MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management's Discussion and Analysis" or "MD&A") is the Company's analysis of its financial performance and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes included in this Quarterly Report on Form 10-Q. The MD&A contains forward-looking statements and the Company does not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the Company's disclosures under "Forward-Looking Statements" and "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q.
For purposes of this Management's Discussion and Analysis, references to "Murphy USA", the "Company", "we", "us" and "our" refer to Murphy USA Inc. and its subsidiaries on a consolidated basis.
Management's Discussion and Analysis is organized as follows:
•Executive Overview - This section provides an overview of our business and the results of operations and financial condition for the periods presented. It includes information on the basis of presentation with respect to the amounts presented in the Management's Discussion and Analysis and a discussion of the trends affecting our business.
•Results of Operations - This section provides an analysis of our results of operations, including the results of our operating segment for the three months ended March 31, 2026 and 2025.
•Capital Resources and Liquidity - This section provides a discussion of our financial condition and cash flows as of and for the three months ended March 31, 2026 and 2025. It also includes a discussion of our capital structure and available sources of liquidity.
•Critical Accounting Policies - This section describes the accounting policies and estimates that we consider most important for our business and that require significant judgment.
Executive Overview
The following MD&A is intended to help the reader understand our results of operations and financial condition. This section is provided to supplement, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to these financial statements contained elsewhere in this Quarterly Report on Form 10-Q, this MD&A section and the consolidated financial statements in our Annual Report on Form 10-K. Our Form 10-K contains a discussion of matters not included within this document, such as disclosures regarding critical accounting policies and estimates, and contractual obligations.
Our Business
The Company owns and operates a chain of retail stores that market gasoline and other merchandise under the brand names of Murphy USA® and Murphy Express, most of which are located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United States. We also have a mix of convenience stores and retail gasoline stores in New Jersey and New York that operate under the QuickChek® brand, comprising our Northeast region. At March 31, 2026, we had a total of 1,803 Company stores in 27 states, of which 1,655 were Murphy branded and 148 were under the QuickChek brand. We also market petroleum products to unbranded wholesale customers through a mixture of Company-owned and third-party terminals.
Basis of Presentation
Murphy USA was incorporated in March 2013, and until the separation from Murphy Oil Corporation was completed on August 30, 2013, it had not commenced operations and had no material assets, liabilities or commitments. The financial information presented in this Management's Discussion and Analysis is derived from the consolidated financial statements of Murphy USA Inc. and its subsidiaries for all periods presented.
Trends Affecting Our Business
Our operations are significantly impacted by the gross margins we receive on our fuel and merchandise sales. The fuel gross margins are commodity-based, change daily and are volatile. While we generally expect our volumes and gross margins to remain stable in a normalized environment, they can change rapidly due to many factors. These factors include, but are not limited to, the price of refined products, geopolitical events that disrupt the global supply including the impact of potential tariffs, overall demand and prices of crude oil, interruptions in our fuel and merchandise supply chain caused by severe weather or pandemics, the effects from pandemics such as travel restrictions and stay-at-home orders imposed during a pandemic, new or changing legislation around nicotine products and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures for an extended period of time, cyber-attacks against the Company or our vendors, changing economic conditions that lower consumer purchasing power such as inflation, and competition in the local markets in which we operate.
The cost of our main fuel products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States. Historically, a rising price environment for crude oil increases the Company's cost for wholesale fuel products purchased, which in turn increases retail fuel prices. Rising prices can cause consumers to reduce discretionary fuel consumption, however our low-price model can also serve as a hedge to draw new customers which can offset the potential loss of discretionary volumes. In Q1 2026, WTI Spot prices experienced increased volatility with prices ranging from $56 per barrel to $105 per barrel with an average price of $73 per barrel in Q1 2026, compared to an average price of $72 per barrel in Q1 2025. Total fuel contribution (retail fuel margin plus fuel supply results which include Renewable Identification Numbers ("RINs")) was 35.0 cents per gallon ("cpg") in Q1 2026, compared to 25.4 cpg in Q1 2025.
