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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-16 · 130 added, 119 removed, 331 unchanged (43% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Results of Operations and Financial Condition (“Management’s Discussion and Analysis”) is the Company’s analysis of its financial performance and of significant trends that may affect future performance.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management’s Discussion and Analysis” or "MD&A") is the Company’s analysis of its financial performance and of significant trends that may affect future performance.

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

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Discussions of 2022 items and the year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K and can be found in the Form 10-K for the year ended December 31, 2023, filed on February 16, 2024.

For purposes of this Management’s Discussion and Analysis, references to “Murphy USA”, the “Company”, “we”, “our”, and "us" refer to Murphy USA Inc.

For purposes of this Management’s Discussion and Analysis, references to “Murphy USA”, the “Company”, “we”, “us”, and "our" refer to Murphy USA Inc.

and its subsidiaries on a consolidated basis.

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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 business segments for the two years ended December 31, 2023.

• Results of Operations — This section provides an analysis of our results of operations, including the results of our operating segment for the two years ended December 31, 2024.

• Capital Resources and Liquidity — This section provides a discussion of our financial condition and cash flows as of and for the two years ended December 31, 2024.

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The Company owns and operates a chain of retail stores that market gasoline and other merchandise under the brand names of Murphy USA ® and Murphy Express, most of which are located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United States.

We also 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 December 31, 2023, we had a total of 1,733 Company stores in 27 states, of which 1,577 were Murphy branded and 156 were QuickChek brand.

We also have a mix of convenience stores and retail gasoline stores in New Jersey and New York that operate under the QuickChek ® brand, comprising our Northeast region.

At December 31, 2024, we had a total of 1,757 Company stores in 27 states, of which 1,601 were Murphy branded and 156 were under the QuickChek brand.

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

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and its subsidiaries for all periods presented.

Our QuickChek subsidiaries use a weekly retail calendar where each quarter typically has 13 weeks.

Our QuickChek subsidiaries use a weekly retail calendar where each quarter has 13 weeks.

For 2024, the QuickChek results cover the period December 30, 2023 to December 27, 2024.

For 2022, the QuickChek results cover the period January 1, 2022 to December 30, 2022.

For 2021, the QuickChek results cover the period January 29, 2021 (date of acquisition) to December 31, 2021.

For 2023, the QuickChek results cover the period December 31, 2022 to December 29, 2023.

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

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While we generally expect our volumes and gross margins to remain stable in a normalized environment, they can change rapidly due to many factors.

These factors include, but are not limited to, the price of refined products, geopolitical events that disrupt the global supply, overall demand, and prices of crude oil, interruptions in our fuel and merchandise supply caused by severe weather or pandemics, the effects from pandemics such as travel restrictions and stay-at-home orders imposed during a pandemic, new or changing legislation around tobacco and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures for an extended period of time, cyber-attacks against the Company or our vendors, changing economic conditions that lower consumer purchasing power such as inflation, and competition in the local markets in which we operate.

These factors include, but are not limited to, the price of refined products, geopolitical events that disrupt the global supply, overall demand, prices of crude oil, interruptions in our fuel and merchandise supply chain caused by severe weather or pandemics, the effects from pandemics such as travel restrictions and stay-at-home orders imposed during a pandemic, new or changing legislation around nicotine products and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures for an extended period of time, cyber-attacks against the Company or our vendors, changing economic conditions that lower consumer purchasing power such as inflation, and competition in the local markets in which we operate.

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

Historically, a rising price environment for crude oil increases the Company’s cost for wholesale fuel products purchased and increases retail fuel prices.

Rising prices can cause consumers to reduce discretionary fuel consumption, however our low-price model can serve as a hedge to draw new customers which can offset the potential loss of discretionary volumes.

Crude oil prices in 2023 continued to be volatile during the year with prices ranging from $67 per barrel to $94 per barrel, with an average price of $78 per barrel, compared to prices in 2022 that ranged from $71 per barrel to $124 per barrel with an average of $95 per barrel.

Historically, a rising price environment for crude oil increases the Company’s cost for wholesale fuel products purchased, which in turn increases retail fuel prices.

Rising prices can cause consumers to reduce discretionary fuel consumption, however our low-price model can also serve as a hedge to draw new customers which can offset the potential loss of discretionary volumes.

Crude oil prices in 2024 experienced less volatility during the year with prices ranging from $67 per barrel to $88 per barrel, with an average price of $77 per barrel, compared to prices in 2023 that ranged from $67 per barrel to $94 per barrel with an average of $78 per barrel.

Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results which include Renewable Identification Numbers ("RINs")) was 30.5 cpg in 2024, compared to 31.4 cpg in 2023.

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

for example, activities such as blending bulk fuel with renewable fuels (ethanol and biodiesel) to capture and subsequently sell RINs.

Under the Energy Policy Act of 2005, the Environmental Protection Agency ("EPA") is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels.

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

for example, activities such as blending bulk fuel with renewable fuels (ethanol and bio-diesel) to capture and subsequently sell RINs.

Under the Energy Policy Act of 2005, the EPA is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels.

Obligated parties are required to demonstrate that they have met any applicable quotas by submitting a certain number of RINs to the EPA.

RINs in excess of the set quota can then be sold in a market for RINs at then-prevailing prices.

RINs in excess of the set quota can be sold in a market for RINs at then-prevailing prices.

The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action.

On June 21, 2023, EPA announced a final rule to establish biofuel volume requirements and associated percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel for 2023–2025.

The rule includes steady growth of biofuels for use in the United States' fuel supply for 2023, 2024, and 2025, however the projected growth of Renewable Diesel production could outstrip the statutory mandated biofuel blending requirements.

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There are other market related factors that can offset the revenue received for RINs on a company-wide basis either favorably or unfavorably.

The Renewable Fuel Standard ("RFS") program continues to be unpredictable and prices received by us for ethanol RINs averaged $1.35 per RIN for the year 2023 compared to $1.42 per RIN in 2022 but exited the year around $0.80 per RIN.

The Renewable Fuel Standard ("RFS") program continues to be unpredictable and prices received by us for ethanol RINs averaged $0.59 per RIN for the year 2024 compared to $1.35 per RIN in 2023.

Our business model does not depend on our ability to generate revenues from RINs, and we have historically observed that changes in revenue are typically coupled with offsetting changes in cost of goods that minimizes the majority of any revenue movement.

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

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

As of December 31, 2024, we had $1.3 billion of Senior Notes and a $386 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 December 31, 2023, we had additional available capacity under the committed $350 million cash flow revolving credit facility, with none drawn.

We had additional available capacity under the committed $350 million cash flow revolving credit facility, which had $56.0 million of outstanding borrowings as of December 31, 2024.

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.

To the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements.

There can be no assurances, however, that we will generate sufficient cash from operations or be able to draw on the credit facilities, obtain commitments for our incremental facility, or obtain

and draw upon other credit facilities.

To the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements and other corporate initiatives.

There can be no assurances, however, that we will generate sufficient cash from operations or be able to draw on the credit

facilities, obtain commitments for our incremental facility, or obtain and draw upon other credit facilities.

For additional information, see Significant Sources of Capital in the Capital Resources and Liquidity section.

The Company currently anticipates total capital expenditures (including land for future development) for the full year 2024 to range from approximately $400 million to $450 million depending on how many new stores are completed.

The Company currently anticipates total capital expenditures (including land for future developments) for the full year 2025 to range from approximately $450 million to $500 million depending on how many new stores are completed.

We intend to fund our capital program in 2025 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facility.

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

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

We believe that our business will continue to grow in the future as 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.

In addition, the Company looks to expand additional capabilities such as food and beverage within our network.

Our business has inherent seasonality due to the concentration of our retail stores in certain geographic areas, as well as customer behaviors during different seasons.

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Our QuickChek subsidiaries use a weekly retail calendar where each quarter has 13 weeks.

For 2023, the QuickChek results cover the period December 31, 2022 to December 29, 2023 and for 2022, the QuickChek results cover the period January 1, 2022 to December 30, 2022 and for 2021 covered the period January 29, 2021 (date of acquisition) to December 31, 2021.

For 2024, the QuickChek results cover the period December 30, 2023 to December 27, 2024.

For 2023, the QuickChek results cover the period December 31, 2022 to December 29, 2023.

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

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Net income was $556.8 million for 2023, or $25.49 per diluted share, on revenue of $21.5 billion.

