MUSA Annual Shareholder Meeting Andrew Clyde - CEO May 2018 Murphy USA Inc. 1
Cautionary Statement This presentation contains forward-looking statements. These statements, which express management’s current views concerning future events or results, are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include, but are not limited to, the volatility and level of crude oil and gasoline prices, the pace and success of our expansion plan, our relationship with Walmart, political and regulatory uncertainty, uncontrollable natural hazards, and adverse market conditions or tax consequences, among other things. For further discussion of risk factors, see “Risk Factors” in the Murphy USA registration statement on our latest form 10-K. Murphy USA undertakes no duty to publicly update or revise any forward-looking statements. The Murphy USA financial information in this presentation is derived from the audited and unaudited consolidated financial statements of Murphy USA, Inc. from the years ended December 31, 2013 through 2017. Please reference our most recent 10-K, 10-Q, and 8-K filings for the latest information. If this presentation contains non-GAAP financial measures, we have provided a reconciliation of such non- GAAP financial measures to the most directly comparable measures prepared in accordance with U.S. GAAP in the Appendix to this presentation. Christian Pikul, CFA Senior Director, Investor Relations Office: 870-875-7683 Christian.pikul@murphyusa.com Murphy USA Inc. 2
The convenience store industry and players continue to evolve Customer Customer Customer Customer • New Strategy • • • • Implementation Acquisition Acceptance Retention Attrition Objectives • Product Proof of Product Product • Product • • • Introduction Extinction Concept Expansion Competition • The Pantry • Buc- ee’s • QuikTrip • 7-Eleven • Amazon Go Notable Firms • Getty • Walmart Wawa EZ Mart • • • Filld, WeFuel Neighborhood Markets Murphy USA Inc. 3
Retail format evolution occurs in a predictable manner Conceptual Framework of Retail Format Evolution • Firms with the same format compete 1. / 5. EQUILIBRIUM 4. 2. EMERGENCE CONSOLIDATION • New format moves up market • A new format emerges • New-format players compete among • Concentrates first on the most themselves switchable customers 3. • New format dominates EXPANSION • New format enjoys extraordinary profits • Others seek to imitate and/or expand to new markets Murphy USA Inc. 4
Winners and losers by format emerge Murphy USA QuikTrip Hypermarkets Big-Box C-Stores Supermarkets and mass Large stores with Walmart Sheetz merchants with comprehensive offerings small-box forecourts including food offer Kroger Wawa Strength: Low fuel prices Strength: Destination and integrated loyalty Safeway Speedway for merchandise offer programs/ promotions tied supported by low fuel prices to in-store purchases Costco Casey’s 784 C-Stores Susser (Stripes) CST The Pantry Sunoco EG GPM Couche-Tard 7-Eleven (Circle K) Empire Consolidation Model Stand-alone Franchises with distinctive C-store brand and capabilities public peer Strength: Store uplift from franchise and scale advantages that support acquisition premiums Murphy USA Inc. 5
MUSA has transitioned to the maturity phase since spin 1996 2007 1999 2018 • First stores in • Rapid Growth • Operating • Portfolio/G&A • Acquire Capabilities front of of >100 stores discipline rationalization for new format entry? Walmart per year • Format • Margin • Expand into Focus • Positioned as • Expansion evolution maximization Adjacencies? low-cost fuels strategy • Contribution • Cash • Harvest Terminal retailer • Kiosk optimization generation Value? evolution • Customer loyalty • Pilot • Unit • EBITDA per • Total • M&A Accretion Economics Growth Store Shareholder Potential Metrics • Market • Volume • NTI ROIC Return • Free Cash Launch per Store • EPS growth • ROACE Flow Dividend Murphy USA Inc. 6
Investor sentiment has shifted accordingly Percent of Outstanding MUSA Shares Owned by Investor Type 12/31/2013 12/31/2017 6% GARP 14% Growth 14% Value Blend 14% 48% 54% 32% 18% Investor Praise Investor Concerns • Consistent Strategy for Long-term • Competitive Impact on Fuel Volume / Value Creation with Tangible Proof Merch Traffic Points • Margin Volatility and Stability of PS&W • Disciplined Capital Allocation + RINs Contribution • Credible Management Team • Future Value Estimation? How to Maximize Terminal Value? Murphy USA Inc. 7