Our revenues are impacted by the ability to leverage our diverse supply infrastructure in pursuit of obtaining the lowest cost of fuel supply available; for example, activities such as blending bulk fuel with renewable fuels (ethanol) to capture and subsequently sell RINs. Under the Energy Policy Act of 2005, the Environmental Protection Agency ("EPA") is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels. Obligated parties are required to demonstrate that they have met any applicable quotas by submitting a certain number of RINs to the EPA. RINs in excess of the set quota can be sold in a market for RINs at then-prevailing prices. The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action. There are other market related factors that can offset the revenue received for RINs on a company-wide basis either favorably or unfavorably. The Renewable Fuel Standard ("RFS") program continues to be unpredictable and prices received by us for ethanol RINs averaged $1.31 per RIN in Q1 2026 compared to $0.74 per RIN in Q1 2025. Our business model does not depend on our ability to generate revenues from RINs, and we have historically observed that changes in revenue are typically coupled with offsetting changes in cost of goods that minimizes the majority of any revenue movement. Revenue from the sales of RINs is included in "Other operating revenues" in the Consolidated Statements of Income.
As of March 31, 2026, we had $1.3 billion of Senior Notes, $160.0 million outstanding under our revolving credit facility and a $598.5 million term loan outstanding. We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements and service our debt obligations. We had additional available capacity under our revolving credit facility, which provides for up to $750 million of borrowings. We expect to use the credit facilities to provide us with available financing to meet any short-term ongoing cash needs in excess of internally generated cash flows. To the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements and other corporate initiatives. There can be no assurances, however, that we will generate sufficient cash from operations or be able to draw on the credit facilities, obtain commitments for our incremental facility, or obtain and draw upon other credit facilities. For additional information, see "Significant Sources of Capital" in the "Capital Resources and Liquidity" section.
The Company currently anticipates total capital expenditures (including land for future developments) for the full year 2026 to range from approximately $475 million to $525 million depending on new store construction activity and planned maintenance capital investments. We intend to fund the remainder of our capital program in 2026 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facility.
We believe that our business will continue to grow in the future as we maintain a pipeline of desirable future store locations for development. The pace of this growth is continually monitored by our management, and these plans
can be altered based on operating cash flows generated and the availability of debt facilities. In addition, the Company looks to expand additional capabilities such as food and beverage within our network.
Seasonality
Our business has inherent seasonality due to the concentration of our retail stores in certain geographic areas, as well as customer behaviors during different seasons. In general, sales volumes and operating incomes are typically highest in the second and third quarters during the summer-activity months and lowest during the winter months. As a result, operating results for the three months ended March 31, 2026, may not necessarily be indicative of the results that may be expected for the remainder of the year ending December 31, 2026.
Business Segment
The Company has one operating segment which is Marketing. The Marketing segment includes our retail marketing stores and fuel supply assets. For additional operating segment information, see Note 22 "Business Segments" in the audited consolidated financial statements for the year ended December 31, 2025 included with our Annual Report on Form 10-K and Note 16 "Business Segments" in the accompanying unaudited consolidated financial statements for the three months ended March 31, 2026.
Results of Operations
Consolidated Results
For the three months ended March 31, 2026, the Company reported net income of $136.3 million, or $7.28 per diluted share, on revenue of $4.8 billion. Net income was $53.2 million for the same period in 2025, or $2.63 per diluted share, on $4.5 billion of revenue. In the current year quarter, the Company experienced higher total fuel and merchandise contribution compared to the prior year period, coupled with lower general and administrative expenses. These benefits were partially offset by higher income taxes, increased store and other operating expenses including payment fees, higher depreciation and amortization and higher interest expense period over period.
Three Months Ended March 31, 2026 versus Three Months Ended March 31, 2025
Revenues for Q1 2026 increased $0.3 billion, or 6.5%, compared to the same quarter in 2025. The increase in revenues was primarily due to a 3.3% increase in the average retail fuel sales price during the quarter, an increase of 2.1% in fuel sales volumes and a 5.0% increase in merchandise sales revenue.
Cost of sales in Q1 2026 increased $0.2 billion, or 4.0%, when compared to Q1 2025. In the current-year quarter, the increase was primarily due to higher fuel cost coupled with higher fuel volumes sold and higher merchandise costs.
Store and other operating expenses increased $13.7 million, or 5.1%, in Q1 2026 compared to Q1 2025, primarily due to increases from net new store operating expenses combined with higher employee related expenses at existing stores.
Selling, general and administrative ("SG&A") expenses for Q1 2026 decreased $3.5 million, or 5.8%, versus Q1 2025. The decrease in SG&A costs is primarily due to lower employee related expenses in the current quarter.
Depreciation and amortization expense increased $3.9 million in Q1 2026, or 5.7%, when compared to the same period of 2025, primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity in the quarter.
The effective income tax rate was approximately 22.6% for Q1 2026 compared to 14.1% in Q1 2025. The rate for the quarter is higher due to lower excess tax benefits related to share-based compensation in the period, partially offset by greater benefits associated with Federal energy tax credits in the current year.
