Murphy USA Inc. — Call Transcript 2026

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA fourth quarter 2025 earnings Q&A call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Christian Pikul. Please go ahead. Hey, thanks, Carly. Good morning, everybody. Thanks for participating in our first Q&A-only session covering fourth quarter and full year 2025 results. I would remind everybody to refer to the forward-looking statements commentary we included in our prepared remarks yesterday, which I hope you all took the opportunity to listen to or read. With me this morning are Mindy West, President and Chief Executive Officer; Donnie Smith, Chief Accounting Officer and Interim Chief Financial Officer; and Ash Aulds, Director of Investor Relations and FP&A. Before I give the call back to Carly, I do wanna remind everybody, in keeping with our prior protocol, please limit your activity to one question and one follow-up question initially, and then, please go ahead and get back in the queue if you wish to ask additional questions, time permitting. Carly, you can go ahead and open us up for questions. Thank you. At this time, I would like to remind everyone to ask a question, press star and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Bobby Griffin with Raymond James. Good morning, buddy. Thanks for taking my questions. To the team, thanks for some of the additional information following the release. I guess, Mindy, yeah, and I like the new format, getting that out there, after, after the press release. I guess, I guess my first question is more on the competitive comments that you, you put in the prepared remarks. Just curious if you can kinda conceptualize where the competitive kinda pressure is versus, you know, 6, 8 months ago. Is it getting worse or getting better? And then, I guess more importantly, after you see that initial competitive response of, of new entrants, how long does it take the store that's impacted to kinda come back to what you'd say are, are, you know, company-wide trends or, or company-wide averages? Right. That's a great question, Bobby. Our same-store gallons in particular are impacted by those factors, of competitive intrusion. And really, the pressures vary market by market. So, for instance, in 2025, some of our stores had average per-store-month volumes that were actually higher. We saw that in nine states that we operate in. Margins were higher in 10 states. But those markets are in different stages of competitive intrusion and pricing behaviors. When we look at Texas, it had both higher margins, higher volumes. Colorado and Florida, though, had lower volumes and lower margins. But those states, over time, are gonna look more like Texas as they mature and stabilize in those new competitor entrants. Their share and then ultimately raise prices because they have to make a return on their sites too. So our new stores also take share from others, and they're outperforming the network. But same-store remains under pressure, so we have to invest an extra penny or so in order to maintain volumes. So typically, when a new entrant enters a market, they do exactly what we do. They price very low at the outset while they try to gain their share from the other competitors that are already entrenched in the market. And that could take three months. It could take six months. It could take a year. And then it depends on how many stores that particular market entrant wants to build and that and what density do they wanna build in that market as to how long it's gonna last. But ultimately, everything goes back to normal, and margins rise, and we are able to increase our margins as well. In a way, we actually like competition because while it creates disruption when it's happening, as that market matures and stabilizes and the winners have acquired their share of customers, then the higher margins ultimately follow. We're disciplined in when and where we build and continuously upgrade, so we're gonna be there for the long term, and we're gonna be a winner also. Okay. That's helpful. And I guess secondly, for me, and I'll turn it back over, the comment there about the step-up or the acceleration in the maintenance capital spending I found interesting, and more so in just, like, the fact about it limiting disruptions. So, can you put any more details around how big of a drag those, call it, disruptions have been, or is more this step-up just kinda getting ahead of what could have been a drag and just kinda trying to see if, you know, we've been, you know, there's been an EBITDA impact that actually will start to go away after you do this maintenance capital step-up? Sure. What I would say is it's more the latter. It's more of a getting ahead of things before it happens. We have been entirely within a break-fix mode for our history. That means that maintenance comes in lumps. It's difficult to predict. And as our fleet ages, we found the need to go ahead and proactively invest in equipment that is end-of-life or near end-of-life because that does two things. It results in maintenance expense that we can predict. It also enhances uptime with that equipment, so enhances the customer experience and therefore their loyalty to us. So the kinds of things that we're talking about doing as a step-up in proactively replacing some dispensers, HVAC units, safes, things like that, which are gonna cost us a little bit in capital from the beginning but will improve it in uptime and store performance over time. And we think the projected savings from just doing that is roughly, you know, $6 million-$8 million, somewhere in that range of maintenance cost maintenance expense that we would avoid by doing that. And then, of course, the impact on our customer goes even beyond that by being able to serve them in a more consistent fashion. Thank you. That's helpful. Best of luck here in the first quarter. Thanks, Bobby. Your next question comes from Bonnie Herzog with Goldman Sachs. Hi. Sorry. Hi. Hi. How are you? Actually, I had good. I actually had a question on your, you know, your long-term guidance, I guess, through 2028. And I guess I'm just thinking about it, you know, you know, this for modeling purpose guide this year of $1 billion. You know, it does imply stronger EBITDA growth in, I guess, 2027 and 2028 to ultimately reach that long-term guidance of EBITDA target of, you know, the $1.2 billion. So, Mindy, I was just hoping maybe you could talk about the drivers of maybe faster expected growth in the out-years and, you know, where you see maybe the most upside or maybe the most downside, you know, just trying to think through the potential for you to kinda meet that, you know, long-term EBITDA guidance. Thank you. Great question, Bonnie. What you're seeing in our EBITDA guidance is really a function of several factors for 2026. The guidance is capturing the timing and scale impacts of our new store program. As we get to a level where we can sustain 50+ NTIs a year and those classes mature, then that EBITDA contribution becomes more visible because we would expect that 50 stores can contribute $35 million-$40 million of EBITDA once they complete their three-year ramp. However, for this year, when an entire class of 50 from last year opens at once, it does create a temporary drag that outweighs the strong two and three-year contributions that we are getting from our earlier smaller classes. It isn't that the stores aren't performing. It's about scaling up our program to deliver the 50-plus stores going forward. So that's one of the factors is us just being able to build 50-plus stores a year and then ramping as expected. The other factor is in a more normalized, more volatile fuel environment, our EBITDA growth will become even more sustainable because, as you know, and we've talked about at length, the current fuel environment does impact our same-store performance and that the new stores right now are not able to offset this early into their ramp, and that's gonna be a headwind this year. Now, when you look at the path to the $1.2 billion, it really depends on three levers, only one of two, two of which we can control. We talked about one, the normalized, fuel environment. That's one, unfortunately, we cannot control. Sustaining the 50+ NTIs annually, we can, and we are in a great position to do that and accelerate our growth there, also executing on our initiatives. So making our business better is also a material driver of that future growth. So when the environment changes, I think investors are gonna be very surprised about the earnings power of this business. But if I was going to handicap, you know, how can we achieve 1.2? What am I, you know, what are the pluses and minuses? I believe in the pipeline that we have. I believe it's a quality pipeline that will deliver the $35 million-$40 million at ramp and a 50+ store ramp per year. I believe in our ability to achieve our initiatives. But again, the 1.2 does depend on a little bit more volatility. I think, as we saw in the fourth quarter, when we can just get brief spurts of that, our business is functioning well, and we are attributing the value to the company that we would expect in periods like that. But we do need a little more help from the macro environment in order to get to the 1.2. Yeah. That's super helpful and, honestly, it makes a lot of sense. And yes, volatility is your friend, as you kinda. Right. Suggest. And maybe a quick follow-up then on that 'cause, you know, also just, in the context of that, the fuel margin, I know, again, it's for modeling purposes, but you did suggest a 30.5, you know, CPG. And so, you know, if, if I'm correct, I think that's, you know, maybe, you know, 4 years of flat to down fuel margin. So just trying to think through that for you, you know, how you're kinda thinking about fuel margins. And again, and then also just the, the break-even cost, like, how have they been trending recently? So for fuel margins, our outlook for the year really reflects what we believe is the highest probability and most likely environment. So it's we think it's gonna still be characterized by relatively low volatility as we go through the year. We think we're gonna see relatively stable and still low fuel prices, which impacts our business model because it makes our customers on margin a bit less price-sensitive. So we believe it is a base case similar to last year. And of course, we're comping, you know, several years ago when we experienced the other extreme of things, which we benefited from tremendously, where we saw really high volatility, higher prices, which made our offer even more compelling. So we are going to focus on the things we can control and improve our business and the earnings power, including levers that in the future could be more fuel immune. But for right now, for the fuel margin, we think that $0.30-ish all-in is right where we need to be. And it's still reflective of that structural component because to be able to earn margins at this level, despite the fact that we're putting $0.01 or $0.02 on the street and despite the fact that we have low volatility, is really speaking to that structural element that is still there and supporting the margins. So when you talk about the break-even, what I can say is the cost to serve is really not going down, and that break-even component is still alive and well and playing out, industry-wide. So the fact that margins were flat this prior year, given the low volatility and really nothing that was there to macro-ly support margins being that high, shows you that those marginal retailers are still requiring those higher margins to break even, much less continue to invest in their business, which they're not able to do. And we are able to do that. Actually makes sense. So I appreciate that, and I'll pass it on. Thank you. Thanks, Bonnie. Your next question comes from Irene Nattel with RBC Capital Markets. Thanks. Good morning, everyone. Before I get to my question, I just wanted to clarify something you just said, Mindy, which is, you're still planning on putting 1-2 cents/gallon on the street this year. And that, even with that, you're still looking at sort of 1%-3% same-store volume pressure. Is that correct? We still think that we will continue to see volume pressure in this lower-price environment, and we will still need to protect our position, especially against competitive entrants in certain markets, by putting some cents on the street in order to do that and maintain our. Right. Competitive position. So yeah. Yeah. Understood. Thank you. And then just moving on to the back half, can you talk about how you see the nicotine environment unfolding this year? We, you know, we had some bright spots last year. How do you think it plays out in 2026 and moving ahead? I think that we are still the ideal retailer for manufacturers as they help our customers progress down the risk spectrum from cigarettes to other products. We will continue to be very promotion-driven throughout the year. I think that we have delivered strongly on promotions. I think you saw that earlier in the year. When we have a promotion, our sales force can get behind that and really sell it. We are having our national leadership conference over these several weeks. I just got home from St. Louis, where we toured the Midwest. We had all our store managers from the Midwest in one location, a couple of weeks ago. We were in Houston for the Southwest. I can tell you, all of those store managers are so excited, and they are very promotion-driven. They are very contest-driven. And I think that, that culture really underpins our ability to be the most effective use of our manufacturer's promotional dollars. And meanwhile, we still continue to take share in cigarettes. And we will continue to do that. But the other categories, the other nicotine categories, are growing strongly, and we don't expect that to slow down any. Now, we do realize that we're gonna be comping a very special one-off promotion. So we are not anticipating in our guidance being able to duplicate that. But we have put in our numbers accelerated promotional funding from what we had last year. That's very helpful. Thank you. Your next question is from Ed Kelly with Wells Fargo. Hi. Good morning. I wanted to ask you about per-store expense growth. You had a very strong year in 2025 below the initial guidance that you had mentioned. The 2026 outlook, you know, assumes that you'll still be running, you know, below that sort of 5% level that I think, you know, at one point, you maybe thought was more normal, in terms of run rate. I'm just hoping that you could talk about the drivers of that for 2026. And then just taking a step back, what's the right or the correct run rate, over time, for per-store expense growth over the next few years? Great questions. Let me take that. And you're right. We have the team has done a great job of managing their expenses. So hats off to them. Delivering OpEx at only 3.3% last year was really good. And obviously, our guidance is still forecasting that we're gonna be below that 5% number. I'll talk about some of the drivers this year that we expect to maintain, going into this year. We've done a lot of work with our Store Excellence campaign and our self-maintenance in particular, and just changing, you know, being able to change our card reader batteries ourselves versus calling in a technician allowed us to save almost $2 million on maintenance expense last year. Our team has also done a great job of cutting overhead almost in half. That's attributed to our store managers just doing a great job with staffing and with scheduling and motivating their teams and running their stores more efficiently, and they've done a great job on loss prevention as well. We've moved some of the higher-shrink items closer to the register. We also really dialed in on our cash loss and our merchandise inventory management. That alone allowed us to cut shrink by over $4 million. That's inclusive of price increases, growth. We still managed to save over $4 million. So we expect the impacts of those things to continue and even amplify. Then things like I talked about with proactively going ahead and replacing some of our equipment; those will earn some savings in our maintenance line over time. Then I think your last question was, what should you expect going forward? I would expect