Murphy USA Inc. Q4 FY2024 earnings call

• 2024 had a slow start with rising prices and severe weather affecting transactions, pressure on food inflation impacting QuickCheck Markets, and well - supplied product market affecting PS&W margins. But Murphy branded network had strong results, fuel retail margins improved. - 2025 plans include targeting up to 50 new stores, forecasting merchandise contribution growth, having a store operating expense increase due to larger format stores, managing SG&A expense with technology and capability investments, and maintaining a balanced capital allocation with share repurchases.

In 2024, Murphy USA delivered just over $1 billion of EBITDA. The Murphy branded network had impressive results, with full-year per store merchandise sales growing 3.5% and margin dollars 5.9%. Fourth - quarter total non - nicotine margin growth was 7.2% versus the fourth quarter of 2023. For the full year, retail margins for fuel were up 50 basis points to $0.281 per gallon. Merchandise contribution dollars in 2024 were $834 million, up 3.8% versus 2023. Operating expenses per store month in 2024 were up 5.2%, toward the low end of the guided range of $35K to $36K. SG&A expense in 2024 was $235 million, down 2.1% versus 2023. Total capital spending in 2024 came in at just over $500 million. In 2025, merchandise contribution is forecasted to be in the range of $855 million to $875 million, nearly 4% growth at the midpoint. The 2025 store operating expense guidance range represents a 4% to 6% increase, from $36.5 thousand per month to $37 thousand per month. SG&A expense in 2025 is forecasted to be in the range of $245 million to $255 million. Capital spending in 2025 is guided to be in the range of $450 million to $500 million.

• 2025 EBITDA is expected to be $1 billion to $1.12 billion with an all - in margin range of 30.5 to 32.5 cents per gallon. - Targets up to 50 new stores in 2025. - Forecasts around 6% total merchandise contribution dollar growth at Murphy stores in 2025, with merchandise contribution in 2025 ranging from $855 million to $875 million. - Store operating expense guidance range for 2025 is a 4% to 6% increase. - SG&A expense in 2025 is forecasted to be in the range of $245 million to $255 million. - Capital spending in 2025 is guided to be in the range of $450 million to $500 million.

• Weather events can disrupt store operations and performance. - Headwinds at QuickCheck stores. - Three - year ramp to maturity of new stores impacts earnings. - Fuel market supply - demand balance and price volatility can affect margins.

Q: What drove the non - nicotine category to flip positive in the quarter?

A: The Murphy stores performed very well with double - digit growth in a number of categories like package beverage, candy, beer sales, and salty snacks. QC also performed well in Q4 but not as per expectations.

Q: On the buyback, how do you think about the buyback versus the balance sheet in an environment where fuel margin could be volatile?

A: We're committed to the 50/50 balanced capital allocation approach. Our leverage rate is well below two times. The business is built to win in all cycles, and we can win even if there are margin fluctuations as we focus on making the business better.

Q: Could you talk about the CapEx coming in lower both this year and next?

A: When we guided the range, there was uncertainty in the opening schedules for our stores. The $500 to $525 million for 2024 was assuming we could deliver our full potential of stores in December, but some slipped into 2025. We're relatively flat with around $500 million in 2024 and planning $500 million in 2025, with a switch from more raise and rebuilds in 2024 to more new store openings and organic growth in 2025.

Q: What kind of discussions are you having with your vendors around promotional support in 2025?

A: Vendors value Murphy USA and QuickCheck for the high volumes per store we generate. We have initiatives around contract management from digital transformation that have brought benefits. We work with vendors to drive mutual business forward in a positive way.

Q: Could you talk about your expectations for the performance of some of the new stores?

A: The 2022 and 2023 class new - to - industry stores are high - performing. We're disappointed in not hitting store month expectations in prior years, but we're pleased with their performance and have an attractive pipeline.

Q: Is there anything with SG&A in particular where you think that there's further efficiency opportunity?

A: There is, and it's built into our year - over - year plan as part of initiatives to make the business better, including retiring systems to get efficiency benefits.

Q: Can you walk us through the build in a little more detail for contribution guidance?

A: There are headwinds at QuickCheck side, and raise and rebuilds from last year. Also, the NTI number is affected by not hitting store months expected in prior years. We're intent on improving existing network store performance with initiatives like the fuel dispenser health proof of concept.