Murphy USA Inc. earnings

Management highlights

- Rebranded PS&W plus RINS business to fuel supply and provided explanation. - Clarified April volumes are on an average per store month basis. - First quarter was strong, focus on building long-term shareholder value. - Everyday low price model brings customers in, non-nicotine sales up at Murphy stores with margin growth. - Working on improving QuickCheck stores in Northeast by simplifying menu, rationalizing assortment, evolving culture to sales-first mentality.

Guidance

- Didn't update 2026 guidance as there's too much volatility and unknowns early in the year. - Fuel supply results volatile month to month dependent on price direction, magnitude, and duration. - Focus on execution, react to market conditions daily, retail margins expected in certain ranges depending on market volatility.

Segment performance

The firm rebranded the PS&W plus RINS business as fuel supply. Fuel supply results were high in the first quarter. Core business had certain performance, with non-nicotine sales up 2% with margins up over 4% at Murphy stores. Details on fuel margin and related impacts from price changes were discussed, but specific absolute revenue figures and contribution percentages weren't provided in detailed tabular form.

Analyst Q&A

• Q: What circumstances would have to occur for the balance of the year not to exceed 2026 guidance?

  A: A lot would have to happen given the first quarter momentum, but with too much volatility and unknowns early, hard to predict, but will react to market conditions daily.

• Q: How to think about evolution of fuel margin?

  A: Fuel supply results high in Q1, core business has certain margin, depends on price direction; if prices increase, positive inventory valuations in fuel supply, if decline, opposite, but retail margins may expand with volume potential.

• Q: Outlook for consumer?

  A: Everyday low price model brings customers, relatively little pressure on non-discretionary categories; seeing new and last customers, non-nicotine sales up, but some discretionary category decisions changing.

• Q: Relative pricing advantages as fuel prices migrate higher?

  A: In lower price environment, put $0.02 a gallon on street in certain areas, in higher price environment, less aggressive but still price where needed to hold volume.

• Q: Capital allocation priorities?

  A: First priority building 45 - 55 sites, then rateable share repurchases, may procure supplies for new stores, deleveraging not high priority now.

• Q: Geopolitical and supply market impact?

  A: Market moving closer to balance, but supply replenishment slowing, some tightness expected, investment bank increased WTI forecast helping.

• Q: QuickCheck store progress?

  A: Drag in Northeast due to QSR pressures, focusing on core items, simplifying menu, evolving culture to sales-first mentality, early stages of change.

• Q: Gallon performance and consumer trade down?

  A: Volume uplift from higher prices takes time, April volumes flat year over year, loyalty signups up, price sensitive customers one factor, market dynamics in different regions impact volume.

• Q: Store operating expense?

  A: Well controlled in Q1, benefits from store labor model changes, different approach to maintenance, new stores will affect OpEx growth.

• Q: New environment impact on strategy?

  A: Overall strategy remains, continue everyday low price, accelerate continuous improvement, push innovation agenda.

• Q: Nicotine category durability?

  A: Promotional activity favorable, strong performance, growing share, customers still figuring out preferences, manufacturers investing in trial, likely to continue growth.

• Q: Retention of incremental customers?

  A: Loyalty initiatives key, new member counts up, active members up, digital programs sophisticated, everyday low price resonates.

• Q: Murphy store model evolution?

  A: Part of innovation agenda to evaluate new formats, think about next layer of products/services, model needs to evolve, but early days of testing.

• Q: Structural pressure on fuel margins?

  A: Marginal retailer becomes more on margin when prices high, competitive entry and cost to serve issues play in, fuel supply results can have large swings.

• Q: Trends by month in quarter?

  A: Started strong, March different, fuel margin exploded in March, loyalty signups key leading indicator, fuel volume will come with time.

• Q: PS&W business change driver?

  A: Variability in price environment, magnitude and direction of price movements magnified in March, April not as dramatic so results not as strong as March.