Murphy Usa Inc. · NYSE:MUSA
Murphy Usa — Raymond James 38th Institutional Investors Conference (March 2017)
27 slides from Murphy Usa's conference presentation, Mar 6, 2017
Slide 1: Raymond James 38th Institutional Investors Conference
Raymond James 38th Institutional Investors Conference Orlando, FL ● March 6, 2017
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: Murphy USA has a proven and differentiated strategy
Murphy USA has a 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, 2017 • Our strategy to compete has five coherent 200 elements: Murphy USA Inc. – Grow Organically S
Slide 4: We compete against three distinct retail models
We compete against three distinct retail models Hypermarkets Big-Box C-Stores Supermarkets and mass merchants with Large stores with Murphy USA Casey’s small-box forecourts comprehensive offerings Speedway including food offer Kroger Strength: Low fuel prices Sheetz and integrated loyalty Safeway Qu
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 Details • 67 new sites Organic 5% unit growth • 10 Raze-and-Rebuilds Growth • 300 refresh; 180 super coolers * • +1.7% volume growth Fuel 5% all-in contribution • 15.4 cpg total margin growth Contri
Slide 6: Disciplined growth continues through Express stores
Organic Growth Disciplined growth continues through Express stores Estimated New Store Growth Raze & Rebuild 2015 - 2019 New Stores 74 77 1 70 70 70 10 20 Up to 20 Up to 20 73 67 45 to 50 Up to 50 Up to 50 2015a 2016a 2017e 2018e 2019e Estimated Year End Total Site Count (excluding Raze & Rebuild) T
Slide 7: Reinvestment programs enhance existing network quality
Organic Growth Reinvestment programs enhance existing network quality Raze and Rebuild Program • 80-100 potential sites have been identified - 11 sites completed through 2016 - Program success translating to 20 stores in 2017 • Kiosks replaced with 1,200 sq ft stores along with more dispensers and i
Slide 8: Advantaged supply mix reflects differentiated capabilities
Fuel Contribution Advantaged supply mix reflects differentiated capabilities 2016 Supply Mix Definition Capabilities Required Percent of Retail Volumes • Access to line space / terminals 3rd Party Rack Proprietary Purchase and •• RIN capture through blending (spot) 8% Supply deliver products •
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 7,260 3,067 6,094 2,216 4,195 1,859 1,366 1,025 1,952 2,060 MUSA CASY ATD CST Speedway MUSA CASY ATD CST Speedway (US) (US) (US) (US) Ave
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 LT Guidance (low) LT Guidance (high) $737 18.5 $106 $647 16.4 2.7 $624 $616 16.0 15.4 1
Slide 11: MUSA's fuel margins are less volatile than its peers
Fuel Contribution MUSA’s fuel margins are less volatile than its peers Average and Standard Deviation Standard Deviation of Total Fuel Margins of Total Fuel Margins Last 16 Fiscal Quarters Last 16 Fiscal Quarters 6.6 Average Standard Company (cpg) Deviation Before Payment Fees 3.2 3.4 MUSA 16.3 2.7
Slide 12: Retail margin changes from price swings dampened by PS&W
Fuel Contribution Retail margin changes from price swings dampened by PS&W Combined Contribution from Retail Quarterly Margin Contribution by Driver And PS&W Inventory Gain/Loss 2014-2016 2014-2016 CPG CPG Retail Margins Product Supply Inventory Gain/Loss US Gulf Coast Spot Price (right) 18 25 300 1
Slide 13: Similarly, spot-to-rack margin changes offset by RINs
Fuel Contribution Similarly, spot-to-rack margin changes offset by RINs Combined Spot-to-Rack Plus Spot-to-Rack vs. RIN Contribution ($MM) RIN Contribution ($MM) 2014 - 2016 122 110 181 Spot-to-Rack 92 RINs 118 93 29 -26 -71 2014 2015 2016 2014 2015 2016 Average $0.48 $0.54 $0.82 RIN Price Murphy US
Slide 14: We actively make our business more competitive
Fuel Breakeven We actively make our business more competitive Fuel Breakeven Requirement CPG (2012 – 2016) 3.4 2.8 2.8 2.5 1.6 2012 2013 2014 2015 2016 Fuel (Merchandise Margin - Site Opex - Allocated Field G&A) = Breakeven Fuel Gallons Note: Site OPEX excludes credit card fees; G&A and Other Costs
Slide 15: Merchandise margins and contribution expanding
