What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-28 compared with 2022-05-05 · 165 added, 112 removed, 595 unchanged (32% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(Millions of dollars, except share amounts) 2022 2021

2 unchanged sentences

Accounts receivable—trade, less allowance for doubtful accounts of $ 0.1 at 2022 and 2021

Inventories 265.9 292.3

Inventories, at lower of cost or market 314.0 292.3

Prepaid expenses and other current assets 31.1 23.4

35 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(Millions of dollars, except share and per share amounts) 2022 2021 2022 2021

16 unchanged sentences

Other income (expense)

Interest income 0.4 — 0.4 —

Interest expense ( 20.2 ) ( 20.4 ) ( 39.8 ) ( 41.7 )

17 unchanged sentences

(Millions of dollars) Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net income $ 183.3 $ 128.8 $ 335.7 $ 184.1

6 unchanged sentences

Amortization of unrealized (gain) loss to interest expense 0.3 0.2 0.5 0.4

0.3 0.2 0.5 0.5

Deferred income tax (benefit) expense 0.1 — 0.1 0.1

5 unchanged sentences

(Millions of dollars)

Three Months Ended

Six Months Ended

Operating Activities

40 unchanged sentences

Balance as of March 31, 2021 46,767,164 0.5 ( 1,535.3 ) 525.6 1,791.5 ( 1.7 ) 780.6

Net income (loss) — — — — 128.8 — 128.8

Amortization of unrealized loss on interest rate hedge, net of tax — — — — — 0.2 0.2

Cash dividends declared ($ 0.25 per share)

( 6.7 ) ( 6.7 )

Purchase of treasury stock — — ( 148.3 ) — — — ( 148.3 )

Issuance of treasury stock — — 0.5 ( 0.5 ) — — —

Amounts related to share-based compensation — — — ( 0.5 ) — — ( 0.5 )

Share-based compensation expense — — — 3.8 — — 3.8

Balance as of June 30, 2021 46,767,164 $ 0.5 $ ( 1,683.1 ) $ 528.4 $ 1,913.6 $ ( 1.5 ) $ 757.9

See notes to consolidated financial statements.

Murphy USA Inc.

Consolidated Statements of Changes in Equity

(Millions of dollars, except share amounts) Shares Par Treasury Stock APIC Retained Earnings AOCI Total

9 unchanged sentences

Balance as of March 31, 2022 46,767,164 0.5 ( 1,982.3 ) 516.7 2,257.6 ( 1.0 ) 791.5

Net income (loss) — — — — 183.3 — 183.3

Amortization of unrealized loss on interest rate hedge, net of tax — — — — — 0.2 0.2

Cash dividends declared ($ 0.31 per share)

— — — — ( 7.4 ) — ( 7.4 )

Dividend equivalent units accrued — — — 0.2 ( 0.2 ) — —

Purchase of treasury stock — — ( 203.6 ) — — — ( 203.6 )

Issuance of treasury stock — — 2.5 ( 2.6 ) — — ( 0.1 )

Amounts related to share-based compensation — — — ( 5.3 ) — — ( 5.3 )

Share-based compensation expense — — — 4.1 — — 4.1

Balance as of June 30, 2022 46,767,164 $ 0.5 $ ( 2,183.4 ) $ 513.1 $ 2,433.3 $ ( 0.8 ) $ 762.7

See notes to consolidated financial statements.

6 unchanged sentences

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, markets gasoline and other products at standalone stores under the Murphy Express brand, and also has a mix of convenience stores with and without retail gasoline that operate under the name of QuickChek®.

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

At June 30, 2022, the Company had a total of 1,695 Company stores of which 1,151 were Murphy USA, 385 were Murphy Express and 159 were QuickChek.

The Company also has certain product supply and wholesale assets, including product distribution terminals and pipeline positions.

1 unchanged sentence

On August 30, 2013, Murphy USA was separated from Murphy Oil through the distribution of 100 % of the common stock of Murphy USA to holders of Murphy Oil stock.

On January 29, 2021, the Company acquired 100 % of QuickChek Corporation ("QuickChek"), a privately held convenience store chain.

On January 29, 2021, the Company acquired 100 % of Quick Chek Corporation ("QuickChek"), a privately held convenience store chain.