Segment Results
A summary of the Company's net income by business function follows:
| Three Months Ended March 31, | ||||||||||||||
| (Millions of dollars) | 2026 | 2025 | ||||||||||||
| Marketing segment | $ | 161.9 | $ | 79.1 | ||||||||||
| Corporate and other assets | (25.6) | (25.9) | ||||||||||||
| Net Income | $ | 136.3 | $ | 53.2 | ||||||||||
Marketing
Three Months Ended March 31, 2026 versus Three Months Ended March 31, 2025
Marketing segment net income for the three months ended March 31, 2026 was higher compared to the same period in 2025 primarily due to:
•Higher total fuel contribution;
•Higher retail fuel sales volumes;
•Higher merchandise contribution;
•Lower SG&A expenses
The items below partially offset the increase in net income in the current period:
•Higher income tax expense;
•Higher store and other operating expenses;
•Higher depreciation and amortization expenses
| (Millions of dollars, except revenue per same store sales (in thousands) and store counts) |
Three Months Ended March 31, | |||||||||||||
| Marketing Segment | 2026 | 2025 | ||||||||||||
| Operating revenues | ||||||||||||||
| Petroleum product sales | $ | 3,696.8 | $ | 3,489.8 | ||||||||||
| Merchandise sales | 1,049.2 | 999.4 | ||||||||||||
| Other operating revenues | 73.3 | 36.1 | ||||||||||||
| Total operating revenues | 4,819.3 | 4,525.3 | ||||||||||||
| Operating expenses | ||||||||||||||
| Petroleum product cost of goods sold | 3,366.0 | 3,238.3 | ||||||||||||
| Merchandise cost of goods sold | 839.0 | 803.5 | ||||||||||||
| Store and other operating expenses | 279.8 | 266.0 | ||||||||||||
| Depreciation and amortization | 65.9 | 61.5 | ||||||||||||
| Selling, general and administrative | 56.6 | 60.1 | ||||||||||||
| Accretion of asset retirement obligations | 0.9 | 0.9 | ||||||||||||
| Total operating expenses | 4,608.2 | 4,430.3 | ||||||||||||
| Gain (loss) on sale of assets | 0.3 | (0.3) | ||||||||||||
| Income (loss) from operations | 211.4 | 94.7 | ||||||||||||
| Other income (expense) | ||||||||||||||
| Interest expense | (2.0) | (1.9) | ||||||||||||
| Total other income (expense) | (2.0) | (1.9) | ||||||||||||
| (Millions of dollars, except revenue per same store sales (in thousands) and store counts) |
Three Months Ended March 31, | |||||||||||||
| Marketing Segment | 2026 | 2025 | ||||||||||||
| Income (loss) before income taxes | 209.4 | 92.8 | ||||||||||||
| Income tax expense (benefit) | 47.5 | 13.7 | ||||||||||||
| Net income (loss) from operations | $ | 161.9 | $ | 79.1 | ||||||||||
Total nicotine sales revenue same store sales1,2 | $ | 128.4 | $ | 123.1 | ||||||||||
Total non-nicotine sales revenue same store sales1,2 | 68.4 | 69.3 | ||||||||||||
Total merchandise sales revenue same store sales1,2 | $ | 196.8 | $ | 192.4 | ||||||||||
12025 amounts not revised for 2026 raze-and-rebuild activity (see SSS definition below) | ||||||||||||||
2Includes store-level discounts redemptions and excludes changes in value of unredeemed points associated with our loyalty program(s) | ||||||||||||||
| Store count at end of period | 1,803 | 1,761 | ||||||||||||
| Total store months during the period | 5,392 | 5,259 | ||||||||||||
Average Per Store Month ("APSM") metric includes all stores open through the date of the calculation, including stores acquired during the period.
Same store sales ("SSS") metric includes aggregated individual store results for all stores open throughout both periods presented. For all periods presented, the store must have been open for the entire calendar year to be included in the comparison. Remodeled stores that remained open or were closed for just a very brief time (less than a month) during the period being compared remain in the same store sales calculation. If a store is replaced either at the same location (raze-and-rebuild) or relocated to a new location, it will be excluded from the calculation during the period it is out of service. Newly constructed stores do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2025 for the stores being compared in the 2026 versus 2025 comparison). Acquired stores are not included in the calculation of same stores for the first 12 months after the acquisition. When prior period SSS volumes or sales are presented, they have not been revised for current year activity for raze-and-rebuilds, asset acquisitions and asset dispositions.