A summary of the Company’s earnings by business segment follows:

A summary of the Company’s earnings by business function follows:

Year ended December 31,

(millions of dollars) 2024 2023 2022

Marketing $ 630.9 $ 740.9 $ 472.8

Marketing segment $ 580.2 $ 630.9 $ 740.9

Corporate and other assets (77.7) (74.1) (68.0)

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Net income for 2024 decreased compared to 2023, primarily due to:

• Lower all-in fuel contribution;

• Lower total fuel contribution;

• Higher store operating expenses, excluding payment fees;

• Higher interest expense;

• Higher depreciation and amortization expense;

• Higher selling, general and administrative ("SG&A") expenses

• Higher impairment charge

The items below partially offset the decrease in earnings in the current period:

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• Lower income tax expense;

• Lower payment fees

• Lower selling, general and administrative ("SG&A") expenses

Financial Summary of 2024 Compared to 2023

Revenues for the year ended December 31, 2024 decreased $1.3 billion, or 6.0%, compared to 2023.

The decrease was due to lower average retail fuel prices which decreased 45 cpg, or 12.3%, lower PS&W revenues, which were partially offset by a 1.1% increase in retail fuel volumes sold and a 4.8% increase in merchandise sales revenues.

Cost of sales decreased $1.8 billion, or 8.7%, compared to 2022, due to the lower average cost of fuel, which decreased 11.1%, and was partially offset by the 1.1% increase in retail fuel volumes sold and a 4.8% increase in merchandise cost of goods sold.

Store and other operating expenses increased $38.3 million, or 3.9%, in 2023 due primarily to higher employee related costs, increased store maintenance expenses, higher inventory shrink, and were partially offset by lower payment fees.

On an average per store month ("APSM") basis, store operating expenses excluding credit card fees and rent increased 4.7% in 2023 when compared to 2022.

Depreciation and amortization expense in 2023 increased $8.3 million due primarily to the increased number of Murphy branded stores with larger formats.

Selling, general and administrative expenses for 2023 were higher by $8.0 million primarily due to increased employee related and incentive expenses, and expenses associated with professional and technology services for business improvement initiatives, which were partially offset by lower charitable contributions.

Interest expense in 2023 increased by $13.2 million compared to 2022 due to an increase in variable interest rates on the term loan during the year.

The effective income tax expense rate in 2023 was 24.2% compared to 23.9% for 2022.

The decrease in revenue was primarily due to 5.8% lower average retail fuel sales prices, which decreased 19 cpg, and lower PS&W revenues, which were partially offset by a 3.1% increase in merchandise sales revenues and an increase of 0.4% in fuel sales volumes.

Cost of sales decreased $1.3 billion, or 6.7%, compared to 2023.

The lower costs were primarily due to lower fuel cost, which decreased 8.6%, and was partially offset by a 2.9% increase in merchandise cost of goods sold and the 0.4% increase in fuel volumes sold.

Store and other operating expenses increased $49.8 million, or 4.9%, in 2024 due primarily to higher employee related expenses and maintenance costs at existing stores combined with increases in net new store operating expenses.

On an average per store month ("APSM") basis, store operating expenses excluding payment fees and rent increased 5.4% in 2024, primarily attributable to increased employee related expenses and higher maintenance costs.

Depreciation and amortization expense in 2024 increased $19.3 million, or 8.4%, due primarily to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity during the year.

In 2024, we recorded an impairment of properties charge of $8.2 million compared to none in 2023, primarily due to competitive pressures in a few Northeast markets.

SG&A expenses for 2024 were lower by $5.1 million, or 2.1%, primarily due to a reduction in employee incentive costs, which were partially offset by higher wages and employee related costs.

The effective income tax expense rate in 2024 was approximately 22.9% compared to approximately 24.2% for 2023.

The lower rate for the current year was primarily due to a discrete state tax benefit recorded in 2024.

Segment Results

Income before income taxes in the Marketing segment for 2023 decreased $139.1 million, or 14.3%, from 2022 due primarily to lower all-in fuel contribution, higher store and other operating costs, increased selling, general and administrative costs, and depreciation, partially offset by higher merchandise contribution.

Income before income taxes in the Marketing segment for 2024 decreased $81.7 million, or 9.8%, from 2023 due primarily to lower total fuel contribution, higher store and other operating expenses, higher depreciation and amortization and an impairment charge, which were partially offset by higher merchandise contribution and decreased SG&A expenses.

The tables below show the results for the Marketing segment for the three years ended December 31, 2024, along with certain key metrics for the segment.