Lifecycle stage informs capital allocation decisions MUSA Capital Allocation Focus Growth Earnings Growth Shareholder Distributions • Quality versus quantity of • Organic growth through • Competition for capital stores important to new stores balances growth and investors repurchase opportunities • Improvements to the core • Returns drive capital business: • Volatility makes allocation commitment to meaningful – Lower cost structure dividend difficult at this – Margin optimization • Internal investments in stage of lifecycle productivity can generate • Scaling corporate costs to strong returns given the • Internal efficiency leverage growth capital force multiplier of a large improvements will drive • Share repurchase network greater future shareholder leverages EPS potential distribution potential Capital Allocation Murphy USA Inc. 8
Mature firms must continue to reinvest in their assets Raze and Rebuild Program • 32 sites completed through 2017 with goal of up to 25 stores in 2018 • Kiosks replaced with 1,200 sq ft stores along with more dispensers and increased fuel offer • Given the premium locations, we estimate per site unlevered IRR’s between 15% and 35% APSM Fuel Gallons * Baseline (Prior FY) 403,184 +10% After 6 months 443,338 APSM Merchandise Sales $ * Baseline (Prior FY) $159,350 +18% After 6 months $188,011 * 2016 & 2017 Raze & Rebuild Class Average Murphy USA Inc. 9
And innovate to grow customers Murphy Drive Rewards is a customer appreciation program that: - Engages and motivates current customers - Attracts new customers - Incentivizes all customers to buy more fuel and more merchandise Murphy USA Inc. 10
While remaining disciplined with capital allocation Capital Allocation ($MM) Capital Allocation 2014 - 2017 2014 - 2017 $1,722 Retail Growth Capital $587 $829 39% $480 $464 48% $323 $206 $248 $191 $893 $52 8% $274 $264 Share 5% $216 Retail Repurchases $139 Corporate Maintenance Capital Capital 2014 2015 2016 2017 4-Year Total Share Repurchases Capital Expenditures Murphy USA Inc. 11
MUSA has become distinctive for increasing its productivity MUSA Value Creation Drivers 2016 Proof Point 2017 Proof Point 5% unit growth 3% unit growth Organic • 67 new sites; 10 R&R • 45 new sites; 21 R&R • 300 refresh; 180 super • 300 refresh; 244 super Growth coolers coolers * 5% contribution $ growth 4.7% contribution $ growth • +1.7% volume growth • -1.3% volume growth Fuel • 15.4 cpg total margin • 16.4 cpg total margin Contribution • 3.8 cpg from PS&W/RINs • 2.4 cpg from PS&W/RINs + Reduced to 1.3 cpg from 2.3 Reduced to 1.2 cpg from 1.3 • +120 bps merchandise • +50 bps merchandise Fuel EPS Growth • +11.2% merch contrib $ • +4.7% merch contrib $ Breakeven • -4.1% site opex* APSM • -2.6% site opex* APSM - SG&A per store down 10% SG&A per store up 3% • $6.6 million decline in • $8.5 million increase in Corporate total SG&A total SG&A** Costs • Tax-efficient non-core • Investing in people and asset sale capabilities / Repurchased 4.9M shares Repurchased 3.0M shares Shares • $323 million of capital • $206 million of capital • 11% of shares outstanding • 8% of shares outstanding Outstanding *Site Opex excludes credit card fees **SG&A per-store excludes stock-based compensation; 2017 proof points exclude $10mm charitable contribution Murphy USA Inc. 12
The business is resilient, but not immune, to headwinds Tobacco Non-Tobacco • Managing decline curve • Managing decline curve in cigarettes in CSD’s • Taxes accelerating • Consumer spending decline in volumes Refined Products & RINs Labor Costs Tax Reform • Product flow patterns • FLSA • Beneficiary of tax shift across value chain reform (25% v 38%) • Minimum Wage • Regulatory and political Increases • Higher FCF to deploy uncertainty with RFS • Lower unemployment • Industry unlikely to rate compete away benefits • Wage inflation Murphy USA Inc. 13
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