10q10k10q10k.net

What changed in Murphy USA Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Murphy USA Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+248 added−252 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-15)

Top changes in Murphy USA Inc.'s 2023 10-K

248 paragraphs added · 252 removed · 214 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

36 edited+4 added−2 removed104 unchanged
Biggest changeState No. of stores State No. of stores State No. of stores Alabama 81 Kentucky 48 New York 19 Arkansas 69 Louisiana 80 North Carolina 91 Colorado 33 Michigan 27 Ohio 44 Florida 137 Missouri 50 Oklahoma 55 Georgia 99 Mississippi 55 South Carolina 70 Iowa 22 Nebraska 5 Tennessee 93 Illinois 43 Nevada 4 Texas 354 Indiana 39 New Jersey 138 Utah 5 Kansas 7 New Mexico 21 Virginia 23 Total 1,712 5 The following table provides a history of our store count during the three-year period ended December 31, 2022: Years Ended December 31, 2022 2021 2020 Start of period 1,679 1,503 1,489 Acquired — 156 — New construction 36 23 24 Closed or sold (3) (3) (10) End of period 1,712 1,679 1,503 The following table present the numbers of our owned and leased stores at December 31, 2022: Located on Owned land Located on Leased Property 3,5 Total Stores Murphy USA 1,047 — 1,047 Leased from Walmart 1,2 — 99 99 Leased from others 2 — 5 5 Murphy Express 2 239 165 404 QuickChek 3,4,5 8 — 8 Stores with leased land — 44 44 Stores with leased land and buildings — 105 105 Total stores operated 1,294 418 1,712 1 This table excludes 3 locations that were disposed of in prior years but remain subleased from Walmart to the buyer 2 Leases for Murphy branded stores are operating leases 3 Operating leases have an average remaining term, including renewals of 25 years 4 Leases for QuickChek land are operating leases and Quick Chek store buildings are finance leases 5 Finance 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.
Biggest changeState No. of stores State No. of stores State No. of stores Alabama 81 Kentucky 48 New York 20 Arkansas 69 Louisiana 80 North Carolina 91 Colorado 37 Michigan 27 Ohio 44 Florida 142 Missouri 50 Oklahoma 55 Georgia 99 Mississippi 55 South Carolina 72 Iowa 22 Nebraska 5 Tennessee 93 Illinois 43 Nevada 4 Texas 365 Indiana 39 New Jersey 136 Utah 5 Kansas 7 New Mexico 21 Virginia 23 Total 1,733 5 The following table provides a history of our store count during the three-year period ended December 31, 2023: Years Ended December 31, 2023 2022 2021 Start of period 1,712 1,679 1,503 Acquired — — 156 New construction 28 36 23 Closed or sold (7) (3) (3) End of period 1,733 1,712 1,679 The following table present the numbers of our owned and leased stores at December 31, 2023: Located on Owned land Located on Leased Property 3,5 Total Stores Murphy branded 1 1,293 185 1,478 Leased from Walmart 2 — 99 99 QuickChek 3,4,5 10 — 10 Stores with leased land — 39 39 Stores with leased land and buildings — 107 107 Total stores operated 1,303 430 1,733 1 Leases for Murphy branded stores are operating leases 2 This table excludes 3 locations that were disposed of in prior years but remain subleased from Walmart to the buyer 3 Operating leases have an average remaining term, including renewals, of 26 years 4 Leases for QuickChek land are operating leases and QuickChek store buildings are finance leases 5 Finance leases have an average remaining term, including renewals, of 23 years We have purchased from Walmart the properties underlying many of our stores, and each of these properties that were purchased from Walmart are subject to Easements and Covenants with Restrictions Affecting Land (“ECRs”), which impose customary restrictions on the use of such properties, which Walmart has the right to enforce.
Technology Systems All of our Company stores use a standard hardware and software platform for point-of-sale (“POS”) that facilitates item level scanning of merchandise for sales and inventory, and the secure acceptance of all major payment methods – cash, check, credit, debit, fleet and mobile. In addition, our QuickChek stores have self-service checkouts and support third-party delivery services.
Technology Systems All of our Company stores use a standard hardware and software platform for point-of-sale (“POS”) that facilitates item level scanning of merchandise for sales and inventory, and the secure acceptance of all major payment methods – cash, check, credit, debit, fleet and mobile. In addition, our QuickChek stores have self- 8 service checkouts and support third-party delivery services.
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 affiliates or former affiliates that manufacture refined products.
We expect that our industry will continue to trend toward this model, resulting in increased 7 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 affiliates or former affiliates that manufacture refined products.
We could also be held responsible for contamination relating to third-party sites to which we or our predecessors have sent hazardous materials for recycling or disposal. We 9 are currently identified as a potentially responsible party ("PRP") in connection with one such disposal site.
We could also be held responsible for contamination relating to third-party sites to which we or our predecessors have sent hazardous materials for recycling or disposal. We are currently identified as a potentially responsible party ("PRP") in connection with one such disposal site.
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, service marks or trademarks.
We acquired 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, service marks or trademarks.
Several key industry trends and characteristics, include: • Sensitivity to gas prices among cost conscious consumers, and increasing customer demand for 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 traffic around supermarkets and large format hypermarkets, supporting complementary demand at nearby and cross-promoted retail fuel stores.
Several key industry trends and characteristics, include: • Sensitivity to gas prices among cost conscious consumers, and increasing customer demand for 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 NTI retail fuel and convenience stores, and • High levels of consumer traffic around supermarkets and large format hypermarkets, supporting complementary demand at nearby and cross-promoted retail fuel 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.
We also market to unbranded wholesale customers through a mixture of Company owned and third-party terminals. During 2023, 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, 2023 and the number of stores in each state.
Our initiatives for fiscal year 2022 addressed, among other things, (i) Our Principles, (ii) Inclusion and Diversity, (iii) Talent Management, (iv) Total Rewards, and (v) Workforce Safety. Our Principles are the heart of our rich culture, creating the foundation of how we operate at Murphy USA. They are the values that shape the strong character of our company.
Our initiatives for fiscal year 2023 addressed, among other things, (i) Our Principles, (ii) Inclusion and Diversity, (iii) Talent Management, (iv) Total Rewards, and (v) Workforce Safety. Our Principles are the heart of our rich culture, creating the foundation of how we operate at Murphy USA. They are the values that shape the strong character of our company.
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.
Many of our Murphy stores require only one or two associates to be present during business hours and 75% of our stores are located on Company-owned property and do not incur any rent expense.
These strengths support our Company vision which is to “Deliver every day the quickest, most friendly service and a low-price value proposition to our growing customer base for the products and markets we serve.” Strategic proximity to and complementary relationship with Walmart Of our network of 1,712 retail stores (as of December 31, 2022), the majority are situated on prime locations located near Walmart stores.
These strengths support our Company vision which is to “Deliver every day the quickest, most friendly service and a low-price value proposition to our growing customer base for the products and markets we serve.” Strategic proximity to and complementary relationship with Walmart Of our network of 1,733 retail stores (as of December 31, 2023), the majority are situated on prime locations located near Walmart stores.
Item 1. BUSINESS Murphy USA Inc. ("Murphy USA", the "Company", "we", or "our") was incorporated in Delaware on March 1, 2013 and holds, through its subsidiaries, the former U.S. retail marketing business of its former 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.
("Murphy USA", the "Company", "we", "us", or "our") was incorporated in Delaware on March 1, 2013 and holds, through its subsidiaries, the former U.S. retail marketing business of its former 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 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 for each of the five years ended December 31, 2022 are reported below.
In 2023, we purchased more than 77% 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 for each of the five years ended December 31, 2023 are reported below.
Approximately half of the leased sites have over 11 years of term remaining, including renewals, should the Company decide to exercise the renewal options.
Approximately half of the leased sites have over 10 years of term remaining, including renewals, should the Company decide to exercise the renewal options.
We allocate a portion of our capital expenditure program to comply with environmental laws and regulations, and such capital expenditures are projected to be approximately $6.7 million in 2023. We could be subject to joint and several as well as strict liability for environmental contamination.
We allocate a portion of our capital expenditure program to comply with environmental laws and regulations, and such capital expenditures are projected to be approximately $7.1 million in 2024. We could be subject to joint and several as well as strict liability for environmental contamination.
Information about our operations, properties and business segments, including revenues by class of products and financial information by geographic area, are provided on pages 32 through #, F-12 , F-13 , F-15 , and F-3 8 through F-3 9 of this Annual Report on Form 10-K.
Information about our operations, properties and business segments, including revenues by class of products and financial information by geographic area, are provided on pages 33 through 48, F-12 , F-13 , F-15 , and F-3 8 through F-39 of this Annual Report on Form 10-K.
We expect to 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, focusing on high-return locations either in high traffic areas, near Walmart Supercenters as a complement to higher performing existing stores in smaller markets, or by strategic infill in our core market areas complemented by our supply chain capabilities.
We expect to build at least 30 to 35 NTI locations and at least 35 raze-and-rebuilds in 2024 and are targeting at least 45 NTI and at least 35 raze-and-rebuilds per year in future periods, focusing on high-return locations either in high traffic areas, near Walmart Supercenters as a complement to higher performing existing stores in smaller markets, or by strategic infill in our core market areas complemented by our supply chain capabilities.
We have over 15,100 dedicated and hardworking employees as of December 31, 2022, that are actively engaged to serve the customer, whether it is the external retail consumer or their internal co-workers.
We have approximately 15,600 dedicated and hardworking employees as of December 31, 2023, that are actively engaged to serve the customer, whether it is the external retail consumer or their internal co-workers.
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.
Air emissions from our facilities are also subject 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.
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.
We invest in disaster recovery, system backups, redundancy, firewall, remote access security and virus and spam protection to promote a high level of system security and availability. We have systems, business policies and processes around access controls, password expirations and file retention to promote a high level of control within our technology network. See Item 1C. "Cybersecurity" for additional information.
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.
Additionally, in order to provide a consistent and meaningful return of capital to shareholders independent of share repurchases, we raised our quarterly dividend four times during 2023 from $0.35 per share in Q4 2022 to $0.41 per share, or $1.64 per share on an annualized basis as of Q4 2023.
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 identify critical roles and potential successors with our succession management program. • We strive to lift up talent through differentiated and personalized development opportunities .
We are intentional about working towards increasing visible and invisible diversity throughout Murphy USA through several talent initiatives: • We invest in established partnerships with HBCUs. • We identify critical roles and potential successors with our succession management program. • We strive to lift up talent through differentiated and personalized development opportunities .
As of December 31, 2022 2021 2020 2019 2018 Branded retail outlets: Murphy USA ® 1,151 1,151 1,151 1,161 1,160 Murphy Express 404 370 352 328 312 QuickChek ® 157 158 — — — Total 1,712 1,679 1,503 1,489 1,472 Retail marketing: Total fuel contribution (including retail, PS&W and RINs) (cpg) 1 34.3 26.3 25.2 16.1 16.2 Retail fuel margin per gallon (cpg) (1) 29.6 21.9 22.9 13.8 14.7 Gallons sold per store month (in thousands) 244.6 229.4 219.5 248.3 244.0 Merchandise sales revenue per store month (in thousands) $ 193.5 $ 186.7 $ 166.3 $ 148.7 $ 139.7 Merchandise margin as a percentage of merchandise sales 19.7% 19.1% 15.6% 16.0% 16.5% 1 Represents net sales prices for fuel less purchased cost of fuel.
