What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-10-31 · 94 added, 172 removed, 262 unchanged (50% of the section changed)

9 unchanged sentences

It includes information on the basis of presentation with respect to the amounts presented in the Management’s Discussion and Analysis and a discussion of the trends affecting our business.

• Results of Operations — This section provides an analysis of our results of operations, including the results of our operating segment for the three and nine months ended September 30, 2024 and 2023.

• Capital Resources and Liquidity — This section provides a discussion of our financial condition and cash flows as of and for the three and nine months ended September 30, 2024 and 2023.

• Results of Operations — This section provides an analysis of our results of operations, including the results of our operating segment for the three months ended March 31, 2025 and 2024.

• Capital Resources and Liquidity — This section provides a discussion of our financial condition and cash flows as of and for the three months ended March 31, 2025 and 2024.

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

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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 ® and comprises our Northeast region.

At September 30, 2024, we had a total of 1,740 Company stores in 27 states, of which 1,586 were Murphy branded and 154 were under the QuickChek brand.

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

At March 31, 2025, we had a total of 1,761 Company stores in 27 states, of which 1,607 were Murphy branded and 154 were under the QuickChek brand.

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

4 unchanged sentences

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

the QuickChek results cover the period June 29, 2024 to September 27, 2024, and the 2024 year-to-date period began December 30, 2023.

For Q3 2023, the QuickChek results cover the period July 1, 2023 to September 29, 2023, and the 2023 year-to-date period began December 31, 2022.

the QuickChek results cover the period December 28, 2024 to March 28, 2025.

For Q1 2024, the QuickChek results cover the period December 30, 2023 to March 29, 2024.

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

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

While we generally expect our volume 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 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.

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 including the impact of potential tariffs, overall demand and 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.

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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.

In Q3 2024, crude oil prices were more volatile than Q2 2024 with prices ranging from $67 per barrel to $85 per barrel with an average price of $76 per barrel in Q3 2024, compared to a average price of $82 per barrel in Q3 2023.

In Q1 2025, crude oil prices experienced moderate volatility with prices ranging from $66 per barrel to $81 per barrel with a average price of $72 per barrel in Q1 2025, compared to an average price of $78 per barrel in Q1 2024.

Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results which include Renewable Identification Numbers ("RINs")) was 25.4 cents per gallon ("cpg") in Q1 2025, compared to 24.8 cpg in Q1 2024.

Retail fuel margin dollars increased 13.5% in the current quarter and retail fuel volumes increased 2.0% when compared to Q3 2023.

Retail fuel margin dollars increased 7.1% in the current quarter while retail fuel volumes decreased 1.9% when compared to Q1 2024.

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

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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.

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

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 be sold in a market for RINs at then-prevailing prices.

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

As of September 30, 2024, we had $1.3 billion of Senior Notes and a $387 million term loan outstanding.

As of March 31, 2025, we had $1.3 billion of Senior Notes, $200.0 million outstanding under our revolving credit facility and a $385 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.

We had additional available capacity under the committed $350 million cash flow revolving credit facility, which had $41.0 million of outstanding borrowings as of September 30, 2024.

We had additional available capacity under our revolving credit facility, which, following a refinancing effective as of April 7, 2025, provides for up to $750 million of borrowings.

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.

2 unchanged sentences

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 developments) for the full year 2024 to range from approximately $500 million to $525 million depending on how many new stores are

We intend to fund the remainder of our capital program in 2024 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facilities.

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 new store construction activity.

We intend to fund the remainder of 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 maintain a pipeline of desirable future store locations for development.

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

As a result, operating results for the three and nine months ended September 30, 2024, may not necessarily be indicative of the results that may be expected for the remainder of the year ending December 31, 2024.

As a result, operating results for the three months ended March 31, 2025, may not necessarily be indicative of the results that may be expected for the remainder of the year ending December 31, 2025.

