What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-10-28 · 137 added, 212 removed, 245 unchanged (59% of the section changed)

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It should be read in conjunction with the consolidated financial statements and notes included in this Quarterly Report on Form 10-Q.

It contains forward-looking statements including, without limitation, statements relating to the Company’s plans, strategies, objectives, expectations and intentions.

The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements.

The Company does not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws.

The MD&A contains forward-looking statements and the Company does not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws.

Readers are cautioned that such forward-looking statements should be read in conjunction with the Company’s disclosures under “Forward-Looking Statements” and “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.

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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 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.

• Results of Operations —This section provides an analysis of our results of operations, including the results of our operating segment for the three months ended March 31, 2022 and 2021.

• Capital Resources and Liquidity —This section provides a discussion of our financial condition and cash flows as of and for the three months ended March 31, 2022 and 2021.

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

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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 ("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.

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, 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.

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.

For additional information concerning the acquisition, see Note 5 “Business Acquisition” in the audited combined financial statements for the year ended December 31, 2021 included with our Annual Report on Form 10-K, and Note 4, "Business Acquisition" in the accompanying unaudited consolidated financial statements.

The Company owns and operates a chain of retail stores under the brand name of Murphy USA ® which are almost all located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United 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 brand name of QuickChek.

At March 31, 2022, we had a total of 1,686 Company stores in 27 states, of which 1,151 were Murphy USA, 376 were Murphy Express and 159 were QuickChek.

We also market to unbranded wholesale customers through a mixture of Company owned and third-party terminals.

Basis of Presentation

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and its subsidiaries for all periods presented.

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 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.

QuickChek uses a weekly retail calendar where each quarter has 13 weeks.

For Q1 2022, the QuickChek results cover the period from January 1, 2022 to April 1, 2022.

For the prior year period, the QuickChek results cover the period from January 29, 2021 (the date of acquisition) to April 2, 2021.

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

Trends Affecting Our Business

Our operations are significantly impacted by the gross margins we receive on our fuel sales.

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

Our operations are significantly impacted by the gross margins we receive on our fuel and merchandise sales.

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.

These factors include, but are not limited to, the price of refined products, geopolitical events, such as Russia's invasion of Ukraine, that upsets global supply and demand and price of crude oil, interruptions in our fuel and merchandise supply chain 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 against the Company or our vendors, and competition in the local markets in which we operate.

The COVID-19 pandemic continued to influence gasoline demand in the first quarter of 2022 but demand has grown as the pandemic pressures lessened, COVID-19 vaccines became more readily available, and government intervention decreased.

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.

The cost of our main sales products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States.

Generally, rising prices for crude oil increase the Company’s cost for wholesale fuel products purchased.

When wholesale fuel costs rise, the Company is not always able to immediately pass these price increases on to its retail customers at the pump, which in turn impacts the Company’s sales margin.

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 $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.

The cost of our main sales products, gasoline and diesel, are greatly impacted by the cost of crude oil in the United States.

Rising prices for crude oil increase the Company’s cost for wholesale fuel products purchased thus increasing the price of retail fuel sales.

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

Crude oil prices continued the volatile trend in 2022 with prices ranging from $76 per barrel to $124 per barrel, with an average price in Q1 2022 of approximately $95 per barrel, compare to an average price of $58 per barrel in Q1 2021.

Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results including Renewable Identification Numbers ("RINs")) for Q1 2022 was 34.0 cents per gallon ("cpg"), compared to 22.5 cpg in Q1 2021.

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.

Retail fuel margin dollars increased 61.6% in the current quarter and retail fuel volumes improved 7.8%.

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

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

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.

As of March 31, 2022, we have $1.3 billion of Senior Notes and a $397 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 March 31, 2022, we have additional available capacity under the committed $350 million cash flow revolving credit facility, which currently remains undrawn.

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.

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We intend to fund the remainder of our capital program in 2022 primarily using operating cash flow but will supplement funding where necessary using borrowings available under cash flow revolving credit facilities.

We believe that our business will continue to grow in the future as we expect to build additional locations that have the characteristics we look for in a strong site as chosen by our real estate development team.

We believe that our business will continue to grow in the future as we expand the food and beverage capabilities within our network.

We maintain a pipeline of desirable future store locations for development.

