index=85&type=chunk) - **Walmart Relationship:** A majority of Murphy branded stores are near Walmart Supercenters, making the relationship a key driver, and any deterioration could adversely affect operations[88](index=88&type=chunk) - **Indebtedness:** Existing debt could restrict business operations, limit flexibility, and make it more difficult to meet payment obligations[73](index=73&type=chunk) - **RINs Revenue:** Revenue generated from Renewable Identification Numbers (RINs) may not be sustainable due to fluctuating prices and regulatory uncertainty[89](index=89&type=chunk) - **Industry and Market Risks:** - **Intense Competition:** The company competes with other fuel retailers, including integrated oil companies and non-traditional retailers like supermarkets and discount clubs, on price, convenience, and consumer appeal[110](index=110&type=chunk) - **Tobacco Legislation:** Sales of tobacco products are a significant portion of merchandise sales, and future legislation, tax increases, or campaigns against smoking could adversely affect revenue and profits[112](index=112&type=chunk) - **Changes in Consumer Behavior:** The development of alternative energy technologies and increased adoption of electric vehicles could reduce long-term demand for gasoline[116](index=116&type=chunk) - **Pandemics:** Outbreaks like COVID-19 can disrupt supply chains, reduce customer traffic due to travel restrictions, and negatively impact demand for fuel and merchandise[108](index=108&type=chunk) - **Operational and Other Risks:** - **Supply Chain Reliance:** The company relies on third-party transportation and a single primary supplier (Core-Mark) for over **74%** of its merchandise, exposing it to supply interruption risks[91](index=91&type=chunk)[99](index=99&type=chunk) - **Environmental Regulations:** The business is subject to stringent environmental laws, which could expose it to significant expenditures and liabilities for remediation and compliance[122](index=122&type=chunk) - **Data Security:** A failure to protect sensitive customer, employee, or vendor data could result in financial loss, regulatory sanctions, and reputational damage[133](index=133&type=chunk) - **QuickChek Acquisition:** The anticipated benefits and synergies from the QuickChek acquisition may not be fully realized or may take longer than expected[104](index=104&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) As of December 31, 2022, the company had no unresolved comments from the U.S. Securities and Exchange Commission staff - The Company reported no unresolved comments from the SEC staff as of the end of the fiscal year[141](index=141&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) The company's properties include its headquarters, QuickChek office, and numerous owned and leased retail stores and terminals - The company's principal properties consist of its headquarters, support centers, and its network of owned and leased retail stores and terminals, as described in Item 1 of this report[67](index=67&type=chunk)[142](index=142&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) Murphy USA is involved in ordinary course legal proceedings, including climate change lawsuits, with no material adverse financial impact expected - The company is a defendant in lawsuits filed by the City of Charleston, South Carolina, and the state of Delaware, which allege damages resulting from climate change[144](index=144&type=chunk) - Management believes that the ultimate resolution of all legal proceedings, which have arisen in the ordinary course of business, is not expected to have a material adverse effect on the company's financial results[143](index=143&type=chunk) [Information About our Executive Officers](index=29&type=section&id=Information%20About%20our%20Executive%20Officers) This section provides biographical information for the company's executive officers as of December 31, 2022 - Key executive officers of the company include: - **R. Andrew Clyde:** President and Chief Executive Officer[147](index=147&type=chunk) - **Mindy K. West:** Executive Vice President, Fuels, Chief Financial Officer, and Treasurer[148](index=148&type=chunk) - **Robert J. Chumley:** Senior Vice President, Chief Digital Officer[149](index=149&type=chunk) - **Renee M. Bacon:** Senior Vice President, Sales and Operations and Chief Merchandising Officer[150](index=150&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under 'MUSA', with active dividends and a significant share repurchase program - The company paid total dividends of **$1.27 per share** during 2022, an increase from **$1.04 per share** in 2021[159](index=159&type=chunk) - In 2022, the company repurchased **3,328,795 common shares** for a total of **$806.4 million**, at an average price of **$242.24 per share**[162](index=162&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total Shares Purchased (Shares) | Average Price Paid Per Share ($/Share) | Approx. Dollar Value Remaining Under Plan ($) | | :--- | :--- | :--- | :--- | | Oct 2022 | 371,671 | $277.44 | $349,999,922 | | Nov 2022 | 100,082 | $290.57 | $320,918,746 | | Dec 2022 | 374,238 | $286.60 | $213,661,734 | | **Q4 Total** | **845,991** | **$283.05** | **$213,661,734** | Cumulative Shareholder Return Performance ($100 Investment on Dec 31, 2017) | Date | Murphy USA Inc. ($) | S&P 500 Index ($) | S&P Retail Select Index ($) | | :--- | :--- | :--- | :--- | | Dec 31, 2017 | $100 | $100 | $100 | | Dec 31, 2018 | $95 | $94 | $91 | | Dec 31, 2019 | $146 | $121 | $102 | | Dec 31, 2020 | $163 | $140 | $142 | | Dec 31, 2021 | $248 | $178 | $202 | | Dec 31, 2022 | $348 | $144 | $136 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Murphy USA's net income significantly increased to $672.9 million, driven by higher fuel margins and volumes [Results of Operations](index=36&type=section&id=Results%20of%20Operations) For fiscal year 2022, net income rose to $672.9 million, driven by higher fuel contribution and improved merchandise performance Consolidated Financial Highlights (2022 vs. 