Fuel
| Three Months Ended March 31, | ||||||||||||||
| Key Operating Metrics | 2026 | 2025 | ||||||||||||
| Total retail fuel contribution ($ Millions) | $ | 293.0 | $ | 267.7 | ||||||||||
| Total fuel supply contribution ($ Millions) | 39.0 | (15.3) | ||||||||||||
| RINs (included in Other operating revenues on Consolidated Statements of Income) ($ Millions) | 71.9 | 34.9 | ||||||||||||
| Total fuel contribution ($ Millions) | $ | 403.9 | $ | 287.3 | ||||||||||
| Retail fuel volume - chain (Million gal) | 1,154.5 | 1,131.2 | ||||||||||||
Retail fuel volume - (K gal APSM)1,3 | 219.2 | 221.3 | ||||||||||||
Retail fuel volume - (K gal SSS)2,3 | 219.6 | 220.1 | ||||||||||||
| Total fuel contribution (cpg) | 35.0 | 25.4 | ||||||||||||
| Retail fuel margin (cpg) | 25.4 | 23.7 | ||||||||||||
| Fuel supply including RINs contribution (cpg) | 9.6 | 1.7 | ||||||||||||
1APSM metric includes all stores open through the date of calculation | ||||||||||||||
22025 amounts not revised for 2026 raze-and-rebuild activity | ||||||||||||||
3All amounts are on a per store per month basis | ||||||||||||||
The reconciliation of the total fuel contribution to the Consolidated Statements of Income is as follows:
| Three Months Ended March 31, | ||||||||||||||
| (Millions of dollars) | 2026 | 2025 | ||||||||||||
| Petroleum product sales | $ | 3,696.8 | $ | 3,489.8 | ||||||||||
| Less Petroleum product cost of goods sold | (3,366.0) | (3,238.3) | ||||||||||||
| Plus RINs and other (included in Other Operating Revenues line) | 73.1 | 35.8 | ||||||||||||
| Total fuel contribution | $ | 403.9 | $ | 287.3 | ||||||||||
Merchandise
| Three Months Ended March 31, | ||||||||||||||
| Key Operating Metrics | 2026 | 2025 | ||||||||||||
| Total merchandise contribution ($ Millions) | $ | 210.2 | $ | 195.9 | ||||||||||
| Total merchandise sales ($ Millions) | $ | 1,049.2 | $ | 999.4 | ||||||||||
Total merchandise sales ($K SSS)1,2,3 | $ | 196.8 | $ | 192.4 | ||||||||||
| Merchandise unit margin (%) | 20.0 | % | 19.6 | % | ||||||||||
Nicotine contribution ($K SSS)1,2,3 | $ | 20.2 | $ | 18.5 | ||||||||||
Non-nicotine contribution ($K SSS)1,2,3 | $ | 19.7 | $ | 19.9 | ||||||||||
Total merchandise contribution ($K SSS)1,2,3 | $ | 39.9 | $ | 38.4 | ||||||||||
12025 amounts not revised for 2026 raze-and-rebuild activity | ||||||||||||||
2Includes store-level discounts for redemptions and excludes changes in value of unredeemed points associated with our loyalty program(s) | ||||||||||||||
3All amounts are on a per store per month basis | ||||||||||||||
Same store sales information compared to APSM metrics:
| Variance from prior year | ||||||||||||||
| Three months ended | ||||||||||||||
| March 31, 2026 | ||||||||||||||
SSS1 |
APSM2 | |||||||||||||
| Fuel gallons per month | (0.8) | % | (0.9) | % | ||||||||||
| Merchandise sales | 2.8 | % | 2.4 | % | ||||||||||
| Nicotine sales | 4.9 | % | 4.1 | % | ||||||||||
| Non-nicotine sales | (1.0 | %) | (0.7 | %) | ||||||||||
| Merchandise margin | 4.9 | % | 4.6 | % | ||||||||||
| Nicotine margin | 10.4 | % | 8.8 | % | ||||||||||
| Non-nicotine margin | (0.1 | %) | 0.2 | % | ||||||||||
1Includes store-level discounts for redemptions and excludes changes in value of unredeemed points associated with our loyalty program(s) | ||||||||||||||
2Includes all activity associated with our loyalty program(s) | ||||||||||||||
Three Months Ended March 31, 2026 versus Three Months Ended March 31, 2025
Net income in the Marketing segment for Q1 2026 increased $82.8 million, to $161.9 million when compared to the Q1 2025 period. Contributions from fuel and merchandise were higher in the current quarter combined with lower general and administrative expenses. These benefits were partially offset by higher income taxes, increased store and other operating expenses including payment fees, and higher depreciation and amortization in Q1 2026 compared to the Q1 2025 period.