The pace of this growth is continually monitored by our management, and these plans can be altered based on operating cash flows generated and the availability of debt facilities.

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In general, sales volumes and operating incomes are typically highest in the second and third quarters during the summer-activity months and lowest during the winter months.

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.

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.

In 2020 and 2021 we saw disruptions to typical seasonal patterns due to the COVID-19 pandemic.

In early 2022, a more normal seasonal pattern has emerged and fuel volumes have approached pre-pandemic levels.

As a result, operating results for the three months ended March 31, 2022 may not be necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2022.

Business Segment

The Company has one operating segment which is Marketing.

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 nine months ended September 30, 2021.

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

For additional operating segment information, see Note 22 “Business Segments” in the audited combined financial statements for the year ended December 31, 2021 included with our Annual Report on Form 10-K and Note 16 “Business Segments” in the accompanying unaudited consolidated financial statements for the three months ended March 31, 2022.

Results of Operations

Consolidated Results

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 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 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, 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.

For the three months ended March 31, 2022, the Company reported net income of $152.4 million, or $6.08 per diluted share, on revenue of $5.1 billion.

Net income was $55.3 million for the same period in 2021, or $2.01 per diluted share, on $3.5 billion of revenue.

The increase in net income was primarily due to higher all-in fuel and merchandise contribution, a decrease in acquisition and integration related expenses and interest expense and was partially offset by increases in store operating expenses, payment fees, depreciation expense, and general and administrative expenses.

The consolidated financial results for Q1 2022 include QuickChek from January 1, 2022 through April 1, 2022, and for the prior year period covered the period from January 29, 2021 (the date of acquisition) to April 2, 2021.

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

Three Months Ended March 31, 2022 versus Three Months Ended March 31, 2021

Revenues for Q1 2022 increased $1.6 billion, or 44.7%, compared to the same quarter in 2021.

The increase in revenues was due to higher fuel sales prices and retail fuel sales volumes, increased merchandise sales, and the inclusion of QuickChek results for three months in 2022 compared to two months in 2021.

Total cost of Q1 2022 sales increased $1.4 billion, or 44.7% when compared to Q1 2021.

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

Store and other operating expenses increased $45.6 million, or 25.7%, from Q1 2022 to Q1 2021, due primarily to increased payment fees, higher employee related costs, maintenance costs and the inclusion of an additional month of QuickChek expenses compared to the prior year period.

SG&A expenses for Q1 2022 increased $1.9 million, or 4.3%, from Q1 2021.

The increase in SG&A costs is primarily due to higher professional fees and outsourced services and one additional month of QuickChek expenses compared to the prior year period.

Depreciation and amortization expense increased $4.4 million, or 8.6%, from Q1 2021 primarily due to the additions of new larger store formats of the MUSA stores and the inclusion of QuickChek stores for three months of 2022 versus two months in 2021.

Acquisition and integration related costs were lower by $8.6 million and interest expense was lower by $1.7 million compared to Q1 2021.

The period-over-period reduction is primarily related to the acquisition of QuickChek in January 2021.

The effective income tax rate was approximately 24.0% for Q1 2022 versus 24.6% for the same period of 2021.

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.

Total cost of sales increased $4.0 billion, or 54.4% when compared to 2020.

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 $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

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Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2022 2021

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Net Income $ 152.4 $ 55.3

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

Three Months Ended March 31, 2022 versus Three Months Ended March 31, 2021

Net income for the three months ended March 31, 2022 increased compared to the same period in 2021 primarily due to:

• Higher all-in fuel contribution

• Higher retail fuel sales volumes

• Higher merchandise contribution

• Lower SG&A expenses

• Lower acquisition and transaction related expenses

• Lower interest expense

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

• Higher store operating expense

• Higher depreciation and amortization expense

• Higher interest expense

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 payment fees

• Higher depreciation and amortization expense

• Higher SG&A expenses

• Acquisition related costs

• Higher interest expense

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

• Higher retail fuel contribution

• Higher fuel contribution from PS&W, including RINs

• Higher merchandise contribution

• Higher retail fuel sales volumes

• Higher general and administrative expense

• Higher income tax expense

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

September 30, Nine Months Ended

September 30,

Marketing Segment 2022 2021

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Total non-tobacco sales revenue same store sales 1,2

48.7 47.7 49.0 46.0

Total merchandise sales revenue same store sales 1,2

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When prior period same store sales volumes or sales are presented, they have not been revised for current year activity for raze-and-rebuilds, asset acquisitions and asset dispositions.