something around, you know, 4%, you know, going forward. And bear in mind, we are building a lot of new-to-industry stores. Those stores are bigger than some of our existing networks. So those are going to come with higher costs from the beginning and especially in the beginning, as we are going to make sure that those stores are fully staffed to make a really good first impression to our customer. And then, of course, the fuel and the merch will ramp over time. So a lot of the driver of our OpEx is actually the new-to-industry growth building the bigger stores. But we are going to hold the line on making sure that we are operating as efficiently as possible. Your next question comes from Jacob Aiken-Phillips with Melius Research. Hi. Good morning. I just wanted to double-click on that, the larger-format stores and some of the cost pressures. I think, last year, there was a dynamic where a lot of stores opened towards the end of the year, beginning of the year. And the winter storm in February, like, exacerbated some of those cost pressures. We had this January storm, and I guess February is still pending. But how should we think about, like, the 1Q dynamics there and then the evolution of that or the cadence throughout the year? What I would tell you is, we will experience some higher maintenance costs from this first quarter winter storms. But we also were the beneficiaries of some higher margins too heading into those storms. So we think that, on balance, all that is going to offset and was fully baked into, you know, kind of the $1 billion-ish that we, we already talked about. So, you are correct that when we build a bunch of stores, these larger stores, all at one time, those come with full OpEx really from day one while our fuel takes a bit of time to ramp and merchandise takes a full three years to ramp. And then, of course, the fuel does ramp faster. But we are also pricing very aggressively in order to take that share as well. So that definitely has an impact on our overall OpEx. I would say that, you know, half of it or so is just attributable to those larger stores. Got it. And then just on the small tuck-in acquisitions that you like, you just did four and then could potentially do some this year, it's a newer dynamic. And I'm just curious, what exactly do you look for? And I know it's early, but, like, what do you envision the, like, economic improvement of the stores when, like, you get the Murphy's merchandising into the stores? We really liked that Colorado acquisition in particular because we got to pick and choose which ones we wanted versus taking a whole portfolio where you get the good and the bad, and you just have to make the best of the bad. In this case, we got to kind of cherry-pick. And it was a market in which, one, we wanted to add density. This was a very quick and easy way to do it. It was also an economic way to do it. And we were able to get those stores open in, what, 30 days or so. More than 30 days. less than 30 days. We were able to put our signage up, get our assortment how we wanted it, get those stores back open. So we were able to hopefully retain most of the customer base that was already going there and then leverage our Murphy Drive Rewards loyalty app and our density of stores in that market to drive more traffic into that store. So we liked it from the standpoint we got to cherry-pick it. It was a market in which we wanted to add density. It also allowed us to do that very quickly without having to go through we like organic growth, but it takes a long time to go through the, "Let's pick the site. Let's permit the site. Let's construct the store. Let's get all our, opening permits." That just takes a long time. Having the ability to bolster that with some of these maybe smaller onesie, twosie, fivesie-type acquisitions, we are certainly in the market looking at some of those right now. Thanks, Mindy. Congrats on the new role. Thank you very much. Your next question comes from Pooran Sharma with Stephens Inc. Hey, good morning. Thanks for the question. I, Good morning. Just wanted to hey, Mindy. Good morning. Just wanted to maybe start off with understanding the contribution from the NTIs in year three. I think you mentioned $35 million-$40 million in yesterday's prepared comments and today as well. And I think you mentioned or yeah, in the prepared comments, you maybe expected was it two years' worth of these 50-class builds contributing $30 million to $35 million to $40 million? So higher level, should we be thinking that you're gonna get about $70 million-$80 million in contribution dollars from these stores? And then that would rise to around $100 million-$120 million by 2028 or just wanted to get the right way to frame up that contribution. It's more of a stairstep. And granted, we're always gonna be for the foreseeable future, we're going to be building a new class of 50, which are going to be a drag on that as they then incur full cost but have to go to ramp. So what we said was we expect each new build class of 50 stores to generate between $35 million and $40 million of EBITDA at maturity after their three-year ramp. So as we enter 2027, we will have the 32 new stores from our 2024 build class, the 51 stores from our 2025 build class, and the 45-55 from this year helping to grow EBITDA in 2027. So cumulatively, this will begin to move the needle even if the fuel environment does not normalize. We expect and continue to potentially increase our ability to add more than 50 stores in the network as we look even beyond 2027. That's why we say looking back, 2026 will be viewed as an inflection point in our ability to deliver sustained EBITDA. The 120 is a bit extreme because you're gonna still have that 50 new stores coming on, which in that first year especially, are a decrement to EBITDA. Okay. That's very helpful. Appreciate the color there. And I wanted to maybe understand kind of the higher-than-expected PS&W and RINs contribution for the quarter. Wanted to understand more specifically what the dynamics at play were during 4Q. And as we look and think about PS&W margins in 1Q, I know you're expecting $0.025 per gallon for the year. But just with the run-up in RIN prices, should we expect PS&W margins to stay a little bit above that $0.02-$0.025 per gallon range you'd previously mentioned? Sure. When you compare the fourth quarter versus prior year in PS&W, this year's were really supported by stronger arbitrage, stronger line-space values, but less than prior year because we did have some downward movements in the price. So that's what's explaining that. But there was a little more volatility in the fourth quarter than in the third quarter, for example. And so you saw the benefit of that in the PS&W line. As we look forward into the first quarter, obviously, these winter storms are having an impact on the network. It's also having an impact on price. Too early to say where we're gonna end up on PS&W for the quarter at this point because the swings can be pretty dramatic. But safe to say for the full year, we think that we're still gonna be within that band unless we can see some more prolonged volatility sustain itself. But that's where we would expect PS&W to land for the full year. Too early to say really for the first quarter. And then with regard to the RINs, as we always say, the price of the RIN is baked into the price of the gas we pay. So while there may be some temporary dislocations if RINs run up very quickly or run down very quickly, over the sweep of time, it all balances out. Okay. Appreciate the color. Thanks, Pooran. Your next question comes from Corey Tarlowe with Jefferies. Great. Thanks. Can you talk a little bit about what happened, on the tobacco side on from a margin perspective in the quarter and then also maybe what to expect ahead there? Sure. And that's a great question. What you were seeing there is something we talked about frequently last year. So for the fourth quarter, it's really the timing of promotional dollars impacting that cigarette category in particular and the volumes. So importantly, though, although volumes were down, we did grow share of market in the cigarette category for both the 4-week and 13-week periods ending January 4th. So our volumes did remain strong compared to the market. But keep in mind, these categories are highly promotional. So you won't necessarily ever see straight-line growth even on a year-to-year basis. But as we've demonstrated over longer periods of time, we do have we have significantly grown those contribution dollars in the overall nicotine category. And we are definitely seeing strength in pouches and other products. And I will tell you too, the business has already normalized in January. We expect to continue to show consistent margin performance when viewed over time. It can be lumpy quarter to quarter. Okay. Great. And then I have two quick follow-ups. I know we're lapping severe weather from last year. Can you provide any context around the storm impacts this year and then also any impacts from changes in SNAP as well? Thanks so much. Well, I would just reiterate what we said for January. You know, it's shaping up to be a good month. We are lapping winter storms from last year, but we're not finished with the winter storms from this year because now we have one impacting the Carolinas and other parts of our network. So, while we were pleased with January's results, that was one of the reasons, quite frankly, that we were not willing to, you know, increase EBITDA guidance materially because we don't know what's gonna happen for the rest of the year. And we know that we're gonna have some impacts on the back end of these winter storms as well. So turning to SNAP, though, that is a great question. And we do have some exposure there, but it is relatively small. It's actually less than 2% of our sales. But we did have those SNAP changes take effect January 1 in five of the states in which we operate. As you, I'm sure, know, they primarily affect candy, Pack Bev, and specifically energy drinks. I'll share with you some data points, but I wanna caveat these are very preliminary. But our early reads suggest kind of a modest headwind in candy and energy drinks. We're gonna continue to monitor the data, obviously, as this phases in. And we do expect some impact in the very discretionary categories, which is included in our guidance, by the way. We put in our guidance a headwind of, I think it's roughly less than $5 million overall for SNAP. Our top EBT item, you might not guess it. It's actually Red Bull. And so while some customers may pull back, we believe that most are gonna continue to buy those products even if they are not eligible for the SNAP benefits. So there is some category noise there, but the over-impact to the overall impact to the business is modest. As I said, it's, it's $5 million or less. Great. Thanks so much, and best of luck. Thank you. Your final question comes from Brad Thomas with KeyBanc Capital Markets. Good morning. Thanks for fitting me in here. Mindy, I'll just add my congratulations as well on your first call as CEO. And I know that. Thanks, Brad. Last quarter, the main message was around much of the leadership transition, keeping the core strategies of Murphy in place. But just wondering if I could ask directly, if there's specific areas that you think the priorities will change a little bit, now that you've taken over. Yeah. That is a great question. Thank you, actually, for asking that. What I said in those certain terms, you know, some things are going to stay the same. Our everyday low-price strategy, our continuous improvement mindset, capital allocation will remain unchanged. So when I think about it, it's really more of our culture that is evolving. So we're pushing for things like quicker collaboration, more nimble decision-making, reorganize the company to create more clear roles and accountability. We've already made some leadership changes to help us work better together, remove some inefficient reporting structures, and increase accountability. I can tell you people are excited because their work and ideas can have more impact. And then that excitement ends up being infectious. And we have an incredibly strong platform to improve this business and are 100% dedicated to growing shareholder value. So our five strategic pillars in which we have grown the company since then are still intact. It's really just a culture shift, which I think is necessary to make sure that we are agile and adaptable and really unafraid to challenge ourselves and stretch further and try new things. So you may see us be, and I hope you will see us be a bit more innovative going forward than we are in the past. And as we have these macro conditions pressuring our stores, we have accelerated competition. I think that's a smart thing to do. We need to be able to fight back in our business model, reducing our reliance on fuel and tobacco where we can but still preserving the strengths in both of those. We need to figure out how to attract and retain new customers, how to grow trips and spend, and how to make our store team's life easier and our stores more productive. And then what are those niches of opportunities of value that we can exploit? We're gonna be looking to innovation to support our core business and also drive for more business. We're really already looking at it around three main pillars, which are our portfolio, our customer, and advanced technology. We're gonna attack all of those types of opportunities and absolutely believe that we have untapped potential in this business to improve not just our existing stores and serving our existing customers but the ability to stretch for more with different stores and different customers. I'm excited about the future. I know the team is too. Stay tuned to see what we will deliver on this topic. That's really helpful, Mindy. If I could squeeze in one last follow-up just on the QuickChek brand. I don't think I heard any commentary about how it performed in the quarter. Could you just address that and how you're thinking about its impact on EBITDA in 2026? Thanks. Yes. Great question. It is continuing to exhibit stronger sales. Margins continue to be pressured. Traffic continues to be pressured. What we're doing really there is really simple. We are refocusing on the fundamentals of the business. We are focusing on the core, which are mainly coffee, breakfast, and sandwich as our traffic drivers. We are simplifying the menu, rationalizing the assortment based on performance, not legacy, not what we've always done. So we're choosing where we win and really not trying to be everything for everybody. We're also focused on improving margin. We need to balance the innovation with cost and margin control because while growth is important, we have to earn money. I can't take growth to the bank. We have to take margin to the bank. So being disciplined around that. And then building a better operating model that simplifies operation, reduces complexity, enhances that customer experience because our speed to service is better. So overall, at QuickChek, really just a recognition that execution and ability to scale are as important as idea generation because ideas which can't be implemented well or executed consistently are actually a bad idea. So I would add too that we have new leadership at QuickChek and that new structure. And that will help speed up execution and also, I think, sparks some innovation. So I really like where the team is headed. And I believe they're focused on the right thing. So really appreciate you asking about that part of our business. That's helpful. Thank you, Mindy. Thank you. There are no further questions at this time. We'll turn the call back over to Murphy's presenter panel for any closing remarks. Thank you for your time and your participation on the call. All great questions. You know, as we look to upcoming calls, I want you to know that we are committed to strengthening our core business while pursuing incremental sources of value that endure across the fuel cycle. We are building from a very solid foundation. I have solid conviction in this leadership team's capacity to unlock Murphy USA's next level of potential. Thank you again. I look forward to next quarter's call. This concludes today's call. Thank you for participating. You may now disconnect.