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues ($ billion) | $23.4 | $17.4 | | Net Income ($ million) | $672.9 | $396.9 | | Diluted EPS ($) | $28.10 | $14.92 | Total Fuel Contribution Analysis | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Fuel Contribution ($ M) | $1,630.0 | $1,144.3 | | Retail Fuel Volume (Million gal) | 4,751.5 | 4,352.2 | | Total Fuel Contribution (cpg) | 34.3 | 26.3 | | Retail Fuel Margin (cpg) | 29.6 | 21.9 | Merchandise Performance Analysis | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Merchandise Contribution ($ M) | $767.1 | $701.6 | | Total Merchandise Sales ($ M) | $3,903.2 | $3,677.7 | | Merchandise Unit Margin (%) | 19.7% | 19.1% | Reconciliation of Net Income to Adjusted EBITDA | (Millions of dollars) | 2022 | 2021 | | :--- | :--- | :--- | | Net income | $672.9 | $396.9 | | Income tax expense | $210.9 | $125.0 | | Interest expense, net | $82.3 | $82.3 | | Depreciation and amortization | $220.4 | $212.6 | | **EBITDA** | **$1,186.5** | **$816.8** | | Other adjustments | $4.4 | $11.2 | | **Adjusted EBITDA** | **$1,190.9** | **$828.0** | [Capital Resources and Liquidity](index=42&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintained strong liquidity in 2022 with $994.7 million in operating cash flow, funding share repurchases and property additions - Capital expenditures for 2023 are expected to range from **$375 million to $425 million**, primarily allocated to retail growth (**$285M-$315M**) and maintenance capital (**$50M-$60M**)[246](index=246&type=chunk) Cash Flow Summary (2022 vs. 2021) | (Millions of dollars) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from Operating Activities | $994.7 | $737.4 | | Net cash used in Investing Activities | $(319.3) | $(914.2) | | Net cash (used in) from Financing Activities | $(871.3) | $269.6 | Long-Term Debt Summary (as of Dec 31, 2022) | Debt Instrument | Amount (Millions) | | :--- | :--- | | 5.625% senior notes due 2027 | $298.4 | | 4.75% senior notes due 2029 | $495.8 | | 3.75% senior notes due 2031 | $494.9 | | Term loan due 2028 | $393.3 | | Capitalized lease obligations & other | $133.6 | | **Total Long-Term Debt** | **$1,816.0** | [Critical Accounting Policies](index=47&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies involve significant judgment in areas like goodwill impairment and asset retirement obligations - Goodwill and intangible assets are tested for impairment annually, or more frequently if indicators of impairment exist[247](index=247&type=chunk) - Long-lived assets, such as individual retail stores, are reviewed for impairment whenever events, like consistent negative cash flow over a 24-month period, indicate the carrying amount may not be recoverable[249](index=249&type=chunk) - The company records asset retirement obligations (AROs) for the estimated future cost to remove underground storage tanks, based on historical costs and estimates of future changes[255](index=255&type=chunk)[256](index=256&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from commodity price volatility and interest rate fluctuations, managed through limited derivative use - The company is exposed to commodity price risk from volatility in crude oil and refined product prices, which it manages with limited use of derivative instruments[261](index=261&type=chunk) - Interest rate risk exists due to the floating-rate term loan (**$394 million** balance at year-end 2022) tied to LIBOR, with an interest rate swap hedging a portion[263](index=263&type=chunk)[264](index=264&type=chunk) [Financial Statements and Supplementary Data](index=50&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, including balance sheets and income statements Consolidated Balance Sheet Data (as of Dec 31) | (Millions of dollars) | 2022 | 2021 | | :--- | :--- | :--- | | Total Current Assets | $726.8 | $767.8 | | Total Assets | $4,123.2 | $4,048.2 | | Total Current Liabilities | $854.2 | $675.3 | | Total Liabilities | $3,482.5 | $3,241.0 | | Total Stockholders' Equity | $640.7 | $807.2 | Consolidated Income Statement Data (Year Ended Dec 31) | (Millions of dollars) | 2022 | 2021 | | :--- | :--- | :--- | | Total Operating Revenues | $23,446.1 | $17,360.5 | | Income from Operations | $968.4 | $604.0 | | Income Before Income Taxes | $883.8 | $521.9 | | Net Income | $672.9 | $396.9 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=51&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes or disagreements with its accountants on accounting principles or financial disclosure - There were no disagreements with accountants on accounting and financial disclosure[266](index=266&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[266](index=266&type=chunk) - Based on an evaluation against the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2022[268](index=268&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=52&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement - Required information for this item is incorporated by reference from the company's 2023 Proxy Statement[272](index=272&type=chunk) [Executive Compensation](index=52&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the definitive Proxy Statement - Required information for this item is incorporated by reference from the company's 2023 Proxy Statement[274](index=274&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=52&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the Proxy Statement - Required information for this item is incorporated by reference from the company's 2023 Proxy Statement[275](index=275&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=52&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the Proxy Statement - Required information for this item is incorporated by reference from the company's 2023 Proxy Statement[275](index=275&type=chunk) [Principal Accountant Fees and Services](index=52&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to and services provided by the principal independent accountant is incorporated by reference - Required information for this item is incorporated by reference from the company's 2023 Proxy Statement[276](index=276&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=53&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K - This section provides an index of all financial statements, schedules, and exhibits included in or incorporated by reference into the Form 10-K filing[278](index=278&type=chunk)[282](index=282&type=chunk) [Form 10-K Summary](index=56&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary provided in this report - No Form 10-K summary is provided[287](index=287&type=chunk)

Murphy USA Inc. (NYSE:MUSA) Q4 2022 Earnings Conference Call February 2, 2023 11:00 AM ET Company Participants Christian Pikul - Vice President, Investor Relations Andrew Clyde - President and CEO Mindy West - Executive Vice President and CFO Donnie Smith - Vice President and Controller Conference Call Participants Bonnie Herzog - Goldman Sachs Anthony Bonadio - Wells Fargo Bobby Griffin - Raymond James Ben Bienvenu - Stephens John Royall - JPMorgan Rob Dickerson - Jefferies Operator Ladies and gentlemen, t ...