Murphy USA Inc., Murphy Oil USA, Inc.

and certain of its subsidiaries operate on a calendar year basis, while the subsidiary QuickChek uses a weekly retail calendar where each quarter has 13 weeks.

For the three month period ended March 31, 2022, the QuickChek results cover the period from January 1, 2022 to April 1, 2022 and for the three month period ended March 31, 2021, results cover the period January 29, 2021 to April 2, 2021.

For the three month period ended June 30, 2022, the QuickChek results cover the period from April 2, 2022 to July 1, 2022 and year-to-date period began January 1, 2022.

For the three month period ended June 30, 2021, results cover the period April 3, 2021 to July 2, 2021 and the year-to-date period began on January 29, 2021.

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

26 unchanged sentences

The Company continues to account for these transactions as non-monetary exchanges under existing accounting guidance and typically reports these on a net basis in the Consolidated Statements of Income.

The following tables disaggregate our revenues by major source for the three months ended March 31, 2022 and 2021, respectively:

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

The following tables disaggregate our revenues by major source for the three and six months ended June 30, 2022 and 2021, respectively:

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

(Millions of dollars) Marketing Corporate and Other Assets Consolidated Marketing Corporate and Other Assets Consolidated

10 unchanged sentences

Total revenues $ 6,766.7 $ — $ 6,766.7 $ 4,455.9 $ 0.1 $ 4,456.0

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

(Millions of dollars) Marketing Corporate and Other Assets Consolidated Marketing Corporate and Other Assets Consolidated

Petroleum product sales (at retail) 1

$ 8,811.3 — $ 8,811.3 $ 5,447.3 $ — $ 5,447.3

Petroleum product sales (at wholesale) 1

1,027.4 — 1,027.4 593.0 — 593.0

Total petroleum product sales 9,838.7 — 9,838.7 6,040.3 — 6,040.3

Merchandise sales 1,886.6 — 1,886.6 1,796.6 — 1,796.6

Other operating revenues:

RINs 156.0 — 156.0 153.1 — 153.1

Other revenues 2

3.7 0.1 3.8 3.0 0.1 3.1

Total revenues $ 11,885.0 $ 0.1 $ 11,885.1 $ 7,993.0 $ 0.1 $ 7,993.1

1 Includes excise and sales taxes that remain eligible for inclusion under Topic 606

7 unchanged sentences

We have accounts receivable from the various credit/debit card providers at any point in time related to product sales made on credit cards and debit cards.

These receivables are typically collected in two to seven days , depending on the terms with the particular credit/debit card

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These receivables are typically collected in two to seven days , depending on the terms with the particular credit/debit card providers.

Payment fees retained by the credit/debit card providers are recorded as Store and other operating expenses.

9 unchanged sentences

As noted above, a mixture of payment types are used for these revenues and the same terms for credit/debit card receivables are realized.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The most significant judgment with respect to merchandise sales revenue is determining whether we are the principal or agent for some categories of merchandise such as lottery tickets, lotto, newspapers and other small categories of merchandise.

8 unchanged sentences

Deferred revenue associated with both rewards programs are included in Trade accounts payable and accrued liabilities in our Consolidated Balance Sheet.

The deferred revenue balances at March 31, 2022 and December 31, 2021 were immaterial.

The deferred revenue balances at June 30, 2022 and December 31, 2021 were immaterial.

For the sale of RINs, we recognize revenue when the RIN is transferred to the counter-party and the sale is completed.

4 unchanged sentences

Trade accounts receivable on the balance sheet represents both receivables related to contracts with customers and other trade receivables.

At March 31, 2022 and December 31, 2021, we had $ 165.1 million and $ 111.8 million of receivables, respectively, related to contracts with customers recorded.

At June 30, 2022 and December 31, 2021, we had $ 208.6 million and $ 111.8 million of receivables, respectively, related to contracts with customers recorded.

All of the trade accounts receivable related to contracts with customers outstanding at the end of each period were collected during the succeeding quarter.

These receivables were generally related to credit and debit card transactions along with short term bulk and wholesale sales to our customers, which have a very short settlement window.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 — Inventories

Inventories consisted of the following:

(Millions of dollars) March 31,

(Millions of dollars) June 30,

2022 December 31,

6 unchanged sentences

Murphy USA and Murphy Express branded petroleum products are valued using the last-in, first-out (LIFO) method and certain QuickChek store merchandise for resale is valued using the LIFO method.

