What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-10-28 compared with 2021-07-29 · 136 added, 125 removed, 321 unchanged (45% of the section changed)

11 unchanged sentences

It includes information on the basis of presentation with respect to the amounts presented in the Management’s Discussion and Analysis and a discussion of the trends affecting our business.

• Results of Operations —This section provides an analysis of our results of operations, including the results of our operating segment for the three and six months ended June 30, 2021 and 2020.

• Capital Resources and Liquidity —This section provides a discussion of our financial condition and cash flows as of and for the three and six months ended June 30, 2021 and 2020.

• Results of Operations —This section provides an analysis of our results of operations, including the results of our operating segment for the three and nine months ended September 30, 2021 and 2020.

• Capital Resources and Liquidity —This section provides a discussion of our financial condition and cash flows as of and for the three and nine months ended September 30, 2021 and 2020.

It also includes a discussion of our capital structure and available sources of liquidity.

4 unchanged sentences

Our Form 10-K contains a discussion of matters not included within this document, such as disclosures regarding critical accounting policies and estimates, and contractual obligations.

On January 29, 2021, MUSA acquired 100% of Quick Chek Corporation ("QuickChek"), a privately held convenience store chain with a strong regional brand consisting of 156 stores located in New Jersey and New York, in an all-cash transaction.

The acquisition expands the MUSA network into the Northeast by adding high-performance stores that had an existing best-in-class food and beverage model and is consistent with the Company's stated strategic priorities of developing enhanced food and beverage capabilities.

On January 29, 2021, MUSA acquired 100% of Quick Chek Corporation ("Quick Chek"), a privately held convenience store chain with a strong regional brand consisting of 156 stores, at the time of acquisition, located in New Jersey and New York, in an all-cash transaction.

The acquisition expanded the MUSA network into the Northeast by adding high-performance stores that had an existing best-in-class food and beverage model and is consistent with the Company's stated strategic priorities of developing enhanced food and beverage capabilities.

For additional information concerning the acquisition, see Note 4, "Business Acquisition" in the accompanying unaudited consolidated financial statements.

We market refined products through a network of retail gasoline stores and to unbranded wholesale customers and in addition, we operate non-fuel convenience stores in select markets in the Northeast.

The Company operates a chain of owned retail stores under the brand name of Murphy USA®, which are almost all located in close proximity to Walmart stores in 25 states, it markets gasoline and other products at standalone stores under the Murphy

Express brand, and has a mix of convenience stores and retail gasoline stores located in New Jersey and New York that operate under the name of QuickChek.

At June 30, 2021, we had a total of 1,662 Company stores of which 1,151 were Murphy USA, 356 were Murphy Express and 155 were QuickChek.

The Company operates a chain of owned retail stores under the brand name of Murphy USA®, which are almost all located in close proximity to Walmart stores in 25 states.

We also market gasoline and other products at standalone stores under the Murphy

Express brand, and have a mix of convenience stores and retail gasoline stores located in New Jersey and New York that operate under the name of QuickChek.

At September 30, 2021, we had a total of 1,669 Company stores of which 1,151 were Murphy USA, 360 were Murphy Express and 158 were QuickChek.

Basis of Presentation

3 unchanged sentences

QuickChek uses a weekly retail calendar where each quarter has 13 weeks and its historical fiscal year end was the Friday nearest to October 31.

For Q2 2021, the results provided include the period from April 3, 2021 to July 2, 2021 and the year-to-date results include the period from January 29, 2021 to July 2, 2021.

The difference in the timing of the month ends are immaterial to the overall consolidated results.

For Q3 2021, the QuickChek results cover the period from July 3, 2021 to October 1, 2021.

For the year-to-date period, the QuickChek results cover the period from January 29, 2021 (the date of acquisition) to October 1, 2021.

The difference in the timing of the month ends is immaterial to the overall consolidated results.

Trends Affecting Our Business

1 unchanged sentence

These gross margins are commodity-based, change daily and are volatile.

While we generally expect our total fuel sales volumes to grow over time and the gross margins we realize on those sales to remain strong in a normalized environment, these gross margins can change rapidly due to many factors.

These factors include, but are not limited to, the price of refined products, interruptions in supply caused by severe weather, travel restrictions and stay-at-home orders imposed during a pandemic such as COVID-19, severe refinery mechanical failures for an extended period of time, cyber-attacks, and competition in the local markets in which we operate.

The COVID-19 pandemic continued to impact gasoline demand in the first quarter of 2021 but demand grew in the second quarter of 2021 as the pandemic pressures lessened, COVID-19 vaccines became more readily available, government intervention decreased, and the spring and summer driving season started.

While we generally expect our total fuel and merchandise sales volumes to grow over time and the gross margins we realize on those sales to remain strong in a normalized environment, these gross margins can change rapidly due to many factors.