Speaker 10: Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA fourth quarter 2025 earnings Q&A call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Christian Pikul. Please go ahead. Thank you for standing by. thank you for standing by My name is Carly, and I will be your conference operator today. my name is carly and i will be your conference operator today At this time, I would like to welcome everyone to the Murphy USA fourth quarter 2025 earnings Q&A call. at this time i would like to welcome everyone to the murphy usa fourth quarter 2025 earnings q&a call All lines have been placed on mute to prevent any background noise. all lines have been placed on mute to prevent any background noise After the speaker's remarks, there will be a question-and-answer session. after the speaker's remarks there will be a question-and-answer session If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad If you would like to withdraw your question, press star one again. if you would like to withdraw your question press star one again Thank you. thank you I would now like to turn the call over to Christian Pikul. i would now like to turn the call over to christian pikul Please go ahead. please go ahead

Speaker 4: Hey, thanks, Carly. Good morning, everybody. Thanks for participating in our first Q&A-only session covering fourth quarter and full year 2025 results. I would remind everybody to refer to the forward-looking statements commentary we included in our prepared remarks yesterday, which I hope you all took the opportunity to listen to or read. With me this morning are Mindy West, President and Chief Executive Officer; Donnie Smith, Chief Accounting Officer and Interim Chief Financial Officer; and Ash Aulds, Director of Investor Relations and FP&A. Before I give the call back to Carly, I do wanna remind everybody, in keeping with our prior protocol, please limit your activity to one question and one follow-up question initially, and then, please go ahead and get back in the queue if you wish to ask additional questions, time permitting. Carly, you can go ahead and open us up for questions. Hey, thanks, Carly. hey thanks carly Good morning, everybody. good morning everybody Thanks for participating in our first Q&A-only session covering fourth quarter and full year 2025 results. thanks for participating in our first q&a-only session covering fourth quarter and full year 2025 results I would remind everybody to refer to the forward-looking statements commentary we included in our prepared remarks yesterday, which I hope you all took the opportunity to listen to or read. i would remind everybody to refer to the forward-looking statements commentary we included in our prepared remarks yesterday which i hope you all took the opportunity to listen to or read With me this morning are Mindy West, President and Chief Executive Officer; Donnie Smith, Chief Accounting Officer and Interim Chief Financial Officer; and Ash Aulds, Director of Investor Relations and FP&A. with me this morning are mindy west president and chief executive officer donnie smith chief accounting officer and interim chief financial officer and ash aulds director of investor relations and fp&a Before I give the call back to Carly, I do wanna remind everybody, in keeping with our prior protocol, please limit your activity to one question and one follow-up question initially, and then, please go ahead and get back in the queue if you wish to ask additional questions, time permitting. before i give the call back to carly i do wanna remind everybody in keeping with our prior protocol please limit your activity to one question and one follow-up question initially and then please go ahead and get back in the queue if you wish to ask additional questions time permitting Carly, you can go ahead and open us up for questions. carly you can go ahead and open us up for questions

Speaker 10: Thank you. At this time, I would like to remind everyone to ask a question, press star and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Bobby Griffin with Raymond James. Thank you. thank you At this time, I would like to remind everyone to ask a question, press star and the number one on your telephone keypad. at this time i would like to remind everyone to ask a question press star and the number one on your telephone keypad We'll pause for just a moment to compile the Q&A roster. we'll pause for just a moment to compile the q&a roster Your first question comes from Bobby Griffin with Raymond James. your first question comes from bobby griffin with raymond james

Speaker 1: Good morning, buddy. Thanks for taking my questions. To the team, thanks for some of the additional information following the release. Good morning, buddy. good morning buddy Thanks for taking my questions. thanks for taking my questions To the team, thanks for some of the additional information following the release. to the team thanks for some of the additional information following the release I guess, Mindy, yeah, and I like the new format, getting that out there, after, after the press release. I guess, I guess my first question is more on the competitive comments that you, you put in the prepared remarks. Just curious if you can kinda conceptualize where the competitive kinda pressure is versus, you know, 6, 8 months ago. Is it getting worse or getting better? And then, I guess more importantly, after you see that initial competitive response of, of new entrants, how long does it take the store that's impacted to kinda come back to what you'd say are, are, you know, company-wide trends or, or company-wide averages? I guess, Mindy, yeah, and I like the new format, getting that out there, after, after the press release. i guess mindy yeah and i like the new format getting that out there after after the press release I guess, I guess my first question is more on the competitive comments that you, you put in the prepared remarks. i guess i guess my first question is more on the competitive comments that you you put in the prepared remarks Just curious if you can kinda conceptualize where the competitive kinda pressure is versus, you know, 6, 8 months ago. just curious if you can kinda conceptualize where the competitive kinda pressure is versus you know 6 8 months ago Is it getting worse or getting better? is it getting worse or getting better And then, I guess more importantly, after you see that initial competitive response of, of new entrants, how long does it take the store that's impacted to kinda come back to what you'd say are, are, you know, company-wide trends or, or company-wide averages? and then i guess more importantly after you see that initial competitive response of of new entrants how long does it take the store that's impacted to kinda come back to what you'd say are are you know company-wide trends or or company-wide averages