At March 31, 2022 and December 31, 2021, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value for petroleum products by $ 373.2 million and $ 227.5 million, respectively and for store merchandise for resale was $ 0.5 million for both March 31, 2022 and December 31, 2021.

At June 30, 2022 and December 31, 2021, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value for petroleum products by $ 473.0 million and $ 227.5 million, respectively and for store merchandise for resale was $ 0.5 million for both June 30, 2022 and December 31, 2021.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 — Business Acquisition

13 unchanged sentences

Fair value of consideration transferred, net of cash acquired $ 641.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars)

Assets acquired:

16 unchanged sentences

Fair value of consideration transferred, net of cash and cash equivalents acquired $ 641.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the acquisition, the Company recognized certain acquisition-related expenses which were expensed as incurred.

These expenses, recognized within acquisition related costs in the consolidated statements of operations, include amounts related to transaction and integration costs, including fees for advisory and professional services incurred as part of the acquisition and integration costs subsequent to the acquisition in the amount of $ 0.2 million and $ 8.8 million for the three months ended March 31, 2022 and 2021, respectively.

These expenses, recognized within acquisition related costs in the consolidated statements of operations, include amounts related to transaction and integration costs, including fees for advisory and professional services incurred as part of the acquisition and integration costs subsequent to the acquisition in the amount of $ 1.0 million and $ 9.0 million for the six months ended June 30, 2022 and 2021, respectively.

Note 5 — Goodwill and Intangible Assets

The Company's goodwill is assigned to its Marketing segment and no ne of the goodwill is deductible for tax purposes.

(Millions of dollars) March 31,

(Millions of dollars) June 30,

2022 December 31,

2 unchanged sentences

Goodwill balance, at end of period $ 328.0 $ 328.0

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the acquisition of QuickChek on January 29, 2021, we recorded the following amount of intangible assets.

9 unchanged sentences

The intangible assets subject to amortization was in addition to the Company's existing intangible asset pipeline space, which is being amortized over a 40 year life.

Intangible assets subject to amortization at March 31, 2022 and December 31, 2021 consisted of the following:

Remaining Useful Life (in years) March 31, 2022 December 31, 2021

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets subject to amortization at June 30, 2022 and December 31, 2021 consisted of the following:

Remaining Useful Life (in years) June 30, 2022 December 31, 2021

(Millions of dollars) Cost Net Cost Net

8 unchanged sentences

Intangible assets, net of amortization $ 146.1 $ 140.5 $ 146.1 $ 140.7

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 — Long-Term Debt

Long-term debt consisted of the following:

(Millions of dollars) March 31,

(Millions of dollars) June 30,

2022 December 31,

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

5.625 % senior notes due 2027 (net of unamortized discount of $ 1.8 at June 30, 2022 and $ 2.0 at December 2021)

$ 298.2 $ 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)

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

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)

4.75 % senior notes due 2029 (net of unamortized discount of $ 4.5 at June 30, 2022 and $ 4.8 at December 31, 2021)

3.75 % senior notes due 2031 (net of unamortized discount of $ 5.4 at June 30, 2022 and $ 5.7 at December 31,2021)

Term loan due 2028 (effective interest rate of 2.84 % at June 30, 2022 and 2.27 % at December 31, 2021 and net of unamortized discount of $ 0.8 at June 30, 2022 and $ 0.9 at December 31, 2021)

Capitalized lease obligations, autos and equipment, due through 2026 2.2 2.7

8 unchanged sentences

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.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On September 13, 2019, Murphy Oil USA, Inc., issued $ 500 million of 4.75 % Senior Notes due 2029 (the “2029 Senior Notes”).

The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of the prior note issuance.

The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of a prior note issuance.

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.

6 unchanged sentences

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 Senior Notes.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revolving Credit Facility and Term Loan

1 unchanged sentence

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 outstanding balance of the term loan was $ 396 million at June 30, 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.

As of June 30, 2022, we had no outstanding borrowings under the revolving facility while there were $ 4.7 million in outstanding letters of credit, which reduces the amount available to borrow.

Interest payable on the Credit Facilities is based on either:

4 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 and casualty events (subject to certain reinvestment rights) and the net cash proceeds of issuances of indebtedness not permitted under the Credit Agreement.