These factors include, but are not limited to, the price of refined products, interruptions in our fuel and merchandise supply caused by severe weather or pandemics such as COVID-19, travel restrictions and stay-at-home orders imposed during a pandemic, severe refinery mechanical failures for an extended period of time, cyber-attacks, and competition in the local markets in which we operate.

The COVID-19 pandemic continued to impact gasoline demand in the first quarter of 2021 but demand has grown steadily throughout 2021 as the pandemic pressures lessened, COVID-19 vaccines became more readily available, government intervention decreased, and the spring and summer driving season started.

During Q3 various parts of the country experienced a resurgence of COVID-19 cases, but overall, the impact was not material in our areas of operation.

If the recoveries experienced to-date stall or reverse as a result of a resurgence in COVID-19 infection rates and related government intervention, our volumes could decline.

3 unchanged sentences

Also, rising prices tend to cause our customers to reduce discretionary fuel consumption, which tends to reduce our fuel sales volumes.

Crude oil prices continued the volatile trend in 2021 with prices ranging from $47 per barrel to $74 per barrel and with an average price in Q2 2021 of approximately $66 per barrel compared to an average price of almost $28 per barrel in Q2 2020.

Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results including Renewable Identification Numbers ("RINs")) for Q2 2021 was 28.2 cents per gallon ("cpg"), compared 38.3 cpg in Q2 2020.

Retail fuel margins decreased 31.2% in the current quarter due to rising prices and were partially offset by improved retail fuel volumes which increased 32.6% resulting in an overall decrease in retail fuel contribution of $24.1 million in Q2 2021 compared to Q2 2020.

Crude oil prices continued the volatile trend in 2021 with prices ranging from $47 per barrel to $75 per barrel, with an average price in Q3 2021 of approximately $71 per barrel which compares to an average price of almost $41 per barrel in Q3 2020.

Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results including Renewable Identification Numbers ("RINs")) for Q3 2021 was 26.6 cents per gallon ("cpg"), compared to 22.3 cpg in Q3 2020.

Retail fuel margins increased 40.9% in the current quarter despite rising prices, while retail fuel volumes improved 11.4%;

combined with the inclusion of QuickChek, total retail fuel contribution increased by $76.7 million in Q3 2021 compared to Q3 2020.

Our revenues are impacted by the ability to leverage our diverse supply infrastructure in pursuit of obtaining the lowest cost fuel supply available;

8 unchanged sentences

Revenue from the sales of RINs is included in “Other operating revenues” in the Consolidated Statements of Income.

As of June 30, 2021, we have $1.3 billion of Senior Notes and a $400 million term loan outstanding.

We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements and service our debt obligations.

At June 30, 2021, we have additional available capacity under the committed $350 million cash

flow revolving credit facility.

As of September 30, 2021, we have $1.3 billion of Senior Notes and a $399 million term loan outstanding.

We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements and service

our debt obligations.

At September 30, 2021, we have additional available capacity under the committed $350 million cash flow revolving credit facility.

We expect to use the credit facilities to provide us with available financing to meet any short-term ongoing cash needs in excess of internally generated cash flows.

10 unchanged sentences

As the pandemic-related travel restraints decreased in the first half of 2021, we began to see historical seasonal patterns trending closer to normal.

At the present time, we cannot forecast the exact timing of a complete recovery, especially in light of the recent resurgence of COVID-19 cases.

As a result, operating results for the three and six months ended June 30, 2021 may not be necessarily indicative of the results that may be expected for the year ending December 31, 2021.

At the present time, we cannot forecast the exact timing of a complete recovery.

As a result, operating results for the three and nine months ended September 30, 2021 may not be necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Business Segment

1 unchanged sentence

This segment includes our retail marketing stores and product supply and wholesale assets.

For additional operating segment information, see Note 20 “Business Segments” in the audited combined financial statements for the year ended December 31, 2020 included with our Annual Report on Form 10-K and Note 16 “Business Segments” in the accompanying unaudited consolidated financial statements for the three and six months ended June 30, 2021.

Results of Operations

Consolidated Results

For the three months ended June 30, 2021, the Company reported net income of $128.8 million, or $4.79 per diluted share, on revenue of $4.5 billion.

For the three months ended September 30, 2021, the Company reported net income of $104.0 million, or $3.98 per diluted share, on revenue of $4.6 billion.

Net income was $66.9 million for the same period in 2020, or $2.27 per diluted share, on $2.8 billion in revenue.

The decrease in net income is primarily due to lower all-in fuel contribution, higher store operating expense, increased payment fees and interest expense, partially offset by an improved merchandise contribution.

For the six month period ended June 30, 2021, the Company reported net income of $184.1 million, or $6.73 per diluted share, on revenue of $8.0 billion.

The increase in net income is primarily due to higher all-in fuel contribution, improved merchandise contribution, and lower general and administrative expenses that were partially offset by higher store operating expenses, increased payment fees, higher depreciation expense and interest expense.