As of December 31, 2023 2022 2021 2020 2019 Branded retail outlets: Murphy USA ® and Murphy Express 1,577 1,555 1,521 1,503 1,489 QuickChek ® 156 157 158 — — Total 1,733 1,712 1,679 1,503 1,489 Retail marketing: Total fuel contribution (cpg) 1 31.4 34.3 26.3 25.2 16.1 Retail fuel margin per gallon (cpg) 1 27.6 29.6 21.9 22.9 13.8 Gallons sold per store month (in thousands) 242.0 244.6 229.4 219.5 248.3 Merchandise sales revenue per store month (in thousands) $ 199.1 $ 193.5 $ 186.7 $ 166.3 $ 148.7 Merchandise margin as a percentage of merchandise sales 19.7% 19.7% 19.1% 15.6% 16.0% 1 Represents net sales prices for fuel less purchased cost of fuel.
The U.S. Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) issued Corporate Average Fuel Economy ("CAFE") standards in 2012 that set fuel economy standards and regulated emissions of GHGs for fleets of 2017-2025 model year cars and light duty trucks. In 2016, the NHTSA finalized a rule imposing stricter penalties against those who exceed CAFE standards.
The U.S. Environmental Protection Agency 9 (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) issued Corporate Average Fuel Economy ("CAFE") standards in 2012 that set fuel economy standards and regulated emissions of GHGs for fleets of 2017-2025 model year cars and light duty trucks.
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.
Our business consists primarily of the marketing of retail motor fuel products and convenience merchandise through a network of 1,733 (as of December 31, 2023) retail stores located in 27 states, of which, 1,577 were branded as Murphy stores and 156 were branded as QuickChek stores.
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.
As of December 31, 2023, Murphy USA had approximately 15,600 employees, including 5,900 full-time employees, and 9,700 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.
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.
Repurchases in 2023 were made pursuant to our now completed $1 billion 2021 authorization and our $1.5 billion 2023 authorization. As of December 31, 2023, we had approximately $1.4 billion remaining under our 2023 authorization.
We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on convenience and consumer appeal.
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 for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on convenience and consumer appeal.
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 for most locations, we believe we are able to effectively create competition for our purchases among various fuel suppliers.
Our retail inventories of fuel turn approximately once daily. By establishing motor fuel supply relationships with several alternate suppliers for most locations, we believe we are able to effectively create competition for our purchases among various fuel suppliers.
The benefits package offered to our full-time employees includes: • Comprehensive health, dental, vision, and life insurance. • Parental leave available to all new parents for birth, adoption or foster placement. • An Employee Assistance Program. • 401K program with company match. • Paid time off including: vacation, sick, parental, bereavement, and holidays.
The benefits package offered to our full-time employees includes: • Comprehensive health benefits (both in-person and telehealth), flex spending accounts & health savings accounts, prescription, dental, and vision benefits. • Life insurance, accident and hospital indemnity insurance and critical illness insurance. • Long-term disability and short-term disability, leave of absence benefits. • Parental leave available to all new parents for birth, adoption or foster placement. • An Employee Assistance Program. • 401K program with company match. • Paid time off including: vacation, sick, parental, bereavement, and holidays.
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 for $806.4 million, for an average price of $242.24 per share.
We have acquired through share repurchases approximately $3.0 billion of our common stock in a little more than ten years of operation. During the year 2023, we repurchased a total of 1,026,300 common shares for $333.2 million, for an average price of $324.62 per share.
In December 2021, the EPA finalized standards for 2023-2026 model years that are more stringent than those in prior standards from 2020. In March 2022 NHTSA finalized CAFE standards addressing the 2024-2026 model years that are more stringent than those in prior standards from 2020.
In 2016, the NHTSA finalized a rule imposing stricter penalties against those who exceed CAFE standards. In December 2021, the EPA finalized standards for 2023-2026 model years that are more stringent than those in prior standards from 2020.
We have numerous sources for our retail fuel supply, including nearly all of the major and large oil companies operating in the U.S. We purchase fuel from oil companies, 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.
We purchase fuel from oil companies, 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.
Grow organically We intend for 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, 2022), the majority of which were developed after our 2013 spin-off from Murphy Oil Corporation.
Grow organically We intend for our evolving NTI real estate strategy to be a key driver of our organic growth over the next several years, which is demonstrated by the over 500 stores that have been added to Murphy USA since our 2013 spin-off from Murphy Oil Corporation.
In addition, the 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 information about our operating leases, see Note 21 "Leases" to the accompanying audited consolidated financial statements for the three years ended December 31, 2022.
In addition, the 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.
These and any future increases in or changes to fuel economy standards or GHG emission reduction requirements could decrease demand for our products. Air emissions from our facilities are also subject to regulation.
On April 12, 2023, the EPA announced new, more ambitious proposed standards to further reduce air pollutant emissions from light-duty and medium-duty vehicles staring with model year 2027. These and any future increases in or changes to fuel economy standards or GHG emission reduction requirements could decrease demand for our products.
Our business is organized into one reporting segment (Marketing). The Marketing segment includes our retail marketing stores and product supply and wholesale assets.
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 information, see Note 22 “Business Segments” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2023.
Removed
Each of our owned properties that were purchased from Walmart are also subject to Easements and Covenants with Restrictions Affecting Land (“ECRs”), which impose customary restrictions on the use of such properties, which Walmart has the right to enforce.
Added
For more information about our operating leases, see Note 20 "Leases" to the accompanying audited consolidated financial statements for the three years ended December 31, 2023. 6 We have numerous sources for our retail fuel supply, including nearly all of the major and large oil companies operating in the U.S.
Removed
For operating segment information, see Note 23 “Business Segments” in the accompanying audited consolidated financial statements for 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.
Added
In March 2022 NHTSA finalized CAFE standards addressing the 2024-2026 model years that are more stringent than those in prior standards from 2020. In July 2023, NHTSA proposed CAFE standards for passenger cars and light trucks built in model years 2027-2032, and new fuel efficiency standards for heavy-duty pickup trucks and vans built in model years 2030-2035.
Added
The proposal would require an industry fleet-wide average of approximately 58 miles per gallon for passenger cars and light trucks in MY 2032, by increasing fuel economy by 2% year over year for passenger cars and by 4% year over year for light trucks.
Added
For heavy-duty pickup trucks and vans, the proposal would increase fuel efficiency by 10% year over year.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

58 edited+11 added−14 removed117 unchanged
Biggest changeOur 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, officers or other employees. 25 Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (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, officer 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 for 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 affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
Biggest changeOur Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (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, officer 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 for 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 affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
This outstanding indebtedness could have significant consequences to our future operations, including: • making it more difficult for 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 for these purposes; • limiting our flexibility in planning for, 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.
This outstanding indebtedness could have significant consequences to our future operations, including: • making it more difficult for us to meet our payment and other obligations under our outstanding debt; • 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 for these purposes; • limiting our flexibility in planning for, 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.
These include provisions: • providing for a classified board of directors; • providing that our directors may be removed by our stockholders only for cause; • establishing super majority vote requirements for 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 for nominations of candidates for election to our board of directors or for proposing matters that can be acted on by stockholders at the annual stockholder meetings.
These include provisions: • providing for a classified board of directors; • providing that our directors may be removed by our stockholders only for cause; • establishing super majority vote requirements for 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 24 • establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted on by stockholders at the annual stockholder meetings.
The trading price of our common stock could be subject 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 they differ from our previously announced guidance or forecasts made by analysts; • 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.
The trading price of our common stock could be subject 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 they differ from our previously announced guidance or forecasts made by analysts; • announcements by us of anticipated future revenues or operating results, or by others concerning us, our competitors, our customers, or our industry; • 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.
A significant change in any of these factors, including a significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on our business, financial condition, results of operations and cash flows.
A significant change in any of these factors, including a significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and 16 merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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.
The ECRs also provide that if we propose to 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.
Although we maintain insurance for certain of these risks as described below, due to policy deductibles and possible coverage limits, weather-related risks are not fully insured. We are subject to various environmental laws, regulations and permit requirements, which could expose us to significant expenditures, liabilities or obligations and reduce product demand.
Although we maintain insurance for certain of these risks as described below, due to policy deductibles and possible coverage limits, weather-related risks are not fully insured. 21 We are subject to various environmental laws, regulations and permit requirements, which could expose us to significant expenditures, liabilities or obligations and reduce product demand.
Developments regarding climate change and the effects 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.
Developments regarding climate change and the effects of greenhouse gas emissions on climate change and the environment have led to increased use of “green” 20 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.
Third parties could also seek to hold us responsible for any of the liabilities that Murphy Oil has agreed to retain, and under certain circumstances, we may be subject to continuing contingent liabilities of Murphy Oil following the Separation. Further, Murphy Oil may not be able to fully satisfy its indemnification obligations.
Third parties could also seek to hold us 15 responsible for any of the liabilities that Murphy Oil has agreed to retain, and under certain circumstances, we may be subject to continuing contingent liabilities of Murphy Oil following the Separation. Further, Murphy Oil may not be able to fully satisfy its indemnification obligations.
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 for fines or penalties, natural resource damages, personal injury and property damage.
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 claims from governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury and property damage.
With respect to merchandise, our retail stores compete with other convenience store chains, independently owned convenience stores, supermarkets, drugstores, discount clubs, gasoline service stores, mass merchants, fast food operations and other similar retail outlets. Non-traditional retailers, including supermarkets, discount club stores and mass merchants, now compete directly with retail gasoline stores.
With respect to merchandise, our retail stores compete with other convenience store chains, independently owned convenience stores, supermarkets, drugstores, discount clubs, gasoline service stores, mass merchants, fast food operations 19 and other similar retail outlets. Non-traditional retailers, including supermarkets, discount club stores and mass merchants, now compete directly with retail gasoline stores.
Uninsured losses and liabilities arising from operating risks could reduce the funds available to us for capital and investment spending and could have a material adverse effect on our financial condition, results of operations and cash flows.
Uninsured losses and liabilities arising from operating risks could reduce the funds available to 13 us for capital and investment spending and could have a material adverse effect on our financial condition, results of operations and cash flows.
If we are not able to generate sufficient cash flow to service 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 not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, including the notes, sell assets, reduce or delay capital investments, 14 or seek to raise additional capital.
Future tobacco legislation, potential court rulings affecting the tobacco industry, 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 for an important portion of our total sales of convenience store merchandise.
Future tobacco legislation and/or regulation, potential court rulings affecting the tobacco industry, 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 for an important portion of our total sales of convenience store merchandise.
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 project pipeline. We currently have one primary supplier for over 74% of our merchandise. A disruption in supply could have a material effect on our business.
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 project pipeline. We currently have one primary supplier for over 77% of our merchandise. A disruption in supply could have a material effect on our business.
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 effect on the demand for tobacco products, and therefore reduce our revenues and profits.
Significant increases in wholesale cigarette costs and tax increases on tobacco products, as well as future legislation and/or regulation, 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 effect on the demand for tobacco products, and therefore reduce our revenues and profits.
We operate in a highly competitive industry, which could adversely affect 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.
Risks Relating to Our Industry We operate in a highly competitive industry, which could adversely affect 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.
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 forecasted benefits and cost savings from our acquisition of QuickChek.
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 forecasted benefits and cost savings from our acquisition of QuickChek.
As a retail gasoline marketing company, we are significantly 21 affected by these factors.
As a retail gasoline marketing company, we are significantly affected by these factors.
Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or vendor data or to comply with applicable regulations relating to data security and privacy.
Risks Relating to our Company Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or vendor data or to comply with applicable regulations relating to data security and privacy.
In 2022, over 74% of our merchandise, including most tobacco products and grocery items, was purchased from a single wholesale grocer, Core-Mark. In January 2021, we renewed and extended for another five years a supply contract with Core-Mark.