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

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

3 unchanged sentences

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 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.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

restricted payments in cash in an aggregate amount not to exceed the greater of $ 112.3 million or 4.50 % of consolidated net tangible assets over the life of the credit agreement.

At June 30, 2022, our total leverage ratio was 1.76 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 an ability to make restricted payments in cash in an aggregate amount not to exceed the greater of $ 111.2 million or 4.50 % 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.

1 unchanged sentence

Note 7— Asset Retirement Obligations (ARO)

The majority of the ARO recognized by the Company at March 31, 2022 and December 31, 2021 is related to the estimated costs to dismantle and abandon certain of its retail gasoline stores.

The majority of the ARO recognized by the Company at June 30, 2022 and December 31, 2021 is related to the estimated costs to dismantle and abandon certain of its retail gasoline stores.

The Company has not recorded an ARO for certain of its marketing assets because sufficient information is presently not available to estimate a range of potential settlement dates for the obligation.

2 unchanged sentences

A reconciliation of the beginning and ending aggregate carrying amount of the ARO is shown in the following table.

(Millions of dollars) March 31,

(Millions of dollars) June 30,

2022 December 31,

7 unchanged sentences

The Company cannot predict the type of revisions to these assumptions that may be required in future periods due to the lack of availability of additional information.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 — Income Taxes

The effective tax rate is calculated as the amount of income tax expense (benefit) divided by income before income tax expense (benefit).

For the three month periods ended March 31, 2022 and 2021, the Company’s approximate effective tax rates were as follows:

Three months ended March 31, 24.0 % 24.6 %

In the three months ended March 31, 2022, the Company recognized approximately $ 1.5 million of excess tax benefits related to stock compensation for employees.

For the three months ended March 31, 2021, the Company recognized approximately $ 0.9 million in excess tax benefits related to stock compensation and $ 1.0 million for other discrete tax items related to state deferred tax rate adjustments due to the QuickChek acquisition.

As of March 31, 2022, the earliest years remaining open for federal audit and/or settlement are 2018 and 2016 for state purposes.

For the three and six month periods ended June 30, 2022 and 2021, the Company’s approximate effective tax rates were as follows:

Three months ended June 30, 24.0 % 24.2 %

Six months ended June 30, 24.0 % 24.3 %

In the six months ended June 30, 2022, the Company recognized approximately $ 2.0 million of excess tax benefits related to stock compensation for employees and $ 0.4 million in other discrete tax benefits.

For the six months ended June 30, 2021, the Company recognized approximately $ 1.1 million in excess tax benefits related to stock compensation, $ 1.0 million for other discrete tax items related to state deferred tax rate adjustments due to the QuickChek acquisition, and $ 0.4 million in other discrete tax benefits.

As of June 30, 2022, the earliest years remaining open for federal audit and/or settlement are 2018 and 2017 for state purposes.

Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future periods from resolution of outstanding unsettled matters.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 — Incentive Plans

16 unchanged sentences

Stock price at valuation date $ 181.18

Changes in options outstanding for Company employees during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in options outstanding for Company employees during the period from December 31, 2021 to June 30, 2022 are presented in the following table:

Options Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (Millions of Dollars)

7 unchanged sentences

The awards granted in the current year were under the MUSA 2013 Plan, are valued at the grant date fair value, and vest over 3 years.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in restricted stock units outstanding for Company employees during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Changes in restricted stock units outstanding for Company employees during the period from December 31, 2021 to June 30, 2022 are presented in the following table:

Employee RSUs Number of units Weighted Average Grant Date Fair Value Total Fair Value (Millions of Dollars)

9 unchanged sentences

For the ROACE portion of the awards, the valuation will be based on the grant date fair value of $ 181.18 per unit and the number of awards will be periodically assessed to determine the probability of vesting.

Changes in performance-based restricted stock units outstanding for Company employees during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in performance-based restricted stock units outstanding for Company employees during the period from December 31, 2021 to June 30, 2022 are presented in the following table:

Employee PSU's Number of Units Weighted Average Grant Date Fair Value Total Fair Value (Millions of Dollars)

11 unchanged sentences

These awards typically vest at the end of three years .

