Murphy Usa Inc. · NYSE:MUSA
Murphy Usa — Raymond James 37th Annual Institutional Investors Conference 2016
24 slides from Murphy Usa's conference presentation, Mar 8, 2016
Slide 1: Raymond James 37th Annual Institutional Investors Conference
Raymond James 37th Annual Institutional Investors Conference March 8th 2016 Presenter: Andrew Clyde President and Chief Executive Officer Murphy USA Inc.
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 on January 8, 2013 • Leads the development and execution of our strategy for creating long-term shareholder value • Oversees corporate-wide strategic initiatives ena
Slide 4: Murphy USA has a proven and differentiated strategy
Murphy USA has a proven and differentiated strategy • Murphy USA is positioned as a low-cost fuel and MUSA Relative Stock Performance convenience retailer in a highly competitive market Indexed From Spinoff to March 4, 2016 200 MURPHY USA INC. • Our strategy to compete has five coherent S&P 500 INDE
Slide 5: We view value creation through a simple formula
We view value creation through a simple formula MUSA Value Creation Drivers Key Levers Illustrated • Unit growth Organic • Site selection Growth • Network upgrades * • Fuel market share growth Fuel • Advantaged product supply Contribution • Margin capture through volatility + • Merchandise margin gr
Slide 6: Unit growth continues with Express stores
Unit growth continues with Express stores Estimated Build Program by Format Raze & Rebuild 2015 - 2019 Express 74 80 USA 1 10 70 70 70 17 20 20 20 20 56 42 50 50 50 8 2015 2016 2017 2018 2019 Estimated Year End Total Site Count (excluding Raze & Rebuild) 1,335* 1,405 1,455 1,505 1,555 * Actual Murph
Slide 7: USA and Express locations achieve similar unlevered returns
USA and Express locations achieve similar unlevered returns USA 1200 Sq Ft Format Economics Express 1200 Sq Ft Format Economics Pro Forma Pro Forma $K, APSM $K, APSM Fuel Contribution 46.0 Fuel Contribution 53.3 Merchandise Contribution 25.4 Merchandise Contribution 26.5 Total Contribution 71.3 Tota
Slide 8: Re-investment opportunities provide incremental growth
Re-investment opportunities provide incremental growth Raze and Rebuild Program Refresh Program • First Raze and Rebuild site completed in 2015 • Refresh Program initiated to revitalize aging sites • Kiosks replaced with 1,200 sq ft stores along • In addition to updating and standardizing the look w
Slide 9: Refresh program enhances the customer experience
Refresh program enhances the customer experience Upgrades include: Brighter more distinctive canopy to enhance visual aesthetics, restroom upgrades, brick veneer added for better look and durability, dispenser fascia upgrades. LED lights, Super Coolers and other programs further enhance the experien
Slide 10: Fuel volume growth occurs largely through new store additions
Fuel volume growth occurs largely through new store additions Murphy USA Fuel Volume vs. Aggregate Market Demand 2005 - 2015 Cumulative Fuel Growth % 60 MUSA Total Fuel Volume 57% MUSA APSM Fuel Volume U.S. Fuel Demand 40 20 0% 0 -1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -20 Source: EIA
Slide 11: Advantaged cost of supply reflects differentiated capabilities
Advantaged cost of supply reflects differentiated capabilities 2015 Supply Mix Definition Capabilities Required Percent of Retail Volumes 3rd Party Rack Purchase and • Access to line space / terminals (spot) 8% Proprietary deliver products • RIN capture through blending Supply purchased in • W
Slide 12: Margin capture follows underlying price volatility
Margin capture follows underlying price volatility Fuel Market Structure Q1 2012 – Q4 2015 4.00 1 Retail 2 3.50 Gulf Coast Blended CBOB 3.00 Fuel Price 2.50 ($) 2.00 1.50 1.00 Sep-14 Jul-12 Sep-12 Nov-12 Jan-13 Jul-13 Sep-13 Nov-13 Jul-14 Nov-14 Jul-15 Sep-15 Nov-15 Jan-12 Jan-14 Jan-15 Jan-16 Mar-1
Slide 13: PS&W plus RINs consistently adds to total fuel contribution