In 2023, over 77% of our merchandise, including most tobacco products and grocery items, was purchased from a single wholesale grocer, Core-Mark. In January 2021, we renewed and extended for another five years a supply contract with Core-Mark.
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 foreign currencies, particularly those of oil producing nations, have significantly affected and in the future could significantly affect oil supplies and wholesale gasoline costs.
General political conditions, acts of war or terrorism and instability in oil producing regions, particularly in the Middle East and South America, and the value of U.S. dollars relative to other foreign currencies, particularly those of oil producing nations, have significantly affected and in the future could significantly affect oil supplies and wholesale gasoline costs.
For more information about our legal matters, see Note 20 “Contingencies” to the consolidated historical financial statements for the three years ended December 31, 2022 included in this Annual Report on Form 10-K.
For more information about our legal matters, see Note 19 “Contingencies” to the consolidated historical financial statements for the three years ended December 31, 2023 included in this Annual Report on Form 10-K.
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.
Although a decline in the market 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 this portion of other operating income. Current litigation and future rule making could impact the Renewable Fuel Standard ("RFS") program.
To protect against unauthorized access or attacks, we have implemented infrastructure protection technologies such as theft 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 effect on our financial condition or results of operations.
To protect against unauthorized access or attacks, we have implemented infrastructure protection technologies such as theft 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 effect on our financial condition or results of operations. 22 Our retail operations are subject to extensive government laws and regulations, and the cost of compliance with such laws and regulations can be material.
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.
As protection against these hazards and risks, we maintain insurance against many, but not all, potential losses or liabilities arising from such risks.
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 project pipeline and the building material supply chain.
Our ability to grow by at least 30 to 35 new stores and at least 35 raze-and-rebuild stores in 2024 and by at least 45 NTI stores and at least 35 raze-and-rebuild stores in future years relies on the continued growth of our project pipeline and the building material supply chain.
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 for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment.
We are required to test goodwill and any other intangible assets with an indefinite life for 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 for impairment if there are indicators of a possible impairment.
Currently, major cigarette manufacturers offer substantial rebates to retailers. We include these rebates as a component of our gross margin. In the event these rebates are no longer offered, or decreased, our profit from cigarette sales will decrease accordingly. In addition, reduced retail display allowances on cigarettes offered by cigarette manufacturers would negatively affect gross margins.
In the event these rebates are no longer offered, or decreased, our profit from cigarette sales will decrease accordingly. In addition, reduced retail display allowances on cigarettes offered by cigarette manufacturers would negatively affect gross margins.
Uncertainty and volatility in financial markets may materially impact the ability of the participating financial institutions to fund their commitments to us under our credit facility. 18 Accordingly, we may not be able to obtain the full amount of the funds available under our credit facility to satisfy our cash requirements, and our failure to do so could have a material adverse effect on our operations and financial position.
Accordingly, we may not be able to obtain the full amount of the funds available under our credit facility to satisfy our cash requirements, and our failure to do so could have a material adverse effect on our operations and financial position.
Also, increasing regulations, 20 including those for e-cigarettes and vapor products could offset some of the recent gains we have experienced from selling these products. Governing bodies continue to consider banning flavored tobacco products and have done so in some instances. If such efforts continue to be successful, it could have a further negative impact on our tobacco sales.
Also, increasing regulations, including those for e-cigarettes, vapor products, and new tobacco products could offset some of the recent gains we have experienced from selling these products. Governing bodies continue to consider banning flavored tobacco products and have done so in some instances.
Our business, prospects, financial condition, results of operations or cash flows could be materially and adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline. Risks Relating to our Company Our operations present hazards and risks, which may not be fully covered by insurance, if insured.
Our business, prospects, financial condition, results of operations or cash flows could be materially and adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline.
An inability to realize the full extent of, or any of, the anticipated benefits of the QuickChek acquisition could have an adverse effect 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.
An inability to realize the full extent of, or any of, the anticipated benefits of the QuickChek acquisition could have an adverse effect on our financial condition, results of operations, and cash flows.
Moreover, even if we ultimately succeed in recovering from Murphy Oil any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves.
Moreover, even if we ultimately succeed in recovering from Murphy Oil any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, results of operations and financial condition.
Much of our competitive advantage arises out of these proprietary arrangements which, when disrupted, have in the past and could in the future adversely affect us, and such effects could be material. The lasting effects of the coronavirus ("COVID-19") pandemic continues to cause disruptions in supply chains into 2023.
Much of our competitive advantage arises out of these proprietary arrangements which, when disrupted, have in the past and could in the future adversely affect us, and such effects could be material.
Tax laws and regulations are dynamic and subject to change as new laws are passed and new interpretations of existing laws are issued and applied. This activity could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority.
This activity could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority.
Actual or anticipated changes or downgrades in our ratings, including any announcement that our ratings are under review for a downgrade, could adversely affect our business, cash flows, financial condition and operating results.
Actual or anticipated changes or downgrades in our ratings, including any announcement that our ratings are under review for a downgrade, could adversely affect our business, cash flows, financial condition and operating results. 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.
Each of these risks could negatively affect 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 affect our operating results.
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 affect our operating results. Our net income is significantly affected by changes in the margins on retail and wholesale gasoline marketing operations.
We are also required to evaluate amortizable intangible assets and fixed assets for 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.
There is significant judgement required in the analysis of a potential impairment of goodwill, identified intangible assets and fixed assets.
Risks Relating to Our Industry Pandemics or disease outbreaks, such as COVID-19, may disrupt consumption and trade patterns, supply chains and normal business activities, which could materially affect our operations and results of operations.
Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties. 23 Pandemics or disease outbreaks, such as COVID-19, may disrupt consumption and trade patterns, supply chains and normal business activities, which could materially affect our operations and results of operations.
The market price for 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.
The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action and market dynamics. In 2023, the market price continued to fluctuate but was lower on average than the prior year.
Many of our Company stores benefit from customer traffic generated by Walmart retail stores, and if the customer traffic through these host stores decreases due to the economy or for any other reason, our sales could be materially and adversely affected. 16 The current level of revenue that is generated from RINs may not be sustainable.
Many of our Company stores benefit from customer traffic generated by Walmart retail stores, and if the customer traffic through these host stores decreases due to the economy or for any other reason, our sales could be materially and adversely affected. Walmart retains certain rights in its agreements with us, which may adversely impact our ability to conduct our business.
Therefore, credit card fees charged on gasoline purchases that are more expensive as a result of higher gasoline prices are not necessarily accompanied by higher gross margins. In fact, such fees may cause lower profitability.
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 effect. Therefore, credit card fees charged on gasoline purchases that are more expensive as a result of higher gasoline prices are not necessarily accompanied by higher gross margins.
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 perform these vital functions to our business. 19 In addition, we could again experience issues with our workforce that limit our ability to continue to operate our stores at their normal hours of operations or experience government intervention that requires us to reduce hours or close certain locations.
In addition, we could again experience issues with our workforce that limit our ability to continue to operate our stores at their normal hours of operations or experience government intervention that requires us to reduce hours or close certain locations.
Further, adverse publicity about consumer or other litigation may negatively affect 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 affect our business.
Further, adverse publicity about consumer or other litigation may negatively affect us, regardless of whether the allegations are true, by discouraging customers from purchasing gasoline or merchandise at our retail stores. Compliance with and changes in tax laws could adversely affect our performance.
Compliance with and changes in tax laws could adversely affect our performance. We are subject 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.
We are subject 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. Tax laws and regulations are dynamic and subject to change as new laws are passed and new interpretations of existing laws are issued and applied.
If a significant accident or event occurs for which we are not adequately insured, our operations and financial results could be adversely affected. 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.
The scope and nature of our operations are subject to 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.
Lower income on gasoline sales caused by higher credit card fees may decrease our overall profitability and could have a material adverse effect 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.
In fact, such fees may cause lower profitability. Lower income on gasoline sales caused by higher credit card fees may decrease our overall profitability and could have a material adverse effect on our business, financial condition, results of operations and cash flows. 17 Walmart continues to be a key relationship with regard to our Murphy USA network.
An inability to maintain a multi-year new store project pipeline may cause our Company's growth to slow in 2023 and beyond.
Furthermore, at some of our locations there are very few suppliers for fuel in that market. An inability to maintain a multi-year new store project pipeline may cause our Company's growth to slow in 2024 and beyond.
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.
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 subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.
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 effect on our reputation, operating results and financial condition.
A breakdown or a breach in our systems or in the systems of our third-party vendors that results in the unauthorized release of individually identifiable customer or other sensitive data could have a material adverse effect on our reputation, operating results and financial condition.
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 for petroleum products, which can be positive or negative depending on the movement of RIN prices.
The current level of revenue that is generated from RINs may be highly variable. 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.
Therefore, 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 for our business. Any deterioration in our relationship with Walmart could have an adverse effect on operations of the stores that are branded Murphy USA and participate in a discount.
Any deterioration in our relationship with Walmart could have an adverse effect on operations of the stores that are branded Murphy USA and participate in a discount. In addition, our competitive posture could be weakened by negative changes at Walmart.
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 subject to Easements with Covenants and Restrictions Affecting Land (the “ECRs”) between us and Walmart.
Our owned properties that were purchased from Walmart are subject to Easements with Covenants and Restrictions Affecting Land (the “ECRs”) between us and Walmart. The ECRs impose customary restrictions on the use of our properties, which Walmart has the right to enforce.
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 effect.
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.
These factors could materially and adversely affect our retail price of cigarettes, tobacco unit volume and sales, merchandise gross margin and overall customer traffic. Reduced sales of tobacco products or smaller gross margins on the sales we make could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Reduced sales of tobacco products or smaller gross margins on the sales we make could have a material adverse effect on our business, financial condition, results of operations and cash flows. Currently, major cigarette manufacturers offer substantial rebates to retailers unless prohibited by state or local laws. We include these rebates as a component of our gross margin.
Our expenditures, liabilities and obligations relating to environmental matters could have a material adverse effect on our business, product demand, reputation, results of operations and financial condition. Our retail operations are subject to extensive government laws and regulations, and the cost of compliance with such laws and regulations can be material.
Our expenditures, liabilities and obligations relating to environmental matters could have a material adverse effect on our business, product demand, reputation, results of operations and financial condition. We rely on our technology systems and network infrastructure to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business.
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.
At December 31, 2023, most of our Murphy branded stores were located in close proximity to Walmart Supercenter stores and we participate with the Walmart+ program. Therefore, 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 for our business.
Removed
The interest rates on our credit facilities may be impacted by the phase-out of the London Interbank Offered 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.
Added
Our operations present hazards and risks, which may not be fully covered by insurance, if insured. If a significant accident or event occurs for which we are not adequately insured, our operations and financial results could be adversely affected.
Removed
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 after December 31, 2021.
Added
Failure to maintain the quality and safety of our food products could adversely impact our reputation and business.
Removed
While publication of all other USD-LIBOR tenors is expected to cease after 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. As of the date hereof, the current recommended replacement for USD-LIBOR is the Secured Overnight Financing Rate (“SOFR”).
Added
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.
Removed
In March 2020, the Federal Reserve Bank of New York began publishing 30-, 90- and 180-day tenor SOFR Averages and a SOFR Index. In addition, forward-looking SOFR term rates are being published. However, the composition and characteristics of SOFR are not the same as those of LIBOR.
Added
Oil and domestic wholesale gasoline markets are volatile.
Removed
As a result, there can be no assurance that SOFR or any rate based on SOFR will perform 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.
Added
Variations in the market price of RINs can also have an impact on our cost of goods sold for petroleum products, which can be positive or negative depending on the movement of the market prices of RINs.
Removed
Any transition away from LIBOR as a benchmark for establishing the applicable interest rate is complex and may affect the cost of servicing our debt under our credit agreement.