For the nine month period ended September 30, 2021, the Company reported net income of $288.1 million, or $10.72 per diluted share, on revenue of $12.6 billion.

Net income was $325.1 million for the same period in 2020, or $10.88 per diluted share, on $8.4 billion in revenue.

The consolidated financial results include QuickChek for the quarter and year of 2021 from April 3, 2021 through July 2, 2021 and January 29, 2021 (date of acquisition) through July 2, 2021, respectively.

Three Months Ended June 30, 2021 versus Three Months Ended June 30, 2020

The decrease in net income is primarily due to higher store operating expense, increased payment fees, depreciation expense, acquisition related costs and interest expense, partially offset by a higher all-in fuel and merchandise contribution.

The consolidated financial results include QuickChek for the quarter and year of 2021 from July 3, 2021 through October 1, 2021 and January 29, 2021 (date of acquisition) through October 1, 2021, respectively.

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

Quarterly revenues for 2021 increased $1.8 billion, or 62.0%, compared to the same quarter in 2020.

The increase in revenues was due to higher retail fuel sales prices, an increase in retail fuel sales volumes, increased merchandise sales, improved PS&W revenues including RINs, and the inclusion of QuickChek.

Total cost of sales increased $2.0 billion, or 104.2% when compared to 2020.

In the current-year quarter, the higher costs were primarily due to higher wholesale fuel prices, higher merchandise costs, and the inclusion of QuickChek results.

Store and other operating expenses increased $77.1 million, or 58.5%, from Q2 2020, due primarily to the inclusion of QuickChek stores which have higher store operating costs due to its larger format stores with an enhanced food and beverage offering, other related store costs, and higher payment fees.

SG&A expenses for Q2 2021 increased $11.4 million, or 30.7%, from Q2 2020.

The increase in SG&A costs is primarily due to the inclusion of QuickChek.

Depreciation and amortization expense increased $13.8 million from Q2 2020 primarily due to the inclusion of QuickChek stores, the additions of new larger store formats, and raze-and-rebuild activity.

The increase in revenues was due to higher retail fuel sales prices, an increase in retail fuel sales volumes, higher RINs sales revenues, increased merchandise sales, and the inclusion of QuickChek.

Total cost of sales increased $1.6 billion, or 64.7% when compared to Q3 2020.

In the current-year quarter, the higher costs were primarily due to higher wholesale fuel prices, increased fuel sales volumes, higher merchandise costs, and the inclusion of QuickChek results.

Store and other operating expenses increased $78.2 million, or 54.7%, from Q3 2020, due primarily to the inclusion of QuickChek stores which have higher store operating costs due to its larger format stores with an enhanced food and beverage offering, higher other related store costs, and increased payment fees.

SG&A expenses for Q3 2021 decreased $6.5 million, or 12.1%, from Q3 2020.

The decrease in SG&A costs is primarily due to a charitable donation of $10 million in the prior year Q3 and was partially offset by the inclusion of QuickChek in the current year.

Depreciation and amortization expense increased $12.6 million, or 31.0%, from Q3 2020 primarily due to the inclusion of QuickChek stores and the additions of new larger store formats of the MUSA stores.

The effective income tax rate was approximately 24.5% for Q3 2021 versus 24.1% for the same period of 2020.

Six Months Ended June 30, 2021 versus Six Months Ended June 30, 2020

Year-to-date revenues for 2021 increased $2.4 billion, or 43.6%, compared to the same quarter in 2020.

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

Year-to-date revenues for 2021 increased $4.2 billion, or 49.9%, compared to the same period in 2020.

The increase in revenues was due to higher retail fuel sales prices, higher retail fuel sales volumes, increased merchandise sales, improved PS&W revenues including RINs, and the inclusion of QuickChek sales results since its acquisition.

1 unchanged sentence

In the current-year period, the higher costs were primarily due to higher wholesale fuel prices combined with higher sales volumes, higher merchandise costs and the inclusion of QuickChek results.

Store and other operating expenses increased $119.1 million, or 44.6%, in the first six months of 2020, due primarily to the inclusion of QuickChek stores which have higher store operating costs due to its larger format stores with an enhanced food and beverage offering and higher payment fees.

SG&A expenses for the first six months of 2021 increased $16.5 million, or 21.6%, compared to the first six months of 2020.

The increase in SG&A costs is primarily due to the inclusion of QuickChek.

Depreciation and amortization expense increased $25.4 million year-to-date from 2020 primarily due to the inclusion of QuickChek, combined with newer larger store formats and raze-and-rebuild activity.

The effective income tax rate was approximately 24.3% for the six months ended June 30, 2021 versus 24.1% for the same period of 2020.

The slight increase in the effective tax rate was due to a discrete tax item related to adjustments of deferred state income taxes from the acquisition of QuickChek that was partially offset by excess tax benefits on stock compensation vesting.

