Murphy USA Inc.

over the financial results and our 2025 guidance. And then following some closing comments from Andrew, we will open the call up to Q&A. Please keep in mind that some of the comments made during this call, including the Q&A portion, will be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. As such, no assurances can be given that these events will occur or that the projections will be attained. A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, please see the latest MurphyUSA forms 10-K, 10-Q, 8-K, and other recent SEC filings. MurphyUSA takes no duty to publicly update or revise any forward-looking statements. During today's call, we may also provide certain performance measures that do not conform to generally accepted accounting principles or GAAP. We have provided schedules to reconcile these non-GAAP measures with the reported results on a GAAP basis as part of our earnings press release, which can be found in the investor section of our website. With that, I'll turn the call over to Andrew. Thank you, Christian.

Good morning, everyone. I'm very pleased with Merck USA's performance in both the fourth quarter and the full year 2024. The business delivered just over $1 billion of EBITDA in 2024, demonstrating the sustainability of the earnings potential of the business. We plan to grow the base of sustainable earnings in the years to come as we accelerate our new store program, remain laser-focused on improving store performance across the network, and relentlessly challenging ourselves to innovate and better serve our customers. Against that backdrop, overall, 2024 was a disappointing year for a number of reasons. The year got off to a slow start as rising prices and severe weather hindered transactions across most of the Moosa network. Continued pressure on food inflation in conjunction with QSR value wars pressured quick check markets. Further, a well-supplied product market with low volatility and minimal logistics challenges impacted the PS&W side of our business, leading us to lower than expected all-in margins in 2024. And although we finished the year with more new stores than the prior year, we under-delivered against our internal schedule targets, which also impacted fuel gallons and merchandise sales due to fewer store months in operation. Consequently, those collective misses translated into lower incentive-related G&A because we fell short of some of our own performance goals. That being said, there were a lot of bright spots too. The Murphy branded network delivered impressive results growing per store merchandise sales and margin dollars by 3.5% and 5.9% respectively for the full year 2024, with great momentum in the fourth quarter across center store categories, which delivered total non-nicotine margin growth of 7.2% versus the fourth quarter of 2023, reflecting the impact of the key initiatives we have spoken to before. Importantly, looking at fuels performance for the full year, while the supply-demand balance and other factors impacting PS&W were less favorable, retail margins were up 50 basis points to 28.1 cents per gallon, reflecting structural industry pressures on the marginal player. Perhaps more importantly, This improvement in retail margins occurred despite conditions that historically have been less favorable to retail margin capture, reflecting a more compressed price environment and lower volatility within that environment. Taken together, the fundamental thesis that MurphyUSA remains an advantage and growing player in an industry with a long-term track record of demand stability not only remains intact, but looks even more favorable from where we are sitting. The runway remains long for continued margin growth over time, high return organic growth investments are accelerating, and our core business performance is supported with value creating initiatives. These persistent and powerful drivers strongly support our balanced capital allocation levers of store growth and share repurchase, which has delivered significant returns to investors since our 2013 spin. I'm going to turn it over to Gallagher to discuss our 2025 guidance in the context of the quarterly and full year performance. Gallagher.