Added
On June 21, 2023, the EPA announced a final 18 rule to establish biofuel volume requirement and associated percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel for 2023-2025.
Removed
Although these borrowing arrangements provide for 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.
Added
The rule includes steady growth of biofuels for use in the United States' fuel supply for 2023, 2024, and 2025, however the projected growth of Renewable Diesel production could outstrip the statutory mandated biofuel blending requirements. As a result, the amount of renewable credits available could outpace the demand, resulting in lower prices.
Removed
This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.
Added
Uncertainty and volatility in financial markets may materially impact the ability of the participating financial institutions to fund their commitments to us under our credit facility.
Removed
Our net income is significantly affected by changes in the margins on retail and wholesale gasoline marketing operations. Oil and domestic wholesale gasoline markets are volatile.
Added
If such efforts continue to be successful, it could have a further negative impact on our tobacco sales. These factors could materially and adversely affect our retail price of cigarettes, tobacco unit volume and sales, merchandise gross margin and overall customer traffic.
Removed
In addition, our competitive posture could be weakened by negative changes at Walmart.
Added
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 perform these vital functions to our business.
Removed
On December 1, 2022, the EPA announced a proposed rule to establish blending mandates for 2023, 2024, and 2025. This is the EPA's first RFS proposal since the statutory volumetric blending mandates that Congress established in 2007 have expired.
Added
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, officers or other employees.

… 3 more changes not shown on this page.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

10 edited+0 added−0 removed8 unchanged
Biggest changeThese lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. 26 SUPPLEMENTAL INFORMATION; Information About our Executive Officers The age at January 1, 2023, present corporate office and length of service in office of each of the Company’s executive officers, as of December 31, 2022, are reported in the following listing.
Biggest changeThese lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories. 27 SUPPLEMENTAL INFORMATION; Information About Our Executive Officers The age at January 1, 2024, present corporate office and length of service in office of each of the Company’s executive officers, as of December 31, 2023, are reported in the following listing.
Executive officers are elected annually but may be removed from office at any time by the Board of Directors. R. Andrew Clyde – Age 59; President and Chief Executive Officer, Director and Member of the Executive Committee since August 2013. Mr. Clyde has led Murphy USA's successful value-creation strategy since its spin-off in 2013. Mr.
Executive officers are elected annually but may be removed from office at any time by the Board of Directors. R. Andrew Clyde – Age 60; President and Chief Executive Officer, Director and Member of the Executive Committee since August 2013. Mr. Clyde has led Murphy USA's successful value-creation strategy since its spin-off in 2013. Mr.
After graduation he served as a commissioned officer 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 Officer, since June 2022. Ms. Bacon joined Murphy USA in 2016 as Regional Vice president, Sales and Operations.
After graduation he served as a commissioned officer in the Royal Canadian Navy. Mr. Chumley also holds an MBA from Dalhousie University. Renee M. Bacon – Age 54; Senior Vice President, Sales and Operations and Chief Merchandising Officer, since June 2022. Ms. Bacon joined Murphy USA in 2016 as Regional Vice president, Sales and Operations.
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. Mindy K. West – Age 53; Executive Vice President, Fuels, Chief Financial Officer, and Treasurer since August 2013. Ms.
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. Mindy K. West – Age 54; Executive Vice President, Fuels, Chief Financial Officer, and Treasurer since August 2013. Ms.
Bacon also holds a Master of Business Administration from the University of Houston and a Doctorate of Jurisprudence from the University of Tennessee. Christopher A. Click – Age 50; Senior Vice President, Strategy and Development since December 2020. Mr. Click joined the Company from KPMG LLP where he served as a Principal in the firm's Energy and Infrastructure Strategy practice.
Bacon also holds a Master of Business Administration from the University of Houston and a Doctorate of Jurisprudence from the University of Tennessee. Christopher A. Click – Age 51; Senior Vice President, Strategy and Development since December 2020. Mr. Click joined the Company from KPMG LLP where he served as a Principal in the firm's Energy and Infrastructure Strategy practice.
He holds a bachelor of arts degree from Texas 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 served as Senior Vice President of Operations. His previous roles within Caesars included Vice President of Operations and Vice President of Analytics.
He holds a bachelor of arts degree from Texas A & M University. Blake Segal – Age 43; Senior Vice President, QuickChek since September 2021. Mr. Segal joined the Company from Caesars Entertainment Inc., where he served as Senior Vice President of Operations. His previous roles within Caesars included Vice President of Operations and Vice President of Analytics.
Bridges – 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.
Bridges – Age 55; 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 Affairs and a Masters of Business Administration, both from the University of Texas at Austin, and a Bachelor of Arts degree from Stanford University.
Prior to retail, she was a management consultant in the Energy practice of Booz Allen Hamilton. Ms. Bridges holds a Masters of 28 Public Affairs and a Masters of Business Administration, both from the University of Texas at Austin, and a Bachelor of Arts degree from Stanford University.
She is a Certified Public Accountant and a Certified Treasury Professional. Robert J. Chumley – Age 58; Senior Vice President, Chief Digital Officer, since June 2022, and was Senior Vice President of Merchandising and Marketing from September 2016. Mr.
She is a Certified Public Accountant (inactive) and a Certified Treasury Professional. Robert J. Chumley – Age 59; Senior Vice President, Chief Digital Officer, since June 2022, and was Senior Vice President of Merchandising and Marketing from September 2016. Mr.
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 for the three years ended December 31, 2022.
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 19 “Contingencies” in the accompanying consolidated financial statements for the three years ended December 31, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+2 added−1 removed4 unchanged
Biggest changeBoard of Directors and announced on December 1, 2021 include authorization for the Company to acquire up to $1 billion of its common shares by December 31, 2026. All common shares repurchased in the fourth quarter of 2022 were made pursuant to the 2021 authorization.
Biggest changeBoard of Directors and announced on May 2, 2023 include authorization for the Company to acquire up to $1.5 billion of its common shares by December 31, 2028. During the fourth quarter of 2023, a total of 113,989 common shares were repurchased pursuant to the now completed 2021 authorization and 328,225 common shares were repurchased pursuant to the 2023 authorization.
Purchases may be effected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management. Purchases will be made subject to available cash, market conditions and compliance with our financing arrangements at any time during the period of authorization.
Purchases may be affected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management. Purchases will be made subject to available cash, market conditions and compliance with our financing arrangements at any time during the period of authorization.
Assumes each restricted stock unit is equivalent to one share and each performance unit is equal to two shares. 30 SHAREHOLDER RETURN PERFORMANCE PRESENTATION The following 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 for the Company, the Standard and Poor’s 500 Stock Index Fund (S&P 500 Index) and the S&P Retail Select Index.
Assumes each restricted stock unit is equivalent to one share and each performance unit is equal to two shares. 31 SHAREHOLDER RETURN PERFORMANCE PRESENTATION The following graph presents a comparison of cumulative total shareholder returns (including the reinvestment of dividends) as if a $100 investment was made on December 31, 2018 for the Company, the Standard and Poor’s 500 Stock Index Fund (S&P 500 Index) and the S&P Retail Select Index.
Equity Compensation Plan Information The table below contains information about securities authorized for issuance under equity compensation plans. The features of these plans are discussed further in Note 13 “Incentive Plans” to our audited consolidated financial statements.
Equity Compensation Plan Information The table below contains information about securities authorized for issuance under equity compensation plans. The features of these plans are discussed further in Note 12 “Incentive Plans” to our audited consolidated financial statements.
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 York Stock Exchange using “MUSA” as the trading symbol. There were 1,561 stockholders of record as of December 31, 2022.
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 York Stock Exchange using “MUSA” as the trading symbol. There were 1,517 stockholders of record as of December 31, 2023.
See “Management's Discussion and Analysis of Financial Condition and Operating Results—Capital Resources and Liquidity—Debt” and Note 10 “Long-Term Debt” to the accompanying audited consolidated financial statements for the three years ended December 31, 2022 for additional information.
See “Management's Discussion and Analysis of Financial Condition and Operating Results—Capital Resources and Liquidity—Debt” and Note 9 “Long-Term Debt” to the accompanying audited consolidated financial statements for the three years ended December 31, 2023 for additional information.
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.
We declared and paid dividends of $1.55 per share during 2023, $1.27 per share in 2022, $1.04 per share in 2021, and we expect to continue quarterly dividend payments in the future.
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2) (a) (b) (c) Equity compensation plans approved by security holders 596,240 $112.06 3,044,241 Equity compensation plans not approved by security holders — — — Total 596,240 $112.06 3,044,241 (1) Amounts in this column include outstanding restricted stock units.
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2) (a) (b) (c) Equity compensation plans approved by security holders 531,086 $139.07 3,154,683 Equity compensation plans not approved by security holders — — — Total 531,086 $139.07 3,154,683 (1) Amounts in this column include outstanding restricted stock units.
We may use cash from operations as well as draws under our credit facilities to effect purchases. During the year 2022, we repurchased a total of 3,328,795 common shares for $806.4 million, for an average price of $242.24 per share. Repurchases in 2022 were made pursuant to our now completed 2020 authorization and our 2021 authorization.
We may use cash from operations as well as draws under our credit facilities to effect purchases. During the year 2023, we repurchased a total of 1,026,300 common shares for $333.2 million, for an average price of $324.62 per share. Repurchases in 2023 were made pursuant to both the now completed 2021 authorization and our 2023 authorization.
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 before such time.
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 was completed in October 2023.
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 fourth quarter of 2022.
As of December 31, 2023, we had approximately $1.4 billion remaining under our 2023 authorization. 30 Below is detail of the company's common share repurchases during the fourth quarter of 2023.
(2) Number of shares available for issuance includes 2,694,914 available shares under the 2013 Long-Term Incentive Plan as of December 31, 2022 plus 349,327 available shares under the 2013 Stock Plan for Non-Employee Directors as of December 31, 2022.
(2) Number of shares available for issuance as of December 31, 2023 includes 2,995,854 available shares under the 2013 Long-Term Incentive Plan plus 157,285 available shares under the 2013 Stock Plan for Non-Employee Directors plus 1,544 available shares under the 2023 Omnibus Incentive Compensation Plan.
Issuer Purchases of Equity Securities Total Number Approximate of Shares Dollar Value of Purchased as Shares That May Total Number Average Part of Publicly Yet Be Purchased of Shares Price Paid Announced Plans Under the Plans Purchased Per Share or Programs or Programs 1 October 1, 2022 to October 31, 2022 371,671 $ 277.44 371,671 $ 349,999,922 November 1, 2022 to November 30, 2022 100,082 290.57 100,082 320,918,746 December 1, 2022 to December 31, 2022 374,238 286.60 374,238 213,661,734 Three Months Ended December 31, 2022 845,991 $ 283.05 845,991 $ 213,661,734 1 Terms of the repurchase plan authorized by the Murphy USA Inc.
Issuer Purchases of Equity Securities Total Number Approximate of Shares Dollar Value of Purchased as Shares That May Total Number Average Part of Publicly Yet Be Purchased of Shares Price Paid Announced Plans Under the Plans Purchased Per Share or Programs or Programs 1 October 1, 2023 to October 31, 2023 116,743 $ 358.04 116,743 $ 1,499,151,826 November 1, 2023 to November 30, 2023 172,011 367.32 172,011 1,435,968,888 December 1, 2023 to December 31, 2023 153,460 361.40 153,460 1,380,508,754 Three Months Ended December 31, 2023 442,214 $ 362.81 442,214 $ 1,380,508,754 1 Terms of the repurchase plan authorized by the Murphy USA Inc.
