Murphy Usa Inc. · NYSE:MUSA
Murphy Usa — Raymond James 39th Annual Institutional Investors Conference 2018
21 slides from Murphy Usa's conference presentation, Mar 6, 2018
Slide 1: Raymond James 39th Institutional Investors Conference
Raymond James 39th Institutional Investors Conference Orlando, FL ● March 6, 2018 Murphy USA Inc. 1
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements. These statements, which express management’s current views concerning future events or results, are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those express
Slide 3: Today's presenters
Today’s presenters Andrew Clyde, President and Chief Executive Officer • Appointed President and Chief Executive Officer of Murphy USA on January 8, 2013 • Leads the development and execution of our strategy for creating long-term shareholder value • Oversees corporate-wide strategic initiatives ena
Slide 4: Murphy USA continues its proven and differentiated strategy
Murphy USA continues its proven and differentiated strategy • Murphy USA is uniquely positioned as a MUSA Relative Stock Performance low-cost fuel and convenience retailer Indexed From Spinoff to February 28, 2018 Murphy USA Inc. • Our strategy to compete has five coherent 220 S&P 500 Index elements
Slide 5: MUSA creates value through a simple formula – and executes
MUSA creates value through a simple formula – and executes MUSA Value Creation Drivers 2016 Proof Point 2017 Proof Point 5% unit growth 3% unit growth Organic • 67 new sites; 10 R&R • 45 new sites; 21 R&R Growth • 300 refresh; 180 super • 300 refresh; 244 super coolers coolers * 5% contribution $ gr
Slide 6: The competitive landscape continues to evolve
The competitive landscape continues to evolve Hypermarkets Murphy USA QuikTrip Big-Box C-Stores Supermarkets and mass Large stores with merchants with Walmart Sheetz comprehensive offerings small-box forecourts including food offer Kroger Wawa Strength: Low fuel prices Strength: Destination and inte
Slide 7: Organic growth moderates ahead of shift in format strategy
Organic Growth Organic growth moderates ahead of shift in format strategy Estimated Store Activity 2015 - 2019 Raze & Rebuild 74 77 1 66 New Stores 10 55 55 Up to 20 21 Up to 25 Up to 25 73 67 45 Up to 30 Up to 30 2015a 2016a 2017a 2018e 2019e Total Units 1,335 1,401 1,446 1,476 1,506 Raze & Rebuild
Slide 8: Reinvestment programs enhance existing network quality
Organic Growth Reinvestment programs enhance existing network quality Raze and Rebuild Program • 32 sites completed through 2017 with goal of up to 25 stores in 2018 • Kiosks replaced with 1,200 sq ft stores along with more dispensers and increased fuel offer • Given the premium locations, we estima
Slide 9: Fuel differentiates MUSA from its peers
Fuel Contribution Fuel differentiates MUSA from its peers Total Chain Fuel Volume (MMgal) Annual Fuel Volumes (Kgal) / Avg Store Last Fiscal Year Last Fiscal Year 7,643 2,909 5,799 2,118 4,141 1,421 1,055 2,062 MUSA CASY ATD (US) Speedway MUSA CASY ATD (US) Speedway Average U.S. Store Count By Chain
Slide 10: Total fuel margins consistently generate 14-16 cpg
Fuel Contribution Total fuel margins consistently generate 14-16 cpg MUSA Total Fuel Margin MUSA Total Fuel Contribution CPG ($MM) Product Supply & Wholesale + RINs Product Supply & Wholesale + RINs Retail Retail 18.5 $737 $575 to $700 $678 16.4 2.7 16.4 14 to 16.5 $106 $647 $75 15.4 $624 $616 - 14.