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 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.

QuickChek uses a weekly retail calendar where each quarter has 13 weeks.

For the Q1 2022 period, the QuickChek results cover the period from January 1, 2022 to April 1, 2022.

For the prior year period, the QuickChek results cover the period from January 29, 2021 (the date of acquisition) to April 2, 2021.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

Key Operating Metrics 2022 2021

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Retail fuel volume - per store (K gal APSM) 1

231.7 224.0 228.0 216.9

Retail fuel volume - per store (K gal SSS) 2

227.6 220.3 224.5 213.7

Total fuel contribution (including retail, PS&W and RINs) (cpg) 34.0 22.5

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Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2022 2021

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Three Months Ended

September 30, Nine Months Ended

September 30,

Key Operating Metrics 2022 2021

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Non-tobacco contribution ($K SSS) 1,2

$ 11.1 $ 10.7 $ 10.7 $ 10.1

Total merchandise contribution ($K SSS) 1,2

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

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.

Three Months Ended March 31, 2022 versus Three Months Ended March 31, 2021

Net income in the Marketing segment for Q1 2022 increased $88.7 million compared to the Q1 2021 period, due to higher all-in fuel contribution and increased fuel sales volume and higher merchandise contributions, combined with the inclusion of QuickChek results for three months in the current period versus two months in 2021.

This was partially offset by increases in store operating expense, depreciation and amortization expense, and selling, general and administrative expenses.

Total revenues for the Marketing segment were approximately $5.1 billion in Q1 2022 compared to $3.5 billion in Q1 2021.

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.

The increased revenues were due to a 44.9% increase in retail fuel sales prices, a 7.8% increase in the number of gallons sold, and a 7.1% increase in merchandise sales.

Revenues included excise taxes collected and remitted to government authorities of $514.1 million in Q1 2022 and $469.6 million in Q1 2021.

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, 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.

Retail fuel margin dollars increased 61.6% compared to the prior year quarter on a higher margin rate of 23.3 cpg for Q1 2022 when compared to 15.5 cpg in the same quarter of 2021, combined with a 7.8% increase in retail fuel volumes.

Total fuel sales volumes on a SSS basis increased 3.8% to 222.8 thousand gallons per store in the 2022 period when compared to Q1 2021.

Total PS&W margin dollars, including RINs, increased by $45.8 million from Q1 2021 results.

The quarter-over-quarter increase is primarily due to typical timing and price-related impacts of the product supply chain.

The 2022 quarter includes the sale of 69 million RINs at an average selling price of $1.12 per RIN while the prior-year quarter had sales of 63 million RINs at an average price of $1.06 per RIN.

Total merchandise sales increased 26.0% to $953.4 million in Q3 2021 compared to $756.8 million in Q3 2020 due to higher sales across the chain in most categories and the inclusion of QuickChek results.

Quarterly total merchandise contribution in 2021 improved 58.6% compared to Q3 2020.

Total SSS merchandise contribution dollars grew 4.0%.

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.

Store and other operating expenses increased $78.2 million in the current period compared to Q3 2020 levels, primarily due to the inclusion of QuickChek, which has higher store operating expense due to its larger format stores which support an enhanced food and beverage offering.

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 $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 $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 $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 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 $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.

Total merchandise sales increased 7.1% to $892.0 million in Q1 2022 compared to $833.2 million in Q1 2021 due to higher sales across the chain in most categories and the inclusion of QuickChek results for three months in Q1 2022 versus two months in the prior year.

Quarterly total merchandise contribution in Q1 2022 improved 18.4% compared to Q1 2021.

Food and beverage contribution, a subset of non-tobacco contribution was 14.6% of total merchandise contribution Q1 2022, up from 11.5% in Q1 2021 as the enterprise benefited from QuickChek's food and beverage activity.

Total SSS merchandise contribution dollars grew 5.6%, which included an increase of 7.8% in tobacco products and a 3.4% increase in non-tobacco products.