Removed
S&P 500 Index S&P Retail Select Index December 31, 2017 $ 100 $ 100 $ 100 December 31, 2018 $ 95 $ 94 $ 91 December 31, 2019 $ 146 $ 121 $ 102 December 31, 2020 $ 163 $ 140 $ 142 December 31, 2021 $ 248 $ 178 $ 202 December 31, 2022 $ 348 $ 144 $ 136
Added
On May 2, 2023, the Board of Directors approved a new share repurchase authorization of up to $1.5 billion to be executed by December 31, 2028. The authorization value excludes any excise tax that may be incurred.
Added
S&P 500 Index S&P Retail Select Index December 31, 2018 $ 100 $ 100 $ 100 December 31, 2019 $ 153 $ 129 $ 112 December 31, 2020 $ 171 $ 150 $ 157 December 31, 2021 $ 260 $ 190 $ 223 December 31, 2022 $ 365 $ 153 $ 150 December 31, 2023 $ 465 $ 190 $ 180 Item 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

93 edited+17 added−19 removed49 unchanged
Biggest changeFuel Twelve Months Ended December 31, Key Operating Metrics 2022 2021 2020 Total retail fuel contribution ($ Millions) $ 1,405.0 $ 951.3 $ 895.0 Total PS&W contribution ($ Millions) (80.8) (72.3) (8.5) RINs and other (included in Other operating revenues on Consolidated Income Statement) ($ Millions) 305.8 265.3 95.6 Total fuel contribution ($ Millions) $ 1,630.0 $ 1,144.3 $ 982.1 Retail fuel volume - chain (Million gal) 4,751.5 4,352.2 3,900.9 Retail fuel volume - per store (K gals APSM) 1 244.6 229.4 219.5 Retail fuel volume - per store (K gal SSS) 2 240.9 225.8 216.2 Total fuel contribution (including retail, PS&W and RINs) (cpg) 34.3 26.3 25.2 Retail fuel margin (cpg) 29.6 21.9 22.9 PS&W including RINs contribution (cpg) 4.7 4.4 2.3 1 APSM metric includes all stores open through the date of calculation 2 2021 and 2020 amounts not revised for 2022 raze-and-rebuild activity The reconciliation of the total fuel contribution to the Consolidated Income Statements is as follows: Twelve Months Ended December 31, (Millions of dollars) 2022 2021 2020 Petroleum product sales $ 19,230.1 $ 13,410.8 $ 8,208.6 Less Petroleum product cost of goods sold (17,910.1) (12,535.5) (7,325.7) Plus RINs and other (included in Other Operating Revenues line) 310.0 269.0 99.2 Total fuel contribution $ 1,630.0 $ 1,144.3 $ 982.1 37 Merchandise Twelve Months Ended December 31, Key Operating Metrics 2022 2021 2020 Total merchandise contribution ($ Millions) $ 767.1 $ 701.6 $ 459.4 Total merchandise sales ($ Millions) $ 3,903.2 $ 3,677.7 $ 2,955.1 Total merchandise sales ($K SSS) 1,2 $ 193.0 $ 168.8 $ 166.1 Merchandise unit margin (%) 19.7 % 19.1 % 15.6 % Tobacco contribution ($K SSS) 1,2 $ 17.7 $ 16.7 $ 16.5 Non-tobacco contribution ($K SSS) 1,2 $ 20.2 $ 10.8 $ 10.0 Total merchandise contribution ($K SSS) 1,2 $ 37.9 $ 27.5 $ 26.5 1 2021 and 2020 amounts not revised for 2022 raze-and-rebuild activity 2 Includes store-level discounts for MDR redemptions and excludes change in value of unredeemed MDR points Same store sales information compared to APSM metrics: Variance from prior year periods December 31, 2022 December 31, 2021 December 31, 2020 SSS 1 APSM 2 SSS 1 APSM 2 SSS 1 APSM 2 Fuel gallons per month 5.4 % 6.6 % 3.0 % 4.5 % (12.3) % (11.6) % Merchandise sales 2.9 % 3.7 % 1.0 % 12.2 % 11.7 % 11.8 % Tobacco sales 2.9 % 2.3 % (0.4) % (0.8) % 12.8 % 12.4 % Non tobacco sales 3.1 % 6.3 % 4.5 % 46.2 % 8.7 % 10.8 % Merchandise margin 5.1 % 6.8 % 3.5 % 37.7 % 9.6 % 8.6 % Tobacco margin 5.5 % 4.2 % 2.3 % 4.3 % 14.9 % 13.0 % Non tobacco margin 4.7 % 9.6 % 5.4 % 89.2 % 2.0 % 4.2 % 1 Includes store-level discounts for MDR redemptions and excludes change in value of unredeemed MDR points 2 Includes 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 $6.0 billion, due primarily to a higher average retail fuel sales price, increased retail fuel volumes sold, higher merchandise sales and the inclusion of QuickChek results for an additional month.
Biggest changeWhen prior period SSS volumes or sales are presented, they have not been revised for current year activity for raze-and-rebuilds and asset dispositions. 37 Fuel Twelve Months Ended December 31, Key Operating Metrics 2023 2022 2021 Total retail fuel contribution ($ Millions) $ 1,324.0 $ 1,405.0 $ 951.3 Total PS&W contribution ($ Millions) (144.9) (80.8) (72.3) RINs and other (included in Other operating revenues on Consolidated Income Statement) ($ Millions) 328.6 305.8 265.3 Total fuel contribution ($ Millions) $ 1,507.7 $ 1,630.0 $ 1,144.3 Retail fuel volume - chain (Million gal) 4,803.7 4,751.5 4,352.2 Retail fuel volume - per store (K gals APSM) 1 242.0 244.6 229.4 Retail fuel volume - per store (K gal SSS) 2 237.8 240.9 225.8 Total fuel contribution (cpg) 31.4 34.3 26.3 Retail fuel margin (cpg) 27.6 29.6 21.9 PS&W including RINs contribution (cpg) 3.8 4.7 4.4 1 APSM metric includes all stores open through the date of calculation 2 2022 and 2021 amounts not revised for 2023 raze-and-rebuild activity The reconciliation of the total fuel contribution to the Consolidated Income Statements is as follows: Twelve Months Ended December 31, (Millions of dollars) 2023 2022 2021 Petroleum product sales $ 17,104.4 $ 19,230.1 $ 13,410.8 Less Petroleum product cost of goods sold (15,929.7) (17,910.1) (12,535.5) Plus RINs and other (included in Other Operating Revenues line) 333.0 310.0 269.0 Total fuel contribution $ 1,507.7 $ 1,630.0 $ 1,144.3 Merchandise Twelve months ended December 31, Key Operating Metrics 2023 2022 2021 Total merchandise contribution ($ Millions) $ 803.4 $ 767.1 $ 701.6 Total merchandise sales ($ Millions) $ 4,089.3 $ 3,903.2 $ 3,677.7 Total merchandise sales ($K SSS) 1,2 $ 199.8 $ 193.0 $ 168.8 Merchandise unit margin (%) 19.7 % 19.7 % 19.1 % Tobacco contribution ($K SSS) 1,2 $ 18.4 $ 17.7 $ 16.7 Non-tobacco contribution ($K SSS) 1,2 $ 21.3 $ 20.2 $ 10.8 Total merchandise contribution ($K SSS) 1,2 $ 39.7 $ 37.9 $ 27.5 1 2022 and 2021 amounts not revised for 2023 raze-and-rebuild activity 2 Includes store-level discounts for MDR redemptions and excludes change in value of unredeemed MDR points 38 Same store sales information compared to APSM metrics: Variance from prior year periods December 31, 2023 December 31, 2022 December 31, 2021 SSS 1 APSM 2 SSS 1 APSM 2 SSS 1 APSM 2 Fuel gallons per month (1.8) % (1.0) % 5.4 % 6.6 % 3.0 % 4.5 % Merchandise sales 2.7 % 2.9 % 2.9 % 3.7 % 1.0 % 12.2 % Tobacco sales 3.5 % 2.9 % 2.9 % 2.3 % (0.4) % (0.8) % Non tobacco sales 1.4 % 3.1 % 3.1 % 6.3 % 4.5 % 46.2 % Merchandise margin 3.0 % 2.9 % 5.1 % 6.8 % 3.5 % 37.7 % Tobacco margin 4.3 % 2.7 % 5.5 % 4.2 % 2.3 % 4.3 % Non tobacco margin 1.9 % 3.8 % 4.7 % 9.6 % 5.4 % 89.2 % 1 Includes store-level discounts for MDR redemptions and excludes change in value of unredeemed MDR points 2 Includes all MDR activity Financial Summary of 2023 Compared to 2022 The Marketing segment had total revenues of $21.5 billion in 2023 compared to $23.4 billion in 2022, a decrease of $1.9 billion, due primarily to a lower average retail fuel sales price, partially offset by increased retail fuel volumes sold and higher merchandise sales.
Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: the Company's ability to realize projected synergies from the acquisition of QuickChek and successfully expand our food and beverage offerings; our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, manage disruptions in our supply chain and our ability to control costs; geopolitical events, such as 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 theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; reduced demand for our products due to the implementation of more stringent fuel economy and greenhouse gas reduction requirements, or increasingly widespread adoption of electric vehicle technology; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins; efficient and proper allocation of our capital resources, including the timing, declaration, amount and payment of any future dividends or levels of the company's share repurchases, or management of operating cash; the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company's cash flows from operations, and general economic conditions; compliance with debt covenants; availability and cost of credit; and changes in interest rates.
Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: the Company's ability to realize projected synergies from the acquisition of QuickChek and successfully expand our food and beverage offerings; our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, manage disruptions in our supply chain and our ability to control costs; geopolitical events, such as Russia's invasion of Ukraine and the conflicts in the Middle East, 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 impact of any systems failures, cybersecurity and/or security breaches of the company or its vendor partners, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; reduced demand for our products due to the implementation of more stringent fuel economy and greenhouse gas reduction requirements, or increasingly widespread adoption of electric vehicle technology; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins; efficient and proper allocation of our capital resources, including the timing, declaration, amount and payment of any future dividends or levels of the company's share repurchases, or management of operating cash; the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company's cash flows from operations, and general economic conditions; compliance with debt covenants; availability and cost of credit; and changes in interest rates.
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 for 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.
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 for matters not resolved with various taxing authorities, gains or losses could occur in future years from changes in estimates or resolution of outstanding matters.
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 forma basis, is greater than 3.0 to 1.0, could be limited.
The Credit Agreement also contains customary events of default. Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0, could be limited.
The credit agreement provides for a senior secured term loan in an aggregate principal amount of $400 million (the “Term 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 Term Facility, the “Credit Facilities”).
The credit agreement provides for a senior secured term loan in an aggregate principal amount of $400 million (the “Term Facility”) (which was borrowed in full on January 29, 2021) and revolving credit commitments in an aggregate amount equal to $350 million (the “Revolving Facility”, and together with the Term Facility, the “Credit Facilities”).
("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).
("MOUSA"), our primary operating subsidiary, issued $300 million of 5.625% Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration 42 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).
Critical Accounting Policies Goodwill and intangible assets Goodwill represents the excess of the aggregate of the consideration transferred over the net assets acquired and liabilities assumed and is tested annually for impairment, or more frequently if there are indicators 45 of impairment.
Critical Accounting Policies Goodwill and intangible assets Goodwill represents the excess of the aggregate of the consideration transferred over the net assets acquired and liabilities assumed and is tested annually for impairment, or more frequently if there are indicators of impairment.
Remodeled stores that remained open or were closed for just a very brief time 36 (less than a month) during the period being compared remain in the same store sales calculation.
Remodeled stores that remained open or were closed for just a very brief time (less than a month) during the period being compared remain in the same store sales calculation.
However, non-GAAP measures are not a 39 substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.
However, non-GAAP measures are not a substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.
It includes information on the basis of presentation with respect to the amounts presented in the Management’s Discussion and Analysis and a discussion of the trends affecting our business. • Results of Operations— this section provides an analysis of our results of operations, including the results of our business segments for the two years ended December 31, 2022. • Capital Resources and Liquidity— this section provides a discussion of our financial condition and cash flows as of and for the two years ended December 31, 2022.
It includes information on the basis of presentation with respect to the amounts presented in the Management’s Discussion and Analysis and a discussion of the trends affecting our business. • Results of Operations — This section provides an analysis of our results of operations, including the results of our business segments for the two years ended December 31, 2023. • Capital Resources and Liquidity — This section provides a discussion of our financial condition and cash flows as of and for the two years ended December 31, 2023.
Under the Energy Policy Act of 2005, the Environmental Protection Agency ("EPA") is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels. Obligated parties are required to demonstrate that they have met any applicable quotas by submitting a certain amount of RINs to the EPA.
Under the Energy Policy Act of 2005, the Environmental Protection Agency ("EPA") is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels. Obligated parties are required to demonstrate that they have met any applicable quotas by submitting a certain number of RINs to the EPA.
Because these estimates are subjective and are currently based on historical costs with adjustments for estimated future changes in the associated costs, the dollar amount of these obligations could change as more information is obtained. There were no material changes in our asset retirement obligation estimates during 2022, 2021, or 2020.
Because these estimates are subjective and are currently based on historical costs with adjustments for estimated future changes in the associated costs, the dollar amount of these obligations could change as more information is obtained. There were no material changes in our asset retirement obligation estimates during 2023, 2022, or 2021.
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 for working capital and other general corporate purposes, including supporting our operating model as described herein.
We have a committed cash flow revolving credit facility (the "revolving facility") of $350 million, which was undrawn at December 31, 2023, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein.
FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains certain statements or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to our M&A activity, anticipated store openings, fuel margins, merchandise margins, sales of RINs, trends in our operations, dividends, and share repurchases.
FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains certain statements or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to our M&A activity, anticipated store openings and associated capital expenditures, fuel margins, merchandise margins, sales of RINs, trends in our operations, dividends, and share repurchases.
Newly constructed stores do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2021 for the stores being compared in the 2022 versus 2021 comparison). Acquired stores are not included in the calculation of same stores for the first 12 months after the acquisition.
Newly constructed stores do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2022, for the stores being compared in the 2023 versus 2022 comparison). Acquired stores are not included in the calculation of same stores for the first 12 months after the acquisition.
It should be read in conjunction with the consolidated financial statements and notes included in this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2022 and 2021 items and the year-to-year comparison between 2022 and 2021.
It should be read in conjunction with the consolidated financial statements and notes included in this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2023 and 2022 items and the year-to-year comparison between 2023 and 2022.
The cost of our main fuel products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States. Historically, a rising price environment for crude oil increases the Company’s cost for wholesale fuel products purchased and increases the price of retail fuel sales.
The cost of our main fuel products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States. Historically, a rising price environment for crude oil increases the Company’s cost for wholesale fuel products purchased and increases retail fuel prices.
Rising prices tend to cause consumers to reduce discretionary fuel consumption, however our low-price model can serve as a hedge to draw in new customers which can offset the potential loss of discretionary volumes.
Rising prices can cause consumers to reduce discretionary fuel consumption, however our low-price model can serve as a hedge to draw new customers which can offset the potential loss of discretionary volumes.
This judgment and determination affects 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 information necessary to identify and measure the assets acquired and liabilities assumed.
This judgment and determination affect the amount of consideration paid that is allocable to assets and liabilities acquired in the 47 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 information necessary to identify and measure the assets acquired and liabilities assumed.
See Note 12 “Income Taxes” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2022 for a further discussion of our tax liabilities. Asset Retirement Obligations We operate above ground and underground storage tanks at our facilities. We recognize the estimated future cost to remove these underground storage tanks (“USTs”) over their estimated useful lives.
See Note 11 “Income Taxes” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2023 for a further discussion of our tax liabilities. Asset Retirement Obligations We operate above ground and underground storage tanks at our facilities. We recognize the estimated future cost to remove these underground storage tanks (“USTs”) over their estimated useful lives.
See Note 19 “Commitments” in the audited consolidated financial statements for the year ended December 31, 2022. Capital Spending Capital spending and investments in our Marketing segment relate primarily to the acquisition of land and the construction of new Company stores. Our Marketing capital is also deployed to improve our existing stores, which we refer to as sustaining capital.
See Note 18 “Commitments” in the audited consolidated financial statements for the year ended December 31, 2023. Capital Spending Capital spending and investments in our Marketing segment relate primarily to the acquisition of land and the construction of new Company stores. Our Marketing capital is also deployed to improve our existing stores, which we refer to as sustaining capital.
See also Note 11 “Asset Retirement Obligation” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2022. Business combinations We account for 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.
See also Note 10 “Asset Retirement Obligation” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2023. Business combinations We account for 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.
Non-GAAP Measures The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three years ended December 31, 2022.
Non-GAAP Measures The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three years ended December 31, 2023.
Discussions of 2020 items and the year-to-year comparisons between 2021 and 2020 are not included in this Form 10-K and can be found in the Form 10-K for the year ended December 31, 2021 filed on February 17, 2022.
Discussions of 2021 items and the year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K and can be found in the Form 10-K for the year ended December 31, 2022, filed on February 15, 2023.
Our revenues are impacted by our ability to leverage our diverse supply infrastructure in pursuit of obtaining the lowest cost of fuel supply available; for example, activities such as blending bulk fuel with ethanol and biodiesel to capture and subsequently sell Renewable Identification Numbers (“RINs”).
Our revenues are impacted by our ability to leverage our diverse supply infrastructure in pursuit of obtaining the lowest cost of fuel supply available; for example, activities such as blending bulk fuel with renewable fuels (ethanol and biodiesel) to capture and subsequently sell RINs.
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 for the 2027 Senior Notes.
The 2029 Senior Notes are fully and unconditionally guaranteed by the Company and by the Company's 100% owned subsidiaries that guarantee our Credit Facilities. The indenture governing the 2029 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2027 Senior Notes.
If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed $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.
If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed the greater of $115.6 million, or 4.5% of consolidated net tangible assets over the life of the credit agreement.
On September 13, 2019, MOUSA issued $500 million of 4.75% Senior Notes due 2029 (the “2029 Senior Notes”). The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of MOUSA's senior notes due 2023.
On September 13, 2019, MOUSA issued $500 million of 4.75% Senior Notes due 2029 (the “2029 Senior Notes”). The net proceeds from the issuance of the 2029 Senior Notes were used to fund, in part, the tender offer and redemption of a prior note issuance.
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 effective income tax expense rate in 2022 was 23.9% compared to 24.0% for 2021.
Interest expense in 2023 increased by $13.2 million compared to 2022 due to an increase in variable interest rates on the term loan during the year. The effective income tax expense rate in 2023 was 24.2% compared to 23.9% for 2022.
See Note 19 “Commitments” in the audited consolidated financial statements for the three years ended December 31, 2022 included in this Annual Report on Form 10-K.
See Note 18 “Commitments” in the audited consolidated financial statements for the three years ended December 31, 2023, included in this Annual Report on Form 10-K.
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.
At December 31, 2023, our total leverage ratio was 1.68 to 1.0 which meant our ability at that date to make restricted payments was not limited.
Our Business The Company owns and operates a chain of retail stores that market gasoline and other merchandise under the brand names of Murphy USA ® , Murphy Express, and QuickChek. Murphy USA ® branded stores are almost all located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United States.
Executive Overview Our Business The Company owns and operates a chain of retail stores that market gasoline and other merchandise under the brand names of Murphy USA ® and Murphy Express, most of which are located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United States.
(Millions of dollars, except revenue per store month (in thousands) and store counts) Years Ended December 31, Marketing Segment 2022 2021 2020 Operating revenues Petroleum product sales $ 19,230.1 $ 13,410.8 $ 8,208.6 Merchandise sales 3,903.2 3,677.7 2,955.1 Other operating revenue 312.1 271.4 100.3 Total operating revenues 23,445.4 17,359.9 11,264.0 Operating expenses Petroleum product cost of goods sold 17,910.1 12,535.5 7,325.7 Merchandise cost of goods sold 3,136.1 2,976.1 2,495.7 Store and other operating expenses 976.5 827.1 549.0 Depreciation and amortization 204.8 197.3 146.3 Selling, general and administrative 232.5 193.6 171.1 Accretion of asset retirement obligations 2.7 2.5 2.3 Total operating expenses 22,462.7 16,732.1 10,690.1 Gain (loss) on sale of assets (0.7) 1.6 1.3 Income (loss) from operations 982.0 629.4 575.2 Other income (expense) Interest expense (9.0) (8.1) (0.1) Total other income (expense) (9.0) (8.1) (0.1) Income (loss) before income taxes 973.0 621.3 575.1 Income tax expense (benefit) 232.1 148.5 132.9 Net Income (loss) from operations $ 740.9 $ 472.8 $ 442.2 Total tobacco sales revenue per same store sales 1,2 $ 123.3 $ 120.2 $ 120.6 Total non-tobacco sales revenue per same store sales 1,2 69.7 48.6 45.5 Total merchandise sales revenue per same store sales 1,2 $ 193.0 $ 168.8 $ 166.1 1 2021 and 2020 amounts not revised for 2022 raze-and-rebuild activity (see SSS definition below) 2 Includes store-level discounts for Murphy Drive Reward ("MDR") redemptions and excludes change in value of unredeemed MDR points Store count at end of period 1,712 1,679 1,503 Total store months during the period 20,172 19,702 17,770 Average Per Store Month ("APSM") metric includes all stores open through the date of the calculation, including stores acquired during the period.
(Millions of dollars, except revenue per store month (in thousands) and store counts) Years Ended December 31, Marketing Segment 2023 2022 2021 Operating revenues Petroleum product sales $ 17,104.4 $ 19,230.1 $ 13,410.8 Merchandise sales 4,089.3 3,903.2 3,677.7 Other operating revenue 335.2 312.1 271.4 Total operating revenues 21,528.9 23,445.4 17,359.9 36 (Millions of dollars, except revenue per store month (in thousands) and store counts) Years Ended December 31, Marketing Segment 2023 2022 2021 Operating expenses Petroleum product cost of goods sold 15,929.7 17,910.1 12,535.5 Merchandise cost of goods sold 3,285.9 3,136.1 2,976.1 Store and other operating expenses 1,014.6 976.5 827.1 Depreciation and amortization 211.9 204.8 197.3 Selling, general and administrative 240.5 232.5 193.6 Accretion of asset retirement obligations 3.0 2.7 2.5 Total operating expenses 20,685.6 22,462.7 16,732.1 Gain (loss) on sale of assets (0.7) (0.7) 1.6 Income (loss) from operations 842.6 982.0 629.4 Other income (expense) Interest expense (8.9) (9.0) (8.1) Other nonoperating income 0.2 — — Total other income (expense) (8.7) (9.0) (8.1) Income (loss) before income taxes 833.9 973.0 621.3 Income tax expense (benefit) 203.0 232.1 148.5 Net Income (loss) from operations $ 630.9 $ 740.9 $ 472.8 Total tobacco sales revenue per same store sales 1,2 $ 127.2 $ 123.3 $ 120.2 Total non-tobacco sales revenue per same store sales 1,2 72.6 69.7 48.6 Total merchandise sales revenue per same store sales 1,2 $ 199.8 $ 193.0 $ 168.8 1 2022 and 2021 amounts not revised for 2023 raze-and-rebuild activity (see SSS definition below) 2 Includes store-level discounts for Murphy Drive Reward ("MDR") redemptions and excludes change in value of unredeemed MDR points Store count at end of period 1,733 1,712 1,679 Total store months during the period 20,535 20,172 19,702 Average Per Store Month ("APSM") metric includes all stores open through the date of the calculation, including stores acquired during the period.
The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows: Years Ended December 31, (Millions of dollars) 2022 2021 2020 Net income $ 672.9 $ 396.9 $ 386.1 Income tax expense (benefit) 210.9 125.0 123.0 Interest expense, net of interest income 82.3 82.3 50.2 Depreciation and amortization 220.4 212.6 161.0 EBITDA 1,186.5 816.8 720.3 Accretion of asset retirement obligations 2.7 2.5 2.3 (Gain) loss on sale of assets (2.1) (1.5) (1.3) Acquisition related costs 1.5 10.4 1.7 Other nonoperating (income) expense 2.3 (0.2) (0.3) Adjusted EBITDA $ 1,190.9 $ 828.0 $ 722.7 Capital Resources and Liquidity Significant Sources of Capital As of December 31, 2022, we had $60.5 million of cash and cash equivalents and total marketable securities of $22.3 million.
The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows: Years Ended December 31, (Millions of dollars) 2023 2022 2021 Net income $ 556.8 $ 672.9 $ 396.9 Income tax expense (benefit) 177.6 210.9 125.0 Interest expense, net of investment income 91.6 82.3 82.3 Depreciation and amortization 228.7 220.4 212.6 EBITDA 1,054.7 1,186.5 816.8 Accretion of asset retirement obligations 3.0 2.7 2.5 (Gain) loss on sale of assets 0.8 (2.1) (1.5) Acquisition and integration related costs — 1.5 10.4 Other nonoperating (income) expense — 2.3 (0.2) Adjusted EBITDA $ 1,058.5 $ 1,190.9 $ 828.0 40 Capital Resources and Liquidity Significant Sources of Capital As of December 31, 2023, we had $117.8 million of cash and cash equivalents and total marketable securities of $11.5 million.
See also Note 17 "Other financial information" in the accompanying audited consolidated financial statements for 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.
See also Note 16 "Other Financial Information" in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2023. Investing Activities For the year ended December 31, 2023, cash required by investing activities was $323.6 million compared to cash required by investing activities of $319.3 million in 2022.
Interest payable on the Credit Facilities is based on either: • the London interbank offered rate, adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”); or • 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 effective rate and the overnight bank funding rate determined by the Federal Reserve Bank of New York 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 Term 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 Term Facility, a spread of 1.75% per annum.
Interest payable on the Revolving Facility is based on either: • the term secured overnight financing rate, plus 0.10% credit spread adjustment for all interest periods (the "Adjusted SOFR Rate"), which is subject to a 0.0% floor; or • 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 effective rate and the overnight bank funding rate determined by the Federal Reserve Bank of New York from time to time plus 0.50% per annum and (c) the one-month Adjusted SOFR Rate plus 1.00% per annum, plus, (A) in the case of Adjusted SOFR Rate borrowings, a spread of 1.75% to 2.25% per annum depending on a total debt to EBITDA ratio and (B) in the case of Alternate Base Rate borrowings, spreads ranging from 0.75% to 1.25% per annum depending on a total debt to EBITDA ratio.
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.
Crude oil prices in 2023 continued to be volatile during the year with prices ranging from $67 per barrel to $94 per barrel, with an average price of $78 per barrel, compared to prices in 2022 that ranged from $71 per barrel to $124 per barrel with an average of $95 per barrel.
Corporate and Other Assets Loss from continuing operations for Corporate and other assets in 2022 was $68.0 million, compared to a loss of $75.9 million in 2021.
Corporate and Other Assets Loss from continuing operations for Corporate and other assets in 2023 was $74.1 million, compared to a loss of $68.0 million in 2022.
The credit agreement also contains total leverage ratio and secured net leverage ratio financial maintenance covenants solely for the benefit of the revolving facility which are tested quarterly.
The Revolving Facility credit agreement also impose total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly.
Total 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.
Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results which include Renewable Identification Numbers ("RINs")) was 31.4 cpg in 2023, compared to 34.3 cpg in 2022.
A summary of the Company’s earnings by business segment follows: Year ended December 31, (millions of dollars) 2022 2021 2020 Marketing $ 740.9 $ 472.8 $ 442.2 Corporate and other assets (68.0) (75.9) (56.1) Net income $ 672.9 $ 396.9 $ 386.1 Net income for 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 offset 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 for the year ended December 31, 2022 increased $6.1 billion, or 35.1%, compared to 2021.
A summary of the Company’s earnings by business segment follows: Year ended December 31, (millions of dollars) 2023 2022 2021 Marketing $ 630.9 $ 740.9 $ 472.8 Corporate and other assets (74.1) (68.0) (75.9) Net income $ 556.8 $ 672.9 $ 396.9 Net income for 2023 decreased compared to 2022, primarily due to: • Lower all-in fuel contribution; • Higher store operating expenses, excluding payment fees; • Higher interest expense; • Higher depreciation and amortization expense; • Higher selling, general and administrative ("SG&A") expenses 35 The items below partially offset the decrease in earnings in the current period: • Higher merchandise contribution; • Lower income tax expense; • Lower payment fees Financial Summary of 2023 Compared to 2022 Revenues for the year ended December 31, 2023 decreased $1.9 billion, or 8.2%, compared to 2022.
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 Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes. Revolving Credit Facility and Term Loan Our credit agreement consists of both a cash flow revolving credit facility and a senior secured term loan.
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 forth below: December 31, (Millions of dollars) 2022 2021 5.625% senior notes due 2027 (net of unamortized discount of $1.6 at 2022 and $2.0 at 2021) $ 298.4 $ 298.0 4.75% senior notes due 2029 (net of unamortized discount of $4.2 at 2022 and $4.8 at 2021) 495.8 495.2 3.75% senior notes due 2031 (net of unamortized discount of $5.1 at 2022 and $5.7 at 2021) 494.9 494.3 Term loan due 2028 (effective 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 393.3 397.1 Capitalized lease obligations, vehicles, due through 2026 2.3 2.7 Capitalized lease obligations, buildings, due through 2059 131.3 138.9 Unamortized debt issuance costs (9.1) (11.1) Total long-term debt 1,806.9 1,815.1 Less current maturities 15.0 15.0 Total long-term debt, net of current $ 1,791.9 $ 1,800.1 Senior Notes On April 25, 2017, Murphy Oil USA, Inc.
Debt Our long-term debt at December 31, 2023 and 2022 was as set forth below: December 31, (Millions of dollars) 2023 2022 5.625% senior notes due 2027 (net of unamortized discount of $1.3 at 2023 and $1.6 at 2022) $ 298.7 $ 298.4 4.75% senior notes due 2029 (net of unamortized discount of $3.6 at 2023 and $4.2 at 2022) 496.4 495.8 3.75% senior notes due 2031 (net of unamortized discount of $4.4 at 2023 and $5.1 at 2022) 495.6 494.9 Term loan due 2028 (effective interest rate of 7.23% at 2023 and 5.95% at 2022) net of unamortized discount of $0.6 at 2023 and $0.7 at 2022 389.4 393.3 Capitalized lease obligations, autos and equipment, due through 2027 3.1 2.3 Capitalized lease obligations, buildings, due through 2059 123.6 131.3 Unamortized debt issuance costs (7.1) (9.1) Total long-term debt 1,799.7 1,806.9 Less current maturities 15.0 15.0 Total long-term debt, net of current $ 1,784.7 $ 1,791.9 Senior Notes On April 25, 2017, Murphy Oil USA, Inc.
The following table outlines our capital spending and investments by category for the three years ended December 31, 2022: Years Ended December 31, (Millions of dollars) 2022 2021 2020 Marketing: Company stores $ 245.7 $ 221.2 $ 175.9 Terminals — 2.5 2.0 Sustaining capital 33.4 21.8 22.9 Corporate and other assets 26.7 32.0 26.3 Total $ 305.8 $ 277.5 $ 227.1 We currently expect capital expenditures for the full year 2023 to range from approximately $375 million to $425 million, including $285 million to $315 million for retail growth, approximately $50 million to $60 million for maintenance capital, with the remaining funds earmarked for other corporate investments and other strategic initiatives.
We also invest in our Corporate and other assets segment which is primarily technology related. 45 The following table outlines our capital spending and investments by category for the three years ended December 31, 2023: Years Ended December 31, (Millions of dollars) 2023 2022 2021 Marketing: Company stores $ 232.0 $ 245.7 $ 221.2 Terminals 5.7 — 2.5 Sustaining capital 51.8 33.4 21.8 Corporate and other assets 54.6 26.7 32.0 Total $ 344.1 $ 305.8 $ 277.5 We currently expect capital expenditures for the full year 2024 to range from approximately $400 million to $450 million, including $275 million to $315 million for retail growth, approximately $75 million to $80 million for maintenance capital, with the remaining funds earmarked for other corporate investments and other strategic initiatives.
Operating Activities Net cash provided by operating activities was $994.7 million for the year ended December 31, 2022 and $737.4 million for 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 offset by a decrease in the amount of cash provided from changes in noncash working capital in 2022 of $38.0 million.
Operating Activities Net cash provided by operating activities was $784.0 million for the year ended December 31, 2023 and was $994.7 million in 2022, a decrease of $210.7 million, or 21.2% The decrease was mainly due to a decrease in net income of $116.1 million in 2023, a decrease in the amount of cash provided from changes in noncash working capital in 2023 of $86.9 million, and lower deferred and noncurrent tax changes of $29.5 million, partially offset by increased depreciation of $8.3 million and an increase of $10.6 million in cash provided by other operating activities.
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 effects from pandemics such as travel restrictions and stay-at-home orders, severe refinery mechanical failures for 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.
These factors include, but are not limited to, the price of refined products, geopolitical events that disrupt the global supply, overall demand, and prices of crude oil, interruptions in our fuel and merchandise supply caused by severe weather or pandemics, the effects from pandemics such as travel restrictions and stay-at-home orders imposed during a pandemic, new or changing legislation around tobacco and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures for an extended period of time, cyber-attacks against the Company or our vendors, changing economic conditions that lower consumer purchasing power such as inflation, and competition in the local markets in which we operate.
Revenue amounts included excise taxes collected and remitted to government authorities of $2.2 billion in 2022 and $2.0 billion in 2021. Total fuel contribution for the year ended December 31, 2022 was $1.6 billion, an increase of $485.7 million, or 42.4% over 2021.
Revenue amounts included excise taxes collected and remitted to government authorities of $2.3 billion in 2023 and $2.2 billion in 2022. Total fuel contribution for the year ended December 31, 2023, was $1.5 billion, a decrease of $0.1 billion or 7.5%, compared to 2022.
The Term 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.
The Term Facility amortizes in quarterly installments, which commenced on July 1, 2021, at a rate of 1.00% per annum.
Trends Affecting Our Business Our operations are significantly impacted by the gross margins we receive on our fuel and merchandise sales. The fuel gross margins are commodity-based, change daily and are volatile.
The difference in the timing of the period ends is immaterial to the overall consolidated results. 33 Trends Affecting Our Business Our operations are significantly impacted by the gross margins we receive on our fuel and merchandise sales. The fuel gross margins are commodity-based, change daily and are volatile.
Segment Results Marketing Income before income taxes in the Marketing segment for 2022 increased $351.7 million, or 56.6%, from 2021 due primarily to higher all-in fuel margin, increased merchandise margins and was partially offset by higher store and other operating costs, selling, general and administrative costs, depreciation, and interest expense.
Segment Results Marketing Income before income taxes in the Marketing segment for 2023 decreased $139.1 million, or 14.3%, from 2022 due primarily to lower all-in fuel contribution, higher store and other operating costs, increased selling, general and administrative costs, and depreciation, partially offset by higher merchandise contribution.
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.
While we generally expect our volumes and gross margins to remain stable in a normalized environment, they can change rapidly due to many factors.
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. Total margins on a SSS basis for 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.
Merchandise unit margins were flat at 19.7% in both 2023 and 2022. On an SSS basis, total merchandise sales were up 2.7%, due to a 1.4% increase in non-tobacco sales and an increase of 3.5% in tobacco products.
We use sustaining capital in this business as needed to ensure reliability and continued performance of our stores. We also invest in our Corporate and other assets segment which is primarily technology related.
We use sustaining capital in this business as needed to ensure reliability and continued performance of our stores.
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.
As of December 31, 2023, we had no outstanding borrowings under the Revolving Facility and had $6.2 million in outstanding letters of credit (which reduces the amount available to borrow under the Revolving Facility).
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 for total payments of $29.9 million, compared to $1.04 per common share, or $27.3 million in 2021.
During 2023 there were net repayments of borrowings of $15.4 million compared to net repayments of $15.2 million in 2022. 41 Dividends The Company paid dividends of $1.55 per common share during 2023 for total payments of $33.4 million, compared to $1.27 per common share, or $29.9 million in 2022.
The Senior Notes and related guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness.
See also Note 9 "Long-Term Debt" in the accompanying consolidated financial statements for the three years ended December 31, 2023. 44 The Senior Notes and related guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the Credit Facilities) to the extent of the value of the assets securing such indebtedness.
For purposes of this Management’s Discussion and Analysis, references to “Murphy USA”, the “Company”, “we”, and “our” refer to Murphy USA Inc. and its subsidiaries on a consolidated basis. Management’s Discussion and Analysis is organized as follows: • Executive Overview— this section provides an overview of our business and the results of operations and financial condition for the periods presented.
For purposes of this Management’s Discussion and Analysis, references to “Murphy USA”, the “Company”, “we”, “our”, and "us" refer to Murphy USA Inc. and its subsidiaries on a consolidated basis.
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.
The increase in cash required by investing activities of $4.3 million compared to the previous year was primarily due to the increase in capital expenditures of $30.3 million, lower proceeds from the sale of assets of $6.4 million, and cash required for other investing activities which were higher by $1.0 million.
There can be no assurances, however, that we will generate sufficient cash from operations or be able to draw on the credit facilities, obtain commitments for our incremental facility and/or 33 obtain and draw upon other credit facilities. For additional information, see Significant Sources of Capital in the Capital Resources and Liquidity section.
To 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 sufficient cash from operations or be able to draw on the credit facilities, obtain commitments for our incremental facility, or obtain 34 and draw upon other credit facilities.
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 for 2021 the QuickChek results cover the period from January 29, 2021 (the date of acquisition) to December 31, 2021.
For 2022, the QuickChek results cover the period January 1, 2022 to December 30, 2022. For 2021, the QuickChek results cover the period January 29, 2021 (date of acquisition) to December 31, 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 offset by $2.0 million in higher interest expense and an increase of $2.5 million in other nonoperating expenses.
The $6.1 million increase from the previous year was mainly due to $13.7 million more in interest expense, $2.8 million less in gain on the sale of assets, and was partially offset by $4.2 million less in income tax benefits, a $3.9 million increase in investment income and a $2.2 million decrease in other nonoperating expenses.
(Millions of dollars) Total Less than 1 year 1-3 years 4-5 years More than 5 years Debt obligations 1 $ 1,827.6 $ 15.0 $ 27.4 $ 26.7 $ 1,758.5 Operating lease obligations 773.7 49.8 98.3 95.0 530.6 Purchase obligations 2 497.0 339.1 132.6 13.5 11.8 Asset retirement obligations 163.7 — — — 163.7 Other long-term obligations, including interest on long-term debt 544.0 83.7 164.7 151.0 144.6 Total $ 3,806.0 $ 487.6 $ 423.0 $ 286.2 $ 2,609.2 1 For additional information, see Note 10 “Long-Term Debt” in the accompanying audited consolidated financial statements. 2 Primarily includes ongoing new retail store construction in progress at December 31, 2022, commitments to purchase land, take-or-pay supply contracts and other services.
(Millions of dollars) Total Less than 1 year 1-3 years 4-5 years More than 5 years Debt obligations 1 $ 1,744.6 $ 15.0 $ 30.9 $ 698.7 $ 1,000.0 Operating lease obligations 794.3 53.1 104.1 101.3 535.8 Purchase obligations 2 664.5 354.7 292.2 9.4 8.2 Asset retirement obligations 164.2 — — — 164.2 Other long-term obligations, including interest on long-term debt 460.9 81.4 160.3 131.7 87.5 Total $ 3,828.5 $ 504.2 $ 587.5 $ 941.1 $ 1,795.7 1 For additional information, see Note 9 “Long-Term Debt” in the accompanying audited consolidated financial statements. 2 Primarily includes ongoing new retail store construction in progress at December 31, 2023, commitments to purchase land, take-or-pay supply contracts and other services.
As part of our capital allocation strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time. Share Repurchase program 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 dividend is payable on March 7, 2024, to shareholders of record as of February 26, 2024. Share Repurchase Program 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 difference in the timing of the period ends is immaterial to the overall consolidated results. 35 The tables below show the results for the Marketing segment for the three years ended December 31, 2022 along with certain key metrics for the segment.
The tables below show the results for the Marketing segment for the three years ended December 31, 2023, along with certain key metrics for the segment.
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 offset by lower debt issuance costs of $9.9 million.
The $468.2 million decrease in financing cash required was due to a decrease of $473.2 million in share repurchases, which was partially offset by an increase of $3.5 million in cash dividends paid, and an increase of $1.3 million in amounts related to share-based compensation.
Tax Matters We are subject 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.
Providing sensitivity analysis if other assumptions were used in performing the impairment evaluations is not practical due to the significant number of assumptions involved in the estimates. 46 Tax Matters We are subject 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.
See "—Debt" above for additional information concerning the Company's outstanding indebtedness, all of which is guaranteed as described below. See also Note 10 "Long Term Debt" in the accompanying consolidated financial statements for the three years ended December 31, 2022.
See "—Debt" above for additional information concerning the Company's outstanding indebtedness, all of which is guaranteed as described below.
This contribution improvement was due to higher retail fuel contribution, increased fuel volumes sold for 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.
This reduction was due to lower retail fuel contribution, combined with lower contribution from PS&W margin, and was partially offset by slightly higher fuel volumes sold for the year. Retail fuel margin on a cpg basis decreased 6.8% in 2023 to 27.6 cpg, compared to 29.6 cpg in the prior year.
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.
Cost of sales decreased $1.8 billion, or 8.7%, compared to 2022, due to the lower average cost of fuel, which decreased 11.1%, and was partially offset by the 1.1% increase in retail fuel volumes sold and a 4.8% increase in merchandise cost of goods sold.
The 2021 authorization expires December 31, 2026, unless utilized in full before such time. Purchases may be effected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management.
Purchases may be effected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management. Purchases will be made subject to available cash, market conditions and compliance with our financing arrangements at any time during the period of authorization.
In the event MOUSA itself were unable to service the Company's consolidated debt obligations, our business and financial condition would be materially adversely impacted. 44 Contractual Obligations The following table summarizes our aggregate contractual fixed and variable obligations as of December 31, 2022.
MOUSA. is our primary operating subsidiary and generated the vast majority of our revenues for the year ended December 31, 2023 and accounted for the vast majority of our total assets as of December 31, 2023. In the event MOUSA itself were unable to service the Company's consolidated debt obligations, our business and financial condition would be materially adversely impacted.
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.
The outstanding balance of the term loan was $390 million at December 31, 2023. The term loan is due January 2028, and we are required to make quarterly principal payments of $1 million, which began on July 1, 2021.
We expect to use the credit facilities to provide us with available financing to meet any short-term ongoing cash needs in excess of internally generated cash flows. To the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements.
At December 31, 2023, 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.
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 York that operate under the brand name of QuickChek ® .
We also have a mix of convenience stores and retail gasoline stores located in New Jersey and New York that operate under the brand name of QuickChek ® . At December 31, 2023, we had a total of 1,733 Company stores in 27 states, of which 1,577 were Murphy branded and 156 were QuickChek brand.
In 2021 these included transaction-specific costs to close the 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 formats and an additional month of QuickChek depreciation in 2022.
Depreciation and amortization expense in 2023 increased $8.3 million due primarily to the increased number of Murphy branded stores with larger formats.
For the current year, cash provided by 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, offset 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.
For the current year, operating cash required by changes in non-cash operating working capital of $42.1 million was due to an increase of $56.3 million in accounts receivable due to the timing of receipts, an increase of $22.1 million in inventories due to higher prices and volumes, a decrease of $12.0 million in accounts payable and accrued liabilities which was due to the timing of payments, and was partially offset by a decrease of $25.2 million in prepaid expenses and other current assets, of which $22.2 million was related to prepaid income taxes as well as an increase of $23.1 million in income taxes payable, due to the timing of payments.
This increase was due primarily to more stores with larger formats operating in the 2022 period and an additional month of depreciation for 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.
This increase was due primarily to more stores with larger formats operating in the 2023 period. 39 Selling, general and administrative expenses ("SG&A") increased $8.0 million in 2023 compared to 2022, primarily due to higher employee related and incentive expenses and expenses associated with professional and technology fees from business improvement initiatives, which were partially offset by lower charitable contributions in the current year.
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.
Our business model does not depend on our ability to generate revenues from RINs, and we have historically observed that changes in revenue are typically coupled with offsetting changes in cost of goods that minimizes the majority of any revenue movement. Revenue from the sales of RINs is included in “Other operating revenues” in the Consolidated Income Statements.
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 in total dollars was due primarily to employee related expenses, maintenance expenses, inventory shrink, and licenses and permits, and was partially offset by lower payment fees. Excluding credit card fees and rent on an APSM basis, store and other operating expenses at the retail level were 4.7% higher in 2023 compared to 2022 levels.
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. Seasonality Our business has inherent seasonality due to the concentration of our retail stores in certain geographic areas, as well as customer behaviors during different seasons.
We maintain a pipeline of desirable future store locations for development. The pace of this growth is continually monitored by our management, and these plans can be altered based on operating cash flows generated and the availability of debt facilities.

… 49 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−2 removed3 unchanged
Biggest changeInterest Rate Risk 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.
Biggest changeChanges in the fair value of these derivative contracts generally offset the changes in the value for an equivalent volume of these products. 48 Interest Rate Risk We have exposure to interest rate risks related to volatility of our floating rate term loan with a balance as of December 31, 2023, of $390.0 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.
Both of these loans are tied to SOFR 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.
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.
As described in Note 14 “Financial Instruments and Risk Management” in the accompanying audited consolidated financial statements, there were short-term commodity derivative contracts in place at December 31, 2023 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 Company. Changes in the fair value of these derivative contracts generally offset the changes in the value for an equivalent volume of these products.
A 10% increase or decrease in the respective benchmark price of the commodities underlying these derivative contracts would have been immaterial to the Company.
Removed
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 for $67.5 million of our outstanding term loan amount at December 31, 2022.
Removed
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.

Other MUSA 10-K year-over-year comparisons