Store and other operating expenses increased $197.3 million, or 48.1%, in the first nine months of 2021, due primarily to the inclusion of QuickChek stores which have higher store operating costs due to its larger format stores with an enhanced food and beverage offering and due to increased payment fees.

SG&A expenses for the first nine months of 2021 increased $10.0 million, or 7.7%, compared to the first nine months of 2020.

The increase in SG&A costs is primarily due to an increase in wages and benefits and to the inclusion of QuickChek, partially offset by a charitable contribution of $10.0 million in 2020.

Depreciation and amortization expense increased $38.0 million, or 31.8% year-to-date from 2020 primarily due to the inclusion of QuickChek, combined with the newer larger store formats of MUSA stores.

The effective income tax rate was approximately 24.4% for the nine months ended September 30, 2021 versus 24.1% for the same period of 2020.

The increase in the effective tax rate was due to a discrete tax item related to adjustments of deferred state income taxes from the acquisition of QuickChek that was partially offset by excess tax benefits on stock compensation vesting compared to a discrete tax credit in 2020.

Segment Results

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2021 2020 2021 2020

2 unchanged sentences

Net Income $ 104.0 $ 66.9 $ 288.1 $ 325.1

Three Months Ended June 30, 2021 versus Three Months Ended June 30, 2020

Net income for the three months ended June 30, 2021 decreased compared to the same period in 2020 primarily due to:

• Lower retail fuel contribution

• Increased payment fees

• Higher store and other operating expenses

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

Net income for the three months ended September 30, 2021 increased compared to the same period in 2020 primarily due to:

• Higher retail fuel contribution

• Higher retail fuel sales volumes

• Higher merchandise contribution

• Lower SG&A expenses

The items below partially offset the increase in net income in the current period:

• Higher store operating expense

• Higher depreciation and amortization expense

• Higher SG&A expenses

• Higher interest expense

The items below partially offset the decrease in net income in the current period:

• Higher contribution from PS&W, including RINs

• Higher merchandise contribution

• Higher retail fuel volumes

Six Months Ended June 30, 2021 versus Six Months Ended June 30, 2020

Net income for the six months ended June 30, 2021 decreased compared to the same period in 2020 primarily due to:

• Lower retail fuel contribution

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

Net income for the nine months ended September 30, 2021 decreased compared to the same period in 2020 primarily due to:

• Higher store and other operating expense

• Increased payment fees

• Higher store and other operating expenses

• Higher depreciation and amortization expense

3 unchanged sentences

The items below partially offset the decrease in net income in the current period:

• Higher contribution from PS&W, including RINs

• Higher retail fuel contribution

• Higher fuel contribution from PS&W, including RINs

• Higher merchandise contribution

• Higher retail fuel volumes

• Higher retail fuel sales volumes

(Millions of dollars, except revenue per store month (in thousands) and store counts) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Marketing Segment 2021 2020 2021 2020

40 unchanged sentences

QuickChek uses a weekly retail calendar where each quarter has 13 weeks and its historical fiscal year end was the Friday nearest to October 31.

For the Q2 2021 period, the results provided include the period from April 3, 2021 to July 2, 2021 and for the six months ended June 20, 2021 include the period January 29, 2021 to July 2, 2021.

The difference in the timing of the month ends are immaterial to the overall consolidated results.

For the Q3 2021 period, the QuickChek results cover the period from July 3, 2021 to October 1, 2021.

For the year-to-date period, the QuickChek results cover the period from January 29, 2021 (the date of acquisition) to October 1, 2021.

The difference in the timing of the month ends is immaterial to the overall consolidated results.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Key Operating Metrics 2021 2020 2021 2020

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2021 2020 2021 2020

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Key Operating Metrics 2021 2020 2021 2020

12 unchanged sentences

2 Includes store-level discounts for MDR redemptions and excludes change in value of unredeemed MDR points

Three Months Ended June 30, 2021 versus Three Months Ended June 30, 2020

Net income in the Marketing segment for Q2 2021 decreased $34.0 million compared to the Q2 2020 period, due to lower all-in fuel contributions, higher store operating expense, higher SG&A costs, and additional depreciation and amortization expense, partially offset by increased merchandise contribution.

All significant variances other than lower all-in fuel contributions were partially due to the inclusion of QuickChek in the current period.

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

Net income in the Marketing segment for Q3 2021 increased $39.4 million compared to the Q3 2020 period, due to higher all-in fuel and merchandise contributions, higher fuel sales volume and lower SG&A expense, combined with the inclusion of QuickChek results, partially offset by higher store operating expense, increased payment fees and additional depreciation and amortization expense.

Total revenues for the Marketing segment were approximately $4.6 billion in Q3 2021 compared to $2.8 billion in Q3 2020.

