What changed in this filing

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Item 1A. Risk Factors

2023-02-15 compared with 2022-02-17 · 39 added, 58 removed, 304 unchanged (24% of the section changed)

38 unchanged sentences

Any transition away from LIBOR as a benchmark for establishing the applicable interest rate is complex and may affect the cost of servicing our debt under our credit agreement.

Although these borrowing arrangements provide for alternative base rates, the composition and characteristics of such alternative base rates are not the same as those of LIBOR, and the consequences of the phase-out of LIBOR cannot be entirely predicted at this time.

predicted at this time.

We expect to address the transition of all our LIBOR based contracts prior to June 30, 2023.

Our ability to meet our payment obligations under the notes and our other debt depends on our ability to generate significant cash flow in the future.

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Oil and domestic wholesale gasoline markets are volatile.

General political conditions, acts of war or terrorism, instability in oil producing regions, particularly in the Middle East and South America, and the value of U.S.

dollars relative to other foreign currencies, particularly those of oil producing nations, could significantly affect oil supplies and wholesale gasoline costs.

In addition, the supply of gasoline and our wholesale purchase costs could be adversely affected in the event of a shortage, which could result from, among other things, lack of capacity at oil refineries, sustained increase in global demand or the fact that our gasoline contracts do not guarantee an uninterrupted, unlimited supply of gasoline.

General political conditions, acts of war or terrorism, such as Russia's invasion of Ukraine, instability in oil producing regions, particularly in the Middle East and South America, and the value of U.S.

dollars relative to other foreign currencies, particularly those of oil producing nations, have significantly affected and in the future could significantly affect oil supplies and wholesale gasoline costs.

In addition, the supply of gasoline and our wholesale purchase costs can be adversely affected in the event of a shortage, which could result from, among other things, lack of capacity at oil refineries, sustained increase in global demand or the fact that our gasoline contracts do not guarantee an uninterrupted, unlimited supply of gasoline.

Our wholesale purchase costs could also be adversely affected by increasingly stringent regulations regarding the content and characteristics of fuel products.

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Our ability to successfully manage operating costs is important because we have little or no influence on the sales prices or regional and worldwide consumer demand for oil and gasoline.

Furthermore, oil prices, wholesale motor fuel costs, motor fuel sales

volumes, motor fuel gross margins and merchandise sales can be subject to seasonal fluctuations.

Furthermore, oil prices, wholesale motor fuel costs, motor fuel sales volumes, motor fuel gross margins and merchandise sales can be subject to seasonal fluctuations.

For example, consumer demand for motor fuel typically increases during the summer driving season, and typically falls during the winter months.

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Although a decline in RIN prices could have a material impact on the Company's revenues, Murphy USA's business model is not dependent on its ability to generate revenues from the sale of RINs.

Current litigation and future rule making could impact the present point of obligation under the Renewable Fuel Standard ("RFS") program.

Current litigation and future rule making could impact the Renewable Fuel Standard ("RFS") program.

The RFS program is the regulatory means by which the federal government requires the introduction of an increasing amount of renewable fuel into the fuel supply.

As it is, refiners are obligated to obtain—either by blending biofuels into petroleum-based fuels or through purchase on the open market—and then retire with the federal government RINs to satisfy their individual obligations.

However, pending litigation and soon-to-begin EPA rule making activities concerning the RFS standard could potentially open the door to a change in the point of obligation.

If the point of obligation were to be shifted from refiners to blenders, Murphy USA would potentially have to utilize the RINs that it obtains through its blending activities to satisfy a new obligation and would therefore be unable to sell those RINs to third parties.

This could have an impact on the Company's current business model, unless it were able to pass along these costs to consumers or other parties.

On December 1, 2022, the EPA announced a proposed rule to establish blending mandates for 2023, 2024, and 2025.

This is the EPA's first RFS proposal since the statutory volumetric blending mandates that Congress established in 2007 have expired.

We are exposed to risks associated with the interruption of supply and increased costs as a result of our reliance on third-party supply and transportation of refined products.

We utilize key product supply and wholesale assets, including our pipeline positions and product distribution terminals, to supply our retail fueling stores.

Much of our competitive advantage arises out of these proprietary arrangements which, if disrupted, could materially and adversely affect us.

The novel coronavirus ("COVID-19") pandemic impacted 2021 and continues to cause disruptions in supply chains into 2022.

In addition to our own operational risks discussed above, we could experience interruptions of supply or increases in costs to deliver refined products to market if the ability of the pipelines or vessels to transport petroleum or refined products is

disrupted because of weather events, accidents, governmental regulations or third-party actions.

Much of our competitive advantage arises out of these proprietary arrangements which, when disrupted, have in the past and could in the future adversely affect us, and such effects could be material.

The lasting effects of the coronavirus ("COVID-19") pandemic continues to cause disruptions in supply chains into 2023.

Furthermore, at some of our locations there are very few suppliers for fuel in that market.

11 unchanged sentences

The ECRs impose customary restrictions on the use of our properties, which Walmart has the right to enforce.

The ECRs also provide that if we propose to sell a fueling store property or any portion thereof (other than in connection with the sale of all or substantially all of our properties that were purchased from Walmart or in connection with a bona fide financing), Walmart has a right of first refusal to purchase such property or portion thereof on similar terms.

The ECRs also provide that if we propose to

sell a fueling store property or any portion thereof (other than in connection with the sale of all or substantially all of our properties that were purchased from Walmart or in connection with a bona fide financing), Walmart has a right of first refusal to purchase such property or portion thereof on similar terms.

Subject to certain exceptions (including a merger in which we participate, the transfer of any of our securities or a change in control of us), if we market for sale to a third party all or substantially all of our properties that were purchased from Walmart, or if we receive an unsolicited offer to purchase such properties that we intend to accept, we are required to notify Walmart.

11 unchanged sentences

We have a very active Asset Development group that works to focus on our key target areas to locate suitable traffic count locations for this future growth.

If the Asset Development group is unable to locate suitable locations or is unable to close the purchase for those locations in a timely fashion, the Company

could find that it does not have sufficient land to fulfill its pipeline.

Further, permitting delays due to local government agency ability to timely respond to our requests could also negatively impact our pipeline.

If the Asset Development group is unable to locate suitable locations or is unable to close the purchase for those locations in a timely fashion, the Company could find that it does not have sufficient land to fulfill its pipeline.

Further, permitting delays due to local government agency ability to timely respond to our requests or construction delays from supply chain or labor constraints could also negatively impact our project pipeline.

We currently have one primary supplier for over 74% of our merchandise.

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The anticipated benefits of the QuickChek acquisition may not be realized or those benefits may take longer to realize than expected.

The success of the QuickChek acquisition will depend, to a large extent, on our ability to realize the anticipated benefits and cost savings derived from the transaction and our ability to integrate the two organizations and businesses.

The combination of two independent businesses is a complex, costly, and time-consuming process.

As a result, we have devoted significant management attention and resources to integrate the business practices and operations of both organizations.

The integration process may disrupt the businesses and, if implemented ineffectively, would impair the realization of the full expected benefits.

We may not be able to maintain the growth rate, levels of revenue, earnings, or operating efficiency that we and QuickChek have achieved or might achieve separately.

In addition, we continue to evaluate our estimates of synergies to be realized from the QuickChek acquisition, so our actual cost-savings could differ materially from our current estimates.

We cannot give assurance that we will achieve the full amount of cost-savings on the schedule anticipated or at all.

Many factors affecting our ability to realize anticipated benefits are outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues, and diversion of management's time and energy, which could materially impact our business, financial condition, and results of operations.

In addition, even if our operations are integrated successfully with QuickChek, the full benefits of the transaction may not be realized, including the synergies, cost savings, or sales or growth opportunities as originally anticipated.

These benefits may not be achieved within the anticipated time frame, or at all.

Further, additional unanticipated costs may be incurred in the integration of our business with QuickChek.

An inability to realize the full extent of, or any of, the anticipated benefits of the QuickChek acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our financial condition, results of operations, and cash flows.

All of these factors could cause dilution to our earnings per share, decrease or delay the expected accretive effect of the transactions, and negatively impact the price of our common stock.

The long-term success of the QuickChek acquisition will depend, on our ability to realize the forecasted benefits and cost savings from our acquisition of QuickChek.

We may not be able to maintain the growth rate, levels of revenue, earnings, or operating efficiency that we and QuickChek have achieved to-date, or might have achieved separately.

Many factors affecting our ability to realize anticipated benefits are outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues, and could materially impact our business, financial condition, and results of operations.

In addition, even upon fully integrating QuickChek into our operations, the full benefits of our acquisition may not be realized, including the synergies, cost savings, or sales or growth opportunities as originally anticipated.

An inability to realize the full extent of, or any of, the anticipated benefits of the QuickChek acquisition could have an adverse effect on our financial condition, results of operations, and cash flows.

We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.

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An impairment charge would be determined based on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on our business, financial condition and results of operations.

We have incurred, and expect to continue to incur, significant integration costs in connection with the QuickChek acquisition.

In connection with the QuickChek acquisition, we have incurred and expect to continue to incur significant costs and expenses, including financial advisory, legal, accounting, consulting and other advisory fees and expenses, reorganization and restructuring costs, employee benefit–related expenses, printing expenses and other related charges.

While we have assumed that a certain level of expenses will be incurred in connection with the QuickChek acquisition, there are many factors that could affect the total amount or timing of the integration and implementation expenses.

There may also be additional unanticipated significant costs in connection with the QuickChek acquisition that we do not anticipate and may not be able to recoup.

These costs and expenses could adversely affect our results of operations in the period in which such expenses are recorded or our cash flow in the period in which any related costs are actually paid, and could reduce the benefits and income we expect to achieve from the QuickChek acquisition.

Risks Relating to Our Industry

Pandemics or disease outbreaks, such as COVID-19, may disrupt consumption and trade patterns, supply chains and normal business activities, which could materially affect our operations and results of operations.

Pandemics or disease outbreaks such as COVID-19 may continue to cause depressed demand for our fuel and convenience merchandise products because quarantines may inhibit the ability or need for our customers to shop with us.

Pandemics or disease outbreaks, such as COVID-19, have in the past and may in the future cause depressed demand for our fuel and convenience merchandise products because quarantines may inhibit the ability or need for our customers to shop with us.

We also may experience disruptions of logistics necessary to obtain and deliver products to our stores and our customers as we rely on third parties to perform these vital functions to our business.

5 unchanged sentences

We operate in the oil and gas industry and experience intense competition from other independent retail and wholesale gasoline marketing companies.

marketing petroleum business is highly competitive, particularly with regard to accessing and marketing petroleum and other refined products.

We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the

basis of price, but also on the basis of convenience and consumer appeal.

petroleum marketing business is highly competitive, particularly with regard to accessing and marketing petroleum and other refined products.

We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on the basis of convenience and consumer appeal.

In addition, we may also face competition from other retail fueling stores that adopt marketing strategies similar to ours by associating with non-traditional retailers, such as supermarkets, discount club stores and hypermarkets, particularly in the geographic areas in which we operate.

17 unchanged sentences

Significant increases in wholesale cigarette costs and tax increases on tobacco products, as well as future legislation, potential rulings in court cases impacting the tobacco industry, and national and local campaigns to discourage smoking in the United States, may have an adverse effect on the demand for tobacco products, and therefore reduce our revenues and profits.

Also, increasing regulations, including those for e-cigarettes and vapor products could offset some of the recent gains we have experienced from selling these products.

Governing bodies continue to consider banning flavored tobacco products.

If such efforts are successful, it could have a further negative impact on our tobacco sales.

Also, increasing regulations,

including those for e-cigarettes and vapor products could offset some of the recent gains we have experienced from selling these products.

Governing bodies continue to consider banning flavored tobacco products and have done so in some instances.

If such efforts continue to be successful, it could have a further negative impact on our tobacco sales.

These factors could materially and adversely affect our retail price of cigarettes, tobacco unit volume and sales, merchandise gross margin and overall customer traffic.

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In the retail gasoline industry, customer traffic is generally driven by consumer preferences and spending trends, growth rates for commercial truck traffic and trends in travel and weather.

Changes in economic conditions

generally, or in the regions in which we operate, could adversely affect consumer spending patterns and travel in our markets.

Changes in economic conditions generally, or in the regions in which we operate, could adversely affect consumer spending patterns and travel in our markets.

In particular, weakening economic conditions may result in decreases in miles driven and discretionary consumer spending and travel, which affect spending on gasoline and convenience items.

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Our success depends on our ability to anticipate and respond in a timely manner to changing consumer demands and preferences while continuing to sell products and services that remain relevant to the consumer and thus will positively impact overall retail gross margin.

Similarly, advanced technology, improved fuel efficiency and increased use of “green” automobiles (e.g., those automobiles that do not use gasoline or that are powered by hybrid engines) would reduce demand for gasoline and could fundamentally change our customers' shopping habits or lead to new forms of fueling destinations or new competitive pressures.

Similarly, advanced technology, improved fuel efficiency and increased use of “green” automobiles (e.g., those automobiles that do not use gasoline or that are powered by hybrid engines) will reduce demand for gasoline and could otherwise change our customers' shopping habits or lead to new forms of fueling destinations or new competitive pressures.

Developments regarding climate change and the effects of greenhouse gas emissions on climate change and the environment have led to increased use of “green” automobiles.

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currency fluctuations, protection and remediation of the environment, concerns over the possibility of global warming being affected by human activity including the production and use of hydrocarbon energy, restraints and controls on imports and exports, safety, and relationships between employers and employees.

As a retail gasoline marketing company, we are significantly affected by these factors.

As a retail gasoline marketing company, we are significantly

affected by these factors.

Because these and other factors are subject to changes caused by governmental and political considerations and are often made in response to changing internal and worldwide economic conditions and to actions of other governments or specific events, it is not practical to attempt to predict the effects of such factors on our future operations and earnings.

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coastline and are vulnerable to hurricane and tropical storm damages, which may result in shutdowns.

season runs from June through November, but the most severe storm activities usually occur in late summer.

Moreover, it should be noted that scientists have predicted that increasing concentrations of greenhouse gases in the earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.

If such effects were to occur, our operations could be adversely affected.

hurricane season runs from June through November, but the most severe storm activities usually occur in late summer.

Moreover, it should be noted that some scientists have predicted that increasing concentrations of greenhouse gases in the earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events, which could adversely impact our operations.

Although we maintain insurance for certain of these risks as described below, due to policy deductibles and possible coverage limits, weather-related risks are not fully insured.

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We could also be held responsible for contamination relating to third-party sites to which we or our predecessors have sent regulated materials.

In addition to potentially significant investigation and remediation costs, any such contamination, leaks from storage tanks or other releases of regulated materials can give rise to claims from governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury and property damage.

In addition to potentially significant investigation and remediation costs, any such contamination, leaks from storage tanks or other releases of regulated materials can give rise to

claims from governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury and property damage.

Our business is also affected by fuel economy standards and GHG vehicle emission reduction measures.

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Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Delaware General Corporation Law, our Certificate of Incorporation (including any certificate of designations for any class or series of our preferred stock) or our Bylaws, in each case, as amended from time to time, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

Unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for the resolution of any action asserting a cause of action arising under the Securities Act will be the federal district courts of the United States of America, to the fullest extent permitted by law.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provision.

This forum selection provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable or cost-effective for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.

We may not achieve the intended benefits of having an exclusive forum provision if it is found to be unenforceable.

We have included an exclusive forum provision in our Bylaws as described above.

However, the enforceability of similar exclusive jurisdiction provisions in other companies’ bylaws or certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the exclusive jurisdiction provision contained in our Bylaws to be inapplicable or unenforceable in such action.

Although in June 2013 the Delaware Court of Chancery upheld the statutory and contractual validity of exclusive forum-selection bylaw provisions, and in 2015 the Delaware General Corporation Law was amended to permit forum-selection provisions applicable to "integral corporate claims", the validity of forum-selection provisions continues to be tested with litigation.

Furthermore, the Delaware Court of Chancery emphasized that such provisions may not be enforceable under circumstances where they are found to operate in an unreasonable or unlawful manner or in a manner inconsistent with a board’s fiduciary duties.

Also, it is uncertain whether non-Delaware courts consistently will enforce such exclusive forum-selection bylaw provisions.

If a court were to find our choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions and we may not obtain the benefits of limiting jurisdiction to the courts selected.

Conversely, if a court were to find our choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions and we may not obtain the benefits of limiting jurisdiction to the courts selected.

UNRESOLVED STAFF COMMENTS

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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-K

Item 1A. Risk Factors