Murphy Usa Inc. · NYSE:MUSA
Murphy Usa — Investor Day (April 2014)
41 slides from Murphy Usa's investor day presentation, Apr 15, 2014
Slide 1: Murphy USA Analyst Day
=|. 83 nae BG * AT | <7 Murphy USA Analyst Day Andrew Clyde, President and Chief Executive Officer Mindy West, Chief Financial Officer New York Stock Exchange April 15, 2014 MURPHY USAy FUELED FOR GROWTH hey Murphy USA, Inc. 1 LAT
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 Murphy USA, Inc. Andrew Clyde, President and Chief Executive Officer Appointed President and Chief Executive Officer of Murphy USA on January 8, 2013 Led the successful separation and spin-off from Murphy Oil Corporation Instrumental in the reformulation of Murphy USA strategy and
Slide 4: 2013 Achievements and Results
2013 Achievements and Results Mindy West Executive Vice President and Chief Financial Officer Murphy USA, Inc. 4
Slide 5: 2013 was a year of major accomplishments for Murphy USA
2013 was a year of major accomplishments for Murphy USA Grow Organically * Opened 39 new Murphy USA and Murphy Express stores in 2013 * Established a pipeline of out lots and carve-outs with Walmart * Positioned to build 50-70 sites in 2014 2013 Accomplishments Diversify Merchandise Mix * Expanded n
Slide 6: Our 2013 financial results provide the fuel for future growth
Our 2013 financial results provide the fuel for future growth 2013 2012 2011 Fuel metrics Total retail gallons sold (billion) 3.800 3.797 3.715 Retail fuel gallons sold (per store month) 268,458 277,001 277,715 Retail fuel margin (cpg) 13.0 12.9 15.6 Retail fuel margin (per store month) $34,998 $35,
Slide 7: 2013 Operational Results
2013 Operational Results Andrew Clyde President and Chief Executive Officer Murphy USA, Inc. 7
Slide 8: Murphy USA has a clear strategy that builds on our strengths
Murphy USA has a clear strategy that builds on our strengths Murphy USA Strategy and Strengths Strategy 5: Invest for the Long Term Strategy 1: Strategy 2: Strategy 3: Strategy 4: Grow Diversify Sustain Cost Create Advantage Organically Merchandise Mix Leadership from Market Position Volatility Stre
Slide 9: Murphy USA has unique organic growth opportunities through our Walmart relationship
Murphy USA has unique organic growth opportunities through our Walmart relationship Murphy USA Strategy and Strengths Strategy 1: Strategy 2: Strategy 3: Strategy 4: Grow Diversify Sustain Cost Create Advantage Organically Merchandise Mix Leadership from Market Position Volatility Strength: Strategi
Slide 10: On Walmart Pads / Off Walmart Pad
• • • • • 986 1 987 • 971 2 973 992 33 1,025 • 996 52 1,048 1,001 1,099 • 1,003 1,128 1,015 1,165 • 1,021 1,203 On Walmart Pads Off Walmart Pad
Slide 11: At year end 2013, we had 1,087 small format sites located near Walmart Supercenters
At year end 2013, we had 1,087 small format sites located near Walmart Supercenters Walmart Supercenters and Murphy USA Network As of December 31, 2013 ee Southwest Region @ Existing Network-1,087 sites Note: Small format sites exclude 85 stores greater than 1400 sq ft Source: _ Murphy USA internal
Slide 12: We also have small format sites at Walmart Neighborhood Markets
We also have 31 small format sites at Walmart Neighborhood Markets Walmart Supercenters and Murphy USA Network As of December 31, 2013 ee *y, ° Southwest Region @ Existing Network -1,087 sites @ Existing Neighborhood Markets -31 sites Note: Small format sites exclude 85 stores greater than 1400 sq f
Slide 13: Our current growth pipeline includes locations in front of Supercenters
Our current growth pipeline includes 198 locations in front of Supercenters Walmart Supercenters and Murphy USA Network As of December 31, 2013 Southwest Region @ Existing Network - 1,087 sites @ Existing Neighborhood Markets - 31 sites @ Remaining Walmart “200” plus Express pipeline'— 198 sites Not
Slide 14: There remains an additional 1,204 Supercenters not covered in our core markets
There remains an additional 1,204 Supercenters not covered in our core markets Walmart Supercenters and Murphy USA Network As of December 31, 2013 Southwest Region @ Existing Network - 1,087 sites @ Existing Neighborhood Markets - 31 sites @ Remaining Walmart “200” plus Express pipeline'— 198 sites
Slide 15: Another Supercenters are located outside our core markets
