Murphy USA Inc.

Murphy USA Inc. operates within the large, growing, competitive and highly fragmented U.S. retail fuel and convenience store industry. Key industry trends include sensitivity to gas prices among cost conscious consumers, increasing customer demand for low-priced fuel, the highly fragmented nature of the industry providing larger chain operators like Murphy USA with significant scale advantage, significantly increased fuel capacity in the marketplace by the addition of new-to-industry retail fuel and convenience stores, and high levels of consumer traffic around supermarkets and large format hypermarkets supporting complementary demand at nearby and cross-promoted retail fuel stores.

The Company competes with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on convenience and consumer appeal. Competitors named in the filing include other retail fueling stores that adopt marketing strategies similar to ours by associating with non-traditional retailers such as supermarkets, discount club stores and hypermarkets, integrated companies that have their own production and/or refining operations, and other retail and wholesale gasoline marketing companies that have more extensive retail outlets and greater brand name recognition. The Company's competitive strengths include strategic proximity to and complementary relationship with Walmart, a winning proposition with value-conscious consumers, a low-cost retail operating model, distinctive fuel supply chain capabilities, and a resilient financial profile and engaged team.

The Company generates revenue primarily through the marketing of retail motor fuel products and convenience merchandise through a network of Company retail stores, and also markets fuel to unbranded wholesale customers through a mixture of Company-owned and third-party product distribution terminals and pipeline positions. Revenue is transactional in nature, recognized when control of goods transfers to customers. Primary customer segments include value-conscious consumers, with a focus on low-price, high-volume fuel retail outlets. The Company operates loyalty programs, Murphy Drive Rewards and QuickChek Rewards, providing customers with targeted discounts and personalized offers on both fuel and in-store purchases.

The Marketing segment includes retail marketing stores and product supply and wholesale assets. Petroleum product sales at retail were $13,397.7 million ¹ in 2025, compared to $14,417.5 million ² in 2024. Petroleum product sales at wholesale were $1,465.1 million ³ in 2025, compared to $1,474.3 million ⁴ in 2024. Total petroleum product sales were $14,862.8 million ⁵ in 2025 and $15,891.8 million ⁶ in 2024. Merchandise sales were $4,303.8 million ⁷ in 2025, compared to $4,214.8 million ⁸ in 2024. Other operating revenues from RINs were $211.7 million ⁹ in 2025, compared to $129.6 million ¹⁰ in 2024. Total Marketing segment revenues were $19,383.5 million ¹¹ in 2025 and $20,243.7 million ¹² in 2024.

The Company's retail stores carry a broad selection of snacks, beverages, nicotine products and non-food merchandise, as well as a greater food and beverage offering at QuickChek locations. In 2025, over 78% ¹³ of merchandise was purchased from a single wholesale grocer, Core-Mark. The Company's robust nicotine business remains among the highest-volume performers in its industry. Total merchandise contribution was $869.0 million ¹⁴ in 2025, compared to $833.7 million ¹⁵ in 2024. Merchandise unit margin was 20.2% ¹⁶ in 2025, compared to 19.8% ¹⁷ in 2024. Total fuel contribution was $1,488.7 million ¹⁸ in 2025, compared to $1,469.7 million ¹⁹ in 2024. Total fuel contribution was 30.7 cpg ²⁰ in 2025, compared to 30.5 cpg ²¹ in 2024. Retail fuel margin was 28.1 cpg ²² in both 2025 and 2024.

During 2025, the Company repurchased a total of 1,536,701 ²³ common shares for approximately $652.0 million ²⁴, at an average price of $424.28 ²⁵ per share, including brokerage fees and accrued excise taxes. The Company raised its quarterly dividend four times during 2025 from $0.48 per share in Q4 2024 to $0.63 per share ²⁶, or $2.52 per share ²⁷ on an annualized basis, as of Q4 2025. On October 29, 2025, the Board of Directors approved a new share repurchase authorization of up to $2.0 billion ²⁸ to be executed by December 31, 2030. The Company incurred restructuring expenses of $12.6 million ²⁹ in 2025, related primarily to severance and other benefits offered to impacted employees. In 2025, the Company recorded impairment charges related to fixed assets of $5.3 million ³⁰.

For the fiscal year ended December 31, 2025, the Company reported net income of $470.6 million ³¹, or $24.10 per diluted share ³², on total operating revenues of $19,384.0 million ³³. This compares to net income of $502.5 million ³⁴, or $24.11 per diluted share ³⁵, on total operating revenues of $20,244.3 million ³⁶ in 2024. Net income decreased compared to 2024 primarily due to higher store operating expenses, higher depreciation and amortization expense, and restructuring expenses, partially offset by higher merchandise contribution, higher total fuel contribution, lower income tax expense, and lower SG&A expenses. Net cash provided by operating activities was $813.9 million ³⁷ for 2025, compared to $847.6 million ³⁸ in 2024.

The Company currently anticipates total capital expenditures (including land for future developments) for the full year 2026 to range from approximately $475 million to $525 million ³⁹ depending on new store construction activity and planned maintenance capital investments. The Company expects to build 45 to 55 ⁴⁰ NTI locations and up to 30 ⁴¹ raze-and-rebuilds in 2026 and is targeting 50-plus ⁴² NTI and up to 30 ⁴³ raze-and-rebuilds per year in future periods.