Business Segment

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

For additional operating segment information, see Note 22 “Business Segments” in the audited combined financial statements for the year ended December 31, 2023 included with our Annual Report on Form 10-K and Note 16 “Business Segments” in the accompanying unaudited consolidated financial statements for the three and nine months ended September 30, 2024.

For additional operating segment information, see Note 22 “Business Segments” in the audited combined financial statements for the year ended December 31, 2024 included with our Annual Report on Form 10-K and Note 16 “Business Segments” in the accompanying unaudited consolidated financial statements for the three months ended March 31, 2025.

Results of Operations

Consolidated Results

For the three months ended September 30, 2024, the Company reported net income of $149.2 million, or $7.20 per diluted share, on revenue of $5.2 billion.

For the three months ended March 31, 2025, the Company reported net income of $53.2 million, or $2.63 per diluted share, on revenue of $4.5 billion.

Net income was $66.0 million for the same period in 2024, or $3.12 per diluted share, on $4.8 billion of revenue.

The decrease in net income was primarily due to lower total fuel contribution with increases in store operating expenses and depreciation and amortization expense, which were partially offset by higher retail fuel sales volumes, higher overall merchandise contributions and lower income tax expense.

For the nine months ended September 30, 2024, the Company reported net income of $360.0 million, or $17.17 per diluted share, on revenue of $15.5 billion.

Net income for the same period in 2023 was $406.8 million, or $18.47 per diluted share, on $16.5 billion of revenue.

The decrease in net income is primarily due to lower total fuel contribution combined with increases in store operating expenses, depreciation and amortization expenses, and general and administrative expenses, which were partially offset by higher overall merchandise contributions, higher fuel sales volumes and lower income tax expense.

Three Months Ended September 30, 2024 versus Three Months Ended September 30, 2023

In the current year quarter, the Company experienced higher total fuel contribution and higher overall merchandise contribution compared to the prior year period, coupled with lower general and administrative expenses and lower income taxes.

These benefits were more than offset by higher store operating expenses, higher depreciation and amortization and higher interest expense, resulting in lower net income for Q1 2025 compared to Q1 2024.

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Revenues for Q1 2025 decreased $0.3 billion, or 6.6%, compared to the same quarter in 2024.

The decrease in revenues was due to 10.9% lower retail fuel sales prices and lower PS&W revenues, which were partially offset by an increase of 2.0% in fuel sales volumes and a 2.5% increase in merchandise sales revenue.

The decrease in revenues was primarily due to 6.0% lower retail fuel sales prices and a decrease of 1.9% in fuel sales volumes.

Cost of sales in Q1 2025 decreased $0.3 billion, or 7.4%, when compared to Q1 2024.

In the current-year quarter, the decrease was primarily due to lower fuel cost and was partially offset by higher fuel volumes sold and higher merchandise costs.

In the current-year quarter, the decrease was primarily due to lower fuel cost, lower fuel volumes sold and lower merchandise costs.

Store and other operating expenses increased $14.0 million, or 5.6%, in Q1 2025 from Q1 2024, primarily due to higher employee related expenses and maintenance costs at existing stores combined with increases from net new store operating expenses, partially offset by a reduction in payment fees.

Selling, general and administrative ("SG&A") expenses for Q3 2024 were relatively flat when compared to Q3 2023.

Increases in the current-year quarter in wages, employee related costs and professional and technology services for business improvement initiatives were offset by a reduction in incentive costs in the current quarter.

Depreciation and amortization expense increased $5.3 million in Q3, or 9.2%, when compared to the same period of 2023, primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity in the quarter.

The effective income tax rate was approximately 24.9% for both Q3 2024 and Q3 2023.

Nine Months Ended September 30, 2024 versus Nine Months Ended September 30, 2023

Year-to-date revenues decreased $0.9 billion, or 5.6%, compared to the same period in 2023.

The decrease in revenues was due to 5.8% lower retail fuel sales prices and lower PS&W revenues, which was partially offset by a 3.0% increase in merchandise sales revenue and a 0.8% increase in retail fuel sales volumes.