Speaker 9: Right. That's a great question, Bobby. Our same-store gallons in particular are impacted by those factors, of competitive intrusion. And really, the pressures vary market by market. So, for instance, in 2025, some of our stores had average per-store-month volumes that were actually higher. We saw that in nine states that we operate in. Margins were higher in 10 states. But those markets are in different stages of competitive intrusion and pricing behaviors. When we look at Texas, it had both higher margins, higher volumes. Colorado and Florida, though, had lower volumes and lower margins. But those states, over time, are gonna look more like Texas as they mature and stabilize in those new competitor entrants. Their share and then ultimately raise prices because they have to make a return on their sites too. So our new stores also take share from others, and they're outperforming the network. Right. right That's a great question, Bobby. that's a great question bobby Our same-store gallons in particular are impacted by those factors, of competitive intrusion. our same-store gallons in particular are impacted by those factors of competitive intrusion And really, the pressures vary market by market. and really the pressures vary market by market So, for instance, in 2025, some of our stores had average per-store-month volumes that were actually higher. so for instance in 2025 some of our stores had average per-store-month volumes that were actually higher We saw that in nine states that we operate in. we saw that in nine states that we operate in Margins were higher in 10 states. margins were higher in 10 states But those markets are in different stages of competitive intrusion and pricing behaviors. but those markets are in different stages of competitive intrusion and pricing behaviors When we look at Texas, it had both higher margins, higher volumes. when we look at texas it had both higher margins higher volumes Colorado and Florida, though, had lower volumes and lower margins. colorado and florida though had lower volumes and lower margins But those states, over time, are gonna look more like Texas as they mature and stabilize in those new competitor entrants. but those states over time are gonna look more like texas as they mature and stabilize in those new competitor entrants Their share and then ultimately raise prices because they have to make a return on their sites too. their share and then ultimately raise prices because they have to make a return on their sites too So our new stores also take share from others, and they're outperforming the network. so our new stores also take share from others and they're outperforming the network But same-store remains under pressure, so we have to invest an extra penny or so in order to maintain volumes. So typically, when a new entrant enters a market, they do exactly what we do. They price very low at the outset while they try to gain their share from the other competitors that are already entrenched in the market. And that could take three months. It could take six months. It could take a year. And then it depends on how many stores that particular market entrant wants to build and that and what density do they wanna build in that market as to how long it's gonna last. But ultimately, everything goes back to normal, and margins rise, and we are able to increase our margins as well. But same-store remains under pressure, so we have to invest an extra penny or so in order to maintain volumes. but same-store remains under pressure so we have to invest an extra penny or so in order to maintain volumes So typically, when a new entrant enters a market, they do exactly what we do. so typically when a new entrant enters a market they do exactly what we do They price very low at the outset while they try to gain their share from the other competitors that are already entrenched in the market. they price very low at the outset while they try to gain their share from the other competitors that are already entrenched in the market And that could take three months. and that could take three months It could take six months. it could take six months It could take a year. it could take a year And then it depends on how many stores that particular market entrant wants to build and that and what density do they wanna build in that market as to how long it's gonna last. and then it depends on how many stores that particular market entrant wants to build and that and what density do they wanna build in that market as to how long it's gonna last But ultimately, everything goes back to normal, and margins rise, and we are able to increase our margins as well. but ultimately everything goes back to normal and margins rise and we are able to increase our margins as well In a way, we actually like competition because while it creates disruption when it's happening, as that market matures and stabilizes and the winners have acquired their share of customers, then the higher margins ultimately follow. We're disciplined in when and where we build and continuously upgrade, so we're gonna be there for the long term, and we're gonna be a winner also. In a way, we actually like competition because while it creates disruption when it's happening, as that market matures and stabilizes and the winners have acquired their share of customers, then the higher margins ultimately follow. in a way we actually like competition because while it creates disruption when it's happening as that market matures and stabilizes and the winners have acquired their share of customers then the higher margins ultimately follow We're disciplined in when and where we build and continuously upgrade, so we're gonna be there for the long term, and we're gonna be a winner also. we're disciplined in when and where we build and continuously upgrade so we're gonna be there for the long term and we're gonna be a winner also

Speaker 1: Okay. That's helpful. And I guess secondly, for me, and I'll turn it back over, the comment there about the step-up or the acceleration in the maintenance capital spending I found interesting, and more so in just, like, the fact about it limiting disruptions. So, can you put any more details around how big of a drag those, call it, disruptions have been, or is more this step-up just kinda getting ahead of what could have been a drag and just kinda trying to see if, you know, we've been, you know, there's been an EBITDA impact that actually will start to go away after you do this maintenance capital step-up? Okay. okay That's helpful. that's helpful And I guess secondly, for me, and I'll turn it back over, the comment there about the step-up or the acceleration in the maintenance capital spending I found interesting, and more so in just, like, the fact about it limiting disruptions. and i guess secondly for me and i'll turn it back over the comment there about the step-up or the acceleration in the maintenance capital spending i found interesting and more so in just like the fact about it limiting disruptions So, can you put any more details around how big of a drag those, call it, disruptions have been, or is more this step-up just kinda getting ahead of what could have been a drag and just kinda trying to see if, you know, we've been, you know, there's been an EBITDA impact that actually will start to go away after you do this maintenance capital step-up? so can you put any more details around how big of a drag those call it disruptions have been or is more this step-up just kinda getting ahead of what could have been a drag and just kinda trying to see if you know we've been you know there's been an ebitda impact that actually will start to go away after you do this maintenance capital step-up

Speaker 9: Sure. What I would say is it's more the latter. It's more of a getting ahead of things before it happens. We have been entirely within a break-fix mode for our history. That means that maintenance comes in lumps. It's difficult to predict. And as our fleet ages, we found the need to go ahead and proactively invest in equipment that is end-of-life or near end-of-life because that does two things. It results in maintenance expense that we can predict. It also enhances uptime with that equipment, so enhances the customer experience and therefore their loyalty to us. Sure. sure What I would say is it's more the latter. what i would say is it's more the latter It's more of a getting ahead of things before it happens. it's more of a getting ahead of things before it happens We have been entirely within a break-fix mode for our history. we have been entirely within a break-fix mode for our history That means that maintenance comes in lumps. that means that maintenance comes in lumps It's difficult to predict. it's difficult to predict And as our fleet ages, we found the need to go ahead and proactively invest in equipment that is end-of-life or near end-of-life because that does two things. and as our fleet ages we found the need to go ahead and proactively invest in equipment that is end-of-life or near end-of-life because that does two things It results in maintenance expense that we can predict. it results in maintenance expense that we can predict It also enhances uptime with that equipment, so enhances the customer experience and therefore their loyalty to us. it also enhances uptime with that equipment so enhances the customer experience and therefore their loyalty to us So the kinds of things that we're talking about doing as a step-up in proactively replacing some dispensers, HVAC units, safes, things like that, which are gonna cost us a little bit in capital from the beginning but will improve it in uptime and store performance over time. And we think the projected savings from just doing that is roughly, you know, $6 million-$8 million, somewhere in that range of maintenance cost maintenance expense that we would avoid by doing that. And then, of course, the impact on our customer goes even beyond that by being able to serve them in a more consistent fashion. So the kinds of things that we're talking about doing as a step-up in proactively replacing some dispensers, HVAC units, safes, things like that, which are gonna cost us a little bit in capital from the beginning but will improve it in uptime and store performance over time. so the kinds of things that we're talking about doing as a step-up in proactively replacing some dispensers hvac units safes things like that which are gonna cost us a little bit in capital from the beginning but will improve it in uptime and store performance over time And we think the projected savings from just doing that is roughly, you know, $6 million-$8 million, somewhere in that range of maintenance cost maintenance expense that we would avoid by doing that. and we think the projected savings from just doing that is roughly you know $6 million-$8 million somewhere in that range of maintenance cost maintenance expense that we would avoid by doing that And then, of course, the impact on our customer goes even beyond that by being able to serve them in a more consistent fashion. and then of course the impact on our customer goes even beyond that by being able to serve them in a more consistent fashion

Speaker 1: Thank you. That's helpful. Best of luck here in the first quarter. Thank you. thank you That's helpful. that's helpful Best of luck here in the first quarter. best of luck here in the first quarter

Speaker 9: Thanks, Bobby. Thanks, Bobby. thanks bobby

Speaker 10: Your next question comes from Bonnie Herzog with Goldman Sachs. Your next question comes from Bonnie Herzog with Goldman Sachs. your next question comes from bonnie herzog with goldman sachs

Speaker 2: Hi. Sorry. Hi. hi Sorry. sorry

Speaker 9: Hi. Hi. hi

Speaker 2: Hi. How are you? Actually, I had good. I actually had a question on your, you know, your long-term guidance, I guess, through 2028. And I guess I'm just thinking about it, you know, you know, this for modeling purpose guide this year of $1 billion. You know, it does imply stronger EBITDA growth in, I guess, 2027 and 2028 to ultimately reach that long-term guidance of EBITDA target of, you know, the $1.2 billion. So, Mindy, I was just hoping maybe you could talk about the drivers of maybe faster expected growth in the out-years and, you know, where you see maybe the most upside or maybe the most downside, you know, just trying to think through the potential for you to kinda meet that, you know, long-term EBITDA guidance. Thank you. Hi. hi How are you? how are you Actually, I had good. actually i had good I actually had a question on your, you know, your long-term guidance, I guess, through 2028. i actually had a question on your you know your long-term guidance i guess through 2028 And I guess I'm just thinking about it, you know, you know, this for modeling purpose guide this year of $1 billion. and i guess i'm just thinking about it you know you know this for modeling purpose guide this year of $1 billion You know, it does imply stronger EBITDA growth in, I guess, 2027 and 2028 to ultimately reach that long-term guidance of EBITDA target of, you know, the $1.2 billion. you know it does imply stronger ebitda growth in i guess 2027 and 2028 to ultimately reach that long-term guidance of ebitda target of you know the $1.2 billion So, Mindy, I was just hoping maybe you could talk about the drivers of maybe faster expected growth in the out-years and, you know, where you see maybe the most upside or maybe the most downside, you know, just trying to think through the potential for you to kinda meet that, you know, long-term EBITDA guidance. so mindy i was just hoping maybe you could talk about the drivers of maybe faster expected growth in the out-years and you know where you see maybe the most upside or maybe the most downside you know just trying to think through the potential for you to kinda meet that you know long-term ebitda guidance Thank you. thank you