Fuel Breakeven Merchandise margins and contribution expanding Merchandise APSM GM ($K) Drivers 2012 – 2016 Core-Mark Benefits 30 Non-Tobacco • New distribution relationship in Tobacco 2016 provided step-change margin 25 improvement 22.5 21.1 20.4 21.3 19.9 20 Super Coolers 7.3 8.8 9.2 • Super Cooler
Slide 16: Operating costs declining, bucking the industry trend
Fuel Breakeven Operating costs declining, bucking the industry trend Site Opex APSM ($K) 2012 – 2016 45 MUSA 42.5 40 Industry 38.2 36.1 35 33.7 30 25 22.4 22.3 21.7 22.1 21.4 20 15 10 5 0 2012 2013 2014 2015 2016 Note: MUSA Site OPEX excludes credit card fees; Industry Site Opex sourced from NACS: S
Slide 17: SG&A costs scaling with growth
Corporate Costs SG&A costs scaling with growth Total SG&A Expenses ($MM) SG&A Per Store* ($K) (Excluding Stock-based Compensation) (Excluding Stock-based Compensation) 2014 – 2016 2014 – 2016 120 86 90 109 113 81 2014 2015 2016 2014 2015 2016 Major Initiatives • Talent acquisition and leadership dev
Slide 18: Capital allocation balances growth and shareholder returns
Shares Outstanding Capital allocation balances growth and shareholder returns Annual Capital Expenditure ($MM) Share Repurchase Activity ($MM) Total 2014 - 2016 = $619MM Total 2014 - 2016 = $623MM Corporate $323 Retail Maintenance $275 $264 20 Retail Growth 25 $248 $216 65 38 Up to 13 28 $177* $139
Slide 19: Balance sheet supported strategic capital allocation in 2016
Shares Outstanding Balance sheet supported strategic capital allocation in 2016 Capitalization ($MM) 2016 Highlights As of December 31st • Announced up to $500 million share As Adjusted 2015 2016 repurchase authorization through 2017 based on increased capital Cash and equivalents1 $172 $154 allocat
Slide 20: Balance sheet remains highly flexible
Shares Outstanding Balance sheet remains highly flexible MUSA Debt / EBITDA Ongoing Strategy As of December 31, 2016 • Sustain debt / EBITDA ratio prudently below 2.5x Target < 2.5x target to maintain business model resilience and restricted payment flexibility 0.9 Remaining Capacity • Add appropria
Slide 21: Murphy USA shareholders have a bright future ahead
Murphy USA shareholders have a bright future ahead Disciplined Capital Allocation Balance of organic growth and shareholder returns Modest Commitment to Organic Unit Share Repurchase Growth Actively manage High return on capital opportunity from unit growth versus valuation mismatch paying M&A premi
Slide 22: Appendix
Appendix Murphy USA Inc. 22
Slide 23: Murphy USA's Management Team
Murphy USA’s Management Team 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 initi
Slide 24: Our 2017 guidance reflects continuous improvement
Our 2017 guidance reflects continuous improvement 2016 Results 2017 Guidance Retail fuel gallons (Billions) 4.2 4.3 to 4.5 Retail gallons (APSM) 259.1 255 to 265 Retail fuel unit margin (cpg) 11.6 N/A Total Fuel Contribution (cpg) N/A 14 to 16 Total Merchandise Sales (Millions) $2,339 $2,400 to $2,4
Slide 25: MUSA's business strategy generates attractive returns
MUSA’s business strategy generates attractive returns Total EBITDA ($K) Per Average Store Return on Invested Capital (ROIC) (Average of Past 3 Fiscal Years) (Average of Past 3 Fiscal Years) $306 15.9% $253 13.1% $230 $210 10.7% 10.7% MUSA CASY ATD* CST MUSA CASY ATD CST * Excludes franchised stores
Slide 26: ROIC calculations – supporting data
ROIC calculations – supporting data MUSA CASY ATD CST (excluding CAPL) Fiscal Year 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 Inventory 184 136 138 205 197 205 817 828 848 237 208 209 Receivables 153 156 157 28 23 26 1,416 1,265 1,726 158 117 138 Prepaid Expenses & Other 25 41 12 17
Slide 27: USA and Express locations achieve similar unlevered returns
USA and Express locations achieve similar unlevered returns 2015 Performance From Stores in Top 3 Market Clusters USA 1200 Sq Ft Format Economics Express 1200 Sq Ft Format Economics $K, APSM $K, APSM Fuel Contribution 46.0 Fuel Contribution 53.3 Merchandise Contribution 25.4 Merchandise Contribution
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