Store and other operating expenses increased $45.6 million in the current period compared to Q1 2021, primarily due to the inclusion of QuickChek for an additional month in 2022, along with higher employee related expenses, payment fees, rent and store maintenance costs.

On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 16.5%, primarily due to increased employee related expenses and maintenance costs.

Depreciation and amortization expense increased $4.8 million, or 10.2% in Q1 2022 when compared to the prior year quarter due primarily to the inclusion of QuickChek for an additional month in 2022 combined with the new larger store formats of MUSA stores.

Selling, general, and administrative expenses increased $1.9 million in Q1 2022 compared to Q1 2021 due primarily to higher professional fees and outsourced services and one additional month of QuickChek expenses.

Same store sales information compared to APSM metrics

Variance from prior year Variance from prior year

Three months ended Nine months ended

September 30, 2021 September 30, 2021

Variance from prior year

Three months ended

March 31, 2022

Fuel gallons per month 3.8 % 4.6 %

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Corporate and Other Assets

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.

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.

Three Months Ended March 31, 2022 versus Three Months Ended March 31, 2021

After-tax results for Corporate and other assets for Q1 2022 were a loss of $16.7 million compared to a loss of $25.1 million in Q1 2021, due primarily to lower acquisition and integration related costs and lower interest expense related to expenses and debt incurred in January 2021 to finance the QuickChek acquisition.

Non-GAAP Measures

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

The following table sets forth the Company’s Adjusted EBITDA for the three months ended March 31, 2022 and 2021.

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).

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Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2022 2021

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(Gain) loss on sale of assets — (0.2)

Acquisition related costs 0.7 — 9.7 —

Acquisition and integration related costs 0.2 8.8

Other nonoperating (income) expense 0.7 —

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Significant Sources of Capital

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).

As of March 31, 2022, we had $356.2 million of cash and cash equivalents.

We have a committed cash flow revolving credit facility (the "revolving facility”) of $350 million, which was undrawn at March 31, 2022 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 $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.

Net cash provided by operating activities was $339.2 million for the three months ended March 31, 2022, an increase of $109.4 million compared to $229.8 million for the same period in 2021.

The increase for the current year is primarily related to the increase in net income of $97.1 million, and changes in noncash working capital of $10.9 million compared to the same period in 2021.

The year-over-year increased non-cash operating working capital changes of $10.9 million consist of benefits related to an increase in accounts payable and accrued liabilities of $45.2 million primarily due to higher wholesale fuel prices and related freight costs and timing of payments, increased income taxes payable of $20.6 million resulted from higher pretax income, and a decrease in inventory of $5.9 million primarily due to lower inventory on hand which was partially offset by higher wholesale prices.

These benefits were partially offset by increased accounts receivables of $59.3 million due to the timing of receipts and increased prices for retail and bulk sales, and a small increase in prepaid expenses and other current assets of $1.5 million.

Investing Activities

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.

For the three months ended March 31, 2022, cash required by investing activities was $64.4 million compared to $696.3 million in 2021.

The decrease in investing cash requirements in the current period was primarily due to the cash payments of $642.1 million for the acquisition of QuickChek in 2021 which was partially offset by the timing of capital expenditures that required $10.4 million more in 2022 over 2021.

Financing Activities

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.

Repayments of debt required $220.5 million in 2021 compared to net repayments of $26.1 million in 2020.

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 $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.

Financing activities in the three months ended March 31, 2022 required cash of $175.0 million compared to cash provided of $607.0 million in the three months ended March 31, 2021.

The first three months of 2022 included payments of $151.8 million for the repurchase of common shares, which was an increase of $101.8 million from the repurchases of $50.0 million in the prior-year period, and dividend payments of $7.2 million in 2022 versus payments of $6.8 million in the first three months of 2021.

Borrowings of debt related to the QuickChek acquisition in 2021 provided $892.8 million compared to no borrowings in the same period of 2022.

Repayments of debt required $3.8 million in 2022 compared to net repayments of $214.4 million in 2021 that were related to the QuickChek acquisition.

Debt issuance costs related to the QuickChek transaction required cash of $8.8 million in 2021 and there were no such costs in 2022.

Amounts related to share-based compensation required $6.4 million more in cash during 2022 than in 2021.