Another 852 Supercenters are located outside our core markets Walmart Supercenters and Murphy USA Network As of December 31, 2013 ve _ . ie . . a - 3 - lee Southwest Region Midwest Region || Southeast Region Existing Network - 1,087 sites Existing Neighborhood Markets - 31 sites Remaining Walmart “2
Slide 16: Number of Sites
1,000 220 209 883 909 900 868 200 800 180 676 160 154 700 Number of Sites Number of Sites 140 600 120 500 93 100 400 349 80 300 60 200 40 22 100 20 13 0 0 2001 2004 2007 2010 2013
Slide 17: These formats generate attractive unlevered returns
These formats generate attractive unlevered returns 1200 Format Economics 2013 Performance; 38 sites in Portfolio 208 Format Economics 2013 Performance; 26 sites built 2010-2012 $K, ASPM $K, ASPM Fuel Contribution 38.3 Fuel Contribution 34.6 - Average volume, apsm - Average volume, apsm 274,232 - Av
Slide 18: Diversifying our merchandise mix is key to drive same store growth
Diversifying our merchandise mix is key to drive same store growth Strategy 1: Grow Organically Strength: Strategic & Complementary Relationship with Walmart Continue to build out the Walmart “200” sites in core markets Maintain pipeline of Murphy Express locations near Walmart to accelerate coverag
Slide 19: Non-tobacco margin dollars continue to grow, helping to offset the decline in cigarette sales
Non-tobacco margin dollars continue to grow, helping to offset the decline in cigarette sales MUSA Merchandise Gross Margins $ Performance . . 2009 - 2013 Actual Merchandise Environment Merchandise Cigarette * Merchandise experiencing headwinds | ree Gen —— in Tobacco Hl Tobacco — 2011-2013 annual U
Slide 20: We tested a number of innovative promotions in 2013 that proved highly successful
We tested a number of innovative promotions in 2013 that proved highly successful for us and our partners MUSA Carbonated Soft Drink Market vs. MUSA Market vs. MUSA 20-0z Promotional Items Carbonated Soft Drink Packaged Beverage Average Sales $ per Store Month Percentage Change in Sales Percentage C
Slide 21: Murphy USA has a differentiated capability to upsell product
Murphy USA has a differentiated capability to upsell product Circle of Stars Program Example Promotion * Annual contest to drive top and bottom line performance by * Two candy items featured for month on a 2-for-1 special site, district, and division * Over 1.2 million units sold, leading to more th
Slide 22: Sustaining cost leadership is critical in a commodity retail business
Sustaining cost leadership is critical in a commodity retail business Strategy 1: Grow Organically Strength: Strategic & Complementary Relationship with Walmart Continue to build out the Walmart “200” sites in core markets Maintain pipeline of Murphy Express locations near Walmart to accelerate cove
Slide 23: We continue to innovate and execute to keep costs lean
We continue to innovate and execute to keep costs lean Murphy USA vs. Industry Average Costs Selective Store-Level Costs % Change 2012 vs. 2013 Average per Site Month Store-Level Operating Expenses (Excluding SG&A, Rent, and Environmental) SK Average per Site Month $41.1 $40.6 Wages & 3.4% Benefits
Slide 24: Our Product Supply & Wholesale capabilities enable us to take advantage of fuel market volatility
Our Product Supply & Wholesale capabilities enable us to take advantage of fuel market volatility Strategy 1: Grow Organically Murphy USA, Inc. Murphy USA Strategy and Strengths Strategy 2: Diversify Merchandise Mix Strategy 3: Sustain Cost Leadership Position 24 Strategy 4: Create Advantage from Ma
Slide 25: Our Retail fuel strategy is based on high volumes at low prices
Our Retail fuel strategy is based on high volumes at low prices MUSA Retail Fuel Net Margin $ Performance 2009 - 2013 Actual Fuel Volume Market Dynamics Margin $ K-Gal _» ; 5 ; ; (APSM) (APSM) * Vehicle miles driven offset by efficiency gains in vehicle technology $557 342 307 r 350 $45 4 r 250 * Fo
Slide 26: PS&W supports Retail, securing low-cost supply
PS&W supports Retail, securing low-cost supply while capturing incremental value in stable and volatile markets * Primary goal is to support Retail through a preferred mix of supply contracts and supporting capabilities * Creates additional value capture opportunities during periods when markets dis
Slide 27: Our Product Supply team secures product at prices equivalent to the local low rack price or better
