What changed in this filing

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Item 1. Business

2024-02-16 compared with 2023-02-15 · 39 added, 32 removed, 297 unchanged (19% of the section changed)

Murphy USA Inc.

("Murphy USA", the "Company", "we", or "our") was incorporated in Delaware on March 1, 2013 and holds, through its subsidiaries, the former U.S.

("Murphy USA", the "Company", "we", "us", or "our") was incorporated in Delaware on March 1, 2013 and holds, through its subsidiaries, the former U.S.

retail marketing business of its former parent company, Murphy Oil Corporation (“Murphy Oil”), plus other assets and liabilities of Murphy Oil that supported the activities of the U.S.

1 unchanged sentence

In addition, on January 29, 2021, the Company acquired Quick Chek Corporation ("QuickChek"), a privately held convenience store chain.

Our business consists primarily of the marketing of retail motor fuel products and convenience merchandise through a network of 1,712 (as of December 31, 2022) retail stores located in 27 states, of which, 1,151 were branded as Murphy USA, 404 were branded as Murphy Express, and 157 were branded as QuickChek stores.

Our business consists primarily of the marketing of retail motor fuel products and convenience merchandise through a network of 1,733 (as of December 31, 2023) retail stores located in 27 states, of which, 1,577 were branded as Murphy stores and 156 were branded as QuickChek stores.

The majority of our existing and new-to-industry ("NTI") retail gasoline stores operate under the brand names of Murphy USA and Murphy Express.

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We expect that our strong cash position combined with availability under our credit facility will continue to provide us with a significant level of liquidity to help maintain a disciplined capital expenditure program focused on growing ratably through periods of both high and low fuel margins.

We have acquired through share repurchases approximately $2.7 billion of our common stock in a little more than nine years of operation.

We have acquired through share repurchases approximately $3.0 billion of our common stock in a little more than ten years of operation.

During the year 2023, we repurchased a total of 1,026,300 common shares for $333.2 million, for an average price of $324.62 per share.

Repurchases in 2022 were made pursuant to our now completed $500 million 2020 authorization and our $1 billion 2021 authorization.

As of December 31, 2022, we had approximately $213.7 million remaining under our 2021 authorization.

Additionally, in order to provide a consistent and meaningful return of capital to shareholders independent of share repurchases, we raised our quarterly dividend three times during 2022 from $0.29 per share in Q1 2022 to $0.35 cents per share, or $1.40 per share on an annualized basis as of Q4 2022.

We have over 15,100 dedicated and hardworking employees as of December 31, 2022, that are actively engaged to serve the customer, whether it is the external retail consumer or their internal co-workers.

Repurchases in 2023 were made pursuant to our now completed $1 billion 2021 authorization and our $1.5 billion 2023 authorization.

As of December 31, 2023, we had approximately $1.4 billion remaining under our 2023 authorization.

Additionally, in order to provide a consistent and meaningful return of capital to shareholders independent of share repurchases, we raised our quarterly dividend four times during 2023 from $0.35 per share in Q4 2022 to $0.41 per share, or $1.64 per share on an annualized basis as of Q4 2023.

We have approximately 15,600 dedicated and hardworking employees as of December 31, 2023, that are actively engaged to serve the customer, whether it is the external retail consumer or their internal co-workers.

We believe our sustainable business model and organic growth opportunities support an employee value proposition that makes Murphy USA an attractive place to work.

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Grow organically

We intend for our independent growth plan to be a key driver of our organic growth over the next several years, which is demonstrated by the 404 standalone Murphy Express locations (as of December 31, 2022), the majority of which were developed after our 2013 spin-off from Murphy Oil Corporation.

We expect to build up to 45 NTI locations and up to 30 raze-and-rebuilds in 2023 and are targeting up to 55 NTI and up to 25 raze-and-rebuilds per year in future periods, focusing on high-return locations either in high traffic areas, near Walmart Supercenters as a complement to higher performing existing stores in smaller markets, or by strategic infill in our core market areas complemented by our supply chain capabilities.

We intend for our evolving NTI real estate strategy to be a key driver of our organic growth over the next several years, which is demonstrated by the over 500 stores that have been added to Murphy USA since our 2013 spin-off from Murphy Oil Corporation.

We expect to build at least 30 to 35 NTI locations and at least 35 raze-and-rebuilds in 2024 and are targeting at least 45 NTI and at least 35 raze-and-rebuilds per year in future periods, focusing on high-return locations either in high traffic areas, near Walmart Supercenters as a complement to higher performing existing stores in smaller markets, or by strategic infill in our core market areas complemented by our supply chain capabilities.