The Company paid a dividend of $0.29 per Common share in March 2022 for a total cash payment of $7.2 million and paid a dividend of $0.25 per share in March 2021 for a total cash payment of $6.8 million.

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.

On May 5, 2022 the Board of Directors declared a quarterly cash dividend of $0.31 per common share, or $1.24 per share on an annualized basis.

The dividend is payable on June 1, 2022, to shareholders of record as of May 17, 2022.

Share Repurchase Program

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,

During the three months ended March 31, 2022 a total of 836,953 shares were repurchased for $151.8 million.

The $500 million share repurchase program approved by the Board of Directors in November 2020 was completed in Q1 2022 and the December 2021 authorization of up to $1 billion had approximately $868.2 million remaining at March 31, 2022, to be executed by December 31, 2026.

Our long-term debt at March 31, 2022 and December 31, 2021 was as set forth below:

(Millions of dollars) March 31,

2022 December 31,

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 September 30, 2021) (net of unamortized discount of $0.9) 398.1 —

5.625% senior notes due 2027 (net of unamortized discount of $1.9 at March 31, 2022 and $2.0 at December 2021) $ 298.1 $ 298.0

4.75% senior notes due 2029 (net of unamortized discount of $4.7 at March 31, 2022 and $4.8 at December 31, 2021) 495.3 495.2

3.75% senior notes due 2031 (net of unamortized discount of $5.5 at March 31, 2022 and $5.7 at December 31, 2021) 494.5 494.3

Term loan due 2028 (effective interest rate of 2.27% at March 31, 2022 and December 31, 2021 and net of unamortized discount of $0.8 at March 31, 2022 and $0.9 at December 31, 2021) 396.2 397.1

Capitalized lease obligations, autos and equipment, due through 2025 2.3 2.7

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Total long-term debt, net of current $ 1,797.4 $ 1,800.1

On April 25, 2017, Murphy Oil USA, Inc., our primary operating subsidiary, issued $300 million of 5.625% Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration statement.

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.

On April 25, 2017, Murphy Oil USA, Inc., our primary operating subsidiary, issued $300 million of 5.625% Senior Notes due 2027 (the "2027 Senior Notes").

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, as defined herein.

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.

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The 2029 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 2029 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 Senior Notes.

The indenture governing the 2029 Senior Notes contains restrictive covenants that are substantially similar to the covenants for the 2027 Senior Notes.

On January 29, 2021, Murphy Oil USA, Inc., issued $500 million of 3.75% Senior Notes due 2031 (the “2031 Senior Notes” and, together with the 2027 Senior Notes and the 2029 Senior Notes, the "Senior Notes").

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The 2031 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 2031 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 and 2029 Senior Notes.

The indenture governing the 2031 Senior Notes contains restrictive covenants that are substantially similar to the covenants for the 2027 and 2029 Senior Notes.

The Senior Notes and the guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness.

The Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.

Credit Facilities and Term Loan

On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash flow revolving credit facility and a senior unsecured term loan that replaced the Company's prior ABL facility and term loan contained in the credit facility that was last renewed in 2019, respectively.

Revolving Credit Facility and Term Loan

On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash flow revolving credit facility and a senior secured term loan that replaced the Company's prior ABL facility and term loan contained in the credit facility that was last renewed in 2019, respectively.

The credit agreement provides for a senior secured term loan in an aggregate principal amount of $400 million (the "Term Facility") (which was borrowed in full on January 29, 2021) and revolving credit commitments in an aggregate amount equal to $350 million (the "Revolving Facility", and together with the Term Facility, the "Credit Facilities").

The outstanding balance of the term loan was $397 million at March 31, 2022 and $398 million at December 31, 2021.

The term loan is due January 2028 and we are required to make quarterly principal payments of $1 million, which began on July 1, 2021.

As of March 31, 2022, we had no outstanding borrowings under the revolving facility while there were $4.1 million in outstanding letters of credit, which reduces the amount available to borrow.