Our Product Supply team secures product at prices that are equivalent to the local low rack price or better Four Rack Price Markers (at Equilibrium) CPG INDICATIVE VALUES 0.75- 1.25 2.00 - 3.00 2.50- 3.50 A A A C 7 NO \ Low Low2 Unbranded Branded Average Average | tow _—i| Unbranded Average Branded
Slide 28: Sourcing product from more distant racks can create a significant advantage
For example, sourcing product from more distant racks can create a significant advantage for unique periods of time Gasoline Sourcing Options for El Dorado, AR f Pipeline @ Fort Smith, AR Tulsa, OK (GRP 3) \ \ Advantage \ Product | Transport- | Laid in | over Local \ Terminal Cost ation Cost Supply
Slide 29: Each quarter tends to have its own unique supply dynamics
Each quarter tends to have its own unique supply dynamics Refining Margins/Utilization 2013 Q3 Fuel Supply Trends 2013 Q3 Trends 2013 Q4 Trends Relatively high, reflecting in higher utilization rates Return to normal margin and utilization levels (lower than Q3) Forward Market In backwardation, crea
Slide 30: Over time, PS&W can make a significant impact to the overall fuel margin
Over time, Murphy USA has demonstrated PS&W can make a significant impact to the overall fuel margin Impact of Product Supply & Wholesale Contribution Q1 - 2012 thru Q4- 2013 38 A 4 ° 24 31 3° 10 304 201 Gi RNs 8 . Contribution 19 | 0.4 5 = PS&W Gross Margin ($MM) 0. a= a PS&W Costs/Other -10 4 -20
Slide 31: 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
25 20 15 10 5 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
Slide 32: Investing for the Long Term
Investing for the Long Term Mindy West Chief Financial Officer ’ eee eee eee e eee ee eee eee Murphy USA, Inc. 32 te “f
Slide 33: Murphy USA is focused on creating long-term value for our investors
Murphy USA is focused on creating long-term value for our investors Murphy USA Strategy and Strengths Strategy 5: Invest for the Strategy 1: Strategy 2: Strategy 3: Strategy 4: Grow Diversify Sustain Cost Create Advantage Long Term Organically Merchandise Mix Leadership from Market Position Volatili
Slide 34: Capitalization and credit metrics, December 31, 2013
• • December 31, 2013 As Adjusted • Cash and equivalents $294,741 Debt Outstanding • $450mm ABL Revolving Credit Facility due 2018 -- (1) • $150mm FILO Term Loan Facility due 2016 70,000 New Senior Unsecured Notes due 2023 $491,578 Total Debt 1 $561,578 Total Stockholders' Equity 656,336 Total Book
Slide 35: We are well positioned to fund growth largely through earnings
We are well positioned to fund growth largely through earnings MUSA Return on Average Capital Employed (ROACE) Performance All sites - excludes ethanol business and certain corporate costs 2009 to 2013 Actual Annual After-Tax EBIT ROACE ($MM) —®— 27% 7 209 r $250 24% 4 196 », J + $200 21% 147 18% +
Slide 36: Our Board of Directors has been actively engaged in discussing priorities since before the spin
Our Board of Directors has been actively engaged in discussing priorities since before the spin * Resilience — Support seasonal capital requirements — Sustain inherently volatile fuel margins * Growth — Support site level expansion in 2014 and beyond — Accelerate raze and rebuild initiatives * De-le
Slide 37: 2014 Goals and Objectives
2014 Goals and Objectives Andrew Clyde President and Chief Executive Officer ’ eee eee eee e eee ee eee eee Murphy USA, Inc. 37 te “f
Slide 38: Our goals for 2014 and beyond are tied to our strategy
Our goals for 2014 and beyond are tied to our strategy Grow Organically * Build 50-70 sites per . year at target returns or better Sustain year-on-year fuel performance leveraging Walmart fuel discount program Supplement new site growth with focused raze and rebuild program and maintenance capital M
Slide 39: Appendix
Appendix te eee eee eee e eee ee eee eee Murphy USA, Inc. 39 “f
Slide 40: MUSA Income from Continuing Operations
MUSA Income from Continuing Operations Selected Income Statement Line Items Years Ended December 31 ($000) Fuel Contribution (Marketing) 550,362 556,669 625,683 Merchandise Contribution 281,836 288,706 263,700 Total 832,198 845,375 889,383 Operating Expenses (Marketing) 460,475 447,102 433,821 SG&A
Slide 41: MUSA Non-GAAP Reconciliation
MUSA Non-GAAP Reconciliation Adjusted EBIT and EBITDA The Company defines Adjusted EBIT as income from continuing operations plus income taxes, net interest expense, impairment of assets, and accretion expense. The Company also defines Adjusted EBITDA as income (loss) and comprehensive income (loss)