BUILT TO LAST
2022 ANNUAL REPORT AND 2023 PROXY STATEMENT
FINANCIAL
HIGHLIGHTS
FUEL METRICS
Total retail gallons sold (in billions)
Retail fuel gallons sold (per store month)
Total fuel contribution (cents per gallon)
MERCHANDISE METRICS
Total merchandise sales ($ billions)
Total merchandise margin dollars (per store month)
Merchandise unit margins (%)
Non-tobacco margin dollars (per store month)
Total non-tobacco unit margins (%)
FINANCIAL METRICS (cid:904)(cid:936)(cid:3)(cid:68)(cid:47)(cid:62)(cid:62)(cid:47)(cid:75)(cid:69)(cid:94)(cid:905)
Net income from continuing operations
Adjusted EBITDA(1)
Cash and cash equivalents
Capital spending
Long-term debt
Market capitalization
Ending share price ($ per share)
2018
2019
2020
2021
2022
4.232
244,033
16.2
$ 2.423
$ 23,086
16.5%
$ 9,615
24.4%
$ 213.6
$ 411.8
$ 184.5
$ 193.8
$ 842.1
$ 2,472.5
$ 76.64
4.374
248,258
16.1
$ 2.620
$ 23,798
16.0%
$ 9,753
23.4%
$ 154.8
$ 422.6
$ 280.3
$ 214.6
$ 999.3
$ 3,563.8
$ 117.00
3.901
219,520
25.2
4.352
229,404
26.3
4.752
244,582
34.3
$ 2.955
$ 25,850
15.6%
$ 10,159
22.0%
$ 386.1
$ 722.7
$ 163.6
$ 227.1
$ 951.2
$ 3,566.0
$ 130.87
$ 3.678
$ 35,607
19.1%
$ 19,218
28.5%
$ 396.9
$ 828.0
$ 256.4
$ 277.5
$ 1,800.1
$ 4,968.1
$ 199.24
$ 3.903
$ 38,025
19.7%
$ 21,055
29.4%
$ 672.9
$ 1,190.9
$
60.5
$ 305.8
$ 1,791.9
$ 6,080.0
$ 279.54
Murphy USA Stock Performance
Indexed from December 31, 2017 to December 31, 2022
Based on Ending Price of Each Period
MURPHY USA INC.
S&P 500 INDEX
S&P Retail Select Index
Total Shareholder Return, Annualized
From December 31, 2019 to December 31, 2022
Based on 10-Day Average Price at End of Each Period
)
7
1
0
2
/
2
1
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0
1
(
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n
I
350
300
250
200
150
100
50
7
1
0
2
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1
3
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2
1
8
1
0
2
/
1
3
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2
1
9
1
0
2
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1
3
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2
0
2
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1
3
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2
1
1
2
0
2
/
1
3
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2
1
2
2
0
2
/
1
3
/
2
1
(1) Please refer to the reconciliation in Appendix A of
the Notice of 2023 Annual Meeting of Stockholders
and Proxy Statement included herein.
348
144
136
45
40
35
30
25
20
15
10
5
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34.7%
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A N N U A L R E P O R T 2 0 2 2
P A G E 1
Letter To Shareholders - Built To Last
Ten years ago, Murphy USA was busy preparing
itself to be spun off as a stand-alone public
company. Rather than penning an annual
letter to our shareholders, my thoughts
as a new CEO were focused instead on
articulating in our formation documents the
underlying strengths that would underpin our
strategy: to win with customers; to engage
our team members and other stakeholders
on our journey; and, importantly, to build
confidence and ultimately trust with our future
shareholders. While strategy is nuanced, with
one foot grounded in the reality of the present
and another in aspirations for the future, the
focus then was—and continues to be now—
about building a sustainable strategy for the
long term, where we truly have the right to
win and where the coherent elements of our
strategy reinforce each other in a manner
that builds and reinforces a competitive
advantage. In short, building a strategy to
endure; a strategy that is built to last.
Our starting point was just that, a new point in
time to be measured against down the road,
under the added scrutiny of being a public
company. Our work had just begun, leveraging
what had been built before us, with new tactics
and initiatives to achieve our ultimate potential
yet to be defined. Our future: uncertain,
given the challenging market and competitive
dynamics that have resulted in significant
industry consolidation. To be sure, within the
first four years of our spin, half our publicly-
traded c-store peers were sold to larger firms
whose core strategy focused on consolidation.
Ten years later, Murphy USA’s differentiated
strategy has stood the test of time. While no
one could have predicted all the challenges
that came before us as a company, as leaders
and members of communities, it is clear we
have built a business that has thrived through
a variety of economic cycles, including a global
pandemic and, most recently, high inflation.
Continuing the track record since our spin, 2022
results clearly demonstrate the improvements
we have made to the business and the
sustaining benefits of our advantaged model.
While we don’t have a crystal ball to guide us for
the next decade, we have something even more
valuable—the clarity of the five key elements of
our business strategy that have served us well
since 2013 and will continue to differentiate
Murphy USA in the future. We prioritized
organic growth, adding over 500 stores to
the network since 2012 and rebuilding 177
legacy kiosks. We diversified our merchandise
mix to grow merchandise contribution while
enhancing our low-cost operating model,
which together lowered our fuel breakeven
requirement, resulting in higher per store
profitability and a more competitive business.
Given our low cost position, we created
advantage from fuel market volatility, growing
fuel contribution dollars significantly, to more
than $1.6 billion in 2022, gaining leverage from
improvements in the execution of our unique
supply and every-day low price positions.
These elements are further reinforced through
our mindset and focus on investing for the
long-term, which underpinned our store
growth, network evolution, productivity
improvements, expanded capabilities, and
enhanced employee engagement and customer
satisfaction. Significant capability investments
like Murphy Drive Rewards continue to
extend our differentiated positioning with
consumers on our core merchandise offer
while the QuickChek acquisition significantly
enhances our food and beverage capabilities
and introduced a new advantaged format
for growth. Taken together, the cumulative
investments over the past decade improved our
relative position on the industry supply curve as
costs for the broader industry rose, increasing
our competitiveness and ability to appeal to
more and more value-conscious consumers,
while capturing disproportionate benefits from
the structural shift in industry fuel margins.
In addition to what we accomplished, I am
even more proud of how we achieved these
results. Our enduring business strategy is
grounded in five sustainability pillars which
continue to be reinforced and set Murphy
USA apart: Affordable, Responsible, Engaged,
Committed and Aligned. Affordability matters
to our customers, more than ever before. We
cannot continue to serve our customers without
building trust through responsible retailing
practices and engaging our workforce of around
15,000 team members who distinctly embody
the Murphy USA spirit and represent the
communities we serve. As our business results
have improved, so too has our commitment
to support others, as demonstrated by our
$25 million donation to the Murphy USA
Foundation, that supports local communities
with an emphasis on South Arkansas, and
through our ongoing national partnership
with the Boys and Girls Club of America.
r
Our approach to business strategy and
sustainability addresses our key stakeholders
while building trust and alignment with
investors. Perhaps the most tangible outcome
for investors is represented by our total
shareholder return of 620% since spin through
year-end 2022. As a result of our balanced
50/50 capital allocation strategy showcasing
steady unit growth with consistent and
opportunistic share repurchase, we grew our
store count by nearly 50%, and repurchased
more than 50% of our original shares
outstanding, including over $800 million
in 2022. We are proud of these milestone
achievements that created significant
shareholder value for our long-term investors.
Looking forward, we are poised to continue
delivering exceptional results and making
investments we believe better prepare the
company to compete and win, in 2023 and
beyond. First, we are preparing for more new
store growth, building better stores in strong
markets, and could grow the network by
another 500 high-performing stores over the
next decade, providing material contributions
to our future earnings potential. Second, we
will remain focused on improving same store
productivity, increasing efficiency across all
aspects of the business, and maintaining an
ultra-low cost structure which supports our
everyday low price strategy. This includes a
comprehensive set of new investments that
will help extend and ultimately widen our
competitive advantage in the industry, including
Digital Transformation which will help evolve the
reach and effectiveness of our loyalty platforms
and data analytics capabilities, and the In-Store
Experience, which involves a comprehensive
redesign of the inside of new and existing
Murphy stores, representing a fundamentally
different experience for our customer that will
better showcase the breadth and accessibility
of our product offering. Third, we will continue
our track record of disciplined capital allocation
through shareholder friendly distributions.
While a lot has changed in the past ten years,
our relentless focus to win at our game the
right way remains the same. We will continue
to adapt and evolve, while staying true to the
needs of our customers and stakeholders.
Change is inevitable. Success isn’t guaranteed.
Even the rules of the game aren’t certain.
However, we are confident in Murphy USA’s
enduring strategy and ability to win in any host
of future scenarios. We are, Built to Last!
R. Andrew Clyde
President and Chief Executive Officer
Murphy USA Markets
QuickChek Markets
A N N U A L R E P O R T 2 0 2 2
P A G E 3
1.
STRATEGY
GROW ORGANICALLY
Growth of Murphy Retail Stores
Murphy USA, Murphy Express, and QuickChek Loca(cid:2)ons
MURPHY EXPRESS
MURPHY USA
QUICKCHEK
1,472
1,489
1,503
1,679
158
312
328
352
370
1,712
157
404
1,160
1,161
1,151
1,151
1,151
2018
2019
2020
2021
2022
Building new stores in attractive markets
remains Murphy USA’s top priority for
growth. Our commitment to organic growth
since our 2013 spin has helped enhance the
quality and attractiveness of our network,
improve the customer experience, and
further diversify our merchandise mix.
In 2022, 36 new-to-industry stores were
added, growing the network by about 2%.
We added 34 new 2,800 square-foot Murphy
branded stores, two new 5,400+ square-foot
QuickChek stores, while closing three older
QuickChek stores without a fuel offer. With
a multi-year development pipeline in place,
we plan to build up to 45 new stores in 2023,
including up to five new QuickChek locations.
Complementing new store growth is our raze
and rebuild program, which replaces high-
performing kiosks near Walmart Supercenters
with 1,400 square-foot walk-in stores with a
broader merchandise assortment. In converting
177 kiosks since 2013, the network has evolved
from nearly 70% kiosks to less than 40% in 2022.
We plan to continue improving the network with
up to 30 raze and rebuilds in 2023. In addition,
our relationship with Walmart continues
through Murphy’s participation in Walmart+
which provides additional value in the form of
fuel discounts to our shared customer base.
Raze & Rebuilds by Year
33
32
45 NEW STORES IN 2023
WE PLAN TO BUILD UP TO
27
27
27
2018
2019
2020
2021
2022
AND REPLACE UP TO 30
KIOSKS WITH SMALL
WALK-IN STORES
A N N U A L R E P O R T 2 0 2 2
P A G E 5
2.
STRATEGY
DIVERSIFY
MERCHANDISE MIX
The strategic acquisition of QuickChek in 2021 continues to
generate synergies for the enterprise while upgrading our
food and beverage capabilities, increasing our exposure
to higher-margin growth opportunities, and improving
the quality and sustainability of our future earnings.
Accordingly, per-store non-tobacco margin contribution
grew 10% in 2022 to $21.1K, driven by a 9% increase in
food and beverage contribution dollars. Importantly,
higher margin non-tobacco categories now constitute 56%
of total merchandise contribution dollars, which combined
with continued share gains in tobacco, led to total margin
contribution growth of 9.3%. As a result, total merchandise
unit margins expanded by 60 basis points to 19.7%.
To sustain this momentum, several initiatives have been
launched to drive future productivity improvements,
including the evolution of our loyalty platform and data
analytics capabilities and the redesign of Murphy branded
stores to improve the customer’s in-store experience.
Merchandise Margin
$K Average Per Store Month
NON-TOBACCO
TOBACCO
$25.9*
10.2
$23.1
$23.8*
9.6
9.8
$38.0*
$35.6*
21.1
19.2
13.5
14.4
16.2
16.9
17.7
2018
2019
2020
2021
2022
*2019 - 2022 totals reflect the impact of MDR discounts and deferrals
Merchandise Unit Margin %
16.5%
16.0%
15.6%
19.1%
19.7%
2018
2019
2020
2021
2022
Merchandise Sales ($ in millions)
Merchandise GM ($ in millions)
2018
2,423
400
2019
2,620
419
2020
2,955
459
2021
3,678
702
2022
3,903
767
Y-O-Y
Change
6.1%
9.3%
(cid:69)(cid:381)(cid:410)(cid:286)(cid:855)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1005)(cid:3)(cid:302)(cid:336)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:1005)(cid:1005)(cid:3)(cid:373)(cid:381)(cid:374)(cid:410)(cid:346)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:89)(cid:437)(cid:349)(cid:272)(cid:364)(cid:18)(cid:346)(cid:286)(cid:364)(cid:854)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1006)(cid:3)(cid:302)(cid:336)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:258)(cid:3)(cid:296)(cid:437)(cid:367)(cid:367)(cid:882)(cid:455)(cid:286)(cid:258)(cid:396)(cid:3)(cid:381)(cid:296)(cid:3)(cid:89)(cid:437)(cid:349)(cid:272)(cid:364)(cid:18)(cid:346)(cid:286)(cid:364)
P A G E 6
B U I L T T O L A S T
3.
STRATEGY
SUSTAIN COST LEADERSHIP
Store Opera(cid:2)ng Expenses Versus Industry Average
Store Opera(cid:2)ng Expenses,* $K Average Per Store Month
MURPHY USA
QUICKCHEK IMPACT
INDUSTRY**
2018
2019
2020
2021
2022
$21.0
$21.4
$22.1
$23.3
$7.7
$31.0
$25.8
$8.4
$34.2
$49.0
$52.5
$51.0
$63.1
*Store Opera(cid:2)ng Expense excludes SG&A, Field Admin cost and payment fees.
**2022 Industry Store Opera(cid:2)ng Expense data not yet available, NACS store set differs from PY.
Coverage Ra(cid:2)o*
92.1%
93.4%
98.0%
102.1%
100.1%
2018
2019
2020
2021
2022
*Merchandise Margin/Store Opera(cid:2)ng Expense
plus allocated G&A and other expenses
Affordability matters to more and more
customers as high prices take their toll.
To successfully execute our everyday low-
price strategy, we must carefully control
the inflationary impacts on our business
and maintain a low-cost structure.
While the addition of larger QuickChek and
Murphy stores to the network come with
higher costs per store, our low-cost structure
remains advantaged relative to the industry
average. Importantly, the coverage ratio,
which measures merchandise margin over and
above store operating expense, reflects that
strong merchandise performance at Murphy
and QuickChek offset much of the higher
costs to serve our customers, especially as a
higher number of new larger stores ramp up.
In 2022, we experienced a 10% increase in
our per-store operating expenses, which
reflected broader inflationary pressures and
included a one-time appreciation bonus
for our employees. While not immune to
cost pressures, our relative position in the
industry allows Murphy USA to be more
competitive as weaker retailers pass on
higher costs through higher prices.
WE BELIEVE OUR
LOW-COST STRUCTURE
RELATIVE TO THE
INDUSTRY AVERAGE
CONTINUES TO BE A
COMPETITIVE ADVANTAGE
P A G E 8
B U I L T T O L A S T
4.
STRATEGY
CREATE ADVANTAGE FROM
MARKET VOLATILITY
Fuel margins continue to increase as post-Covid and
inflationary pressures force weaker retailers to make up their
loss in profitability from higher costs and lower volumes.
With an advantaged cost structure and EDLP position,
Murphy and QuickChek stores are well positioned to gain
market share profitably.
In 2022, price volatility increased significantly, exacerbated by
geopolitical factors, and the resulting uncertainty continued
to exert pressure across segments of the industry. Coupled
with a significant fall-off in product prices during the third
quarter, total fuel margins were exceptionally strong in 2022,
climbing to 34.3 cents per gallon.
The robust margin environment, coupled with our low-cost
fuel supply advantage, allowed us to further discount prices,
helping to attract new customers and grow market share,
resulting in 6.6% per-store volume growth in 2022. These
share gains, along with 4.7 cents per gallon of contribution
from our product supply and wholesale positions, resulted in
a record $1.6 billion of total fuel contribution.
TOTAL FUEL MARGINS
WERE EXCEPTIONALLY STRONG
IN 2022, CLIMBING TO
34.3 CENTS PER GALLON
Total Fuel Margin
(cents per gallon)*
PRODUCT SUPPLY AND WHOLESALE + RINS
RETAIL
34.3
4.7
25.2
2.3
26.3
4.4
16.2
1.5
14.7
16.1
2.3
13.8
22.9
21.9
29.6
2018
2019
2020
2021
2022
*Cents per gallon based on retail volumes, before corporate overhead
Total Fuel Contribu(cid:2)on
(in millions)
PRODUCT SUPPLY AND WHOLESALE + RINS
RETAIL
$1,630
225
$1,144
193
$982
87
$686
624
$705
99
606
895
951
1,405
2018
2019
2020
2021
2022
(cid:69)(cid:381)(cid:410)(cid:286)(cid:855)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1005)(cid:3)(cid:302)(cid:336)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:1005)(cid:1005)(cid:3)(cid:373)(cid:381)(cid:374)(cid:410)(cid:346)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:89)(cid:437)(cid:349)(cid:272)(cid:364)(cid:18)(cid:346)(cid:286)(cid:364)(cid:854)(cid:3)
(cid:1006)(cid:1004)(cid:1006)(cid:1006)(cid:3)(cid:302)(cid:336)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:258)(cid:3)(cid:296)(cid:437)(cid:367)(cid:367)(cid:882)(cid:455)(cid:286)(cid:258)(cid:396)(cid:3)(cid:381)(cid:296)(cid:3)(cid:89)(cid:437)(cid:349)(cid:272)(cid:364)(cid:18)(cid:346)(cid:286)(cid:364)
A N N U A L R E P O R T 2 0 2 2
P A G E 11
5.
STRATEGY
INVEST FOR
THE LONG TERM
Since our spin, Murphy USA has maintained a
disciplined and return-focused approach to capital
allocation, balancing new store growth with meaningful
share repurchase, resulting in higher earnings per share
over time.
We are dedicated to optimizing our returns on invested
capital, working relentlessly to improve returns at the
store-level and opportunistically utilizing excess free cash
flow to repurchase our shares, creating enduring benefits
for long-term shareholders. In 2022, we completed
nearly $800M of share repurchases, which has helped
reduce our share count more than 50% since spin.
In addition to store growth and share repurchase, we
began in 2020 to return capital to shareholders in a more
ratable manner through a quarterly dividend, which has
grown from $0.25 per share to $0.37 per share in the
first quarter of 2023, or a 48% increase since inception.
Earnings Per Share
Income from Con(cid:2)nuing Opera(cid:2)ons—Diluted
$28.10
$14.92
$13.08
$6.48
$4.86
Annual Capital Expenditures
(in millions)
CORPORATE AND OTHER ASSETS
MAINTENANCE
GROWTH
$227
26
23
$194
25
34
$215
61
20
$306
27
33
$278
32
22
135
134
178
224
246
2018
2019
2020
2021
2022
Total Shares Outstanding
Fiscal Year End Since Spinoff
(in millions)
46.8
32.3
30.5
27.2
24.9
21.7
2018
2019
2020
2021
2022
2013
Spin
2018
2019
2020
2021
2022
(cid:69)(cid:381)(cid:410)(cid:286)(cid:855)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1005)(cid:3)(cid:302)(cid:336)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:1005)(cid:1005)(cid:3)(cid:373)(cid:381)(cid:374)(cid:410)(cid:346)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:89)(cid:437)(cid:349)(cid:272)(cid:364)(cid:18)(cid:346)(cid:286)(cid:364)(cid:854)(cid:3)(cid:1006)(cid:1004)(cid:1006)(cid:1006)(cid:3)(cid:302)(cid:336)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:258)(cid:3)(cid:296)(cid:437)(cid:367)(cid:367)(cid:882)(cid:455)(cid:286)(cid:258)(cid:396)(cid:3)(cid:381)(cid:296)(cid:3)(cid:89)(cid:437)(cid:349)(cid:272)(cid:364)(cid:18)(cid:346)(cid:286)(cid:364)
SUSTAINABLE GROWTH UNDERPINNED BY FIVE PILLARS
At Murphy USA, our strategy is reinforced by the resiliency and sustainability of our
business and is anchored by five pillars connecting our business strategy to our foundation
as an affordable, responsible retailer. Every day we endeavor to serve our customers and
earn their trust through our actions. Our business is dependent on the enthusiasm of our
engaged associates and a commitment to the communities we serve in order to remain
aligned with all our stakeholders, including our investors.
We know an effective and impactful ESG program will evolve and change over time.
We are continuing our ESG journey in 2023 with updated metrics and additional
disclosures through a Summary Report expected later this year. This summary report
represents a continued evolution of our progress in preserving the sustainability of our
business strategy and other important ESG topics. We plan to report our 2022 Scope 1
and Scope 2 greenhouse gas emissions (GHG), along with continued disclosure of our
EEO-1 report on our website.
For more information about our ESG program, please visit our website,
https://ir.corporate.murphyusa.com.
AFFORDABLE
(cid:94)(cid:286)(cid:396)(cid:448)(cid:286)(cid:3)(cid:272)(cid:437)(cid:400)(cid:410)(cid:381)(cid:373)(cid:286)(cid:396)(cid:400)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:3)(cid:286)(cid:448)(cid:286)(cid:396)(cid:455)(cid:282)(cid:258)(cid:455)(cid:3)(cid:367)(cid:381)(cid:449)(cid:3)(cid:393)(cid:396)(cid:349)(cid:272)(cid:286)(cid:400)(cid:3)
(cid:296)(cid:381)(cid:396)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:296)(cid:437)(cid:286)(cid:367)(cid:400)(cid:853)(cid:3)(cid:373)(cid:286)(cid:396)(cid:272)(cid:346)(cid:258)(cid:374)(cid:282)(cid:349)(cid:400)(cid:286)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:296)(cid:381)(cid:381)(cid:282)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)
(cid:271)(cid:286)(cid:448)(cid:286)(cid:396)(cid:258)(cid:336)(cid:286)(cid:3)(cid:393)(cid:396)(cid:381)(cid:282)(cid:437)(cid:272)(cid:410)(cid:400)(cid:3)(cid:410)(cid:346)(cid:286)(cid:455)(cid:3)(cid:374)(cid:286)(cid:286)(cid:282)
RESPONSIBLE
(cid:17)(cid:437)(cid:349)(cid:367)(cid:282)(cid:3)(cid:410)(cid:396)(cid:437)(cid:400)(cid:410)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:3)(cid:272)(cid:381)(cid:374)(cid:400)(cid:437)(cid:373)(cid:286)(cid:396)(cid:400)(cid:853)(cid:3)(cid:396)(cid:286)(cid:336)(cid:437)(cid:367)(cid:258)(cid:410)(cid:381)(cid:396)(cid:400)(cid:3)
(cid:258)(cid:374)(cid:282)(cid:3)(cid:393)(cid:258)(cid:396)(cid:410)(cid:374)(cid:286)(cid:396)(cid:400)(cid:3)(cid:271)(cid:455)(cid:3)(cid:286)(cid:454)(cid:272)(cid:286)(cid:286)(cid:282)(cid:349)(cid:374)(cid:336)(cid:3)(cid:286)(cid:454)(cid:393)(cid:286)(cid:272)(cid:410)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:400)(cid:3)
(cid:349)(cid:374)(cid:3)(cid:258)(cid:396)(cid:286)(cid:258)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:349)(cid:374)(cid:336)(cid:3)(cid:282)(cid:258)(cid:410)(cid:258)(cid:3)(cid:393)(cid:396)(cid:381)(cid:410)(cid:286)(cid:272)(cid:410)(cid:349)(cid:381)(cid:374)(cid:853)(cid:3)
(cid:258)(cid:336)(cid:286)(cid:3)(cid:448)(cid:286)(cid:396)(cid:349)(cid:296)(cid:349)(cid:272)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:853)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:400)(cid:258)(cid:296)(cid:286)(cid:410)(cid:455)
ENGAGED
(cid:28)(cid:373)(cid:393)(cid:381)(cid:449)(cid:286)(cid:396)(cid:3)(cid:381)(cid:437)(cid:396)(cid:3)(cid:393)(cid:286)(cid:381)(cid:393)(cid:367)(cid:286)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)(cid:346)(cid:3)(cid:258)(cid:374)(cid:3)
(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:400)(cid:349)(cid:448)(cid:286)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:282)(cid:349)(cid:448)(cid:286)(cid:396)(cid:400)(cid:286)(cid:3)(cid:272)(cid:437)(cid:367)(cid:410)(cid:437)(cid:396)(cid:286)(cid:853)(cid:3)(cid:272)(cid:381)(cid:373)(cid:393)(cid:286)(cid:410)(cid:349)(cid:410)(cid:349)(cid:448)(cid:286)(cid:3)
(cid:410)(cid:381)(cid:410)(cid:258)(cid:367)(cid:3)(cid:396)(cid:286)(cid:449)(cid:258)(cid:396)(cid:282)(cid:400)(cid:3)(cid:393)(cid:396)(cid:381)(cid:336)(cid:396)(cid:258)(cid:373)(cid:400)(cid:853)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:296)(cid:437)(cid:367)(cid:296)(cid:349)(cid:367)(cid:367)(cid:349)(cid:374)(cid:336)(cid:3)
(cid:272)(cid:258)(cid:396)(cid:286)(cid:286)(cid:396)(cid:3)(cid:381)(cid:393)(cid:393)(cid:381)(cid:396)(cid:410)(cid:437)(cid:374)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)
COMMITTED
(cid:47)(cid:374)(cid:448)(cid:286)(cid:400)(cid:410)(cid:3)(cid:381)(cid:437)(cid:396)(cid:3)(cid:396)(cid:286)(cid:400)(cid:381)(cid:437)(cid:396)(cid:272)(cid:286)(cid:400)(cid:3)(cid:410)(cid:381)(cid:3)(cid:400)(cid:410)(cid:396)(cid:286)(cid:374)(cid:336)(cid:410)(cid:346)(cid:286)(cid:374)(cid:3)
(cid:410)(cid:346)(cid:286)(cid:3)(cid:272)(cid:381)(cid:373)(cid:373)(cid:437)(cid:374)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)(cid:3)(cid:449)(cid:286)(cid:3)(cid:400)(cid:286)(cid:396)(cid:448)(cid:286)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)
(cid:410)(cid:346)(cid:286)(cid:349)(cid:396)(cid:3)(cid:286)(cid:374)(cid:448)(cid:349)(cid:396)(cid:381)(cid:374)(cid:373)(cid:286)(cid:374)(cid:410)
ALIGNED
(cid:28)(cid:374)(cid:400)(cid:437)(cid:396)(cid:286)(cid:3)(cid:381)(cid:437)(cid:396)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:3)(cid:349)(cid:374)(cid:448)(cid:286)(cid:400)(cid:410)(cid:381)(cid:396)(cid:400)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)(cid:346)(cid:3)
(cid:400)(cid:410)(cid:396)(cid:381)(cid:374)(cid:336)(cid:3)(cid:271)(cid:437)(cid:400)(cid:349)(cid:374)(cid:286)(cid:400)(cid:400)(cid:3)(cid:286)(cid:410)(cid:346)(cid:349)(cid:272)(cid:400)(cid:853)(cid:3)(cid:336)(cid:381)(cid:381)(cid:282)(cid:3)(cid:272)(cid:381)(cid:396)(cid:393)(cid:381)(cid:396)(cid:258)(cid:410)(cid:286)(cid:3)
(cid:336)(cid:381)(cid:448)(cid:286)(cid:396)(cid:374)(cid:258)(cid:374)(cid:272)(cid:286)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:286)(cid:296)(cid:296)(cid:286)(cid:272)(cid:410)(cid:349)(cid:448)(cid:286)(cid:3)(cid:272)(cid:258)(cid:393)(cid:349)(cid:410)(cid:258)(cid:367)(cid:3)(cid:258)(cid:367)(cid:367)(cid:381)(cid:272)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)
FORM 10-K
[THIS PAGE INTENTIONALLY LEFT BLANK]
UNITED STATT TAA ES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ to ____ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Commission File Number 001-35914
MURPHY USA INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.
Delaware
46-2279221
200 Peach Street
El Dorado, Arkansas
(Address of principal executive offff ices)
71730-5836
(Zip Code)
(870) 875-7600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 Par VaVV lue
MUSA
New YoYY rk Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☑ YeYY s ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ YeYY s ☑ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or foff r such shorter period that the registrant was required to file such reports), and
(2) has been subjb ect to such filing requirements foff r the past 90 days. ☑ YeYY s ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or foff r such shorter period that the
registrant was required to submit such files). ☑ YeYY s ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and "emerging growth company" in Rule 12b-2 of the Exchange act.
Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period fof r
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effff ectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis on incentive-based
compensation received by any of the registrant's executive offff icers during the relevant recovery period pursuant to §240.10D-1(b)). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ YeYY s ☑ No
The aggregate market value of the voting and non-voting common equity held by non-affff iliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the
registrant’s most recently completed second fiscal quarter (as of June 30, 2022), based on the closing price on that date of $232.87 was
$5,438,737,000.
Number of shares of Common Stock, $0.01 par value, outstanding at January 31, 2023 was 21,700,941.
Documents incorporated by reference:
Portions of the Registrant’s definitive Proxy Statement relating to the Annual Meeting of Stockholders on May 4, 2023 will be
incorporated by reference in Part III herein.
[THIS PAGE INTENTIONALLY LEFT BLANK]
MURPHY USA INC.
TATT BLE OF CONTENTS – 2022 Form 10-K
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staffff Comments
Item 2. Properties
Item 3. Legal Proceedings
Supplemental Infoff rmation.
Infoff rmation About our Executive Offff icers
Item 4. Mine Safety Disclosures
PART II
Item 5. Market foff r Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchase of Securities
Item 6. Reserverr d
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Infoff rmation
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Offff icers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Servirr ces
Item 15. Exhibits, Financial Statement Schedules
PART IV
Item 16. Form 10-K Summary
Signatures
Pageg
2
13
26
26
26
27
28
29
31
32
48
48
49
49
49
49
50
50
50
50
50
51
54
55
1
Item 1. BUSINESS
Part I
Murphy USA Inc. ("Murphy USA", the "Company", "we", or "our") was incorporated in Delaware on
March 1, 2013 and holds, through its subsidiaries, the foff rmer U.S. retail marketing business of its foff rmer parent
company, Murphy Oil Corporation (“Murphy Oil”), plus other assets and liabilities of Murphy Oil that supported
the activities of the U.S. retail marketing operations.
In addition, on January 29, 2021, the Company acquired
Quick Chek Corporation ("QuickChek"), a privately held convenience store chain.
Our business consists primarily of
the marketing of retail motor fuel products and convenience
merchandise through a network of 1,712 (as of December 31, 2022) retail stores located in 27 states, of which,
1,151 were branded as Murphy USA, 404 were branded as Murphy Express, and 157 were branded as
QuickChek stores. The maja ority of our existing and new-to-industry ("NTI") retail gasoline stores operate under
the brand names of Murphy USA and Murphy Express. Plans are under development to transition all Murphy
Express branded stores to the Murphy USA brand name. These locations operate within close proximity to
Walmart stores or within preferred markets across 25 states in the Southeast, Southwest, and Midwest areas of
the United States. We also operate a combination of convenience stores and convenience stores with retail
gasoline under the brand name of QuickChek, which are located in New Jersey and New YoYY rk.
In addition, we
market fuel to unbranded wholesale customers through a mixture of Company owned and third-party product
distribution terminals and pipeline positions. We are an independent publicly traded company, with low-price,
high volume fuel retail outlets selling convenience merchandise through low-cost small store foff rmats and
kiosks, as well as larger foff rmat stores that have a broader range of merchandise and foff od and beverage
offff erings which are driven by key strategic relationships and experienced management.
Our business is subjb ect to various risks. For a description of these risks, see “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere
in this Annual Report on Form 10-K.
Infoff rmation about our operations, properties and business segments, including revenues by class of
products and financial infoff rmation by geographic area, are provided on pages 32 through 48, F-12, F-13, F-15,
and F-38 through F-39 of this Annual Report on Form 10-K.
Our Competitive Strengths
Our business foff undation is built around five reinfoff rcing strengths which we believe provide us a
competitive advantage over our peers. These strengths support our Company vision which is to “Deliver every
day the quickest, most friendly servirr ce and a low-price value proposition to our growing customer base foff r the
products and markets we serverr
.”
Strtt arr tegic prorr ximii
ityt
to and complementatt ryr
rerr latitt onshipii wiww thtt WaWW lmll artrr
Of our network of 1,712 retail stores (as of December 31, 2022), the maja ority are situated on prime
locations located near Walmart stores. We believe our proximity to Walmart stores generates significant traffff ic
to our existing retail stores while our competitively priced gasoline and convenience offff erings appeal to our
shared customers. We continue to collaborate with Walmart on fuel discount programs, mainly Walmart+, which
we believe enhances the customer value proposition as well as the competitive position of both Murphy USA
and Walmart.
WiWW nii ninii g prorr posititt on wiww thtt value-conscious consumersrr
Our competitively priced fuel is a compelling offff ering foff r value-conscious consumers. Despite a flat
long-term outlook in overall gasoline demand (increased vehicle miles traveled in a normal economy essentially
tting increased fuel effff iciency), we believe value-conscious consumers that prefer convenience and servirr ce
offff seff
In combination with our high traffff ic locations, our competitive gasoline prices
are a growing demand segment.
In addition, we believe we are an industry leader in per-store tobacco
drive high fuel volumes and gross profit.
sales with our low-priced tobacco products and in total store sales per square foff ot as we also sell a growing
2
/immediate consumption items. We continue to provide value opportunities to our
assortment of single-serverr
customers through our Murphy Drive Rewards and QuickChek Rewards loyalty programs which reward
customers with discounted and free items based on purchases of qualifyiff ng fuel and merchandise, as
applicable.
Low cost rerr tat ilii operarr titt nii g model
We operate our Murphy USA and Murphy Express retail gasoline stores with a strong emphasis on fuel
sales complemented by a foff cused convenience offff ering that allows foff r a smaller store foff otprint than most of our
competitors. We build a mix of raze-and-rebuild 1,400 square foff ot stores and NTI 2,800 square foff ot Murphy
stores which we believe have low capital expenditure, maintenance and utility requirements relative to our
competitors. Many of our Murphy stores require only one or two associates to be present during business hours
and 76% of our stores are located on Company-owned property and do not incur any rent expense. The
combination of a foff cused convenience offff ering and standardized smaller foff otprint stores of our Murphy USA
and Express brands allow us to achieve lower overhead costs and on-site costs compared to competitors with a
much larger store foff rmat. Our low cost operating model translates into a low cash fuel breakeven requirement
that allows us to weather extended periods of low fuel margins and which has improved by more than 3 cents
per gallon ("cpg") since our spin-offff in 2013.
Distii
itt nii ctitt ve fuff el supu plyl chainii capabilii ill titt es
We source fuel at competitive industry benchmark prices due to the diversity of fuel options available to
us in the bulk and rack product markets, our shipper status on maja or pipeline systems, and our access to
numerous terminal locations.
In addition, we have a strong distribution system in which we leverage our scale
and ratability to deliver the most favorably priced products foff r our Murphy stores and QuickChek stores with
gasoline, further reducing our fuel product costs. By participating in the broader fuel supply chain, we believe
our business model provides additional upside exposure to opportunities to enhance margins and volume, such
as shiftff ing non-contractual wholesale volumes to protect retail fuel supply during periods of constrained supply
and elevated margins. These activities demonstrate our belief that participating in the broader fuel supply chain
provides us with added flexibility to ensure reliable low-cost fuel supply in various market conditions especially
It would take substantial time and investment,
during periods of significant price volatility or delivery diffff iculties.
both in expertise and assets, foff r a competitor to replicate our existing position, and we believe this continues to
be a significant barrier to any attempt to emulate our business model.
