Slide 1: Investor Presentation
Investor Presentation May 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: 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 4: Creating value by executing a simple formula
Creating value by executing a simple formula MUSA Value Creation Drivers 2013 – 2018 Highlights Increased total stores by 21% . Organic • 271 new sites Growth • 59 Raze & Rebuilds * Grew fuel contribution margin by 10% . Fuel • 11% total volume growth Contribution • 16.3 cpg average total margin + S
Slide 5: Value creation translating to shareholder returns
Value creation translating to shareholder returns MUSA Share Price By Year Average, Min, Max Drivers of Share Price $100 2013 2018 %Δ $89 $90 $86 EBITDA $340 $412 21% $81 $79 $80 $80 $73 $76 Shares Outstanding 46.8 32.3 (31%) $69 $74 $70 $70 $67 EV/EBITDA Multiple 6 9 50% $60 $61 $63 $61 $50 $54 $46
Slide 6: Common investor questions
Common investor questions Strategic Objective . Common Questions . • Are there more opportunities to increase Increase Store store level performance? Productivity to Grow Competitive Advantage • Is it enough to offset industry headwinds and matter in the long run? • Where does MUSA have the “right t
Slide 7: 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 8: Example: Murphy Drive Rewards
Example: Murphy Drive Rewards MDR Engagement as of April 29, 2019 Rating: 4.8 of 5.0 Reviews: 45.9K Rank: Presently #29 Shopping App; As high as #10 Participants: 6.4 Million Enrolled members: 1.4 Million Age Verified Members: 850 Thousand Competitor Approach . MDR Approach . General approach: • Dis
Slide 9: 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 10: Industry headwinds: regulations and substitution
Industry headwinds: regulations and substitution Regulatory Headwinds Substitution • CAFE standards • E15/E85 Fuel • EV mandates in ZEV states • Electric vehicles • Lowest legal state pricing • Ride hailing/ride sharing • Threats to ban c-stores from e-cigs • E-cigs Tobacco • FDA challenging menthol
Slide 11: More favorable markets for fuel demand
More favorable markets for fuel demand • Updates to drivers of fuel demand in the US and MUSA markets project the market for transportation fuel will remain flat to slightly improving over the next decade for MUSA – CAFE standards for 2021 locked in while vehicle miles travelled (VMT) growing under
Slide 12: Fuel demand in MUSA markets – flat to increasing
Fuel demand in MUSA markets – flat to increasing VMT still growing: Gross Domestic • 2018 GDP of 2.9% higher than Vehicle Miles Product estimates made in 2017 Traveled • Fuel prices remain range-bound by Fuel Prices crude Fuel Demand: CAFE Regulations Fuel Economy decelerates: • Recent CAFE regulati
Slide 13: Light truck/SUV usage accelerating with aging fleet
Light truck/SUV usage accelerating with aging fleet % of new On-the-road auto sales car mix 100% 50% Total Car Mix 80% New Light Trucks Mix 49% 50% 52% 56% 45% 60% 63% New Cars Mix 68% 60% 40% New EV Cars Mix 40% Record year for EVs 51% 49% 47% 44% 35% 20% 40% results in 1.9% mix of 36% 30% units so
Slide 14: EV sales follow forecasts – ZEV “quotas” driving OEMs
EV sales follow forecasts – ZEV “quotas” driving OEMs ZEV States & 2016 Top Ten States by EV Sales Forecasted EV Sales Penetration 2018-2027 10.8% 11% 1.1% DC 1.0% ZEV States 10% 1.0% Total US 8.8% 0.3% 9% Non-ZEV States 8% 0.4% 0.4% 7% 0.5% 1.9% 6% 0.3% 5% 3.8% 3.8% 4% 3.2% 3% 0.9% 2% 1.5% 0.9% 1.0
Slide 15: Lots of EV headlines – including Plug In Hybrids
Lots of EV headlines – including Plug In Hybrids EVs are the Future Maybe, but “it’s going to be a while” General Motors – 20 BEV or PHEV Toyota – Toyota is planning no BEV models by 2023, profitable EVs by 2021. model but says hybrid’s will account for --- 15% of total sales by 2020. According to F
Slide 16: Ride hailing: tiny proportion of total passenger miles
Ride hailing: tiny proportion of total passenger miles 2016 US Passenger Miles by Mode of Transport Goldman Sachs 2017 Report • Ride hailing could grow 8x by 2030, primarily stealing share from rental cars 3,658B 150B 100% • Goldman analysts don’t anticipate AV cost savings being passed on to passen
Slide 17: Growing in declining categories and their substitutes
Growing in declining categories and their substitutes 12-month % Change Sales $ Margin $ Market Share Δ Tobacco Cigarettes -1.0% 2.5% -0.2% Smokeless 2.3% 1.4% -0.1% OTP 4.3% 4.3% -0.2% Vapor/E-Cig 40.7% 54.3% NA 0.10% -3.1% 0.0% Packaged CSDs Beverages Energy 14.5% 12.3% 0.6% Sports 15.4% 23.2% 0.2
Slide 18: Enhancing MUSA’s competitive advantage
Enhancing MUSA’s competitive advantage MUSA Fuel Breakeven NACS 4 Quartiles vs Margin Requirement MUSA FBE 3.2 2.6 2.3 1.3 1.2 0.8 2013 2014 2015 2016 2017 2018 Fuel Breakeven Cash = Store Opex + Marketing G&A – Merchandise Margin Margin Requirement Retail Fuel Volume MUSA FBE declining with store p
Slide 19: Increasing resilience to fuel price/margin volatility
Increasing resilience to fuel price/margin volatility MUSA Total Fuel Margin and FBE 2013 to 2018 20 18.5 18 16.4 16.4 16.2 16 14.9 15.4 14 12 10 CPG 8 6 3.2 4 2.6 2.3 1.3 1.2 0.8 2 0 -2 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Fuel Breakeven Margin (cpg) PS&W plus RIN Retail Margins Murphy U
Slide 20: Right to Win = Differentiation and Relevance to Customer
Right to Win = Differentiation and Relevance to Customer Keys to developing a Winning Retail Format Distinctive and Relevant Offer to Customers Traffic and Economics to Capabilities to Generate Return Support Offer on Capital Execution to Beat Competition Murphy USA Inc. 20
Slide 21: 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 22: High class problem – Cash Flow Machine
High class problem – Cash Flow Machine Operating Sources of Future Net Debt (MM) Cash Flow Growth As of December 31, 2018 • Achieving Zero Fuel Term Loan $ 72 2013 357 Breakeven Bonds: • Murphy Drive Rewards 2013 6.000% 495 2014 306 2017 5.625% 296 • Retail Pricing Excellence • Contribution from lar
Slide 23: 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 24: Capital allocation considerations
Capital allocation considerations • Organic growth is flexible based on opportunity – Building In-fill NTI pipeline for 30-40+ potential stores in 2020 and beyond – Developing strategic alternatives for non-urban sister store where MUSA has a right to win – Raze and rebuilds are flexible based on ca
Slide 25: 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