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 ...

Financial Performance - For Q3 2022, the company reported net income of $219.5 million, or $9.28 per diluted share, on revenue of $6.2 billion, compared to net income of $104.0 million, or $3.98 per diluted share, on $4.6 billion of revenue in Q3 2021[148]. - Year-to-date revenues for 2022 increased by $5.5 billion, or 43.6%, compared to the same period in 2021, driven by higher retail fuel sales prices and volumes, increased merchandise sales, and the inclusion of QuickChek sales results[157]. - Net income for the three months ended September 30, 2022, increased to $236.8 million, up from $121.1 million in the same period of 2021, primarily due to higher retail fuel and merchandise contributions[172]. - Net income in the Marketing segment for the nine months ended September 30, 2022 increased by $257.9 million compared to the same period in 2021, attributed to improved fuel and merchandise contributions[179]. Revenue and Sales - Total revenues for the Marketing segment were approximately $6.2 billion in Q3 2022, compared to $4.6 billion in Q3 2021, driven by a 27.0% increase in retail fuel sales prices and a 13.2% increase in gallons sold[173]. - Total revenues for the Marketing segment were approximately $18.1 billion for the nine-month period ended September 30, 2022, a 43.5% increase from $12.6 billion in the same period of 2021[180]. - Total merchandise sales for the nine months ended September 30, 2022, were $2,913.8 million, compared to $2,750.0 million in the same period of 2021[171]. - Total merchandise sales increased 7.7% to $1.0 billion in Q3 2022 compared to $953.4 million in Q3 2021, driven by higher sales across most categories[176]. Fuel and Margin Analysis - Total fuel contribution for Q3 2022 was 37.6 cents per gallon, compared to 26.6 cents per gallon in Q3 2021, with retail fuel margin dollars increasing by 85.1% and retail fuel volumes improving by 13.2%[139]. - Retail fuel margin increased by 85.1% in Q3 2022, with a margin rate of 39.3 cents per gallon compared to 24.0 cents per gallon in Q3 2021[174]. - Total fuel contribution for the nine months ended September 30, 2022, was $1,260.7 million, up from $836.8 million in the same period of 2021[170]. - Retail fuel margin dollars increased 59.7% in the nine-month period ended September 30, 2022, with a retail margin rate of 30.0 cpg compared to 20.6 cpg in the same period of 2021[181]. Expenses and Costs - Store and other operating expenses increased by $33.4 million, or 15.1%, in Q3 2022, primarily due to increased payment fees and higher employee-related costs, including a non-recurring special bonus of $4.0 million[154]. - Total cost of sales in Q3 2022 increased by $1.4 billion, or 34.0%, compared to Q3 2021, primarily due to higher wholesale fuel prices and fuel volumes sold[153]. - Store and other operating expenses increased $122.4 million in 2022 compared to the same period in 2021, primarily due to an additional month of QuickChek results[184]. Capital Expenditures and Debt - The company anticipates total capital expenditures for the full year 2022 to range from approximately $300 million to $350 million, primarily funded through operating cash flow[142]. - The total capital spending for the nine months ended September 30, 2022, was $229.2 million, compared to $218.6 million for the same period in 2021[221]. - The long-term debt as of September 30, 2022, was $1,794.0 million, a slight decrease from $1,800.1 million as of December 31, 2021[202]. - 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[203][204][205]. Share Repurchase and Dividends - A total of 2,482,804 shares were repurchased for $566.9 million during the nine months ended September 30, 2022, completing the $500 million share repurchase program approved in November 2020[201]. - The company paid cash dividends of $0.92 per common share for a total of $22.1 million during the nine months ended September 30, 2022, compared to $0.75 per share totaling $19.9 million in the same period of 2021[199]. - The company has approximately $453.1 million remaining under the $1 billion share repurchase program authorized in December 2021[201]. Market Risks and Hedging - 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[226]. - As of September 30, 2022, 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[227]. - The company has a floating rate term loan of $395 million and an undrawn Revolving Facility, both tied to LIBOR interest rates, which can cause fluctuations in interest expenses[228]. - An interest rate swap hedges exposure to one-month LIBOR for $90.5 million of the outstanding term loan amount as of September 30, 2022, with a 10% change in interest rates having an immaterial impact on financial statements[229].