Murphy USA Inc. (NYSE:MUSA) Q3 2022 Earnings Conference Call October 27, 2022 11:00 AM ET Company Participants Christian Pikul - Vice President, Investor Relations Andrew Clyde - President and Chief Executive Officer Mindy West - Executive Vice President, Fuels and Chief Financial Officer Conference Call Participants Ben Bienvenu - Stephens Anthony Bonadio - Wells Fargo Robert Dickerson - Jefferies John Royall - JP Morgan Carla Casella - JP Morgan Bobby Griffin - Raymond James Bonnie Herzog - Goldman Sachs ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 001-35914 MURPHY USA INC. (Exact name of registrant as specified in its charter) Delaware 46-227 ...

Murphy USA Inc. (NYSE:MUSA) Q2 2022 Earnings Conference Call July 28, 2022 11:00 AM ET Company Participants Mitchell Freer - Investor Relations Analyst Andrew Clyde - President and Chief Executive Officer Mindy West - Executive Vice President, Fuels and Chief Financial Officer Conference Call Participants Ben Bienvenu - Stephens Anthony Bonadio - Wells Fargo Bonnie Herzog - Goldman Sachs Bobby Griffin - Raymond James Carla Casella - JP Morgan Operator Good morning. My name is Chantelle, and I will be your c ...

Part I – Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Murphy USA's unaudited consolidated financial statements, including balance sheets, income, cash flows, equity, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202022%20(unaudited)%20and%20December%2031%2C%202021)) Presents Murphy USA's financial position, detailing assets, liabilities, and equity at specific dates Consolidated Balance Sheet Highlights (Millions of dollars) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :------------------ | | Total Assets | $4,217.8 | $4,048.2 | | Total Liabilities | $3,455.1 | $3,241.0 | | Total Stockholders' Equity | $762.7 | $807.2 | | Current Assets | $882.3 | $767.8 | | Current Liabilities | $852.7 | $675.3 | - Total assets increased by **$169.6 million**, primarily driven by increases in accounts receivable and inventories[8](index=8&type=chunk) - Total liabilities increased by **$214.1 million**, mainly due to higher trade accounts payable and accrued liabilities[8](index=8&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021%20(unaudited))) Presents Murphy USA's financial performance, detailing revenues, operating income, and net income for specified periods Consolidated Statements of Income (Three Months Ended June 30, Millions of dollars, except per share amounts) | Metric | 2022 | 2021 | YoY Change (%) | | :------------------------- | :----- | :----- | :------------- | | Total Operating Revenues | $6,766.7 | $4,456.0 | 51.9% | | Income from Operations | $262.3 | $190.2 | 37.9% | | Net Income | $183.3 | $128.8 | 42.3% | | Diluted Earnings Per Share | $7.53 | $4.79 | 57.2% | Consolidated Statements of Income (Six Months Ended June 30, Millions of dollars, except per share amounts) | Metric | 2022 | 2021 | YoY Change (%) | | :------------------------- | :----- | :----- | :------------- | | Total Operating Revenues | $11,885.1 | $7,993.1 | 48.7% | | Income from Operations | $483.0 | $284.8 | 69.6% | | Net Income | $335.7 | $184.1 | 82.3% | | Diluted Earnings Per Share | $13.59 | $6.73 | 101.9% | - Petroleum product sales significantly increased, contributing to the overall revenue growth[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021)) Reports Murphy USA's comprehensive income, including net income and other comprehensive income (loss) components Consolidated Statements of Comprehensive Income (Millions of dollars) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net Income | $183.3 | $128.8 | | Other Comprehensive Income (Loss) | $0.2 | $0.2 | | Comprehensive Income | $183.5 | $129.0 | | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net Income | $335.7 | $184.1 | | Other Comprehensive Income (Loss) | $0.4 | $0.4 | | Comprehensive Income | $336.1 | $184.5 | - Other comprehensive income (loss) remained stable and immaterial across both periods[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202022%20and%202021%20(unaudited))) Summarizes Murphy USA's cash inflows and outflows from operating, investing, and financing activities for specified periods Consolidated Statements of Cash Flows (Six Months Ended June 30, Millions of dollars) | Activity | 2022 | 2021 | | :--------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $516.5 | $330.8 | | Net cash required by investing activities | $(137.4) | $(778.3) | | Net cash required by financing activities | $(395.1) | $448.9 | | Net increase (decrease) in cash | $(16.0) | $1.4 | | Cash at end of period | $240.4 | $165.0 | - Operating cash flow increased significantly due to higher net income and changes in noncash working capital[16](index=16&type=chunk) - Investing cash requirements decreased substantially in **2022** due to the absence of a major acquisition like QuickChek, which occurred in **2021**[16](index=16&type=chunk) - Financing activities shifted from providing cash in **2021** to requiring cash in **2022**, primarily due to increased share repurchases and no new debt