Hello everyone and thank you, Andrew. Let me start off by reviewing 2024 performance results and highlights in combination with the elements of our 2025 guidance. Starting with new store growth. We completed 32 new to industry stores in 2024 in line with our guided range of 30 to 35 new stores. Since year end, we have opened four additional stores with 17 stores currently under construction. giving us a great head start on our 2025 build program. As we have discussed, we expect to increase new store openings this year, targeting up to 50 new stores in 2025, and our pipeline sets us up well for continued delivery in 2026 and beyond. We also completed 47 raise and rebuild projects last year. While our construction schedule allowed for a higher pace raise and rebuild activity in 2024, we're taking a more measured approach in 2025, planning for no more than 30 projects to ensure we're supporting new store development. Our primary focus remains adding more highly productive 2,800 square foot stores to the network as part of our long-term goal of adding around 500 new stores over the next decade. Turning to fuel volume, average 2024 fuel volumes of 240.6,000 gallons per store month came in closer to the low end of our guidance of 240 to 245,000 gallons. Full year volumes were pushed a bit lower by softness in Q4 volumes, which were down 2.4% on an average per store month basis. While October volumes were flat to prior year, as we mentioned in our third quarter call, a flat to rising price profile in November and December limited our ability to deploy pricing and capture share. Additionally, year-end volumes were softer than expected, with weather events across the South in late December and the Christmas and New Year's holidays falling on a Wednesday in 2024 versus Friday in the prior year. Going forward, we expect total per-store fuel volumes to remain relatively flat, with the opportunity for high-performing new-store gallons to more than offset legacy declines in our older, smaller format stores. As such, average per store month fuel volumes are expected to remain within a range of 240,000 to 245,000 gallons. In 2025, we expect to sell just over 5 billion gallons of fuel in total, up 4.5% from 2024. Keep in mind, though, per store fuel volumes only tell part of the story. We're adding more new stores in 2025 as prior build classes ramp up to maturity coupled with more productive raise and rebuilds from prior years. Our share of market continues to grow. Interestingly, when compared to the 4 billion total gallons Murphy USA sold in 2014, our first full year as a public company, Murphy USA experienced total volume growth of nearly a billion gallons, or 21% through 2024. QuickCheck accounts for a portion of that, but Murphy-only fuel volumes have grown over 500 million gallons in the past decade. That is more than double the 6.5% total volume growth seen in the states we operate, according to the Federal Highway Administration. So that means we're taking share in a large and growing market and building highly productive assets in the right areas to capture that growth. We remain very excited about the future potential of our business as our strategy and execution puts us in a strong position to compete and win in this growing industry. Moving to merchandise contribution dollars. We generated $834 million in merchandising contribution dollars in 2024, up 3.8% versus 2023, with notable acceleration and improvement in fourth quarter results. Fourth quarter merchandising margin $209 million was up $11 million versus the prior year, the largest absolute year-over-year increase during 2024, driven by strength in both nicotine and non-nicotine margin contribution, which grew 6.1% and 4.4% respectively. For the full year 2024, merchandising contribution growth was slower than we originally projected due to some trends that are likely to continue into 2025. We expect a challenging customer environment and value menu competition to continue pressuring QuickCheck markets and their food-led offer. We relaunched QuickCheck rewards in the fourth quarter and are seeing strong early results, but expect the QuickCheck business to deliver slightly lower year-over-year contribution dollars. However, our merchandising customer remains strong at MurphyUSA, driven by our core inside categories, resulting in 6.7% total contribution dollar growth in 2024. We expect that strength to continue at Murphy Source in 2025 and are forecasting around 6% total contribution dollar growth. Taken together, in 2025, we're forecasting a range of $855 million to $875 million, or nearly 4% growth at the midpoint, in line with the rate of growth we saw in 2024. Moving to OPEX. In 2024, operating expenses per store month were up 5.2% toward the low end of our guided range of 35K to 36K. Nearly half of this total increase was driven by new and larger stores that opened in 2024. Our operations team continues to drive efficiencies across labor, which was up only 3.9% per store. Our labor expense was driven by larger format stores, targeted wage investments, and rising minimum wage requirements in several states. Looking to 2025, Nearly half of our projected per-store OPEX increase is again a direct outcome of our decision to build larger format stores, which are more costly to run than the network average, but most importantly, they also contribute more merchandise dollars. However, do keep in mind that when new stores are put into service, operating expense is running very close to the target maturity rate, while merchandise dollars take about three years to reach maturity. Thus, in the early years of accelerating new stores, you will see OPEX growing a little bit more than merchandising contribution. until the stores reach maturity, at which point the coverage ratio turns positive in our new larger format stores. Given these factors, our 2025 store operating expense guidance range represents a 4% to 6% increase, or an average per store metric of $36,500 per month to $37,000 per month. Now moving to corporate cost. SG&A expense was $235 million in 2024, down 2.1% versus 2023. and below our adjusted guidance range of $240 million to $250 million. These 2024 results were driven by tightly managing home office expenses, a reduction in professional fees as some major initiative investments wound down, and lower incentive-based compensation, which Andrew mentioned earlier, a component we would expect to return to normal in 2025. Remember, most of the expenses associated with larger-scale transformative projects such as digital transformation and QuickCheck rewards were incurred in 2023 and 2024. In 2025, we will continue making technology and capability investments to enhance our performance, while driving additional leverage and efficiency from our teams. As such, we're forecasting a range of $245 million to $255 million in SG&A, ensuring we deliver incremental value to investors as we ramp up our store growth. Finally, to capital spending. Total capital spending in 2024 came in at just over $500 million. Above our original guided range of $400 to $450 million, but within our revised range of 500 to 525 million provided on a third quarter call. Importantly, all of this increase is attributed to a purposeful acceleration of new store growth, allowing us to get a head start on 2025 construction activity. Our 2025 program will look similar in terms of total capital allocated for growth, resulting in a guided range of 450 million to 500 million. Importantly, this capital spend will deliver more new stores and more EBITDA growth in both 2025 and 2026 as in-service stores progress along their three-year ramp curve. The new store pipeline remains in good shape. We're making steady progress toward achieving a sustainable run rate of around 50 new stores each year, which at maturity should deliver roughly 40 to 45 million of incremental EBITDA annually. Now, before I turn it back to Andrew, and as mentioned in the earnings release, we continued our balanced capital allocation strategy and repurchased approximately 240,000 shares in Q4, and 938,000 shares for the full year of 2024 for a total of $446.6 million, resulting in a cash and cash equivalence balance of $47 million at the year end. The power and impact of our share repurchase decisions are reflected in our year end share count of around 20 million shares, meaning we have bought back nearly 60% of our shares outstanding since our spend. The exact amount of shares we purchase in any given year will depend on a number of factors, one of the most important of which is the share price. Given our free cash flow generation, we intend to continue executing a balanced capital allocation strategy, which result in meaningful EPS accretion in both the year of repurchase and preserving that benefit in all future years. As we grow net income, the accretion impact will be compounded going forward, underscoring our strong commitment to ongoing shareholder value creation. And with that, I turn it back over to Andrew.