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)

Financial Performance - For Q1 2022, the company reported net income of $152.4 million, or $6.08 per diluted share, on revenue of $5.1 billion, compared to net income of $55.3 million, or $2.01 per diluted share, on revenue of $3.5 billion in Q1 2021[149]. - Total operating revenues for Q1 2022 were approximately $5.1 billion, a 44.7% increase from $3.5 billion in Q1 2021[166]. - Adjusted EBITDA for Q1 2022 was $277.0 million, compared to $154.8 million in Q1 2021, reflecting a significant increase[176]. - Net cash provided by operating activities increased to $339.2 million for the three months ended March 31, 2022, up from $229.8 million in the same period in 2021, reflecting a net income increase of $97.1 million[179]. Revenue Drivers - Revenues for Q1 2022 increased by $1.6 billion, or 44.7%, driven by higher fuel sales prices, increased retail fuel sales volumes, and the inclusion of QuickChek results for three months in 2022 compared to two months in 2021[150]. - Retail fuel sales prices increased by 44.9%, with a 7.8% increase in the number of gallons sold and a 7.1% increase in merchandise sales[166]. - Total merchandise sales increased by 7.1% to $892.0 million in Q1 2022 compared to $833.2 million in Q1 2021[169]. - Same store sales for merchandise grew by 5.6%, with tobacco products increasing by 7.8% and non-tobacco products by 3.4%[169]. Costs and Expenses - Total cost of sales for Q1 2022 increased by $1.4 billion, or 44.7%, primarily due to higher wholesale fuel prices and fuel sales volumes[151]. - Store and other operating expenses rose by $45.6 million, or 25.7%, mainly due to increased payment fees and higher employee-related costs[152]. - Store and other operating expenses increased by $45.6 million in Q1 2022, primarily due to the inclusion of QuickChek for an additional month[170]. Capital Expenditures and Investments - The company anticipates total capital expenditures for the full year 2022 to range from approximately $350 million to $400 million, primarily funded through operating cash flow[144]. - Capital expenditures for the full year 2022 are expected to range from approximately $350 million to $400 million, including $300 million to $325 million for retail growth[204]. - Total capital spending for the three months ended March 31, 2022, was $69.1 million, compared to $55.9 million for the same period in 2021, representing a 23% increase[204]. - The company invested $52.0 million in new Company stores during the three months ended March 31, 2022, up from $48.3 million in the same period in 2021[204]. Debt and Financing - The company has $1.3 billion of Senior Notes and a $397 million term loan outstanding, with additional capacity under a $350 million cash flow revolving credit facility[143]. - Total long-term debt as of March 31, 2022, was $1,797.4 million, slightly down from $1,800.1 million at December 31, 2021[185]. - The company’s total leverage ratio was 1.90 to 1.0 as of March 31, 2022, allowing for unrestricted payments under the credit agreement[196]. - The company has a remaining balance of approximately $868.2 million under the $1 billion share repurchase authorization from December 2021, valid until December 31, 2026[184]. Shareholder Returns - The company paid a dividend of $0.29 per common share in March 2022, totaling $7.2 million, compared to $0.25 per share and $6.8 million in March 2021[182]. - A total of 836,953 shares were repurchased for $151.8 million during the three months ended March 31, 2022, completing a $500 million share repurchase program[184]. Risk Management - The company has exposure to interest rate risks related to a floating rate term loan of $397 million, which is tied to LIBOR interest rates[211]. - The company currently has an interest rate swap that hedges exposure to one-month LIBOR for $90.5 million of its outstanding term loan amount[212]. - The company is subject to risks and uncertainties related to M&A activity, anticipated store openings, and supply chain disruptions[207]. - The company has made limited use of derivative instruments to manage risks related to commodity prices and interest rates[209].

Murphy USA Inc. (NYSE:MUSA) Q1 2022 Earnings Conference Call May 4, 2022 11:00 AM ET Company Participants Christian Pikul - Vice President of Investor Relations Andrew Clyde - President & Chief Executive Officer Mindy West - Executive Vice President & Chief Financial Officer Donnie Smith - Vice President & Controller Conference Call Participants John Royall - JPMorgan Bonnie Herzog - Goldman Sachs Bobby Griffin - Raymond James Ben Bienvenu - Stevens Operator Good morning, my name is Audrey and I will be you ...