(Millions of dollars, except revenue per store month (in thousands) and store counts) Years Ended December 31,

(Millions of dollars, except revenue per same store sales (in thousands) and store counts) Years Ended December 31,

Marketing Segment 2024 2023 2022

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Total operating revenues 20,243.7 21,528.9 23,445.4

(Millions of dollars, except revenue per store month (in thousands) and store counts) Years Ended December 31,

Marketing Segment 2023 2022 2021

Operating expenses

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Depreciation and amortization 229.8 211.9 204.8

Impairment of properties 8.2 — —

Selling, general and administrative 235.4 240.5 232.5

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Net Income (loss) from operations $ 580.2 $ 630.9 $ 740.9

Total tobacco sales revenue per same store sales 1,2

Total nicotine sales revenue per same store sales 1,2

$ 132.0 $ 127.2 $ 123.3

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

Total non-nicotine sales revenue per same store sales 1,2

73.6 72.6 69.7

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1 2023 and 2022 amounts not revised for 2024 raze-and-rebuild activity (see SSS definition below)

2 Includes store-level discounts for Murphy Drive Reward ("MDR") redemptions and excludes change in value of unredeemed MDR points

2 Includes store-level discounts for redemptions and excludes changes in value of unredeemed points associated with our loyalty program(s)

Store count at end of period 1,757 1,733 1,712

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Same store sales ("SSS") metric includes aggregated individual store results for all stores open throughout both periods presented.

For all periods presented, the store must have been open for the entire calendar year to be included in the comparison.

For all periods presented, the store must have been open for the entire calendar year to be

included in the comparison.

Remodeled stores that remained open or were closed for just a very brief time (less than a month) during the period being compared remain in the same store sales calculation.

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Acquired stores are not included in the calculation of same stores for the first 12 months after the acquisition.

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

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

Twelve Months Ended December 31,

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Total PS&W contribution ($ Millions) (16.6) (144.9) (80.8)

RINs and other (included in Other operating revenues on Consolidated Income Statement)

($ Millions) 328.6 305.8 265.3

RINs (included in Other operating revenues on Consolidated Statements of Income) ($ Millions) 129.6 328.6 305.8

Total fuel contribution ($ Millions) $ 1,469.7 $ 1,507.7 $ 1,630.0

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2 2023 and 2022 amounts not revised for 2024 raze-and-rebuild activity

The reconciliation of the total fuel contribution to the Consolidated Income Statements is as follows:

The reconciliation of the total fuel contribution to the Consolidated Statements of Income is as follows:

Twelve Months Ended December 31,

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Merchandise unit margin (%) 19.8 % 19.7 % 19.7 %

Tobacco contribution ($K SSS) 1,2

Nicotine contribution ($K SSS) 1,2

$ 19.4 $ 18.4 $ 17.7

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

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

$ 21.6 $ 21.3 $ 20.2

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1 2023 and 2022 amounts not revised for 2024 raze-and-rebuild activity

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

2 Includes store-level discounts for redemptions and excludes changes in value of unredeemed points associated with our loyalty program(s)

Same store sales information compared to APSM metrics:

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Merchandise sales 2.3 % 2.6 % 2.7 % 2.9 % 2.9 % 3.7 %

Tobacco sales 3.5 % 2.9 % 2.9 % 2.3 % (0.4) % (0.8) %

Non tobacco sales 1.4 % 3.1 % 3.1 % 6.3 % 4.5 % 46.2 %

Nicotine sales 4.3 % 3.8 % 3.5 % 2.9 % 2.9 % 2.3 %

Non-nicotine sales (1.0) % 0.4 % 1.4 % 3.1 % 3.1 % 6.3 %

Merchandise margin 2.7 % 3.3 % 3.0 % 2.9 % 5.1 % 6.8 %

Tobacco margin 4.3 % 2.7 % 5.5 % 4.2 % 2.3 % 4.3 %

Non tobacco margin 1.9 % 3.8 % 4.7 % 9.6 % 5.4 % 89.2 %

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

2 Includes all MDR activity

Nicotine margin 7.3 % 6.1 % 4.3 % 2.7 % 5.5 % 4.2 %

Non-nicotine margin (1.0) % 0.8 % 1.9 % 3.8 % 4.7 % 9.6 %

1 Includes store-level discounts for redemptions and excludes changes in value of unredeemed points associated with our loyalty program(s)

2 Includes all activity associated with our loyalty program(s)

Financial Summary of 2024 Compared to 2023

The Marketing segment had total revenues of $21.5 billion in 2023 compared to $23.4 billion in 2022, a decrease of $1.9 billion, due primarily to a lower average retail fuel sales price, partially offset by increased retail fuel volumes sold and higher merchandise sales.

Revenue amounts included excise taxes collected and remitted to government authorities of $2.3 billion in 2023 and $2.2 billion in 2022.

Total fuel contribution for the year ended December 31, 2023, was $1.5 billion, a decrease of $0.1 billion or 7.5%, compared to 2022.