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in restricted stock units outstanding for Company non-employee directors during the period from December 31, 2021 to March 31, 2022 are presented in the following table:

Changes in restricted stock units outstanding for Company non-employee directors during the period from December 31, 2021 to June 30, 2022 are presented in the following table:

Director RSU's Number of Units Weighted Average Grant Date Fair Value Total Fair Value (Millions of Dollars)

3 unchanged sentences

Outstanding at 6/30/2022 26,863 $ 132.68 $ 6.3

For the three months ended March 31, 2022 and 2021, share-based compensation was $ 2.9 million and $ 3.6 million, respectively.

For the six months ended June 30, 2022 and 2021, share-based compensation was $ 7.0 million and $ 7.4 million, respectively.

There were $ 0.5 million and $ 0.1 million in income tax benefits realized for the tax deductions from options exercised for the six months ended June 30, 2022 and 2021, respectively.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 — Financial Instruments and Risk Management

3 unchanged sentences

Derivative instruments are traded primarily with credit worthy major financial institutions or over national exchanges such as the New York Mercantile Exchange (“NYMEX”).

For accounting purposes, the Company has not designated commodity derivative contracts as hedges, and therefore, it recognizes all gains and losses on these derivative contracts in its Consolidated Statement of Income.

Certain interest rate derivative contracts were accounted for as hedges and gain or loss associated with recording the fair value of these contracts was deferred in AOCI until the anticipated transactions occur.

As of March 31, 2022, all current commodity derivative activity is immaterial.

At March 31, 2022, there was $ 1.6 million cash deposit and at December 31, 2021 the cash deposit was $ 0.6 million related to commodity derivative contracts reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

These cash deposits have not been used to increase the reported net assets or reduce the reported net liabilities on the derivative contracts at March 31, 2022 or December 31, 2021.

As of June 30, 2022, all current commodity derivative activity is immaterial.

At June 30, 2022, there was $ 1.6 million cash deposit and at December 31, 2021 the cash deposit was $ 0.6 million related to commodity derivative contracts reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

These cash deposits have not been used to increase the reported net assets or reduce the reported net liabilities on the derivative contracts at June 30, 2022 or December 31, 2021.

Interest Rate Risks

Under hedge accounting rules, the Company deferred the net charge or benefit associated with the interest rate swap entered into to manage the variability in interest payments for the variable-rate debt in association with $ 150.0 million of our outstanding term loan dated August 27, 2019 until the debt was repaid on January 29, 2021.

At that time the hedge was de-designated and therefore hedge accounting is no longer applicable and mark-to-market gains and losses are recognized in the period in which the change occurs in the Consolidated Statement of Income in interest expense.

The current loan balance subject to the hedge is $ 90.0 million.The Company is reclassifying the accumulated other comprehensive loss on the previous interest rate swap, $ 2.4 million as of the de-designation date, into interest expense using a straight-line approach over the remaining life of the originally designated hedging relationship.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.2 million for the three months ended March 31, 2022 and 2021.

The remaining balance at March 31, 2022 was $ 1.3 million.

The current loan balance subject to the hedge is $ 82.5 million.

The Company is reclassifying the accumulated other comprehensive loss on the previous interest rate swap, $ 2.4 million as of the de-designation date, into interest expense using a straight-line approach over the remaining life of the originally designated hedging relationship.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.3 million and $ 0.5 million for the three and six months ended June 30, 2022, respectively.

The amount of pre-tax gains in accumulated other comprehensive loss that was reclassified into interest expense was $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2021, respectively.

The remaining balance at June 30, 2022 was $ 1.1 million.

Prior to the de-designation, changes in the fair values of the interest rate swaps were recorded as a component of other comprehensive loss.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 — Earnings Per Share

3 unchanged sentences

The 2020 program was completed in January 2022, and a new authorized program for up to $ 1 billion, approved in December 2021 to be executed by December 31, 2026, is now in effect.

For the three months ended March 31, 2022, the Company repurchased 836,953 shares of common stock for an average price of $ 181.36 per share including brokerage fees.

For the three months ended March 31, 2021, 397,882 shares were repurchased for an average price of $ 125.67 per share.

The following table provides a reconciliation of basic and diluted earnings per share computations for the three months ended March 31, 2022 and 2021:

For the six months ended June 30, 2022, the Company repurchased 1,716,166 shares of common stock for an average price of $ 207.10 per share including brokerage fees.