borrowings[16](index=16&type=chunk) [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021)) Details changes in Murphy USA's stockholders' equity, including net income, share repurchases, and other equity adjustments Total Stockholders' Equity (Millions of dollars) | Date | Amount | | :----------------- | :----- | | December 31, 2021 | $807.2 | | June 30, 2022 | $762.7 | - The decrease in total stockholders' equity was primarily influenced by significant treasury stock repurchases (**$355.4 million** for the six months ended June 30, 2022), partially offset by net income[22](index=22&type=chunk) - Retained earnings increased from **$2,112.4 million** at December 31, 2021, to **$2,433.3 million** at June 30, 2022, driven by net income[22](index=22&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited))) Provides detailed explanations and breakdowns for various accounts and accounting policies within the financial statements [Note 1 — Description of Business and Basis of Presentation](index=10&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business%20and%20Basis%20of%20Presentation)) Describes Murphy USA's business operations, QuickChek acquisition, and the basis of financial statement presentation - Murphy USA Inc operates a network of **1,695** retail gasoline and convenience stores (Murphy USA, Murphy Express, QuickChek) and markets refined products to unbranded wholesale customers[25](index=25&type=chunk) - The company acquired QuickChek Corporation on January 29, 2021, expanding its network and food and beverage capabilities[26](index=26&type=chunk) - Recently issued accounting standards (ASU 2021-01 and ASU 2021-08) are not expected to have a material impact on the consolidated financial statements[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2 — Revenues](index=11&type=section&id=Note%202%20%E2%80%94%20Revenues)) Details Murphy USA's revenue recognition policies and provides a breakdown of operating revenues by source - Revenue is recognized when control of petroleum products, convenience merchandise, Renewable Identification Numbers (RINs), and other assets is transferred to customers[33](index=33&type=chunk) Total Operating Revenues by Source (Three Months Ended June 30, Millions of dollars) | Revenue Source | 2022 | 2021 | | :----------------------- | :----- | :----- | | Petroleum product sales | $5,690.3 | $3,404.5 | | Merchandise sales | $994.6 | $963.4 | | Other operating revenues | $81.8 | $88.1 | | **Total operating revenues** | **$6,766.7** | **$4,456.0** | Total Operating Revenues by Source (Six Months Ended June 30, Millions of dollars) | Revenue Source | 2022 | 2021 | | :----------------------- | :----- | :----- | | Petroleum product sales | $9,838.7 | $6,040.3 | | Merchandise sales | $1,886.6 | $1,796.6 | | Other operating revenues | $159.8 | $156.2 | | **Total operating revenues** | **$11,885.1** | **$7,993.1** | - Trade accounts receivable related to customer contracts increased from **$111.8 million** at December 31, 2021, to **$208.6 million** at June 30, 2022[45](index=45&type=chunk) [Note 3 — Inventories](index=13&type=section&id=Note%203%20%E2%80%94%20Inventories)) Explains Murphy USA's inventory valuation methods and provides a breakdown of inventory categories and LIFO reserve Inventories (Millions of dollars) | Category | June 30, 2022 | December 31, 2021 | | :------------------------------------------ | :------------ | :------------------ | | Petroleum products - FIFO basis | $590.2 | $339.8 | | Store merchandise for resale - FIFO basis | $188.7 | $173.1 | | Less LIFO reserve | $(473.5) | $(228.0) | | **Total inventories** | **$314.0** | **$292.3** | - Petroleum products and certain QuickChek store merchandise are valued using the Last-In, First-Out (LIFO) method[46](index=46&type=chunk) - The LIFO reserve for petroleum products increased from **$227.5 million** at December 31, 2021, to **$473.0 million** at June 30, 2022[46](index=46&type=chunk) [Note 4 — Business Acquisition](index=14&type=section&id=Note%204%20%E2%80%94%20Business%20Acquisition)) Details the acquisition of QuickChek Corporation, including purchase price, goodwill, and related costs - On January 29, 2021, Murphy USA acquired **100%** of QuickChek Corporation for **$641.1 million** (net of cash acquired) to expand into the Northeast and enhance food and beverage capabilities[48](index=48&type=chunk)[51](index=51&type=chunk) - The acquisition resulted in the recognition of **$328.0 million** in goodwill, reflecting expected synergies[49](index=49&type=chunk)[51](index=51&type=chunk) Acquisition Related Costs (Millions of dollars) | Period | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Six months ended June 30 | $1.0 | $9.0 | [Note 5 — Goodwill and Intangible Assets](index=15&type=section&id=Note%205%20%E2%80%94%20Goodwill%20and%20Intangible%20Assets)) Provides information on Murphy USA's goodwill and intangible assets, including amortization and indefinite-lived assets - Goodwill remained constant at **$328.0 million** at both June 30, 2022, and December 31, 2021, assigned to the Marketing segment[54](index=54&type=chunk)[55](index=55&type=chunk) Intangible Assets, Net of