This reduction was due to lower retail fuel contribution, combined with lower contribution from PS&W margin, and was partially offset by slightly higher fuel volumes sold for the year.

Retail fuel margin on a cpg basis decreased 6.8% in 2023 to 27.6 cpg, compared to 29.6 cpg in the prior year.

The Marketing segment had total revenues of $20.2 billion in 2024 compared to $21.5 billion in 2023, a decrease of $1.3 billion, due primarily to a lower average retail fuel sales price and lower PS&W revenues, which were partially offset by higher merchandise sales revenue and an increase in fuel volumes sold.

Revenue amounts included excise taxes collected and remitted to government authorities of $2.3 billion in both 2024 and 2023.

Total fuel contribution for the year ended December 31, 2024 decreased $38.0 million, or 2.5%, compared to 2023.

This reduction was primarily due to lower contribution from PS&W margins, and was partially offset by higher retail fuel contribution and fuel volumes sold for the year.

Retail fuel margin on a cpg basis increased 1.8% in 2024 to 28.1 cpg, compared to 27.6 cpg in the prior year.

Total retail fuel volumes increased 0.4%, while fuel sales on an SSS basis decreased 1.1%.

Total product supply and wholesale contribution dollars decreased $41.3 million in the current year due to lower unbranded margins combined with timing and price-related impacts.

During 2023, other operating revenue included the sale of 242.7 million RINs compared to the sale of 215.6 million in 2022.

Merchandise sales were up 4.8% in 2023 to $4.1 billion due to higher sales volumes and prices.

Total PS&W contribution including RINs decreased by $70.7 million in the current year, primarily due to timing and pricing impacts related to market

During 2024, other operating revenue included the sales of 221.4 million RINs compared to the 242.7 million of sales in 2023.

Merchandise sales were up 3.1% in 2024 to $4.2 billion compared to $4.1 billion in 2023 primarily due to higher retail prices across the chain in most categories and an increased number of stores with larger formats.

Total merchandise contribution in 2024 increased $30.3 million, or 3.8%, to $833.7 million compared to $803.4 million in 2023.

Merchandise unit margins were flat at 19.7% in both 2023 and 2022.

On an SSS basis, total merchandise sales were up 2.7%, due to a 1.4% increase in non-tobacco sales and an increase of 3.5% in tobacco products.

Total margins on a SSS basis for 2023 improved 3.0%, tobacco margins were higher by 4.3%, and non-tobacco margins increased 1.9%, mainly from increased beverage and snack categories.

Store and other operating expenses increased $38.1 million in 2023 compared to 2022 levels, an increase of 3.9%.

This increase in total dollars was due primarily to employee related expenses, maintenance expenses, inventory shrink, and licenses and permits, and was partially offset by lower payment fees.

Excluding credit card fees and rent on an APSM basis, store and other operating expenses at the retail level were 4.7% higher in 2023 compared to 2022 levels.

Depreciation and amortization increased $7.1 million in 2023, an increase of 3.5%.

This increase was due primarily to more stores with larger formats operating in the 2023 period.

Selling, general and administrative expenses ("SG&A") increased $8.0 million in 2023 compared to 2022, primarily due to higher employee related and incentive expenses and expenses associated with professional and technology fees from business improvement initiatives, which were partially offset by lower charitable contributions in the current year.

Merchandise unit margins increased to 19.8% in 2024 from 19.7% in 2023.

On an SSS basis, total merchandise sales were up 2.3%, due to a 4.3% increase in nicotine product sales partially offset by a 1.0% decline in non-nicotine product sales.

Total merchandise contribution dollars on a SSS basis improved 2.7%, with an increase of 7.3% in nicotine product margins and was partially offset by a 1.0% decrease in non-nicotine product margins.

Store and other operating expenses increased $49.8 million, or 4.9%, in 2024 compared to 2023 levels.

This increase was due primarily to higher employee related expenses and maintenance costs at existing stores combined with net new store operating expenses.

On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 5.4% in 2024 compared to 2023, primarily due to employee related expenses and maintenance costs.

Depreciation and amortization expense increased $17.9 million in 2024, an increase of 8.4%.

This was due primarily to the increased number of new larger store formats for Murphy branded stores combined with raze-and-rebuild activities in the 2024 period.

SG&A expenses decreased $5.1 million in 2024 compared to 2023, primarily due to lower incentive costs, partially offset by higher employee related expenses and other professional fees.