Resilii ill ent fiff nii anciaii
l prorr fiff lii e and engaged team
Our predominantly fee-simple asset base, ability to generate attractive gross margins through our low-
price, high-volume strategy, and our low overhead costs should help us endure prolonged periods of
unfavorable commodity price movements and compressed fuel margins. We also believe our conservarr
tive
financial structure further protects us from the inherently volatile fuel environment. We expect that our strong
cash position combined with availability under our credit facility will continue to provide us with a significant level
of liquidity to help maintain a disciplined capital expenditure program foff cused on growing ratably through
periods of both high and low fuel margins.
We have acquired through share repurchases approximately $2.7 billion of our common stock in a little
more than nine years of operation. During the year 2022, we repurchased a total of 3,328,795 common shares
foff r $806.4 million, foff r an average price of $242.24 per share. Repurchases in 2022 were made pursuant to our
now completed $500 million 2020 authorization and our $1 billion 2021 authorization. As of December 31,
2022, we had approximately $213.7 million remaining under our 2021 authorization. Additionally, in order to
provide a consistent and meaningful return of capital to shareholders independent of share repurchases, we
raised our quarterly dividend three times during 2022 from $0.29 per share in Q1 2022 to $0.35 cents per share,
or $1.40 per share on an annualized basis as of Q4 2022.
We have over 15,100 dedicated and hardworking employees as of December 31, 2022, that are
actively engaged to serverr
the customer, whether it is the external retail consumer or their internal co-workers.
We believe our sustainable business model and organic growth opportunities support an employee value
proposition that makes Murphy USA an attractive place to work.
3
Our Business Strategy
Our business strategy reflects a set of coherent choices that leverage our diffff erentiated strengths and
capabilities.
Grorr w orgrr anicallll yl
We intend foff r our independent growth plan to be a key driver of our organic growth over the next
several years, which is demonstrated by the 404 standalone Murphy Express locations (as of December 31,
from Murphy Oil Corporation. We expect to
2022), the maja ority of which were developed aftff er our 2013 spin-offff
build up to 45 NTI locations and up to 30 raze-and-rebuilds in 2023 and are targeting up to 55 NTI and up to 25
raze-and-rebuilds per year in future periods, foff cusing on high-return locations either in high traffff ic areas, near
Walmart Supercenters as a complement to higher perfrr off rming existing stores in smaller markets, or by strategic
in our core market areas complemented by our supply chain capabilities. While we were previously
infill
foff cused on smaller store size, we now expect to build more Murphy branded NTI stores that are 2,800 square
feet or larger, as well as our NTI QuickChek branded locations in their existing foff otprint, which average between
5,000 to 7,000 square feet in size. Our real estate development team works to maintain a multi-year pipeline of
projo ects that supports continued ratable expansion in these high-return locations.
Diversirr
fii yff merchrr andidd seii mixii
We plan to continuously evaluate our remaining kiosk strategy in an effff off rt to maximize our store
economics and return on investment. Complementary to that strategy, we are continually refining Murphy
branded 1,400 square foff ot and 2,800 square foff ot designs to create a foff undation foff r increasing higher-margin
non-tobacco sales and diversifyiff ng our merchandise offff erings. Key to achieving the highest potential returns
from our large and small foff rmat stores is the development and execution of enhanced foff od and beverage
to further expand merchandise
("F&B") capabilities by leveraging QuickChek's F&B offff ering. We expect
revenue and margins through our primary supplier relationship with Core-Mark Holding Company, Inc. ("Core-
Mark") and in addition,
to optimize our promotional planning, merchandise assortment, and pricing
effff ectiveness, in order to help boost overall store returns.
Sustatt inii cost leadershrr
ipii posititt on
We believe that sustaining our low cost position is a strategic advantage as a retailer of commodity
products. We are undertaking several initiatives foff r the purpose of increasing effff iciency which should allow us
to continue to beat inflation on per-store operating costs to help sustain low store-level costs. We also believe
that through our planned growth and effff iciency initiatives, we can control overhead costs to support an overall
improvement in store returns and keep costs properly scaled as we grow organically.
In order to do this
successfully, we will foff cus on the continued development of our employees and foff ster an operating culture
aligned with business perfrr off rmance, including cost leadership.
Crerr ate advantat ge frff orr m markerr
t volatitt lii ill tyt
We plan to continue to foff cus our product supply and wholesale effff off rts on activities that enhance our
ability to be a low-price retail fuel
leader and our ability to take advantage of fuel price volatility. We will
continue to invest in capabilities and asset positions that support our supply chain strategy. Our distinctive
business model and supply chain advantage allows us to deliver consistent margins over time and withstand
periods of volatility and uncertainty.
Invest foff r thtt e long termrr
We maintain a portfoff lio of predominantly fee-simple assets and utilize what we believe to be an
appropriate debt structure that will allow us to be resilient during times of volatility in fuel demand, price, and
margin. We believe our strong financial position should allow us to profitably execute our low-cost, high volume
retail strategy through periods of both high and low fuel margins while preservirr ng the ability to re-invest in and
grow our existing stores, brand image and supporting capabilities such as enhancing our foff od and beverage
offff erings. Furthermore, in addition to our store-development capital and investments in new capabilities, we
4
have diversified our shareholder distribution mechanism to provide consistent return of capital through quarterly
cash dividends and meaningful share repurchase programs as we continue to foff cus on maximizing shareholder
value.
Industryrr Trends
We operate within the large, growing, competitive and highly fragmented U.S.
retail
fuel and
convenience store industry. Several key industry trends and characteristics, include:
•
•
•
•
Sensitivity to gas prices among cost conscious consumers, and increasing customer demand
foff r low-priced fuel;
Highly fragmented nature of the industry providing larger chain operators like Murphy USA with
significant scale advantage;
Significantly increased fuel capacity in the marketplace by the addition of new-to-industry retail
fuel and convenience stores, and
High levels of consumer traffff ic around supermarkets and large foff rmat hypermarkets, supporting
complementary demand at nearby and cross-promoted retail fuel stores.
Corporate Information
Murphy USA was incorporated in Delaware on March 1, 2013 and our business consists of U.S. retail
marketing operations. Our Murphy USA headquarters is located at 200 Peach Street, El Dorado, Arkansas
71730
is
is
www.murphyusa.com. Our website and the infoff rmation contained on that site, or connected to that site, are not
incorporated by reference into this Annual Report on Form 10-K. Shares of Murphy USA common stock are
traded on the NYSE under the ticker symbol “MUSA”.
Internet website
875-7600.
telephone
number
general
(870)
and
Our
our
Description of Our Business
We market fueling products and convenience merchandise through a network of Company retail stores.
We also market to unbranded wholesale customers through a mixture of Company owned and third-party
terminals. During 2022, the Company sold approximately 4.8 billion gallons of motor fuel through our retail
outlets. Below is a table that lists the states where we operate our stores at December 31, 2022 and the
number of stores in each state.
State
New YoYY rk
North Carolina
No. of stores
48
80
27 Ohio
50 Oklahoma
55
5
4
138
21
South Carolina
TeTT nnessee
TeTT xas
Utah
Virginia
ToTT tal
No. of stores
19
91
44
55
70
93
354
5
23
1,712
State
Alabama
Arkansas
Colorado
Florida
Georgia
Iowa
Illinois
Indiana
Kansas
State
No. of stores
Kentucky
81
Louisiana
69
33 Michigan
137 Missouri
99 Mississippi
22
43
39
7
Nebraska
Nevada
New Jersey
New Mexico
5
The foff llowing table provides a history of our store count during the three-year period ended December
31, 2022:
Start of period
Acquired
New construction
Closed or sold
End of period
YeYY ars Ended December 31,
2022
2021
2020
1,679
—
36
(3)
1,712
1,503
156
23
(3)
1,679
1,489
—
24
(10)
1,503
The foff llowing table present the numbers of our owned and leased stores at December 31, 2022:
Murphy USA
Leased from Walmart1,2
Leased from others2
Murphy Express2
QuickChek3,4,5
Stores with leased land
Stores with leased land and buildings
ToTT tal stores operated
Located on
Owned land
Located on
Leased
Property3,5
ToTT tal Stores
1,047
—
—
239
8
—
—
1,294
—
99
5
165
—
44
105
418
1,047
99
5
404
8
44
105
1,712
1This table excludes 3 locations that were disposed of in prior years but remain subleased from Walmart to the buyer
2Leases foff r Murphy branded stores are operating leases
3Operating leases have an average remaining term, including renewals of 25 years
4Leases foff r QuickChek land are operating leases and Quick Chek store buildings are finance leases
5Finance leases have an average remaining term, including renewals, of 20 years
Since 2007, we have purchased from Walmart the properties underlying many of our stores. Each of
our owned properties that were purchased from Walmart are also subjb ect to Easements and Covenants with
Restrictions Affff ecting Land (“ECRs”), which impose customary restrictions on the use of such properties, which
Walmart has the right to enfoff rce.
In addition, pursuant to the ECRs, certain transfers involving these properties
are subjb ect to Walmart’s right of first refusal or right of first offff er. Also, pursuant to the ECRs, we are prohibited
from transferring such properties to a competitor of Walmart.
For risks related to our agreements with Walmart, including the ECRs, see “Risk Factors—Risks
Relating to Our Business—Walmart retains certain rights in its agreements with us, which may adversely impact
our ability to conduct our business.”
For the remaining stores located on or adjacent to Walmart property that are not owned, we have a
master lease agreement that allows us to rent land from Walmart. The master lease agreement contains
general terms applicable to all rental stores on Walmart property in the United States. The term of the leases is
ten years at each store, with us holding foff ur successive five-year extension options at each site. Approximately
half of the leased sites have over 11 years of term remaining, including renewals, should the Company decide
to exercise the renewal options. The agreement permits Walmart to terminate it in its entirety, or only as to
its option under customary circumstances (including in certain events of bankruptcy or
affff ected sites, at
In addition, the
insolvency), or if we improperly transfer the rights under the agreements to another party.
6
master lease agreement prohibits us from selling a leased store or allowing a third party to operate a leased
store without written consent from Walmart.
For more infoff rmation about our operating leases, see Note 21 "Leases" to the accompanying audited
consolidated financial statements foff r the three years ended December 31, 2022.
from oil companies,
We have numerous sources foff r our retail fuel supply, including nearly all of the maja or and large oil
companies operating in the U.S. We purchase fuel
independent refiners, and other
marketers at rates that fluctuate with market prices and generally are reset daily, and we sell fuel to our
customers at prices that we establish daily. All fuel is delivered by the truckload as needed to replenish supply
at our Company stores. Our inventories of fuel on site turn approximately once daily. By establishing motor fuel
supply relationships with several alternate suppliers foff r most locations, we believe we are able to effff ectively
create competition foff r our purchases among various fuel suppliers. We also believe that purchasing
arrangements with multiple fuel suppliers may help us avoid product outages during times of motor fuel supply
disruptions. At some locations, however, there are limited suppliers foff r fuel in that market and we may have
only one supplier. Our refined products are distributed through a few product distribution terminals that are
wholly owned and operated by us and from numerous terminals owned by others. About half of our wholly
owned terminals are supplied by marine transportation and the rest are supplied by pipeline. We also receive
products at terminals owned by others either in exchange foff r deliveries from our terminals or by outright
purchase.
In addition to the motor fuel sold at our Company stores, our stores carry a broad selection of snacks,
beverages, tobacco products and non-foff od merchandise, as well as a greater foff od and beverage offff ering at our
QuickChek locations.
In 2022, we purchased more than 74% of our merchandise from a single vendor, Core-
Mark, with whom we renewed a new five-year supply agreement in January 2021.
A statistical summary of key operating and financial
indicators foff r each of
the five years ended
December 31, 2022 are reported below.
Branded retail outlets:
Murphy USA®AA
Murphy Express
QuickChek®
ToTT tal
Retail marketing:
ToTT tal fuel contribution (including retail,
PS&W and RINs) (cpg)1
Retail fuel margin per gallon (cpg) (1)
Gallons sold per store month (in
thousands)
Merchandise sales revenue per store
month (in thousands)
Merchandise margin as a percentage of
merchandise sales
2022
2021
2020
2019
2018
As of December 31,
1,151
404
157
1,712
34.3
29.6
1,151
370
158
1,679
26.3
21.9
1,151
352
—
1,503
25.2
22.9
1,161
328
—
1,489
16.1
13.8
1,160
312
—
1,472
16.2
14.7
244.6
229.4
219.5
248.3
244.0
$
193.5
$
186.7
$
166.3
$
148.7
$
139.7
19.7%
19.1%
15.6%
16.0%
16.5%
1 Represents net sales prices foff r fuel less purchased cost of fuel.
Our business is organized into one reporting segment (Marketing). The Marketing segment includes our retail
marketing stores and product supply and wholesale assets. For operating segment infoff rmation, see Note 23
“Business Segments” in the accompanying audited consolidated financial statements foff r the three-year period
ended December 31, 2022.
7
Competition
The U.S. petroleum business is highly competitive, particularly with regard to accessing and marketing
petroleum and other refined products. We compete with other chains of retail fuel stores foff r fuel supply and in
the retail sale of refined products to end consumers, primarily on the basis of price, but also on convenience
In addition, we may also face competition from other retail fueling stores that adopt
and consumer appeal.
marketing strategies similar to ours by associating with non-traditional retailers, such as quick servirr ce
restaurants, supermarkets, discount club stores and hypermarkets, particularly in the geographic areas in which
we operate. We expect that our industry will continue to trend toward this model, resulting in increased
competition to us over time. Moreover, because we do not produce or refine any of the petroleum or other
refined products that we market, we compete with retail gasoline companies that have ongoing supply
relationships with affff iliates or foff rmer affff iliates that manufacture refined products. We also compete with
integrated companies that have their own production and/or refining operations that are at times able to offff seff
t
losses from marketing operations with profits from producing or refining operations, and may be better
positioned to withstand periods of depressed retail margins or supply shortages.
In addition, we compete with
other retail and wholesale gasoline marketing companies that have more extensive retail outlets and greater
brand name recognition. Some of our competitors have been in existence longer than we have and have
greater financial, marketing and other resources than we do. As a result, these competitors may have a greater
ability to bear the economic risks inherent in all phases of our business and may be able to respond better to
changes in the economy and new opportunities within the industry.
The retail gasoline industry in the United States is highly competitive due to ease of entry and constant
change in the number and type of retailers offff ering similar products and servirr ces. With respect to merchandise,
our retail stores compete with other convenience store chains, independently owned convenience stores,
supermarkets, drugstores, discount clubs, gasoline servirr ce stores, mass merchants, fast foff od operations and
other similar retail outlets. Non-traditional retailers, including supermarkets, discount club stores and mass
merchants, now compete directly with retail gasoline stores. These non-traditional gasoline retailers have
obtained a significant share of the gasoline market, and their market share is expected to grow, and these
retailers may use promotional pricing or discounts, both at the fuel pump and in the convenience store, to
encourage in-store merchandise sales and gasoline sales.
In addition, some large retailers and supermarkets
are adjusting their store layouts and product prices in an attempt to appeal to convenience store customers.
Maja or competitive factors are: location, ease of access, product and servirr ce selection, gasoline brands, pricing,
customer servirr ce, store appearance, cleanliness and safety.
Market Conditions and Seasonality
Market conditions in the oil and gas industry are cyclical and subjb ect to global economic and political
events, such as Russia's invasion of Ukraine, that upset global supply and demand and impact the price of
crude oil and to new and changing governmental regulations. Our operating results are affff ected by price
changes in crude oil, natural gas and refined products, pandemics that may lead to travel restrictions or
changed customer behavior, and changes in competitive conditions in the markets we serverr
.
to seasonal
Oil prices, wholesale motor fuel costs, motor fuel sales volumes, motor fuel gross margins and
typically
merchandise sales can be subjb ect
increases during the summer driving season, and typically falls during the winter months. Travel, recreation and
construction are typically higher in these months in the geographic areas in which we operate, increasing the
demand foff r motor fuel and merchandise that we sell. Therefoff re, our revenues and sales volumes are typically
higher in the second and third quarters of our fiscal year. A significant change in any of these factors, including
a significant decrease in consumer demand (other than typical seasonal variations), could materially affff ect our
motor fuel and merchandise volumes, motor fuel gross profit and overall customer traffff ic, which in turn could
have a material adverse effff ect on our business, financial condition, results of operations and cash flows.
fluctuations. Consumer demand foff r motor fuel
Trademarks
In the highly competitive business in which we operate, our trade names, servirr ce marks and trademarks
are important to distinguish our products and servirr ces from those of our competitors. We sell gasoline primarily
under the Murphy USA®AA and Murphy Express brands, which we acquired from Murphy Oil. We acquired
8
ownership of the QuickChek® trademark and others as a result of the QuickChek acquisition. We are not aware
of any facts which would negatively impact our continuing use of any of the above trade names, servirr ce marks
or trademarks.
Technology Systems
All of our Company stores use a standard hardware and softff ware platfoff rm foff r point-of-ff sale (“POS”) that
facilitates item level scanning of merchandise foff r sales and inventory, and the secure acceptance of all maja or
payment methods – cash, check, credit, debit, fleet and mobile.
In addition, our QuickChek stores have self-ff
third-party delivery servirr ces. Our standard approach to large scale and
servirr ce checkouts and support
geographically dispersed deployments reduces total technology cost of ownership foff r the POS and inherently
makes the system easier to use, support, and replace. This POS technology strategy reflects close alignment
with our growth plan.
We use a combination of softff ware as a servirr ce, commercial offff
the shelf softff ware, and custom softff ware
applications developed using modern industry standard tools and methodologies to manage and run our
business. For our financial systems, we use enterprise class systems which provide significant flexibility in
managing corporate and store operations, as well as scalability foff r growth.
We invest in disaster recovery, system backups, redundancy, firewall, remote access security and virus
and spam protection to ensure a high level of system security and availability. We have systems, business
policies and processes around access controls, password expirations and file retention to ensure a high level of
control within our technology network.
Environmental
We are subjb ect
to numerous federal, state and local environmental
laws, regulations and permit
requirements. Such environmental requirements have historically been subjb ect to frequent change and have
tended to become more stringent over time. While we strive to comply with these environmental requirements,
any violation of such requirements can result in litigation, increased costs or the imposition of significant civil
and criminal penalties, injunctions or other sanctions. Compliance with these environmental requirements
affff ects our overall cost of business, including capital costs to construct, maintain and upgrade equipment and
facilities, and ongoing operating expenditures. We maintain sophisticated leak detection and remote monitoring
systems foff r underground storage tanks at most of our retail fueling stores and install up-to-date tank, piping,
and monitoring systems at our new stores. We operate above ground bulk petroleum tanks at our terminal
locations and have upgraded certain product lines and conduct annual monitoring to help mitigate the risk of
potential soil and groundwater contamination. We allocate a portion of our capital expenditure program to
comply with environmental
laws and regulations, and such capital expenditures are projo ected to be
approximately $6.7 million in 2023.
We could be subjb ect to joint and several as well as strict liability foff r environmental contamination.
Some of our current and foff rmer properties have been operated by third parties whose handling and
management of hazardous materials were not under our control, and substantially all of them have or previously
had motor fuel or petroleum product storage tanks. Pursuant to certain environmental laws and regulations, we
could be responsible foff r investigating and remediating contamination relating to such stores, including impacts
attributable to prior site occupants or other third parties, and foff r implementing remedial measures to mitigate the
risk of future contamination. We may also have liability foff r contamination and violations of environmental laws
and regulations under contractual arrangements with third parties, such as landlords and foff rmer owners of our
sites, including at our sites in close proximity to Walmart stores. Contamination has been identified at certain of
our current and foff rmer terminals and retail fueling stores, and we are continuing to conduct investigation and
remediation activities in relation to such properties. The discovery of additional contamination or the imposition
of further investigation or remediation obligations at these or other properties could result in significant costs. In
some cases, we may be eligible to receive money from state “leaking petroleum storage tank” trust funds to
help fund remediation. However, receipt of such payments is subjb ect to stringent eligibility requirements and
other limitations that can significantly reduce the availability of such trust fund payments and may delay or
increase the duration of associated cleanups. We could also be held responsible foff r contamination relating to
third-party sites to which we or our predecessors have sent hazardous materials foff r recycling or disposal. We
9
are currently identified as a potentially responsible party ("PRP") in connection with one such disposal site. Any
such contamination, leaks from storage tanks or other releases of regulated materials could result in claims
against us by governmental authorities and other third parties foff r fines or penalties, natural resource damages,
personal
to legal and administrative
proceedings governing the investigation and remediation of contamination or spills from current and past
operations, including from our terminal operations and leaking petroleum storage tanks.
From time to time, we are subjb ect
injury, and property damage.
Consumer demand foff r our products may be adversely impacted by fuel economy standards as well as
greenhouse gas (“GHG”) vehicle emission reduction measures. The U.S. Environmental Protection Agency
(“EPAPP ”) and the National Highway Traffff ic Safety Administration (“NHTSA”) issued Corporate AveAA rage Fuel
Economy ("CAFE") standards in 2012 that set fuel economy standards and regulated emissions of GHGs foff r
In 2016, the NHTSA finalized a rule imposing stricter
fleets of 2017-2025 model year cars and light duty trucks.
penalties against those who exceed CAFE standards.
In December 2021, the EPAPP finalized standards foff r
In March 2022 NHTSA
2023-2026 model years that are more stringent than those in prior standards from 2020.
finalized CAFE standards addressing the 2024-2026 model years that are more stringent than those in prior
standards from 2020. The EPAPP and NHTSA also regulate GHG emission and fuel effff iciency standards foff r
medium and heavy-duty vehicles and in August 2016,
jointly finalized "Phase 2" vehicle and engine
perfrr off rmance standards covering model years 2021 through 2027, which apply to semi-trucks, large pick-up
trucks and vans, and all types and sizes of buses and work trucks.
In December 2022, the EPAPP finalized a rule
that sets more stringent standards to reduce pollution from heavy duty vehicles and engines beginning with
model year 2027; this was the first rulemaking under the EPAPP 's Clean Trucks Plan, which is an EPAPP regulatory
initiative to reduce GHG emissions and other harmful air pollutants from heavy-duty trucks via various
rulemakings. These and any future increases in or changes to fuel economy standards or GHG emission
reduction requirements could decrease demand foff r our products.
Air emissions from our facilities are also subjb ect to regulation. For example, certain of our fueling stores
may be required to install and maintain vapor recovery systems to control emissions of volatile organic
compounds to the air during the vehicle fueling process. Although the EPAPP declined to revise national ambient
air quality standards foff r ground level ozone in December 2020, the EPAPP under a President Biden administration
may revise such standards, which could require additional equipment upgrades and operating controls that
could increase our capital and operating expenses. Any other future environmental regulatory changes
applicable to our business or operations may also result in increased compliance costs.
Our business is also subjb ect to increasingly stringent laws and regulations governing the content and
characteristics of fuel. For example, the gasoline we sell generally must meet increasingly rigorous sulfur and
benzene standards.
In addition, renewable fuel standards generally require refiners and gasoline blenders to
meet certain volume quotas or obtain representative trading credits foff r renewable fuels that are established as a
percentage of their finished product production. Such fuel requirements and renewable fuel standards may
adversely affff ect our wholesale fuel purchase costs.
Sale of Regulated Products
In certain areas where our retail stores are located, state or local laws limit the hours of operation foff r
the sale of alcoholic beverages and restrict the sale of alcoholic beverages and tobacco products to persons
younger than a certain age. State and local regulatory agencies have the authority to approve, revoke, suspend
or deny applications foff r and renewals of permits and licenses relating to the sale of alcoholic beverages, as well
as to issue fines to convenience stores foff r the improper sale of alcoholic beverages and tobacco products.
Failure to comply with these laws may result in the loss of necessary licenses and the imposition of fines and
penalties on us. Such a loss or imposition could have a material adverse effff ect on our business, liquidity and
results of operations. In many states, retailers of alcoholic beverages have been held responsible foff r damages
caused by intoxicated individuals who purchased alcoholic beverages from them. While the potential exposure
foff r damage claims as a seller of alcoholic beverages and tobacco products is substantial, we have adopted
procedures intended to minimize such exposure. We also adhere to the rules governing lottery sales as
determined by state lottery commissions in each state in which we make such sales.
10
Safety
We are subjb ect to the requirements of the federal Occupational Safety and Health Act (“OSHA”) and
comparable state statutes that regulate the protection of the health and safety of workers.
In addition, the
OSHA hazard communication standard requires that certain infoff rmation be maintained about hazardous
materials used or produced in our operations and that this infoff rmation be provided to employees, state and local
government authorities and citizens.
Other Regulatoryrr Matters
Our retail stores are also subjb ect to regulation by federal agencies and to licensing and regulations by
state and local health, sanitation, fire and other departments relating to the development and operation of retail
stores, including regulations relating to zoning and building requirements and the preparation and sale of foff od.
Diffff iculties in obtaining or failures to obtain the required licenses or approvals could delay or prevent the
development of a new retail store in a particular area.
Our operations are also subjb ect to federal and state laws governing such matters as wage rates,
overtime and citizenship requirements. At the federal and state levels, there are proposals under consideration
Increases in wages,
from time to time to increase minimum wage rates and periods of protected leaves.
overtime pay, or benefits due to changes in the statutory minimum salary requirements or minimum wage rates
or mandated health benefits would result in an increase in our labor costs. Such cost increases, or the
penalties foff r failing to comply, could adversely affff ect our business, financial condition, and results of operations.
We monitor such changes to ensure our continued compliance with these ever-changing regulations.
Human Capital
At Murphy USA, we know that the strength of our workfoff rce is critical to our long-term success and we
strive to build upon this through the foff undation laid by our Principles. As of December 31, 2022, Murphy USA
had over 15,100 employees, including 6,000 full-time employees, and 9,100 part-time employees working at our
stores, support centers, and corporate headquarters.
Murphy USA is committed to the attraction, development, retention, and safety of our employees. Our
initiatives foff r fiscal year 2022 addressed, among other things, (i) Our Principles, (ii) Inclusion and Diversity, (iii)
TaTT lent Management, (iv) ToTT tal Rewards, and (v) Workfoff rce Safety.
Our Principles are the heart of our rich culture, creating the foff undation of how we operate at Murphy
USA. They are the values that shape the strong character of our company. The basis foff r our human capital
management foff cus is driven by our core Principles of Integrity, Respect, Citizenship, and Spirit.
Integrity
Be persistently ethical
and honest to foster
trust. We carry
ourselves with a quiet
confidence because we
know that – in the long
run — our character will
speak foff r itself. We
always do the right
thing, even when no one
is watching.
Respect
Citizenship
Value and appreciate
others. We encourage
and promote diverse
approaches in all our
thoughts, ideas and
actions. We understand
the value gained through
embracing the strengths,
experiences, and
perspectives of others.
Believe in the power of
good actions. We are
committed to the greater
good foff r our employees,
company, customers,
suppliers and other
stakeholders. We are
responsible and involved
in the communities in
which we live and work as
ambassadors of Murphy
USA.
Spirit
Strive to be the best. We
are highly engaged and
truly care about what we
do and how we are
perceived. We have a
strong desire to exceed
our customers’
expectations. We work
closely with each other to
drive our success through
reliable and consistent
execution.
11
We are committed to living our Principles, specifically, the principle of "Respect" as it relates to inclusion
and diversity. We are intentional about working towards increasing visible and invisible diversity throughout
Murphy USA through several talent initiatives:
• We partner with universities to attract diverse talent.
• We identifyff critical roles and potential successors with our succession management program.
• We strive to liftff up talent through diffff erentiated and personalized development opportunities.
We employ thoughtful talent management strategies, including annual succession planning, semi-
annual people reviews, promotion review committees, mid-year and annual perfrr off rmance reviews, and cohort
perfrr off rmance review calibrations.
We are dedicated to helping our employees succeed professionally by offff ering a robust suite of learning
and development opportunities.
• Our field teams have comprehensive functional training programs at each level.
• We have individual development plans (IDPs) and an eLearning platfoff rm to support employee-
driven development.
• We offff er a foff rmal stretch role and assignment process to support development at all levels.
• We have a mentorship process.
•
Leadership development opportunities are available foff r all leaders.
• We provide tuition reimbursement foff r home offff ice employees, store managers, and assistant
store managers.
• We sponsor employees seeking to earn their GED.
We have demonstrated a history of investing in our employees by offff ering competitive salaries and
wages. We offff er comprehensive benefit packages designed to support employees' overall well-being. We have
benefit packages available at all
levels of the organization. The benefits package offff ered to our full-time
employees includes:
• Comprehensive health, dental, vision, and life insurance.
•
•
•
•
Parental leave available to all new parents foff r birth, adoption or foff ster placement.
An Employee Assistance Program.
401K program with company match.
Paid time offff including: vacation, sick, parental, bereavement, and holidays.
A thoughtful and well-planned approach has been taken to evaluate and execute benefits consolidation
between Murphy USA and QuickChek, where appropriate. At present, several QuickChek benefit programs and
vendors have been consolidated with Murphy USA's, including medical, dental, vision, flexible spending, and
retirement. We continue to evaluate QuickChek's benefit plans, and such evaluation could lead to additional
consolidation with the Murphy USA plans in the future.
We are committed to keeping our employees and customers safe through foff stering and maintaining a
strong safety culture and emphasizing the importance of our employees’ role in identifyiff ng, mitigating and
communicating safety risks. We have continued to build our rapid response program to ensure safety events
(i.e., slip and falls, medical emergencies, and vehicle accidents) are escalated quickly and responded to
effff iciently.
12
Properties
Our headquarters of approximately 120,000 square feet is located at 200 Peach Street, El Dorado,
Arkansas. We also own and operate two other offff ice buildings in El Dorado, Arkansas that house our store
support center and technology servirr ces personnel, and we own and operate an offff ice building and training
center in Whitehouse Station, New Jersey foff r our QuickChek store support personnel. We have numerous
owned and leased properties foff r our retail fueling stores as described under “Description of Our Business,” as
well as wholly-owned product distribution terminals.
Website access to SEC Reports
Interested parties may obtain the Company’s public disclosures filed with the Securities and Exchange
Commission (SEC), including Form 10-K, Form 10-Q, Form 8-K and other documents, by accessing the
Investor Relations section of Murphy USA Inc.’s website at ir.corporate.murphyusa.com.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and
Exchange Act of 1934 are available on our website, free of charge, as soon as reasonably practicable aftff er such
reports are filed with, or furnished to, the SEC. Alternatively, you may access these reports at the SEC’s
website at http:/// www.sec.gov.
The infoff rmation contained on these websites referenced herein is not
incorporated by reference into this filing.
Item 1A. RISK FACTORS
YoYY u should carerr fuff llll yl consider each of thtt e foff llll owiww nii g rirr sksii
and allll of thtt e othtt er inii
foff rmrr atitt on contat inii ed inii
thtt isii
Annual Reportrr on FoFF rmrr 10-K.KK
Our businii ess, prorr spects,tt
fiff nii anciaii
l condidd titt on, rerr sultstt of operarr titt ons or cash flff owsww could be materirr aii
llll yl and
adverserr
lyl affff eff cted by any of thtt ese rirr sks,
ii
and,d as a rerr sult,t thtt e trtt arr didd nii g prirr ce of our common stock could declill nii e.
Risks Relating to our Company
Our operations present hazards and risks, which may not be fully covered by insurance,
if
If a significant accident or event occurs for which we are not adequately insured, our
insured.
operations and financial results could be adversely affff ected.
The scope and nature of our operations present a variety of operational hazards and risks, including
explosions, fires, toxic emissions, and natural catastrophes that must be managed through continual oversight
and control. These and other risks are present throughout our operations. As protection against these hazards
and risks, we maintain insurance against many, but not all, potential losses or liabilities arising from such risks.
Uninsured losses and liabilities arising from operating risks could reduce the funds available to us foff r capital
and investment spending and could have a material adverse effff ect on our financial condition, results of
operations and cash flows.
Our indebtedness could restrict our business and adversely impact our financial condition,
results of operations or cash flows; our leverage could increase the overall cost of debt funding and
decrease the overall debt capacity and commercial credit available to us in the future.
We have debt obligations that could restrict our business and adversely impact our financial condition,
results of operations or cash flows. This outstanding indebtedness could have significant consequences to our
future operations, including:
• making it more diffff icult foff r us to meet our payment and other obligations under our outstanding
debt;
13
•
•
•
•
resulting in an event of default if we fail to comply with the financial and other restrictive
covenants contained in our debt agreements, which event of default could result in all of our
debt becoming immediately due and payable;
reducing the availability of our cash flow to fund working capital, capital expenditures,
acquisitions and other general corporate purposes, and limiting our ability to obtain additional
financing foff r these purposes;
limiting our flexibility in planning foff r, or reacting to, and increasing our vulnerability to, changes
in our business, the industry in which we operate and the general economy; and
placing us at a competitive disadvantage compared to our competitors that have less debt or
are less leveraged.
Any of the above-listed factors could have an adverse effff ect on our business, financial condition and
results of operations.
In addition, our credit facilities and the indentures that govern the notes include restrictive covenants
that, subjb ect to certain exceptions and qualifications, restrict or limit our ability and the ability of our restricted
subsidiaries to, among other things, incur additional indebtedness, pay dividends, make certain investments,
sell certain assets and enter into certain strategic transactions, including mergers and acquisitions. These
covenants and restrictions could affff ect our ability to operate our business, and may limit our ability to react to
market conditions or take advantage of potential business opportunities as they arise.
Our leverage may increase the overall cost of debt funding and decrease the overall debt capacity and
commercial credit available to us. Our leverage could increase with additional borrowings on our shelf
registration statement. We have below investment-grade ratings on our notes from Moody’s and S&P while our
credit facilities are rated investment grade. Our credit ratings could be lowered or withdrawn entirely by a
ise
ratings agency if, in its judgment, the circumstances warrant.
we do not obtain an investment grade rating in the future foff r the notes, or if we do and a rating agency were to
downgrade us again to below investment grade, our borrowing costs would increase and our funding sources
could decrease. Actual or anticipated changes or downgrades in our ratings, including any announcement that
our ratings are under review foff r a downgrade, could adversely affff ect our business, cash flows, financial
condition and operating results.
If our existing ratings are lowered, or otherwrr
The interest rates on our credit facilities may be impacted by the phase-out of the London
Interbank Offff ered Rate ("LIBOR") and the transition to the Secured Overnight Financing Rate ("SOFR").
Interest rates on borrowings under our credit agreement may be based on LIBOR.
Following
announcements by the United Kingdom Financial Conduct Authority (“FCA”) and ICE Benchmark Administration
Limited, the FCA-regulated LIBOR administrator, publication of the one-week and two-month United States
Dollar (“USD”)-LIBOR tenors ceased aftff er December 31, 2021. While publication of all other USD-LIBOR
tenors is expected to cease aftff er June 30, 2023, U.S. regulators and the FCA have published guidance
instructing banks to cease entering into new contracts referencing USD-LIBOR no later than December 31,
2021, with limited exceptions.
In March 2020, the Federal Reserverr
As of the date hereof, the current recommended replacement foff r USD-LIBOR is the Secured Overnight
Financing Rate (“SOFR”).
Bank of New YoYY rk began publishing 30-, 90-
and 180-day tenor SOFR AveAA rages and a SOFR Index. In addition, foff rwrr ard-looking SOFR term rates are being
published. However, the composition and characteristics of SOFR are not the same as those of LIBOR. As a
result, there can be no assurance that SOFR or any rate based on SOFR will perfrr off rm in the same way as
LIBOR would have at any time. For example, since publication of SOFR began on April 3, 2018, daily changes
in SOFR have, on occasion, been more volatile than daily changes in comparable benchmark or other market
rates.