Year-to-date cost of sales decreased $0.9 billion, or 6.2%, compared to the same period in 2023.

In the current-year period, the lower costs were primarily due to lower fuel cost, partially offset by higher fuel volumes sold and higher merchandise costs.

Year-to-date store and other operating expenses increased $37.5 million, or 4.9%, compared to the same period in 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with increases in net new store operating expenses, partially offset by slightly lower payment fees.

SG&A expenses for the first nine months of 2024 increased $2.8 million, or 1.6%, compared to the first nine months of 2023.

The increase in SG&A costs is primarily due to higher wages, employee related costs, and professional and technology services for business improvement initiatives, which were partially offset by a reduction in incentive cost, versus the same period of 2023.

Depreciation and amortization expense increased $9.1 million, or 5.3%, year-to-date from the same period of 2023 primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity during the period.

The effective income tax rate was approximately 24.0% for the nine months ended September 30, 2024 versus approximately 24.4% for the same period of 2023.

Selling, general and administrative ("SG&A") expenses for Q1 2025 decreased $2.0 million, or 3.2%, compared to Q1 2024.

The decrease in SG&A costs is primarily due to lower professional fees and employee related costs, partially offset by higher incentive costs in the current quarter.

Depreciation and amortization expense increased $9.5 million in Q1, or 16.2%, when compared to the same period of 2024, primarily due to the increased number of Murphy branded stores with larger formats, raze-and-rebuild activity in the quarter and strategic investments related to technology improvement initiatives in recent years.

The effective income tax rate was approximately 14.1% for Q1 2025 compared to 19.4% in Q1 2024.

The rate for the quarter is lower due to excess tax benefits related to share-based compensation and recognition of purchased Federal energy tax credits.

Segment Results

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2025 2024

Marketing $ 168.0 $ 187.2 $ 417.3 $ 464.8

Marketing segment $ 79.1 $ 85.5

Corporate and other assets (25.9) (19.5)

Net Income $ 53.2 $ 66.0

Three Months Ended September 30, 2024 versus Three Months Ended September 30, 2023

Marketing segment net income for the three months ended September 30, 2024 was lower compared to the same period in 2023 primarily due to:

• Lower total fuel contribution

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Marketing segment net income for the three months ended March 31, 2025 was lower compared to the same period in 2024 primarily due to:

• Lower retail fuel sales volumes;

• Higher store and other operating expenses;

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

• Higher fuel sales volumes

• Higher merchandise contribution

• Lower income tax expense

Nine Months Ended September 30, 2024 versus Nine Months Ended September 30, 2023

Marketing segment net income for the nine months ended September 30, 2024 was lower compared to the same nine-month period in 2023 primarily due to:

• Lower total fuel contribution

• Higher store and other operating expenses

• Higher depreciation and amortization expenses

• Higher SG&A expenses

The items below partially offset the decrease in net income in the nine-month period:

• Higher total fuel contribution;

• Higher merchandise contribution;

• Higher fuel sales volumes

• Lower SG&A expenses;

• Lower income tax expense

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

September 30, Nine Months Ended

September 30,

Marketing Segment 2025 2024

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Income (loss) from operations 94.7 108.4

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

Marketing Segment 2025 2024

Other income (expense)

Interest expense (1.9) (2.1)

Other nonoperating income (expense) — 0.1 — 0.1

Total other income (expense) (1.9) (2.1)

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Net income (loss) from operations $ 79.1 $ 85.5

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

September 30, Nine Months Ended

September 30,

Marketing Segment 2024 2023 2024 2023

Total nicotine sales revenue same store sales 1,2

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

75.6 74.7 73.8 73.5

Total merchandise sales revenue same store sales 1,2

$ 192.4 $ 195.0

1 2023 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

1 2024 amounts not revised for 2025 raze-and-rebuild activity (see SSS definition below)

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

Store count at end of period 1,761 1,733

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

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.