PS&W plus RINs consistently adds to total fuel contribution Fuel Margin Total Fuel Margin CPG ($MM) Product Supply & Wholesale +RINs Retail Product Supply & Wholesale + RINs Fuel Breakeven Retail $737 18.5 $106 17.2 $639 $624 16.7 $616 2.7 $60 1.6 14.9 $538 $128 $101 14.2 3.7 2.4 $47 1.2 $630 CPG1 1
Slide 14: Since the spin we have become more competitive
Since the spin we have become more competitive Fuel Breakeven Requirement CPG (2011 – 2016E) 3.4 2.7 2.8 2.8 2.5 < 2.0 2011 2012 2013 2014 2015 2016E Fuel (Merchandise Margin - Site Opex - Allocated Field G&A) = Breakeven Fuel Gallons Note: Site OPEX excludes credit card fees; G&A and Other Costs in
Slide 15: Merchandise margins expand with enhanced product mix
Merchandise margins expand with enhanced product mix Merchandise APSM GM ($K) 2011 - 2015 30 Non-Tobacco Tobacco 25 21.1 20.4 21.3 20.2 19.9 20 6.5 7.3 8.8 7.5 8.0 15 10 13.7 13.8 12.4 12.4 12.5 5 0 2011 2012 2013 2014 2015 Non-Tobacco 32.2% 34.6% 37.7% 39.3% 41.3% % of GM$ Merchandise 12.5% 13.5% 1
Slide 16: Step-level improvements support future margin growth
Step-level improvements support future margin growth Core-Mark Benefits Super Coolers • Implemented a 5-year contract with a more • Super Coolers enhance the beverage offering transparent, fixed rebate structure outside the kiosk, more than doubling the product capacity • Store margins improve throu
Slide 17: Super coolers improve the customer offer
Super coolers improve the customer offer Smaller, Less Efficient Broad Variety, Increased Selling Space Murphy USA Inc. 16
Slide 18: Cost leadership remains the hallmark of a low price retailer
Cost leadership remains the hallmark of a low price retailer Site Opex APSM ($K) Site Operating Expense Levers 2012 – 2016E 30 • Optimizing labor hours through standardizing operating procedures 25 21.7 22.1 22.4 22.3 • Providing clear job roles and 21.6 20 responsibilities to optimize cohorts • Red
Slide 19: Scaling systems and processes enable SG&A opportunities
Scaling systems and processes enable SG&A opportunities Overview of Advanced System and Process Initiative • Addressing legacy systems and processes originally intended for an integrated oil and gas company • Overarching goals: – Create process efficiencies, reduce manual interventions, and free up
Slide 20: Non-core assets have been monetized efficiently
Non-core assets have been monetized efficiently Gross Proceeds Non-Core Asset Sale Date ($MM) North Dakota Crude September 30, 2013 6 Gathering System Hankinson Ethanol Plant December 19, 2013 173 Hereford Ethanol Plant November 12, 2015 98 Pursuing like- kind exchange treatment CAM Pipeline Februar
Slide 21: Capital allocation balances growth and shareholder returns
Capital allocation balances growth and shareholder returns Annual Capital Expenditure ($MM) Share Repurchase Activity ($MM) 2014 - 2017 2014 - 2017 Corporate Up to Retail Maintenance $275 $500 Retail Growth 31 $216 42 13 28 $139 $248 8 18 202 175 113 $52 2014 2015 2016E 2014 2015 2016 - 2017 2014 20
Slide 22: Balance sheet flexibility supports future capital allocation
Balance sheet flexibility supports future capital allocation Capitalization ($K) As of December 31, 2015 As Adjusted • Maintain debt / EBITDA target prudently below < 2.5x Cash and equivalents1 $103,335 Debt Outstanding $450mm ABL Revolving Credit Facility • Repaid initial $150 million term loan fro
Slide 23: Taken together, our efforts support robust 2016 guidance
Taken together, our efforts support robust 2016 guidance 2015 Guidance 2015 Actual 2016 Guidance Retail fuel gallons (Billions) 4.1 - 4.3 4.12 4.2 to 4.4 Retail gallons (APSM) 267 - 273 267.9 265 to 270 Retail fuel unit margin (cpg) 9.0 - 13.0 12.5 12.25 to 13.25 Product Supply & Wholesale contribut
Slide 24: Murphy USA has a bright future ahead for shareholders
Murphy USA has a bright future ahead for shareholders • Our proven strategy, our resilient business model and our commitment to shareholder returns remain unchanged • The recently announced independent growth plan provides clarity on how we choose new sites and how we allocate capital between growth
Murphy USA — Raymond James 37th Annual Institutional Investors Conference 2016 on 6ix