Interest payable on the Credit Facilities is based on either:

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• the Alternate Base Rate, which is defined as the highest of (a) the rate of interest last quoted by The Wall Street Journal as the "Prime Rate", (b) the greater of the federal funds effective rate and the overnight bank funding rate determined by the Federal Reserve Bank of New York from time to time plus 0.50% per annum and (c) the one-month Adjusted LIBO Rate plus 1.00% per annum,

plus, (A) in the case of Adjusted LIBO Rate borrowings, (i) with respect to the Revolving Facility, spreads ranging from 1.75% to 2.25% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, a spread of 1.75% per annum and (B) in the case of Alternate Base Rate borrowings (i) with respect to the Revolving Facility, spreads ranging from 0.75% to 1.25% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, a spread of 1.75% per annum.

respect to the Revolving Facility, spreads ranging from 0.75% to 1.25% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, a spread of 1.75% per annum.

The Term Facility amortizes in quarterly installments starting with the first amortization payment being due on July 1, 2021 at a rate of 1.00% per annum.

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.

The Credit Agreement also contains total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly.

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 Revolving Facility also imposes total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly.

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 and 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 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.

At March 31, 2022, our total leverage ratio was 1.90 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 the greater of $112.3 million or 4.5% of consolidated net tangible assets over the life of the credit agreement.

All obligations under the credit agreement are guaranteed by Murphy USA and the subsidiary guarantors party thereto, and all obligations under the credit agreement, including the guarantees of those obligations, are secured by certain assets of Murphy USA, Murphy Oil USA, Inc.

and the guarantors party to the guarantee and collateral agreement in respect thereof.

Supplemental Guarantor Financial Information

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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 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.

MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the three months ended March 31, 2022, and accounted for the vast majority of our total assets as of March 31, 2022.

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.

Capital Spending

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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 nine month periods ended September 30, 2021 and 2020:

The following table outlines our capital spending and investments by segment for the three month periods ended March 31, 2022 and 2021:

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2022 2021

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Total $ 69.1 $ 55.9

We currently expect capital expenditures for the full year 2021 to range from approximately $325 million to $375 million, including $298 million for retail growth, approximately $25 million for maintenance capital, with the remaining funds earmarked for other corporate investments and other strategic initiatives.

We currently expect capital expenditures for the full year 2022 to range from approximately $350 million to $400 million, including $300 million to $325 million for retail growth, and $30 million to $40 million for maintenance capital, with the remaining funds earmarked for other corporate investments and other strategic initiatives.

See Note 18 “Commitments” in the audited consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K for more information.

Critical Accounting Policies

Our critical accounting policies have been updated to include changes since our Annual Report on Form 10-K for the year ended December 31, 2020.

There has been no material update to our critical accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2021.

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies” in the Form 10-K.

Business combinations — We account for business combinations using the purchase method of accounting.

The purchase price of an acquisition is measured as the aggregate of the fair value of the consideration transferred.

The purchase price is allocated to the fair values of the tangible and intangible assets acquired and liabilities assumed, with any excess recorded as goodwill.

These fair value determinations require judgment and may involve the use of significant estimates and assumptions.

The purchase price allocation may be provisional during a measurement period of up to one year to provide reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed.

Any such measurement period adjustments are recognized in the period in which the adjustment amount is determined.

Transaction costs associated with the acquisition are expensed as incurred.

Goodwill and intangible assets — Goodwill represents the excess of the aggregate of the consideration transferred over the net assets acquired and liabilities assumed and is tested annually for impairment, or more frequently if there are indicators of impairment.

Acquired finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and are reviewed for impairment when events or circumstances indicate that the asset group to which the intangible assets belong might be impaired.

The Company revises the estimated remaining useful life of these assets when events or changes in circumstances warrant a revision.

If the Company revises the useful life, the unamortized balance is amortized over the use life on a prospective basis.

Indefinite-lived intangibles are tested annually for impairment, or more often if indicators warrant.

FORWARD-LOOKING STATEMENTS

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our ability to continue to maintain a good business relationship with Walmart;

successful execution of our growth strategy, including our ability to realize the anticipated benefits from

such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties;

successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties;

our ability to effectively manage our inventory, disruptions in our supply chain and our ability to control costs;

geopolitical events, such as Russia's invasion of Ukraine, that impact the supply and demand and prices of crude oil;

the impact of severe weather events, such as hurricanes, floods and earthquakes;

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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;

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;

efficient and proper allocation of our capital resources, including the timing, declaration, amount and payment of any future dividends or levels of the company's share repurchases, or management of operating cash;

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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