Three Months Ended

September 30, Nine Months Ended

September 30,

Key Operating Metrics 2025 2024

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Total PS&W contribution ($ Millions) (15.3) 6.7

RINs (included in Other operating revenues on Consolidated Statements of Income)

($ Millions) 32.7 81.8 91.0 281.2

RINs (included in Other operating revenues on Consolidated Statements of Income) ($ Millions) 34.9 29.4

Total fuel contribution ($ Millions) $ 287.3 $ 286.1

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

248.4 245.8 241.9 241.8

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

245.2 241.7 238.7 237.7

Total fuel contribution (cpg) 25.4 24.8

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Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2025 2024

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

Key Operating Metrics 2025 2024

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1 2024 amounts not revised for 2025 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 MDR redemptions and excludes change in value of unredeemed points associated with our loyalty program(s)

Same store sales information compared to APSM metrics:

Variance from prior year Variance from prior year

Three months ended Nine months ended

September 30, 2024 September 30, 2024

Variance from prior year

Three months ended

March 31, 2025

Fuel gallons per month (4.2) % (3.9) %

5 unchanged sentences

Non-nicotine margin (0.6 %) — %

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

2 Includes all MDR activity

Three Months Ended September 30, 2024 versus Three Months Ended September 30, 2023

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

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

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Net income in the Marketing segment for Q1 2025 decreased $6.4 million, to $79.1 million when compared to the Q1 2024 period.

The decrease was primarily due to lower total fuel contribution combined with increases in store operating expenses and depreciation and amortization expenses, which were partially offset by higher fuel sales volumes, higher merchandise contributions and lower income tax expense.

Total fuel contribution for Q3 2024, was $404.2 million, a decrease of $14.8 million, or 3.5%, compared to Q3 2023.

This decrease was due to lower contribution from PS&W margins, which were partially offset by higher

retail fuel contribution and higher fuel volumes sold in the period when compared to Q3 of 2023.

Contributions from both fuel and merchandise were higher in the current quarter compared to the prior year period coupled with lower general and administrative expenses and lower income taxes.

These benefits were more than offset by higher store operating expenses, higher depreciation and amortization and higher interest expense, resulting in lower net income in Q1 2025 compared to the Q1 2024 period.

Total fuel contribution for Q1 2025, was $287.3 million, an increase of $1.2 million, or 0.4%, compared to Q1 2024.

This increase was due to higher retail fuel contribution, which was partially offset by lower contribution from PS&W margins and lower fuel volumes sold in the period when compared to Q1 of 2024.

Retail fuel margins on a cpg basis increased 9.2% in Q1 2025 to 23.7 cpg, compared to 21.7 cpg in the prior year period.

Total retail fuel volumes increased 2.0%, and fuel sales volumes on an SSS basis increased 0.5% in Q3 2024 when compared to Q3 2023.

Total product supply and wholesale contribution dollars, including RINs, decreased $61.9 million in Q3 2024 when compared to Q3 2023, primarily due to negative impacts of timing and inventory pricing adjustments in a falling market.

Total merchandise sales were $26.8 million higher in Q3 2024 vs Q3 2023, coming in at $1.1 billion in both quarters.

Total merchandise contribution in Q3 2024 improved 2.4% compared to Q3 2023 primarily due to higher retail prices, up 7.8%, and net increased number of larger format stores.

Total retail fuel volumes decreased 1.9%, and fuel sales volumes on an SSS basis declined 4.2% in Q1 2025 when compared to Q1 2024.

Total product supply and wholesale contribution dollars, including RINs, decreased $16.5 million in Q1 2025 when compared to Q1 2024, primarily due to timing and pricing impacts related to market conditions.

Total merchandise sales were $1.3 million lower in Q1 2025 vs Q1 2024, coming in at approximately $1.0 billion in both quarters.

