Murphy USA (MUSA) - 2021 Q2 - Quarterly Report

Part I – Financial Information Financial Statements (Unaudited) Unaudited consolidated financial statements for Q2 and YTD June 30, 2021, reflecting the QuickChek acquisition's impact Consolidated Balance Sheets Total assets surged to nearly $4.0 billion by June 30, 2021, primarily due to the QuickChek acquisition Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2021 | Dec 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $3,986.1 | $2,685.7 | +48.4% | | Goodwill | $329.1 | $0.0 | N/A | | Intangible assets, net | $141.2 | $34.6 | +308.1% | | Total Liabilities | $3,228.2 | $1,901.6 | +69.8% | | Long-term debt | $1,794.4 | $951.2 | +88.7% | | Total Stockholders' Equity | $757.9 | $784.1 | -3.3% | - The acquisition of QuickChek resulted in the recognition of $329.1 million in goodwill and a significant increase in intangible assets, property, plant, and equipment[10][55] Consolidated Statements of Income Net income decreased in Q2 2021 and YTD, primarily due to lower fuel margins and higher operating expenses Income Statement Summary (in millions, except per share data) | Metric | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $4,456.0 | $2,379.6 | $7,993.1 | $5,564.4 | | Income from Operations | $190.2 | $235.5 | $284.8 | $366.3 | | Net Income | $128.8 | $168.9 | $184.1 | $258.2 | | Diluted EPS | $4.79 | $5.73 | $6.73 | $8.60 | Consolidated Statements of Cash Flows Operating cash flow decreased, while investing activities surged due to the QuickChek acquisition, largely debt-financed Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $330.8 | $381.9 | | Net cash used in investing activities | $(778.3) | $(99.2) | | Net cash from financing activities | $448.9 | $(159.4) | | Net change in cash | $1.4 | $123.3 | - The primary use of cash in investing activities was the $641.1 million payment for the QuickChek acquisition, net of cash acquired[20] - Financing activities were dominated by $892.8 million in debt borrowings, largely to fund the acquisition, alongside $198.3 million in treasury stock purchases and $13.5 million in dividend payments[20] Notes to Consolidated Financial Statements Detailed notes explain the QuickChek acquisition, debt, revenue recognition, and the company's single Marketing segment - On January 29, 2021, the company acquired 100% of QuickChek for an all-cash consideration of $641.9 million, resulting in $329.1 million of goodwill[52][55] - To fund the QuickChek acquisition, the company issued $500 million of 3.75% Senior Notes due 2031 and entered into a new credit agreement with a $400 million term loan[66][70] - The company operates under a single reportable segment, Marketing, which includes retail fuel and merchandise sales, as well as wholesale operations[135] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses QuickChek's impact, lower Q2 2021 net income from reduced fuel margins, and 2021 capital expenditures - Net income for Q2 2021 was $128.8 million, down from $168.9 million in Q2 2020, primarily due to lower all-in fuel contribution and higher operating expenses, partly offset by improved merchandise contribution[154] - The acquisition of QuickChek on January 29, 2021, is a key strategic move to expand into the Northeast and enhance food and beverage capabilities[140] Key Operating Metrics (Q2 2021 vs Q2 2020) | Metric | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Total Fuel Contribution (cpg) | 28.2 | 38.3 | | Retail Fuel Margin (cpg) | 21.8 | 31.7 | | Total Merchandise Contribution | $184.5M | $118.4M | | Merchandise Unit Margin | 19.2% | 15.4% | - Full-year 2021 capital expenditures are projected to be between $325 million and $375 million[149][224] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from commodity price volatility and interest rate fluctuations, with some hedging - Primary market risks are commodity price volatility for refined products and interest rate risk on its floating-rate debt[231][233] - The company has a $400 million floating-rate term loan and uses an interest rate swap to hedge $150 million of this exposure[233][234] Controls and Procedures Management confirmed effective disclosure controls and procedures as of June 30, 2021, with no material internal control changes - Management concluded that disclosure controls and procedures were effective as of June 30, 2021[236] - There were no material changes to internal control over financial reporting during the second quarter of 2021[237] Part II – Other Information Legal Proceedings The company is involved in routine legal proceedings not expected to materially impact its financial condition or operations - As of June 30, 2021, the company was engaged in routine legal proceedings incidental to its business, which are not expected to have a material adverse effect[238] Risk Factors No new risk factors were identified beyond those previously disclosed in the Annual Report on Form 10-K - No new risk factors were identified beyond those previously disclosed in the Annual Report on Form 10-K[239] Issuer Purchases of Equity Securities During Q2 2021, Murphy USA repurchased 1,085,876 shares for $148.3 million under its program Share Repurchases for Q2 2021 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2021 | — | $— | | May 2021 | 571,777 | $138.92 | | June 2021 | 514,099 | $133.97 | | Q2 Total | 1,085,876 | $136.58 | - As of June 30, 2021, approximately $176.7 million remained available for repurchase under the current plan, which extends through December 31, 2023[240] Other Information No information was reported under this item - No information was reported under this item[241] Exhibits This section lists exhibits filed with the Form 10-Q, including required certifications from the CEO and CFO - The report includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act[246]