Amortization (Millions of dollars) | Category | June 30, 2022 | December 31, 2021 | | :------------------------------------------ | :------------ | :------------------ | | Intangible assets subject to amortization | $24.9 | $25.1 | | Intangible assets not subject to amortization | $115.6 | $115.6 | | **Total intangible assets, net** | **$140.5** | **$140.7** | - The trade name, valued at **$115.4 million**, has an indefinite life and is not subject to amortization[56](index=56&type=chunk)[58](index=58&type=chunk) [Note 6 — Long-Term Debt](index=16&type=section&id=Note%206%20%E2%80%94%20Long-Term%20Debt)) Details Murphy USA's long-term debt obligations, including senior notes, term loans, revolving credit facility, and covenants Long-Term Debt, Net of Current Maturities (Millions of dollars) | Date | Amount | | :----------------- | :----- | | June 30, 2022 | $1,795.5 | | December 31, 2021 | $1,800.1 | - The company's debt includes **$300 million** of **5.625%** Senior Notes due **2027**, **$500 million** of **4.75%** Senior Notes due **2029**, and **$500 million** of **3.75%** Senior Notes due **2031**[59](index=59&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - A senior secured term loan of **$396 million** was outstanding at June 30, 2022, due January 2028, with quarterly principal payments of **$1 million**[59](index=59&type=chunk)[66](index=66&type=chunk) - The company has a **$350 million** revolving credit facility, which was undrawn at June 30, 2022, with **$4.7 million** in outstanding letters of credit[66](index=66&type=chunk) - The total leverage ratio at June 30, 2022, was **1.76 to 1.0**, well below the covenant limit of **5.0 to 1.0**, indicating no limitation on restricted payments[72](index=72&type=chunk) [Note 7 — Asset Retirement Obligations (ARO)](index=18&type=section&id=Note%207%20%E2%80%94%20Asset%20Retirement%20Obligations%20(ARO))) Explains Murphy USA's asset retirement obligations, primarily related to store dismantling, and changes in the liability - The majority of ARO relates to estimated costs to dismantle and abandon retail gasoline stores[74](index=74&type=chunk) Asset Retirement Obligations (Millions of dollars) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------- | :------------ | :------------------ | | Balance at beginning of period | $39.2 | $35.1 | | Accretion expense | $1.4 | $2.5 | | Settlements of liabilities | $(1.5) | $(1.0) | | Liabilities incurred | $1.0 | $1.4 | | **Balance at end of period** | **$40.1** | **$39.2** | [Note 8 — Income Taxes](index=19&type=section&id=Note%208%20%E2%80%94%20Income%20Taxes)) Presents Murphy USA's approximate effective tax rates and details tax benefits related to stock compensation Approximate Effective Tax Rates | Period | 2022 | 2021 | | :------------------------ | :----- | :----- | | Three months ended June 30 | 24.0% | 24.2% | | Six months ended June 30 | 24.0% | 24.3% | - For the six months ended June 30, 2022, the company recognized approximately **$2.0 million** of excess tax benefits related to stock compensation[78](index=78&type=chunk) [Note 9 — Incentive Plans](index=19&type=section&id=Note%209%20%E2%80%94%20Incentive%20Plans)) Describes Murphy USA's equity incentive plans, including stock options, RSUs, PSUs, and related compensation expense - The company operates the MUSA 2013 Long-Term Incentive Plan and the 2013 Stock Plan for Non-employee Directors, granting stock options, restricted stock units (RSUs), and performance-based restricted stock units (PSUs)[80](index=80&type=chunk)[90](index=90&type=chunk) Share-Based Compensation Expense (Millions of dollars) | Period | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Six months ended June 30 | $7.0 | $7.4 | Outstanding Equity Awards (June 30, 2022) | Award Type | Number of Units | | :-------------------------------- | :-------------- | | Stock Options | 338,250 | | Employee Restricted Stock Units | 153,354 | | Employee Performance-Based RSUs | 105,763 | | Director Restricted Stock Units | 26,863 | [Note 10 — Financial Instruments and Risk Management](index=22&type=section&id=Note%2010%20%E2%80%94%20Financial%20Instruments%20and%20Risk%20Management)) Outlines Murphy USA's use of derivative instruments to manage commodity price and interest rate risks - The company makes limited use of derivative instruments to manage commodity price and interest rate risks, not for speculative purposes[93](index=93&type=chunk) - All current commodity derivative activity was immaterial as of June 30, 2022[93](index=93&type=chunk) Pre-tax Gains Reclassified to Interest Expense from Interest Rate Swap (Millions of dollars) | Period | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Three months ended June 30 | $0.3 | $0.2 | | Six months ended June 30 | $0.5 | $0.4 | - The remaining balance of accumulated other comprehensive loss on the previous interest rate swap was **$1.1 million** at June 30, 2022[95](index=95&type=chunk) [Note 11 — Earnings Per Share](index=22&type=section&id=Note%2011%20%E2%80%94%20Earnings%20Per%20Share)) Details Murphy USA's basic and diluted earnings per common share, including the impact of share