Total merchandise contribution in Q1 2025 improved 2.2% compared to Q1 2024, primarily due to favorable sales mix and higher retail prices, combined with increased store count year-over-year.

Total SSS merchandise contribution dollars grew 1.0%, which included an increase of 2.8% in nicotine products, partially offset by a 0.6% decrease in non-nicotine products.

1 unchanged sentence

On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent were 5.7% higher, primarily attributable to increased employee related expenses and maintenance costs.

SG&A expenses in Q3 2024 were relatively flat when compared to Q3 2023, due primarily to reductions in employee incentive cost offsetting the increases in wages, employee related costs and professional and technology services for business improvement initiatives in the quarter.

SG&A expenses in Q1 2025 were $2.0 million lower compared to Q1 2024, due primarily to lower professional fees and employee related costs, partially offset by higher incentive costs in the current quarter.

Depreciation and amortization expense increased $6.6 million, or 12.0%, in Q1 2025 compared to Q1 2024 due to the increased number of larger format Murphy branded stores and raze-and-rebuild activity in the quarter.

Nine Months Ended September 30, 2024 versus Nine Months Ended September 30, 2023

Net income in the Marketing segment for the nine months ended September 30, 2024 decreased $47.5 million compared to the nine months ended September 30, 2023.

The decrease was primarily due to lower total fuel contributions, combined with increased store operating expenses, depreciation and amortization expenses, and SG&A expenses, which were partially offset by higher fuel sales volumes, higher overall merchandise contributions and lower income tax expense.

Total fuel contribution for the nine-month period ended September 30, 2024 was $1.1 billion, a decrease of $34.1 million, or 3.1%, compared to the first nine months of 2023.

This decrease was primarily due to lower contribution from PS&W margins, and was partially offset by higher retail fuel contribution and fuel volumes sold in the period when compared to the first nine months of 2023.

Retail fuel margins on a cpg basis increased 5.7%, to 27.9 cpg, for the nine-month period ended September 30, 2024, compared to 26.4 cpg in the same period of 2023.

Total retail fuel sales volumes increased 0.8%, while volumes on an SSS basis decreased 0.6% in the nine-month period ended September 30, 2024 when compared to the same nine-month period of 2023.

Total product supply and wholesale contribution dollars, including RINs, decreased $97.0 million compared to the first nine months of 2023, primarily due to negative impacts of timing of transactions and regional supply imbalances.

Total merchandise sales increased 3.0% to $3.2 billion in the nine months ended September 30, 2024 compared to $3.1 billion in the first nine months of 2023 due to higher retail prices across the chain in most categories and increased number of stores with larger formats.

Year-to-date total merchandise contribution in 2024 increased 3.2% compared to the same period of 2023.

Total SSS merchandise contribution dollars improved 2.8% with an increase of 8.2% in nicotine products and was partially offset by a 1.5% decrease in non-nicotine products.

Store and other operating expenses increased $37.5 million in the current year compared to the same nine-month period of 2023, primarily due to employee related expenses and maintenance expenses 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 5.7%, primarily due to employee related expenses and maintenance costs.

SG&A expenses increased $2.8 million in 2024 compared to the same nine-month period of 2023 due primarily to higher employee salaries and benefits costs incurred and professional and technology services for business improvement initiatives, partially offset by a reduction in employee incentive cost.

Depreciation and amortization expense increased $10.2 million, or 6.4%, in the first nine months of 2024 due to new larger store formats for Murphy branded stores combined with raze-and-rebuild activities.

Corporate and Other Assets

Three Months Ended September 30, 2024 versus Three Months Ended September 30, 2023

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Loss from continuing operations for Corporate and other assets for Q1 2025 was $25.9 million, compared to a loss of $19.5 million in Q1 2024.

The decrease in loss was primarily due to an increase in other nonoperating income which was partially offset by a reduction in investment income.