The increased revenues were due to a 59.6% increase in retail fuel sales prices and a 32.6% increase in the number of gallons sold, improved PS&W revenues, including RINs, and a 25.6% increase in merchandise sales.

The increased revenues were due to a 52.2% increase in retail fuel sales prices and a 11.4% increase in the number of gallons sold, and a 26.0% increase in merchandise sales.

Revenues included excise taxes collected and remitted to government authorities of $520.9 million in Q3 2021 and $447.0 million in Q3 2020.

Retail fuel margin dollars decreased 9.0% compared to the prior year quarter on a smaller margin rate of 21.8 cpg for Q2 2021 when compared to 31.7 cpg in the same quarter of 2020, partially offset by an increase in retail fuel volumes.

The decrease in the cpg margin rate was due primarily to higher prices paid for fuel during the current-year quarter.

Retail fuel margin dollars increased 40.9% compared to the prior year quarter on a higher margin rate of 24.0 cpg for Q3 2021 when compared to 19.0 cpg in the same quarter of 2020, combined with an increase in retail fuel volumes.

Total fuel sales volumes on a SSS basis increased 1.9% to 227.6 thousand gallons per store in the 2021 period.

Total PS&W margin dollars, including RINs, increased by $16.1 million over Q2 2020 results.

The quarter-over-quarter increase is primarily due to higher RIN prices, partially offset by negative spot-to-rack margins.

Total PS&W margin dollars, including RINs, decreased by $3.6 million from Q3 2020 results.

The quarter-over-quarter decrease is primarily due to negative spot-to-rack margins, driven by market demand concerns and partially offset by higher RIN prices.

The 2021 quarter includes the sale of 51 million RINs at an average selling price of $1.40 per RIN while the prior-year quarter had sales of 54 million RINs at an average price of $0.47 per RIN.

2 unchanged sentences

Total SSS merchandise contribution dollars grew 4.0%.

On a SSS basis there was a slight increase of 0.1% in tobacco products sales and 3.7% in non-tobacco sales, including higher beverage and general merchandise sales.

On a SSS basis there was a slight decrease of 0.3% in tobacco products sales and 0.2% in non-tobacco sales, partially offset by improved beverage and general merchandise sales.

Food and beverage contribution, a subset of non-tobacco contribution, experienced a significant shift to 14.8% of total merchandise contribution as the enterprise benefited from QuickChek's robust offerings.

1 unchanged sentence

On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 39.6%, primarily due to the inclusion of higher QuickChek related store costs.

Depreciation and amortization expense increased $13.7 million in Q2 2021 due primarily to the inclusion of QuickChek combined with new larger store formats and raze-and-rebuild activity.

Selling, general, and administrative expenses increased $11.4 million due primarily to the inclusion of QuickChek.

Six Months Ended June 30, 2021 versus Six Months Ended June 30, 2020

Net income in the Marketing segment for the six months ended June 30, 2021 decreased $54.5 million compared to the six months ended June 30, 2020 period, due to lower all-in fuel contributions, higher store operating expense, higher SG&A costs, and additional depreciation and amortization expense, partially offset by increased merchandise contribution.

All significant variances other than lower all-in fuel contributions were partially due to the inclusion of QuickChek in the current year.

Total revenues for the Marketing segment were approximately $8.0 billion for the six month period ended June 30, 2021 compared to $5.6 billion for the same period ended June 30, 2020.

Depreciation and amortization expense increased $12.6 million, or 34.1% in Q3 2021 when compared to the prior year quarter due primarily to the inclusion of QuickChek combined with new larger store formats of MUSA stores.

Selling, general, and administrative expenses decreased $6.5 million in Q3 2021 compared to Q3 2020 due primarily to the charitable contribution of $10.0 million in Q3 2020, partially offset by the inclusion of QuickChek in 2021.

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

Net income in the Marketing segment for the nine months ended September 30, 2021 decreased $15.1 million compared to the nine months ended September 30, 2020 period, due to higher store operating expense, higher SG&A costs, and increased depreciation and amortization expense, partially offset by improved all-in fuel and merchandise contributions and the inclusion of QuickChek results.

Total revenues for the Marketing segment were approximately $12.6 billion for the nine month period ended September 30, 2021 compared to $8.4 billion for the same period ended September 30, 2020.

The increased revenues were due to a 38.4% increase in retail fuel sales prices combined with a 11.9% higher number of gallons sold, improved PS&W revenues, including RINs, and a 24.4% increase in merchandise sales.

Revenues included excise taxes collected and remitted to government authorities of $994.0 million in the six months ended June 30, 2021 and $853.7 million in the six months ended June 30, 2020.

Retail fuel margin dollars decreased 27.2% compared to the prior year six months on a smaller margin rate of 18.8 cpg for the six months ended June 30, 2021 when compared to 29.0 cpg in the same period of 2020.