Corporate and Other Assets

Loss from continuing operations for Corporate and other assets in 2024 was $77.7 million, compared to a loss of $74.1 million in 2023.

The $6.1 million increase from the previous year was mainly due to $13.7 million more in interest expense, $2.8 million less in gain on the sale of assets, and was partially offset by $4.2 million less in income tax benefits, a $3.9 million increase in investment income and a $2.2 million decrease in other nonoperating expenses.

The $3.6 million increase from the previous year was mainly due to $1.4 million more in depreciation and amortization expense and a $2.5 million reduction in the income tax benefit attributable to the period over period tax rate reduction, which was partially offset by $0.8 million less in net interest expense.

Non-GAAP Measures

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generally accepted accounting principles (GAAP).

We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure is useful to eliminate certain items in order to focus on what we deem to be an indicator of ongoing operating performance and our ability to generate cash flow from operations.

We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure is useful to eliminate certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations.

Adjusted EBITDA is also used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance.

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However, non-GAAP measures are not a substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.

The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:

The reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is as follows:

Years Ended December 31,

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EBITDA $ 990.3 $ 1,054.7 $ 1,186.5

Impairment of properties 8.2 — —

Accretion of asset retirement obligations 3.2 3.0 2.7

(Gain) loss on sale of assets 4.5 0.8 (2.1)

Acquisition and integration related costs — 1.5 10.4

Acquisition related costs — — 1.5

Other nonoperating (income) expense 0.6 — 2.3

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Significant Sources of Capital

As of December 31, 2023, we had $117.8 million of cash and cash equivalents and total marketable securities of $11.5 million.

Our cash management policy provides that cash balances in excess of a certain threshold are reinvested in certain types of low-risk investments.

We have a committed cash flow revolving credit facility (the "revolving facility") of $350 million, which was undrawn at December 31, 2023, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein.

As of December 31, 2024, we had $47.0 million of cash and cash equivalents.

Our cash management policy provides that cash balances in excess of a certain threshold may be reinvested in certain types of low-risk investments.

We have a committed cash flow revolving credit facility (the "Revolving Facility") of $350 million, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein.

Additional borrowing capacity under the Revolving Facility may be extended at our request and with the consent of the participating lenders.

As of December 31, 2024, there was $56.0 million of outstanding borrowings under our Revolving Facility reported in Long-term debt in the Consolidated Balance Sheet.

The Revolving Facility was undrawn at December 31, 2023.

We also have a shelf registration on file with the SEC for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.

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, dividend payments, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies.

We believe our existing cash on hand and future borrowing capacity of our existing facilities 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 $784.0 million for the year ended December 31, 2023 and was $994.7 million in 2022, a decrease of $210.7 million, or 21.2% The decrease was mainly due to a decrease in net income of $116.1 million in 2023, a decrease in the amount of cash provided from changes in noncash working capital in 2023 of $86.9 million, and lower deferred and noncurrent tax changes of $29.5 million, partially offset by increased depreciation of $8.3 million and an increase of $10.6 million in cash provided by other operating activities.

For the current year, operating cash required by changes in non-cash operating working capital of $42.1 million was due to an increase of $56.3 million in accounts receivable due to the timing of receipts, an increase of $22.1 million in inventories due to higher prices and volumes, a decrease of $12.0 million in accounts payable and accrued liabilities which was due to the timing of payments, and was partially offset by a decrease of $25.2 million in prepaid expenses and other current assets, of which $22.2 million was related to prepaid income taxes as well as an increase of $23.1 million in income taxes payable, due to the timing of payments.

Net cash provided by operating activities was $847.6 million for the year ended December 31, 2024 and was $784.0 million in 2023, an increase of $63.6 million, or 8.1%.

The increase was mainly due to an increase in the amount of cash provided from changes in noncash working capital in 2024 of $74.9 million, increased depreciation of $19.3 million and higher deferred and noncurrent tax charges of $12.0 million, partially offset by a decrease in net income of $54.3 million in 2024.

For the current year, operating cash provided by changes in non-cash operating working capital of $32.8 million was due to a decrease of $65.4 million in accounts receivable due to the timing of receipts, an increase of $34.6 million in income taxes payable due in part to phase-out of federal bonus depreciation resulting in higher current tax expense and the timing of estimated tax payments, and was partially offset by an increase of $60.2 million in inventories due to higher prices and volumes, a decrease of $3.9 million in accounts payable and accrued liabilities which was due to the timing of payments and an increase of $3.1 million in prepaid expenses.