repurchases Earnings Per Common Share (Three Months Ended June 30) | Metric | 2022 | 2021 | | :------------------- | :----- | :----- | | Basic EPS | $7.65 | $4.85 | | Diluted EPS | $7.53 | $4.79 | Earnings Per Common Share (Six Months Ended June 30) | Metric | 2022 | 2021 | | :------------------- | :----- | :----- | | Basic EPS | $13.81 | $6.82 | | Diluted EPS | $13.59 | $6.73 | - The company repurchased **1,716,166** shares of common stock for **$355.4 million** during the six months ended June 30, 2022, under its share repurchase program[97](index=97&type=chunk) - Diluted weighted-average common shares outstanding decreased from **27,351 thousand** in **2021** to **24,708 thousand** in **2022** for the six-month period[99](index=99&type=chunk) [Note 12 — Other Financial Information](index=23&type=section&id=Note%2012%20%E2%80%94%20Other%20Financial%20Information)) Provides additional financial disclosures, including cash income taxes paid, interest paid, and noncash working capital changes Cash Flow Disclosures (Six Months Ended June 30, Millions of dollars) | Metric | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Cash income taxes paid, net of refunds | $87.4 | $44.6 | | Interest paid, net of capitalized amounts | $39.5 | $31.4 | Net (Increase) Decrease in Noncash Operating Working Capital (Six Months Ended June 30, Millions of dollars) | Metric | 2022 | 2021 | | :------------------------------------------ | :--- | :--- | | Accounts receivable | $(99.9) | $(83.4) | | Inventories | $(21.8) | $(8.3) | | Accounts payable and accrued liabilities | $175.9 | $114.1 | | **Net (increase) decrease in working capital** | **$47.8** | **$17.3** | [Note 13 — Assets and Liabilities Measured at Fair Value](index=24&type=section&id=Note%2013%20%E2%80%94%20Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value)) Details the fair value measurements of Murphy USA's financial instruments, including debt and derivatives - The fair value of commodity derivatives contracts and interest rate swap derivatives was immaterial at June 30, 2022[105](index=105&type=chunk) Fair Value of Current and Long-Term Debt (excluding finance leases, Millions of dollars) | Date | Carrying Amount | Fair Value | | :----------------- | :-------------- | :--------- | | June 30, 2022 | $(1,673.3) | $(1,661.8) | | December 31, 2021 | $(1,673.5) | $(1,709.5) | - The fair value of current and long-term debt was estimated based on Level 1 inputs (rates offered for debt of the same maturities)[106](index=106&type=chunk) [Note 14 — Contingencies](index=24&type=section&id=Note%2014%20%E2%80%94%20Contingencies)) Discusses Murphy USA's legal proceedings, environmental liabilities, insurance claims, and contingent liabilities - The company is subject to various governmental actions, environmental laws, and legal proceedings, including climate change lawsuits[108](index=108&type=chunk)[111](index=111&type=chunk)[115](index=115&type=chunk) - Management believes that future remediation costs for known contamination sites and the ultimate resolution of legal matters will not have a material adverse effect on the company's net income, financial condition, or liquidity[114](index=114&type=chunk)[115](index=115&type=chunk) - An accrued liability of **$42.8 million** is maintained for estimated incurred but unpaid insurance claims as of June 30, 2022[117](index=117&type=chunk) - Contingent liabilities of **$9.8 million** on outstanding letters of credit at June 30, 2022, are considered to have a remote likelihood of being drawn[120](index=120&type=chunk) [Note 15 — Lease Accounting](index=26&type=section&id=Note%2015%20%E2%80%94%20Lease%20Accounting)) Explains Murphy USA's lease accounting policies and provides details on leased assets, liabilities, and lease costs - Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments[121](index=121&type=chunk) Leased Assets and Liabilities (Millions of dollars) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :------------------ | | Total leased assets | $574.1 | $556.5 | | Total lease liabilities | $591.3 | $568.6 | Net Lease Costs (Six Months Ended June 30, Millions of dollars) | Lease Type | 2022 | 2021 | | :------------------------ | :--- | :--- | | Operating lease cost | $24.5 | $19.8 | | Finance lease cost | $12.5 | $10.0 | | **Total net lease costs** | **$37.0** | **$29.8** | - The weighted average remaining lease term for operating leases was **16.1 years** and for finance leases was **13.4 years** at June 30, 2022[128](index=128&type=chunk) [Note 16 — Business Segment](index=28&type=section&id=Note%2016%20%E2%80%94%20Business%20Segment)) Describes Murphy USA's single operating segment (Marketing) and presents its financial performance - The company operates as a single Marketing segment, which includes retail marketing stores and product supply and wholesale assets[129](index=129&type=chunk) Marketing Segment Performance (Millions of dollars) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | | External Revenues | $6,766.7 | $4,455.9 | | Income (Loss) | $199.1 | $145.6 | | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------- | :------------------------------- | :------------------------------- | | External