Total fuel contribution for Q1 2026, was $403.9 million, an increase of $116.6 million, or 40.6%, compared to Q1 2025. This increase was due to higher retail fuel contribution and fuel volumes sold coupled with higher fuel
supply margins in the period when compared to Q1 of 2025. Retail fuel margins on a cpg basis increased 7.2% in Q1 2026 to 25.4 cpg, compared to 23.7 cpg in the prior year period. Total retail fuel volumes increased 2.1% and fuel sales volumes on an SSS basis declined 0.8% in Q1 2026 when compared to Q1 2025. Total fuel supply contribution dollars, including RINs, increased $91.3 million in Q1 2026 when compared to Q1 2025, primarily due to market-driven pricing effects and timing of inventory movements during the period.
Total merchandise sales increased $49.8 million, or 5.0%, in Q1 2026 vs Q1 2025, coming in at approximately $1.0 billion in both quarters. Total merchandise contribution in Q1 2026 improved 7.3% compared to Q1 2025, primarily due to favorable sales mix and unit growth, combined with increased store count compared to the prior year period. Total SSS merchandise contribution dollars grew by 4.9%, which included an increase of 10.4% in nicotine products, partially offset by a 0.1% decrease in non-nicotine products.
Store and other operating expenses increased $13.8 million in Q1 2026 compared to Q1 2025, primarily due to increases in net new store operating expenses combined with higher employee related expenses at existing stores. On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent were 0.3% higher, primarily attributable to increased employee related expenses tied to the new store growth (an increase of 1.9% on a same store basis).
SG&A expenses in Q1 2026 were $3.5 million lower compared to Q1 2025, due primarily to lower incentive costs and employee related expenses in the current quarter.
Depreciation and amortization expense increased $4.4 million, or 7.2%, in Q1 2026 compared to Q1 2025 due to the increased number of larger format Murphy branded stores and raze-and-rebuild activity in the quarter.
Corporate and Other Assets
Three Months Ended March 31, 2026 versus Three Months Ended March 31, 2025
Loss from continuing operations for Corporate and other assets for Q1 2026 was $25.6 million, compared to a loss of $25.9 million in Q1 2025. The decrease from the prior year quarter was primarily due to a $2.6 million increase in the income tax benefit, a $0.5 million decrease in depreciation and amortization expense, a $0.4 million increase in investment income, and a $0.3 million decrease in other nonoperating expenses, partially offset by a $3.5 million increase in net interest expense compared to the prior year quarter.
Non-GAAP Measures
The following table sets forth the Company's EBITDA and Adjusted EBITDA for the three months ended March 31, 2026 and 2025. EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, net settlement proceeds, (gain) loss on sale of assets, loss on early debt extinguishment, transaction and integration costs related to acquisitions, restructuring expenses, and other non-operating (income) expense). EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).
We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure is useful to eliminate certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. Adjusted EBITDA is also used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance. We believe that the presentation of Adjusted EBITDA provides useful information to investors because it allows understanding of a key measure that we evaluate internally when making operating and strategic decisions, preparing our annual plan, and evaluating our overall performance. However, non-GAAP measures are not a substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.
The reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is as follows:
| Three Months Ended March 31, | ||||||||||||||
| (Millions of dollars) | 2026 | 2025 | ||||||||||||
| Net income | $ | 136.3 | $ | 53.2 | ||||||||||
| Income tax expense (benefit) | 39.9 | 8.7 | ||||||||||||
| Interest expense, net of investment income | 28.7 | 25.5 | ||||||||||||
| Depreciation and amortization | 72.1 | 68.2 | ||||||||||||
| EBITDA | $ | 277.0 | $ | 155.6 | ||||||||||
| Accretion of asset retirement obligations | 0.9 | 0.9 | ||||||||||||
| (Gain) loss on sale of assets | (0.3) | 0.3 | ||||||||||||
| Other nonoperating (income) expense | 0.3 | 0.6 | ||||||||||||
| Adjusted EBITDA | $ | 277.9 | $ | 157.4 | ||||||||||
Capital Resources and Liquidity
Significant Sources of Capital
As of March 31, 2026, we had $118.6 million of cash and cash equivalents. Our cash management policy provides that cash balances in excess of a certain threshold may be reinvested in certain types of low-risk investments. We have a committed cash flow revolving credit facility providing for aggregate borrowings of $750 million, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein. As of March 31, 2026, there was $160.0 million of outstanding borrowings under our Revolving Facility reported in Long-term debt in the Consolidated Balance Sheet. The Revolving Facility had $183.0 million of outstanding borrowings at December 31, 2025.