Speaker 9: Great question, Bonnie. What you're seeing in our EBITDA guidance is really a function of several factors for 2026. The guidance is capturing the timing and scale impacts of our new store program. As we get to a level where we can sustain 50+ NTIs a year and those classes mature, then that EBITDA contribution becomes more visible because we would expect that 50 stores can contribute $35 million-$40 million of EBITDA once they complete their three-year ramp. However, for this year, when an entire class of 50 from last year opens at once, it does create a temporary drag that outweighs the strong two and three-year contributions that we are getting from our earlier smaller classes. It isn't that the stores aren't performing. It's about scaling up our program to deliver the 50-plus stores going forward. Great question, Bonnie. great question bonnie What you're seeing in our EBITDA guidance is really a function of several factors for 2026. what you're seeing in our ebitda guidance is really a function of several factors for 2026 The guidance is capturing the timing and scale impacts of our new store program. the guidance is capturing the timing and scale impacts of our new store program As we get to a level where we can sustain 50+ NTIs a year and those classes mature, then that EBITDA contribution becomes more visible because we would expect that 50 stores can contribute $35 million-$40 million of EBITDA once they complete their three-year ramp. as we get to a level where we can sustain 50+ ntis a year and those classes mature then that ebitda contribution becomes more visible because we would expect that 50 stores can contribute $35 million-$40 million of ebitda once they complete their three-year ramp However, for this year, when an entire class of 50 from last year opens at once, it does create a temporary drag that outweighs the strong two and three-year contributions that we are getting from our earlier smaller classes. however for this year when an entire class of 50 from last year opens at once it does create a temporary drag that outweighs the strong two and three-year contributions that we are getting from our earlier smaller classes It isn't that the stores aren't performing. it isn't that the stores aren't performing It's about scaling up our program to deliver the 50-plus stores going forward. it's about scaling up our program to deliver the 50-plus stores going forward So that's one of the factors is us just being able to build 50-plus stores a year and then ramping as expected. The other factor is in a more normalized, more volatile fuel environment, our EBITDA growth will become even more sustainable because, as you know, and we've talked about at length, the current fuel environment does impact our same-store performance and that the new stores right now are not able to offset this early into their ramp, and that's gonna be a headwind this year. Now, when you look at the path to the $1.2 billion, it really depends on three levers, only one of two, two of which we can control. We talked about one, the normalized, fuel environment. That's one, unfortunately, we cannot control. So that's one of the factors is us just being able to build 50-plus stores a year and then ramping as expected. so that's one of the factors is us just being able to build 50-plus stores a year and then ramping as expected The other factor is in a more normalized, more volatile fuel environment, our EBITDA growth will become even more sustainable because, as you know, and we've talked about at length, the current fuel environment does impact our same-store performance and that the new stores right now are not able to offset this early into their ramp, and that's gonna be a headwind this year. the other factor is in a more normalized more volatile fuel environment our ebitda growth will become even more sustainable because as you know and we've talked about at length the current fuel environment does impact our same-store performance and that the new stores right now are not able to offset this early into their ramp and that's gonna be a headwind this year Now, when you look at the path to the $1.2 billion, it really depends on three levers, only one of two, two of which we can control. now when you look at the path to the $1.2 billion it really depends on three levers only one of two two of which we can control We talked about one, the normalized, fuel environment. we talked about one the normalized fuel environment That's one, unfortunately, we cannot control. that's one unfortunately we cannot control Sustaining the 50+ NTIs annually, we can, and we are in a great position to do that and accelerate our growth there, also executing on our initiatives. So making our business better is also a material driver of that future growth. So when the environment changes, I think investors are gonna be very surprised about the earnings power of this business. But if I was going to handicap, you know, how can we achieve 1.2? What am I, you know, what are the pluses and minuses? I believe in the pipeline that we have. I believe it's a quality pipeline that will deliver the $35 million-$40 million at ramp and a 50+ store ramp per year. I believe in our ability to achieve our initiatives. But again, the 1.2 does depend on a little bit more volatility. Sustaining the 50+ NTIs annually, we can, and we are in a great position to do that and accelerate our growth there, also executing on our initiatives. sustaining the 50+ ntis annually we can and we are in a great position to do that and accelerate our growth there also executing on our initiatives So making our business better is also a material driver of that future growth. so making our business better is also a material driver of that future growth So when the environment changes, I think investors are gonna be very surprised about the earnings power of this business. so when the environment changes i think investors are gonna be very surprised about the earnings power of this business But if I was going to handicap, you know, how can we achieve 1.2? but if i was going to handicap you know how can we achieve 1.2 What am I, you know, what are the pluses and minuses? what am i you know what are the pluses and minuses I believe in the pipeline that we have. i believe in the pipeline that we have I believe it's a quality pipeline that will deliver the $35 million-$40 million at ramp and a 50+ store ramp per year. i believe it's a quality pipeline that will deliver the $35 million-$40 million at ramp and a 50+ store ramp per year I believe in our ability to achieve our initiatives. i believe in our ability to achieve our initiatives But again, the 1.2 does depend on a little bit more volatility. but again the 1.2 does depend on a little bit more volatility I think, as we saw in the fourth quarter, when we can just get brief spurts of that, our business is functioning well, and we are attributing the value to the company that we would expect in periods like that. But we do need a little more help from the macro environment in order to get to the 1.2. I think, as we saw in the fourth quarter, when we can just get brief spurts of that, our business is functioning well, and we are attributing the value to the company that we would expect in periods like that. i think as we saw in the fourth quarter when we can just get brief spurts of that our business is functioning well and we are attributing the value to the company that we would expect in periods like that But we do need a little more help from the macro environment in order to get to the 1.2. but we do need a little more help from the macro environment in order to get to the 1.2

Speaker 2: Yeah. That's super helpful and, honestly, it makes a lot of sense. And yes, volatility is your friend, as you kinda. Yeah. yeah That's super helpful and, honestly, it makes a lot of sense. that's super helpful and honestly it makes a lot of sense And yes, volatility is your friend, as you kinda. and yes volatility is your friend as you kinda

Speaker 9: Right. Right. right

Speaker 2: Suggest. And maybe a quick follow-up then on that 'cause, you know, also just, in the context of that, the fuel margin, I know, again, it's for modeling purposes, but you did suggest a 30.5, you know, CPG. And so, you know, if, if I'm correct, I think that's, you know, maybe, you know, 4 years of flat to down fuel margin. So just trying to think through that for you, you know, how you're kinda thinking about fuel margins. And again, and then also just the, the break-even cost, like, how have they been trending recently? Suggest. suggest And maybe a quick follow-up then on that 'cause, you know, also just, in the context of that, the fuel margin, I know, again, it's for modeling purposes, but you did suggest a 30.5, you know, CPG. and maybe a quick follow-up then on that 'cause you know also just in the context of that the fuel margin i know again it's for modeling purposes but you did suggest a 30.5 you know cpg And so, you know, if, if I'm correct, I think that's, you know, maybe, you know, 4 years of flat to down fuel margin. and so you know if if i'm correct i think that's you know maybe you know 4 years of flat to down fuel margin So just trying to think through that for you, you know, how you're kinda thinking about fuel margins. so just trying to think through that for you you know how you're kinda thinking about fuel margins And again, and then also just the, the break-even cost, like, how have they been trending recently? and again and then also just the the break-even cost like how have they been trending recently

Speaker 9: So for fuel margins, our outlook for the year really reflects what we believe is the highest probability and most likely environment. So it's we think it's gonna still be characterized by relatively low volatility as we go through the year. We think we're gonna see relatively stable and still low fuel prices, which impacts our business model because it makes our customers on margin a bit less price-sensitive. So we believe it is a base case similar to last year. And of course, we're comping, you know, several years ago when we experienced the other extreme of things, which we benefited from tremendously, where we saw really high volatility, higher prices, which made our offer even more compelling. So we are going to focus on the things we can control and improve our business and the earnings power, including levers that in the future could be more fuel immune. So for fuel margins, our outlook for the year really reflects what we believe is the highest probability and most likely environment. so for fuel margins our outlook for the year really reflects what we believe is the highest probability and most likely environment So it's we think it's gonna still be characterized by relatively low volatility as we go through the year. so it's we think it's gonna still be characterized by relatively low volatility as we go through the year We think we're gonna see relatively stable and still low fuel prices, which impacts our business model because it makes our customers on margin a bit less price-sensitive. we think we're gonna see relatively stable and still low fuel prices which impacts our business model because it makes our customers on margin a bit less price-sensitive So we believe it is a base case similar to last year. so we believe it is a base case similar to last year And of course, we're comping, you know, several years ago when we experienced the other extreme of things, which we benefited from tremendously, where we saw really high volatility, higher prices, which made our offer even more compelling. and of course we're comping you know several years ago when we experienced the other extreme of things which we benefited from tremendously where we saw really high volatility higher prices which made our offer even more compelling So we are going to focus on the things we can control and improve our business and the earnings power, including levers that in the future could be more fuel immune. so we are going to focus on the things we can control and improve our business and the earnings power including levers that in the future could be more fuel immune But for right now, for the fuel margin, we think that $0.30-ish all-in is right where we need to be. And it's still reflective of that structural component because to be able to earn margins at this level, despite the fact that we're putting $0.01 or $0.02 on the street and despite the fact that we have low volatility, is really speaking to that structural element that is still there and supporting the margins. So when you talk about the break-even, what I can say is the cost to serve is really not going down, and that break-even component is still alive and well and playing out, industry-wide. But for right now, for the fuel margin, we think that $0.30-ish all-in is right where we need to be. but for right now for the fuel margin we think that $0.30-ish all-in is right where we need to be And it's still reflective of that structural component because to be able to earn margins at this level, despite the fact that we're putting $0.01 or $0.02 on the street and despite the fact that we have low volatility, is really speaking to that structural element that is still there and supporting the margins. and it's still reflective of that structural component because to be able to earn margins at this level despite the fact that we're putting $0.01 or $0.02 on the street and despite the fact that we have low volatility is really speaking to that structural element that is still there and supporting the margins So when you talk about the break-even, what I can say is the cost to serve is really not going down, and that break-even component is still alive and well and playing out, industry-wide. so when you talk about the break-even what i can say is the cost to serve is really not going down and that break-even component is still alive and well and playing out industry-wide So the fact that margins were flat this prior year, given the low volatility and really nothing that was there to macro-ly support margins being that high, shows you that those marginal retailers are still requiring those higher margins to break even, much less continue to invest in their business, which they're not able to do. And we are able to do that. So the fact that margins were flat this prior year, given the low volatility and really nothing that was there to macro-ly support margins being that high, shows you that those marginal retailers are still requiring those higher margins to break even, much less continue to invest in their business, which they're not able to do. so the fact that margins were flat this prior year given the low volatility and really nothing that was there to macro-ly support margins being that high shows you that those marginal retailers are still requiring those higher margins to break even much less continue to invest in their business which they're not able to do And we are able to do that. and we are able to do that

Speaker 2: Actually makes sense. So I appreciate that, and I'll pass it on. Thank you. Actually makes sense. actually makes sense So I appreciate that, and I'll pass it on. so i appreciate that and i'll pass it on Thank you. thank you

Speaker 9: Thanks, Bonnie. Thanks, Bonnie. thanks bonnie

Speaker 10: Your next question comes from Irene Nattel with RBC Capital Markets. Your next question comes from Irene Nattel with RBC Capital Markets. your next question comes from irene nattel with rbc capital markets