Slide 11: Volatility favors our low-cost business model
Fuel Contribution Volatility favors our low-cost business model Total Fuel and Breakeven Margin (cpg) Fuel Breakeven Margin (cpg) 2013 – 2017 PS&W plus RIN Retail Margins 22 20.6 20 18.5 17.9 18.1 18 16.4 16.7 16.5 16.4 16 14.9 15.5 15.4 15.4 13.8 14.0 13.9 14.0 14 12 10.1 CPG 10 8 6 3.2 4 2.6 2.3 1
Slide 12: We actively make our business more competitive
Fuel Breakeven We actively make our business more competitive Fuel Breakeven Requirement CPG (2013 – 2017) 3.2 2.6 2.3 1.3 1.2 2013 2014 2015 2016 2017 (Operating expense less payment fees and rent – merchandise margins) Fuel Breakeven = Fuel Gallons Note: Operating expense includes allocated G&A an
Slide 13: Merchandise margins and contribution expanding
Fuel Breakeven Merchandise margins and contribution expanding Merchandise APSM GM ($K) Drivers 2012 – 2017 Continuous Improvement Initiatives 30 Non-Tobacco • Price optimization Tobacco 25 • Promotion effectiveness 22.5 22.6 21.3 19.9 20.4 • Product assortment by format 20 9.2 9.3 • Visual merchandi
Slide 14: Murphy Drive Rewards: A unique and distinctive loyalty platform
Fuel Breakeven Murphy Drive Rewards: A unique and distinctive loyalty platform Murphy Drive Rewards is a customer appreciation program that: - Engages and motivates current customers - Attracts new customers - Incentivizes all customers to buy more fuel and more merchandise Murphy USA Inc. 14
Slide 15: Operating costs declining, bucking the industry trend
Fuel Breakeven Operating costs declining, bucking the industry trend Site Opex APSM ($K) 2013 – 2017 50 MUSA 45.4 45 Industry 42.5 40 38.2 36.1 35 30 25 22.1 22.4 22.3 21.4 20.8 20 15 10 5 0 2013 2014 2015 2016 2017 Note: MUSA Site OPEX excludes credit card fees; Industry Site Opex sourced from NACS
Slide 16: SG&A investments enhance capabilities and scalability
Corporate Costs SG&A investments enhance capabilities and scalability Total SG&A ($MM) • People 2014 – 2017 – Establishing competencies to achieve corporate goals and strategies 131 – Aligning incentive plans with principles and 129 123 competencies 119 – Empowering leadership to drive change and su
Slide 17: Capital allocation balances growth and capital returns
Shares Outstanding Capital allocation balances growth and capital returns Capital Allocation ($MM) Capital Allocation 2014 - 2017 2014 - 2017 $1,722 Retail Growth Capital $587 $829 $464 $480 39% $323 48% $206 $248 $191 $893 $52 8% $264 $274 Share 5% $216 Repurchases Retail $139 Corporate Maintenance
Slide 18: We have strategically added leverage to boost equity returns
Shares Outstanding We have strategically added leverage to boost equity returns Leverage Structure and Ratio 2013 to 2017 Total Debt Debt / • Adding appropriate debt to the balance ($MM) EBITDA sheet allows us to leverage business 1,400 2.5x 2.1x improvements for the benefit of long- 1,200 2.0x term
Slide 19: 2018 guidance
2018 guidance 2017 Updated 2017 Actual 2018 Guidance Guidance Range Results Range Organic Growth New Stores 45 to 50 45 Up to 30 Raze and Rebuilds 15 to 20 21 Up to 25 Fuel Contribution Total fuel contribution ($ Millions) N/A $678 $575 to $700 Annual retail volume (Billion gallons) 4.3 to 4.5 4.1 4
Slide 20: Through our formula, we continue to build a bright future
Through our formula, we continue to build a bright future MUSA Formula for EPS Growth MUSA Value Creation Drivers Organic Growth Disciplined Capital * Allocation Fuel Contribution Commitment Modest + to Share Organic Unit Repurchase Growth EPS Fuel Growth Breakeven − Corporate High Sustained EBITDA
Slide 21: Non-GAAP Adjusted EBITDA Reconciliation
Non-GAAP Adjusted EBITDA Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, (Thousands of dollars) 2017 2016 2017 2016 Net income $ 124,840 $ 43,817 $ 245,264 $ 221,492 Income tax expense (benefit) (73,631) 23,015 (5,242) 130,539 Interest expense, net of interest income
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