Any transition away from LIBOR as a benchmark foff r establishing the applicable interest rate is complex
and may affff ect
the cost of servirr cing our debt under our credit agreement. Although these borrowing
arrangements provide foff r alternative base rates, the composition and characteristics of such alternative base
rates are not the same as those of LIBOR, and the consequences of the phase-out of LIBOR cannot be entirely
14
predicted at this time. We expect to address the transition of all our LIBOR based contracts prior to June 30,
2023.
Our ability to meet our payment obligations under the notes and our other debt depends on our
ability to generate significant cash flow in the future.
Our ability to meet our payment and other obligations under our debt instruments, including the notes,
depends on our ability to generate significant cash flow in the future. This, to some extent, is subjb ect to general
economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our
control. We cannot provide assurance that our business will generate cash flow from operations, or that future
borrowings will be available to us under our credit agreement or any future credit facilities or otherwrr
ise, in an
amount suffff icient to enable us to meet our payment obligations under the notes and our other debt and to fund
other liquidity needs.
If we are not able to generate suffff icient cash flow to servirr ce our debt obligations, we may
need to refinance or restructure our debt, including the notes, sell assets, reduce or delay capital investments,
or seek to raise additional capital.
If we are unable to implement one or more of these alternatives, we may not
be able to meet our payment obligations under the notes and our other debt.
Despite our current indebtedness levels, we may be able to incur substantially more debt. This
could exacerbate further the risks associated with our leverage.
indebtedness,
We and our subsidiaries may incur substantial additional
including secured
indebtedness, in the future, subjb ect to the terms of the indentures governing the notes and our credit agreement
that limit our ability to do so. Such additional indebtedness may include additional notes, which will also be
guaranteed by the guarantors, to the extent permitted by the indentures and our credit agreement. Although the
indentures limit our ability and the ability of our subsidiaries to create liens securing indebtedness, there are
significant exceptions to these limitations that will allow us and our subsidiaries to secure significant amounts of
If we or our subsidiaries incur secured
indebtedness without equally and ratably securing the notes.
indebtedness and such secured indebtedness is either accelerated or becomes subjb ect
to a bankruptcy,
liquidation or reorganization, our and our subsidiaries' assets would be used to satisfyff obligations with respect
to the indebtedness secured thereby befoff re any payment could be made on the notes that are not similarly
In addition, the indentures governing the Senior Notes will not prevent us or our subsidiaries from
secured.
incurring other liabilities that do not constitute indebtedness.
If new debt or other liabilities are added to our
current debt levels, the related risks that we now face could intensifyff .
In connection with our Separation from Murphy Oil, Murphy Oil has agreed to indemnifyff us for
certain liabilities and we have agreed to indemnifyff Murphy Oil for certain liabilities.
If we are required to
act under these indemnities to Murphy Oil, we may need to divert cash to meet those obligations and
our financial results could be negatively impacted. The Murphy Oil indemnity may not be suffff icient to
insure us against the full amount of liabilities for which it will be allocated responsibility, and Murphy
Oil may not be able to satisfyff
its indemnification obligations to us in the future.
Pursuant to the Separation and Distribution Agreement ("the Separation") and certain other agreements
with Murphy Oil, Murphy Oil has agreed to indemnifyff us foff r certain liabilities, and we have agreed to indemnifyff
Indemnities that we may be required to provide Murphy Oil are not subjb ect to
Murphy Oil foff r certain liabilities.
any cap, may be significant and could negatively impact our business, particularly indemnities relating to our
actions that could impact the tax-free nature of the distribution. Third parties could also seek to hold us
responsible foff r any of the liabilities that Murphy Oil has agreed to retain, and under certain circumstances, we
may be subjb ect to continuing contingent liabilities of Murphy Oil foff llowing the Separation. Further, Murphy Oil
may not be able to fully satisfyff
its indemnification obligations. Moreover, even if we ultimately succeed in
recovering from Murphy Oil any amounts foff r which we are held liable, we may be temporarily required to bear
these losses ourselves. Each of these risks could negatively affff ect our business, results of operations and
financial condition.
15
Risks Relating to Our Business
Volatility in the global prices of oil and petroleum products and general economic conditions that
are largely out of our control, as well as seasonal variations in fuel pricing, can significantly affff ect our
operating results.
Our net income is significantly affff ected by changes in the margins on retail and wholesale gasoline
marketing operations. Oil and domestic wholesale gasoline markets are volatile. General political conditions,
acts of war or terrorism, such as Russia's invasion of Ukraine, instability in oil producing regions, particularly in
the Middle East and South America, and the value of U.S. dollars relative to other foff reign currencies, particularly
those of oil producing nations, have significantly affff ected and in the future could significantly affff ect oil supplies
and wholesale gasoline costs.
In addition, the supply of gasoline and our wholesale purchase costs can be
adversely affff ected in the event of a shortage, which could result from, among other things, lack of capacity at oil
refineries, sustained increase in global demand or the fact that our gasoline contracts do not guarantee an
uninterrupted, unlimited supply of gasoline. Our wholesale purchase costs could also be adversely affff ected by
increasingly stringent regulations regarding the content and characteristics of
fuel products. Significant
increases and volatility in wholesale gasoline costs could result in lower gasoline gross margins per gallon. This
volatility makes it extremely diffff icult to predict the effff ect that future wholesale cost fluctuations will have on our
operating results and financial condition in future periods.
Except in limited cases, we typically do not seek to hedge any significant portion of our exposure to the
effff ects of changing prices of commodities. Dramatic increases in oil prices reduce retail gasoline gross
margins, because wholesale gasoline costs typically increase faster than retailers are able to pass them along
to customers. We purchase refined products, particularly gasoline, needed to supply our retail stores.
Therefoff re, our most significant costs are subjb ect to volatility of prices foff r these commodities. Our ability to
successfully manage operating costs is important because we have little or no influence on the sales prices or
regional and worldwide consumer demand foff r oil and gasoline. Furthermore, oil prices, wholesale motor fuel
costs, motor fuel sales volumes, motor fuel gross margins and merchandise sales can be subjb ect to seasonal
fluctuations. For example, consumer demand foff r motor fuel typically increases during the summer driving
season, and typically falls during the winter months. Travel, recreation and construction are typically higher in
increasing the demand foff r motor fuel and
these months in the geographic areas in which we operate,
merchandise that we sell. Therefoff re, our revenues and/or sales volumes are typically higher in the second and
third quarters of our fiscal year. A significant change in any of these factors, including a significant decrease in
consumer demand (other
fuel and
merchandise volumes, motor fuel gross profit and overall customer traffff ic, which in turn could have a material
adverse effff ect on our business, financial condition, results of operations and cash flows.
than typical seasonal variations), could materially affff ect our motor
Further, recessionary economic conditions, higher interest rates, higher gasoline and other energy
costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels,
higher tax rates and other changes in tax laws or other economic factors may affff ect consumer spending or
buying habits, and could adversely affff ect the demand foff r products we sell at our retail stores. Unfavorable
economic conditions, higher gasoline prices and unemployment
levels can affff ect consumer confidence,
spending patterns and vehicle miles driven. These factors can lead to sales declines in both gasoline and
general merchandise, and in turn have an adverse impact on our business, financial condition, results of
operations and cash flows.
Walmart continues to be a key relationship with regard to our Murphy USA network.
At December 31, 2022, most of our Murphy branded stores were located in close proximity to Walmart
Supercenter stores. Therefoff re, our relationship with Walmart, the continued goodwill of Walmart and the
integrity of Walmart’s brand name in the retail marketplace are all
important drivers foff r our business. Any
deterioration in our relationship with Walmart could have an adverse effff ect on operations of the stores that are
In addition, our competitive posture could be weakened by
branded Murphy USA and participate in a discount.
negative changes at Walmart. Many of our Company stores benefit from customer traffff ic generated by Walmart
retail stores, and if the customer traffff ic through these host stores decreases due to the economy or foff r any other
reason, our sales could be materially and adversely affff ected.
16
The current level of revenue that is generated from RINs may not be sustainable.
Murphy USA's business is impacted by its ability to generate revenues from capturing and subsequently
selling Renewable Identification Numbers ("RINs"), a practice enabled through the blending of petroleum-based
fuels with renewable fuels. RIN prices also have an impact on our cost of goods sold foff r petroleum products,
which can be positive or negative depending on the movement of RIN prices. The market price foff r RINs
fluctuates based on a variety of factors, including but not limited to governmental and regulatory action and
market dynamics.
In 2022, RIN prices continued to fluctuate but were higher on average due to uncertainty of
future regulations. Although a decline in RIN prices could have a material impact on the Company's revenues,
Murphy USA's business model is not dependent on its ability to generate revenues from the sale of RINs.
Current litigation and future rule making could impact the Renewable Fuel Standard ("RFS") program.
The RFS program is the regulatory means by which the federal government requires the introduction of an
increasing amount of renewable fuel into the fuel supply. As it is, refiners are obligated to obtain—either by
blending biofuels into petroleum-based fuels or through purchase on the open market—and then retire with the
federal government RINs to satisfyff
their individual obligations. On December 1, 2022, the EPAPP announced a
proposed rule to establish blending mandates foff r 2023, 2024, and 2025. This is the EPAPP 's first RFS proposal
since the statutory volumetric blending mandates that Congress established in 2007 have expired.
We are exposed to risks associated with the interruption of supply and increased costs as a result
of our reliance on third-party supply and transportation of refined products.
We utilize key product supply and wholesale assets, including our pipeline positions and product
distribution terminals, to supply our retail fueling stores. Much of our competitive advantage arises out of these
proprietary arrangements which, when disrupted, have in the past and could in the future adversely affff ect us,
and such effff ects could be material. The lasting effff ects of the coronavirus ("COVID-19") pandemic continues to
In addition to our own operational risks discussed above, we
cause disruptions in supply chains into 2023.
could experience interruptions of supply or increases in costs to deliver refined products to market if the ability
of the pipelines or vessels to transport petroleum or refined products is disrupted because of weather events,
accidents, governmental regulations or third-party actions. Furthermore, at some of our locations there are very
few suppliers foff r fuel in that market.
Changes in credit card expenses could reduce our profitability, especially on gasoline.
A significant portion of our retail sales involve payment using credit cards. We are assessed credit card
fees as a percentage of transaction amounts and not as a fixed dollar amount or percentage of our gross
margins. Higher gasoline prices result in higher credit card expenses, and an increase in credit card use or an
increase in credit card fees would have a similar effff ect. Therefoff re, credit card fees charged on gasoline
purchases that are more expensive as a result of higher gasoline prices are not necessarily accompanied by
In fact, such fees may cause lower profitability. Lower income on gasoline sales caused
higher gross margins.
by higher credit card fees may decrease our overall profitability and could have a material adverse effff ect on our
business, financial condition, results of operations and cash flows.
Failure to maintain the quality and safety of our food products could adversely impact our
reputation and business.
As we continue to foff cus on enhancing our foff od and beverage offff erings, concerns regarding the quality
or safety of our foff od products or our foff od supply chain, even if factually incorrect or based on isolated incidents,
could hurt our sales of prepared foff od products and possibly lead to product liability and personal injury claims,
litigation, government agency investigations and damages.
Walmart retains certain rights in its agreements with us, which may adversely impact our ability to
conduct our business.
Our owned properties that were purchased from Walmart are subjb ect to Easements with Covenants and
Restrictions Affff ecting Land (the “ECRs”) between us and Walmart. The ECRs impose customary restrictions on
the use of our properties, which Walmart has the right to enfoff rce. The ECRs also provide that if we propose to
17
sell a fueling store property or any portion thereof (other than in connection with the sale of all or substantially all
of our properties that were purchased from Walmart or in connection with a bona fide financing), Walmart has a
right of first refusal to purchase such property or portion thereof on similar terms. Subjb ect to certain exceptions
(including a merger in which we participate, the transfer of any of our securities or a change in control of us), if
we market foff r sale to a third party all or substantially all of our properties that were purchased from Walmart, or
if we receive an unsolicited offff er to purchase such properties that we intend to accept, we are required to notifyff
Walmart. Walmart then has the right, within 90 days of receipt of such notice, to make an offff er to purchase
such properties.
If Walmart makes such an offff er, foff r a period of one year we will generally only be permitted to
accept third-party offff ers where the net consideration to us would be greater than that offff ered by Walmart.
The ECRs also prohibit us from transferring all or substantially all of our fueling store properties that
were purchased from Walmart to a “competitor” of Walmart, as reasonably determined by Walmart. The term
“competitor” is generally defined in the ECRs as an entity that owns, operates or controls grocery stores or
supermarkets, wholesale club operations similar to that of a Sam’s Club, discount department stores or other
discount retailers similar to any of the various Walmart store prototypes or pharmacy or drug stores.
if Murphy Oil USA,
Similarly, some of our leased properties are subjb ect to certain rights retained by Walmart. Our master
is acquired or becomes party to any merger or
Inc.
lease agreement states that
consolidation that results in a material change in the management of the stores, Walmart will have the option to
purchase the stores at fair market value. The master lease also prohibits us from selling all or any portion of a
store without first offff ering to sell all or such portion to Walmart on the same terms and conditions. These
provisions may restrict our ability to conduct our business on the terms and in the manner we consider most
favorable and may adversely affff ect our future growth.
An inability to maintain a multi-year new store projo ect pipeline may cause our Company's growth
to slow in 2023 and beyond.
Our ability to grow by up to 45 new stores and up to 30 raze-and-rebuild stores in 2023 and by up to 55
NTI stores and 25 raze-and-rebuild stores in future years relies on the continued growth of our projo ect pipeline
and the building material supply chain. We have a very active Asset Development group that works to foff cus on
If the Asset Development
our key target areas to locate suitable traffff ic count locations foff r this future growth.
group is unable to locate suitable locations or is unable to close the purchase foff r those locations in a timely
fashion, the Company could find that it does not have suffff icient land to fulfill its pipeline. Further, permitting
delays due to local government agency ability to timely respond to our requests or construction delays from
supply chain or labor constraints could also negatively impact our projo ect pipeline.
We currently have one primaryrr supplier for over 74% of our merchandise. A disruption in supply
could have a material effff ect on our business.
In 2022, over 74% of our merchandise, including most tobacco products and grocery items, was
In January 2021, we renewed and extended foff r another
purchased from a single wholesale grocer, Core-Mark.
five years a supply contract with Core-Mark.
If Core-Mark is unable to fulfill its obligations under our contract,
alternative suppliers that we could use in the event of a disruption may not be immediately available or offff er
merchandise on similar commercial terms. A disruption in supply could have a material effff ect on our business,
financial condition, results of operations and cash flows.
Capital financing may not always be available to fund our activities.
We usually must spend and risk a significant amount of capital to fund our activities. Although most
capital needs are funded from operating cash flow, the timing of cash flows from operations and capital funding
needs may not always coincide, and the levels of cash flow may not fully cover capital funding requirements.
From time to time, we may need to supplement our cash generated from operations with proceeds from
financing activities. We have entered into a credit facility to provide us with available financing foff r working
capital and other general corporate purposes. This credit facility is intended to meet any ongoing cash needs in
excess of internally generated cash flows. Uncertainty and volatility in financial markets may materially impact
institutions to fund their commitments to us under our credit facility.
the ability of the participating financial
18
Accordingly, we may not be able to obtain the full amount of the funds available under our credit facility to
satisfyff our cash requirements, and our failure to do so could have a material adverse effff ect on our operations
and financial position.
We could be adversely affff ected if we are not able to attract and retain qualified personnel.
We are dependent on our ability to attract and retain qualified personnel.
If, foff r any reason, we are not
able to attract and retain qualified personnel, our business, financial condition, results of operations and cash
flows could be adversely affff ected.
Risks Relating to the QuickChek Acquisition
The anticipated benefits of the QuickChek acquisition may not be realized or those benefits may
take longer to realize than expected.
The long-term success of the QuickChek acquisition will depend, on our ability to realize the foff recasted
benefits and cost savings from our acquisition of QuickChek. We may not be able to maintain the growth rate,
levels of revenue, earnings, or operating effff iciency that we and QuickChek have achieved to-date, or might
have achieved separately.
Many factors affff ecting our ability to realize anticipated benefits are outside of our control and any one
of them could result in increased costs, decreases in the amount of expected revenues, and could materially
In addition, even upon fully integrating
impact our business, financial condition, and results of operations.
QuickChek into our operations, the full benefits of our acquisition may not be realized, including the synergies,
cost savings, or sales or growth opportunities as originally anticipated. An inability to realize the full extent of, or
any of, the anticipated benefits of the QuickChek acquisition could have an adverse effff ect on our financial
condition, results of operations, and cash flows.
We may need to recognize impairment charges related to goodwill, identified intangible assets
and fixed assets.
We have balances of goodwill and intangible assets as a result of the QuickChek acquisition. We are
required to test goodwill and any other intangible assets with an indefinite life foff r possible impairment on the
same date each year and on an interim basis if there are indicators of a possible impairment. We are also
required to evaluate amortizable intangible assets and fixed assets foff r impairment if there are indicators of a
possible impairment.
There is significant judgement required in the analysis of a potential impairment of goodwill, identified
intangible assets and fixed assets.
If, as a result of a general economic slowdown, deterioration in one or more
of the markets in which we operate or impairment in our financial perfrr off rmance and/or future outlook, the
estimated fair value of our long–lived assets decreases, we may determine that one or more of our long–lived
assets is impaired. An impairment charge would be determined based on the estimated fair value of the assets
and any such impairment charge could have a material adverse effff ect on our business, financial condition and
results of operations.
Risks Relating to Our Industryrr
Pandemics or disease outbreaks, such as COVID-19, may disrupt consumption and trade patterns,
supply chains and normal business activities, which could materially affff ect our operations and results
of operations.
Pandemics or disease outbreaks, such as COVID-19, have in the past and may in the future cause
depressed demand foff r our fuel and convenience merchandise products because quarantines may inhibit the
ability or need foff r our customers to shop with us. We also may experience disruptions of logistics necessary to
obtain and deliver products to our stores and our customers as we rely on third parties to perfrr off rm these vital
functions to our business.
19
In addition, we could again experience issues with our workfoff rce that limit our ability to continue to
operate our stores at their normal hours of operations or experience government interverr ntion that requires us to
reduce hours or close certain locations.
If a significant percentage of our workfoff rce is unable to work, including
because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, our
In addition, pandemics or disease outbreaks could result in an
operations may be negatively impacted.
economic downturn that could adversely affff ect the economies and financial markets, resulting in an economic
downturn that could affff ect customers' demand foff r our products and servirr ces. We have had to reduce hours of
operation in some stores temporarily, but this has not had a material impact on our financial results.
We operate in a highly competitive industryrr , which could adversely affff ect us in many ways,
including our profitability, our ability to grow, and our ability to manage our businesses.
We operate in the oil and gas industry and experience intense competition from other independent retail
and wholesale gasoline marketing companies. The U.S. petroleum marketing business is highly competitive,
particularly with regard to accessing and marketing petroleum and other refined products. We compete with
other chains of retail fuel stores foff r fuel supply and in the retail sale of refined products to end consumers,
primarily on the basis of price, but also on the basis of convenience and consumer appeal.
In addition, we may
fueling stores that adopt marketing strategies similar to ours by
also face competition from other retail
associating with non-traditional retailers, such as supermarkets, discount club stores and hypermarkets,
particularly in the geographic areas in which we operate. We expect that our industry will continue to trend
toward this model, resulting in increased competition to us over time. Moreover, because we do not produce or
refine any of the petroleum or other refined products that we market, we compete with retail gasoline companies
that have ongoing supply relationships with affff iliates or foff rmer affff iliates that manufacture refined products. We
also compete with integrated companies that have their own production and/or refining operations that are at
t losses from marketing operations with profits from producing or refining operations, and may
times able to offff seff
In addition, we
be better positioned to withstand periods of depressed retail margins or supply shortages.
compete with other retail and wholesale gasoline marketing companies that have more extensive retail outlets
and greater brand name recognition. Some of our competitors have been in existence longer than we have and
have greater financial, marketing and other resources than we do. As a result, these competitors may have a
greater ability to bear the economic risks inherent in all phases of our business and may be able to respond
better to changes in the economy and new opportunities within the industry. Such competition could adversely
affff ect us, including our profitability, our ability to grow and our ability to manage our business.
In addition, the retail gasoline industry in the United States is highly competitive due to ease of entry
and constant change in the number and type of retailers offff ering similar products and servirr ces. With respect to
merchandise, our retail stores compete with other convenience store chains, independently owned convenience
stores, supermarkets, drugstores, discount clubs, gasoline servirr ce stores, mass merchants, fast foff od operations
and other similar retail outlets. Non-traditional retailers, including supermarkets, discount club stores and mass
merchants, now compete directly with retail gasoline stores. These non-traditional gasoline retailers have
obtained a significant share of the gasoline market, and their market share is expected to grow, and these
retailers may use promotional pricing or discounts, both at the fuel pump and in the convenience store, to
encourage in-store merchandise sales and gasoline sales. In addition, some large retailers and supermarkets
are adjusting their store layouts and product prices in an attempt to appeal to convenience store customers.
Maja or competitive factors include: location, ease of access, product and servirr ce selection, gasoline brands,
pricing, customer servirr ce, store appearance, cleanliness and safety. Competition from these retailers may
reduce our market share and our revenues, and the resulting impact on our business and results of operations
could be materially adverse.
Future tobacco legislation, potential court rulings affff ecting the tobacco industryrr , campaigns to
discourage smoking, increases in tobacco taxes and wholesale cost increases of tobacco products
could have a material adverse impact on our retail operating revenues and gross margin.
Sales of tobacco products have historically accounted foff r an important portion of our total sales of
convenience store merchandise. Significant increases in wholesale cigarette costs and tax increases on
tobacco products, as well as future legislation, potential rulings in court cases impacting the tobacco industry,
and national and local campaigns to discourage smoking in the United States, may have an adverse effff ect on
the demand foff r tobacco products, and therefoff re reduce our revenues and profits. Also, increasing regulations,
20
t some of the recent gains we have experienced
including those foff r e-cigarettes and vapor products could offff seff
from selling these products. Governing bodies continue to consider banning flavored tobacco products and
have done so in some instances.
If such effff off rts continue to be successful, it could have a further negative
impact on our tobacco sales. These factors could materially and adversely affff ect our retail price of cigarettes,
tobacco unit volume and sales, merchandise gross margin and overall customer traffff ic. Reduced sales of
tobacco products or smaller gross margins on the sales we make could have a material adverse effff ect on our
business, financial condition, results of operations and cash flows.
Currently, maja or cigarette manufacturers offff er substantial rebates to retailers. We include these rebates
In the event these rebates are no longer offff ered, or decreased, our profit
as a component of our gross margin.
from cigarette sales will decrease accordingly. In addition, reduced retail display allowances on cigarettes
offff ered by cigarette manufacturers would negatively affff ect gross margins. These factors could materially affff ect
our retail price of cigarettes, cigarette unit volume and revenues, merchandise gross margin and overall
customer traffff ic, which could in turn have a material adverse effff ect on our business, financial condition, results
of operations and cash flows.
Changes in consumer behavior and travel as a result of changing economic conditions, the
development of alternative energy technologies or otherwrr ise could affff ect our business.
In the retail gasoline industry, customer traffff ic is generally driven by consumer preferences and
spending trends, growth rates foff r commercial truck traffff ic and trends in travel and weather. Changes in
economic conditions generally, or in the regions in which we operate, could adversely affff ect consumer spending
patterns and travel in our markets. In particular, weakening economic conditions may result in decreases in
miles driven and discretionary consumer spending and travel, which affff ect spending on gasoline and
convenience items.
In addition, changes in the types of products and servirr ces demanded by consumers may
adversely affff ect our merchandise sales and gross margin. Additionally, negative publicity or perception
surrounding gasoline suppliers could adversely affff ect their reputation and brand image, which may negatively
affff ect our gasoline sales and gross margin. Our success depends on our ability to anticipate and respond in a
timely manner to changing consumer demands and preferences while continuing to sell products and servirr ces
that remain relevant to the consumer and thus will positively impact overall retail gross margin.
ise change our customers' shopping habits or lead to new foff rms of
Similarly, advanced technology, improved fuel effff iciency and increased use of “green” automobiles (e.g.,
those automobiles that do not use gasoline or that are powered by hybrid engines) will reduce demand foff r
gasoline and could otherwrr
fueling
destinations or new competitive pressures. Developments regarding climate change and the effff ects of
greenhouse gas emissions on climate change and the environment have led to increased use of “green”
automobiles.
In addition, in August 2021, the Biden Administration issued an executive order which set a target
to make half of all new vehicles sold in 2030 zero emission vehicles. Other market and social initiatives such as
public and private initiatives that aim to subsidize the development of non-foff ssil fuel energy sources may also
reduce the competitiveness of gasoline. Consequently, the increased adoption of "green" automobiles and
general attitudes toward gasoline and its relationship to the environment may significantly affff ect our sales and
ability to market our products. Reduced consumer demand foff r gasoline could have a material adverse effff ect on
our business, financial condition, results of operations and cash flows.
Our operations and earnings have been and will continue to be affff ected by worldwide political
developments.
Many governments, including those that are members of the Organization of Petroleum Exporting
Countries (“OPEC”), unilaterally interverr ne at times in the orderly market of petroleum and natural gas produced
in their countries through such actions as setting prices, determining rates of production, and controlling who
may buy and sell the production.
In addition, prices and availability of petroleum, natural gas and refined
products could be influenced by political unrest and by various governmental policies to restrict or increase
petroleum usage and supply. Other governmental actions that could affff ect our operations and earnings include
tax changes, royalty increases and regulations concerning: currency fluctuations, protection and remediation of
the environment, concerns over the possibility of global warming being affff ected by human activity including the
production and use of hydrocarbon energy, restraints and controls on imports and exports, safety, and
relationships between employers and employees. As a retail gasoline marketing company, we are significantly
21
affff ected by these factors. Because these and other factors are subjb ect to changes caused by governmental
and political considerations and are oftff en made in response to changing internal and worldwide economic
conditions and to actions of other governments or specific events, it is not practical to attempt to predict the
effff ects of such factors on our future operations and earnings.
Our business is subjb ect to operational hazards and risks normally associated with the marketing
of petroleum products.
We operate in many diffff erent locations around the United States. The occurrence of an event, including
but not limited to acts of nature such as hurricanes, floods, earthquakes and other foff rms of severe weather, and
mechanical equipment
terrorist
attacks could result in damage to our facilities, and the resulting interruption and loss of associated revenues;
environmental pollution or contamination; and personal injury, including death, foff r which we could be deemed to
be liable, and which could subjb ect us to substantial fines and/or claims foff r punitive damages.
fires, explosions, acts of war and intentional
industrial accidents,
failures,
We store gasoline in storage tanks at our retail stores. Our operations are subjb ect to significant hazards
and risks inherent in storing gasoline. These hazards and risks include, but are not limited to, fires, explosions,
spills, discharges and other releases, any of which could result in distribution diffff iculties and disruptions,
environmental pollution, fines imposed by governmental agencies or cleanup obligations, personal
injury or
wrongful death claims and other damage to our properties and the properties of others. Any such event could
have a material adverse effff ect on our business, financial condition, results of operations and cash flows.
Certain of our assets such as gasoline terminals and certain retail fueling stores lie near the U.S.
coastline and are vulnerable to hurricane and tropical storm damages, which may result in shutdowns. The
U.S. hurricane season runs from June through November, but the most severe storm activities usually occur in
late summer. Moreover, it should be noted that some scientists have predicted that increasing concentrations of
greenhouse gases in the earth's atmosphere may produce climate changes that have significant physical
effff ects, such as increased frequency and severity of storms, droughts, and floods and other climatic events,
which could adversely impact our operations. Although we maintain insurance foff r certain of these risks as
described below, due to policy deductibles and possible coverage limits, weather-related risks are not fully
insured.
We are subjb ect to various environmental laws, regulations and permit requirements, which
could expose us to significant expenditures, liabilities or obligations and reduce product demand.
We are subjb ect to stringent federal, state and local environmental
laws and regulations governing,
among other things, the generation, storage, handling, use and transportation of petroleum products and
hazardous materials; the emission and discharge of such substances into the environment; the content and
characteristics of fuel products; the process safety of our facilities; and human health and safety. Pursuant to
such environmental laws and regulations, we are also required to obtain permits from governmental authorities
foff r certain of our operations. While we strive to abide by these requirements, we cannot assure you that we
have been or will be at all times in compliance with such laws, regulations and permits.
If we violate or fail to
comply with these requirements, we could be subjb ect to litigation, costs, fines or other sanctions. Environmental
requirements, and the enfoff rcement and interpretation thereof, change frequently and have generally become
more stringent over time. Compliance with existing and future environmental laws, regulations and permits may
require significant expenditures.
In addition, to the extent fuel content and characteristic standards increase our
wholesale purchase costs, we may be adversely affff ected if we are unable to recover such costs in our pricing.
We could be subjb ect to joint and several as well as strict liability foff r environmental contamination,
without regard to fault or the legality of our conduct.
In particular, we could be liable foff r contamination relating
to properties that we own, lease or operate or that we or our predecessors previously owned, leased or
operated. Substantially all of these properties have or in the past had storage tanks to store motor fuel or
petroleum products. Leaks from such tanks may impact soil or groundwater and could result in substantial
costs. We could also be held responsible foff r contamination relating to third-party sites to which we or our
predecessors have sent regulated materials.
In addition to potentially significant investigation and remediation
costs, any such contamination, leaks from storage tanks or other releases of regulated materials can give rise to
22
claims from governmental authorities and other third parties foff r fines or penalties, natural resource damages,
personal injury and property damage.
Our business is also affff ected by fuel economy standards and GHG vehicle emission reduction
measures. As such fuel economy and GHG reduction requirements become more stringent over time, demand
foff r our products may be adversely affff ected.
In addition, some of our facilities are subjb ect to GHG regulation.
We are currently required to report annual GHG emissions from certain of our operations, and additional GHG
emission-related requirements that may affff ect our business have been finalized or are in various phases of
discussion or implementation. Any existing or future GHG emission requirements could result in increased
operating costs and additional compliance expenses.
Our expenditures, liabilities and obligations relating to environmental matters could have a material
adverse effff ect on our business, product demand, reputation, results of operations and financial condition.
Our retail operations are subjb ect to extensive government laws and regulations, and the cost of
compliance with such laws and regulations can be material.
Our retail operations are subjb ect to extensive local, state and federal governmental laws and regulations
relating to, among other things, the sale of alcohol, tobacco, lottery and lotto, employment conditions, including
minimum wage requirements, and public accessibility requirements. The cost of compliance with these laws
and regulations can have a material adverse effff ect on our business, financial condition, results of operations
and cash flows.
In addition, failure to comply with local, state and federal laws and regulations to which our
operations are subjb ect may result in penalties and costs that could adversely affff ect our business, financial
condition, results of operations and cash flows.
In certain areas where our retail stores are located, state or local laws limit the retail stores’ hours of
operation or sale of alcoholic beverages, tobacco products, possible inhalants and lottery tickets, in particular to
minors. Failure to comply with these laws could adversely affff ect our revenues and results of operations
because these state and local regulatory agencies have the power to revoke, suspend or deny applications foff r
and renewals of permits and licenses relating to the sale of these products or to seek other remedies, such as
the imposition of fines or other penalties.
Regulations related to wages also affff ect our business. Any appreciable increase in the statutory
minimum wage or changes in overtime rules would result in an increase in our labor costs and such cost
increase, or the penalties foff r failing to comply with such statutory minimums, could adversely affff ect our
business, financial condition, results of operations and cash flows.
Any changes in the laws or regulations described above that are adverse to us and our properties could
affff ect our operating and financial perfrr off rmance.
In addition, new regulations are proposed from time to time
which, if adopted, could have a material adverse effff ect on our business, financial condition, results of operations
and cash flows.
Future consumer or other litigation could adversely affff ect our business, financial condition,
results of operations and cash flows.
Our retail operations are characterized by a high volume of customer traffff ic and by transactions
involving a wide array of product selections. These operations carry a higher exposure to consumer litigation
risk when compared to the operations of companies operating in many other industries. Consequently, we have
been, and may in the future be from time to time, involved in lawsuits seeking cash settlements foff r alleged
personal
injuries, property damages and other business-related matters, as well as energy content, offff -ff
specification gasoline, products liability and other legal actions in the ordinary course of our business. While
these actions are generally routine in nature and incidental to the operation of our business, if our assessment
of any action or actions should prove inaccurate, our business, financial condition, results of operations and
cash flows could be adversely affff ected.
For more infoff rmation about our legal matters, see Note 20
“Contingencies” to the consolidated historical financial statements foff r the three years ended December 31, 2022
included in this Annual Report on Form 10-K. Further, adverse publicity about consumer or other litigation may
negatively affff ect us, regardless of whether the allegations are true, by discouraging customers from purchasing
gasoline or merchandise at our retail stores.
23
We rely on our technology systems and network infrastructure to manage numerous aspects of
our business, and a disruption of these systems could adversely affff ect our business.
We depend on our technology systems and network infrastructure to manage numerous aspects of our
business and provide analytical infoff rmation to management. These systems are an essential component of our
business and growth strategies, and a serious disruption to them could significantly limit our ability to manage
and operate our business effff iciently. These systems are vulnerable to, among other things, damage and
interruption from power
loss of
telecommunications servirr ces, physical and electronic loss of data, security breaches and computer viruses,
which could result in a loss of sensitive personal data, including credit and debit card infoff rmation from our
customers, sensitive business infoff rmation, systems interruption or the disruption of our business operations. ToTT
protect against unauthorized access or attacks, we have implemented infrastructure protection technologies
such as theftff and disaster recovery plans, but there can be no assurance that a technology systems breach or
systems failure, which may occur and go undetected, will not have a material adverse effff ect on our financial
condition or results of operations.
loss or natural disasters, computer system and network failures,
Our business and our reputation could be adversely affff ected by the failure to protect sensitive
customer, employee or vendor data or to comply with applicable regulations relating to data security
and privacy.
In the normal course of our business as a gasoline and merchandise retailer, we obtain large amounts
of personal data, including credit and debit card infoff rmation from our customers. We also engage third-party
vendors that provide technology, systems, and servirr ces to facilitate our collection, retention, processing and
transmission of this infoff rmation. While we have invested significant amounts in the protection of our technology
systems and maintain what we believe are adequate security controls over individually identifiable customer,
employee and vendor data provided to us, a breakdown or a breach in our systems that results in the
unauthorized release of individually identifiable customer or other sensitive data could nonetheless occur and
have a material adverse effff ect on our reputation, operating results and financial condition. Such a breakdown
or breach could also materially increase the costs we incur to protect against such risks. Also, a material failure
on our part, or the part of our vendors, to comply with regulations relating to our obligation to protect such
sensitive data or the privacy rights of our customers, employees and others could subjb ect us to fines or other
regulatory sanctions and potentially to lawsuits and adversely affff ect our brand name.
Compliance with and changes in tax laws could adversely affff ect our perfr ormance.
We are subjb ect to extensive tax liabilities imposed by multiple jurisdictions, including income taxes,
indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes
and ad valorem taxes. TaTT x laws and regulations are dynamic and subjb ect to change as new laws are passed
and new interpretations of existing laws are issued and applied. This activity could result
in increased
expenditures foff r tax liabilities in the future. Many of these liabilities are subjb ect to periodic audits by the
respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subjb ect us
to interest and penalties.
Risks Relating to Our Common Stock
The price of our common stock may fluctuate significantly and if securities or industryrr analysts
publish unfavorable research reports about our business or if they downgrade their rating on our
common stock, the price of our common stock could decline.
The price at which our common stock trades may fluctuate significantly. The trading price of our
common stock could be subjb ect to wide fluctuations in response to a number of factors, including, but not limited
to:
•
•
fluctuations in quarterly or annual results of operations, especially if
previously announced guidance or foff recasts made by analysts;
they diffff er from our
announcements by us of anticipated future revenues or operating results, or by others
concerning us, our competitors, our customers, or our industry;
24
•
•
•
•
our ability to execute our business plan;
competitive environment;
regulatory developments; and
changes in overall stock market conditions, including the stock prices of our competitors.
Provisions in our Certificate of Incorporation and Bylaws and certain provisions of Delaware law
could delay or prevent a change in control of us.
The existence of some provisions of our Certificate of Incorporation and Bylaws and Delaware law
could discourage, delay or prevent a change in control of us that a stockholder may consider favorable. These
include provisions:
•
•
•
•
•
•
providing foff r a classified board of directors;
providing that our directors may be removed by our stockholders only foff r cause;
establishing super maja ority vote requirements foff r our shareholders to amend certain provisions
of our Certificate of Incorporation and our Bylaws;
authorizing a large number of shares of stock that are not yet issued, which would allow our
board of directors to issue shares to persons friendly to current management,
thereby
protecting the continuity of our management, or which could be used to dilute the stock
ownership of persons seeking to obtain control of us;
prohibiting stockholders from calling special meetings of stockholders or taking action by written
consent; and
establishing advance notice requirements foff r nominations of candidates foff r election to our
board of directors or foff r proposing matters that can be acted on by stockholders at the annual
stockholder meetings.
In addition, we are subjb ect to Section 203 of the Delaware General Corporation Law, which may have
an anti-takeover effff ect with respect to transactions not approved in advance by our board of directors, including
discouraging takeover attempts that could have resulted in a premium over the market price foff r shares of our
common stock.
These provisions apply even if a takeover offff er may be considered beneficial by some stockholders and
could delay or prevent an acquisition that our board of directors determines is not in our and our stockholders’
best interests.
We may issue preferred stock with terms that could dilute the voting power or reduce the value of
our common stock.
Our Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or
more classes or series of preferred stock having such designations, powers, preferences and relative,
participating, optional and other rights, and such qualifications, limitations or restrictions as our board of
directors generally may determine. The terms of one or more classes or series of preferred stock could dilute
the voting power or reduce the value of our common stock. For example, we could grant holders of preferred
stock the right to elect some number of our directors in all events or on the happening of specified events or the
right to veto specified transactions. Similarly, the repurchase or redemption rights or dividend, distribution or
liquidation preferences we could assign to holders of preferred stock could affff ect the residual value of the
common stock.
Our Bylaws designate a state or federal court located within the State of Delaware as the sole and
exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders,
which could limit our stockholders’ ability to obtain a preferred judicial forum for disputes with us or
our directors, offff icers or other employees.
25
Our Bylaws provide that, unless we consent in writing to the selection of an alternative foff rum, the sole
and exclusive foff rum foff r (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a
claim of breach of a fiduciary duty owed by any director, offff icer or other employee to us or our stockholders, (iii)
any action asserting a claim arising pursuant to any provision of Delaware General Corporation Law, our
Certificate of Incorporation (including any certificate of designations foff r any class or series of our preferred
stock) or our Bylaws, in each case, as amended from time to time, or (iv) any action asserting a claim governed
by the internal affff airs doctrine shall be a state or federal court located within the State of Delaware, in all cases
subjb ect to the court’s having personal jurisdiction over the indispensable parties named as defendants. Unless
we consent in writing to the selection of an alternative foff rum, the sole and exclusive foff rum foff r the resolution of
any action asserting a cause of action arising under the Securities Act will be the federal district courts of the
United States of America, to the fullest extent permitted by law. Any person or entity purchasing or otherwrr
ise
acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the
foff regoing provision. This foff rum selection provision may limit a stockholder’s ability to bring a claim in a judicial
foff rum that it finds favorable or cost-effff ective foff r disputes with us or our directors, offff icers or other employees,
which may discourage such lawsuits against us and our directors, offff icers and employees. Conversely, if a
court were to find our choice of foff rum provision inapplicable to, or unenfoff rceable in respect of, one or more of
the specified types of actions or proceedings, we may incur additional costs associated with resolving such
matters in other jurisdictions and we may not obtain the benefits of limiting jurisdiction to the courts selected.
Item 1B. UNRESOLVED STAFF COMMENTS
The Company had no unresolved comments from the staffff of the U.S. Securities and Exchange
Commission as of December 31, 2022.
Item 2. PROPERTIES
See Item 1 "Description of the Business" and "Properties" foff r this infoff rmation in this Annual Report on
Form 10-K beginning on page 2.
Item 3. LEGAL PROCEEDINGS
Murphy USA and its subsidiaries are engaged in a number of legal proceedings, all of which have
arisen in the ordinary course of business. See Note 20 “Contingencies” in the accompanying consolidated
financial statements foff r the three years ended December 31, 2022. Based on infoff rmation currently available to
the Company, the ultimate resolution of matters referred to in this item is not expected to have a material
adverse effff ect on the Company’s net income, financial condition or liquidity in a future period.
Litigation
The City of Charleston, South Carolina and the state of Delaware have filed lawsuits against energy
companies, including the Company. These lawsuits allege damages as a result of climate change and the
plaintiffff sff are seeking unspecified damages and abatement under various tort theories.
26
SUPPLEMENTAL INFORMATION; Information About our Executive Offff icers
The age at January 1, 2023, present corporate offff ice and length of servirr ce in offff ice of each of the
Company’s executive offff icers, as of December 31, 2022, are reported in the foff llowing listing. Executive offff icers
are elected annually but may be removed from offff ice at any time by the Board of Directors.
R. Andrdd err w Clydl e – Age 59; President and Chief Executive Offff icer, Director and Member of
the
Executive Committee since August 2013. Mr. Clyde has led Murphy USA's successful value-creation strategy
since its spin-offff in 2013. Mr. Clyde serverr d Booz & Company (and prior to August 2008, Booz Allen Hamilton) in
its global energy practice. He joined the firm in 1993, was elected vice president in 2000 and held leadership
roles as North American Energy Practice Leader and Dallas offff ice Managing Partner and serverr d on the firm’s
Board Nominating Committee. Mr. Clyde received a master’s degree in Management with Distinction from the
Kellogg Graduate School of Management at Northwestern University. He received a BBA in Accounting and a
minor in Geology from Southern Methodist University.
MiMM nii dyd K.KK WeWW st – Age 53; Executive Vice President, Fuels, Chief Financial Offff icer, and Treasurer since
August 2013. Ms. West joined Murphy Oil in 1996 and has held positions in Accounting, Employee Benefits,
Planning and Investor Relations. In 2007, she was promoted to Vice President & Treasurer foff r Murphy Oil. She
holds a bachelor’s degree in Finance from the University of Arkansas and a bachelor’s degree in Accounting
from Southern Arkansas University. She is a Certified Public Accountant and a Certified Treasury Professional.
Robertrr J. Chumley – Age 58; Senior Vice President, Chief Digital Offff icer, since June 2022, and was
Senior Vice President of Merchandising and Marketing from September 2016. Mr. Chumley joined the
Company from 7-Eleven Inc., where he serverr d as Senior Product Director, Vice President of Merchandising and
Senior Vice President of Innovation. His previous experience includes Sales and Marketing leadership roles
with Procter and Gamble, Coca-Cola, Kellogg's and Gillette. Mr. Chumley graduated from the Royal Military
College of Canada with a Bachelors of Engineering degree. Aftff er graduation he serverr d as a commissioned
offff icer in the Royal Canadian Navy. Mr. Chumley also holds an MBA from Dalhousie University.
Renee M. Bacon – Age 53; Senior Vice President, Sales and Operations and Chief Merchandising
Offff icer, since June 2022. Ms. Bacon joined Murphy USA in 2016 as Regional Vice president, Sales and
Operations.
In 2018, she was promoted to National Vice President, Sales and Operations and in 2019 was
promoted to Senior Vice President, Sales and Operations. She holds a Bachelor of Business Administration
degree from the University of TeTT xas--Austin. Ms. Bacon also holds a Master of Business Administration from
the University of Houston and a Doctorate of Jurisprudence from the University of TeTT nnessee.
Chrirr stii opher A. Clill ck – Age 50; Senior Vice President, Strategy and Development since December
2020. Mr. Click joined the Company from KPMG LLP where he serverr d as a Principal in the firm's Energy and
Infrastructure Strategy practice. His previous experience includes ten years with Booz & Company (and prior to
August 2008, Booz Allen Hamilton) where he serverr d in its global energy practice and was elected Vice
President in 2011. Mr. Click received a Master's degree in Management from the Kellogg Graduate School of
Management at Northwestern University. He holds a bachelor of arts degree from TeTT xas A & M University.
Blake Segal – Age 42; Senior Vice President, QuickChek since September 2021. Mr. Segal
joined the
Company from Caesars Entertainment Inc., where he serverr d as Senior Vice President of Operations. His
previous roles within Caesars included Vice President of Operations and Vice President of Analytics. He also
has experience as an independent advisor to Apollo Global Management's private equity unit and has serverr d on
the boards of Opportunity Village, Laughlin (NV) ToTT urism Commission and Mohave (AZ) Airport Authority. Mr.
Segal holds a Bachelor of Science degree in Management from the A. B. Freeman School of Business at
Tulane University.
Jennifi eff r R. Brirr dgd es – Age 54; Senior Vice President, Asset Development since February 2022. Ms.
Bridges joined the Company in 2017 as Vice President, Asset Development and was promoted to Senior Vice
President, Asset Development
in 2022. Her previous experience includes 14 years in planning, store
development, and property management at 7-Eleven, including 5 years at Vice President. Prior to retail, she
was a management consultant in the Energy practice of Booz Allen Hamilton. Ms. Bridges holds a Masters of
27
Public Affff airs and a Masters of Business Administration, both from the University of TeTT xas at Austin, and a
Bachelor of Arts degree from Stanfoff rd University.
Item 4. MINE SAFETY DISCLOSURES
Not applicable
28
Part II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is traded on the New YoYY rk Stock Exchange using “MUSA” as the trading
symbol. There were 1,561 stockholders of record as of December 31, 2022.
The declaration and amount of any dividends to holders of our common stock will be at the discretion of
our board of directors and will depend upon many factors, including our financial condition, earnings, cash
flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements,
regulatory constraints, industry practice and other factors the board of directors deem relevant.
We are a holding company and have no direct operations. As a result, we are able to pay dividends on
our common stock only from available cash on hand and distributions received from our subsidiaries. We
declared and paid dividends of $1.27 per share during 2022, $1.04 per share 2021, $0.25 per share in 2020,
and we expect to continue quarterly dividend payments in the future.
The indenture governing the Senior Notes and the credit agreement governing our credit facilities and
term loan contain restrictive covenants that limit, among other things, the ability of Murphy USA and the
restricted subsidiaries to make certain restricted payments, which as defined under both agreements, include
the declaration or payment of any dividends of any sort in respect of its capital stock and repurchase of shares
of our common stock. See “Management's Discussion and Analysis of Financial Condition and Operating
Results—Capital Resources and Liquidity—Debt” and Note 10 “Long-TeTT rm Debt” to the accompanying audited
consolidated financial statements foff r the three years ended December 31, 2022 foff r additional infoff rmation.
On December 1, 2021, our Board of Directors approved a share repurchase authorization of up to $1
billion that we began to utilize upon the completion of our 2020 $500 million share repurchase authorization.
The 2021 authorization expires December 31, 2026 unless utilized in full befoff re such time. Purchases may be
effff ected in the open market, through privately negotiated transactions, through one or more accelerated stock
repurchase programs, through a combination of the foff regoing or in any other manner in the discretion of
management. Purchases will be made subjb ect 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 effff ect purchases.
During the year 2022, we repurchased a total of 3,328,795 common shares foff r $806.4 million, foff r an
average price of $242.24 per share. Repurchases in 2022 were made pursuant to our now completed 2020
authorization and our 2021 authorization. As of December 31, 2022, we had approximately $213.7 million
remaining under our 2021 authorization.
29
Below is detail of the company's common share repurchases during the foff urth quarter of 2022.
Issuer Purchases of Equity Securities
ToTT tal Number
of Shares
Purchased
AveAA rage
Price Paid
Per Share
ToTT tal Number
of Shares
Approximate
Dollar VaVV lue of
Purchased as
Shares That May
Part of Publicly
YeYY t Be Purchased
Announced Plans
Under the Plans
or Programs
or Programs 1
October 1, 2022 to
October 31, 2022
November 1, 2022 to
November 30, 2022
December 1, 2022 to
December 31, 2022
Three Months Ended
December 31, 2022
371,671
$
277.44
371,671
$
349,999,922
100,082
374,238
290.57
286.60
100,082
320,918,746
374,238
213,661,734
845,991
$
283.05
845,991
$
213,661,734
1TeTT rms of the repurchase plan authorized by the Murphy USA Inc. Board of Directors and announced on December 1, 2021 include
authorization foff r the Company to acquire up to $1 billion of its common shares by December 31, 2026. All common shares repurchased in
the foff urth quarter of 2022 were made pursuant to the 2021 authorization.
Equity Compensation Plan Information
The table below contains infoff rmation about securities authorized foff r
issuance under equity
compensation plans. The features of these plans are discussed further in Note 13 “Incentive Plans” to our
audited consolidated financial statements.
Plan categoryrr
Equity compensation plans
approved by security
holders
Equity compensation plans
not approved by security
holders
ToTT tal
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights (1)
(a)
Weighted-average exercise
price of outstanding
options, warrants and
rights
(b)
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a)) (2)
(c)
596,240
—
596,240
$112.06
—
$112.06
3,044,241
—
3,044,241
(1) Amounts in this column include outstanding restricted stock units.
(2) Number of shares available fof r issuance includes 2,694,914 available shares under the 2013 Long-TeTT rm Incentive Plan as of
December 31, 2022 plus 349,327 available shares under the 2013 Stock Plan fof r Non-Employee Directors as of December 31,
2022. Assumes each restricted stock unit is equivalent to one share and each perfrr of rmance unit is equal to two shares.
30
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The foff llowing graph presents a comparison of cumulative total shareholder returns (including the
reinvestment of dividends) as if a $100 investment was made on December 31, 2017 foff r the Company, the
Index. This
Standard and Poor’s 500 Stock Index Fund (S&P 500 Index) and the S&P Retail Select
perfrr off rmance infoff rmation is “furnished” by the Company and is not considered as “filed” with this Annual Report
on Form 10-K and is not incorporated into any document that incorporates this Annual Report on Form 10-K by
reference.
Murphy USA Inc.
Comparison of Cumulative Shareholder Returns
)
7
1
0
2
/
1
3
/
2
1
f
o
s
a
0
0
1
(
x
e
d
n
I
350
300
250
200
150
100
50
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
Murphy USA Inc.
S&P 500 Index
S&P Retail Select Index
Shareholder Return Perfrr ormance Table
Murphy USA Inc.
S&P 500 Index
S&P Retail Select
Index
December 31, 2017
December 31, 2018
December 31, 2019
December 31, 2020
December 31, 2021
December 31, 2022
Item 6. RESERVED
$
$
$
$
$
$
100
95
146
163
248
348
$
$
$
$
$
$
31
100
94
121
140
178
144
$
$
$
$
$
$
100
91
102
142
202
136
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overvrr iew
l
l
ssion and Analysi
sii
ssion and Analysi
Management’s’ Discuii
l stat tementstt and notes inii cluded inii
of Resultstt
thtt e Company’s’ analysi
l Condidd titt on
l perfrr off rmrr ance and of
thtt e consolill dated
10-K
sses 2022 and 2021 items and thtt e year-rr to-ye- ar comparirr soii n betweww en 2022 and 2021.
thtt isii
10-K foff r thtt e year ended December 31, 2021 fiff lii ed on Februrr aryr 17,7
(“M“ anagement’s’ Discuii
sigi nifii iff cant trtt err ndsdd thtt at may affff eff ct fuff turerr perfrr off rmrr ance.
fiff nii anciaii
generarr llll yl
Discuii
FoFF rmrr
2022.
ssions of 2020 items and thtt e year-rr to-ye- ar comparirr sii ons betweww en 2021 and 2020 arerr not inii cluded inii
10-K and can be foff und inii
sii of itstt
It should be rerr ad inii conjn unctitt on wiww thtt
10-K.KK ThTT isii sectitt on of thtt isii FoFF rmrr
of OpO erarr titt ons and FiFF nii anciai
thtt isii Annual Reportrr on FoFF rmrr
thtt e FoFF rmrr
fiff nii anciai
didd scuii
)”
s”ii
isii
l
FoFF r purprr oses of
thtt isii Management’s’ Discuii
ssion and Analysi
l
s,ii
rerr feff rerr nces to “M“ urprr hy USASS ”,
thtt e
“Company”, “w““ eww ”, and “o“ ur” rerr feff r to Murprr hy USASS Inc. and itstt subsididd aii rirr es on a consolill dated basis.ii
Management’s Discussion and Analysis is organized as foff llows:
•
•
•
•
ExeEE cutitt ve Overvirr ew—ww this section provides an overvirr ew of our business and the results of operations
and financial condition foff r the periods presented.
It includes infoff rmation on the basis of presentation
with respect to the amounts presented in the Management’s Discussion and Analysis and a discussion
of the trends affff ecting our business.
Resultstt of OpO erarr titt ons—this section provides an analysis of our results of operations, including the
results of our business segments foff r the two years ended December 31, 2022.
Capitat l Resourcerr
this section provides a discussion of our financial condition and cash
flows as of and foff r the two years ended December 31, 2022. It also includes a discussion of our capital
structure and available sources of liquidity.
s and Liquididd ty—t
Crirr titt cal Accountitt nii g Polill cies—this section describes the accounting policies and estimates that we
consider most important foff r our business and that require significant judgment.
ExEE ecutitt vevv Ovevv rvrr ivv ew
On January 29, 2021, MUSA acquired 100% of Quick Chek Corporation ("QuickChek"), a privately held
convenience store chain with a strong regional brand that consisted of 156 stores at the time of acquisition,
located in New Jersey and New YoYY rk, in an all-cash transaction. The acquisition expanded the MUSA network
into the Northeast by adding high-perfrr off rmance stores that had an existing best-in-class foff od and beverage
model and is consistent with the Company's stated strategic priorities of developing enhanced foff od and
beverage capabilities. For additional infoff rmation concerning the acquisition, see Note 6, "Business Acquisition"
in the accompanying audited consolidated financial statements.
QuickChek uses a weekly retail calendar where each quarter has 13 weeks. Current year QuickChek
results cover the period from January 1, 2022 to December 30, 2022 and in the prior year covered January 29,
2021 (the date of acquisition) to December 31, 2021. The diffff erence in the timing of the period ends is
immaterial to the overall consolidated results.
Our Businii ess
The Company owns and operates a chain of retail stores that market gasoline and other merchandise
under the brand names of Murphy USA®AA , Murphy Express, and QuickChek. Murphy USA®AA branded stores are
almost all located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest
areas of the United States. Our standalone stores operate under the Murphy Express brand and market
32
gasoline and other products. We also have a mix of convenience stores and retail gasoline stores located in
New Jersey and New YoYY rk that operate under the brand name of QuickChek®. At December 31, 2022, we had
a total of 1,712 Company stores in 27 states, of which 1,151 were Murphy USA, 404 were Murphy Express and
157 were QuickChek. We also market to unbranded wholesale customers through a mixture of Company
owned and third-party terminals.
TrTT err ndsdd Affff eff ctitt nii g Our Businii ess
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 total fuel and merchandise sales volumes to grow over time and the gross margins to remain strong in a
normalized environment, these sales and gross margins can change rapidly due to many factors. These factors
include, but are not limited to, the price of refined products, interruptions in our fuel and merchandise supply
caused by severe weather or pandemics, the effff ects from pandemics such as travel restrictions and stay-at-
home orders, severe refinery mechanical failures foff r an extended period of time, cyber-attacks against the
Company or our vendors, changing economic conditions 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 foff r crude oil
increases the Company’s cost foff r
wholesale fuel products purchased and increases the price of retail fuel sales. Rising prices tend to cause
as a hedge to
consumers to reduce discretionary fuel consumption, however our low-price model can serverr
draw in new customers which can offff seff
t the potential loss of discretionary volumes. When wholesale fuel costs
rise, the Company is not able to pass these price increases immediately on to retail customers at the pump,
which in turn can negatively impact the Company’s margins.
In recent periods, however, we have noticed a
structural change in the industry's breakeven costs that has driven marginal retailers to preserverr margins which,
in turn, has allowed the Company to adjust retail prices in a more timely manner. Crude oil prices in 2022
continued to be volatile during the year with prices ranging from $71 per barrel to $124 per barrel, with an
average price of $95 per barrel, compared to prices in 2021 that ranged from $47 per barrel to $86 per barrel
with an average of $68 per barrel. ToTT tal fuel contribution (retail fuel margin plus product supply and wholesale
("PS&W") results including Renewable Identification Numbers ("RINs")) was 34.3 cpg in 2022, compared to
26.3 cpg in 2021.
Our revenues are impacted by our ability to leverage our diverse supply infrastructure in pursuit of
obtaining the lowest cost of fuel supply available; foff r example, activities such as blending bulk fuel with ethanol
and biodiesel to capture and subsequently sell Renewable Identification Numbers (“RINs”). Under the Energy
Policy Act of 2005, the Environmental Protection Agency ("EPAPP ") 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
amount of RINs to the EPAPP . RINs in excess of the set quota can then be sold in a market foff r RINs at then-
prevailing prices. The market price foff r 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 impact the net benefit we
receive foff r RINs on a company-wide basis either favorably or unfavorably. The Renewable Fuel Standard
("RFS") program continues to be unpredictable and prices received foff r ethanol RINs averaged $1.42 per RIN
foff r the year 2022 compared to $1.31 in 2021. Our business model does not depend on our ability to generate
revenues from RINs. Revenue from the sales of RINs is included in “Other operating revenues” in the
Consolidated Income Statements.
As of December 31, 2022, we had $1.3 billion of Senior Notes and a $394 million term loan outstanding.
We believe that we will generate suffff icient cash from operations to fund our ongoing operating requirements
and servirr ce our debt obligations.
At December 31, 2022, we had additional available capacity under the
committed $350 million cash flow revolving credit facility, with none drawn. 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. ToTT the extent necessary, we will borrow under these facilities to fund our ongoing
operating requirements. There can be no assurances, however, that we will generate suffff icient cash from
operations or be able to draw on the credit facilities, obtain commitments foff r our incremental facility and/or
33
obtain and draw upon other credit facilities. For additional infoff rmation, see Significant Sources of Capital in the
Capital Resources and Liquidity section.
The Company currently anticipates total capital expenditures (including land foff r future development) foff r
the full year 2023 to range from approximately $375 million to $425 million depending on how many new stores
are completed. We intend to fund our capital program in 2023 primarily using operating cash flow, but will
supplement funding where necessary using borrowings under available credit facilities.
We believe that our business will continue to grow in the future as we expand the foff od and beverage
capabilities within our network. We have an active real estate development team that maintains a pipeline of
desirable future store locations foff r 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.
Seasonalill tyt
Our business has inherent seasonality due to the concentration of our retail stores in certain geographic
In general, sales volumes and operating
areas, as well as customer behaviors during diffff erent seasons.
incomes are highest in the second and third quarters during the summer activity months and lowest during the
winter months.
In 2020 and 2021, we saw disruptions to typical seasonal patterns due to the COVID-19
pandemic resulting in fuel volumes sold falling below our historical average. Beginning in 2021 a more normal
seasonal pattern emerged and in 2022 fuel volumes approached and sometimes exceeded pre-pandemic
levels.
Businii ess Segmentstt
Our business is organized into one operating segment which is Marketing. The Marketing segment
includes our retail marketing stores and product supply and wholesale assets. For operating segment
infoff rmation, see Note 23 “Business Segments” in the accompanying audited consolidated financial statements
foff r the three-year period ended December 31, 2022.
Results of Operations
Consolidated Results
or the year ended December 31, 2022, the Company reported net income of $672.9 million or $28.10
per diluted share on revenue of $23.4 billion. Net income was $396.9 million foff r 2021 or $14.92 per diluted
share on revenue of $17.4 billion. The consolidated financial results foff r 2022 include full year QuickChek
results from January 1, 2022 to December 30, 2022 and foff r 2021 include QuickChek results from January 29,
2021 (date of acquisition) to December 31, 2021. The diffff erence in timing of the period ends is immaterial to
the overall consolidated results.
A summary of the Company’s earnings by business segment foff llows:
ilii lll ill ons of dollll ars)rr
(m((
Marketing
Corporate and other assets
Net income
Year ended December 31,
2022
2021
2020
$
$
740.9 $
(68.0)
672.9 $
472.8 $
(75.9)
396.9 $
442.2
(56.1)
386.1
Net income foff r 2022 increased compared to 2021, primarily due to:
•
•
•
•
Higher all-in fuel contribution;
Higher retail fuel sales volumes;
Higher merchandise contribution;
Lower acquisition and integration related costs
34
The items below partially offff seff
t the increase in earnings in the current period:
•
•
•
•
Higher store and other operating expenses;
Higher depreciation and amortization expense;
Higher selling, general and administrative ("SG&A") expenses;
Higher income tax expense
Financial Summary of 2022 Compared to 2021
Revenues foff r the year ended December 31, 2022 increased $6.1 billion, or 35.1%, compared to
2021. The increase was due to higher average retail fuel prices which increased 86 cpg, or 31.0%, retail fuel
volumes which increased 9.2%, merchandise sales which increased 6.1%, improved PS&W revenues including
RINs, and the inclusion of QuickChek results foff r 12 months in 2022 compared to 11 months in 2021.
Cost of sales increased $5.5 billion, or 35.7%, compared to 2021, due to the higher average cost of
fuel, which increased 42.9%, the increase of 9.2% in retail fuel volumes sold, and 5.4% higher merchandise
cost of goods sold.
Store and other operating expenses increased $149.2 million, or 18.0%, in 2022 due primarily to higher
payment fees (42% of the increase), higher employee related costs in part due to a non-recurring special bonus
of $7.0 million, rent expense, increased store maintenance expenses and the inclusion of one additional month
of QuickChek expense. On an average per store month ("APSM") basis, store operating expenses excluding
credit card fees and rent increased 10.0% in 2022 when compared to 2021.
The Company incurred $1.5 million in integration costs foff r QuickChek in 2022 compared to acquisition
In 2021 these included transaction-specific costs to close the
and integration costs of $10.4 million in 2021.
acquisition and costs related to integrating technology and systems.
Depreciation and amortization expense in 2022 increased $7.8 million due primarily to the increased
number of Murphy branded stores with larger foff rmats and an additional month of QuickChek depreciation in
2022.
Selling, general and administrative expenses foff r 2022 were higher by $38.9 million primarily due to a
$25 million charitable pledge in Q4 2022, increased employee incentive expense, and the inclusion of an
additional month of expense foff r QuickChek.
Interest expense in 2022 increased by $2.9 million compared to 2021 due to an increase in interest
rates on the term loan during the year.
The effff ective income tax expense rate in 2022 was 23.9% compared to 24.0% foff r 2021.
Segment Results
MaM rkrr ekk titt nii g
Income befoff re income taxes in the Marketing segment foff r 2022 increased $351.7 million, or 56.6%,
t by
from 2021 due primarily to higher all-in fuel margin, increased merchandise margins and was partially offff seff
higher store and other operating costs, selling, general and administrative costs, depreciation, and interest
expense. QuickChek uses a weekly retail calendar where each quarter has 13 weeks. For 2022,
the
QuickChek results cover the period from January 1, 2022, to December 30, 2022 and foff r 2021 the QuickChek
results cover the period from January 29, 2021 (the date of acquisition) to December 31, 2021. The diffff erence
in the timing of the period ends is immaterial to the overall consolidated results.
35
The tables below show the results foff r the Marketing segment foff r the three years ended December 31,
2022 along with certain key metrics foff r the segment.
(M((
iMM lii lll ill ons of dollll ars,rr except rerr venue per storerr monthtt
thtt ousands)dd and storerr counts)tt
Marketing Segment
(i(( nii
Years Ended December 31,
2022
2021
2020
Operating revenues
Petroleum product sales
Merchandise sales
Other operating revenue
ToTT tal operating revenues
Operating expenses
Petroleum product cost of goods sold
Merchandise cost of goods sold
Store and other operating expenses
Depreciation and amortization
Selling, general and administrative
Accretion of asset retirement obligations
ToTT tal operating expenses
Gain (loss) on sale of assets
Income (loss) from operations
Other income (expense)
Interest expense
ToTT tal other income (expense)
Income (loss) befoff re income taxes
Income tax expense (benefit)
$
19,230.1 $
13,410.8 $
3,903.2
312.1
23,445.4
17,910.1
3,136.1
976.5
204.8
232.5
2.7
22,462.7
(0.7)
982.0
(9.0)
(9.0)
973.0
232.1
3,677.7
271.4
17,359.9
12,535.5
2,976.1
827.1
197.3
193.6
2.5
16,732.1
1.6
629.4
(8.1)
(8.1)
621.3
148.5
Net Income (loss) from operations
$
740.9 $
472.8 $
8,208.6
2,955.1
100.3
11,264.0
7,325.7
2,495.7
549.0
146.3
171.1
2.3
10,690.1
1.3
575.2
(0.1)
(0.1)
575.1
132.9
442.2
ToTT tal tobacco sales revenue per same store sales1,2 $
123.3 $
120.2 $
120.6
ToTT tal non-tobacco sales revenue per same store
sales1,2
ToTT tal merchandise sales revenue per same store
sales1,2
$
69.7
48.6
45.5
193.0 $
168.8 $
166.1
12021 and 2020 amounts not revised foff r 2022 raze-and-rebuild activity (see SSS definition below)
2Includes store-level discounts fof r Murphy Drive Reward ("MDR") redemptions and excludes change in value of unredeemed MDR points
Store count at end of period
ToTT tal store months during the period
1,712
20,172
1,679
19,702
1,503
17,770
AveAA rage 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 foff r all stores open throughout both
periods presented. For all periods presented, the store must have been open foff r the entire calendar year to be
included in the comparison. Remodeled stores that remained open or were closed foff r just a very brief time
36
If a store is
(less than a month) during the period being compared remain in the same store sales calculation.
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 servirr ce. Newly constructed stores do not enter the calculation until
they are open foff r each full calendar year foff r the periods being compared (open by January 1, 2021 foff r the
included in the
stores being compared in the 2022 versus 2021 comparison). Acquired stores are not
calculation of same stores foff r the first 12 months aftff er the acquisition. When prior period SSS volumes or sales
are presented, they have not been revised foff r current year activity foff r raze-and-rebuilds and asset dispositions.
FuFF el
Key Operating Metrics
2022
2021
2020
Twelve Months Ended December 31,
$
$
ToTT tal retail fuel contribution ($ Millions)
ToTT tal PS&W contribution ($ Millions)
RINs and other (included in Other operating
revenues on Consolidated Income Statement)
($ Millions)
ToTT tal fuel contribution ($ Millions)
Retail fuel volume - chain (Million gal)
Retail fuel volume - per store (K gals APSM)1
Retail fuel volume - per store (K gal SSS)2
ToTT tal fuel contribution (including retail, PS&W
and RINs) (cpg)
Retail fuel margin (cpg)
PS&W including RINs contribution (cpg)
1APSM metric includes all stores open through the date of calculation
22021 and 2020 amounts not revised foff r 2022 raze-and-rebuild activity
1,405.0 $
(80.8)
951.3 $
(72.3)
895.0
(8.5)
305.8
265.3
1,630.0 $
1,144.3 $
4,751.5
244.6
240.9
34.3
29.6
4.7
4,352.2
229.4
225.8
26.3
21.9
4.4
95.6
982.1
3,900.9
219.5
216.2
25.2
22.9
2.3
The reconciliation of the total fuel contribution to the Consolidated Income Statements is as foff llows:
Twelve Months Ended December 31,
2022
2021
2020
19,230.1 $
13,410.8 $
(17,910.1)
(12,535.5)
8,208.6
(7,325.7)
310.0
1,630.0 $
269.0
1,144.3 $
99.2
982.1
(Millions of dollars)
Petroleum product sales
Less Petroleum product cost of goods sold
Plus RINs and other (included in Other Operating
Revenues line)
ToTT tal fuel contribution
$
$
37
Mercrr handidd sii e
Key Operating Metrics
ToTT tal merchandise contribution ($ Millions)
ToTT tal merchandise sales ($ Millions)
ToTT tal merchandise sales ($K SSS)1,2
Merchandise unit margin (%)
ToTT bacco contribution ($K SSS)1,2
Non-tobacco contribution ($K SSS)1,2
ToTT tal merchandise contribution ($K SSS)1,2
Twelve Months Ended December 31,
2022
767.1
3,903.2
193.0
19.7%
17.7
20.2
37.9
$
$
$
$
$
$
2021
701.6
3,677.7
168.8
19.1%
16.7
10.8
27.5
$
$
$
$
$
$
2020
459.4
2,955.1
166.1
15.6%
16.5
10.0
26.5
$
$
$
$
$
$
12021 and 2020 amounts not revised foff r 2022 raze-and-rebuild activity
2Includes store-level discounts fof r MDR redemptions and excludes change in value of unredeemed MDR points
Same store sales infoff rmation compared to APSM metrics:
Variance from prior year periods
Fuel gallons per month
5.4 %
6.6 %
3.0 %
4.5 %
December 31, 2022
APSM2
SSS1
December 31, 2021
APSM2
SSS1
Merchandise sales
ToTT bacco sales
Non tobacco sales
Merchandise margin
ToTT bacco margrr inii
Non tobacco margrr inii
2.9 %
2.9 %
3.1 %
5.1 %
5.5 %
4.7 %
3.7 %
2.3 %
6.3 %
6.8 %
4.2 %
9.6 %
1.0 %
(0(( .4)4 %
4.5 %
3.5 %
2.3 %
5.4 %
12.2 %
(0(( .8)8 %
46.2 %
37.7 %
4.3 %
89.2 %
December 31, 2020
APSM2
SSS1
(11.6)%
(12.3)%
11.7 %
12.8 %
8.7 %
9.6 %
14.9 %
2.0 %
11.8 %
12.4 %
10.8 %
8.6 %
13.0 %
4.2 %
1Includes store-level discounts fof r MDR redemptions and excludes change in value of unredeemed MDR points
2Includes all MDR activity
Financial Summary of 2022 Compared to 2021
The Marketing segment had total revenues of $23.4 billion in 2022 compared to $17.4 billion in 2021,
an increase of $6.0 billion, due primarily to a higher average retail fuel sales price, increased retail fuel volumes
sold, higher merchandise sales and the inclusion of QuickChek results foff r an additional month. Revenue
amounts included excise taxes collected and remitted to government authorities of $2.2 billion in 2022 and $2.0
billion in 2021.
ToTT tal fuel contribution foff r the year ended December 31, 2022 was $1.6 billion, an increase of $485.7
million, or 42.4% over 2021. This contribution improvement was due to higher retail fuel contribution, increased
fuel volumes sold foff r the year, and an improved contribution from PS&W margin (including RINs). Retail fuel
margin on a cpg basis increased 35.2% in 2022 to 29.6 cpg, compared to 21.9 cpg in the prior year. Fuel
volumes increased 9.2%, primarily due to the return of pre-pandemic trends and to new customers seeking
lower prices. ToTT tal fuel sales volumes on an SSS basis were 240,940 gallons per month in 2022, an increase
38
from 225,792 gallons per month in the prior year. ToTT tal product supply and wholesale margin dollars befoff re
RINs decreased in the current year due to timing and price-related impacts and lower spot-to-rack margins.
Additionally, there was an increase in the contribution from sales of RINs. During 2022, other operating income
included $305.8 million from the sale of 215.6 million RINs at an average selling price of $1.42 per RIN
compared to $265.3 million from the sale of 202.0 million RINs at an average price of $1.31 per RIN in 2021.
Merchandise sales were up 6.1% in 2022 to $3.9 billion due to higher sales across the chain in most
categories and the inclusion of QuickChek results foff r an additional month in 2022. ToTT tal merchandise
contribution in 2022 increased $65.5 million, or 9.3%, to $767.1 million compared to 2021. Merchandise unit
margins increased to 19.7% in 2022 from 19.1% in 2021. On an SSS basis, total merchandise sales were up
2.9%, due to a 3.1% increase in non-tobacco sales and an increase of 2.9% in tobacco products. ToTT tal margins
on a SSS basis foff r 2022 were up 5.1%, tobacco margins were higher by 5.5%, and non-tobacco margins
increased 4.7%, mainly from increased beverage and snack categories.
Store and other operating expenses increased $149.4 million in 2022 compared to 2021 levels, an
increase of 18.1%. This increase in total dollars was due primarily to higher payment fees, employee related
expenses (due in part to a $7.0 million non-recurring special bonus), maintenance expenses, and to the
inclusion of QuickChek stores foff r an additional month. Excluding credit card fees and rent on an APSM basis,
store and other operating expenses at the retail level were 10.0% higher in 2022 compared to 2021 levels.
Depreciation and amortization increased $7.5 million in 2022, an increase of 3.8%. This increase was
due primarily to more stores with larger foff rmats operating in the 2022 period and an additional month of
depreciation foff r QuickChek assets.
Selling, general and administrative expenses ("SG&A") increased $38.9 million in 2022 compared to
2021, primarily due to a charitable pledge of $25.0 million, higher employee incentive expense, and an
additional month of QuickChek expenses.
Corporate and Other Assets
Loss from continuing operations foff r Corporate and other assets in 2022 was $68.0 million, compared to
a loss of $75.9 million in 2021. The $7.9 million improvement from the previous year was mainly due to $8.9
million less in acquisition and integration costs, a $2.9 increase in investment income, and was partially offff seff
t
by $2.0 million in higher interest expense and an increase of $2.5 million in other nonoperating expenses.
Non-GAGG AP Measurerr s
The foff llowing table sets foff rth the Company’s EBITDA and Adjusted EBITDA foff r the three years ended
December 31, 2022. 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
in assessing our operating perfrr off rmance (e.g., (income) from discontinued operations, net
to be meaningful
settlement proceeds, (gain) loss on sale of assets,
transaction and
integration costs related to acquisitions, 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
(GAAAA P).
loss on early debt extinguishment,
We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure
is useful to eliminate certain items in order to foff cus on what we deem to be an indicator of ongoing operating
perfrr off rmance 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 perfrr off rmance. We
believe that the presentation of Adjusted EBITDA provides useful
infoff rmation 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 perfrr off rmance. However, non-GAAAA P measures are not a
39
substitute foff r GAAAA P disclosures, and EBITDA and Adjusted EBITDA may be prepared diffff erently by us than by
other companies using similarly titled non-GAAAA P measures.
The reconciliation of net income to EBITDA and Adjusted EBITDA is as foff llows:
iMM lii lll ill ons of dollll ars)rr
(M((
Net income
Income tax expense (benefit)
Interest expense, net of interest income
Depreciation and amortization
EBITDA
Accretion of asset retirement obligations
(Gain) loss on sale of assets
Acquisition related costs
Other nonoperating (income) expense
Years Ended December 31,
2022
2021
2020
$
672.9 $
396.9 $
210.9
82.3
220.4
1,186.5
2.7
(2.1)
1.5
2.3
125.0
82.3
212.6
816.8
2.5
(1.5)
10.4
(0.2)
386.1
123.0
50.2
161.0
720.3
2.3
(1.3)
1.7
(0.3)
Adjusted EBITDA
$
1,190.9 $
828.0 $
722.7
Capital Resources and Liquidity
Sigi nififf cant Sourcrr es of Capitatt l
As of December 31, 2022, we had $60.5 million of cash and cash equivalents and total marketable
securities of $22.3 million. Our cash management policy provides that cash balances in excess of a certain
threshold are reinvested in certain types of low-risk investments. We have a committed cash flow revolving
credit facility (the "revolving facility") of $350 million, which was undrawn at December 31, 2022, which can be
utilized foff r working capital and other general corporate purposes, including supporting our operating model as
described herein. Additional borrowing capacity under the revolving facility may be extended at our request and
with the consent of the participating lenders.
We also have a shelf registration on file with the SEC foff r an indeterminate amount of debt and equity
securities foff r future issuance, subjb ect to our internal limitations on the amount of debt to be issued under this
shelf registration statement.
We believe our short-term and long-term liquidity 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, 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 $994.7 million foff r the year ended December 31, 2022 and
$737.4 million foff r the comparable period in 2021, an increase of $257.3 million, or 34.9%, mainly due to an
increase in net income of $276.0 million in 2022, increased depreciation of $7.8 million, and increased deferred
and noncurrent tax changes of $12.5 million, partially offff seff
t by a decrease in the amount of cash provided
in 2022 of $38.0 million. For the current year, cash provided by
from changes in noncash working capital
changes in noncash operating working capital of $44.8 million was due to an increase of $180.1 million in
accounts payable and accrued liabilities, offff seff
t by increases of $84.7 million in accounts receivable, $26.9
million in inventories, and $23.7 million in prepaid expenses and other current assets. The changes in accounts
receivable and accounts payable were due to timing of invoicing, billing, payments, and receipts and were
further affff ected by increased fuel and merchandise inventory prices which affff ected inventories and accounts
payable. See also Note 17 "Other financial infoff rmation" in the accompanying audited consolidated financial
statements foff r the three-year period ended December 31, 2022.
40
Investing Activities
For the year ended December 31, 2022, cash required by investing activities was $319.3 million
compared to cash required by investing activities of $914.2 million in 2021. The decrease in cash required by
investing activities of $594.9 million compared to the previous year was primarily due to the $641.1 million cash
purchase of QuickChek in 2021, an increase in cash from the sale of assets of $5.4 million and other investing
activities which were lower by $1.2 million. These decreases were partially offff seff
t by higher capital expenditures
which required cash of $305.3 million in 2022 compared to $274.7 million in 2021 primarily due to new store
openings, and an investment in marketable securities of $22.2 million.
Financing Activities
Financing activities in the year ended December 31, 2022 required net cash of $871.3 million
compared to net cash provided of $269.6 million in the year ended December 31, 2021. The $1.1 billion change
in financing cash required was due to a decrease in net borrowings of $683.7 million, an increase of $451.4
million in share repurchases, an increase of $13.1 million in amounts related to share-based compensation, an
increase of $2.6 million in cash dividends paid, partially offff seff
t by lower debt issuance costs of $9.9 million.
Borrowings of debt in 2021 were related to the QuickChek acquisition and there were no net borrowings in
2022.
Dividends
The Company paid dividends of $1.27 per common share during 2022 foff r total payments of $29.9
As part of our capital allocation
million, compared to $1.04 per common share, or $27.3 million in 2021.
strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time.
Sharerr Repe urcrr hase prorr grarr m
On December 1, 2021, our Board of Directors approved a share repurchase authorization of up to $1
billion that we began to utilize upon the completion of our 2020 $500 million share repurchase authorization.
The 2021 authorization expires December 31, 2026, unless utilized in full befoff re such time. Purchases may be
effff ected in the open market, through privately negotiated transactions, through one or more accelerated stock
repurchase programs, through a combination of the foff regoing or in any other manner in the discretion of
management. Purchases will be made subjb ect 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 effff ect purchases.
During the year 2022, we repurchased a total of 3,328,795 common shares foff r $806.4 million, at an
average price of $242.24 per share. Repurchases in 2022 were made pursuant to our now completed 2020
authorization and our 2021 authorization. As of December 31, 2022, we had approximately $213.7 million
remaining under our 2021 authorization.
41
Debt
Our long-term debt at December 31, 2022 and 2021 was as set foff rth below:
(Millions of dollars)
5.625% senior notes due 2027 (net of unamortized discount of
$1.6 at 2022 and $2.0 at 2021)
4.75% senior notes due 2029 (net of unamortized discount of $4.2
at 2022 and $4.8 at 2021)
3.75% senior notes due 2031 (net of unamortized discount of $5.1
at 2022 and $5.7 at 2021)
TeTT rm loan due 2028 (effff ective interest rate of 5.95% at 2022 and
2.27% at 2021) net of unamortized discount of $0.7 at 2022 and
$0.9 at 2021
Capitalized lease obligations, vehicles, due through 2026
Capitalized lease obligations, buildings, due through 2059
Unamortized debt issuance costs
ToTT tal long-term debt
Less current maturities
December 31,
2022
2021
$
298.4 $
495.8
494.9
393.3
2.3
131.3
(9.1)
1,806.9
15.0
ToTT tal long-term debt, net of current
$
1,791.9 $
298.0
495.2
494.3
397.1
2.7
138.9
(11.1)
1,815.1
15.0
1,800.1
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 affff iliates 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 offff er and redemption of MOUSA's senior notes due 2023. The 2029 Senior Notes are fully and
unconditionally guaranteed by Murphy USA, and are 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 foff r 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 foff r 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 effff ectively 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.
42
Revolving Credit Facility and Term Loan
On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash
flow revolving credit facility and a senior secured term loan and that replaced the Company’s prior ABL facility
and term loan.
The credit agreement provides foff r a senior secured term loan in an aggregate principal amount of $400
million (the “TeTT rm Facility”) (which was borrowed in full on January 29, 2021) and revolving credit commitments
in an aggregate amount equal to $350.0 million (the “Revolving Facility”, and together with the TeTT rm Facility, the
“Credit Facilities”). The outstanding balance of the term loan was $394.0 million at December 31, 2022. The
revolving facility expires January 2026 while the term loan is due January 2028 and requires quarterly principal
payments of $1.0 million beginning July 1, 2021. As of December 31, 2022, we had none outstanding under the
revolving facility while there were $4.7 million in outstanding letters of credit, which reduces the amount
available to borrow.
Interest payable on the Credit Facilities is based on either:
•
•
the London interbank offff ered rate, adjusted foff r statutory reserverr
Rate”); or
requirements (the “Adjusted LIBO
the Alternate Base Rate, which is defined as the highest of (a) the rate of interest last quoted by The
Wall Street Journal as the “Prime Rate”, (b) the greater of federal funds effff ective rate and the overnight
bank funding rate determined by the Federal Reserverr
Bank of New YoYY rk from time to time plus 0.50%
per annum and (c) the one-month Adjusted LIBO Rate plus 1.00% per annum,
plus, (A) in the case of Adjusted LIBO Rate borrowings, (i) with respect to the Revolving Facility,
spreads ranging from 1.75% to 2.25% per annum depending on a total debt to EBITDA ratio or (ii) with respect
to the TeTT rm Facility, a spread of 1.75% per annum and (B) in the case of Alternate Base Rate borrowings (i) with
respect to the Revolving Facility, spreads ranging from 0.75% to 1.25% per annum depending on a total debt to
EBITDA ratio or (ii) with respect to the TeTT rm Facility, a spread of 1.75% per annum.
The TeTT rm Facility amortizes in quarterly installments starting with the first amortization payment being
due on July 1, 2021 at a rate of 1.00% per annum. Murphy USA is also required to prepay the TeTT rm Facility with
a portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales, and casualty events
(subjb ect to certain reinvestment rights) and the net cash proceeds of issuances of indebtedness not permitted
under the Credit Agreement. The Credit Agreement allows Murphy USA to prepay, in whole or in part, the TeTT rm
Facility outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without
premium or penalty other than breakage and redeployment costs.
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 affff iliates, to enter into
agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting
changes. The credit agreement also contains total
leverage ratio and secured net leverage ratio financial
maintenance covenants solely foff r the benefit of the revolving facility 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
maximum secured net leverage ratio of not more than 3.75 to 1.0 with an ability in certain circumstances to
temporarily increase that limit to 4.25 to 1.0. The Credit Agreement also contains customary events of default.
43
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 foff rma
basis, is greater than 3.0 to 1.0, could be limited. At December 31, 2022, our total leverage ratio was 1.51 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 foff rma basis, exceeds 3.0 to 1.0, any restricted payments made foff llowing that time until the ratio is once
again, on a pro foff rma 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 $100
million in any fiscal year and an additional ability to make restricted payments in an aggregate not to exceed the
greater of $106.7 million, or 4.5% of consolidated net tangible assets over the life of the credit agreement.
Supplemental Guarantor Financial Information
The foff llowing is a description of the guarantees with respect to the Senior Notes and the Credit
foff r which MOUSA is primary obligor, and foff r which the Company and certain 100% owned
Facilities,
subsidiaries provide full and unconditional guarantees on a joint and several basis. See "—Debt" above foff r
additional
infoff rmation concerning the Company's outstanding indebtedness, all of which is guaranteed as
described below. See also Note 10 "Long TeTT rm Debt" in the accompanying consolidated financial statements
foff r the three years ended December 31, 2022.
The Senior Notes and related guarantees rank equally with all of our and the guarantors’ existing and
future senior unsecured indebtedness and effff ectively 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 diffff erent from corresponding amounts presented in the consolidated financial statements included
herein. MOUSA is our primary operating subsidiary and generated the vast maja ority of our revenues foff r the
year ended December 31, 2022 and accounted foff r the vast maja ority of our total assets as of December 31,
2022.
In the event MOUSA itself were unable to servirr ce the Company's consolidated debt obligations, our
business and financial condition would be materially adversely impacted.
44
Contractual Obligations
The foff llowing table summarizes our aggregate contractual fixed and variable obligations as of
December 31, 2022.
(Millions of dollars)
Debt obligations 1
Operating lease obligations
Purchase obligations 2
Asset retirement obligations
Other long-term obligations,
including interest on long-term
debt
ToTT tal
$
$
ToTT tal
Less than 1
year
1-3 years
4-5 years
More than 5
years
1,827.6 $
773.7
497.0
163.7
15.0 $
49.8
339.1
—
27.4 $
98.3
132.6
—
26.7 $
95.0
13.5
—
1,758.5
530.6
11.8
163.7
544.0
3,806.0 $
83.7
487.6 $
164.7
423.0 $
151.0
286.2 $
144.6
2,609.2
1For additional infof rmation, see Note 10 “Long-TeTT rm Debt” in the accompanying audited consolidated financial statements.
2Primarily includes ongoing new retail store construction in progress at December 31, 2022, commitments to purchase land, take-or-pay
supply contracts and other servirr ces. See Note 19 “Commitments” in the audited consolidated financial statements foff r the year ended
December 31, 2022.
Capitatt l SpS endidd nii g
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 sustaining capital. We use sustaining capital in this business as needed to
ensure reliability and continued perfrr off rmance of our stores. We also invest in our Corporate and other assets
segment which is primarily technology related.
The foff llowing table outlines our capital spending and investments by category foff r the three years
ended December 31, 2022:
iMM lii lll ill ons of dollll ars)rr
(M((
Marketing:
Company stores
TeTT rminals
Sustaining capital
Corporate and other assets
ToTT tal
Years Ended December 31,
2022
2021
2020
$
$
245.7 $
—
33.4
26.7
305.8 $
221.2 $
2.5
21.8
32.0
277.5 $
175.9
2.0
22.9
26.3
227.1
We currently expect capital expenditures foff r the full year 2023 to range from approximately $375 million
to $425 million, including $285 million to $315 million foff r retail growth, approximately $50 million to $60 million
foff r maintenance capital, with the remaining funds earmarked foff r other corporate investments and other strategic
initiatives. See Note 19 “Commitments” in the audited consolidated financial statements foff r the three years
ended December 31, 2022 included in this Annual Report on Form 10-K.
Crirr titt cal Accountitt nii g Polill cies
Goodwiww lii lll and inii
tatt ngibii
le assetstt
Goodwill represents the excess of the aggregate of the consideration transferred over the net assets
acquired and liabilities assumed and is tested annually foff r impairment, or more frequently if there are indicators
45
of impairment. Acquired finite-lived intangible assets are amortized on a straight-line basis over their estimated
useful lives and are reviewed foff r impairment when events or circumstances indicate that the asset group to
which the intangible assets belong might be impaired. The Company revises the estimated remaining useful life
If the Company revises the useful
of these assets when events or changes in circumstances warrant a revision.
Indefinite-lived intangibles
life, the unamortized balance is amortized over the use life on a prospective basis.
are tested annually foff r impairment, or more oftff en if indicators warrant.
Impairii mrr ent of Long-Lived Assetstt
Individual retail stores are reviewed foff r impairment periodically or whenever events or circumstances
indicate that the carrying amount of an asset may not be recoverable. Our primary indicator that operating store
assets may not be recoverable is consistent negative cash flow over a twenty-foff ur month period foff r those retail
stores that have been open in the same location foff r a suffff icient period to allow foff r meaningful analysis of
ongoing results. We also monitor other factors when evaluating retail stores foff r impairment, including individual
store execution of operating plans and local market conditions.
When an evaluation is required, the projo ected future undiscounted cash flows to be generated from
each retail store over its remaining economic life are compared to the carrying value of the long-lived assets of
that store to determine if a write-down of the carrying value to fair value is required. When determining future
cash flows associated with an individual retail store, we make assumptions about key variables such as sales
volume, gross margins and expenses. Cash flows vary foff r each retail store year to year. Changes in market
demographics, traffff ic patterns, competition and other factors impact the overall operations of certain of our
individual retail store locations. Similar changes may occur in the future that will require us to record impairment
charges. We have not made any material change in the methodology used to estimate future cash flows of
retail store locations during the past three years.
Our impairment evaluations are based on assumptions we deem to be reasonable.
If the actual results
of our retail stores are not consistent with the estimates and judgments we have made in estimating future cash
flows and determining fair values, our actual impairment losses could vary positively or negatively from our
estimated impairment losses. Providing sensitivity analysis if other assumptions were used in perfrr off rming the
impairment evaluations is not practical due to the significant number of assumptions involved in the estimates.
TaTT x Mattersrr
We are subjb ect to extensive tax liabilities imposed by multiple jurisdictions, including income taxes,
indirect taxes (excise/duty, sales/use, and gross receipts taxes), payroll taxes, franchise taxes, withholding
taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are
continuously being enacted or proposed that could result in increased expenditures foff r tax liabilities that cannot
be predicted at this time.
In addition, we have received claims from various jurisdictions related to certain tax
matters. TaTT x liabilities include potential assessments of penalty and interest amounts.
We record tax liabilities based on our assessment of existing tax laws and regulations. A contingent loss
related to a transactional tax claim is recorded if the loss is both probable and estimable. The recording of our
tax liabilities requires significant judgments and estimates. Actual tax liabilities can vary from our estimates foff r a
variety of reasons, including diffff erent interpretations of tax laws and regulations and diffff erent assessments of
the amount of tax due.
In addition, in determining our income tax provision, we must assess the likelihood that
our deferred tax assets will be recovered through future taxable income. Significant judgment is required in
estimating the amount of valuation allowance, if any, that should be recorded against those deferred income tax
assets.
If our actual results of operations diffff er from such estimates or our estimates of future taxable income
change, the valuation allowance may need to be revised. However, an estimate of the sensitivity to earnings
that would result from changes in the assumptions and estimates used in determining our tax liabilities is not
practicable due to the number of assumptions and tax laws involved, the various potential interpretations of the
tax laws, and the wide range of possible outcomes. The Company is occasionally challenged by taxing
authorities over the amount and/or timing of recognition of revenues and deductions in its various income tax
returns. Although the Company believes it has adequate accruals foff r matters not resolved with various taxing
authorities, gains or losses could occur in future years from changes in estimates or resolution of outstanding
46
matters. See Note 12 “Income TaTT xes” in the accompanying audited consolidated financial statements foff r the
three-year period ended December 31, 2022 foff r a further discussion of our tax liabilities.
Asset Retitt rii err ment Oblill gi atitt ons
We operate above ground and underground storage tanks at our facilities. We recognize the estimated
future cost to remove these underground storage tanks (“USTs”TT ) over their estimated useful lives. We record a
discounted liability foff r the fair value of an asset retirement obligation with a corresponding increase to the
carrying value of the related long-lived asset at the time a UST is installed. We depreciate the amount added to
cost of the property and recognize accretion expense in connection with the discounted liability over the
remaining life of the UST.
We have not made any material changes in the methodology used to estimate future costs foff r removal
of a UST during the past three years. We base our estimates of such future costs on our prior experience with
removal and normal and customary costs we expect to incur associated with UST removal. We compare our
cost estimates with our actual removal cost experience, if any, on an annual basis, and if the actual costs we
experience exceed our original estimates, we will recognize an additional liability foff r estimated future costs to
Because these estimates are subjb ective and are currently based on historical costs with
remove the USTs.TT
adjustments foff r estimated future changes in the associated costs, the dollar amount of these obligations could
change as more infoff rmation is obtained. There were no material changes in our asset retirement obligation
estimates during 2022, 2021, or 2020. See also Note 11 “Asset Retirement Obligation” in the accompanying
audited consolidated financial statements foff r the three-year period ended December 31, 2022.
Businii ess combinii atitt ons
We account foff r business combinations using the purchase method of accounting. The purchase price
of an acquisition is measured as the aggregate of the fair value of the consideration transferred. The purchase
price is allocated to the fair values of the tangible and intangible assets acquired and liabilities assumed at date
of acquisition, with any excess recorded as goodwill. These fair value determinations require management to
make estimates which are based on all available infoff rmation, and may involve the use of assumptions with
respect to the timing and amount of future revenues and expenses, the weighted average cost of capital, and
royalty rates
associated with the transaction and the assets or liabilities acquired. This judgment and
determination affff ects the amount of consideration paid that is allocable to assets and liabilities acquired in the
business purchase transaction. The purchase price allocation may be provisional during a measurement period
of up to one year to provide reasonable time to obtain the infoff rmation necessary to identifyff and measure the
assets acquired and liabilities assumed. Any such measurement period adjustments are recognized in the
period in which the adjustment amount is determined. Transaction costs associated with the acquisition are
expensed as incurred.
FORWARD-LOOKING STATEMENTS
that
including, but not
limited to our M&A activity, anticipated store openings,
This Annual Report on Form 10-K contains certain statements or may suggest “foff rwrr ard-looking”
involve risk and
infoff rmation (as defined in the Private Securities Litigation Refoff rm Act of 1995)
uncertainties,
fuel margins,
merchandise margins, sales of RINs, trends in our operations, dividends, and share repurchases. Such
statements are based upon the current beliefsff and expectations of the Company’s management and are subjb ect
to significant risks and uncertainties. Actual future results may diffff er materially from historical results or current
expectations depending upon factors including, but not limited to: the Company's ability to realize projo ected
synergies from the acquisition of QuickChek and successfully expand our foff od and beverage offff erings; 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 effff ectively manage our inventory, manage disruptions in our supply chain
and our ability to control costs; geopolitical events, such as Russia's invasion of Ukraine,
that impact the supply
and demand and prices of crude oil; the impact of severe weather events, such as hurricanes, floods and
earthquakes; the impact of a global health pandemic, and the government reaction in response thereof; the
47
impact of any systems failures, cybersecurity and/or security breaches of the company or its vendor partners,
including any security breach that results in theftff , transfer or unauthorized disclosure of customer, employee or
company infoff rmation or our compliance with infoff rmation security and privacy laws and regulations in the event
of such an incident; successful execution of our infoff rmation technology strategy; reduced demand foff r our
fuel economy and greenhouse gas reduction
products due to the implementation of more stringent
requirements, or increasingly widespread adoption of electric vehicle technology;
future tobacco or e-cigarette
legislation and any other effff off rts that make purchasing tobacco products more costly or diffff icult could hurt our
revenues and impact gross margins; effff icient 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. The Company undertakes no obligation to update or revise any foff rwrr ard-looking
statements to reflect subsequent events, new infoff rmation or future circumstances.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Price Risk
e are exposed to market risks related to the volatility in the price of crude oil and refined products
(primarily gasoline and diesel) used in our operations. These fluctuations can affff ect our revenues and
purchases, as well as the cost of operating, investing, and financing activities. We make limited use of
derivative
of
derivative instruments foff r risk management is covered by operating policies and is closely monitored by our
middle-offff ice function and the Company’s senior management.
prices. The
to manage
instruments
commodity
related
certain
risks
use
to
As described in Note 15 “Financial Instruments and Risk Management” in the accompanying audited
consolidated financial statements, there were short-term commodity derivative contracts in place at December
31, 2022 to hedge the purchase price of refined products. A 10% increase or decrease in the respective
benchmark price of the commodities underlying these derivative contracts would have been immaterial to the
t the changes in the value foff r
Company. Changes in the fair value of these derivative contracts generally offff seff
an equivalent volume of these products.
InII tererr st Rate Risii k
We have exposure to interest rate risks related to volatility of our floating rate term loan with a balance
as of December 31, 2022 of $394 million and to our cash flow revolver facility which currently is undrawn. Both
of these loans are tied to LIBOR interest rates which can move in either direction and cause fluctuations in our
interest expense recognized in any period and in our cash flows related to interest payments made. We make
limited use of interest rate swaps to hedge a portion of our exposure to these rate movements. The acquisition
of any interest rate derivatives is undertaken by senior management when appropriate with delegated authority
from the appropriate Board level committee.
As described in Note 15 “Financial Instruments and Risk Management” in the accompanying audited
consolidated financial statements, we currently have an interest rate swap that hedges exposure to one-month
LIBOR foff r $67.5 million of our outstanding term loan amount at December 31, 2022. A 10% increase or
decrease in the underlying interest rate would have an immaterial impact on the financial statements of the
Company at December 31, 2022.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Infoff rmation required by this item appears on Pages F-1 through F-40, which foff llow the exhibit index of
the Annual Report on Form 10-K.
48
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
Item 9A. CONTROLS AND PROCEDURES
Evaluatitt on of Discl
ii
osurerr Contrtt orr lsll and Prorr cedurerr s.
Our management has evaluated, with the participation of our principal executive and financial offff icers,
the effff ectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities
Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure
controls and procedures were effff ective and appropriately allowed foff r timely decisions regarding required
disclosures as of December 31, 2022.
Internrr al Contrtt orr l over FiFF nii anciaii
l Reportrr itt nii g
The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules that generally
require every company that files reports with the SEC to evaluate its effff ectiveness of internal controls over
financial reporting.
Management has conducted an evaluation of the effff ectiveness of the Company's internal control over
financial reporting based on the criteria set foff rth in Internrr al Contrtt orr l-ll Integrarr ted FrFF arr mewoww rkrr
(2(( 013)3 issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation,
management concluded that
the Company’s internal control over financial reporting was effff ective as of
December 31, 2022. Management’s report is included on page F-1 of this Annual Report on Form 10-K. KPMG
LLP,P an independent
the
effff ectiveness of the Company’s internal control over financial reporting as of December 31, 2022 and their
report is included on page F-4 of this Annual Report on Form 10-K.
registered public accounting firm, has made an independent assessment of
There were no changes in the Company’s internal controls over financial reporting that occurred during
the foff urth quarter of 2022 that have affff ected, or are reasonably likely to materially affff ect, the Company’s internal
control over financial reporting.
Item 9B. OTHER INFORMATION
None
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None
49
Part III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Certain infoff rmation regarding executive offff icers of
the Company is included under the caption
“Executive Offff icers of the Registrant” in Part I of this Annual Report on Form 10-K. Other infoff rmation required
by this item is incorporated by reference to the Registrant’s definitive Proxy Statement foff r the Annual Meeting of
Stockholders on May 4, 2023 under the captions “Election of Directors” and “Committees”.
Murphy USA has adopted a Code of Business Conduct and Ethics, which can be foff und under the
Corporate Governance tab at http:/// ir.corporate.murphyusa.com. Stockholders may also obtain free of charge a
copy of the Code of Business Conduct and Ethics by writing to the Company’s Secretary at P.O. Box 7300, El
Dorado, AR 71730-5836. Any future amendments to or waivers of the Company’s Code of Business Conduct
and Ethics will be posted on the Company’s Internet Web site.
Item 11. EXECUTIVE COMPENSATION
Infoff rmation required by this item is incorporated by reference to Murphy USA’AA s definitive Proxy
foff r the Annual Meeting of Stockholders on May 4, 2023 under the captions “Compensation
Statement
Discussion and Analysis” and “Compensation of Directors” and in various compensation schedules.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Infoff rmation required by this item is incorporated by reference to Murphy USA’AA s definitive Proxy
Statement foff r the Annual Meeting of Stockholders on May 4, 2023 under the captions “Security Ownership of
Certain Beneficial Owners,” “Security Ownership of Management,” and “Equity Compensation Plan Infoff rmation.”
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Infoff rmation required by this item is incorporated by reference to Murphy USA’AA s definitive Proxy
Statement foff r the Annual Meeting of Stockholders on May 4, 2023 under the caption “Review, Approval or
Ratification of Transactions with Related Persons.”
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Infoff rmation required by this item is incorporated by reference to Murphy USA’AA s definitive Proxy
Statement foff r the Annual Meeting of Stockholders on May 4, 2023 under the caption “Audit Committee Report.”
50
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Part IV
(a) 1. Financial Statements – The consolidated financial statements of Murphy USA Inc. and
consolidated subsidiaries are located or begin on the pages of this Annual Report on Form 10-K as indicated
below.
INDEX TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Report of Management - Financial Statements
Report of Management - Internal Controls
Report of Independent Registered Public Accounting Firm (PCAOB ID 185)
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Note 1 - Description of Business and Basis of Presentation
Note 2 - Significant Accounting Policies
Note 3 - Revenues
Note 4 - Inventories
Note 5 - Marketable Securities
Note 6 - Business Acquisition
Note 7 - Property, Plant and Equipment
Note 8 - Goodwill and Intangibles
Note 9 - Accounts Payable and Accrued Liabilities
Note 10 - Long-TeTT rm Debt
Note 11 - Asset Retirement Obligation (ARO)
Note 12 - Income TaTT xes
Note 13 - Incentive Plans
Note 14 - Employee and Retiree Benefits
Note 15 - Financial Instruments and Risk Management
Note 16 - Earnings Per Share
Note 17 - Other Financial Infoff rmation
Note 18 - Assets and Liabilities Measured at Fair VaVV lue
Note 19 - Commitments
Note 20 - Contingencies
Note 21 - Leases
Note 22 - Recent Accounting and Reporting Rules
Note 23 - Business Segments
51
Page No.
1
1
2
4
6
7
8
9
10
11
11
11
15
16
17
18
19
19
21
21
23
24
25
28
29
29
30
31
33
33
35
37
38
2. Financial Statement Schedules
Schedule II – VaVV luation Accounts and Reserverr
s
40
All other financial statement schedules are omitted because they are either not applicable or the
required infoff rmation is included in the consolidated financial statements or notes thereto.
3. Exhibits – The foff llowing is an index of exhibits that are hereby filed as indicated by asterisk (*), that
are considered furnished rather than filed, or that are incorporated by reference. Exhibits other than those listed
have been omitted since they either are not required or are not applicable.
Exhibit
Number
2.1
2.2
2.3
3.1
3.2
4.1
4.2
4.3
4.4*
10.1
10.2
10.3
10.4
Descriptionp
Separation and Distribution Agreement, dated August 30, 2013, between Murphy Oil
Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’AA s Current Report
on Form 8-K filed September 5, 2013)
Agreement and Plan of Merger by and amount Quick Chek Corporation, Murphy USA NJ,
Inc., Murphy USA Inc. and Fortis Advisors LLC, a Shareholder Representative, dated
December 12, 2020 (incorporated by reference to Exhibit 2.1 to Murphy USA's Current Report
on Form 8-K filed February 1, 2021)
Amendment to Agreement and Plan of Merger, dated as of January 29, 2021, by and among
Murphy USA Inc., Quick Chek Corporation, Murphy USA NJ, Inc. and Fortis Advisors LLC
(incorporated by reference to Exhibit 2.2 to Murphy USA's Current Report on Form 8-K filed
February 1, 2021)
Murphy USA Inc. Amended and Restated Certificate of Incorporation (incorporated by
reference to Murphy USA’AA s Quarterly Report on Form 10-Q filed November 8, 2013)
Murphy USA Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1
Murphy USA’AA s Current Report on Form 8-K filed March 18, 2022)
Indenture (including foff rm of notes) dated as of April 25, 2017 among Murphy Oil USA, Inc.,
Murphy USA Inc., as a guarantor, the other guarantors party thereto and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.1 to Murphy USA's Current
Report on Form 8-K filed April 25, 2017)
Indenture dated as of September 13, 2019 among Murphy Oil USA, Inc., Murphy USA Inc., as
a guarantor, the other guarantor party thereto and UMB Bank, N.A., as trustee (incorporated
by reference to Exhibit 4.1 to Murphy USA's Current Report on Form 8-K filed September 13,
2019)
Indenture dated as of January 29, 2021, by and among Murphy Oil USA, Inc., Murphy USA
Inc., as a guarantor, the other guarantors party thereto and UMB Bank, N.A., as trustee
(incorporated by reference to Exhibit 4.1 to Murphy USA's Current Report on Form 8-K filed
February 1, 2021)
Description of Registrant's Securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934
TaTT x Matters Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy
USA Inc. (incorporated by reference to Murphy USA’AA s Current Report on Form 8-K filed
September 5, 2013)
Severance Protection Agreement dated as of August 20, 2013 between Murphy USA and R.
Andrew Clyde, (incorporated by reference to Murphy USA’AA s Current Report on Form 8-K filed
August 22, 2013)†
Murphy USA Inc. 2013 Long-TeTT rm Incentive Plan, as amended and restated effff ective as of
February 9, 2017)† (incorporated by reference to Murphy USA Inc's Annual Report on Form
10-K filed February 22, 2017)
Murphy USA Inc. 2013 Stock Plan foff r Non-Employee Directors (incorporated by reference to
Murphy USA’AA s Registration Statement on Form S-8 (File No. 333-191131) filed September 12,
2013)†
52
10.5
10.6
10.7
10.8
10.9
10.10
10.11
Murphy USA Inc. Supplemental Executive Retirement Plan, as amended and restated, on
October 1, 2018 and effff ective January 1, 2019 (incorporated by reference to Exhibit 10.11 to
Murphy USA's Annual Report on Form 10-K filed February 19, 2019) †
Form of Murphy USA 2013 Long-TeTT rm Incentive Plan Option Grant Agreement (incorporated
by reference to Exhibit 10.10 to Murphy USA Inc's Annual Report on Form 10-K filed February
19, 2021)†
Form of Murphy USA 2013 Long-TeTT rm Incentive Plan RSU Agreement (incorporated by
reference to Exhibit 10.11 to Murphy USA Inc's Annual Report on Form 10-K filed February
19, 2021)†
Form of Murphy USA 2013 Long-TeTT rm Incentive Plan Perfrr off rmance Share Agreement
(incorporated by reference to Exhibit 10.12 to Murphy USA Inc's Annual Report on Form 10-K
filed on February 19 2021)†
Form of Murphy USA 2013 Non-Employee Director AwAA ard (incorporated by reference to
Exhibit 10.13 to Murphy USA Inc's Annual Report on Form 10-K file February 19, 2021)†
Murphy USA Inc. 2019 Annual Incentive Plan, as amended and restated, on February 7, 2019
and effff ective as of January 1, 2019 (incorporated by reference to Exhibit 10.20 to Murphy
USA's Annual Report on Form 10-K filed February 19, 2019)†
Credit Agreement, dated as of January 29, 2021, by and among Murphy USA Inc., Murphy Oil
USA, Inc., Royal Bank of Canada, as term administrative agent, JPMorgan Chase Bank, N.A.,
as revolving administrative agent, and the lenders party thereto (incorporated by reference to
Exhibit 10.1 to Murphy USA's Current Report on Form 8-K as filed February 1, 2021)
10.12*
Form of Murphy USA 2013 Long-TeTT rm Incentive Plan Option Agreement (February 2023
grants)
10.13*
Form of Murphy USA 2013 Long-TeTT rm Incentive Plan RSU Agreement (February 2023 grants)
10.14*
Form of Murphy USA 2013 Long-TeTT rm Incentive Plan Perfrr off rmance Stock Unit Agreement
(February 2023 grants)
10.15*
Form of Murphy USA 2013 Non-Employee Director Equity Grant (February 2023 grants)
10.16*
Form of Murphy USA 2013 Non-Employee Director Cash Deferral Equity Grant (February
2023 grants)
21*
22*
23.1*
31.1*
31.2*
32.1*
32.2*
List of Subsidiaries of Murphy USA
List of Subsidiary Guarantors and Issuers of Guaranteed Debt
Consent of KPMG LLP,P Independent Registered Public Accounting Firm
Certification required by Rule 13a-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 of Principal Executive Offff icer
Certification required by Rule 13a-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 of Principal Financial Offff icer
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 of Principal Executive Offff icer
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 of Principal Financial Offff icer
101. INS
101. SCH*
Inline XBRL Instance Document - the instance document does not appear in the Interactive
Data File because its XBRL tags are embedded within the Inline XBRL documents
Inline XBRL TaTT xonomy Extension Schema Document
101. CAL*
Inline XBRL TaTT xonomy Extension Calculation Linkbase Document
101. DEF*
Inline XBRL TaTT xonomy Extension Definition Linkbase Document
101. LAB*
Inline XBRL TaTT xonomy Extension Labels Linkbase Document
53
101. PRE*
Inline XBRL TaTT xonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File - the cover page interactive data file does not appear in the
Interactive Data file because its XBRL tags are embedded within the Inline XBRL document
* Filed herewith
† Management contract or compensatory plan or arrangement
Item 16. Form 10-K Summaryrr
None
54
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MURPHY USA, Inc.