Speaker 7: Thanks. Good morning, everyone. Before I get to my question, I just wanted to clarify something you just said, Mindy, which is, you're still planning on putting 1-2 cents/gallon on the street this year. And that, even with that, you're still looking at sort of 1%-3% same-store volume pressure. Is that correct? Thanks. thanks Good morning, everyone. good morning everyone Before I get to my question, I just wanted to clarify something you just said, Mindy, which is, you're still planning on putting 1-2 cents/gallon on the street this year. before i get to my question i just wanted to clarify something you just said mindy which is you're still planning on putting 1-2 cents/gallon on the street this year And that, even with that, you're still looking at sort of 1%-3% same-store volume pressure. and that even with that you're still looking at sort of 1%-3% same-store volume pressure Is that correct? is that correct

Speaker 9: We still think that we will continue to see volume pressure in this lower-price environment, and we will still need to protect our position, especially against competitive entrants in certain markets, by putting some cents on the street in order to do that and maintain our. We still think that we will continue to see volume pressure in this lower-price environment, and we will still need to protect our position, especially against competitive entrants in certain markets, by putting some cents on the street in order to do that and maintain our. we still think that we will continue to see volume pressure in this lower-price environment and we will still need to protect our position especially against competitive entrants in certain markets by putting some cents on the street in order to do that and maintain our

Speaker 7: Right. Right. right

Speaker 9: Competitive position. So yeah. Competitive position. competitive position So yeah. so yeah

Speaker 7: Yeah. Understood. Thank you. And then just moving on to the back half, can you talk about how you see the nicotine environment unfolding this year? We, you know, we had some bright spots last year. How do you think it plays out in 2026 and moving ahead? Yeah. yeah Understood. understood Thank you. thank you And then just moving on to the back half, can you talk about how you see the nicotine environment unfolding this year? and then just moving on to the back half can you talk about how you see the nicotine environment unfolding this year We, you know, we had some bright spots last year. we you know we had some bright spots last year How do you think it plays out in 2026 and moving ahead? how do you think it plays out in 2026 and moving ahead

Speaker 9: I think that we are still the ideal retailer for manufacturers as they help our customers progress down the risk spectrum from cigarettes to other products. We will continue to be very promotion-driven throughout the year. I think that we have delivered strongly on promotions. I think you saw that earlier in the year. When we have a promotion, our sales force can get behind that and really sell it. We are having our national leadership conference over these several weeks. I just got home from St. Louis, where we toured the Midwest. We had all our store managers from the Midwest in one location, a couple of weeks ago. We were in Houston for the Southwest. I can tell you, all of those store managers are so excited, and they are very promotion-driven. They are very contest-driven. I think that we are still the ideal retailer for manufacturers as they help our customers progress down the risk spectrum from cigarettes to other products. i think that we are still the ideal retailer for manufacturers as they help our customers progress down the risk spectrum from cigarettes to other products We will continue to be very promotion-driven throughout the year. we will continue to be very promotion-driven throughout the year I think that we have delivered strongly on promotions. i think that we have delivered strongly on promotions I think you saw that earlier in the year. i think you saw that earlier in the year When we have a promotion, our sales force can get behind that and really sell it. when we have a promotion our sales force can get behind that and really sell it We are having our national leadership conference over these several weeks. we are having our national leadership conference over these several weeks I just got home from St. Louis, where we toured the Midwest. i just got home from st louis where we toured the midwest We had all our store managers from the Midwest in one location, a couple of weeks ago. we had all our store managers from the midwest in one location a couple of weeks ago We were in Houston for the Southwest. we were in houston for the southwest I can tell you, all of those store managers are so excited, and they are very promotion-driven. i can tell you all of those store managers are so excited and they are very promotion-driven They are very contest-driven. they are very contest-driven And I think that, that culture really underpins our ability to be the most effective use of our manufacturer's promotional dollars. And meanwhile, we still continue to take share in cigarettes. And we will continue to do that. But the other categories, the other nicotine categories, are growing strongly, and we don't expect that to slow down any. Now, we do realize that we're gonna be comping a very special one-off promotion. So we are not anticipating in our guidance being able to duplicate that. But we have put in our numbers accelerated promotional funding from what we had last year. And I think that, that culture really underpins our ability to be the most effective use of our manufacturer's promotional dollars. and i think that that culture really underpins our ability to be the most effective use of our manufacturer's promotional dollars And meanwhile, we still continue to take share in cigarettes. and meanwhile we still continue to take share in cigarettes And we will continue to do that. and we will continue to do that But the other categories, the other nicotine categories, are growing strongly, and we don't expect that to slow down any. but the other categories the other nicotine categories are growing strongly and we don't expect that to slow down any Now, we do realize that we're gonna be comping a very special one-off promotion. now we do realize that we're gonna be comping a very special one-off promotion So we are not anticipating in our guidance being able to duplicate that. so we are not anticipating in our guidance being able to duplicate that But we have put in our numbers accelerated promotional funding from what we had last year. but we have put in our numbers accelerated promotional funding from what we had last year

Speaker 7: That's very helpful. Thank you. That's very helpful. that's very helpful Thank you. thank you

Speaker 10: Your next question is from Ed Kelly with Wells Fargo. Your next question is from Ed Kelly with Wells Fargo. your next question is from ed kelly with wells fargo

Speaker 6: Hi. Good morning. I wanted to ask you about per-store expense growth. You had a very strong year in 2025 below the initial guidance that you had mentioned. The 2026 outlook, you know, assumes that you'll still be running, you know, below that sort of 5% level that I think, you know, at one point, you maybe thought was more normal, in terms of run rate. I'm just hoping that you could talk about the drivers of that for 2026. And then just taking a step back, what's the right or the correct run rate, over time, for per-store expense growth over the next few years? Hi. hi Good morning. good morning I wanted to ask you about per-store expense growth. i wanted to ask you about per-store expense growth You had a very strong year in 2025 below the initial guidance that you had mentioned. you had a very strong year in 2025 below the initial guidance that you had mentioned The 2026 outlook, you know, assumes that you'll still be running, you know, below that sort of 5% level that I think, you know, at one point, you maybe thought was more normal, in terms of run rate. the 2026 outlook you know assumes that you'll still be running you know below that sort of 5% level that i think you know at one point you maybe thought was more normal in terms of run rate I'm just hoping that you could talk about the drivers of that for 2026. i'm just hoping that you could talk about the drivers of that for 2026 And then just taking a step back, what's the right or the correct run rate, over time, for per-store expense growth over the next few years? and then just taking a step back what's the right or the correct run rate over time for per-store expense growth over the next few years

Speaker 9: Great questions. Let me take that. And you're right. We have the team has done a great job of managing their expenses. So hats off to them. Delivering OpEx at only 3.3% last year was really good. And obviously, our guidance is still forecasting that we're gonna be below that 5% number. I'll talk about some of the drivers this year that we expect to maintain, going into this year. We've done a lot of work with our Store Excellence campaign and our self-maintenance in particular, and just changing, you know, being able to change our card reader batteries ourselves versus calling in a technician allowed us to save almost $2 million on maintenance expense last year. Our team has also done a great job of cutting overhead almost in half. Great questions. great questions Let me take that. let me take that And you're right. and you're right We have the team has done a great job of managing their expenses. we have the team has done a great job of managing their expenses So hats off to them. so hats off to them Delivering OpEx at only 3.3% last year was really good. delivering opex at only 3.3% last year was really good And obviously, our guidance is still forecasting that we're gonna be below that 5% number. and obviously our guidance is still forecasting that we're gonna be below that 5% number I'll talk about some of the drivers this year that we expect to maintain, going into this year. i'll talk about some of the drivers this year that we expect to maintain going into this year We've done a lot of work with our Store Excellence campaign and our self-maintenance in particular, and just changing, you know, being able to change our card reader batteries ourselves versus calling in a technician allowed us to save almost $2 million on maintenance expense last year. we've done a lot of work with our store excellence campaign and our self-maintenance in particular and just changing you know being able to change our card reader batteries ourselves versus calling in a technician allowed us to save almost $2 million on maintenance expense last year Our team has also done a great job of cutting overhead almost in half. our team has also done a great job of cutting overhead almost in half That's attributed to our store managers just doing a great job with staffing and with scheduling and motivating their teams and running their stores more efficiently, and they've done a great job on loss prevention as well. We've moved some of the higher-shrink items closer to the register. We also really dialed in on our cash loss and our merchandise inventory management. That alone allowed us to cut shrink by over $4 million. That's inclusive of price increases, growth. We still managed to save over $4 million. So we expect the impacts of those things to continue and even amplify. Then things like I talked about with proactively going ahead and replacing some of our equipment; those will earn some savings in our maintenance line over time. Then I think your last question was, what should you expect going forward? That's attributed to our store managers just doing a great job with staffing and with scheduling and motivating their teams and running their stores more efficiently, and they've done a great job on loss prevention as well. that's attributed to our store managers just doing a great job with staffing and with scheduling and motivating their teams and running their stores more efficiently and they've done a great job on loss prevention as well We've moved some of the higher-shrink items closer to the register. we've moved some of the higher-shrink items closer to the register We also really dialed in on our cash loss and our merchandise inventory management. we also really dialed in on our cash loss and our merchandise inventory management That alone allowed us to cut shrink by over $4 million. that alone allowed us to cut shrink by over $4 million That's inclusive of price increases, growth. that's inclusive of price increases growth We still managed to save over $4 million. we still managed to save over $4 million So we expect the impacts of those things to continue and even amplify. so we expect the impacts of those things to continue and even amplify Then things like I talked about with proactively going ahead and replacing some of our equipment; those will earn some savings in our maintenance line over time. then things like i talked about with proactively going ahead and replacing some of our equipment those will earn some savings in our maintenance line over time Then I think your last question was, what should you expect going forward? then i think your last question was what should you expect going forward I would expect something around, you know, 4%, you know, going forward. And bear in mind, we are building a lot of new-to-industry stores. Those stores are bigger than some of our existing networks. So those are going to come with higher costs from the beginning and especially in the beginning, as we are going to make sure that those stores are fully staffed to make a really good first impression to our customer. And then, of course, the fuel and the merch will ramp over time. So a lot of the driver of our OpEx is actually the new-to-industry growth building the bigger stores. But we are going to hold the line on making sure that we are operating as efficiently as possible. I would expect something around, you know, 4%, you know, going forward. i would expect something around you know 4% you know going forward And bear in mind, we are building a lot of new-to-industry stores. and bear in mind we are building a lot of new-to-industry stores Those stores are bigger than some of our existing networks. those stores are bigger than some of our existing networks So those are going to come with higher costs from the beginning and especially in the beginning, as we are going to make sure that those stores are fully staffed to make a really good first impression to our customer. so those are going to come with higher costs from the beginning and especially in the beginning as we are going to make sure that those stores are fully staffed to make a really good first impression to our customer And then, of course, the fuel and the merch will ramp over time. and then of course the fuel and the merch will ramp over time So a lot of the driver of our OpEx is actually the new-to-industry growth building the bigger stores. so a lot of the driver of our opex is actually the new-to-industry growth building the bigger stores But we are going to hold the line on making sure that we are operating as efficiently as possible. but we are going to hold the line on making sure that we are operating as efficiently as possible

Speaker 10: Your next question comes from Jacob Aiken-Phillips with Melius Research. Your next question comes from Jacob Aiken-Phillips with Melius Research. your next question comes from jacob aiken-phillips with melius research

Speaker 8: Hi. Good morning. I just wanted to double-click on that, the larger-format stores and some of the cost pressures. I think, last year, there was a dynamic where a lot of stores opened towards the end of the year, beginning of the year. And the winter storm in February, like, exacerbated some of those cost pressures. We had this January storm, and I guess February is still pending. But how should we think about, like, the 1Q dynamics there and then the evolution of that or the cadence throughout the year? Hi. hi Good morning. good morning I just wanted to double-click on that, the larger-format stores and some of the cost pressures. i just wanted to double-click on that the larger-format stores and some of the cost pressures I think, last year, there was a dynamic where a lot of stores opened towards the end of the year, beginning of the year. i think last year there was a dynamic where a lot of stores opened towards the end of the year beginning of the year And the winter storm in February, like, exacerbated some of those cost pressures. and the winter storm in february like exacerbated some of those cost pressures We had this January storm, and I guess February is still pending. we had this january storm and i guess february is still pending But how should we think about, like, the 1Q dynamics there and then the evolution of that or the cadence throughout the year? but how should we think about like the 1q dynamics there and then the evolution of that or the cadence throughout the year

Speaker 9: What I would tell you is, we will experience some higher maintenance costs from this first quarter winter storms. But we also were the beneficiaries of some higher margins too heading into those storms. So we think that, on balance, all that is going to offset and was fully baked into, you know, kind of the $1 billion-ish that we, we already talked about. So, you are correct that when we build a bunch of stores, these larger stores, all at one time, those come with full OpEx really from day one while our fuel takes a bit of time to ramp and merchandise takes a full three years to ramp. And then, of course, the fuel does ramp faster. But we are also pricing very aggressively in order to take that share as well. So that definitely has an impact on our overall OpEx. What I would tell you is, we will experience some higher maintenance costs from this first quarter winter storms. what i would tell you is we will experience some higher maintenance costs from this first quarter winter storms But we also were the beneficiaries of some higher margins too heading into those storms. but we also were the beneficiaries of some higher margins too heading into those storms So we think that, on balance, all that is going to offset and was fully baked into, you know, kind of the $1 billion-ish that we, we already talked about. so we think that on balance all that is going to offset and was fully baked into you know kind of the $1 billion-ish that we we already talked about So, you are correct that when we build a bunch of stores, these larger stores, all at one time, those come with full OpEx really from day one while our fuel takes a bit of time to ramp and merchandise takes a full three years to ramp. so you are correct that when we build a bunch of stores these larger stores all at one time those come with full opex really from day one while our fuel takes a bit of time to ramp and merchandise takes a full three years to ramp And then, of course, the fuel does ramp faster. and then of course the fuel does ramp faster But we are also pricing very aggressively in order to take that share as well. but we are also pricing very aggressively in order to take that share as well So that definitely has an impact on our overall OpEx. so that definitely has an impact on our overall opex I would say that, you know, half of it or so is just attributable to those larger stores. I would say that, you know, half of it or so is just attributable to those larger stores. i would say that you know half of it or so is just attributable to those larger stores

Speaker 8: Got it. And then just on the small tuck-in acquisitions that you like, you just did four and then could potentially do some this year, it's a newer dynamic. And I'm just curious, what exactly do you look for? And I know it's early, but, like, what do you envision the, like, economic improvement of the stores when, like, you get the Murphy's merchandising into the stores? Got it. got it And then just on the small tuck-in acquisitions that you like, you just did four and then could potentially do some this year, it's a newer dynamic. and then just on the small tuck-in acquisitions that you like you just did four and then could potentially do some this year it's a newer dynamic And I'm just curious, what exactly do you look for? and i'm just curious what exactly do you look for And I know it's early, but, like, what do you envision the, like, economic improvement of the stores when, like, you get the Murphy's merchandising into the stores? and i know it's early but like what do you envision the like economic improvement of the stores when like you get the murphy's merchandising into the stores

Speaker 9: We really liked that Colorado acquisition in particular because we got to pick and choose which ones we wanted versus taking a whole portfolio where you get the good and the bad, and you just have to make the best of the bad. In this case, we got to kind of cherry-pick. And it was a market in which, one, we wanted to add density. This was a very quick and easy way to do it. It was also an economic way to do it. And we were able to get those stores open in, what, 30 days or so. We really liked that Colorado acquisition in particular because we got to pick and choose which ones we wanted versus taking a whole portfolio where you get the good and the bad, and you just have to make the best of the bad. we really liked that colorado acquisition in particular because we got to pick and choose which ones we wanted versus taking a whole portfolio where you get the good and the bad and you just have to make the best of the bad In this case, we got to kind of cherry-pick. in this case we got to kind of cherry-pick And it was a market in which, one, we wanted to add density. and it was a market in which one we wanted to add density This was a very quick and easy way to do it. this was a very quick and easy way to do it It was also an economic way to do it. it was also an economic way to do it And we were able to get those stores open in, what, 30 days or so. and we were able to get those stores open in what 30 days or so

Speaker 8: More than 30 days. More than 30 days. more than 30 days

Speaker 9: less than 30 days. We were able to put our signage up, get our assortment how we wanted it, get those stores back open. So we were able to hopefully retain most of the customer base that was already going there and then leverage our Murphy Drive Rewards loyalty app and our density of stores in that market to drive more traffic into that store. So we liked it from the standpoint we got to cherry-pick it. It was a market in which we wanted to add density. It also allowed us to do that very quickly without having to go through we like organic growth, but it takes a long time to go through the, "Let's pick the site. Let's permit the site. Let's construct the store. Let's get all our, opening permits." That just takes a long time. less than 30 days. less than 30 days We were able to put our signage up, get our assortment how we wanted it, get those stores back open. we were able to put our signage up get our assortment how we wanted it get those stores back open So we were able to hopefully retain most of the customer base that was already going there and then leverage our Murphy Drive Rewards loyalty app and our density of stores in that market to drive more traffic into that store. so we were able to hopefully retain most of the customer base that was already going there and then leverage our murphy drive rewards loyalty app and our density of stores in that market to drive more traffic into that store So we liked it from the standpoint we got to cherry-pick it. so we liked it from the standpoint we got to cherry-pick it It was a market in which we wanted to add density. it was a market in which we wanted to add density It also allowed us to do that very quickly without having to go through we like organic growth, but it takes a long time to go through the, "Let's pick the site. it also allowed us to do that very quickly without having to go through we like organic growth but it takes a long time to go through the "let's pick the site Let's permit the site. let's permit the site Let's construct the store. let's construct the store Let's get all our, opening permits." That just takes a long time. let's get all our opening permits." that just takes a long time Having the ability to bolster that with some of these maybe smaller onesie, twosie, fivesie-type acquisitions, we are certainly in the market looking at some of those right now. Having the ability to bolster that with some of these maybe smaller onesie, twosie, fivesie-type acquisitions, we are certainly in the market looking at some of those right now. having the ability to bolster that with some of these maybe smaller onesie twosie fivesie-type acquisitions we are certainly in the market looking at some of those right now

Speaker 8: Thanks, Mindy. Congrats on the new role. Thanks, Mindy. thanks mindy Congrats on the new role. congrats on the new role

Speaker 9: Thank you very much. Thank you very much. thank you very much

Speaker 10: Your next question comes from Pooran Sharma with Stephens Inc. Your next question comes from Pooran Sharma with Stephens Inc. your next question comes from pooran sharma with stephens inc

Speaker 11: Hey, good morning. Thanks for the question. I, Hey, good morning. hey good morning Thanks for the question. thanks for the question I, i

Speaker 9: Good morning. Good morning. good morning

Speaker 11: Just wanted to hey, Mindy. Good morning. Just wanted to maybe start off with understanding the contribution from the NTIs in year three. I think you mentioned $35 million-$40 million in yesterday's prepared comments and today as well. And I think you mentioned or yeah, in the prepared comments, you maybe expected was it two years' worth of these 50-class builds contributing $30 million to $35 million to $40 million? So higher level, should we be thinking that you're gonna get about $70 million-$80 million in contribution dollars from these stores? And then that would rise to around $100 million-$120 million by 2028 or just wanted to get the right way to frame up that contribution. Just wanted to hey, Mindy. just wanted to hey mindy Good morning. good morning Just wanted to maybe start off with understanding the contribution from the NTIs in year three. just wanted to maybe start off with understanding the contribution from the ntis in year three I think you mentioned $35 million-$40 million in yesterday's prepared comments and today as well. i think you mentioned $35 million-$40 million in yesterday's prepared comments and today as well And I think you mentioned or yeah, in the prepared comments, you maybe expected was it two years' worth of these 50-class builds contributing $30 million to $35 million to $40 million? and i think you mentioned or yeah in the prepared comments you maybe expected was it two years' worth of these 50-class builds contributing $30 million to $35 million to $40 million So higher level, should we be thinking that you're gonna get about $70 million-$80 million in contribution dollars from these stores? so higher level should we be thinking that you're gonna get about $70 million-$80 million in contribution dollars from these stores And then that would rise to around $100 million-$120 million by 2028 or just wanted to get the right way to frame up that contribution. and then that would rise to around $100 million-$120 million by 2028 or just wanted to get the right way to frame up that contribution