Nine Months Ended September 30, 2024 versus Nine Months Ended September 30, 2023

Loss from continuing operations for Corporate and other assets was $57.3 million for the nine months ended September 30, 2024, compared to a loss of $58.0 million in the same period of 2023.

The year-to-date loss for 2024, compared to the same period of 2023, had a reduction in depreciation expense combined with an increase in other nonoperating income but was partially offset by a reduction in investment income and an increase in interest expense.

The increase from the prior year quarter was primarily due to a $2.9 million increase in depreciation and amortization expense, a $1.3 million reduction in investment income, a $1.0 million reduction in other nonoperating income, a $0.6 million increase in net interest expense and a $0.5 million decrease in gain on sale of assets.

Non-GAAP Measures

The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.

EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, net settlement proceeds, (gain) loss on sale of assets, loss on early debt extinguishment, transaction and integration costs related to acquisition, and other non-operating (income) expense).

The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three months ended March 31, 2025 and 2024.

EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S.

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2025 2024

10 unchanged sentences

Significant Sources of Capital

As of September 30, 2024, we had $52.5 million of cash and cash equivalents and total marketable securities of $1.5 million.

As of March 31, 2025, we had $49.4 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 September 30, 2024, there was $41.0 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.

Following the refinancing effective as of April 7, 2025, we have a committed cash flow revolving credit facility providing for aggregate borrowings of $750 million, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein.

As of March 31, 2025, there was $200.0 million of outstanding borrowings under our Revolving Facility reported in Long-term debt in the Consolidated Balance Sheet.

The Revolving Facility had $56.0 million of outstanding borrowings at December 31, 2024.

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 $598.9 million for the nine months ended September 30, 2024 compared to $510.9 million for the same period of 2023, an increase of $88.0 million, or 17.2%.

The increase for the nine months ended September 30, 2024 is mainly due to an increase in the amount of cash provided from changes in noncash working capital of $129.2 million and increased depreciation of $9.1 million, partially offset by a decrease in net income of $46.8 million and lower deferred and noncurrent tax changes of $4.1 million when compared to the same period in 2023.

For the nine months ended September 30, 2024, operating cash provided by changes in non-cash operating working capital of $32.0 million was due to a decrease in accounts receivable of $71.4 million due to the timing of receipts, an increase of $39.7 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, a decrease in inventory of $0.1 million, and was partially offset by a decrease in accounts payable and accrued liabilities of $75.3 million which was related to the timing of payments and an increase in prepaid expenses of $3.9 million.

Net cash provided by operating activities was $128.5 million for the three months ended March 31, 2025 and was $136.0 million for the same period of 2024, a decrease of $7.5 million, or 5.5%.

The decrease for the three months ended March 31, 2025 is mainly due to a decrease in net income of $12.8 million and a decrease in the amount of cash required from changes in noncash working capital of $3.9 million partially offset by increased depreciation of $9.5 million compared to the same period in 2024.

For the three months ended March 31, 2025, operating cash provided by changes in non-cash operating working capital of $0.3 million was due to a decrease in inventory of $37.2 million due to lower retail prices and volumes, an increase in accounts payable and accrued liabilities of $2.9 million which was related to the timing of payments and a decrease in prepaid expenses of $1.1 million, which was partially offset by a decrease of $37.2 million in income taxes payable due in part to the recognition of Federal energy tax credits in the current year period and the timing of estimated tax payments and an increase in accounts receivable of $3.7 million due to the timing of receipts.

Investing Activities

For the nine months ended September 30, 2024, cash required by investing activities was $320.9 million compared to $217.0 million in 2023.

The $103.9 million increase in cash required by investing activities in the

current year period was primarily due to an increase of $106.5 million in capital expenditures due to the timing of projects partially offset by net cash received of $3.3 million from the amount of maturities of marketable securities.

For the three months ended March 31, 2025, cash required by investing activities was $87.7 million compared to $74.9 million in 2024.