Revenues | $11,885.0 | $7,993.0 | | Income (Loss) | $368.2 | $226.0 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations)) This section provides management's analysis of Murphy USA's financial performance, significant trends, and future outlook. It highlights strong revenue and net income growth for Q2 and YTD June 2022, driven by higher fuel and merchandise contributions, despite inflationary pressures and volatile crude oil prices. The company's liquidity remains strong, supported by operating cash flow and available credit facilities, with ongoing investments in store expansion and share repurchases [Executive Overview](index=30&type=section&id=Executive%20Overview)) Provides an overview of Murphy USA's operations, key financial highlights, and strategic initiatives - Murphy USA operates **1,695** stores across **27** states, including Murphy USA, Murphy Express, and QuickChek brands, with the QuickChek acquisition in **2021** enhancing its food and beverage model[136](index=136&type=chunk)[137](index=137&type=chunk) - Net income for Q2 **2022** increased to **$183.3 million** (**$7.53** diluted EPS) from **$128.8 million** (**$4.79** diluted EPS) in Q2 **2021**, driven by higher fuel and merchandise contributions[150](index=150&type=chunk) - Crude oil prices averaged **$109** per barrel in Q2 **2022**, up from **$66** in Q2 **2021**, impacting fuel costs and retail prices[141](index=141&type=chunk) - Total fuel contribution for Q2 **2022** was **34.9 cents per gallon (cpg)**, compared to **28.2 cpg** in Q2 **2021**[141](index=141&type=chunk) - Anticipated capital expenditures for full year **2022** range from **$350 million** to **$400 million**, primarily for retail growth[144](index=144&type=chunk) - The company maintains strong liquidity with **$240.4 million** in cash and cash equivalents and an undrawn **$350 million** revolving credit facility at June 30, 2022[194](index=194&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations)) Analyzes Murphy USA's financial performance, including revenue drivers, expenses, and segment contributions Consolidated Net Income (Millions of dollars, except per share amounts) | Period | 2022 | 2021 | | :-------------------------------- | :----- | :----- | | Three months ended June 30 | $183.3 | $128.8 | | Diluted EPS (3 months) | $7.53 | $4.79 | | Six months ended June 30 | $335.7 | $184.1 | | Diluted EPS (6 months) | $13.59 | $6.73 | - Total operating revenues for Q2 **2022** increased by **$2.3 billion** (**51.9%**) compared to Q2 **2021**, driven by higher retail fuel sales prices and volumes, and increased merchandise sales[154](index=154&type=chunk) - Store and other operating expenses increased by **$43.3 million** (**20.7%**) in Q2 **2022**, primarily due to higher payment fees, employee-related costs, and store maintenance[156](index=156&type=chunk) Marketing Segment Income (Millions of dollars) | Period | 2022 | 2021 | | :-------------------------------- | :----- | :----- | | Three months ended June 30 | $199.1 | $145.6 | | Six months ended June 30 | $368.2 | $226.0 | - Retail fuel margin increased to **26.5 cpg** in Q2 **2022** from **21.8 cpg** in Q2 **2021**, with retail fuel volumes improving by **7.8%**[175](index=175&type=chunk) - Total merchandise sales increased by **3.2%** to **$994.6 million** in Q2 **2022**, with total merchandise contribution improving by **6.6%**[177](index=177&type=chunk) Adjusted EBITDA (Millions of dollars) | Period | 2022 | 2021 | | :-------------------------------- | :----- | :----- | | Three months ended June 30 | $316.6 | $244.5 | | Six months ended June 30 | $593.6 | $399.3 | [Capital Resources and Liquidity](index=40&type=section&id=Capital%20Resources%20and%20Liquidity)) Examines Murphy USA's cash flow, capital expenditures, debt, and share repurchase activities - Net cash provided by operating activities increased to **$516.5 million** for the six months ended June 30, 2022, from **$330.8 million** in **2021**[196](index=196&type=chunk) - Cash required by investing activities decreased to **$137.4 million** in **2022** from **$778.3 million** in **2021**, primarily due to the QuickChek acquisition in the prior year[197](index=197&type=chunk) - Financing activities required **$395.1 million** in cash in **2022**, compared to providing **$448.9 million** in **2021**, mainly due to increased share repurchases and no new debt borrowings[198](index=198&type=chunk) Share Repurchase Program (Six Months Ended June 30) | Year | Shares Repurchased | Amount (Millions $) | | :--- | :----------------- | :------------------ | | 2022 | 1,716,166 | $355.4 | | 2021 | 1,483,758 | $198.3 | - Approximately **$664.6 million** remained authorized for share repurchases under the **$1 billion** program as of June 30, 2022[200](index=200&type=chunk) Capital Spending by Segment (Six Months Ended June 30, Millions of dollars) | Segment | 2022 | 2021 | | :-------------------- | :--- | :--- | | Marketing | $133.0 | $120.2 | | Corporate and other | $14.5 | $24.0 | | **Total** | **$147.5** | **$144.6** | [Critical Accounting