We believe our existing cash on hand and future borrowing capacity of our existing facilities is adequate to fund not only our operations, but also our anticipated near-term and long-term funding requirements, including capital spending programs, execution of announced share repurchase programs, potential dividend payments, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies.
Operating Activities
Net cash provided by operating activities was $320.0 million for the three months ended March 31, 2026 and was $128.5 million for the same period of 2025, an increase of $191.5 million, or 149.0%. The increase for the three months ended March 31, 2026 is mainly due to an increase in the amount of cash provided from changes in non-cash working capital of $94.8 million, an increase in net income of $83.1 million, higher deferred and noncurrent tax charges of $10.7 million and increased depreciation of $3.9 million compared to the same period in 2025.
For the three months ended March 31, 2026, operating cash provided by changes in non-cash operating working capital of $95.1 million was due to an increase in accounts payable and accrued liabilities of $161.5 million which was related to the timing of payments and a decrease in inventory of $49.7 million due to lower volume levels, partially offset by an increase in accounts receivable of $78.0 million due to the timing of collecting receipts, an increase in prepaid expenses of $5.2 million, and a decrease of $32.9 million in income taxes payable due to changes in accrued income tax liabilities and timing of income tax payments in the current year period.
Investing Activities
For the three months ended March 31, 2026, cash required by investing activities was $98.5 million compared to $87.7 million in 2025. The $10.8 million increase in cash required by investing activities in the current year period was primarily due to an increase of $10.5 million in capital expenditures due to the timing of payments for projects.
Financing Activities
Financing activities in the three months ended March 31, 2026 required cash of $131.8 million compared to cash of $38.4 million in the three months ended March 31, 2025, an increase of $93.4 million. The first three months of 2026 included payments of $70.5 million for the repurchase of common shares, which was a decrease of $79.5 million compared to repurchases of $150.0 million in the 2025 period. Dividend payments increased $1.9 million in 2026 compared to amounts paid in the first three months of 2025. Net repayments of debt required $27.8 million in 2026 compared to net borrowings of debt providing $140.0 million in 2025. Amounts related to share-based compensation required $3.2 million more in cash during 2026 than in 2025.
Dividends
During the three months ended March 31, 2026, the Company paid cash dividend payments of $0.63 per common share, for a total of $11.7 million, compared to the period ended March 31, 2025, in which dividends of $0.49 per common share were paid for total cash dividend payments of $9.8 million. As a part of our capital allocation strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time.
On May 7, 2026, the Company announced that the Board of Directors had declared a quarterly cash dividend of $0.64 per common share, or $2.56 per share on an annualized basis. The dividend is payable on June 1, 2026, to stockholders of record as of May 18, 2026.
Share Repurchase Program
On May 2, 2023, our Board of Directors approved a share repurchase authorization of up to $1.5 billion. The authorization value excludes any excise tax that may be incurred. During the three months ended March 31, 2026, the Company repurchased a total of 168,963 common shares for approximately $70.9 million, at an average price of $419.87 per share, including accrued excise taxes. As of March 31, 2026, we had approximately $221.4 million remaining under our 2023 authorization.
On October 29, 2025, the Company announced that the Board of Directors approved a share repurchase authorization of up to $2.0 billion to be executed by December 31, 2030. This authorization will commence at the conclusion of the existing 2023 authorization. The authorization value excludes any excise tax that may be incurred. Purchases may be effected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management. Purchases will be made subject to available cash, market conditions and compliance with our financing arrangements at any time during the period of authorization. We may use cash from operations as well as draws under our credit facilities to effect purchases.