For the six months ended June 30, 2021, 1,483,758 shares were repurchased for an average price of $ 133.65 per share.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of basic and diluted earnings per share computations for the three and six months ended June 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

(Millions of dollars, except share and per share amounts) 2022 2021 2022 2021

12 unchanged sentences

Earnings per common share assuming dilution $ 7.53 $ 4.79 $ 13.59 $ 6.73

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have excluded from the earnings-per-share calculation certain stock options and shares that are considered to be anti-dilutive under the treasury stock method and are reported in the table below.

Three Months Ended

June 30, Six Months Ended

Potentially dilutive shares excluded from the calculation as their inclusion would be anti-dilutive 2022 2021 2022 2021

3 unchanged sentences

Note 12 — Other Financial Information

CASH FLOW DISCLOSURES — There were no cash income taxes paid nor refunds received for the three month periods ended March 31, 2022 and 2021, respectively.

Interest paid, net of amounts capitalized, was $ 26.2 million and $ 18.4 million for the three month periods ended March 31, 2022 and 2021, respectively.

CASH FLOW DISCLOSURES — Cash income taxes paid, net of refunds, was $ 87.4 million and $ 44.6 million for the six month periods ended June 30, 2022 and 2021, respectively.

Interest paid, net of amounts capitalized, was $ 39.5 million and $ 31.4 million for the six month periods ended June 30, 2022 and 2021, respectively.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CHANGES IN WORKING CAPITAL:

Three Months Ended

Six Months Ended

(Millions of dollars) 2022 2021

13 unchanged sentences

The carrying value of the Company’s Cash and cash equivalents, Accounts receivable-trade, Trade accounts payable, interest rate swap contracts and accrued liabilities approximates fair value.

See also Note 10 "Financial Instruments and Risk Management" in these consolidated financial statements for the period ended March 31, 2022, for more information.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at March 31, 2022 and December 31, 2021.

See also Note 10 "Financial Instruments and Risk Management" in these consolidated financial statements for the period ended June 30, 2022, for more information.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at June 30, 2022 and December 31, 2021.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.

1 unchanged sentence

The fair value of Current and Long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities and these qualify as Level 1 inputs.

The Company has off-balance sheet exposures relating to certain financial guarantees and

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

letters of credit.

The Company has off-balance sheet exposures relating to certain financial guarantees and letters of credit.

The fair value of these, which represents fees associated with obtaining the instruments, was nominal.

At March 31, 2022 At December 31, 2021

At June 30, 2022 At December 31, 2021

Carrying Carrying

12 unchanged sentences

and laws and regulations affecting the Company’s relationships with employees, suppliers, customers, stockholders and others.

Because governmental actions are often motivated by political considerations, may be taken without full consideration of their consequences, and may be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.

Because governmental actions are often motivated by political considerations, may be taken without full consideration of their consequences, and may

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.

ENVIRONMENTAL MATTERS AND LEGAL MATTERS — Murphy USA is subject to numerous federal, state and local laws and regulations dealing with the environment.

11 unchanged sentences

Certain environmental expenditures are likely to be recovered by the Company from other sources, primarily environmental funds maintained by certain states.

Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries at March 31, 2022, however certain jurisdictions provide reimbursement for these expenses which have been considered in recording the net exposure.

Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries at June 30, 2022, however certain jurisdictions provide reimbursement for these expenses which have been considered in recording the net exposure.

Environmental Protection Agency (EPA) currently considers the Company a Potentially Responsible Party (PRP) at one Superfund site.

1 unchanged sentence

However, based on current negotiations and available information, the Company believes that it is a de minimis party as to ultimate responsibility at the Superfund site.

Accordingly, the Company has not recorded a liability for remedial costs at the Superfund site at March 31, 2022.

The Company could be required to bear a pro rata share of costs attributable to nonparticipating PRPs or could be

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assigned additional responsibility for remediation at this site or other Superfund sites.

Accordingly, the Company has not recorded a liability for remedial costs at the Superfund site at June 30, 2022.

The Company could be required to bear a pro rata share of costs attributable to nonparticipating PRPs or could be assigned additional responsibility for remediation at this site or other Superfund sites.

The Company believes that its share of the ultimate costs to clean-up this site will be immaterial and will not have a material adverse effect on its net income, financial condition or liquidity in a future period.

6 unchanged sentences

Based on information currently available to the Company, the ultimate resolution of those other legal matters is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INSURANCE — The Company maintains insurance coverage at levels that are customary and consistent with industry standards for companies of similar size.