The $12.8 million increase in cash required by investing activities in the current year period was primarily due to an increase of $11.6 million in capital expenditures due to the timing of payments for projects and a reduction of $1.0 million in the amount of maturities of marketable securities.

Financing Activities

Financing activities in the nine months ended September 30, 2024 required cash of $343.3 million compared to cash of $229.6 million in the nine months ended September 30, 2023, an increase of $113.7 million.

The first nine months of 2024 included payments of $317.7 million for the repurchase of common shares, which was an increase of $145.0 million compared to repurchases of $172.7 million in the 2023 period.

Amounts related to share-based compensation required $7.2 million more in cash during 2024 than in 2023.

Dividend payments increased $2.4 million in 2024 compared to amounts paid in the first nine months of 2023.

Financing activities in the three months ended March 31, 2025 required cash of $38.4 million compared to cash of $122.2 million in the three months ended March 31, 2024, a decrease of $83.8 million.

The first three months of 2025 included payments of $150.0 million for the repurchase of common shares, which was an increase of $63.6 million compared to repurchases of $86.4 million in the 2024 period.

Dividend payments increased $1.0 million in 2025 compared to amounts paid in the first three months of 2024.

Net borrowings of debt provided $140.0 million in 2025 compared to net repayments of debt requiring $3.9 million in 2024.

During the nine months ended September 30, 2024, the Company paid cash dividend payments of $1.31 per common share, for a total of $27.1 million, compared to the period ended September 30, 2023, in which dividends of $1.14 per common share were paid for total cash dividend payments of $24.7 million.

Amounts related to share-based compensation required $4.5 million less in cash during 2025 than in 2024.

During the three months ended March 31, 2025, the Company paid cash dividend payments of $0.49 per common share, for a total of $9.8 million, compared to the period ended March 31, 2024, in which dividends of $0.42 per common share were paid for total cash dividend payments of $8.8 million.

As a part of our capital allocation strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time.

On October 24, 2024, the Board of Directors declared a quarterly cash dividend of $0.48 per common share, or $1.92 per share on an annualized basis.

The dividend is payable on December 2, 2024, to shareholders of record as of November 4, 2024.

On May 1, 2025, the Board of Directors declared a quarterly cash dividend of $0.50 per common share, or $2.00 per share on an annualized basis.

The dividend is payable on June 2, 2025, to shareholders of record as of May 12, 2025.

Share Repurchase Program

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The authorization value excludes any excise tax that may be incurred.

During the nine months ended September 30, 2024, a total of 698,855 shares were repurchased for $320.4 million, including excise tax under the 2023 program.

As of September 30, 2024, we had approximately $1.1 billion remaining under the 2023 authorization.

Our long-term debt at September 30, 2024 and December 31, 2023 was as set forth below:

(Millions of dollars) September 30,

During the three months ended March 31, 2025, the Company repurchased a total of 321,119 common shares for approximately $151.2 million, at an average price of $470.80 per share, including accrued excise taxes.

As of March 31, 2025, we had approximately $787.8 million remaining under our 2023 authorization.

Our long-term debt at March 31, 2025 and December 31, 2024 was as set forth below:

(Millions of dollars) March 31,

2025 December 31,

5.625% senior notes due 2027 (net of unamortized discount of $1.0 at September 30, 2024 and $1.3 at December 31, 2023)

5.625% senior notes due 2027 (net of unamortized discount of $0.8 at March 31, 2025 and $0.9 at December 31, 2024)

$ 299.2 $ 299.1

4.75% senior notes due 2029 (net of unamortized discount of $3.1 at September 30, 2024 and $3.6 at December 31, 2023)

3.75% senior notes due 2031 (net of unamortized discount of $4.0 at September 30, 2024 and $4.4 at December 31, 2023)

Term loan due 2028 (effective interest rate of 7.09% at September 30, 2024 and 7.23% at December 31, 2023) net of unamortized discount of $0.5 at September 30, 2024 and $0.6 at December 31, 2023