Debt
Our long-term debt at March 31, 2026 and December 31, 2025 was as set forth below:
| (Millions of dollars) |
March 31, 2026 |
December 31, 2025 | ||||||||||||
5.625% senior notes due 2027 (net of unamortized discount of $0.4 at March 31, 2026 and $0.5 at December 31, 2025) | $ | 299.6 | $ | 299.5 | ||||||||||
4.75% senior notes due 2029 (net of unamortized discount of $2.2 at March 31, 2026 and $2.3 at December 31, 2025) | 497.8 | 497.7 | ||||||||||||
3.75% senior notes due 2031 (net of unamortized discount of $3.0 at March 31, 2026 and $3.2 at December 31, 2025) | 497.0 | 496.8 | ||||||||||||
Term loan due 2032 (effective interest rate of 5.43% at March 31, 2026) net of unamortized discount of $1.0 at March 31, 2026 and December 31, 2025 | 597.5 | 599.0 | ||||||||||||
Revolving credit facility, due 2030 (weighted average interest rate of 5.27% at March 31, 2026) | 160.0 | 183.0 | ||||||||||||
Capitalized lease obligations, autos and equipment, due through 2030 | 8.2 | 7.7 | ||||||||||||
Capitalized lease obligations, buildings, due through 2059 | 107.7 | 110.8 | ||||||||||||
| Unamortized debt issuance costs | (11.3) | (11.9) | ||||||||||||
| Total long-term debt | 2,156.5 | 2,182.6 | ||||||||||||
| Less current maturities | 19.2 | 19.0 | ||||||||||||
| Total long-term debt, net of current | $ | 2,137.3 | $ | 2,163.6 | ||||||||||
Senior Notes
On April 25, 2017, Murphy Oil USA, Inc. ("MOUSA"), our primary operating subsidiary, issued $300 million of 5.625% Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration statement. The 2027 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's subsidiaries that guarantee our Credit Facilities (as defined below). The indenture governing the 2027 Senior Notes contains restrictive covenants that limit, among other things, the ability of the Company, MOUSA, and the restricted subsidiaries to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates or merge with or into other entities.
On September 13, 2019, MOUSA, issued $500 million of 4.75% Senior Notes due 2029 (the "2029 Senior Notes"). The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of a prior note issuance. The 2029 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's subsidiaries that guarantee our Credit Facilities. The indenture governing the 2029 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 Senior Notes.
On January 29, 2021, MOUSA, issued $500 million of 3.75% Senior Notes due 2031 (the "2031 Senior Notes" and, together with the 2027 Senior Notes and the 2029 Senior Notes, the "Senior Notes"). The net proceeds from the issuance of the 2031 Senior Notes were used, in part, to fund the acquisition of QuickChek and other obligations related to that transaction. The 2031 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's subsidiaries that guarantee our Credit Facilities. The indenture governing the 2031 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 and 2029 Senior Notes.
The Senior Notes and related guarantees rank equally with all of our and the guarantors' existing and future senior unsecured indebtedness and effectively junior to our and the guarantors' existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness. The Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.
Revolving Credit Facility and Term Loan
Our credit agreement consists of both a cash flow revolving credit facility and a senior secured term loan.
The credit agreement provides for a senior secured term loan in an aggregate principal amount of $600.0 million (the "Term Facility") (which was borrowed in full on April 7, 2025) and revolving credit commitments in an aggregate amount equal to $750.0 million (the "Revolving Facility", and together with the Term Facility, the "Credit Facilities"). The outstanding balance of the term loan was $598.5 million at March 31, 2026 and $600.0 million at December 31, 2025. The term loan is due April 2032, and we are required to make quarterly principal payments of $1.5 million, which began on January 1, 2026. As of March 31, 2026, we had $160.0 million of outstanding borrowings under the Revolving Facility and $6.2 million of outstanding letters of credit (which reduces the amount available to borrow under the Revolving Facility).
The Term Facility amortizes in quarterly installments, with the first amortization payment being due on January 1, 2026, at a rate of 1.00% per annum. Pursuant to the credit agreement, the applicable margin, (A) in the case of Adjusted SOFR Rate borrowings, (i) with respect to the Revolving Facility, ranges from 1.25% to 2.00% per annum depending on a total debt to EBITDA ratio and (ii) with respect to the Term Facility, is 1.75% per annum and (B) in the case of Alternate Base Rate borrowings (i) with respect to the Revolving Facility, ranges from 0.25% to 1.00% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, is 0.75% per annum.
The credit agreement contains certain covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes. The Revolving Facility credit agreement also imposes total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly. Pursuant to the total leverage ratio financial maintenance covenant, the Company must maintain a total leverage ratio of not more than 5.0 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 5.5 to 1.0 and a consolidated cash interest coverage ratio of not less than 2.5 to 1.0. The credit agreement also contains customary events of default.
Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0 could be limited. At March 31, 2026, our total leverage ratio was 1.87 to 1.0 which meant our ability at that date to make restricted payments was not limited. If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed the greater of (a) $400.0 million or (b) 15.0% of consolidated net tangible assets, estimated at $427.8 million as of March 31, 2026, over the life of the credit agreement.
