Slide 1: Jefferies
Jefferies June 2019 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 Jan 2013 • Leads development and execution of strategy for creating long-term shareholder value • Oversees corporate-wide strategic initiatives enabling Murphy USA’s
Slide 4: Murphy USA’s strategy since 2013 – Winning at our game
Murphy USA’s strategy since 2013 – Winning at our game Strength Strategy Overarching Objectives Strategic Increase productivity of existing stores Relationship with Grow Organically Walmart to grow competitive advantage Winning with Build/rebuild assets where MUSA has Diversify Value-Oriented Mercha
Slide 5: MUSA creates value through a simple formula – and executes
MUSA creates value through a simple formula – and executes MUSA Value Creation Drivers 2013 vs 2018 Go-forward 21% total unit growth Modest Unit Growth Organic • 271 new sites • 40-50+ high-return projects Growth • 59 Raze & Rebuilds per year • Format optimization * 10% total contribution $ growth F
Slide 6: Value creation translating to shareholder returns
Value creation translating to shareholder returns MUSA Share Price By Year Average, Min, Max Drivers of Share Price 2019 YTD as of 6/13/2019 $100 2013 2018 %Δ $89 $90 $86 EBITDA $340 $412 21% $81 $79 $81 $80 $73 $76 Shares 46.8 32.3 (31%) $69 Outstanding $70 $70 $74 $67 EV/EBITDA Multiple 6 9 50% $6
Slide 7: Future EBITDA has a runway well beyond $400M
Future EBITDA has a runway well beyond $400M MUSA Adjusted EBITDA Key Sources of 2013 to 2018 Future Growth Annual, in millions Productivity drivers: . 446 • Retail price optimization will attract 400 406 412 customers to our stores • Outstanding customer service and 337 343 Murphy Drive Rewards wil
Slide 8: Significant future opportunity to grow shareholder value
Significant future opportunity to grow shareholder value Examples of MUSA Opportunity Set for Store Productivity Past Present Future • CoreMark contract • Scan based trading for • Item level inventory to Doing general merchandise drive computer assisted Things ordering Differently • Store labor • Wa
Slide 9: Murphy Drive Rewards is foundational
Murphy Drive Rewards is foundational MDR Engagement as of June 14, 2019 Rating: 4.8 of 5.0 Reviews: 83.9K Rank: Presently #47 Shopping App; As high as #10 Participants: 8.2 Million Enrolled members: 1.8 Million Age Verified Members: 1.1 Million Competitor Approach . MDR Approach . General approach:
Slide 10: Growing customer segment
Growing customer segment Who are MUSA’s Customers? What Are Their Challenges? • Finding value with scarce disposable MUSA High school or less income; start the year under water • Costs of household goods and services rising faster than wage growth QuikTrip Speedway Shell Ratio of Chevron Where Do Th
Slide 11: Future portfolio changes
Future portfolio changes Approach Considerations • Limited good and available locations in attractive Walmart Supercenter Halo markets where we can win with small store format • Remaining states unattractive from demand or regulatory standpoint • Building pipeline for 30-40+ locations per year in mo
Slide 12: The 2,800 format offers a long runway of high return sites
The 2,800 format offers a long runway of high return sites Format Performance Express & USA, Unlevered Returns, FYE18 # of Sites Fuel Volume CPG Merch Sales GP% EBITDA ROIC% FBE Kiosk 761 233,822 16.5 128,983 16.0% 33,286 23.9% 0.40 243 / 270 129 201,505 16.1 125,260 15.3% 25,877 18.4% 1.06 543 / 59
Slide 13: Reinvestment programs enhance existing network quality
Reinvestment programs enhance existing network quality Raze and Rebuild Program • 59 sites completed through 2018 • Kiosks replaced with 1200/1400 square foot stores along with more dispensers and increased fuel offer • Given the premium locations, we estimate per site unlevered IRR’s between 15% an
Slide 14: Higher sustainable cash flows to create future optionality
Higher sustainable cash flows to create future optionality Operating Cash Flow Net Debt (MM) As of March 31, 2019 2013 357 Term Loan $ 68 Bonds: 2014 306 2013 6.000% 495 2017 5.625% 296 2015 216 Total Debt $859 Less Cash < 180> 2016 337 Net Debt $679 . Leverage Ratio**: 2.0x 2017 284 * 2018 399 Aver
Slide 15: Capital allocation balances growth and capital returns
Capital allocation balances growth and capital returns Capital Allocation ($MM) Capital Allocation 2014 – 2018 2014 – 2018 $2,060 Retail Growth Capital $587 $973 $464 $480 $323 39% $206 $338 47% $248 $144 $191 $1,087 $52 $264 $274 $216 $194 $139 Share 8% Repurchases 6% Retail 2014 2015 2016 2017 201
Slide 16: Relative valuation drivers
Relative valuation drivers 2013 Drivers of MUSA 2018 Drivers of MUSA Drivers of QSR Multiple Growth Multiple Peer Discount Public Peers Premium QSRs • Post spin credibility • Less clear line of sight • Greater exposure 6x and consistent strategy and 9x to earnings growth 11x to food service 15x mess
Slide 17: Winning at our game lets all our stakeholders win
Winning at our game lets all our stakeholders win Stakeholders What MUSA Delivers Customers • Commitment to deliver exceptional value in products they choose to buy • Trusted brand to ensure guaranteed products, safe facilities and secure personal information Suppliers • Commitment to share growth i
Slide 18: Appendix
Appendix Murphy USA Inc. 18
Slide 19: 2019 guidance
2019 guidance 2018 Guidance 2018 Actual 2019 Guidance Range Results Range Organic Growth New Stores Up to 30 26 15-20 Raze and Rebuilds Up to 25 27 20-25 Fuel Contribution Total fuel contribution ($ Millions) $575 to $700 $686 Not provided Annual retail volume (Billion gallons) 4.1 to 4.3 4.2 Not pr
Slide 20: Non-GAAP Adjusted EBITDA Reconciliation
Non-GAAP Adjusted EBITDA Reconciliation Year Ended December 31, (Millions of dollars) 2013 2014 2015 2016 2017 2018 Net Income $ 235.0 $ 243.9 $ 176.3 $ 221.5 $ 245.3 $ 213.6 Income taxes 100.1 116.4 80.7 130.5 (5.2) 60.3 Interest expense, net of interest income 13.4 36.4 31.4 39.1 45.4 51.4 Depreci
Slide 21: Non-GAAP Adjusted EBITDA Reconciliation
Non-GAAP Adjusted EBITDA Reconciliation For purposes of this reconciliation, the midpoint of a range for each reconciling item was used, and therefore actual results for each of these reconciling items is expected to be higher or lower than the amounts shown above. The size of the ranges varies base