The decrease in the cpg margin rate was due primarily to higher prices paid for fuel and were partially offset by an increase in the retail fuel volumes.

Revenues included excise taxes collected and remitted to government authorities of $1.5 billion in the nine months ended September 30, 2021 and $1.3 billion in the nine months ended September 30, 2020.

Retail fuel margin dollars decreased 9.9% in 2021 compared to the prior year nine months on a smaller margin rate of 20.6 cpg for the nine months ended September 30, 2021 when compared to 25.6 cpg in the same period of 2020.

Total fuel sales volumes on a SSS basis increased 3.6% to 224.5 gallons per store in the 2021 period.

Total PS&W margin dollars, including RINs, were a gain of $142.4 million in the 2021 six month period compared to a gain of $9.7 million in the first six months of 2020.

The six months ended June 30, 2021 includes the sales of 116.8 million RINs at an average selling price of $1.31 per RIN while the prior-year period had sales of 128.2 million RINs at an average price of $0.30 per RIN.

Total merchandise sales increased 23.5% to $1.8 billion in the six months ended June 30, 2021 compared to $1.5 billion in the first six months of 2020 due to higher sales across the chain in most categories and the inclusion of QuickChek results.

Total PS&W margin dollars, including RINs, were a gain of $170.8 million in the 2021 nine month period compared to a gain of $41.8 million in the first nine months of 2020.

The nine months ended September 30, 2021 includes the sales of 167.7 million RINs at an average selling price of $1.34 per RIN while the prior-year period had sales of 182.2 million RINs at an average price of $0.35 per RIN.

Total merchandise sales increased 24.4% to $2.8 billion in the nine months ended September 30, 2021 compared to $2.2 billion in the first nine months of 2020 due to higher sales across the chain in most categories and the inclusion of QuickChek results.

Year-to-date total merchandise contribution in 2021 increased 51.2% compared to the same period of 2020.

Total SSS merchandise contribution dollars grew 3.4%.

On a SSS basis there was an increase of 1.1% in tobacco products sales and 6.5% in non-tobacco sales, including higher beverage and general merchandise sales.

Food and beverage contribution jumped to 13.6% of total merchandise contribution as the enterprise benefited from QuickChek results.

Store and other operating expenses increased $119.1 million in the current period compared to the same period of 2020, primarily due to the inclusion of QuickChek, which has higher store operating expense due to its larger format stores and greater food and beverage offering.

On a SSS basis there was an increase of 0.6% in tobacco products sales and 4.2% in non-tobacco sales, combined with higher beverage and lottery sales.

Food and beverage contribution was 14.0% of total merchandise contribution in 2021 versus 0.7% in 2020 which reflects the benefits from QuickChek results.

Store and other operating expenses increased $197.3 million in the current year compared to the same period of 2020, primarily due to the inclusion of QuickChek, which has higher store operating expense due to its larger format stores and greater food and beverage offering.

On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 34.6%, primarily due to the inclusion of higher QuickChek related store costs.

Depreciation and amortization expense increased $24.7 million in the first six months of 2021 due primarily to the inclusion of QuickChek combined with new larger store formats and raze-and-rebuild activity.

Selling, general and administrative expenses increased $16.5 million due primarily to the inclusion of QuickChek.

Depreciation and amortization expense increased $37.3 million, or 34.3%, in the first nine months of 2021 due primarily to the inclusion of QuickChek combined with new larger store formats.

Selling, general and administrative expenses increased $10.0 million in 2021 compared to 2020 due primarily to the inclusion of QuickChek and company wide increases in employee wages and benefits.

Same store sales information compared to APSM metrics

Variance from prior year Variance from prior year

Three months ended Six months ended

June 30, 2021 June 30, 2021

Three months ended Nine months ended

September 30, 2021 September 30, 2021

Fuel gallons per month 1.9 % 3.4 % 3.6 % 5.1 %

8 unchanged sentences

Corporate and Other Assets

Three Months Ended June 30, 2021 versus Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

After-tax results for Corporate and other assets for Q3 2021 were a loss of $17.1 million compared to a loss of $14.8 million in Q3 2020, due primarily to increased interest expense related to debt incurred in January 2021 to finance the QuickChek acquisition.

Six Months Ended June 30, 2021 versus Six Months Ended June 30, 2020

After-tax results for Corporate and other assets for the six months ended June 30, 2021 were a loss of $41.9 million compared to a loss of $22.3 million in the same period of 2020, due primarily to the acquisition related costs and increased interest expense due to the acquisition.

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

After-tax results for Corporate and other assets for the nine months ended September 30, 2021 were a loss of $59.0 million compared to a loss of $37.1 million in the same period of 2020, due primarily to the acquisition related costs and increased interest expense due to the acquisition.

Non-GAAP Measures

The following table sets forth the Company’s Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020.

The following table sets forth the Company’s Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020.

EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, net settlement proceeds, (gain) loss on sale of assets, loss on early debt extinguishment, transaction and integration costs related to acquisition, and other non-operating (income) expense).

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2021 2020 2021 2020

11 unchanged sentences

Significant Sources of Capital

We have a committed $350 million cash flow revolving credit facility (the "revolving facility”), which was undrawn at June 30, 2021 (which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein).

We have a committed $350 million cash flow revolving credit facility (the "revolving facility”), which was undrawn at September 30, 2021 (which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein).

We believe our short-term and long-term liquidity is adequate to fund not only our operations, but also our anticipated near-term and long-term funding requirements, including capital spending programs, execution of announced share repurchase programs, potential dividend payments, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies.

Operating Activities

Net cash provided by operating activities was $330.8 million for the six months ended June 30, 2021 and was $381.9 million for the comparable period in 2020.

The decrease for the current year is primarily related to the decrease in net income of $74.1 million compared to the corresponding period in 2020, changes in working capital, and is partly offset by an increase in depreciation expense.

Non-cash operating working capital changes in the current year consisted of an $83.4 million increase in accounts receivable, an $8.1 million increase in prepaid expenses and other current assets, $8.3 million increase in inventories, and a $3.0 million increase in income taxes payable, which were partially offset by a $114.1 million increase in accounts payable and accrued liabilities.

The changes in accounts receivable was due to the timing of payments received, and the inclusion of QuickChek activity.

Net cash provided by operating activities was $587.0 million for the nine months ended September 30, 2021 and was $467.8 million for the comparable period in 2020.

The increase for the current year is primarily related to the changes in working capital, an increase in depreciation expense and was partially offset by the decrease in net income of $37.0 million compared to the corresponding period in 2020.

Non-cash operating working capital changes in the current year consisted of a $15.0 million decrease in inventories, a $0.2 million decrease in income taxes payable, a $137.0 million increase in accounts payable and accrued liabilities and was partially offset by a $31.5 million increase in accounts receivable and an $8.1 million increase in prepaid expenses and other current assets.

The changes in accounts receivable were due to the timing of payments received, and the inclusion of QuickChek activity.

The changes in accounts payable and accrued liabilities were due to the timing of payments, increased prices of wholesale fuel, and the inclusion of QuickChek activity.

Investing Activities

For the six months ended June 30, 2021, cash required by investing activities was $778.3 million compared to $99.2 million in 2020.

For the nine months ended September 30, 2021, cash required by investing activities was $853.7 million compared to $163.3 million in 2020.

The increase in investing cash requirements in the current period was primarily due to the cash payments for the acquisition of QuickChek and the timing of capital expenditures.

In addition, the sale of the Company's Minnesota assets were included in the reported $7.7 million proceeds from sale of assets in 2020 whereas there was no such sale included in the 2021 amount of $1.0 million.

Other investing activities required $2.0 million in cash during 2021 compared to cash required of $1.6 million in 2020.

Financing Activities

Financing activities in the six months ended June 30, 2021 provided cash of $448.9 million compared to cash required of $159.4 million in the six months ended June 30, 2020.

The first six months of 2021 included payments

of $198.3 million for the repurchase of common shares, which was an increase of $57.7 million from the prior-year period, and dividend payments of $13.5 million in 2021 versus none in the first six months of 2020.

Financing activities in the nine months ended September 30, 2021 provided cash of $404.4 million compared to cash required of $267.3 million in the nine months ended September 30, 2020.

The first nine months of 2021 included payments of $231.5 million for the repurchase of common shares, which was an increase of $1.0 million from the prior-year period, and dividend payments of $19.9 million in 2021 versus none in the first nine months of 2020.

Borrowings of debt in 2021 provided $892.8 million compared to no borrowings in the same period of 2020.

1 unchanged sentence

Debt issuance costs required cash of $9.9 million in 2021 and there were no such costs in 2020.

Amounts related to share-based compensation required $0.7 million more in cash during 2021 than in 2020.

Amounts related to share-based compensation required $4.1 million less in cash during 2021 than in 2020.

The Company paid a dividend of $0.25 per Common share in July 2021 with no comparable dividend in the prior year quarter.

In October 2021, the Board approved an increase in the quarterly dividend to $0.29 per Common share to be paid on December 1, 2021 to shareholders of record as of November 8, 2021.

As a part of our capital allocation strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time.

Share Repurchase Program

During the quarter ended June 30, 2021, a total of 1,085,876 shares were repurchased for $148.3 million, and for the six months ended June 30, 2021 a total of 1,483,758 shares were repurchased for $198.3 million.

Purchases made in 2021 were made under the $500 million share repurchase program approved by the Board of Directors in November 2020, with approximately $176.7 million remaining in the plan at June 30, 2021.