Murphy USA maintains statutory workers compensation insurance with a deductible of $ 1.0 million per occurrence, general liability insurance with a self-insured retention of $ 3.0 million per occurrence, and auto liability insurance with a deductible of $ 0.3 million per occurrence.

As of March 31, 2022, there were a number of outstanding claims that are of a routine nature.

As of June 30, 2022, there were a number of outstanding claims that are of a routine nature.

The estimated incurred but unpaid liabilities relating to these claims are included in Trade account payables and accrued liabilities on the Consolidated Balance Sheets.

6 unchanged sentences

OTHER MATTERS — In the normal course of its business, the Company is required under certain contracts with various governmental authorities and others to provide financial guarantees or letters of credit that may be drawn upon if the Company fails to perform under those contracts.

At March 31, 2022, the Company had contingent liabilities of $ 10.1 million on outstanding letters of credit.

At June 30, 2022, the Company had contingent liabilities of $ 9.8 million on outstanding letters of credit.

The Company has not accrued a liability in its balance sheet related to these financial guarantees and letters of credit because it is believed that the likelihood of having these drawn is remote.

6 unchanged sentences

Most leases include one or more options to renew, with renewal terms that can extend the lease term from 5 to 20 years or more.

The exercise of lease renewal options is

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

at the Company's sole discretion.

The exercise of lease renewal options is at the Company's sole discretion.

Due to the uncertainties of future markets, economic factors, technology changes, demographic shifts and behavior, environmental regulatory requirements and other information that impacts decisions as to store location, management has determined that it was not reasonably certain to exercise contract options and they are not included in the lease term.

7 unchanged sentences

Our lease agreements do not contain any material residual value guarantees and approximately 102 stores leased from Walmart contain restrictive covenants, though the restrictions are deemed to have an immaterial impact.

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Leases are reflected in the following balance sheet accounts:

(Millions of dollars) Classification March 31,

(Millions of dollars) Classification June 30,

2022 December 31,

Operating (Right-of-use) Operating lease right-of-use assets, net $ 443.7 $ 419.2

Finance Property, plant, and equipment, at cost, less accumulated depreciation of $ 20.7 at March 31, 2022 and $ 16.7 at December 31, 2021

Finance Property, plant, and equipment, at cost, less accumulated depreciation of $ 24.2 at June 30, 2022 and $ 16.7 at December 31, 2021

Total leased assets $ 574.1 $ 556.5

4 unchanged sentences

Total lease liabilities $ 591.3 $ 568.6

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

June 30, Six Months Ended

(Millions of dollars) Classification 2022 2021 2022 2021

1 unchanged sentence

Finance lease cost

Amortization of leased assets Depreciation & amortization expense 4.0 2.6

Amortization of leased assets Depreciation & amortization 3.9 3.8 7.9 6.4

Interest on lease liabilities Interest expense 2.3 2.2 4.6 3.6

1 unchanged sentence

Cash flow information:

Three Months Ended

Six Months Ended

(Millions of dollars) 2022 2021

3 unchanged sentences

Financing cash flows from finance leases $ 5.6 $ 4.3

Maturity of Lease Liabilities at March 31, 2022:

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Maturity of Lease Liabilities at June 30, 2022:

(Millions of dollars) Operating leases Finance leases

8 unchanged sentences

Present value of lease liabilities $ 454.2 $ 137.1

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease Term and Discount Rate:

Three Months Ended

Six Months Ended

Weighted average remaining lease term (years)

12 unchanged sentences

Three Months Ended

March 31, 2022 March 31, 2021

Total Assets at March 31, 2022 External Revenues Income (Loss) External Revenues Income (Loss)

June 30, 2022 June 30, 2021

(Millions of dollars) Total Assets at June 30, 2022 External Revenues Income (Loss) External Revenues Income (Loss)

Marketing $ 3,745.8 $ 6,766.7 $ 199.1 $ 4,455.9 $ 145.6

Corporate and other assets 472.0 — ( 15.8 ) 0.1 ( 16.8 )

Total $ 4,217.8 $ 6,766.7 $ 183.3 $ 4,456.0 $ 128.8

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

June 30, 2022 June 30, 2021

External Revenues Income (Loss) External Revenues Income (Loss)

(Millions of dollars)

3 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 1. Financial Statements