See also Note 16 "Other Financial Information" in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2024.

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For the year ended December 31, 2024, cash required by investing activities was $445.8 million compared to cash required by investing activities of $323.6 million in 2023.

The increase in cash required by investing activities of $4.3 million compared to the previous year was primarily due to the increase in capital expenditures of $30.3 million, lower proceeds from the sale of assets of $6.4 million, and cash required for other investing activities which were higher by $1.0 million.

The increase in cash required by investing activities was partially offset by the change in redemptions of marketable securities net of new investments of $33.4 million.

The increase in cash required by investing activities of $122.2 million compared to the previous year was primarily due to the increase in capital expenditures of $122.5 million and lower proceeds from the sale of assets of $0.4 million.

The increase in cash required by investing activities was partially offset by the cash required for other investing activities which were lower by $0.4 million and the change in redemptions of marketable securities net of new investments of $0.3 million.

Financing Activities

Financing activities in the year ended December 31, 2024 required net cash of $472.6 million compared to net cash required of $403.1 million in 2023.

The $468.2 million decrease in financing cash required was due to a decrease of $473.2 million in share repurchases, which was partially offset by an increase of $3.5 million in cash dividends paid, and an increase of $1.3 million in amounts related to share-based compensation.

During 2023 there were net repayments of borrowings of $15.4 million compared to net repayments of $15.2 million in 2022.

The $69.5 million increase in financing cash required was due to an increase of $112.5 million in share repurchases, an increase of $9.3 million in amounts related to share-based compensation, and an increase of $3.4 million in cash dividends paid.

During 2024 there were net borrowings of $40.3 million compared to net repayments of borrowings of $15.4 million in 2023.

The Company paid dividends of $1.79 per common share during 2024 for total payments of $36.8 million, compared to $1.55 per common share, or $33.4 million in 2023.

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We may use cash from operations as well as draws under our credit facilities to effect purchases.

During the year 2023, we repurchased a total of 1,026,300 common shares for $336.2 million, at an average price of $327.55 per share, including any excise tax.

Repurchases in 2023 were made pursuant to both the now completed 2021 authorization and our 2023 authorization.

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

During the year 2024, the Company repurchased a total of 938,528 common shares for approximately $446.6 million, at an average price of $475.86 per share, including accrued excise taxes.

Repurchases in 2024 were made pursuant to our $1.5 billion 2023 authorization.

As of December 31, 2024, we had approximately $937.8 million remaining under our 2023 authorization.

Our long-term debt at December 31, 2024 and 2023 was as set forth below:

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5.625% senior notes due 2027 (net of unamortized discount of $0.9 at 2024 and $1.3 at 2023)

$ 299.1 $ 298.7

4.75% senior notes due 2029 (net of unamortized discount of $3.0 at 2024 and $3.6 at 2023)

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Term loan due 2028 (effective interest rate of 6.44% at 2024 and 7.23% at 2023) net of unamortized discount of $0.4 at 2024 and $0.6 at 2023 385.6 389.4

Revolving credit facility, due 2026 (weighted average interest rate of 7.55% at December 31, 2024

Capitalized lease obligations, autos and equipment, due through 2028

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On April 25, 2017, Murphy Oil USA, Inc.

("MOUSA"), our primary operating subsidiary, issued $300 million of 5.625% Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration

("MOUSA"), 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 the Company and by the Company's subsidiaries that guarantee our Credit Facilities (as defined below).

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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 the Company and by the Company's 100% owned subsidiaries that guarantee our Credit Facilities.

The 2029 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's 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.

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The Senior Notes and related 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.

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.

Revolving Credit Facility and Term Loan

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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 December 31, 2023, we had no outstanding borrowings under the Revolving Facility and had $6.2 million in outstanding letters of credit (which reduces the amount available to borrow under the Revolving Facility).

As of December 31, 2024, we had $56.0 million of outstanding borrowings under the Revolving Facility and $6.2 million of outstanding letters of credit (which reduces the amount available to borrow under the Revolving Facility).

Interest payable on the Term Facility is based on either:

• the term overnight financing rate, plus the applicable Alternative Reference Rate Committee ("ARRC") recommended credit spread adjustment (the “Adjusted Term SOFR Rate”);

• 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 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 Term SOFR Rate plus 1.00% per annum,

• the term secured overnight financing rate, plus the applicable Alternative Reference Rate Committee ("ARRC") recommended credit spread adjustment (the “Adjusted Term SOFR Rate”);

• 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 Term SOFR Rate plus 1.00% per annum,

plus, (A) in the case of Adjusted Term SOFR Rate borrowings, a spread of 1.75% per annum and (B) in the case of Alternate Base Rate borrowings, a spread of 0.75% per annum.