Our long-term debt at June 30, 2021 and December 31, 2020 was as set forth below:

(Millions of dollars) June 30,

During the quarter ended September 30, 2021, a total of 215,285 shares were repurchased for $33.2 million, and for the nine months ended September 30, 2021 a total of 1,699,043 shares were repurchased for $231.5 million.

Purchases made in 2021 were made under the $500 million share repurchase program approved by the Board of Directors in November 2020, with approximately $143.6 million remaining in the plan at September 30, 2021.

Our long-term debt at September 30, 2021 and December 31, 2020 was as set forth below:

(Millions of dollars) September 30,

2021 December 31,

3.75% senior notes due 2031 (net of unamortized discount of $6.0 at June 30, 2021) $ 494.0 $ —

5.625% senior notes due 2027 (net of unamortized discount of $2.2 at June 30, 2021 and $2.4 at December 2020) 297.8 297.6

4.75% senior notes due 2029 (net of unamortized discount of $5.1 at June 30, 2021 and $5.4 at December 31, 2020) 494.9 494.6

3.75% senior notes due 2031 (net of unamortized discount of $5.8 at September 30, 2021) $ 494.2 $ —

5.625% senior notes due 2027 (net of unamortized discount of $2.1 at September 30, 2021 and $2.4 at December 2020) 297.9 297.6

4.75% senior notes due 2029 (net of unamortized discount of $5.0 at September 30, 2021 and $5.4 at December 31, 2020) 495.0 494.6

Term loan due 2023 (effective interest rate of 2.67% at December 31, 2020) — 212.5

Term loan due 2028 (effective interest rate of 2.27% at June 30, 2021) (net of unamortized discount of $0.9) 399.1 —

Term loan due 2028 (effective interest rate of 2.27% at September 30, 2021) (net of unamortized discount of $0.9) 398.1 —

Capitalized lease obligations, autos and equipment, due through 2025 2.7 2.1

6 unchanged sentences

The 2027 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities.

The indenture governing the 2027 Senior Notes contains restrictive covenants that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc.

The indenture governing the 2027 Senior Notes contains restrictive covenants

that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc.

and the restricted subsidiaries to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates or merge with or into other entities.

18 unchanged sentences

Murphy USA is also required to prepay the Term Facility with a portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales, casualty events (subject to certain reinvestment rights) and issuances of indebtedness not permitted under the Credit Agreement and with designated proceeds received from certain asset sales, issuances of indebtedness and sale-leaseback transactions, subject to certain exceptions.

The Credit Agreement allows Murphy USA to prepay, in whole or in part, the Term Facility outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without premium or penalty other than breakage and redeployment costs.

The Credit Agreement allows Murphy USA to prepay, in whole or in part, the Term Facility

outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without premium or penalty other than breakage and redeployment costs.

The credit agreement contains certain covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes.

1 unchanged sentence

Pursuant to the total leverage ratio financial maintenance covenant, the Company must maintain a total leverage ratio of not more than 5.0 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 5.5 to 1.0.

In conformance to the secured net leverage ratio financial maintenance covenant, the Company must

maintain a maximum secured net leverage ratio of 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0.

In conformance to the secured net leverage ratio financial maintenance covenant, the Company must maintain a maximum secured net leverage ratio of 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0.

The Credit Agreement also contains customary events of default.

Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0 could be limited.

At June 30, 2021, our total leverage ratio was 2.55 to 1.0 which meant our ability at that date to make restricted payments was not limited.

At September 30, 2021, our total leverage ratio was 2.40 to 1.0 which meant our ability at that date to make restricted payments was not limited.

If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including the ability to make restricted payments in cash in an aggregate amount not to exceed $100 million in any fiscal year and an additional ability to make restricted payments in an aggregate amount not to exceed the greater of $113 million or 4.5% of consolidated net tangible assets over the life of the credit agreement.

8 unchanged sentences

The combined assets, liabilities and results of operations of MOUSA and the guarantors are not materially different from corresponding amounts presented in the consolidated financial statements included herein.

MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the three and six months ended June 30, 2021, and accounted for the vast majority of our total assets as of June 30, 2021.

MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the three and nine months ended September 30, 2021, and accounted for the vast majority of our total assets as of September 30, 2021.

In the event MOUSA itself were unable to service the Company's consolidated debt obligations, our business and financial condition would be materially adversely impacted.

3 unchanged sentences

We also invest capital in our Corporate and other assets segment.

The following table outlines our capital spending and investments by segment for the three and six month periods ended June 30, 2021 and 2020:

The following table outlines our capital spending and investments by segment for the three and nine month periods ended September 30, 2021 and 2020:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2021 2020 2021 2020

34 unchanged sentences

successful execution of our information technology strategy;

reduced demand for our products due to the implementation of more stringent fuel economy and greenhouse gas reduction requirements, or increasingly widespread adoption of electric vehicle technology;

future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins;

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis