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Murphy USA Inc. 1
Murphy USA Inc. 2
Murphy USA Inc. (MUSA) November 2017 Investor Presentation Murphy - - PowerPoint PPT Presentation
Murphy USA Inc. (MUSA) November 2017 Investor Presentation Murphy - - PowerPoint PPT Presentation
Murphy USA Inc. (MUSA) November 2017 Investor Presentation Murphy USA Inc. 1 Cautionary Statement This presentation contains forward-looking statements. These statements, which express managements current views concerning future events or
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Murphy USA Inc. 3
- Murphy USA is uniquely positioned as a
low-cost fuel and convenience retailer
- Our strategy to compete has five coherent
elements: – Grow Organically – Diversify Merchandise Mix – Sustain Cost Leadership Position – Create Advantage from Market Volatility – Invest for the Long-Term
- Our business model is resilient to, and takes
advantage of, volatile market conditions
- Our independent growth plan combines
efficient unit-growth and shareholder-friendly capital allocations
- Murphy USA has a proven track record of
execution since our 2013 spin-off
- We have a very bright future ahead
Murphy USA continues its proven and differentiated strategy
MUSA Relative Stock Performance
Indexed From Spinoff to November 24, 2017
Murphy USA Inc. S&P 500 Index S&P 400 Midcap Index
200 220 120 160 140 100 180
Q2, 2014 Q1, 2016 Q2, 2015 Q1, 2015 Q3, 2016 Q2, 2016 Q4, 2016 Q3, 2015 Q1, 2014 Q4, 2013 Q4, 2014 Q4, 2017 Q3, 2017
Spin
Q3, 2013 Q2, 2017 Q3, 2014 Q4, 2015 Q1, 2017
159 166 200
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Murphy USA Inc. 4
MUSA creates value through a simple formula - and executes
EPS Growth Organic Growth Fuel Contribution Fuel Breakeven Shares Outstanding
5% unit growth
- 67 new sites; 10 R&R
- 300 refresh; 180 Super
Coolers
2016 Proof Point Corporate Costs
* +
- /
MUSA Value Creation Drivers 2017 Proof Point
3-4% unit growth (estimated)
- 45-50 new sites; 20 R&R
- 300 refresh; 246 super
coolers 5% contribution growth
- +1.7% volume growth
- 15.4 cpg total margin
- 3.8 cpg from PS&W/RINs
2.5 cpg to 1.6 cpg
- +120 bps merchandise
- +11.2% contribution $
- -4.1% site opex* APSM
- 4.9M shares
repurchased
- 11% of shares out
SG&A per store down 10%
- $6.6 million decline in
total SG&A
- Tax-efficient non-core
asset sale EPS increased 39% to $5.59 in 2016
*Site Opex excludes credit card fees **SG&A per-store excludes stock-based compensation
5.6% YTD contribution growth
- (0.9)% volume growth
- 16.3 cpg total margin
- 2.2 cpg from PS&W/RINs
1.6 cpg to 1.56 cpg YTD
- +30 bps merchandise
- (0.8%) contribution $
- -3.9% site opex* APSM
SG&A per store up 3%
- $6.1 million increase in
total SG&A YTD
- Investing in people and
capabilities
- 2.3M shares
repurchased YTD
- 6.1% of shares out
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Murphy USA Inc. 5
7-Eleven
The competitive landscape continues to evolve
Hypermarkets
Supermarkets and mass merchants with small-box forecourts Strength: Low fuel prices and integrated loyalty programs/ promotions tied to in-store purchases
Big-Box C-Stores
Large stores with comprehensive offerings including food offer
Strength: Destination for merchandise offer supported by low fuel prices
Kroger Safeway Costco Murphy USA Speedway CST Couche-Tard (Circle K) Casey’s QuikTrip Wawa Sheetz Sunoco
Stand-alone public peer
Consolidation Model
Franchises with distinctive C-store brand and capabilities Strength: Store uplift from franchise and scale advantages that support acquisition premiums Susser (Stripes) The Pantry Murphy USA
- # 1 in Low Fuel Price
- #2 in Pump Speed
QuikTrip
- # 1 in Fresh Food
- #1 in Merchandise
Selection The Consolidators: 7-11 and Circle K
- Middle of the road
in all categories Walmart
C-Store Study conducted by Market Force Information, published in Convenience Store News
784 Non-Supermarket C-Stores
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Murphy USA Inc. 6
Express growth, rebuilds continue in Independent Growth Plan
67 73
2019e 2016a
20
2015a 2017e
1
2018e
10
Raze & Rebuild New Stores
Estimated Store Activity
2015 - 2019
74 77 70 70 70
Up to 20 Up to 50 45 to 50 Up to 50 Up to 20
Total Units 1,335 1,401 1,451 1,501 1,551 Express Growth 17 25 42 50 50 USA Growth 56 42 8 Raze & Rebuild 1 10 20 20 20 Organic Growth
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Murphy USA Inc. 7
Fuel margins reside within a historical range of 14 to 16 cpg
2.7 3.4 16.4 2017 Guidance (Revised) 14.9 18.5 15.4 3.8 2016 2014 2.4 2015 2013 1.5 14.4 2012 Product Supply & Wholesale + RINs LT expectations (low) LT expectations (high) Retail
MUSA Total Fuel Margin
CPG
CPG
16.0 14.0
$631 $486 $515 $496 $491
- We expect to earn 14 to 16 cpg in total fuel
contribution from our combined retail and PS&W plus RIN sources
- MUSA’s total fuel margin has come within or
above the expected range each of the last 5 fiscal years
- We revised 2017 margin guidance down
from our expected annual range after Q1
- Adverse supply conditions pressured rack prices
- Political uncertainty caused RIN prices to decline
without offsetting spot-to-rack adjustments
- Weaker Q1 fuel demand and retail margins
- We revised 2017 margin guidance higher on
Q3 conf call, suggesting higher-end of
- riginal guidance range of 14-16 cpg
- Robust retail margin environment from seasonal
- il price declines and aftermath of hurricanes
- RIN’s back in equilibrium, spot-rack margins
closer to historical levels 14 -16 Fuel Contribution 12.9 13.0 15.8 12.5 11.6
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Murphy USA Inc. 8
Volatility favors our low-cost business model
- 5
5 10 15 20 25 15.4
10.2
FY 2016 FYE 2017 16.0 Q3 14.9 Q4
13.9
Q3
17.9 18.1
Q2
20.6
Q4
15.4
Q3
15.5
Q2
14.0
Q1
13.8
Q2
16.7
Q1
14.0
FY 2015 FY 2014 18.5 Q4
22.7
Q3
18.7
Q2
20.4
Q1
12.3
FY 2013 16.4 CPG Q1
Retail Margins PS&W plus RIN Fuel Breakeven Margin (cpg)
PS&W + RIN 3.4
5.5 7.2 1.2
- 1.9
2.7
3.8 5.0
- 0.2
1.5
2.4
2.9 5.9 1.8 4.8
3.8
0.0 1.5 5.1 2.0
Retail Margin 13.0
6.8 13.2 17.5 24.6
15.8
10.0 9.0 18.1 12.4 12.5 11.1 10.8 13.7 10.6 11.6 10.1 16.6 15.5 14.0
Total Fuel and Breakeven Margin (cpg)
2013 – 2016 3.4 2.8 2.5 1.6 Fuel Breakeven
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Murphy USA Inc. 9
MUSA’s in-store metrics buck industry trends
(6.3%) contraction
2016
15.2%
2015
21.5% 6.5% 9.1%
2014
Site Opex Excluding Payment Fees (Industry) Merchandise Profit (Industry)
Cumulative Growth in Industry Metrics (APSM)
2014 - 2016 2014
- 3.2%
1.4%
2016
2.5% 7.0% 13.1% 0.9%
2015
+16.3% expansion
Merchandise Profit (MUSA) Site Opex Excluding Payment Fees (MUSA)
Cumulative Growth in MUSA Metrics (APSM)
2014 - 2016
Data Not Available
Fuel Breakeven
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Murphy USA Inc. 10
SG&A investments enhance capabilities and scalability
- People
– Establish competencies to achieve corporate goals and strategies – Align incentive plans with principles and competencies – Empower leadership to drive change and support value creation process
- Process
– Restructured corporate functions to support strategy execution – Establish process framework vs. break/fix cycle – Proactively manage enterprise risk across the
- rganization
- Technology
– Develop IT strategy and roadmap to manage business priorities and replace patchwork legacy systems – Invest in scalable and secure technology platforms – Upgrade capabilities in line with major retailing standards 123 129 119 2017e 2016 2015 2014 135-140
Total SG&A ($MM)
2014 – 2017e
*Using end-of-year store count
SG&A per Store* (K)
2014 – 2017e
94 97 88 93
Corporate Costs
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Murphy USA Inc. 11
Capital allocation balances growth and capital returns
$139 $216 $264 $52 $248 $323 2014 $191 2016 $587 2015 $464
Capital Allocation ($MM)
2014 - 2016
Share Repurchases
50%
Corporate Capital
4%
Retail Maintenance Capital
7%
Retail Growth Capital
39%
Capital Allocation
2014 - 2016
Capital Expenditures Share Repurchases Shares Outstanding
$619 $623 $1,242 3-Year Total
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Murphy USA Inc. 12
We have strategically added leverage to boost equity returns
Leverage Structure and Ratio
2013 to 2017e
1,200 2.0x 200 1,000 800 1,400 400 1.5x 2.5x 0.5x 1.0x 0.0x 600
2017e 890 2.4x 2016 1.6x 1.4x 680 570 2015 2014 1.1x 1.6x 500 500 2013
- Adding appropriate debt to the balance
sheet allows us to leverage business improvements for the benefit of long- term shareholders
- Incremental new debt has been
- pportunistic and cost-efficient
– Advantaged rate term loan – 10 Year Senior Notes @ 5.625%
- Term loan pre-payment flexibility
allows for active management of leverage ratio to remain within 2.5x restricted payment covenant
- Buying back shares at advantaged
prices will benefit long-term investors given continuous improvements we are making in the business and our view of long-term value creation potential
Total Debt ($MM) Debt / EBITDA
* Year-end Balances
Shares Outstanding 570 500 500 680 500 70 180 Total Debt* Senior Note Due 2023 Term Loan Senior Note Due 2027 884 84 300 500 500 500 500
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Murphy USA Inc. 13