All obligations under the credit agreement are guaranteed by Murphy USA and the subsidiary guarantors party thereto, and all obligations under the credit agreement, including the guarantees of those obligations, are secured by certain assets of Murphy USA, Murphy Oil USA, Inc. and the guarantors party to the guarantee and collateral agreement in respect thereof.
Supplemental Guarantor Financial Information
The following is a description of the guarantees with respect to the Senior Notes and the Credit Facilities, for which MOUSA is primary obligor, and for which the Company and certain subsidiaries provide full and unconditional guarantees on a joint and several basis. See "-Debt" above for additional information concerning the Company's outstanding indebtedness, all of which is guaranteed as described below. See also Note 6 "Long Term Debt" in the accompanying consolidated financial statements.
The Senior Notes and related guarantees rank equally with all of our and the guarantors' existing and future senior unsecured indebtedness and effectively junior to our and the guarantors' existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness. The Senior Notes and related guarantees are structurally subordinated to all of the
existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.
All obligations under the Credit Facilities are guaranteed by the Company and the same subsidiary guarantors that guarantee the Senior Notes. All obligations under the Credit Facilities, including the guarantees of those obligations, are secured by certain assets of the Company, MOUSA, and the other guarantors.
The combined assets, liabilities and results of operations of MOUSA and the guarantors are not materially different from corresponding amounts presented in the consolidated financial statements included herein. MOUSA is our primary operating subsidiary and generated the vast majority of our revenues for the three months ended March 31, 2026, and accounted for the vast majority of our total assets as of March 31, 2026. In the event MOUSA itself were unable to service the Company's consolidated debt obligations, our business and financial condition would be materially adversely impacted.
Capital Spending
Capital spending and investments in our Marketing segment relate primarily to the acquisition of land and the construction of new Company stores. Our Marketing capital is also deployed to improve our existing stores, which we refer to as maintenance capital. We use maintenance capital in this business as needed to ensure reliability and continued performance of our stores. The remainder of our capital spending and investment activity, which is primarily technology related, is attributable to Corporate and other assets.
The following table outlines our capital spending and investments for the three month periods ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||||||||
| (Millions of dollars) | 2026 | 2025 | ||||||||||||
| Marketing: | ||||||||||||||
| Company stores | $ | 77.4 | $ | 49.3 | ||||||||||
| Terminals | - | 0.2 | ||||||||||||
| Maintenance capital | 9.5 | 11.3 | ||||||||||||
| Corporate and other assets | 4.0 | 3.2 | ||||||||||||
| Total | $ | 90.9 | $ | 64.0 | ||||||||||
We currently expect capital expenditures for the full year 2026 to range from approximately $475 million to $525 million, including $375 million to $400 million for retail growth, approximately $80 million to $95 million for maintenance capital, with the remaining funds earmarked for other corporate investments and other strategic initiatives. See Note 18 "Commitments" in the audited consolidated financial statements for the year ended December 31, 2025 included in our Annual Report on Form 10-K for more information.
Critical Accounting Policies
There has been no material update to our critical accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2025. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies" in the Form 10-K.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain statements or may suggest "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to our M&A activity, anticipated store openings and associated capital expenditures, fuel margins, merchandise margins, sales of RINs, trends in our operations, dividends, and share repurchases. Such statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the
anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, manage disruptions in our supply chain and our ability to control costs; geopolitical events, such as evolving trade policies and the imposition of reciprocal tariffs and the conflicts in the Middle East, that impact the supply and demand and price of crude oil; the impact of severe weather events, such as hurricanes, floods and earthquakes; the impact of a global health pandemic and any governmental response thereto; the impact of any systems failures, cybersecurity and/or security breaches of the company or its vendor partners, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; reduced demand for our products due to the implementation of more stringent fuel economy and greenhouse gas reduction requirements, or increasingly widespread adoption of electric vehicle technology; future nicotine or e-cigarette legislation and any other efforts that make purchasing nicotine products more costly or difficult could hurt our revenues and impact gross margins; our ability to successfully expand our food and beverage offerings; efficient and proper allocation of our capital resources, including the timing, declaration, amount and payment of any future dividends or levels of the Company's share repurchases, or management of operating cash; the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company's cash flows from operations, and general economic conditions; compliance with debt covenants; availability and cost of credit; and changes in interest rates. Our SEC reports, including our most recent Annual Report on Form 10-K, contain other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.