Revolving credit facility, due 2026 (weighted average interest rate of 8.75% at September 30, 2024)

4.75% senior notes due 2029 (net of unamortized discount of $2.8 at March 31, 2025 and $3.0 at December 31, 2024)

3.75% senior notes due 2031 (net of unamortized discount of $3.7 at March 31, 2025 and $3.8 at December 31, 2024)

Term loan due 2028 (effective interest rate of 6.21% at March 31, 2025 and 6.44% at December 31, 2024) net of unamortized discount of $0.4 at March 31, 2025 and $0.4 at December 31, 2024

Revolving credit facility, due 2026 (weighted average interest rate of 6.59% at March 31, 2025)

Capitalized lease obligations, autos and equipment, due through 2028

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Our credit agreement consists of both a cash flow revolving credit facility and a senior secured term loan.

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

The outstanding balance of the term loan was $387 million at September 30, 2024 and $390 million at December 31, 2023.

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 September 30, 2024, we had $41.0 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 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.

Interest payable on the Revolving Facility is based on either:

• the term secured overnight financing rate, plus a 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.

The Term Facility amortizes in quarterly installments, which commenced on July 1, 2021, at a rate of 1.00% per annum.

Murphy USA is also required to prepay the Term Facility with a portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales and casualty events (subject to certain reinvestment rights) and the net cash proceeds of issuances of indebtedness not permitted under the Credit Agreement.

The Credit Agreement allows Murphy USA to prepay, in whole or in part, the Term Facility outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without premium or penalty other than breakage and redeployment costs.

Following a refinancing effective as of April 7, 2025, the credit agreement provides for a senior secured term loan in an aggregate principal amount of $600 million (the "Term Facility") (which was borrowed in full on April 7, 2025) and revolving credit commitments in an aggregate amount equal to $750 million (the "Revolving Facility", and together with the Term Facility, the "Credit Facilities").

The Term Facility amortizes in quarterly installments at a rate of 1.00% per annum.

Pursuant to the credit agreement, the applicable margin, (A) in the case of Adjusted SOFR Rate borrowings, (i) with respect to the Revolving Facility, ranges from 1.25% to 2.00% per annum depending on a total debt to EBITDA ratio and (ii) with respect to the Term Facility, is 1.75% per annum and (B) in the case of Alternate Base Rate borrowings (i) with respect to the Revolving Facility, ranges from 0.25% to 1.00% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, is 0.75% per annum..

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 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.

The credit agreement also contains customary events of default.

Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0, could be limited.

At September 30, 2024, our total leverage ratio was 1.79 to 1.0 which meant our ability at that date to make restricted payments was not limited.

If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed the greater of $117.6 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.

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The combined assets, liabilities and results of operations of MOUSA and the guarantors are not materially different from corresponding amounts presented in the consolidated financial statements included herein.

MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the three and nine months ended September 30, 2024, and accounted for the vast majority of our total assets as of September 30, 2024.

MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the three months ended March 31, 2025, and accounted for the vast majority of our total assets as of March 31, 2025.

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

The following table outlines our capital spending and investments by segment for the three and nine month periods ended September 30, 2024 and 2023:

The following table outlines our capital spending and investments by segment for the three month periods ended March 31, 2025 and 2024:

Three Months Ended

September 30, Nine Months Ended

September 30,

(Millions of dollars) 2025 2024

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This Quarterly Report on Form 10-Q contains certain statements or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to our M&A activity, anticipated store openings and associated capital expenditures, fuel margins, merchandise margins, sales of RINs, trends in our operations, dividends, and share repurchases.

statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties.

Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties.

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

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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 price of crude oil;

geopolitical events, such as evolving trade policies and the imposition of reciprocal tariffs and 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;

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and changes in interest rates.

Our SEC reports, including our most recent annual Report on Form 10-K and quarterly report on Form 10-Q, contain other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide.

Our SEC reports, including our most recent Annual Report on Form 10-K, contain other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide.

The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis