Murphy Usa Inc. · NYSE:MUSA
Murphy Usa — Investor Day (April 2015)
30 slides from Murphy Usa's investor day presentation, Apr 16, 2015
Slide 1: Driven to Perform Murphy USA Analyst Day
• Driven to Perform Murphy USA Analyst Day Andrew Clyde, President and Chief Executive Officer • Mindy West, Chief Financial Officer • New York Stock Exchange • April 16, 2015
Slide 2: Cautionary Statement
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 materi
Slide 3: Today's presenters
Today’s presenters • Today’s presenters Andrew Clyde, President and Chief Executive Officer Mindy West, Executive Vice President and Chief Financial Officer Appointed President and Chief Executive Officer of Murphy USA on January 8, 2013 • Leads the development and execution of our strategy in creat
Slide 4: Murphy USA competes in a fierce retailing environment
Murphy USA competes in a fierce retailing environment • Murphy USA competes in a fierce retailing environment Hypermarkets • Supermarkets and mass merchants with small-box forecourts Strength: Low fuel prices and integrated loyalty programs/ promotions tied to in-store purchases Big-Box C-Stores • L
Slide 5: We face a number of headwinds
We face a number of headwinds • We face a number of headwinds Market Headwinds Fuel Demand Fleet fuel efficiency – over the long run; Substitution to alternative fuels/technologies • Demographic and economic growth’s impact on Vehicle Miles Traveled • Relative impact of innovations in competitor fue
Slide 6: We compete with unique strengths and a distinctive strategy
We compete with unique strengths and a distinctive strategy • We compete with unique strengths and a distinctive strategy Murphy USA Strategy and Strengths Sustain a low cash breakeven requirement on fuel • Maintain conservative balance sheet position to fund organic growth and sustaining improvemen
Slide 7: 2014 was a very rewarding year as we continued to execute our growth strategy
2014 was a very rewarding year as we continued to execute our growth strategy, deliver results, and meet commitments • 2014 was a very rewarding year as we continued to execute our growth strategy, deliver results, and meet commitments 2014 Ac complishments Grow Organically Diversify Merchandise Mix
Slide 8: Our partnership with Walmart differentiates Murphy USA from other retailers
Our partnership with Walmart differentiates Murphy USA from other retailers • Our partnership with Walmart differentiates Murphy USA from other retailers Fuel Only Fuel + Store Store only Supercenter with MUSA 5,925 Neighborhood Market with MUSA 2,935 Typical Supermarket with Gas 2,385 Traffic Flow
Slide 9: Our differentiated formats in front of Walmart continue to earn attractive returns
Meanwhile, MUSA’s differentiated formats in front of Walmart continue to earn attractive unlevered returns • Meanwhile, MUSA’s differentiated formats in front of Walmart continue to earn attractive unlevered returns 1200-Format Economics (unlevered) • FYE2014; 38 sites 208-Format Economics (unlevere
Slide 10: There is significant future growth potential alongside Walmart
There is significant future growth potential alongside Walmart • There is significant future growth potential alongside Walmart FYE2015E Site Count 1,303 2015E Site Builds 82 FYE2014 Site Count1 1,221 New Marketing • Area Potential Existing Marketing • Area Potential • (Including Pipeline) Cumulativ
Slide 11: Our site performance is underpinned by our ability to grow and diversify our merchandise mix
Our site performance is underpinned by our ability to grow and diversify our merchandise mix • $40 $35 $30 $25 $20 $15 $10 $5 $0 $160 $140 $120 $100 $80 $60 Merchandise • GM$ • (APSM) Cigarette Sales$ • (APSM) 2014 20.5 2013 19.9 2012 21.1 2011 20.2 2010 2009 17.2 MUSA Merchandise Gross Margins $ Pe
Slide 12: Our promotion innovations and cooler upgrades drive same-store sale growth
Our promotion innovations and cooler upgrades drive same-store sale growth • Promotion Innovations Expanded partner support for the fuel discount program • 8 manufacturers across 5 categories in 2014 with 11 manufacturers across 7 categories in 2015 • $1.8M in incremental vendor partner funding in 2
Slide 13: Cost leadership is essential for our business model
Cost leadership is essential for our business model • Examples of Cost Leadership Site Operating Expenses • Beat inflation on per site operating costs • Sustained our top-quartile safety record at 1.072 • Improved our customer satisfaction scores • Above Site Expenses • Reduced overhead costs per si
Slide 14: Driven to Perform Video in Progress
• Driven to Perform Video in Progress •
Slide 15: We are continuing to invest in our existing sites and capabilities
We are continuing to invest in our existing sites and capabilities • Overview of Our Refresh Program A significant part of our network is aged, 22% of the chain was 14 years or older at the close of 2014 • Our Refresh Program takes a proactive approach to maintenance that will not only allow us to s
Slide 16: Our Retail fuel strategy achieves high fuel margin dollars
