Murphy USA Inc. (MUSA) Earnings

Management highlights

- Overall Business Resilience * Management reports Q2 2026 performance demonstrates the resilience of Murphy USA's business model, with fuel highlighting the strength of the company's competitive supply advantages, and merchandise growing total contribution dollars despite ongoing category-level pressures. * The company is positioned to generate long-term value for both customers and shareholders. - Loyalty Program Performance * Monthly new loyalty program signups remain above 600,000 per month, up from a baseline of ~400,000 per month prior to recent fuel price volatility. * 46% of new loyalty signups are new or lapsed customers, up from 40% in the prior quarter. * Targeted onboarding promotions (such as "spend $5 inside, save 5 cents on gas") are successfully driving pump-to-store conversion, and the company is continuing to upgrade and refine the loyalty platform to improve customer retention and engagement. - Fuel Volume Dynamics * Q2 2026 same-store fuel volumes finished positive 0.5% year-over-year, with performance aligned with historical patterns: volumes are softer when wholesale prices are rising (as competitors raise prices quickly, compressing spreads) and stronger when wholesale prices are falling (as competitors adjust prices at different speeds, allowing Murphy USA to capture incremental volume through price separation). * Early August 2026 volumes are up 1.5% year-over-date amid falling wholesale prices, with margins in the high 30s cent range. - Supply Chain Advantage * Murphy USA's direct refinery sourcing and terminal access network creates a larger advantage during periods of fuel supply scarcity than when product is plentiful. In Q2 2026, the company's controllable supply advantage delivered over 7 cents per gallon, up from only ~2.5 cents per gallon in the year-ago quarter when product was widely abundant. - Competitive Dynamics * Competitive entry has pressured volumes in core markets Colorado and Florida, but margins in both markets have improved sequentially, showing early signs of stabilization after initial competitive entry. * Mature competitive markets like Texas have seen volume stabilize at new equilibrium levels with higher margins than before new competitors entered, and the company continues to gain share overall through new store openings. - QuickCheck Turnaround * QuickCheck performance is stabilizing, with food and beverage sales and margins turning positive. Growth in the sandwich, bakery, and coffee categories, plus a shift to a sales-focused culture similar to core Murphy USA stores, has driven improved promotional execution. The business is not yet at target performance levels but is moving in the right direction with the right leadership in place.

Guidance

- Fuel margin guidance for the second half of 2026 is set at a conservative 35 cents per gallon, reflecting management's view that market volatility and macro uncertainty justify conservative forecasting, even as the company sees a rising floor for retail fuel margins driven by rational competitor pricing. - Full-year 2026 merchandise guidance is maintained at the low end of the original projected range. The original full-year merch target was a stretch goal, and first quarter winter storms that closed roughly half of the company's network for a period, combined with ongoing consumer budget pressures, led management to anchor guidance at the low end of the range. - Full-year 2026 same-store fuel volume guidance is maintained at a range of a 1% to 3% year-over-year decline, which is a conservative outlook. Management did not bake any prolonged falling wholesale prices (which would drive stronger volume and margin performance) into the forecast, and results would likely outperform this range if sustained price declines occur in the second half. - 2026 new store (NTI) opening guidance is tracking to the lower end of the prior range at approximately 45 new organic stores, as no tuck-in acquisitions are currently included in the base forecast (acquisitions could still push full-year openings higher). The company has pulled forward construction of stores originally scheduled for 2027 opening. - Capital expenditure guidance for 2026 is trending to the high end of the prior projected range, driven by increased proactive lifecycle investments in existing store assets (dispensers, HVAC units, safes), and continued investment in the company's future growth land bank. - Management expects the structural upward shift in fuel margin floors to be sustainable beyond 2026, as the marginal retailer's rising costs push industry equilibrium breakeven levels higher, creating a sustained virtuous cycle for margins.

Segment performance

The provided transcript does not include specific absolute financial results or revenue contribution percentage data for Murphy USA's product segments. It only mentions high-level performance trends: fuel margins saw a strong contribution from the company's supply advantages, merchandise grew total contribution dollars and delivered positive margin growth despite consumer budget pressures, nicotine products (including pouches and value-priced cigarettes) remained a growth tailwind, non-nicotine merchandise saw core category strength offset by challenges in lottery and beer, and QuickCheck (Murphy USA's convenience concept) is stabilizing with improving food and beverage sales and margins.

Risks & headwinds

- Heightened macro and geopolitical volatility created ongoing uncertainty around fuel market supply and pricing, making future performance difficult to predict with precision. A sustained geopolitical crisis has created global fuel supply shocks, depleted inventories, and disrupted shipping and infrastructure, with no clarity on how quickly markets would normalize even if geopolitical tensions de-escalate. - Consumers continue to face ongoing budget pressures that weigh on non-discretionary merchandise sales, as well as discretionary categories like lottery. - Competitive entry in key markets can create near-term volume and margin pressure, even if margins stabilize at higher levels over time, and new competitive entry can emerge in any market at any time. - New nicotine product category dynamics and promotional intensity create near-term margin and comparable earnings pressure, such as the tough 2025 Q3 promotional lap that will pressure 2026 Q3 results. - QuickCheck's turnaround is still in progress, and the business has not yet reached target performance levels.

Analyst Q&A

• Q: Irene Nettel (RBC) asked for more context on 2026 full-year guidance, specifically why fuel margin guidance is conservative and why merchandise guidance is anchored at the low end of the range. /

  A: Management noted fuel margin guidance is intentionally conservative due to high macro and geopolitical volatility, and the forecast does not assume the pronounced price decline that would boost Murphy USA's volume and margins. Competitor pricing remains rational, and the floor for retail margins is higher than in past cycles, so the conservative guidance sets up the potential for outperformance. For merchandise, the original 2026 target was already a stretch goal, and first quarter winter storm closures, combined with ongoing consumer budget pressures, led management to guide toward the low end of the range, though full-year results are still expected to hit the guided range.

• Q: Puran Sharma (Stevens) asked how long supply tightness and volatility would persist even if the ongoing geopolitical conflict resolves, given depleted inventories and damaged infrastructure. /

  A: Management stated the current conflict has created a material global supply shock that is very different from past volatility, with meaningful impacts on global inventories and supply chains. Even if the conflict resolves soon, rebuilding damaged infrastructure and restocking depleted inventories will take a prolonged period of time, and management does not expect supply to normalize until well into 2027.

• Q: Bonnie Herzog (Goldman Sachs) asked why 2026 NTI (new store) openings are tracking to 45 (the low end of guidance), what changed from original guidance, and whether pulling forward 2027 stores means faster NTI growth in 2027. /

  A: Management confirmed the lower organic NTI guidance only reflects that the original high-end guidance included potential tuck-in acquisitions, which have not yet closed and are not included in the current base forecast. Large-scale M&A is not a near-term priority, as the company's organic new store pipeline is already robust. Pulling forward construction of 2027 stores will not change the expected long-term growth pace, and new stores will still take approximately three years to reach full run-rate profitability as expected.

• Q: Jacob Iken Phillips (Mellius Research) asked why capital expenditure is rising even though NTI openings are lower, and how this impacts planned share repurchases. /

  A: Management explained the higher CapEx reflects three priorities: pulling forward construction of planned future NTI stores, proactive lifecycle replacement of end-of-life assets in existing stores (instead of repeated repairs), and continued investment in the company's land bank for future growth. The company's capital allocation strategy has not changed: it generates enough cash flow to fund planned organic growth, future NTI expansion, and maintain disciplined share repurchases at the same time, and share repurchase remains a core capital allocation lever.