The Company intends for its evolving NTI real estate strategy to be a key driver of its organic growth over the next several years, demonstrated by the over 500 ⁴⁴ stores that have been added to Murphy USA since its 2013 spin-off from Murphy Oil Corporation. The Company expects to build more Murphy branded NTI stores that are 2,800 square-foot ⁴⁵ or larger, as well as NTI QuickChek branded locations in their existing footprint, which average from 5,000 to 7,000 square-feet ⁴⁶ in size. The real estate development team works to maintain a multi-year pipeline of projects that supports continued ratable expansion in these high-return locations.

The Company plans to continuously evaluate its remaining kiosk strategy to maximize store economics and return on investment. Key to achieving the highest potential returns from QuickChek branded stores is continuing the ongoing development and execution of the enhanced food and beverage offer. The Company expects to further expand merchandise revenue and margins through its primary supplier relationship with Core-Mark, while further optimizing promotional planning, assortment, and pricing to strengthen overall store returns. In November 2025, the Company renewed and extended for another five years a supply contract with Core-Mark through the year 2031 ⁴⁷.

The Company believes that sustaining its low-cost position is a strategic advantage as a retailer of commodity products. It is undertaking several initiatives for the purpose of increasing efficiency which should allow it to continue to beat inflation on per-store operating costs to help sustain low store-level costs. The Company also believes that through its planned growth and efficiency initiatives, it can control overhead costs to support an overall improvement in-store returns and keep costs properly scaled as it grows organically.

The Company plans to continue to focus its product supply and wholesale efforts on activities that enhance its ability to be a low-price retail fuel leader and its ability to take advantage of fuel price volatility. It will continue to invest in capabilities and asset positions that support its supply chain strategy. The Company's distinctive business model and supply chain advantage allows it to deliver consistent margins over time and withstand periods of volatility and uncertainty.

The Company intends to fund its capital program in 2026 primarily using operating cash flow but will supplement funding where necessary through borrowings under its revolving credit facility. The Company expects to build 45 to 55 ⁴⁸ NTI locations and up to 30 ⁴⁹ raze-and-rebuilds in 2026. Capital expenditures for 2026 are expected to range from approximately $475 million to $525 million ⁵⁰, including $375 million to $400 million ⁵¹ for retail growth, approximately $80 million to $95 million ⁵² for maintenance capital, with the remaining funds earmarked for other corporate investments and other strategic initiatives. The Company raised its quarterly dividend four times during 2025 from $0.48 per share in Q4 2024 to $0.63 per share ⁵³, or $2.52 per share ⁵⁴ on an annualized basis, as of Q4 2025. On February 12, 2026, the Board of Directors declared a quarterly cash dividend of $0.63 per common share ⁵⁵, or $2.52 per share ⁵⁶ on an annualized basis.

The Company's ability to grow by 45 to 55 new stores and up to 30 raze-and-rebuild stores in 2026 and by 50-plus NTI stores and up to 30 raze-and-rebuild stores in future years relies on the continued growth of its project pipeline and the building material supply chain. If the Asset Development group is unable to locate suitable locations or is unable to close the acquisition of those locations in a timely fashion, the Company could find that it does not have sufficient land to fulfill its pipeline. Further, permitting delays due to local governmental agency ability to timely respond to requests or construction delays from supply chain or labor constraints could also negatively impact the project pipeline.

The Company's operations are significantly impacted by the gross margins it receives on its fuel and merchandise sales. The fuel gross margins are commodity-based, change daily and are volatile. Factors that can change rapidly include 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 fuel and merchandise supply chain caused by severe weather or pandemics, new or changing legislation around nicotine products and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures, cyber-attacks, changing economic conditions that lower consumer purchasing power such as inflation, and competition in local markets.

Volatility in global prices of oil and petroleum products significantly affects operating results, as net income is significantly affected by changes in margins on retail and wholesale gasoline marketing operations, and the Company typically does not seek to hedge any significant portion of its exposure to changing commodity prices. The Company relies on a single wholesale grocer, Core-Mark, for over 78% ⁵⁷ of its merchandise, and a disruption in supply could have a material effect on the business. Walmart retains certain rights in its agreements with the Company, including rights of first refusal and prohibitions on transferring properties to a competitor of Walmart, which may adversely impact the Company's ability to conduct business. Future nicotine legislation, regulation, court rulings, campaigns to discourage smoking, and increases in nicotine taxes could have a material adverse impact on retail operating revenues and gross margin, as sales of nicotine products have historically accounted for an important portion of total convenience store merchandise sales. The Company recorded impairment charges related to fixed assets of $5.3 million ⁵⁸ in 2025 and $8.2 million ⁵⁹ in 2024, largely attributable to competitive pressures in certain Northeast markets, and may have additional impairment charges in future periods.

Management's message emphasizes the Company's five reinforcing competitive strengths: strategic proximity to and complementary relationship with Walmart, a winning proposition with value-conscious consumers, a low-cost retail operating model, distinctive fuel supply chain capabilities, and a resilient financial profile and engaged team. The strategic priorities emphasized for the period ahead include growing organically through an evolving NTI real estate strategy targeting 45 to 55 ⁶⁰ NTI locations and up to 30 ⁶¹ raze-and-rebuilds in 2026, diversifying the merchandise mix by continuously evaluating the kiosk strategy and refining Murphy and QuickChek branded merchandising and store designs, sustaining the cost leadership position through efficiency initiatives, creating advantage from market volatility by focusing on product supply and wholesale efforts, and investing for the long term with a predominantly fee-simple asset base and appropriate debt structure. The Company currently anticipates total capital expenditures for the full year 2026 to range from approximately $475 million to $525 million ⁶².