While we were previously focused on smaller store size, we now expect to build more Murphy branded NTI stores that are 2,800 square feet or larger, as well as our NTI QuickChek branded locations in their existing footprint, which average between 5,000 to 7,000 square feet in size.

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• Highly fragmented nature of the industry providing larger chain operators like Murphy USA with significant scale advantage;

• Significantly increased fuel capacity in the marketplace by the addition of new-to-industry retail fuel and convenience stores, and

• Significantly increased fuel capacity in the marketplace by the addition of NTI retail fuel and convenience stores, and

• High levels of consumer traffic around supermarkets and large format hypermarkets, supporting complementary demand at nearby and cross-promoted retail fuel stores.

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Located on Owned land Located on Leased Property 3,5

Murphy USA 1,047 — 1,047

Murphy branded 1

1,293 185 1,478

Leased from Walmart 2

Leased from others 2

Murphy Express 2

QuickChek 3,4,5

2 unchanged sentences

Total stores operated 1,303 430 1,733

1 This table excludes 3 locations that were disposed of in prior years but remain subleased from Walmart to the buyer

1 Leases for Murphy branded stores are operating leases

2 This table excludes 3 locations that were disposed of in prior years but remain subleased from Walmart to the buyer

3 Operating leases have an average remaining term, including renewals, of 26 years

4 Leases for QuickChek land are operating leases and Quick Chek store buildings are finance leases

4 Leases for QuickChek land are operating leases and QuickChek store buildings are finance leases

5 Finance leases have an average remaining term, including renewals, of 23 years

Since 2007, we have purchased from Walmart the properties underlying many of our stores.

Each of our owned properties that were purchased from Walmart are also subject to Easements and Covenants with Restrictions Affecting Land (“ECRs”), which impose customary restrictions on the use of such properties, which Walmart has the right to enforce.

We have purchased from Walmart the properties underlying many of our stores, and each of these properties that were purchased from Walmart are subject to Easements and Covenants with Restrictions Affecting Land (“ECRs”), which impose customary restrictions on the use of such properties, which Walmart has the right to enforce.

In addition, pursuant to the ECRs, certain transfers involving these properties are subject to Walmart's right of first refusal or right of first offer.

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The agreement permits Walmart to terminate it in its entirety, or only as to affected sites, at its option under customary circumstances (including in certain events of bankruptcy or insolvency), or if we improperly transfer the rights under the agreements to another party.

In addition, the

master lease agreement prohibits us from selling a leased store or allowing a third party to operate a leased store without written consent from Walmart.

In addition, the master lease agreement prohibits us from selling a leased store or allowing a third party to operate a leased store without written consent from Walmart.

For more information about our operating leases, see Note 20 "Leases" to the accompanying audited consolidated financial statements for the three years ended December 31, 2023.

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All fuel is delivered by the truckload as needed to replenish supply at our Company stores.

Our inventories of fuel on site turn approximately once daily.

Our retail inventories of fuel turn approximately once daily.

By establishing motor fuel supply relationships with several alternate suppliers for most locations, we believe we are able to effectively create competition for our purchases among various fuel suppliers.

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Branded retail outlets:

Murphy USA ® and Murphy Express

1,577 1,555 1,521 1,503 1,489

Murphy Express 404 370 352 328 312

156 157 158 — —

1 unchanged sentence

Retail marketing:

Total fuel contribution (including retail, PS&W and RINs) (cpg) 1

Total fuel contribution (cpg) 1

31.4 34.3 26.3 25.2 16.1

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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 quick service restaurants, supermarkets, discount club stores and hypermarkets, particularly in the geographic areas in which we operate.

We expect that our industry will continue to trend toward this model, resulting in increased competition to us over time.

We expect that our industry will continue to trend toward this model, resulting in increased

competition to us over time.

Moreover, because we do not produce or refine any of the petroleum or other refined products that we market, we compete with retail gasoline companies that have ongoing supply relationships with affiliates or former affiliates that manufacture refined products.

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We sell gasoline primarily under the Murphy USA ® and Murphy Express brands, which we acquired from Murphy Oil.

ownership of the QuickChek ® trademark and others as a result of the QuickChek acquisition.

We acquired ownership of the QuickChek ® trademark and others as a result of the QuickChek acquisition.

We are not aware of any facts which would negatively impact our continuing use of any of the above trade names, service marks or trademarks.

1 unchanged sentence

All of our Company stores use a standard hardware and software platform for point-of-sale (“POS”) that facilitates item level scanning of merchandise for sales and inventory, and the secure acceptance of all major payment methods – cash, check, credit, debit, fleet and mobile.

In addition, our QuickChek stores have self-service checkouts and support third-party delivery services.

In addition, our QuickChek stores have self-

service checkouts and support third-party delivery services.

Our standard approach to large scale and geographically dispersed deployments reduces total technology cost of ownership for the POS and inherently makes the system easier to use, support, and replace.

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For our financial systems, we use enterprise class systems which provide significant flexibility in managing corporate and store operations, as well as scalability for growth.

We invest in disaster recovery, system backups, redundancy, firewall, remote access security and virus and spam protection to ensure a high level of system security and availability.

We have systems, business policies and processes around access controls, password expirations and file retention to ensure a high level of control within our technology network.

We invest in disaster recovery, system backups, redundancy, firewall, remote access security and virus and spam protection to promote a high level of system security and availability.

We have systems, business policies and processes around access controls, password expirations and file retention to promote a high level of control within our technology network.

"Cybersecurity" for additional information.

Environmental

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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 hazardous materials for recycling or disposal.

are currently identified as a potentially responsible party ("PRP") in connection with one such disposal site.

We are currently identified as a potentially responsible party ("PRP") in connection with one such disposal site.

Any such contamination, leaks from storage tanks or other releases of regulated materials could result in claims against us by governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury, and property damage.

1 unchanged sentence

Consumer demand for our products may be adversely impacted by fuel economy standards as well as greenhouse gas (“GHG”) vehicle emission reduction measures.

Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) issued Corporate Average Fuel Economy ("CAFE") standards in 2012 that set fuel economy standards and regulated emissions of GHGs for fleets of 2017-2025 model year cars and light duty trucks.

Environmental Protection Agency

(“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) issued Corporate Average Fuel Economy ("CAFE") standards in 2012 that set fuel economy standards and regulated emissions of GHGs for fleets of 2017-2025 model year cars and light duty trucks.

In 2016, the NHTSA finalized a rule imposing stricter penalties against those who exceed CAFE standards.

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In March 2022 NHTSA finalized CAFE standards addressing the 2024-2026 model years that are more stringent than those in prior standards from 2020.

In July 2023, NHTSA proposed CAFE standards for passenger cars and light trucks built in model years 2027-2032, and new fuel efficiency standards for heavy-duty pickup trucks and vans built in model years 2030-2035.

The proposal would require an industry fleet-wide average of approximately 58 miles per gallon for passenger cars and light trucks in MY 2032, by increasing fuel economy by 2% year over year for passenger cars and by 4% year over year for light trucks.

For heavy-duty pickup trucks and vans, the proposal would increase fuel efficiency by 10% year over year.

The EPA and NHTSA also regulate GHG emission and fuel efficiency standards for medium and heavy-duty vehicles and in August 2016, jointly finalized "Phase 2" vehicle and engine performance standards covering model years 2021 through 2027, which apply to semi-trucks, large pick-up trucks and vans, and all types and sizes of buses and work trucks.

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this was the first rulemaking under the EPA's Clean Trucks Plan, which is an EPA regulatory initiative to reduce GHG emissions and other harmful air pollutants from heavy-duty trucks via various rulemakings.

On April 12, 2023, the EPA announced new, more ambitious proposed standards to further reduce air pollutant emissions from light-duty and medium-duty vehicles staring with model year 2027.

These and any future increases in or changes to fuel economy standards or GHG emission reduction requirements could decrease demand for our products.

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At Murphy USA, we know that the strength of our workforce is critical to our long-term success and we strive to build upon this through the foundation laid by our Principles.

As of December 31, 2022, Murphy USA had over 15,100 employees, including 6,000 full-time employees, and 9,100 part-time employees working at our stores, support centers, and corporate headquarters.

As of December 31, 2023, Murphy USA had approximately 15,600 employees, including 5,900 full-time employees, and 9,700 part-time employees working at our stores, support centers, and corporate headquarters.

Murphy USA is committed to the attraction, development, retention, and safety of our employees.

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We are intentional about working towards increasing visible and invisible diversity throughout Murphy USA through several talent initiatives:

• We partner with universities to attract diverse talent.

• We invest in established partnerships with HBCUs.

• We identify critical roles and potential successors with our succession management program.

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The benefits package offered to our full-time employees includes:

• Comprehensive health, dental, vision, and life insurance.

• Comprehensive health benefits (both in-person and telehealth), flex spending accounts & health savings accounts, prescription, dental, and vision benefits.

• Life insurance, accident and hospital indemnity insurance and critical illness insurance.

• Long-term disability and short-term disability, leave of absence benefits.

• Parental leave available to all new parents for birth, adoption or foster placement.

17 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-K

Item 1. Business