Our Retail fuel strategy achieves high fuel margin dollars • $30 $45 $55 $50 $40 $35 $25 $20 Fuel • Margin $ • (APSM) Volume • K-Gal • (APSM) 2014 2013 2012 2010 2009 2011 MUSA Retail Fuel Net Margin $ Performance 2009 – 2014 Actual Fuel Strategy and Execution Focusing on the growing price-sensitive
Slide 17: PS&W supports Retail, securing low-cost supply while capturing incremental value
PS&W supports Retail, securing low-cost supply while capturing incremental value • • PS&W’s primary goal is to secure low-cost, ratable supply for Retail through a preferred mix of supply contracts and supporting capabilities • Creates additional value during periods when markets dislocate • PS&W co
Slide 18: We secure this low-cost supply consistently with a diverse supply mix
We secure this low-cost supply consistently with a diverse supply mix supported by unique capabilities • We secure this low-cost supply consistently with a diverse supply mix supported by unique capabilities 3rd Party Rack (spot) 8% 3rd Party • Contract 42% Proprietary • Supply 50% 2014 Supply Mix •
Slide 19: We took advantage of regional market dislocations to create incremental value
We took advantage of regional market dislocations to create incremental value for the company • We took advantage of regional market dislocations to create incremental value for the company Gulf Coast New York Harbor Group 3 Colonial Pipeline Murphy Terminals Illustrative $1.99/ gal $1.81/ gal Examp
Slide 20: At a micro level, we create additional value by taking advantage of local market dislocations
At a micro level, we create additional value by taking advantage of local market dislocations • At a micro level, we create additional value by taking advantage of local market dislocations Example: Gasoline Sourcing Options for El Dorado, AR El Dorado, AR Little Rock, AR Fort Smith, AR Shreveport,
Slide 21: Over time and in aggregate, PS&W provides positive contribution to MUSA
Over time and in aggregate, PS&W provides positive contribution to MUSA • Over time and in aggregate, PS&W provides positive contribution to MUSA Impact of Product Supply & Wholesale Contribution • Q1 – 2012 thru Q4 - 2014 1) Total contribution per quarter equals quarterly EBITDA contribution from P
Slide 22: Our PS&W capabilities enable our competitiveness and resilience to fuel margin volatility
Our PS&W capabilities enable our competitiveness and resilience to fuel margin volatility • Our PS&W capabilities enable our competitiveness and resilience to fuel margin volatility 25 5 20 0 15 10 3Q11 20.0 2Q11 19.9 1Q11 9.1 4Q10 7.4 3Q10 13.7 2Q10 16.1 1Q10 8.2 4Q09 3Q09 14.7 2Q09 8.1 1Q09 7.7 4Q
Slide 23: Resilience and growth are further supported by a strong balance sheet
Resilience and growth are further supported by a strong balance sheet • Resilience and growth are further supported by a strong balance sheet Achieved debt/EBITDA target of < 2.5x • Reached target of 45% debt/book cap • Reduced long-term debt by $70 million • Executed $50 million share repurchase an
Slide 24: We can continue to fund growth of our advantaged formats through operations
We can continue to fund growth of our advantaged formats through operations • $400 $350 $300 $250 $200 $150 $100 $50 $0 $450 Annual • ROACE After-Tax EBIT • ($M) 2014 2013 2011 2010 2009 2012 Note: Capital employed: average of beginning and ending balances for each year; capital employed = net PP&E
Slide 25: Our capital allocation priorities focus on Return on Equity
Our capital allocation priorities focus on Return on Equity • • Resilience • Support seasonal capital requirements • Sustain inherently volatile fuel margins • Growth • Support organic growth in 2015 and beyond • Accelerate raze/rebuild and refresh initiatives • Shareholder Returns • Paid off $150 m
Slide 26: We have set 2015 goals that build on our drive to perform
We have set 2015 goals that build on our drive to perform • Strategy 1: Grow Organically Strategy 2: Diversify Merchandise Mix Strategy 3: Sustain Cost Leadership Position Strategy 4: Create Advantage from Market Volatility Strategy 5: Invest for the Long Term Increase new sites opened by 60-80 plus
Slide 27: Our operating model generates more cash flow than our peers
Our operating model generates more cash flow than our peers • Our operating model generates more cash flow than our peers Source: Publicly available financials – 10Q ,10K, Call Transcripts, NACS • Note: CST’s figures are based on US operations only;. Operating expenses and SG&A were allocated betwee
Slide 28: Murphy USA is committed to create value for all its stakeholders
Murphy USA is committed to create value for all its stakeholders • • Distinctive strategy • Supporting strengths and capabilities • Delivering results against goals • Cash generating machine • Positioned for strong organic growth and shareholder returns Murphy USA is committed to create value for al
Slide 29: Driven to Perform Q & A
MURPHY USA Driven to Perform Murphy USA Inc.
Slide 30: Driven to Perform Murphy USA Analyst Day
• Driven to Perform Murphy USA Analyst Day Andrew Clyde, President and Chief Executive Officer • Mindy West, Chief Financial Officer • New York Stock Exchange • April 16, 2015