Policies](index=44&type=section&id=Critical%20Accounting%20Policies)) Summarizes Murphy USA's critical accounting policies and any recent updates or changes - There have been no material updates to the company's critical accounting policies since its Annual Report on Form 10-K for the year ended December 31, 2021[220](index=220&type=chunk) [FORWARD-LOOKING STATEMENTS](index=44&type=section&id=FORWARD-LOOKING%20STATEMENTS)) Highlights forward-looking statements and associated risks and uncertainties regarding future performance - The report contains forward-looking statements regarding M&A activity, store openings, margins, RINs sales, operational trends, dividends, and share repurchases[222](index=222&type=chunk) - These statements are subject to significant risks and uncertainties, including the ability to realize QuickChek synergies, maintain the Walmart relationship, execute growth strategy, manage supply chain, geopolitical events, severe weather, cybersecurity, regulatory changes, capital allocation, debt covenants, credit availability, and interest rates[222](index=222&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk)) Assesses Murphy USA's exposure to market risks from commodity prices and interest rates, and risk management strategies - The company is exposed to market risks from volatility in refined product prices (gasoline and diesel) and interest rates on its floating rate term loan and revolving facility[224](index=224&type=chunk)[226](index=226&type=chunk) - Limited derivative instruments, including short-term commodity derivative contracts and an interest rate swap hedging **$90.5 million** of the term loan, are used for risk management[225](index=225&type=chunk)[227](index=227&type=chunk) - A **10%** increase or decrease in commodity prices or the underlying interest rate would have an immaterial impact on the company's financial statements[225](index=225&type=chunk)[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures)) Reports on the effectiveness of Murphy USA's disclosure controls and internal control over financial reporting - Management, with the participation of principal executive and financial officers, concluded that disclosure controls and procedures were effective as of June 30, 2022[229](index=229&type=chunk) - There have been no material changes in the company's internal control over financial reporting during the quarter ended June 30, 2022[230](index=230&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings)) Details Murphy USA's involvement in legal proceedings, including climate change lawsuits, and their potential impact - The company is engaged in routine legal proceedings incidental to its business[231](index=231&type=chunk) - Lawsuits alleging damages from climate change have been filed against energy companies, including Murphy USA, by the City of Charleston, SC, and the state of Delaware[232](index=232&type=chunk) - Based on available information, the ultimate resolution of these legal matters is not expected to have a material adverse effect on the company's net income, financial condition, or liquidity[231](index=231&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors)) Confirms no new material risk factors beyond those previously disclosed in annual and quarterly reports - No new risk factors have been identified since the Annual Report on Form 10-K and the prior quarterly report on Form 10-Q[233](index=233&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds)) Reports on Murphy USA's share repurchase program, including shares bought and remaining authorization Issuer Purchases of Equity Securities (Three Months Ended June 30, 2022) | Period Duration | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | April 1, 2022 to April 30, 2022 | 84,430 | $215.87 | | May 1, 2022 to May 31, 2022 | 296,280 | $239.85 | | June 1, 2022 to June 30, 2022 | 498,503 | $229.37 | | **Total (3 months)** | **879,213** | **$231.60** | - As of June 30, 2022, approximately **$664.6 million** remained available for repurchase under the **$1 billion** share repurchase program authorized through December 31, 2026[234](index=234&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information)) Indicates that there is no other information to report in this section - No other information is reported in this section[235](index=235&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits)) Lists all exhibits filed with the Form 10-Q, including certifications required by the Sarbanes-Oxley Act and various Inline XBRL documents - Exhibits include certifications required by Rule 13a-14(a) and 18 U.S.C Section 1350 for principal executive and financial officers[240](index=240&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Labels, Presentation Linkbase) and the Cover Page Interactive Data File are also listed as exhibits[240](index=240&type=chunk) Signatures Certifies the accuracy of the report by authorized officers of Murphy USA Inc - The report was signed on behalf of Murphy USA Inc by Donald R Smith Jr, Vice President and Controller (Chief Accounting Officer and Duly Authorized Officer), on July 28, 2022[238](index=238&type=chunk)