By:
/s/ R. Andrew Clyde
Date:
February 15, 2023
R. Andrew Clyde, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
on February 15, 2023 by the foff llowing persons on behalf of the registrant and in the capacities indicated.
/s/ R. Madison Murphy
R. Madison Murphy, Chairman and Director
/s/ David B. Miller
David B. Miller, Director
/s/ R. Andrew Clyde
R. Andrew Clyde, President and Chief
Executive Offff icer and Director
(Principal Executive Offff icer)
/s/ Jeanne L. Phillips
Jeanne L. Phillips, Director
/s/ Claiborne P. Deming
Claiborne P. Deming, Director
/s/ Jack T. TaTT ylor
Jack T. TaTT ylor, Director
/s/ David L. Goebel
David L. Goebel, Director
/s/ Rosemary Turner
Rosemary Turner, Director
/s/ Fred L. Holliger
Fred L. Holliger, Director
/s/ James W. Keyes
James W. Keyes, Director
/s/ Diane N. Landen
Diane N. Landen, Director
/s/ Mindy K. West
Mindy K. West, Executive Vice President, Fuels,
Treasurer, and Chief Financial Offff icer
(Principal Financial Offff icer)
/s/ Donald R. Smith, Jr.
Donald R. Smith, Jr.
Vice President and Controller
(Principal Accounting Offff icer)
55
[THIS PAGE INTENTIONALLY LEFT BLANK]
REPORT OF MANAGEMENT- CONSOLIDATED FINANCIAL STATEMENTS
The management of Murphy USA Inc. is responsible foff r the preparation and integrity of the accompanying
consolidated financial statements and other financial data. The statements were prepared in confoff rmity with
U.S. generally accepted accounting principles appropriate in the circumstances and include some amounts
based on infoff rmed estimates and judgments, with consideration given to materiality.
An independent, registered public accounting firm, KPMG LLP,P has audited the Company’s consolidated
financial statements in accordance with the standards of the Public Company Accounting Oversight Board and
provides an objb ective, independent opinion about the Company’s consolidated financial statements. The Audit
Committee of the Board of Directors appoints the independent registered public accounting firm; ratification of
the appointment is solicited annually from the shareholders. KPMG LLP’s opinion covering the Company’s
consolidated financial statements can be foff und on page F-2.
The Board of Directors appoints an Audit Committee annually to implement and to support the Board’s oversight
function of the Company’s financial reporting, accounting policies, internal controls and independent registered
public accounting firm. This Committee is composed solely of directors who are not employees of
the
Company. The Committee meets routinely with representatives of management, the Company’s internal audit
team and the independent registered public accounting firm to review and discuss the adequacy and
effff ectiveness of the Company’s internal controls, the quality and clarity of its financial reporting, the scope and
results of independent and internal audits, and to fulfill other responsibilities included in the Committee’s
Charter. The independent registered public accounting firm and the Company’s internal audit team have
unrestricted access to the Committee, without management presence, to discuss audit findings and other
financial matters.
REPORT OF MANAGEMENT – INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible foff r establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rules 13a-15(f). The Company’s internal controls have been designed
to provide reasonable assurance regarding the reliability of
reporting and the preparation of
consolidated financial statements in accordance with U.S. generally accepted accounting principles. All internal
control systems have inherent limitations, and therefoff re, can provide only reasonable assurance with respect to
the reliability of financial reporting and preparation of consolidated financial statements.
financial
Management has conducted an evaluation of the effff ectiveness of the Company’s internal control over financial
issued by the Committee of
reporting based on the criteria set foff rth in Internrr al Contrtt orr l – Integrarr ted FrFF arr mewoww rkrr
Sponsoring Organizations of the Treadway Commission in 2013. Based on the results of this evaluation,
management concluded that
the Company’s internal control over financial reporting was effff ective as of
December 31, 2022.
KPMG LLP has perfrr off rmed an audit of the Company’s internal control over financial reporting and their opinion
thereon can be foff und on page F-4.
F-1
Report of Independent Registered Public Accounting Firm
ToTT the Stockholders and Board of Directors
Murphy USA Inc.:
OpO inii
ion on thtt e Consolill dated FiFF nii anciaii
l Statt tementstt
We have audited the accompanying consolidated balance sheets of Murphy USA Inc. and subsidiaries (the
Company) as of December 31, 2022 and 2021, the related consolidated income statements, statements of
comprehensive income, statements of cash flows, and statements of changes in equity foff r each of the years in
the three-year period ended December 31, 2022, and the related notes and financial statement schedule II
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021,
and the results of its operations and its cash flows foff r each of the years in the three-year period ended
December 31, 2022, in confoff rmity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022,
(2(( 013)3 issued by the Committee of
based on criteria established in Internrr al Contrtt orr l – Integrarr ted FrFF arr mewoww rkrr
Sponsoring Organizations of the Treadway Commission, and our report dated February 15, 2023 expressed an
unqualified opinion on the effff ectiveness of the Company’s internal control over financial reporting.
Basisii
foff r OpO inii
ion
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits. We are
a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perfrr off rm the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud. Our audits included perfrr off rming procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and perfrr off rming procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. We believe that our audits
provide a reasonable basis foff r our opinion.
Crirr titt cal Audidd t Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial
statements and (2) involved our especially challenging, subjb ective, or complex judgments. The communication
of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Assessment of imii pairii mrr ent trtt irr gi gerirr nii g eventstt
rerr lated to prorr pertrr y,t plant and equipii ment
As discussed in Note 2 to the consolidated financial statements, the Company assesses its property, plant
and equipment foff r potential impairment whenever events or changes in circumstances indicate that the
carrying value of the asset or asset group may not be recoverable. The property, plant and equipment
balance, at cost less accumulated depreciation, as of December 31, 2022 was $2,459.3 million. Some
retail sites may generate negative cash flow or experience events that indicate carrying values might not
be recovered, indicating a higher risk that these retail sites might be impaired. This requires the
F-2
Company to consider profitability and retail site specific factors when evaluating its retail sites foff r
impairment in order to determine whether or not an impairment triggering event has occurred.
We identified the assessment of impairment triggering events related to property, plant and equipment as
a critical audit matter. The determination of the asset group level, the evaluation of retail site profitability,
and the assessment of retail site specific factors involved challenging auditor judgment, as changes to
those factors could have a significant impact on the Company’s assessment of an impairment triggering
event.
The foff llowing are the primary procedures we perfrr off rmed to address this critical audit matter. We
evaluated the design and tested the operating effff ectiveness of certain internal controls related to the
Company’s triggering events assessment process over property, plant and equipment, including controls
related to the identification of impairment triggers. We evaluated the asset group level at which the
Company’s analysis was perfrr off rmed. We assessed the Company’s methodology of identifyiff ng retail site
specific factors to be considered in the triggering events analysis, including length of the time period used
by the Company to evaluate retail site profitability to identifyff
historical cash flows by asset group to the general ledger infoff rmation to assess the reliability of the
infoff rmation used.
triggering events. We also compared the
/s/ KPMG LLP
We have serverr d as the Company’s auditor since 2013.
Dallas, TeTT xas
February 15, 2023
F-3
Report of Independent Registered Public Accounting Firm
ToTT the Stockholders and Board of Directors
Murphy USA Inc.:
OpO inii
ion on Internrr al Contrtt orr l Over FiFF nii anciai
l Reportrr itt nii g
We have audited Murphy USA Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2022, based on criteria established in Internrr al Contrtt orr l – Integrarr ted FrFF arr mewoww rkrr
the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effff ective internal control over financial reporting as of December 31, 2022,
based on criteria established in Internrr al Contrtt orr l – Integrarr ted FrFF arr mewoww rkrr
Sponsoring Organizations of the Treadway Commission.
(2(( 013)3 issued by the Committee of
(2(( 013)3 issued by
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021,
the related consolidated income statements, statements of comprehensive income, statements of cash flows,
and statements of changes in equity foff r each of the years in the three-year period ended December 31, 2022,
and the related notes and financial statement schedule II (collectively, the consolidated financial statements),
and our report dated February 15, 2023 expressed an unqualified opinion on those consolidated financial
statements.
Basisii
foff r OpO inii
ion
The Company’s management is responsible foff r maintaining effff ective internal control over financial reporting and
foff r its assessment of the effff ectiveness of internal control over financial reporting, included in the accompanying
Report of Management – Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perfrr off rm the audit to obtain reasonable assurance about whether effff ective internal control over financial
reporting was maintained in all material respects. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effff ectiveness of internal control based on
the assessed risk. Our audit also included perfrr off rming such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis foff r our opinion.
Defiff nii
ititt on and Limii
itat titt ons of Internrr al Contrtt orr l Over FiFF nii anciaii
l Reportrr itt nii g
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements foff r external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effff ect on the financial statements.
F-4
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projo ections of any evaluation of effff ectiveness to future periods are subjb ect to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ KPMG LLP
Dallas, TeTT xas
February 15, 2023
F-5
Murphy USA Inc.
Consolidated Balance Sheets
iMM lii lll ill ons of dollll ars,rr except sharerr amounts)tt
(M((
Assets
Current assets
Cash and cash equivalents
Marketable securities, current
Accounts receivable—trade, less allowance foff r doubtful accounts of
$0.3 in 2022 and $0.1 in 2021, respectively
Inventories, at lower of cost or market
Prepaid expenses and other current assets
ToTT tal current assets
Marketable securities, non-current
Property, plant and equipment, at cost less accumulated depreciation
and amortization of $1,553.1 in 2022 and $1,373.4 in 2021, respectively
Operating lease right of use assets, net
Intangible assets, net of amortization
Goodwill
Other assets
ToTT tal assets
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt
Trade accounts payable and accrued liabilities
ToTT tal current liabilities
Long-term debt, including capitalized lease obligations
Deferred income taxes
Asset retirement obligations
Non-current operating lease liabilities
Deferred credits and other liabilities
ToTT tal liabilities
$
$
$
December 31,
2022
2021
60.5 $
17.9
281.7
319.1
47.6
726.8
4.4
256.4
—
195.7
292.3
23.4
767.8
—
2,459.3
2,378.4
449.6
140.4
328.0
14.7
419.2
140.7
328.0
14.1
4,123.2 $
4,048.2
15.0 $
839.2
854.2
1,791.9
327.4
43.3
444.2
21.5
15.0
660.3
675.3
1,800.1
295.9
39.2
408.9
21.6
3,482.5
3,241.0
Stockholders' Equity
Preferred Stock, par $0.01, (authorized 20,000,000 shares,
none outstanding)
Common Stock, par $0.01, (authorized 200,000,000 shares,
46,767,164 shares issued at December 31, 2022 and 2021, respectively)
Treasury stock (25,017,324 and 21,831,904 shares held at
December 31, 2022 and 2021, respectively)
Additional paid in capital (APIC)
Retained earnings
Accumulated other comprehensive income (AOCI)
ToTT tal stockholders' equity
—
0.5
(2,633.3)
518.9
2,755.1
(0.5)
640.7
ToTT tal liabilities and stockholders' equity
$
4,123.2 $
See accompanying notes to consolidated financial statements.
—
0.5
(1,839.3)
534.8
2,112.4
(1.2)
807.2
4,048.2
F-6
iMM lii lll ill ons of dollll arsrr except per sharerr amounts)tt
(M((
2022
2021
2020
Murphy USA Inc.
Consolidated Income Statements
YeYY ars Ended December 31,
Operating Revenues
Petroleum product sales 1
Merchandise sales
Other operating revenues
ToTT tal operating revenues
Operating Expenses
Petroleum product cost of goods sold 1
Merchandise cost of goods sold
Store and other operating expenses
Depreciation and amortization
Selling, general and administrative
Accretion of asset retirement obligations
Acquisition related costs
$
19,230.1 $
13,410.8 $
3,903.2
312.8
23,446.1
17,910.1
3,136.1
976.5
220.4
232.5
2.7
1.5
3,677.7
272.0
17,360.5
12,535.5
2,976.1
827.3
212.6
193.6
2.5
10.4
8,208.6
2,955.1
100.6
11,264.3
7,325.7
2,495.7
549.1
161.0
171.1
2.3
1.7
ToTT tal operating expenses
22,479.8
16,758.0
10,706.6
Gain (loss) on sale of assets
Income (loss) from operations
Other income (expense)
Investment income
Interest expense
Other nonoperating income (expense)
ToTT tal other income (expense)
Income befoff re income taxes
Income tax expense (benefit)
Net Income
Basic and Diluted Earnings Per Common Share:
Basic
Diluted
Weighted-average shares outstanding (in
thousands):
Basic
Diluted
Supplemental infoff rmation:
1 Includes excise taxes of:
2.1
968.4
3.0
(85.3)
(2.3)
(84.6)
883.8
210.9
1.5
604.0
0.1
(82.4)
0.2
(82.1)
521.9
125.0
$
$
$
672.9 $
396.9 $
28.63 $
28.10 $
15.14 $
14.92 $
1.3
559.0
1.0
(51.2)
0.3
(49.9)
509.1
123.0
386.1
13.25
13.08
23,506
23,950
26,210
26,604
29,132
29,526
$
2,180.2 $
2,041.7 $
1,760.0
See accompanying notes to consolidated financial statements.
F-7
Murphy USA Inc.
Consolidated Statements of Comprehensive Income
(Millions of dollars)
Net income
YeYY ars Ended December 31,
2022
2021
2020
$
672.9 $
396.9 $
386.1
Other comprehensive income (loss), net of tax
Interest rate swap:
Realized gain (loss)
Unrealized gain (loss)
Reclassified to interest expense (interest rate swap):
Realized (gain) loss reclassified to interest expense
Amortization of unrealized gain to interest expense
Deferred income tax expense (benefit)
Other comprehensive income (loss)
Comprehensive income
$
See accompanying notes to consolidated financial statements.
—
—
—
0.9
0.9
0.2
0.7
673.6 $
(0.1)
0.1
0.1
0.9
1.0
0.3
0.7
397.6 $
(0.9)
(3.4)
0.9
—
(3.4)
(0.8)
(2.6)
383.5
F-8
Murphy USA Inc.
Consolidated Statements of Cash Flows
YeYY ars Ended December 31,
2022
2021
2020
$
672.9 $
396.9 $
386.1
220.4
212.6
161.0
iMM lii lll ill ons of dollll ars)rr
(M((
Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization
Deferred and noncurrent income tax charges
(benefits)
Accretion of asset retirement obligations
Amortization of discount on marketable securities
Pretax (gains) losses from sale of assets
Net (increases) decrease in noncash operating
working capital
Other operating activities - net
Net cash provided (required) by operating
activities
Investing Activities
Property additions
Payments foff r acquisition, net of cash acquired
Proceeds from sale of assets
Investment in marketable securities
Other investing activities - net
Net cash provided (required) by investing
activities
Financing Activities
Purchase of treasury stock
Dividends paid
Repayments of debt
Borrowings of debt
Debt issuance costs
Amounts related to share-based compensation
Net cash provided (required) by financing
activities
Net change in cash, cash equivalents, and
restricted cash
Cash, cash equivalents, and restricted cash at
January 1
Cash, cash equivalents, and restricted cash at
December 31
31.5
2.7
(0.1)
(2.1)
44.8
24.6
19.0
2.5
—
(1.5)
82.8
25.1
994.7
737.4
(305.3)
—
8.8
(22.2)
(0.6)
(319.3)
(806.4)
(29.9)
(20.2)
5.0
—
(19.8)
(871.3)
(195.9)
256.4
(274.7)
(641.1)
3.4
—
(1.8)
(355.0)
(27.3)
(224.3)
892.8
(9.9)
(6.7)
269.6
92.8
163.6
2.5
2.3
—
(1.3)
(13.1)
26.2
563.7
(230.7)
—
8.1
—
(1.7)
(399.6)
(6.9)
(38.9)
—
—
(10.7)
(456.1)
(116.7)
280.3
163.6
(914.2)
(224.3)
$
60.5 $
256.4 $
See accompanying notes to consolidated financial statements.
F-9
(M((
iMM lii lll ill ons of dollll ars,rr except sharerr
amounts)tt
Balance as of December 31,
2019
Net income
Cumulative effff ect of a change in
accounting principle
Loss on interest rate hedge, net
of tax
Cash dividends declared, ($0.25
per share)
Dividend equivalent units accrued
Purchase of treasury stock
Issuance of treasury stock
Amounts related to share-based
compensation
Share-based compensation
expense
Balance as of December 31,
2020
Net income
Gain on interest rate hedge, net
of tax
Cash dividends declared, ($1.04
per share)
Dividend equivalent units accrued
Purchase of treasury stock
Issuance of treasury stock
Amounts related to share-based
compensation
Share-based compensation
expense
Balance as of December 31,
2021
Net income
Gain on interest rate hedge, net
of tax
Cash dividends declared, ($1.27
per share)
Dividend equivalent units accrued
Purchase of treasury stock
Issuance of treasury stock
Amounts related to share-based
compensation
Share-based compensation
expense
Balance as of December 31,
2022
Murphy USA Inc.
Consolidated Statements of Changes in Equity
Common Stock
Shares
Par
Treasury
Stock
APIC
Retained
Earnings
AOCI
ToTT tal
46,767,164
$
0.5
$ (1,099.8) $ 538.7
$ 1,362.9
$
0.7
$
—
—
—
—
—
—
—
—
—
46,767,164
—
—
—
—
—
—
—
—
46,767,164
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.5
—
—
—
—
—
—
—
—
0.5
—
—
—
—
—
—
—
—
—
—
—
—
—
(399.6)
—
—
—
—
0.1
—
8.5
(9.0)
—
—
(10.7)
14.2
386.1
1.1
—
(6.9)
(0.1)
—
—
—
—
—
—
(2.6)
—
—
—
—
—
—
(1,490.9)
533.3
1,743.1
(1.9)
—
—
—
—
(355.0)
6.6
—
—
—
—
—
0.3
—
(6.5)
(6.7)
14.4
396.9
—
(27.3)
(0.3)
—
—
—
—
—
0.7
—
—
—
—
—
—
(1,839.3)
534.8
2,112.4
(1.2)
—
—
—
—
(806.4)
—
—
—
0.3
—
12.4
(12.4)
—
—
(19.8)
16.0
672.9
—
(29.9)
(0.3)
—
—
—
—
—
0.7
—
—
—
—
—
—
803.0
386.1
1.1
(2.6)
(6.9)
—
(399.6)
(0.5)
(10.7)
14.2
784.1
396.9
0.7
(27.3)
—
(355.0)
0.1
(6.7)
14.4
807.2
672.9
0.7
(29.9)
—
(806.4)
—
(19.8)
16.0
46,767,164
$
0.5
)
$ (2,633.3) $ 518.9
)
(
(
$ 2,755.1
$
)
(0.5) $
(
)
(
640.7
See accompanying notes to consolidated financial statements.
F-10
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 1 — Description of Business and Basis of Presentation
The business of Murphy USA Inc. and its subsidiaries (“Murphy USA”, "we", or the “Company”) primarily
consists of the U.S. retail marketing business that was separated from its foff rmer parent company, Murphy Oil
Corporation (“Murphy Oil”), plus other assets, liabilities and operating expenses of Murphy Oil that were
associated with supporting the activities of the U.S. retail marketing operations. Murphy USA was incorporated
in March 2013. The separation was approved by the Murphy Oil board of directors on August 7, 2013, and was
completed on August 30, 2013 through the distribution of 100% of the outstanding capital stock of Murphy USA
to holders of Murphy Oil common stock on the record date of August 21, 2013. Following the separation,
Murphy USA is an independent, publicly traded company, and Murphy Oil retains no ownership interest in
Murphy USA. On January 29, 2021, MUSA acquired 100% of Quick Chek Corporation ("QuickChek"), a
privately held convenience store chain with a strong regional brand that consisted of 156 stores at the time of
infoff rmation
acquisition,
concerning the acquisition, see Note 6, "Business Acquisition".
in an all-cash transaction. For additional
located in New Jersey and New YoYY rk,
Murphy USA markets refined products through a network of retail gasoline stores and unbranded wholesale
customers and in addition, we operate non-fuel convenience stores in select markets. The Company owns and
operates a chain of retail stores under the brand name of Murphy USA®AA which are almost all located in close
proximity to Walmart stores, markets gasoline and other products at standalone stores under the Murphy
Express brand, and also has a mix of convenience stores and convenience stores with retail gasoline that
operate under the name of QuickChek®. At December 31, 2022, Murphy USA had a total of 1,712 Company
stores in 27 states, of which 1,151 were Murphy USA, 404 were Murphy Express and 157 were QuickChek.
The Company also has certain product supply and wholesale assets, including product distribution terminals
and pipeline positions.
Note 2 – Significant Accounting Policies
PRINCIPLES OF CONSOLIDATAA ION – These consolidated financial statements were prepared in accordance
with U.S. generally accepted accounting principles (“U.S. GAAAA P”) and include the accounts of Murphy USA Inc.
and its subsidiaries foff r all periods presented. All significant intercompany accounts and transactions within the
consolidated financial statements have been eliminated.
REVENUE RECOGNITION – Revenue is recognized when obligations under the terms of a contract with our
customers are satisfied; generally,
this occurs with the transfer of control of our petroleum products,
convenience merchandise, Renewable Identification Numbers ("RINs") and other assets to our third-party
customers. Revenue is measured as the amounts of consideration we expect to receive in exchange foff r
transferring goods or providing servirr ces. Excise and sales tax that we collect where we have determined we
are the principal in the transaction have been recorded as revenue on a jurisdiction-by-j- urisdiction basis.
The Company enters into buy/sell and similar arrangements when petroleum products are held at one location
but are needed at a diffff erent location. The Company oftff en pays or receives funds related to the buy/sell
arrangement based on location or quality diffff erences. The Company accounts foff r such transactions as non-
monetary exchanges under existing accounting guidance and typically reports these on a net basis in its
Consolidated Income Statements. See Note 3 "Revenues" foff r additional infoff rmation.
SHIPPING AND HANDLING COSTS – Costs incurred foff r the shipping and handling of motor fuel are included
in Petroleum product cost of goods sold in the Consolidated Income Statements. Costs incurred foff r the
shipping and handling of convenience store merchandise are included in Merchandise cost of goods sold in the
Consolidated Income Statements.
TATT XES COLLECTED FROM CUSTOMERS AND REMITTED TO GOVERNMENT AUTHORITIES – Excise and
other taxes collected on sales of refined products and remitted to governmental agencies are included in
operating revenues and operating expenses in the Consolidated Income Statements. Excise taxes on
F-11
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
petroleum products collected and remitted were $2.2 billion in 2022, $2.0 billion in 2021, and $1.8 billion in
2020.
CASH EQUIVAVV LENTS – Short-term investments, which include government securities, money market funds
and other instruments with government securities as collateral, that have a maturity of three months or less from
the date of purchase are classified as cash equivalents.
MARKETATT BLE SECURITIES – The Company considers highly liquid treasury notes, corporate debt securities,
and other funds with original maturities of more than three months to be marketable securities. Securities with
less than one year to maturity are included in short-term marketable securities, and all other securities are
classified as long-term marketable securities. Marketable securities are classified as held-to-maturity when the
Company has both the positive intent and ability to hold the securities to maturity and are carried at amortized
cost. Marketable securities are classified as available-foff r-sale when the Company does not have the intent to
hold securities to maturity to allow flexibility in response to liquidity needs and are carried at fair value. The
Company records securities at fair value on its consolidated balance sheets, with unrealized gains and losses
reported as a component of accumulated other comprehensive income (loss). See Note 5 "Marketable
Securities" and Note 18 "Assets and Liabilities Measured at Fair VaVV lue" foff r additional infoff rmation on our policy
and the fair value measurement of the Company's marketable securities.
ACCOUNTS RECEIVAVV BLE – The Company’s accounts receivable are recorded at the invoiced amount and do
not bear interest. The accounts receivable primarily consists of amounts owed to the Company from credit card
companies and by customers foff r wholesale sales of refined petroleum products. The allowance foff r doubtful
accounts is the Company’s best estimate of the amount of probable credit losses on these receivables. The
Company reviews this allowance foff r adequacy at least quarterly and bases its assessment on a combination of
current infoff rmation about its customers and historical write-offff experience. Any trade accounts receivable
The Company has not
balances written offff are charged against
experienced any significant credit-related losses in the past three years.
the allowance foff r doubtful accounts.
INVENTORIES – Inventories of petroleum products located at Murphy branded stores are valued at the lower of
cost, generally applied on a last-in, first-out (“LIFO”) basis, or market, while petroleum products located at
QuickChek branded stores are valued at weighted average cost. Any increments to LIFO inventory volumes are
valued based on the first purchase price foff r these volumes during the year. Merchandise inventories held foff r
resale at Murphy branded stores are carried at average cost. Certain merchandise inventories at QuickChek
stores are on a LIFO basis while all other items are valued on average cost. Materials and supplies are valued
at the lower of average cost or net realizable value.
VENDOR ALLOWAWW NCES AND REBATAA ES – Murphy USA receives payments foff r vendor allowances, volume
rebates and other related payments from various suppliers of its convenience store merchandise. VeVV ndor
allowances foff r price markdowns are credited to merchandise cost of goods sold during the period the related
markdown is recognized. VoVV lume rebates of merchandise are recorded as reductions to merchandise cost of
goods sold when the merchandise qualifyiff ng foff r the rebate is sold. Slotting and stocking allowances received
from a vendor are recorded as a reduction to cost of sales over the period covered by the agreement.
BUSINESS COMBINATAA IONS – The Company accounts foff r business combinations under the purchase method
of accounting. The purchase price of an acquisition is measured as the aggregate of the fair value of the
consideration transferred. The purchase price is allocated to the fair values of the tangible and intangible
assets acquired and liabilities assumed, with any excess recorded as goodwill. These fair value determinations
require judgment and may involve the use of significant estimates and assumptions. The purchase price
allocation may be provisional during a measurement period of up to one year to provide reasonable time to
obtain the infoff rmation necessary to identifyff and measure the assets acquired and liabilities assumed. Any such
measurement period adjustments are recognized in the period in which the adjustment amount is determined.
Transaction costs associated with the acquisition are expensed as incurred.
PROPERTY,YY PLANT AND EQUIPMENT – Additions to property, plant and equipment, including renewals and
betterments, are capitalized and recorded at cost. Certain marketing facilities are primarily depreciated using
the composite straight-line method with depreciable lives ranging from 16 to 25 years. Gasoline stores,
F-12
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
improvements to gasoline stores and other assets are depreciated over 3 to 50 years by individual unit on the
straight-line method. The Company capitalizes interest costs as a component of construction in progress on
individually significant projo ects based on the weighted average interest rates incurred on its long-term
borrowings. ToTT tal interest cost capitalized was $1.1 million in 2022, $2.1 million in 2021 and $1.4 million in
2020.
The Company has undertaken like-kind exchange ("LKE") transactions under the Federal tax code in an effff off rt
to acquire and sell real property in a tax effff icient manner. The Company generally enters into foff rwrr ard
transactions, in which property is sold and the proceeds are reinvested by acquiring similar property; and
reverse transactions, in which property is acquired and similar property is subsequently sold. A qualified LKE
intermediary is used to facilitate these LKE transactions. Proceeds from foff rwrr ard LKE transactions are held by
the intermediary and are classified as restricted cash on the Company's balance sheet because the funds must
be reinvested in similar properties.
If the acquisition of suitable LKE properties is not completed within 180 days
of the sale of the Company-owned property, the proceeds are distributed to the Company by the intermediary
and are reclassified as available cash and applicable income taxes are determined.
An exchange
accommodation titleholder, a type of variable interest entity, is used to facilitate reverse like-kind exchanges.
The acquired assets are held by the exchange accommodation titleholder until the exchange transactions are
If the Company determines that it is the primary beneficiary of the exchange accommodation
complete.
titleholder, the replacements assets held by the exchange accommodation titleholder are consolidated and
recorded in Property, Plant and Equipment on the Consolidated Balance Sheets. The unspent proceeds that
are held in trust with the intermediary are recorded as noncurrent assets in the Consolidated Balance Sheet as
the cash was restricted foff r the acquisition of similar properties. At December 31, 2022 and 2021, the Company
had no open LKE transactions with an intermediary.
GOODWILL AND INTATT NGIBLE ASSETS – Goodwill
the
consideration transferred over the net assets acquired and liabilities assumed and is tested annually foff r
impairment, or more frequently if there are indicators of impairment. Acquired finite-lived intangible assets are
amortized on a straight-line basis over their estimated useful
lives, and are reviewed foff r impairment when
events or circumstances indicate that the asset group to which the intangible assets belong might be impaired.
these assets when events or changes in
The Company revises the estimated remaining useful
circumstances warrant a revision.
If the Company revises the useful life, the unamortized balance is amortized
over the useful life on a prospective basis.
represents the excess of
the aggregate of
life of
IMPAPP IRMENT OF ASSETS – Long-lived assets, which include property and equipment and finite-lived assets,
are tested foff r recoverability whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. Indefinite-lived intangible assets are tested annually. A long-lived asset is
not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from
If a long-lived asset is not recoverable, an impairment loss is recognized foff r
its use and eventual disposition.
the long-lived asset exceeds its fair value, with fair value
the amount by which the carrying amount of
determined based on discounted estimated net cash flows or other appropriate methods.
ASSET RETIREMENT OBLIGATAA IONS – The Company records a liability foff r asset retirement obligations
(“ARO”) equal to the fair value of the estimated cost to retire an asset. The ARO liability is initially recorded in
the period in which the obligation meets the definition of a liability, which is generally when the asset is placed in
servirr ce. The ARO liability is estimated using existing regulatory requirements and anticipated future inflation
rates. When the liability is initially recorded, the Company increases the carrying amount of the related long-
lived asset by an amount equal to the original liability. The liability is increased over time to reflect the change in
its present value, and the capitalized cost is depreciated over the useful life of the related long-lived asset. The
Company reevaluates the adequacy of its recorded ARO liability at least annually. Actual costs of asset
retirements such as dismantling servirr ce stores and site restoration are charged against the related liability. Any
diffff erence between costs incurred upon settlement of an asset retirement obligation and the recorded liability is
recognized as a gain or loss in the Company’s Consolidated Income Statements.
ENVIRONMENTATT L LIABILITIES – A liability foff r environmental matters is established when it is probable that an
environmental obligation exists and the cost can be reasonably estimated.
If there is a range of reasonably
estimated costs, the most likely amount will be recorded, or if no amount is most likely, the minimum of the
F-13
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
range is used. Related expenditures are charged against the liability. Environmental remediation liabilities have
not been discounted foff r the time value of future expected payments. Environmental expenditures that have
future economic benefit are capitalized.
INCOME TATT XES – The Company accounts foff r income taxes using the asset and liability method. Under this
method, income taxes are provided foff r amounts currently payable and foff r amounts deferred as tax assets and
liabilities based on diffff erences between the financial statement carrying amounts and the tax bases of existing
assets and liabilities. Deferred income taxes are measured using the enacted tax rates that are assumed will
be in effff ect when the diffff erences reverse. The Company routinely assesses the realizability of deferred tax
assets based on available positive and negative evidence including assumptions of future taxable income, tax
planning strategies and other pertinent factors. A deferred tax asset valuation allowance is recorded when
evidence indicates that it is more likely than not that all or a portion of these deferred tax assets will not be
realized in a future period. The accounting principles foff r income tax uncertainties permit recognition of income
tax benefits only when they are more likely than not to be realized.
The Company has elected to classifyff any interest expense and penalties related to the underpayment of income
taxes in Income tax expense in the Consolidated Income Statements.
DERIVAVV TAA IVE INSTRUMENTS AND HEDGING ACTIVITIES – The fair value of a derivative instrument
is
recognized as an asset or liability in the Company’s Consolidated Balance Sheets. Upon entering into a
derivative contract, the Company may designate the derivative as either a fair value hedge or a cash flow
hedge, or decide that the contract is not a hedge, and therefoff re, recognize changes in the fair value of the
contract in earnings. The Company documents the relationship between the derivative instrument designated
as a hedge and the hedged items as well as its objb ective foff r risk management and strategy foff r use of the
hedging instrument to manage the risk. Derivative instruments designated as fair value or cash flow hedges are
linked to specific assets and liabilities or to specific firm commitments or foff recasted transactions. The Company
assesses at inception and on an ongoing basis whether a derivative instrument accounted foff r as a hedge is
tting changes in the fair value or cash flows of the hedged item. A derivative that is not a
highly effff ective in offff seff
highly effff ective hedge does not qualifyff
foff r hedge accounting. The change in the fair value of a qualifyiff ng fair
value hedge is recorded in earnings along with the gain or loss on the hedged item. The effff ective portion of the
change in the fair value of a qualifyiff ng cash flow hedge is recorded in Accumulated other comprehensive
income (AOCI) in the consolidated Balance Sheets until the hedged item is recognized currently in earnings.
If
a derivative instrument no longer qualifies as a cash flow hedge and the underlying foff recasted transaction is no
longer probable of occurring, hedge accounting is discontinued and the gain or loss recorded in Accumulated
If a hedge is de-designated, hedge
other comprehensive income is recognized immediately in earnings.
accounting will no longer apply and from that time the gain and losses will be recognized in earnings and any
accumulated amounts in other comprehensive income will be amortized to earnings over the remaining life of
the underlying instrument. See Note 15 "Financial Instruments and Risk Management" and Note 18 "Assets
and Liabilities Measured at Fair VaVV lue" foff r further infoff rmation about the Company’s derivatives.
STOCK-BASED COMPENSATAA ION – The fair value of awarded stock options, restricted stock, restricted stock
units and perfrr off rmance stock units is determined based on a combination of management assumptions foff r
awards issued. The Company uses the Black-Scholes option pricing model foff r computing the fair value of stock
options. The primary assumptions made by management included the expected life of the stock option award
and the expected volatility of the Company’s common stock prices. The Company uses both historical data and
current infoff rmation to support its assumptions. Stock option expense is recognized on a straight-line basis over
the requisite servirr ce period of three years. The Company uses a Monte Carlo valuation model to determine the
fair value of perfrr off rmance-based stock units that are based on perfrr off rmance compared against a peer group and
the related expense is recognized over the three-year requisite servirr ce period. Management estimates the
number of all awards that will not vest and adjusts its compensation expense accordingly. Diffff erences between
estimated and actual vested amounts are accounted foff r as an adjustment to expense when known. See Note
13 "Incentive Plans" foff r a discussion of the basis of allocation of such costs.
USE OF ESTIMATAA ES – In preparing the financial statements of the Company in confoff rmity with U.S. GAAAA P,P
management has made a number of estimates and assumptions related to the reporting of assets, liabilities,
revenues, and expenses and the disclosure of contingent assets and liabilities. Actual results may diffff er from
F-14
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
the estimates. On an ongoing basis, we review our estimates based on currently available infoff rmation.
Changes in facts and circumstances may result in revised estimates.
Note 3 – Revenues
Revenue Recognititt on
The foff llowing table disaggregates our revenue by maja or source foff r the years ended December 31, 2022, 2021,
and 2020.
(M((
iMM lii lll ill ons of dollll ars)rr
Marketing Segment
Petroleum product sales (at retail) 1
Petroleum product sales (at wholesale) 1
ToTT tal petroleum product sales
Merchandise sales
Other operating revenues:
RINs
Other revenues 2
ToTT tal marketing segment revenues
Corporate and Other Assets
ToTT tal revenues
YeYY ars Ended December 31,
2022
2021
2020
$
17,198.9 $
12,022.7 $
2,031.2
19,230.1
3,903.2
305.8
6.3
23,445.4
0.7
1,388.1
13,410.8
3,677.7
265.3
6.1
17,359.9
0.6
7,444.6
764.0
8,208.6
2,955.1
95.5
4.8
11,264.0
0.3
$
23,446.1 $
17,360.5 $
11,264.3
1 Includes excise and sales taxes that remain eligible foff r inclusion under ToTT pic 606
2 Primarily includes collection allowance on excise and sales taxes and other miscellaneous items
Marketing segment
Petrtt orr leum prorr duct sales (a(( t rerr tat ilii )l . For our retail store locations, the revenue related to petroleum product sales
is recognized as the fuel is pumped to our customers. The transaction price at the pump typically includes
some portion of sales or excise taxes as levied in the respective jurisdictions. Those taxes that are collected foff r
remittance to governmental entities on a pass through basis are not recognized as revenue and they are
recorded to a liability account until they are paid. Our customers typically use a mixture of cash, checks, credit
cards and debit cards to pay foff r our products as they are received. We have accounts receivable from the
various credit/debit card providers at any point in time related to product sales made on credit cards and debit
cards. These receivables are typically collected in two to seven days, depending on the terms with the
particular credit/debit card providers. Payment fees retained by the credit/debit card providers are recorded as
store and other operating expenses.
Petrtt orr leum prorr duct sales (a(( t whww olesale)e . Our sales of petroleum products at wholesale are generally recorded
as revenue when the deliveries have occurred and legal ownership of the product has transferred to the
customer.
Title transfer foff r bulk refined product sales typically occurs at pipeline custody points and upon
trucks loading at product terminals. For bulk pipeline sales, we record receivables from customers that are
generally collected within a week from custody transfer date. For our rack product sales, the maja ority of our
customers' accounts are draftff ed by us within 10 days from product transfer.
sales. For our retail store locations, the revenue related to merchandise sales is recognized as
Merchrr andidd seii
the customer completes their purchase at our locations. The transaction price typically includes some portion of
sales tax as levied in the respective jurisdictions. Those taxes that are collected foff r remittance to governmental
entities on a pass through basis are not recognized as revenue and they are recorded to a liability account until
they are paid. As noted above, a mixture of payment types are used foff r these revenues and the same terms foff r
credit/debit card receivables are realized.
F-15
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
The most significant judgment with respect to merchandise sales revenue is determining whether we are the
principal or agent foff r some categories of merchandise such as lottery tickets, lotto tickets, newspapers and
other small categories of merchandise. For scratch-offff
lottery tickets, we have determined we are the principal
in the maja ority of the jurisdictions and therefoff re we record those sales on a gross basis. We have some
categories of merchandise (such as lotto tickets) where we are the agent and the revenues recorded foff r those
transactions are our net commission only.
The Company offff ers loyalty programs through its Murphy USA, Murphy Express, and QuickChek branded retail
locations. The customers earn rewards based on their spending or other promotional activities. These
programs create a perfrr off rmance obligation which requires us to defer a portion of sales revenue to the loyalty
program participants until they redeem their rewards. The rewards may be redeemed foff r free or discounted
merchandise or cash discounts at all stores and on fuel purchases at Murphy USA and Murphy Express stores.
Earned rewards expire aftff er an account is inactive foff r a period of 90 days at Murphy USA and Murphy Express,
while certain QuickChek rewards require use within the month. We recognize loyalty revenue when a customer
redeems an earned reward. Deferred revenue associated with both rewards programs are included in Trade
accounts payable and accrued liabilities in our Consolidated Balance Sheet. The deferred revenue balances at
December 31, 2022 and 2021 were immaterial.
RINs sales. For the sale of RINs, we recognize revenue when the RIN is transferred to the counter-party and
the sale is completed. Receivables from our counter-parties related to the RIN sales are typically collected
within five days of the sale.
Othtt er rerr venues.
tax and other miscellaneous items and are recognized as revenue when the transaction is completed.
Items reported as other operating revenues include collection allowances foff r excise and sales
Accounts receivable
Trade accounts receivable on the balance sheet represents both receivables related to contracts with
customers and other trade receivables. At December 31, 2022 and December 31, 2021, we had $164.1 million
and $111.8 million of receivables, respectively, related to contracts with customers recorded. All of the trade
accounts receivable related to contracts with customers outstanding at the end of each period were collected
during the succeeding quarter. These receivables were generally related to credit and debit card transactions
along with short term bulk and wholesale sales from our customers, which have a very short settlement window.
Note 4 — Inventories
Inventories consisted of the foff llowing:
(M((
iMM lii lll ill ons of dollll ars)rr
Petroleum products - FIFO basis
Store merchandise foff r resale - FIFO basis
Less LIFO reserverr
ToTT tal petroleum products and store merchandise inventory
Materials and supplies
ToTT tal inventories
December 31,
2022
2021
$
$
367.0 $
192.1
(250.7)
308.4
10.7
319.1 $
339.8
173.1
(228.0)
284.9
7.4
292.3
Murphy USA and Murphy Express branded petroleum products are valued using the last-in, first-out (LIFO)
method and certain QuickChek store merchandise foff r resale is valued using the LIFO method. At December
31, 2022 and 2021, the replacement cost (market value) of LIFO inventories exceeded the LIFO carrying value
foff r petroleum products by $249.1 million and $227.5 million, respectively, and store merchandise foff r resale by
$1.6 million and $0.5 million, respectively.
F-16
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 5 — Marketable Securities
The Company invests a portion of its excess operational cash in marketable securities. The goal of the
Company's investment policy, in order of priority, are as foff llows: (1) preservarr
tion of principal, (2) maintaining a
high degree of liquidity to meet cash flow requirements, and (3) deliver competitive returns subjb ect to prevailing
market conditions and the Company's stated objb ectives related to safety and liquidity. Nothing in the policy is
intended to indicate that management must invest excess operational cash; it merely allows it subject to specific
limitations.
Securities are generally required to have a final maturity of 24 months or less with a weighted average maturity
foff r the portfoff lio of no longer than 12 months and must have an active secondary market.
Investments may
include U.S. Treasury bills, notes and bond, U.S. Agency securities, repurchase agreements, certificates of
deposit, institutional, government money market funds that maintain a stable $1.00 net asset value, domestic
and foff reign commercial paper, municipal securities, domestic and foff reign debt issued by corporations or
financial institutions with the primary objb ective of minimizing the potential risk of principal loss. The Company
determines the classification of its marketable securities based on its investment strategy at the time of
purchase. All marketable securities in the periods presented have been classified as available-foff r-sale.
The carrying values of marketable securities within cash and cash equivalents and marketable securities consist
of the foff llowing:
(M((
iMM lii lll ill ons of dollll ars)rr
AvaAA ilable-foff r-sale debt securities:
Marketable securities current
Amortized
Cost
December 31, 2022
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash and cash equivalents
$
— $
— $
— $
U S Govt Bonds
Corporate bonds
Non U S Corporate bonds
Investment income receivable
Marketable securities non-current
Corporate bonds
8.8
6.0
3.0
0.1
17.9
4.4
—
—
—
—
—
—
—
—
—
—
—
—
ToTT tal Marketable Securities
$
22.3
$
— $
— $
—
8.8
6.0
3.0
0.1
17.9
4.4
22.3
The amortized cost basis and fair value of the Company's available-foff r-sale marketable securities at December
31, 2022, by contractual maturity, are as foff llows:
(Millions of dollars)
Less than 1 year
1 to 2 years
ToTT tal
Amortized Cost
Fair Value
$
$
19.3
3.0
22.3
$
$
19.3
3.0
22.3
There was no impairment on any available-foff r-sale marketable securities as of December 31, 2022, while there
were none at December 31, 2021.
F-17
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 6 — Business Acquisition
On January 29, 2021, MUSA acquired 100% of QuickChek, a privately-held convenience store chain with a
regional brand which consisted of 156 stores located in New Jersey and New YoYY rk, in an all-cash transaction.
The acquisition was made to expand the MUSA network into the Northeast by adding stores that had an existing
foff od and beverage model and is consistent with the Company's stated strategic priorities of developing
enhanced foff od and beverage capabilities and accelerating its growth plans.
The excess of the purchase price over the estimated fair value of the net, identifiable assets acquired was
recorded as goodwill. The factors contributing to the recognition of goodwill are a mixture of direct and reverse
synergies that are expected to be realized as a result of this acquisition. The direct synergies include additional
margin capture on the retail fuel side from the tactical pricing decisions and improved benefits from increased
scale on the product acquisition side combined with other cost savings in both merchandise and store
operations. The reverse synergies reflect management's ability to leverage QuickChek's product pricing and
operational capabilities related to foff od and beverage sales to Murphy branded stores. All fair values were final
as of December 31, 2021.
The Company has determined that the trade name has an indefinite life, as there is no economic, contractual, or
other factors that limit its useful life and expects to generate value as long as the trade name is utilized, and
therefoff re is not subjb ect to amortization. The fair value of intangible assets was based on widely-accepted
valuation techniques, including discounted cash flows.
The foff llowing table summarizes the fair value of the consideration transferred at the date of the acquisition, as
well as the calculation of goodwill based on the excess of consideration over the fair value of net assets
acquired:
iMM lii lll ill ons of dollll ars)rr
(M((
Cash paid to shareholders
Less: cash and cash equivalents acquired
Fair value of consideration transferred, net of cash acquired
Assets acquired:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Property and equipment
Right of use assets
Other assets
Identified intangible assets
Liabilities assumed:
Accounts payable and accrued expenses
Deferred income tax liabilities
Asset retirement obligation
Current and long term debt, including finance lease obligations
Deferred credits and other liabilities
Operating lease liabilities
Net assets acquired
F-18
$
$
$
Januaryrr 29,
2021
641.9
0.8
641.1
8.0
24.3
5.5
447.1
237.6
5.4
106.8
(68.4)
(58.5)
(1.2)
(148.5)
(7.4)
(237.6)
313.1
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
iMM lii lll ill ons of dollll ars)rr
(M((
Januaryrr 29,
2021
Goodwill
Fair value of consideration transferred, net of cash and cash equivalents acquired
$
328.0
641.1
In connection with the acquisition, the Company recognized certain acquisition-related expenses which were
expensed as incurred. These expenses, recognized within acquisition related costs in the consolidated
statements of operations, include amounts related to transaction and integration costs, including fees foff r
advisory and professional servirr ces incurred as part of the acquisition and integration costs subsequent to the
acquisition in the amount of $1.5 million, $10.4 million, and $1.7 million foff r the years ended December 31, 2022,
2021, and 2020, respectively.
Note 7 – Property, Plant and Equipment
iMM lii lll ill ons of dollll ars)rr
(M((
Land
Real estate finance lease
Pipeline and terminal facilities
Retail gasoline stores
Buildings
Other
$
Estimated
Useful Life
1 to 40 years
16 to 25 years
3 to 50 years
20 to 45 years
3 to 20 years
December 31, 2022
December 31, 2021
Cost
Net
Cost
Net
645.2 $
147.7
83.7
2,897.7
71.0
167.1
645.2 $
122.2
42.5
1,536.4
47.2
65.8
639.4 $
147.1
83.2
2,657.8
70.7
153.6
639.4
134.3
44.5
1,451.1
49.7
59.4
$
4,012.4 $
2,459.3 $
3,751.8 $
2,378.4
Depreciation expense of $219.4 million, $211.6 million and $160.0 million was recorded foff r the years ended
December 31, 2022, 2021 and 2020, respectively.
Note 8 – Goodwill and Intangible Assets
The Company's goodwill resides in its Marketing segment and none of the goodwill
purposes.
is deductible foff r tax
iMM lii lll ill ons of dollll ars)rr
(M((
Goodwill balance, at beginning of period
QuickChek acquisition
Goodwill balance, at end of period
December 31,
2022
2021
$
$
328.0 $
—
328.0 $
—
328.0
328.0
F-19
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
In connection with our acquisition of QuickChek on January 29, 2021, we recorded the foff llowing amounts of
intangible assets.
iMM lii lll ill ons of dollll ars)rr
(M((
Intangible assets subjb ect to amortization:
Intangible lease liability
Intangible assets not subjb ect to amortization:
Trade name
Liquor licenses
ToTT tal intangible assets
Remaining
Useful Life
(in years)
Januaryrr 29,
2021
Carrying VaVV lue
13.6
n/a
n/a
$
$
(9.1)
115.4
0.5
106.8
We amortize intangible assets subjb ect to amortization on a straight-line or accelerated basis based on the
period foff r which the economic benefits of the asset or liability are expected to be realized. The intangible
assets subjb ect to amortization was in addition to the Company's existing intangible asset pipeline space, which
is being amortized over a 40-year life.
Intangible assets at December 31, 2022 and 2021 consisted of the foff llowing:
Remaining Useful
Life (in years)
iMM lii lll ill ons of dollll ars)rr
(M((
Intangible assets subjb ect to amortization:
Pipeline space
Intangible lease
liability
32.7
11.4
ToTT tal intangible assets subjb ect to
amortization
Intangible assets not subjb ect to
amortization, indefinite lives:
Trade name
Liquor licenses
ToTT tal intangible assets not subjb ect to
amortization
December 31, 2022
December 31, 2021
Cost
Net
Cost
Net
$
39.6
$
32.7
$
39.6
$
33.7
(9.1)
30.5
115.4
0.2
115.6
(7.9)
24.8
115.4
0.2
115.6
140.4
(9.1)
30.5
115.4
0.2
115.6
$
146.1
$
(8.6)
25.1
115.4
0.2
115.6
140.7
Intangible assets, net of amortization
$
146.1
$
F-20
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 9 – Accounts Payable and Accrued Liabilities
Trade accounts payable and accrued liabilities consisted of the foff llowing:
(M((
iMM lii lll ill ons of dollll ars)rr
Trade accounts payable
Excise taxes/withholdings payable
Accrued insurance obligations
Accrued taxes other than income
Accrued compensation and benefits
Current operating lease liabilities
Other
Accounts payable and accrued liabilities
Note 10 — Long-Term Debt
Long-term debt consisted of the foff llowing:
iMM lii lll ill ons of dollll ars)rr
(M((
December 31,
2022
2021
547.6 $
93.2
51.8
44.6
46.6
20.5
34.9
839.2 $
$
$
December 31,
2022
2021
5.625% senior notes due 2027 (net of unamortized discount of
$1.6 at 2022 and $2.0 at 2021)
$
4.75% senior notes due 2029 (net of unamortized discount of
$4.2 at 2022 and $4.8 at 2021)
3.75% senior notes due 2031 (net of unamortized discount of
$5.1 at 2022 and $5.7 at 2021)
TeTT rm loan due 2028 (effff ective interest rate of 5.95% at 2022 and
2.27% at 2021) net of unamortized discount of $0.7 at 2022 and
$0.9 at 2021
Capitalized lease obligations, vehicles, due through 2026
Capitalized lease obligations, buildings, due through 2059
Unamortized debt issuance costs
ToTT tal long-term debt
Less current maturities
298.4 $
495.8
494.9
393.3
2.3
131.3
(9.1)
1,806.9
15.0
ToTT tal long-term debt, net of current
$
1,791.9 $
Senior Notes
392.5
93.6
46.2
41.4
36.5
18.1
32.0
660.3
298.0
495.2
494.3
397.1
2.7
138.9
(11.1)
1,815.1
15.0
1,800.1
On April 25, 2017, Murphy Oil USA, Inc., 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 Murphy USA, and are guaranteed by certain 100% owned
subsidiaries that guarantee our credit facilities. The indenture governing the 2027 Senior Notes contains
restrictive covenants that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc. and the
restricted subsidiaries to incur additional
indebtedness or liens, dispose of assets, make certain restricted
payments or investments, enter into transactions with affff iliates or merge with or into other entities.
On September 13, 2019, Murphy Oil USA, Inc., 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 offff er and redemption of the prior notes issuance. The 2029 Senior Notes are fully and unconditionally
guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit
F-21
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
facilities. The indenture governing the 2029 Senior Notes contains restrictive covenants that are essentially
identical to the covenants foff r the 2027 Senior Notes.
On January 29, 2021, Murphy Oil USA, Inc. 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
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 foff r the 2027 and 2029 Senior Notes.
transaction.
The Senior Notes and related guarantees rank equally with all of our and the guarantors’ existing and future
senior unsecured indebtedness and effff ectively 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.
Revolvinii g Crerr didd t FaFF cilii ill tyt and TeTT rmrr Loan
On January 29, 2021, the Company entered into a new credit agreement that consists of both a cash flow
revolving credit facility and a senior secured term loan and that replaced the Company’s prior ABL facility and
term loan.
The credit agreement provides foff r a senior secured term loan in an aggregate principal amount of $400.0 million
(the “TeTT rm Facility”) (which was borrowed in full on January 29, 2021) and revolving credit commitments in an
aggregate amount equal to $350.0 million (the “Revolving Facility”, and together with the TeTT rm Facility, the
“Credit Facilities”). The outstanding balance of the term loan was $394.0 million at December 31, 2022. The
revolving facility expires January 2026 while the term loan is due January 2028 and requires quarterly principal
payments of $1.0 million beginning July 1, 2021. As of December 31, 2022, we had none outstanding under the
revolving facility, while there were $4.7 million in outstanding letters of credit, which reduces the amount
available to borrow.
Interest payable on the Credit Facilities is based on either:
•
•
the London interbank offff ered rate, adjusted foff r statutory reserverr
Rate”); or
requirements (the “Adjusted LIBO
the Alternate Base Rate, which is defined as the highest of (a) the rate of interest last quoted by The
Wall Street Journal as the “Prime Rate”, (b) the greater of federal funds effff ective rate and the overnight
bank funding rate determined by the Federal Reserverr
Bank of New YoYY rk from time to time plus 0.50%
per annum and (c) the one-month Adjusted LIBO Rate plus 1.00% per annum,
plus, (A) in the case of Adjusted LIBO Rate borrowings, (i) with respect to the Revolving Facility, spreads
ranging from 1.75% to 2.25% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the
TeTT rm Facility, a spread of 1.75% per annum and (B) in the case of Alternate Base Rate borrowings (i) with
respect to the Revolving Facility, spreads ranging from 0.75% to 1.25% per annum depending on a total debt to
EBITDA ratio or (ii) with respect to the TeTT rm Facility, a spread of 1.75% per annum.
The TeTT rm Facility amortizes in quarterly installments starting with the first amortization payment being due on
July 1, 2021 at a rate of 1.00% per annum. Murphy USA is also required to prepay the TeTT rm Facility with a
portion of its excess cash flow, a portion of the net cash proceeds of certain asset sales and casualty events
(subjb ect to certain reinvestment rights) and the net cash proceeds of issuances of indebtedness not permitted
under the Credit Agreement. The Credit Agreement allows Murphy USA to prepay, in whole or in part, the TeTT rm
Facility outstanding thereunder, together with any accrued and unpaid interest, with prior notice but without
premium or penalty other than breakage and redeployment costs.
F-22
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
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 affff iliates, to enter into agreements restricting
the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes. The credit
agreement also contains total leverage ratio and secured net leverage ratio financial maintenance covenants
solely foff r the benefit of the revolving facility 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 maximum secured
net leverage ratio of not more than 3.75 to 1.0 with an ability in certain circumstances to temporarily increase
that limit to 4.25 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
leverage ratio, calculated on a pro foff rma basis, is
our equity interests, including dividends, when the total
greater than 3.0 to 1.0, could be limited. At December 31, 2022, our total leverage ratio was 1.5 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
foff rma basis, exceeds 3.0 to 1.0, any restricted payments made foff llowing that time until the ratio is once again,
on a pro foff rma 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 an aggregate not to exceed the greater of $106.7 million or
4.5% of consolidated net tangible assets 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 thereto.
Note 11 — Asset Retirement Obligations (ARO)
The maja ority of the ARO recognized by the Company at December 31, 2022 and 2021 is related to the
estimated costs to dismantle and abandon certain of its retail gasoline stores. The Company has not recorded
an ARO foff r certain of its marketing assets because suffff icient infoff rmation is presently not available to estimate a
range of potential settlement dates foff r the obligation. These assets are consistently being upgraded and are
expected to be operational into the foff reseeable future.
In these cases, the obligation will be initially recognized
in the period in which suffff icient infoff rmation exists to estimate the obligation.
A reconciliation of the beginning and ending aggregate carrying amount of the ARO is shown in the foff llowing
table:
(M((
iMM lii lll ill ons of dollll ars)rr
Balance at beginning of period
Addition foff r acquisition
Accretion expense
Settlement of liabilities
Liabilities incurred
Balance at end of period
December 31,
2022
2021
39.2 $
—
2.7
(2.3)
3.7
43.3 $
35.1
1.2
2.5
(1.0)
1.4
39.2
$
$
The estimation of future ARO is based on a number of assumptions requiring professional
judgment. The
Company cannot predict the type of revisions to these assumptions that may be required in future periods due
to the lack of availability of additional infoff rmation.
F-23
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 12 — Income Taxes
The components of income befoff re income taxes foff r each of the three years ended December 31, 2022 and
income tax expense (benefit) attributable thereto were as foff llows:
(M((
iMM lii lll ill ons of dollll ars)rr
Income (loss) befoff re income taxes
Income tax expense (benefit)
Federal - Current
Federal - Deferred
State - Current and deferred
ToTT tal
YeYY ars Ended December 31,
2022
2021
2020
883.8 $
521.9 $
509.1
143.5 $
33.0
34.4
86.2 $
14.4
24.4
210.9 $
125.0 $
96.0
4.7
22.3
123.0
$
$
$
The foff llowing table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax
expense (benefit).
(M((
iMM lii lll ill ons of dollll ars)rr
Income tax expense based on the U.S. statutory tax rate
State income taxes, net of federal benefit
Federal credits
Other, net
ToTT tal
$
$
YeYY ars Ended December 31,
2022
2021
2020
185.6 $
28.0
(2.9)
0.2
210.9 $
109.6 $
19.2
(2.2)
(1.6)
125.0 $
106.9
17.5
(1.9)
0.5
123.0
An analysis of the Company’s deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021
showing the tax effff ects of significant temporary diffff erences is as foff llows:
iMM lii lll ill ons of dollll ars)rr
(M((
Deferred tax assets
Property costs and asset retirement obligations
Net operating loss
Employee benefits
Operating leases liability
Other deferred tax assets
ToTT tal gross deferred tax assets
Deferred tax liabilities
Accumulated depreciation and amortization
State deferred taxes
Operating leases right of use assets
Other deferred tax liabilities
ToTT tal gross deferred tax liabilities
Net deferred tax liabilities
December 31,
2022
2021
$
$
5.9 $
—
10.7
97.6
13.6
127.8
(316.0)
(30.5)
(94.4)
(14.3)
(455.2)
)
(
)
(
(327.4) $
5.2
6.3
8.6
89.7
11.8
121.6
(285.4)
(31.7)
(88.0)
(12.4)
(417.5)
)
(
)
(
(295.9)
In management’s judgment, the deferred tax assets in the preceding table will more likely than not be realized
as reductions of future taxable income or utilized by available tax planning strategies.
As of December 31, 2022, the earliest year remaining open foff r Federal audits and/or settlement is 2019 and foff r
state audits and/or settlement is 2018. Although the Company believes that recorded liabilities foff r unsettled
issues are adequate, additional gains or losses could occur in future periods from resolution of outstanding
unsettled matters.
F-24
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
the criteria foff r recognizing uncertain income
The FAFF SB’s rules foff r accounting foff r income tax uncertainties clarifyff
tax benefits and require additional disclosures about uncertain tax positions. Under U.S. GAAAA P the financial
statement recognition of the benefit foff r a tax position is dependent upon the benefit being more likely than not to
be sustainable upon audit by the applicable taxing authority.
If this threshold is met, the tax benefit is then
measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon
ultimate settlement. Liabilities associated with uncertain income tax positions are included in Deferred Credits
and Other Liabilities in the Consolidated Balance Sheets.
A reconciliation of the beginning and ending amount of the consolidated liability foff r unrecognized income tax
benefits during the year ended December 31, 2022 and 2021 is shown in the foff llowing table:
(M((
iMM lii lll ill ons of dollll ars)rr
Balance at January 1
Additions foff r tax positions related to prior years
Expiration of statutes of limitation
Balance at December 31
YeYY ar Ended December 31,
2022
2021
$
$
0.5 $
0.2
(0.1)
0.6 $
0.4
0.3
(0.2)
0.5
All additions or reductions to the above liability affff ect the Company’s effff ective tax rate in the respective period of
change. The Company accounts foff r any applicable interest and penalties on uncertain tax positions as a
Income tax expense foff r the years ended December 31, 2022, 2021 and
component of income tax expense.
2020 included immaterial amounts of interest and penalties, associated with uncertain tax positions. Of these
amounts shown in the table, $0.5 million and $0.4 million represent the amount of unrecognized tax benefits
that, if recognized, would impact our effff ective tax rate foff r the years ended December 31, 2022 and 2021,
respectively.
During the next twelve months, the Company does not expect a material change to the liability foff r uncertain
taxes. Although existing liabilities could be reduced by settlement with taxing authorities or lapse due to statute
of limitations, the Company believes that the changes in its unrecognized tax benefits due to these events will
not have a material impact on the Consolidated Income Statement during 2023.
ToTT tal excess tax benefits foff r equity compensation recognized in the twelve months ended December 31, 2022,
2021 and 2020 were $2.9 million, $4.9 million, and $2.2 million, respectively.
Note 13 — Incentive Plans
2013 Long-TeTT rmrr
Incentitt ve PlPP an
Effff ective August 30, 2013, certain of our employees began to participate in the Murphy USA 2013 Long-TeTT rm
Incentive Plan, which was subsequently amended and restated effff ective as of February 8, 2017 (the “MUSA
2013 Plan”). The MUSA 2013 Plan authorizes the Executive Compensation Committee of our Board of
Directors (“the Committee”) to grant non-qualified or incentive stock options, stock appreciation rights, stock
awards (including restricted stock and restricted stock unit awards), dividend equivalent units, cash awards, and
perfrr off rmance awards to our employees. No more than 5.5 million shares of common stock may be delivered
under the MUSA 2013 Plan and no more than 1 million shares of common stock may be awarded to any one
employee, subjb ect to adjustment foff r changes in capitalization. The maximum cash amount payable pursuant to
any “perfrr off rmance-based” award to any participant in any calendar year is $5.0 million.
During the period from August 30, 2013 to December 31, 2022, the Company granted a total of 2,805,086
awards from the MUSA 2013 Plan which leaves 2,694,914 remaining shares to be granted in future years (aftff er
consideration of the amendments made to the MUSA 2013 Plan in February 2014 by the Board of Directors). At
present, the Company expects to issue all shares that vest out of existing treasury shares rather than issuing
new common shares.
F-25
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
2013 Stock PlPP an foff r Non-employee Dirii err ctorsrr
Effff ective August 8, 2013, Murphy USA adopted the 2013 Murphy USA Stock Plan foff r Non-employee Directors
(the “Directors Plan”). The directors foff r Murphy USA are compensated with a mixture of cash payments and
equity-based awards. AwAA ards under the Directors Plan may be in the foff rm of restricted stock, restricted stock
units, dividend equivalent units, stock options, or a combination thereof. An aggregate of 500,000 shares of
common stock shall be available foff r issuance of grants under the Directors Plan. Since 2013, 150,673 time-
based restricted stock units have been granted under the terms of the Directors Plan which leaves 349,327
shares available to be granted in the future.
Amounts recognized in the financial statements by the Company with respect to all share-based plans are
shown in the foff llowing table:
(M((
iMM lii lll ill ons of dollll ars)rr
Compensation charged against income befoff re income
tax benefit
Related income tax benefit recognized in income
$
$
YeYY ars Ended December 31,
2022
2021
2020
16.0 $
3.4 $
14.4 $
3.0 $
14.3
3.0
As of December 31, 2022, there was $24.0 million in compensation costs to be expensed over approximately
the next 1.8 years related to unvested share-based compensation arrangements granted by the
Company. Employees who have stock options are required to net settle their options in shares, aftff er applicable
statutory withholding taxes are considered, upon each stock option exercise. Therefoff re, no cash is received
upon exercise. ToTT tal income tax benefits realized from tax deductions related to stock option exercises under
share-based payment arrangements were $1.0 million, $0.3 million, and $0.7 million foff r the years ended
December 31, 2022, 2021, and 2020, respectively.
The Company issues dividend equivalent units ("DEU") on all outstanding, unvested equity awards (except
stock options) in an amount commensurate with regular quarterly dividends paid on common stock. The terms
of the DEU mirror the underlying awards and will only vest if the related award vests. DEU's issued are
included with grants in each respective table as applicable.
STOTT CK OPTITT ONS (M(( USASS 2013 PlPP an)n – The Committee fixes the option price of each option granted at no less
than fair market value (FMV) on the date of the grant and fixes the option term at no more than 7 years from
such date.
Most of
February 2022.
the nonqualified stock options granted to certain employees by the Committee were granted in
Following are the assumptions used by the Company to value the original awards:
Fair value per option grant
Assumptions
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (years)
Stock price at valuation date
YeYY ars Ended December 31,
2022
2021
2020
$
51.46
$
32.00
$
28.28
0.6 %
32.2%
1.8%
4.7
181.18
$
0.8 %
32.3%
0.4%
4.6
126.00
$
— %
28.1%
1.5%
4.7
106.72
$
F-26
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Changes in options outstanding foff r Company employees during the period from December 31, 2021 to
December 31, 2022 are presented in the foff llowing table:
Weighted
AveAA rage
Exercise
Price
Weighted
AveAA rage
Remaining
Contractual
TeTT rm
(YeYY ars)
Aggregate
Intrinsic VaVV lue
(Millions of
Dollars)
Number of Shares
Options
Outstanding at December 31, 2021
Granted
Exercised
Forfrr eited
Outstanding at December 31, 2022
366,100
55,150
(98,200)
(9,100)
313,950 $
90.44
181.80
69.95
119.43
112.06
4.1 $
Exercisable at December 31, 2022
150,450 $
80.68
2.8 $
Additional infoff rmation about stock options outstanding at December 31, 2022 is shown below:
52.6
29.9
Range of Exercise Prices per
Option
$60.00 to $89.99
$90.00 to $119.99
$120.00 to $149.99
$180.00 to $209.99
Options Outstanding
Options Exercisable
No. of Options
120,500
63,800
74,500
55,150
313,950
AvgAA . Life
Remaining in
YeYY ars
2.6
4.0
5.1
6.1
4.1
No. of Options
118,700
31,750
—
—
150,450
AvgAA . Life
Remaining in
YeYY ars
2.6
3.8
—
—
2.8
RESTRTT ICTETT DEE STOTT CK UNITSTT (M(( USASS 2013 PlPP an)n – The Committee has granted time based restricted stock
units (RSUs) as part of the compensation plan foff r its executives and certain other employees since its inception.
The awards granted in the current year were under the MUSA 2013 Plan, are valued at the grant date fair value,
and vest over three years.
Changes in restricted stock units outstanding foff r Company employees during the period from December 31,
2021 to December 31, 2022 are presented in the foff llowing table:
Employee RSUs
Outstanding at December 31, 2021
Granted
VeVV sted and issued
Forfrr eited
Outstanding at December 31, 2022
Number of units
Weighted AveAA rage Grant
Date Fair VaVV lue
ToTT tal Fair VaVV lue
(Millions of Dollars)
175,627
42,258
$
$
(60,070) $
(8,449) $
149,366
$
95.93
186.55
80.10 $
138.83
125.51 $
11.6
41.8
RESTRTT ICTETT DE
STOTT CK UNITSTT
PERFORMAMM NCE-BABB SEDE
the
Committee awarded perfrr off rmance-based restricted stock units (perfrr off rmance units) to certain employees. Half of
the perfrr off rmance units vest based on a three-year return on average capital employed (ROACE) calculation and
the other half vest based on a three-year total shareholder return (TSR) calculation that compares MUSA to a
group of 18 peer companies. The portion of the awards that vest based on TSR qualifyff as a market condition
and must be valued using a Monte Carlo valuation model. For the TSR portion of the awards, the fair value was
determined to be $259.17 per unit. For the ROACE portion of the awards, the valuation was based on the grant
2013 PlPP an)n – In February 2022,
(M(( USASS
F-27
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
date fair value of $181.18 per unit and the number of awards will be periodically assessed to determine the
probability of vesting.
Changes in perfrr off rmance-based restricted stock units outstanding foff r Company employees during the period
from December 31, 2021 to December 31, 2022 are presented in the foff llowing table:
Employee PSU's
Outstanding at December 31, 2021
Granted
VeVV sted and issued
Forfrr eited
Outstanding at December 31, 2022
Number of Units
Weighted AveAA rage
Grant Date Fair VaVV lue
ToTT tal Fair VaVV lue
(Millions of Dollars)
127,638
78,949
$
$
(94,226) $
(6,360) $
106,001
$
117.59
217.81
87.62 $
133.98
160.03 $
17.1
29.6
RESTRTT ICTETT DEE STOTT CK UNITSTT (Directors Plan) – The Committee has also granted time based RSUs to the non-
employee directors of the Company as part of their overall compensation package foff r being a member of the
Board of Directors. These awards typically vest at the end of three years.
Changes in restricted stock units outstanding foff r Company non-employee directors during the period from
December 31, 2021 to December 31, 2022 are presented in the foff llowing table:
Director RSU's
Outstanding at December 31, 2021
Granted
VeVV sted and issued
Outstanding at December 31, 2022
Number of Units
Weighted AveAA rage
Grant Date Fair VaVV lue
ToTT tal Fair VaVV lue
(Millions of Dollars)
30,664 $
7,994 $
(11,735) $
26,923 $
100.23
172.88
75.96 $
132.38 $
2.1
7.5
Note 14 — Employee and Retiree Benefit Plans
THTT RIFT PLAN – Most full-time employees of the Company may participate in defined contribution savings plans
by contributing up to a specified percentage of their base pay. The Company matches contributions foff r Murphy
USA eligible employees at 100% of each employee’s contribution with a maximum match of 6%. In addition, the
Company makes profit sharing contributions on an annual basis foff r Murphy USA employees. Eligible
employees receive a stated percentage of their base and incentive pay of 5%, 7%, or 9% determined on a
foff rmula that is based on a combination of age and years of servirr ce. The Company maintained the thriftff plan of
QuickChek on acquisition, and matches 100% of the first 3% and 50% of the next 2% contributed by eligible
employees. The Company’s combined expenses related to these plans were $17.3 million in 2022, $16.9
million in 2021 and $15.3 million in 2020.