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• the term secured overnight financing rate, plus 0.10% credit spread adjustment for all interest periods (the "Adjusted SOFR Rate"), which is subject to a 0.0% floor;

plus, (A) in the case of Adjusted SOFR Rate borrowings, a spread of 1.75% to 2.25% per annum depending on a total debt to EBITDA ratio and (B) in the case of Alternate Base Rate borrowings, spreads ranging from 0.75% to 1.25% per annum depending on a total debt to EBITDA ratio.

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

The Revolving Facility credit agreement 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 not more than 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0.

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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 $119.6 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

The following is a description of the guarantees with respect to the Senior Notes and the Credit Facilities, for which MOUSA is primary obligor, and for which the Company and certain 100% owned subsidiaries provide full and unconditional guarantees on a joint and several basis.

The following is a description of the guarantees with respect to the Senior Notes and the Credit Facilities, for which MOUSA is primary obligor, and for which the Company and certain subsidiaries provide full and unconditional guarantees on a joint and several basis.

See "—Debt" above for additional information concerning the Company's outstanding indebtedness, all of which is guaranteed as described below.

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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.

is our primary operating subsidiary and generated the vast majority of our revenues for the year ended December 31, 2023 and accounted for the vast majority of our total assets as of December 31, 2023.

MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the year ended December 31, 2024 and accounted for the vast majority of our total assets as of December 31, 2024.

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.

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Capital spending and investments in our Marketing segment relate primarily to the acquisition of land and the construction of new Company stores.

Our Marketing capital is also deployed to improve our existing stores, which we refer to as sustaining capital.

We use sustaining capital in this business as needed to ensure reliability and continued performance of our stores.

Our Marketing capital is also deployed to improve our existing stores, which we refer to as maintenance capital.

We use maintenance capital in this business as needed to ensure reliability and continued performance of our stores.

We also invest in our Corporate and other assets segment which is primarily technology related.

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Terminals 3.8 5.7 —

Sustaining capital 51.8 33.4 21.8

Maintenance capital 70.2 51.8 33.4

Corporate and other assets 38.9 54.6 26.7

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We currently expect capital expenditures for the full year 2025 to range from approximately $450 million to $500 million, including $350 million to $390 million for retail growth, approximately $65 million to $70 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 three years ended December 31, 2023, included in this Annual Report on Form 10-K.

See Note 18 “Commitments” in the audited consolidated financial statements for the three years ended December 31, 2024, included in this Annual Report on Form 10-K for more information.

Critical Accounting Policies

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.

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.

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We have not made any material change in the methodology used to estimate future cash flows of retail store locations during the past three years.

In 2024, we recorded an impairment charge of $8.2 million.

Our impairment evaluations are based on assumptions we deem to be reasonable.

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The Company is occasionally challenged by taxing authorities over the amount and/or timing of recognition of revenues and deductions in its various income tax returns.

Although the Company believes it has adequate accruals for matters not resolved with various taxing authorities, gains or losses could occur in future years from changes in estimates or resolution of outstanding matters.

See Note 11 “Income Taxes” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2024 for a further discussion of our tax liabilities.

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These fair value determinations require management to make estimates which are based on all available information and may involve the use of assumptions with respect to the timing and amount of future revenues and expenses, the weighted average cost of capital, and royalty rates associated with the transaction and the assets or liabilities acquired.

This judgment and determination affect the amount of consideration paid that is allocable to assets and liabilities acquired in the

business purchase transaction.

This judgment and determination affect the amount of consideration paid that is allocable to assets and liabilities acquired in the business purchase transaction.

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.

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Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to:

the Company's ability to realize projected synergies from the acquisition of QuickChek and successfully expand our food and beverage offerings;

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

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

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

geopolitical events, such as the conflicts in the Middle East, that impact the supply and demand and price of crude oil;

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

the impact of a global health pandemic, and the government reaction in response thereof;

the impact of any systems failures, cybersecurity and/or security breaches of the company or its vendor partners, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident;

the impact of a global health pandemic and any governmental response thereto;

the impact of any systems failures, cybersecurity and/or security breaches of the company or its vendor partners, including any security breach that

results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident;

successful execution of our information technology strategy;

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

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

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

our ability to successfully expand our food and beverage offerings;

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-K

Item 7. Management’s Discussion and Analysis