Financial Performance & Shareholder Value - Murphy USA has a strong record of delivering shareholder value, driven by strategy and execution[7] - Cumulative shareholder returns as of 12/31/2021 show MUSA outperforming the S&P 500 and Russell 2000 since spin-off, with returns of 417% compared to 188% and 119% respectively[9] - Adjusted EBITDA has increased significantly since 2017, reaching $828 million in 2021[10] - The company projects 2026 EBITDA to reach approximately $800 million in a base scenario and $1 billion in an upside scenario[58] Strategic Advantages & Growth Drivers - Structural shifts in the market, such as inflation and higher fuel margins, favor Murphy USA's advantaged model[8, 20] - The company's low-cost model allows it to retain higher residual margins compared to competitors[24, 25] - Murphy USA's low price position leads to profitable share growth, gaining share across extreme periods of price volatility[32] - The integration of QuickChek has validated the investment, with year-one synergies realized at over $8 million and an all-in merchandise gross profit of 33%[39, 40] Capital Allocation & Future Investments - The company is focused on long-term organic growth and disciplined capital allocation, balancing growth investments with share repurchases[51] - Murphy USA expects to spend $350 million to $400 million on capital expenditures in 2022[68] - The company repurchased approximately 50% of shares outstanding, with emphasis in periods of share price volatility[51]

(Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Delaware 46-2279221 (State or other jurisdiction of incorporation or organization) (I.R.S. Empl ...

Financial Data and Key Metrics Changes - Revenue for Q4 2021 was $4.8 billion, and for the full year, it was $17.4 billion, compared to $2.9 billion and $11.2 billion in the previous year [16] - Adjusted EBITDA for Q4 was $216.2 million, up from $136.3 million in Q4 2020, and for the full year, it was $828 million compared to $723 million in the prior year [17] - Cash and cash equivalents totaled $256.4 million as of December 31, 2021, with total debt approximately $1.8 billion, resulting in an adjusted gross leverage ratio of about 2.2x [17] Business Line Data and Key Metrics Changes - Fuel contribution reached a record $1.1 billion, with merchandise contribution exceeding $700 million [7] - Merchandise contribution for 2021 was $702 million, slightly above the guided range, with expectations to grow to between $740 million and $760 million in 2022 [25] - Fuel volumes averaged 229,000 gallons per store per month in 2021, below the adjusted guidance range, with expectations for 2022 to increase to between 235,000 and 245,000 gallons [24] Market Data and Key Metrics Changes - Average retail gasoline prices per gallon during Q4 were $3.05, compared to $1.87 in the prior year, and for the full year, prices averaged $2.77 versus $1.91 in 2020 [16] - Cost inflation was evident across the supply chain, impacting operational costs and necessitating adjustments in workforce management [10] Company Strategy and Development Direction - The company is committed to accelerating new store growth, targeting up to 45 new stores and 35 raze-and-rebuilds in 2022 [12][23] - The acquisition of QuickChek is seen as a strategic move to enhance food and beverage capabilities, with synergy capture ahead of schedule, targeting $28 million over three years [13][14] - The company emphasizes its low-price model as a competitive advantage, particularly in an inflationary environment [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the low-price positioning is expected to attract value-conscious customers amid rising inflation [9] - The company remains vigilant in cost discipline to support its everyday low-price model, which is critical in the current economic environment [10] - Management expressed confidence in generating strong operating cash flows and returning capital to shareholders through dividends and share repurchases [11][12] Other Important Information - Capital expenditures for 2021 totaled $278 million, with a focus on growth capital, including new store openings and maintenance projects [18] - The company plans to continue its capital allocation strategy, prioritizing growth while also returning excess capital to shareholders [12][28] Q&A Session Summary Question: Impact of inflation on consumer behavior - Management indicated that while consumers are becoming more price-sensitive, the company expects to gain market share as customers seek value [35] Question: Fuel margin assumptions for EBITDA guidance - Management noted that the previous assumption for fuel margin was around $0.16 per gallon, while the current planning assumes $0.21 per gallon, reflecting a structural change in the market [37][42] Question: CapEx guidance and M&A opportunities - Management clarified that while they are open to M&A, the focus remains on organic growth and integrating QuickChek, with no immediate plans for further acquisitions [49][50] Question: QuickChek synergy targets - Management stated that they are not ready to announce specific year two synergy numbers but emphasized continuous improvement opportunities from the integration [55] Question: Same-store margin performance - Management highlighted strong performance in non-tobacco categories, driven by packaged beverages and promotional activities [59][60] Question: Stability of fuel margins - Management noted that fuel margins have been more stable due to a consistent rising price environment, contrasting with historical volatility [66]