PROFIT SHAHH RING PLAN – Eligible part-time employees of Murphy USA may participate in the Company’s
noncontributory profit sharing plan. Each year, the Company may make a discretionary employer contribution in
an amount determined and authorized at the discretion of the Board of Directors. Eligible employees receive an
allocation based on their compensation earned foff r the year the contribution is allocated. The Company’s
expenses related to this plan were $1.6 million in 2022, $1.1 million in 2021 and $1.8 million in 2020.
SUPPLEMEE ENTATT L EXEE EXX CUTITT VEVV RETITT REMEE ENT – The Company provides a Supplemental Executive Retirement
Plan ('SERP'), a nonqualified deferred compensation plan foff r Murphy USA employees, to eligible executives
and certain members of management. The SERP plan is intended to restore qualified defined contribution plan
benefits restricted under the Internal Revenue Code of 1986 to certain highly-compensated individuals. The
liability balances, net of associated assets, were $5.5 million and $4.7 million, at December 31, 2022 and 2021,
respectfully.
F-28
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 15 — Financial Instruments and Risk Management
DERIVAVV TAA IVE INSTRUMENTS — The Company makes limited use of derivative instruments to manage certain
risks related to commodity prices and interest rates. The use of derivative instruments foff r risk management is
covered by operating policies and is closely monitored by the Company’s senior management. The Company
does not hold any derivatives foff r speculative purposes and it does not use derivatives with leveraged or
complex features. Derivative instruments are traded primarily with creditworthy maja or financial institutions or
over national exchanges such as the New YoYY rk Mercantile Exchange (“NYMEX”). For accounting purposes, the
Company has not designated commodity derivative contracts as hedges, and therefoff re, it recognizes all gains
and losses on these derivative contracts in its Consolidated Statement of Income. Certain interest rate
derivative contracts were accounted foff r as hedges and gain or loss associated with recording the fair value of
these contracts was deferred in AOCI until the anticipated transactions occur. As of December 31, 2022, all
current commodity derivative activity is immaterial.
Cash deposits were none at December 31, 2022 and at December 31, 2021 the cash deposit was $0.6 million
related to commodity derivative contracts and were reported in Prepaid expenses and other current assets in
the Consolidated Balance Sheets. These cash deposits have not been used to reduce the reported net
liabilities on the derivative contracts at December 31, 2022 and 2021.
Interest Rate Risks
Under hedge accounting rules, the Company deferred the net charge or benefit associated with the interest rate
swap entered into to manage the variability in interest payments foff r the variable-rate debt in association with
$150.0 million of our outstanding term loan dated August 27, 2019 until the debt was repaid on January 29,
2021. At that time the hedge was de-designated and therefoff re hedge accounting is no longer applicable and
mark-to-market gains and losses are recognized in the period in which the change occurs in the Consolidated
Statement of income in interest expense. The current loan balance subjb ect to the hedge is $67.5 million. The
Company is reclassifyiff ng the accumulated other comprehensive loss on the previous interest rate swap, $2.4
million as of the de-designation date, into interest expense using a straight-line approach over the remaining life
The amount of pre-tax gains in accumulated other
of
comprehensive loss that was reclassified into interest expense was $0.9 million foff r the twelve months ended
December 31, 2022 and 2021, leaving a balance of $0.6 million at December 31, 2022. Prior to the de-
designation, changes in the fair values of the interest rate swaps were recorded as a component of other
comprehensive loss.
the originally designated hedging relationship.
Note 16 – Earnings Per Share
Basic earnings per common share is computed by dividing net income available to common stockholders by the
weighted average of common shares outstanding during the period. Diluted earnings per common share
adjusts basic earnings per common share foff r the effff ects of stock options and restricted stock in the periods
where such items are dilutive.
On December 1, 2021, the Board of Directors approved a share repurchase authorization of up to $1 billion to
begin upon completion of the $500 million authorization made in October 2020, and is to be executed by
December 31, 2026. During the year 2022, the total number of share repurchases were 3,328,795 common
shares foff r $806.4 million, at an average price of $242.24 per share. The 2022 shares repurchased included
3,226,379 common shares foff r $786.3 million, at an average price of $243.72 per share under the 2021
$1 billion authorization, leaving approximately $213.7 million remaining available, as of December 31, 2022, and
included 102,416 common shares repurchased foff r $20.0 million, at an average price of $195.45 per share
which completed the October 2020 $500 million authorization.
Purchases in 2021 and 2020 under the October 2020 authorization were 2,398,477 common shares foff r $355.0
million, at an average price of $148.00 per share and 969,654 common shares foff r $125.0 million, at an average
price of $128.91 per share, respectively.
F-29
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
The foff llowing table provides a reconciliation of basic and diluted earnings per share computations foff r the years
ended December 31, 2022, 2021, and 2020.
iMM lii lll ill ons of dollll arsrr except per sharerr amounts)tt
(M((
2022
2021
2020
YeYY ars ended December 31,
Earnings per common share:
Net income per share - basic
Net income attributable to common stockholders
Weighted average common shares outstanding (in
thousands)
Earnings per common share
Earnings per common share - assuming dilution:
Net income per share - diluted
Net income attributable to common stockholders
Weighted average common shares outstanding (in
thousands)
Common equivalent shares:
Share-based awards
Weighted average common shares outstanding -
assuming dilution (in thousands)
$
$
$
672.9 $
396.9 $
386.1
23,506
26,210
28.63 $
15.14 $
29,132
13.25
672.9 $
396.9 $
386.1
23,506
26,210
29,132
444
394
394
23,950
26,604
29,526
Earnings per common share assuming dilution
$
28.10 $
14.92 $
13.08
We have excluded from the earnings-per-share calculation certain stock options and shares that are considered
to be anti-dilutive under the treasury stock method and are reported in the table below.
Potentially dilutive shares excluded from the
calculation as their inclusion would be anti-dilutive
Stock options
Restricted share units
ToTT tal anti-dilutive shares
YeYY ars ended December 31,
2022
2021
2020
—
—
—
80,500
1,562
82,062
75,600
20,137
95,737
Note 17 — Other Financial Information
CASH FLOW DISCLOSURES — Cash income taxes paid (collected), net of refunds, were $199.7 million,
$120.4 million and $96.5 million foff r the three years ended December 31, 2022, 2021 and 2020, respectively.
Interest paid, net of amounts capitalized, was $81.6 million, $70.8 million and $49.1 million foff r the years ended
December 31, 2022, 2021 and 2020, respectively.
F-30
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
CHANGES IN WORKING CAPITATT L -
(M((
iMM lii lll ill ons of dollll ars)rr
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable and accrued liabilities
Income taxes payable
YeYY ars ended December 31,
2022
2021
2020
$
(84.7) $
(18.9) $
(26.9)
(23.7)
180.1
—
11.1
(3.6)
102.9
(8.7)
4.9
(51.7)
16.6
8.3
8.8
Net decrease (increase) in noncash operating working
capital
$
44.8 $
82.8 $
)
(13.1)
(
)
(
Note 18 — Assets and Liabilities Measured at Fair Value
The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheets. The fair
value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest
quality and Level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets foff r identical
assets or liabilities. Level 2 inputs are observarr ble inputs other than quoted prices included within Level 1. Level
3 inputs are unobservarr ble inputs which reflect assumptions about pricing by market participants.
The Company's available-foff r-sale marketable securities consist of high quality, investment grade securities from
diverse issuers. We value these securities at the closing price in the principal active markets as of the last
business day of the reporting period. The fair values of the Company's marketable securities by asset class are
described in Note 5 "Marketable Securities" in these consolidated financial statements foff r the period ended
December 31, 2022. We value the deferred compensation plan assets, which consist of money market and
mutual funds, based on quoted prices in active markets at the measurement date. For additional infoff rmation on
deferred compensation plans see also Note 14 "Employee and Retirement Benefit Plans" in these consolidated
financial statements foff r the period ended December 31, 2022.
At the balance sheet date, the fair value of commodity derivatives contracts was determined using NYMEX
quoted values and the value of the Interest rate swap derivative was derived by using level 3 inputs. The
the Company’s Cash and cash equivalents, Accounts receivable-trade, Trade accounts
carrying value of
payable, and accrued liabilities approximates fair value. See also Note 15 "Financial Instruments and Risk
Management" in these consolidated financial statements foff r the period ended December 31, 2022, foff r more
infoff rmation.
Financial assets and liabilities measured at fair value on a recurring basis
g
The foff llowing table presents the Company's financial assets and liabilities measured at fair value on a recurring
basis, as of December 31, 2022 and 2021:
iMM lii lll ill ons of dollll ars)rr
(M((
Financial assets
Marketable securities, current
U S Govt Bonds
Corporate bonds
Non U S Govt Bonds
Accounts receivable - trade
Interest rate swap derivative
Level 1
Level 2
Level 3
Fair VaVV lue
December 31, 2022
$
— $
8.8 $
— $
6.1
3.0
—
—
—
1.3
—
—
—
F-31
8.8
6.1
3.0
1.3
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
iMM lii lll ill ons of dollll ars)rr
(M((
Level 1
Level 2
Level 3
Fair VaVV lue
December 31, 2022
Marketable securities, noncurrent
Corporate bonds
Other assets
Deferred compensation plan assets
Financial liabilities
Deferred credits and other liabilities
Deferred compensation plan
liabilities
—
9.5
4.4
—
—
—
4.4
9.5
(14.7)
)
(5.2) $
(
)
(
—
22.3 $
$
—
1.3 $
(14.7)
18.4
iMM lii lll ill ons of dollll ars)rr
(M((
Financial assets
Prepaid expenses and other current assets
Level 1
Level 2
Level 3
Fair VaVV lue
December 31, 2021
Fuel derivative
Other assets
$
— $
— $
0.6 $
Deferred compensation plan assets
10.2
Financial liabilities
Trade accounts payable and accrued liabilities
Interest rate swap derivative
—
Deferred credits and other liabilities
Deferred compensation plan
liabilities
(13.9)
)
(3.7) $
(
)
(
$
Fair value of financial instruments not recognized at fair value
g
—
—
—
— $
0.6
10.2
—
(0.7)
(0.7)
—
)
(0.1) $
(
)
(
(13.9)
)
(3.8)
(
)
(
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties. The table below excludes Cash and cash equivalents, Accounts receivable-
trade, and Trade accounts payable and accrued liabilities, all of which had fair values approximating carrying
amounts. The fair value of Current and Long-term debt was estimated based on rates offff ered to the Company
at that time foff r debt of the same maturities. The Company has offff -ff balance sheet exposures relating to certain
financial guarantees and letters of credit. The fair value of these, which represents fees associated with
obtaining the instruments, was nominal.
The foff llowing table presents the carrying amounts and estimated fair values of financial instruments held by the
Company at December 31, 2022 and 2021.
iMM lii lll ill ons of dollll ars)rr
(M((
Financial liabilities
Current and long-term debt,
excluding finance leases
December 31, 2022
December 31, 2021
Carrying
Amount
Fair VaVV lue
Carrying
Amount
Fair VaVV lue
$
(1,673.3) $
(1,643.0) $
(1,673.5) $
(1,709.5)
F-32
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 19 – Commitments
The Company leases land, gasoline stores, and other facilities under operating leases. During the next five
years, expected future rental payments under all operating leases are approximately $49.9 million in 2023,
$49.6 million in 2024, $48.6 million in 2025, $47.9 million in 2026, and $47.1 million in 2027.
Rental expense foff r noncancellable operating leases, including contingent payments when applicable, was
$57.6 million in 2022, $48.7 million in 2021 and $24.9 million in 2020.
Commitments foff r capital expenditures were approximately $365.9 million at December 31, 2022, including
$310.8 million approved foff r potential construction of future stores (including land) at year-end, along with $7.6
million foff r improvements of existing stores, to be financed with our operating cash flow and/or incurrence of
indebtedness.
The Company has certain take-or-pay contracts primarily to supply terminals with a noncancellable remaining
term of 7.8 years. At December 31, 2022, our minimum annual payments under our take-or-pay contracts are
estimated to be $8.4 million in 2023 and $6.9 million in 2024, $6.9 million in 2025, $6.9 million in 2026, and $4.3
million in 2027.
Note 20 — Contingencies
The Company’s operations and earnings have been and may be affff ected by various foff rms of governmental
action. Examples of such governmental action include, but are by no means limited to: tax increases and
retroactive tax claims;
import and export controls; price controls; allocation of supplies of crude oil and
petroleum products and other goods; laws and regulations intended foff r the promotion of safety and the
protection and/or remediation of the environment; governmental support foff r other foff rms of energy; and laws and
regulations affff ecting the Company’s relationships with employees, suppliers, customers, stockholders and
others. Because governmental actions are oftff en motivated by political considerations, may be taken without full
consideration of their consequences, and may be taken in response to actions of other governments, it is not
practical to attempt to predict the likelihood of such actions, the foff rm the actions may take or the effff ect such
actions may have on the Company.
laws,
regulations and permit
laws, regulations and permits can result
ENVIRONMENTATT L MATAA TERS AND LEGAL MATAA TERS — Murphy USA is subjb ect to numerous federal, state
Violation of such
and local
environmental
in the imposition of significant civil and criminal
penalties, injunctions, and other sanctions. A discharge of hazardous substances into the environment could, to
the extent such event is not adequately insured, subjb ect the Company to substantial expense, including the cost
to comply with applicable laws and regulations, claims by neighboring landowners, governmental authorities
and other third parties foff r any personal injury, property damage and other losses that might result.
requirements dealing with the environment.
The Company currently owns or leases, and has in the past owned or leased, properties at which hazardous
In connection with these activities, hazardous substances may
substances have been or are being handled.
have been disposed of or released on or under the properties owned or leased by the Company or on or under
other locations where they have been taken foff r disposal.
In addition, many of these properties have been
operated by third parties whose management of hazardous substances was not under the Company’s control.
Under existing laws,
the Company could be required to remediate contaminated property (including
contaminated groundwater) or to perfrr off rm remedial actions to prevent future contamination. Certain of these
contaminated properties are in various stages of negotiation, investigation, and/or cleanup, and the Company is
investigating the extent of any related liability and the availability of applicable defenses. With the sale of the
U.S. refineries in 2011, Murphy Oil retained certain liabilities related to environmental matters. Murphy Oil also
obtained insurance covering certain levels of environmental exposures. With respect to the previously owned
refinery properties, Murphy Oil retained those liabilities in the Separation and Distribution agreement that was
entered into related to the separation on August 30, 2013. With respect to any remaining potential liabilities,
the Company believes costs related to these
based on infoff rmation currently available to the Company,
F-33
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
properties will not have a material adverse effff ect on Murphy USA’AA s net income, financial position or liquidity in a
future period.
While it is possible that certain environmental expenditures could be recovered by the Company from other
sources, primarily environmental funds maintained by certain states, no assurance can be given that future
recoveries from these other sources will occur. As such, the Company has not recorded a benefit foff r likely
recoveries at December 31, 2022, however certain jurisdictions provide reimbursement foff r these expenses
which have been considered in recording the net exposure. The U.S. EPAPP currently considers the Company a
PRP at one Superfrr und site. As to the site, the potential total cost to all parties to perfrr off rm necessary remedial
work at this site may be substantial. However, based on current negotiations and available infoff rmation, the
Company believes that it is a de minimis party as to ultimate responsibility at the Superfrr und site. Accordingly,
the Company has not recorded a liability foff r remedial costs at the Superfrr und site at December 31, 2022. The
Company could be required to bear a pro rata share of costs attributable to nonparticipating PRPs or could be
assigned additional responsibility foff r remediation at this site or other Superfrr und sites. Based on infoff rmation
currently available to the Company, the Company believes that its share of the ultimate costs to clean-up this
site will be immaterial and will not have a material adverse effff ect on its net income, financial position or liquidity
in a future period.
Based on infoff rmation currently available to the Company, the amount of future remediation costs to be incurred
to address known contamination sites is not expected to have a material adverse effff ect on the Company’s
future net income, cash flows or liquidity. However, there is the possibility that additional environmental
including as a result of discovering additional
expenditures could be required to address contamination,
contamination or the imposition of new or revised requirements applicable to known contamination, and such
additional expenditures could be material.
Murphy USA is engaged in a number of other legal proceedings, all of which the Company considers routine
and incidental to its business. Currently, the City of Charleston, South Carolina and the state of Delaware have
filed lawsuits against energy companies, including the Company. These lawsuits allege damages as a result of
climate change and the plaintiffff sff are seeking unspecified damages and abatement under various tort theories.
At this early stage, the ultimate outcome of these matters remain uncertain, and neither the likelihood of an
unfavorable outcome nor the ultimate liability, if any, can be determined. Based on infoff rmation currently
available to the Company, the ultimate resolution of those other legal matters is not expected to have a material
adverse effff ect on the Company’s net income, financial condition or liquidity in a future period.
INSURANCE — The Company maintains insurance coverage at levels that are customary and consistent with
industry standards foff r companies of similar size. Murphy USA maintains statutory workers compensation
insurance with a deductible of $1.0 million per occurrence, general liability insurance with a deductible of $3.0
million per occurrence, and auto liability insurance with a deductible of $0.3 million per occurrence. As of
December 31, 2022, there were a number of outstanding claims that are of a routine nature. The estimated
incurred but unpaid liabilities relating to these claims are included in Trade account payables and accrued
liabilities on the Consolidated Balance Sheets. While the ultimate outcome of these claims cannot presently be
determined, management believes that the accrued liability of $44.6 million will be suffff icient to cover the related
liability and that the ultimate disposition of these claims will have no material effff ect on the Company’s financial
position and results of operations.
The Company has obtained insurance coverage as appropriate foff r the business in which it is engaged, but may
s, in whole or in part, and such losses could adversely
incur losses that are not covered by insurance or reserverr
affff ect our results of operations and financial position.
TATT X MATAA TERS — Murphy USA is subjb ect to extensive tax liabilities imposed by multiple jurisdictions, including
income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes,
withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and
regulations are continuously being enacted or proposed that could result in increased expenditures foff r tax
liabilities in the future. Many of these liabilities are subjb ect to periodic audits by the respective taxing authority.
Subsequent changes to our tax liabilities because of these audits may subjb ect us to interest and penalties.
F-34
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
OTHER MATAA TERS — In the normal course of its business, the Company is required under certain contracts
with various governmental authorities and others to provide financial guarantees or letters of credit that may be
drawn upon if the Company fails to perfrr off rm under those contracts. At December 31, 2022, the Company had
contingent liabilities of $9.8 million on outstanding letters of credit. The Company has not accrued a liability in
its balance sheet related to these financial guarantees and letters of credit because it is believed that the
likelihood of having these drawn is remote.
Note 21 — Leases
The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease right-
of-ff use assets and liabilities are recognized at commencement date based on the present value of lease
payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance
sheet; we recognize lease expense foff r these leases on a straight-line basis over the lease term. The
Company's leases have remaining lease terms of approximately 1 year to 38 years, which may include the
option to extend the lease when it is reasonably certain the Company will exercise the option. Most leases
include one or more options to renew, with renewal terms that can extend the lease term from 5 to 20 years or
more. The exercise of lease renewal options is at the Company's sole discretion. Due to the uncertainties of
technology changes, demographic shiftff s and behavior, environmental
future markets, economic factors,
regulatory requirements and other infoff rmation that impacts decisions as to store location, management has
determined that it was not reasonably certain to exercise contract options and they are not included in the lease
term. Additionally, short-term leases and leases with variable lease costs are immaterial. The Company
its lease agreements to determine if changes are
ise modifyff
reviews all options to extend, terminate, or otherwrr
required to the right of use assets and liabilities.
As the implicit interest rate is not readily determinable in most of the Company's lease agreements, the
Company uses its estimated secured incremental borrowing rate based on the infoff rmation available at
commencement date in determining the present value of lease payments.
Lessor — We have various arrangements foff r certain spaces foff r foff od servirr ce and vending equipment under
which we are the lessor. These leases meet the criteria foff r operating lease classification. Lease income
associated with these leases is immaterial. We also have certain areas where we sublease building and land
space to others. This lease income is immaterial.
Lessee —We lease land foff r 435 stores, one terminal, and various equipment. Our lease agreements do not
contain any material residual value guarantees and approximately 102 sites leased from Walmart contain
restrictive covenants, though the restrictions are deemed to have an immaterial impact.
F-35
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Leases are reflected in the foff llowing balance sheet accounts:
(Millions of dollars)
Assets
Classification
Operating (Right-of-ff use)
Operating lease right of use assets, net
Property, plant, and equipment, at cost, less
accumulated depreciation of $30.5 in 2022 and
$16.7 in 2021
December 31,
2022
December 31,
2021
$
$
449.6
$
419.2
124.6
574.2
$
137.3
556.5
Trade accounts payable and accrued liabilities
$
Current maturities of long-term debt
Non-current operating lease liabilities
Long-term debt, including capitalized lease
obligations
$
20.5
11.0
444.2
122.6
$
598.3
$
18.1
11.0
408.9
130.6
568.6
Finance
ToTT tal leased assets
Liabilities
Current
Operating
Finance
Noncurrent
Operating
Finance
ToTT tal lease liabilities
Lease Cost:
(Millions of dollars)
Operating lease cost
Finance lease cost
Year Ended December 31,
2022
2021
2020
52.2 $
43.1 $
16.6
15.9
9.1
14.8
8.2
77.2 $
66.1 $
1.3
0.1
18.0
Year Ended December 31,
2022
2021
2020
45.6
9.1
11.2
$
$
$
38.8 $
8.2 $
9.8 $
15.5
0.1
1.4
$
$
$
$
$
Classification
Store and other operating
expenses
Amortization of leased
assets
Depreciation & amortization
expense
Interest on lease liabilities
Interest expense
Net lease costs
Cash Flow Infoff rmation:
(Millions of dollars)
Cash paid foff r amounts included in the measurement of
liabilities
Operating cash flows required by operating leases
Operating cash flows required by finance leases
Financing cash flows required by finance leases
F-36
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Maturity of Lease Liabilities:
(Millions of dollars)
2023
2024
2025
2026
2027
Aftff er 2027
ToTT tal lease payments
less: interest
Operating leases
Finance leases
$
$
49.9
49.6
48.6
47.9
47.1
530.6
773.7
309.0
19.4
17.8
16.7
15.8
15.5
122.0
207.2
73.6
133.6
Present value of lease liabilities
$
464.7
$
Lease TeTT rm and Discount Rate:
Weighted average remaining lease term
Finance leases
Operating leases
Weighted average discount rate
Finance leases
Operating leases
Year Ended December 31,
2022
In YeYY ars
13.0
15.8
6.7 %
6.5 %
Note 22 — Recent Accounting and Reporting Rules
In August 2021, the FAFF SB issued ASU 2021-08, "Accounting foff r Contract Assets and Contract Liabilities from
Contracts with Customers," which requires an acquirer in a business combination to recognize and measure
contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition
guidance in ToTT pic 606. Under ToTT pic 606, the acquirer applies the revenue model as if it had originated the
contracts. This is a departure from the current requirement to measure contract assets and contract liabilities at
fair value. This ASU is effff ective foff r the Company foff r the year beginning January 1, 2023, with early adoption
permitted. The Company has determined this will not have a material impact on the Company's consolidated
financial statements.
In December 2022, the FAFF SB issued ASU 2022-06, "Reference Rate Refoff rm (ToTT pic 848): Deferral of the Sunset
Date of ToTT pic 848." The amendments in this Update defer the sunset date of ToTT pic 848 from December 31,
2022, to December 31, 2024. These amendments apply to all entities and are effff ective upon issuance of the
impact on the Company's
Update. The Company has determined this standard has not had a material
consolidated financial statements.
F-37
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Note 23 — Business Segments
Our operations include the sale of retail motor fuel products and convenience merchandise along with the
wholesale and bulk sale capabilities of our product supply and wholesale group. As the primary purpose of the
product supply and wholesale group is to support our retail operations and provide fuel foff r their daily operation,
the bulk and wholesale fuel sales are secondary to the support functions played by these groups. As such, they
are all treated as one segment foff r reporting purposes as they sell the same products and have similar economic
characteristics. This Marketing segment contains essentially all of the revenue generating activities of the
Company. Results not included in the reportable segment include Corporate and Other Assets. The reportable
segment was determined based on infoff rmation reviewed by the Chief Operating Decision Maker.
Segment Information
iMM lii lll ill ons of dollll ars)rr
(M((
Year ended December 31, 2022
Segment income (loss)
Revenues from external customers
Interest income
Interest expense
Income tax expense (benefit)
Significant noncash charges (credits)
Depreciation and amortization
Accretion of asset retirement obligations
Deferred and noncurrent income taxes (benefits)
Additions to property, plant and equipment
ToTT tal assets at year-end
Segment Information
iMM lii lll ill ons of dollll ars)rr
(M((
Year ended December 31, 2021
Segment income (loss)
Revenues from external customers
Interest income
Interest expense
Income tax expense (benefit)
Significant noncash charges (credits)
Depreciation and amortization
Accretion of asset retirement obligations
Deferred and noncurrent income taxes (benefits)
Additions to property, plant and equipment
ToTT tal assets at year-end
Marketing
Corporate and
Other Assets
Consolidated
740.9
23,445.4
$
$
— $
(9.0) $
232.1
$
204.8
2.7
35.0
279.1
3,794.0
$
$
$
$
$
(68.0) $
0.7
3.0
$
$
(76.3) $
(21.2) $
15.6
$
— $
(3.5) $
26.7
329.2
$
$
672.9
23,446.1
3.0
(85.3)
210.9
220.4
2.7
31.5
305.8
4,123.2
Marketing
Corporate and
Other Assets
Consolidated
472.8
17,359.9
$
$
— $
(8.1) $
148.5
$
197.3
2.5
22.6
245.5
3,569.4
$
$
$
$
$
(75.9) $
0.6
0.1
$
$
(74.3) $
(23.5) $
15.3
$
— $
(3.6) $
32.0
478.8
$
$
396.9
17,360.5
0.1
(82.4)
125.0
212.6
2.5
19.0
277.5
4,048.2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
F-38
Murphy USA Inc.
NOTES TO CONSOLIDATAA ED FINANCIAL STATT TAA EMENTS
Segment Information
iMM lii lll ill ons of dollll ars)rr
(M((
Year ended December 31, 2020
Segment income (loss)
Revenues from external customers
Interest income
Interest expense
Loss on early debt extinguishment
Income tax expense (benefit)
Significant noncash charges (credits)
Depreciation and amortization
Accretion of asset retirement obligations
Debt extinguishment costs
Deferred and noncurrent income taxes (benefits)
Additions to property, plant and equipment
ToTT tal assets at year-end
Marketing
Corporate and
Other Assets
Consolidated
$
$
$
$
$
$
$
$
$
$
$
$
442.2
11,264.0
$
$
— $
(0.1) $
— $
132.9
$
146.3
2.3
$
$
— $
2.8
200.8
2,418.2
$
$
$
(56.1) $
$
0.3
1.0
$
(51.1) $
— $
(9.9) $
14.7
$
— $
— $
(0.3) $
$
26.3
$
267.5
386.1
11,264.3
1.0
(51.2)
—
123.0
161.0
2.3
—
2.5
227.1
2,685.7
F-39
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
Murphy USA Inc.
Valuation Accounts and Reservrr es
iMM lii lll ill ons of dollll ars)rr
(M((
2022
Deducted from assets accounts
Allowance foff r doubtful accounts
2021
Deducted from assets accounts
Allowance foff r doubtful accounts
2020
Deducted from assets accounts
Allowance foff r doubtful accounts
$
$
$
Balance at
January 1,
Charged
(Credited) to
Expense
Deductions
Balance at
December 31,
0.1
0.2
— $
0.3
0.1
1.2
—
—
— $
0.1
)
(1.1) $
(
)
(
0.1
F-40
OUR BOARD OF DIRECTORS
R. Madison Murphy, Chairman
Mr. Murphy has been involved in the energy sector for 40+ years. In addition to his executive leadership in finance, Mr. Murphy has served on the boards of
three other public companies in the energy, banking, and natural resources sectors, chairing one of these boards from 1994 to 2002. His experience in executive
and board leadership positions brings to the Board a unique business and financial perspective.
Executive Committee (Chair) and ex-officio of all Committees
R. Andrew Clyde, Director
(cid:4)(cid:400)(cid:3)(cid:87)(cid:396)(cid:286)(cid:400)(cid:349)(cid:282)(cid:286)(cid:374)(cid:410)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:18)(cid:28)(cid:75)(cid:853)(cid:3)(cid:68)(cid:396)(cid:856)(cid:3)(cid:18)(cid:367)(cid:455)(cid:282)(cid:286)(cid:3)(cid:346)(cid:258)(cid:400)(cid:3)(cid:367)(cid:286)(cid:282)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:381)(cid:393)(cid:286)(cid:396)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:258)(cid:367)(cid:853)(cid:3)(cid:272)(cid:437)(cid:367)(cid:410)(cid:437)(cid:396)(cid:258)(cid:367)(cid:853)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:400)(cid:410)(cid:396)(cid:258)(cid:410)(cid:286)(cid:336)(cid:349)(cid:272)(cid:3)(cid:410)(cid:396)(cid:258)(cid:374)(cid:400)(cid:296)(cid:381)(cid:396)(cid:373)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)(cid:68)(cid:437)(cid:396)(cid:393)(cid:346)(cid:455)(cid:3)(cid:104)(cid:94)(cid:4)(cid:3)(cid:400)(cid:349)(cid:374)(cid:272)(cid:286)(cid:3)(cid:349)(cid:410)(cid:400)(cid:3)(cid:393)(cid:437)(cid:271)(cid:367)(cid:349)(cid:272)(cid:3)(cid:349)(cid:374)(cid:272)(cid:286)(cid:393)(cid:410)(cid:349)(cid:381)(cid:374)(cid:853)(cid:3)(cid:367)(cid:286)(cid:448)(cid:286)(cid:396)(cid:258)(cid:336)(cid:349)(cid:374)(cid:336)(cid:3)(cid:346)(cid:349)(cid:400)(cid:3)(cid:1006)(cid:1004)(cid:3)(cid:455)(cid:286)(cid:258)(cid:396)(cid:400)(cid:3)
of management consulting experience serving integrated downstream and midstream energy firms, large independent c-store chains and a variety of small-box
retailers on similar engagements. His broad industry knowledge, analogous strategic and transformational experiences and insights into Murphy USA’s customers
and markets make Mr. Clyde a valuable member of our Board.
Executive Committee
Claiborne P. Deming, Director
(cid:68)(cid:396)(cid:856)(cid:3)(cid:24)(cid:286)(cid:373)(cid:349)(cid:374)(cid:336)(cid:3)(cid:271)(cid:396)(cid:349)(cid:374)(cid:336)(cid:400)(cid:3)(cid:1008)(cid:1004)(cid:1085)(cid:3)(cid:455)(cid:286)(cid:258)(cid:396)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:286)(cid:454)(cid:393)(cid:286)(cid:396)(cid:349)(cid:286)(cid:374)(cid:272)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:286)(cid:374)(cid:286)(cid:396)(cid:336)(cid:455)(cid:3)(cid:349)(cid:374)(cid:282)(cid:437)(cid:400)(cid:410)(cid:396)(cid:455)(cid:856)(cid:3)(cid:44)(cid:349)(cid:400)(cid:3)(cid:410)(cid:349)(cid:373)(cid:286)(cid:3)(cid:258)(cid:400)(cid:3)(cid:18)(cid:28)(cid:75)(cid:3)(cid:393)(cid:396)(cid:381)(cid:448)(cid:349)(cid:282)(cid:286)(cid:400)(cid:3)(cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:400)(cid:349)(cid:336)(cid:346)(cid:410)(cid:3)(cid:349)(cid:374)(cid:410)(cid:381)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:18)(cid:381)(cid:373)(cid:393)(cid:258)(cid:374)(cid:455)(cid:859)(cid:400)(cid:3)(cid:400)(cid:410)(cid:396)(cid:258)(cid:410)(cid:286)(cid:336)(cid:455)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:381)(cid:393)(cid:286)(cid:396)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:400)(cid:856)(cid:3)
Mr. Deming has served on the boards of two other public companies in the energy sector. He is the former Chair of an advisory committee to the Secretary
of Energy. Mr. Deming has served in an advisory role providing strategic and financial advice to investors, management teams, boards of directors, governmental
bodies, and other professionals and participants in the global energy industry. His deep understanding of the energy sector and strategy strengthens the Board’s
collective knowledge.
Executive Committee and Executive Compensation Committee (Chair)
David L. Goebel, Director
More than 40 years of experience in retail, food service, and hospitality provides Mr. Goebel with vast knowledge that benefits the Board. He brings unique
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service on several private company boards, including QuickChek. His comprehensive experience in food and beverage, supply chain management, risk
assessment, risk management, succession planning, executive development, executive compensation, and strategic planning enables him to share valuable
insights and perspectives.
Audit Committee and Executive Compensation Committee
Fred L. Holliger, Director
Mr. Holliger’s career in the energy industry spans more than four decades in a variety of engineering, marketing, supply, and management positions,
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of the downstream sector from refining to retail, make Mr. Holliger a unique asset for the Board.
Executive Compensation Committee and Nominating and Governance Committee
James W. Keyes, Director
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of fresh foods, built a nationwide network of commissaries, and a daily distribution system for fresh product delivery which resulted in the growth of fresh food
sales to over 20% of product mix. Mr. Keyes currently serves on two other public company boards and has served on the boards of numerous private companies.
His industry knowledge and business expertise are invaluable to our Board.
Executive Committee and Executive Compensation Committee
Diane N. Landen, Director
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Ms. Landen has been an owner and served on the boards of private companies involved in oil and gas exploration and production and timber. The Board benefits
from her asset management experience and unique insights into communications, media, and natural resources industries.
Audit Committee and Nominating and Governance Committee (Chair)
David B. Miller, Director
Mr. Miller provides expertise in banking and finance. His leadership experience includes serving as Managing Partner of a firm he co-founded that is a leading
provider of private equity capital to the energy industry. In addition to having served on the boards of four publicly traded companies in the energy sector,
Mr. Miller has served on the boards of many private oil/gas exploration and production companies. He is a member of the council that serves as an oil/gas
advisory committee to the Secretary of Energy. Mr. Miller’s broad energy industry knowledge and his leadership experience and expertise in business valuation,
capital structure and strategic relationships complement the collective strength and leadership of our Board.
Executive Compensation Committee and Nominating and Governance Committee
Hon. Jeanne L. Phillips, Director
The Honorable Ms. Phillips brings unique experience to the Board in the areas of governmental affairs and public policy having served in varying capacities at the
state, national, and international levels. In addition, as an executive of one of the largest privately-held family companies in the U.S. and its related affiliates, she has
extensive experience in the areas of corporate leadership, media relations, crisis communications, and sustainability which bolsters the Board’s ability to react to an
ever-changing business environment.
Audit Committee and Nominating and Governance Committee
Jack T. Taylor, Director
Mr. Taylor has extensive experience with financial and public accounting issues as well as a deep knowledge of the energy industry. He was a partner of KPMG,
LLP for 29 years. As an executive leader, Mr. Taylor was responsible for the execution of global strategy within all KPMG member firms in North and South
America, encompassing 40,000+ employees and $8B in revenue. He serves on the audit committees of two other publicly traded energy companies, and is Chair
of one of these committees. Mr. Taylor lends considerable expertise to our Board in finance, accounting, and energy matters.
Audit Committee (Chair) and Executive Compensation Committee
Rosemary L. Turner, Director
Ms. Turner has an impressive history in the logistics and distribution industry. She served as president of various UPS divisions applying her strengths of business
development, relationship management and operational stewardship. Ms. Turner has also served as director of two other publicly traded companies that are
leaders in the transport and distribution markets. Through her experience with the Philadelphia Federal Reserve Board and the San Francisco Federal Reserve
Board, which she formerly Chaired in 2021, Ms. Turner has an excellent understanding of the macro economy, state of markets and consumers, and evolving
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Audit Committee and Nominating and Governance Committee
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