Speaker 9: It's more of a stairstep. And granted, we're always gonna be for the foreseeable future, we're going to be building a new class of 50, which are going to be a drag on that as they then incur full cost but have to go to ramp. So what we said was we expect each new build class of 50 stores to generate between $35 million and $40 million of EBITDA at maturity after their three-year ramp. So as we enter 2027, we will have the 32 new stores from our 2024 build class, the 51 stores from our 2025 build class, and the 45-55 from this year helping to grow EBITDA in 2027. So cumulatively, this will begin to move the needle even if the fuel environment does not normalize. It's more of a stairstep. it's more of a stairstep And granted, we're always gonna be for the foreseeable future, we're going to be building a new class of 50, which are going to be a drag on that as they then incur full cost but have to go to ramp. and granted we're always gonna be for the foreseeable future we're going to be building a new class of 50 which are going to be a drag on that as they then incur full cost but have to go to ramp So what we said was we expect each new build class of 50 stores to generate between $35 million and $40 million of EBITDA at maturity after their three-year ramp. so what we said was we expect each new build class of 50 stores to generate between $35 million and $40 million of ebitda at maturity after their three-year ramp So as we enter 2027, we will have the 32 new stores from our 2024 build class, the 51 stores from our 2025 build class, and the 45-55 from this year helping to grow EBITDA in 2027. so as we enter 2027 we will have the 32 new stores from our 2024 build class the 51 stores from our 2025 build class and the 45-55 from this year helping to grow ebitda in 2027 So cumulatively, this will begin to move the needle even if the fuel environment does not normalize. so cumulatively this will begin to move the needle even if the fuel environment does not normalize We expect and continue to potentially increase our ability to add more than 50 stores in the network as we look even beyond 2027. That's why we say looking back, 2026 will be viewed as an inflection point in our ability to deliver sustained EBITDA. The 120 is a bit extreme because you're gonna still have that 50 new stores coming on, which in that first year especially, are a decrement to EBITDA. We expect and continue to potentially increase our ability to add more than 50 stores in the network as we look even beyond 2027. we expect and continue to potentially increase our ability to add more than 50 stores in the network as we look even beyond 2027 That's why we say looking back, 2026 will be viewed as an inflection point in our ability to deliver sustained EBITDA. that's why we say looking back 2026 will be viewed as an inflection point in our ability to deliver sustained ebitda The 120 is a bit extreme because you're gonna still have that 50 new stores coming on, which in that first year especially, are a decrement to EBITDA. the 120 is a bit extreme because you're gonna still have that 50 new stores coming on which in that first year especially are a decrement to ebitda

Speaker 11: Okay. That's very helpful. Appreciate the color there. And I wanted to maybe understand kind of the higher-than-expected PS&W and RINs contribution for the quarter. Wanted to understand more specifically what the dynamics at play were during 4Q. And as we look and think about PS&W margins in 1Q, I know you're expecting $0.025 per gallon for the year. But just with the run-up in RIN prices, should we expect PS&W margins to stay a little bit above that $0.02-$0.025 per gallon range you'd previously mentioned? Okay. okay That's very helpful. that's very helpful Appreciate the color there. appreciate the color there And I wanted to maybe understand kind of the higher-than-expected PS&W and RINs contribution for the quarter. and i wanted to maybe understand kind of the higher-than-expected ps&w and rins contribution for the quarter Wanted to understand more specifically what the dynamics at play were during 4Q. wanted to understand more specifically what the dynamics at play were during 4q And as we look and think about PS&W margins in 1Q, I know you're expecting $0.025 per gallon for the year. and as we look and think about ps&w margins in 1q i know you're expecting $0.025 per gallon for the year But just with the run-up in RIN prices, should we expect PS&W margins to stay a little bit above that $0.02-$0.025 per gallon range you'd previously mentioned? but just with the run-up in rin prices should we expect ps&w margins to stay a little bit above that $0.02-$0.025 per gallon range you'd previously mentioned

Speaker 9: Sure. When you compare the fourth quarter versus prior year in PS&W, this year's were really supported by stronger arbitrage, stronger line-space values, but less than prior year because we did have some downward movements in the price. So that's what's explaining that. But there was a little more volatility in the fourth quarter than in the third quarter, for example. And so you saw the benefit of that in the PS&W line. As we look forward into the first quarter, obviously, these winter storms are having an impact on the network. It's also having an impact on price. Too early to say where we're gonna end up on PS&W for the quarter at this point because the swings can be pretty dramatic. Sure. sure When you compare the fourth quarter versus prior year in PS&W, this year's were really supported by stronger arbitrage, stronger line-space values, but less than prior year because we did have some downward movements in the price. when you compare the fourth quarter versus prior year in ps&w this year's were really supported by stronger arbitrage stronger line-space values but less than prior year because we did have some downward movements in the price So that's what's explaining that. so that's what's explaining that But there was a little more volatility in the fourth quarter than in the third quarter, for example. but there was a little more volatility in the fourth quarter than in the third quarter for example And so you saw the benefit of that in the PS&W line. and so you saw the benefit of that in the ps&w line As we look forward into the first quarter, obviously, these winter storms are having an impact on the network. as we look forward into the first quarter obviously these winter storms are having an impact on the network It's also having an impact on price. it's also having an impact on price Too early to say where we're gonna end up on PS&W for the quarter at this point because the swings can be pretty dramatic. too early to say where we're gonna end up on ps&w for the quarter at this point because the swings can be pretty dramatic But safe to say for the full year, we think that we're still gonna be within that band unless we can see some more prolonged volatility sustain itself. But that's where we would expect PS&W to land for the full year. Too early to say really for the first quarter. And then with regard to the RINs, as we always say, the price of the RIN is baked into the price of the gas we pay. So while there may be some temporary dislocations if RINs run up very quickly or run down very quickly, over the sweep of time, it all balances out. But safe to say for the full year, we think that we're still gonna be within that band unless we can see some more prolonged volatility sustain itself. but safe to say for the full year we think that we're still gonna be within that band unless we can see some more prolonged volatility sustain itself But that's where we would expect PS&W to land for the full year. but that's where we would expect ps&w to land for the full year Too early to say really for the first quarter. too early to say really for the first quarter And then with regard to the RINs, as we always say, the price of the RIN is baked into the price of the gas we pay. and then with regard to the rins as we always say the price of the rin is baked into the price of the gas we pay So while there may be some temporary dislocations if RINs run up very quickly or run down very quickly, over the sweep of time, it all balances out. so while there may be some temporary dislocations if rins run up very quickly or run down very quickly over the sweep of time it all balances out

Speaker 11: Okay. Appreciate the color. Okay. okay Appreciate the color. appreciate the color

Speaker 9: Thanks, Pooran. Thanks, Pooran. thanks pooran

Speaker 10: Your next question comes from Corey Tarlowe with Jefferies. Your next question comes from Corey Tarlowe with Jefferies. your next question comes from corey tarlowe with jefferies

Speaker 5: Great. Thanks. Can you talk a little bit about what happened, on the tobacco side on from a margin perspective in the quarter and then also maybe what to expect ahead there? Great. great Thanks. thanks Can you talk a little bit about what happened, on the tobacco side on from a margin perspective in the quarter and then also maybe what to expect ahead there? can you talk a little bit about what happened on the tobacco side on from a margin perspective in the quarter and then also maybe what to expect ahead there

Speaker 9: Sure. And that's a great question. What you were seeing there is something we talked about frequently last year. So for the fourth quarter, it's really the timing of promotional dollars impacting that cigarette category in particular and the volumes. So importantly, though, although volumes were down, we did grow share of market in the cigarette category for both the 4-week and 13-week periods ending January 4th. So our volumes did remain strong compared to the market. But keep in mind, these categories are highly promotional. So you won't necessarily ever see straight-line growth even on a year-to-year basis. But as we've demonstrated over longer periods of time, we do have we have significantly grown those contribution dollars in the overall nicotine category. And we are definitely seeing strength in pouches and other products. And I will tell you too, the business has already normalized in January. Sure. sure And that's a great question. and that's a great question What you were seeing there is something we talked about frequently last year. what you were seeing there is something we talked about frequently last year So for the fourth quarter, it's really the timing of promotional dollars impacting that cigarette category in particular and the volumes. so for the fourth quarter it's really the timing of promotional dollars impacting that cigarette category in particular and the volumes So importantly, though, although volumes were down, we did grow share of market in the cigarette category for both the 4-week and 13-week periods ending January 4th. so importantly though although volumes were down we did grow share of market in the cigarette category for both the 4-week and 13-week periods ending january 4th So our volumes did remain strong compared to the market. so our volumes did remain strong compared to the market But keep in mind, these categories are highly promotional. but keep in mind these categories are highly promotional So you won't necessarily ever see straight-line growth even on a year-to-year basis. so you won't necessarily ever see straight-line growth even on a year-to-year basis But as we've demonstrated over longer periods of time, we do have we have significantly grown those contribution dollars in the overall nicotine category. but as we've demonstrated over longer periods of time we do have we have significantly grown those contribution dollars in the overall nicotine category And we are definitely seeing strength in pouches and other products. and we are definitely seeing strength in pouches and other products And I will tell you too, the business has already normalized in January. and i will tell you too the business has already normalized in january We expect to continue to show consistent margin performance when viewed over time. It can be lumpy quarter to quarter. We expect to continue to show consistent margin performance when viewed over time. we expect to continue to show consistent margin performance when viewed over time It can be lumpy quarter to quarter. it can be lumpy quarter to quarter

Speaker 5: Okay. Great. And then I have two quick follow-ups. I know we're lapping severe weather from last year. Can you provide any context around the storm impacts this year and then also any impacts from changes in SNAP as well? Thanks so much. Okay. okay Great. great And then I have two quick follow-ups. and then i have two quick follow-ups I know we're lapping severe weather from last year. i know we're lapping severe weather from last year Can you provide any context around the storm impacts this year and then also any impacts from changes in SNAP as well? can you provide any context around the storm impacts this year and then also any impacts from changes in snap as well Thanks so much. thanks so much

Speaker 9: Well, I would just reiterate what we said for January. You know, it's shaping up to be a good month. We are lapping winter storms from last year, but we're not finished with the winter storms from this year because now we have one impacting the Carolinas and other parts of our network. So, while we were pleased with January's results, that was one of the reasons, quite frankly, that we were not willing to, you know, increase EBITDA guidance materially because we don't know what's gonna happen for the rest of the year. And we know that we're gonna have some impacts on the back end of these winter storms as well. So turning to SNAP, though, that is a great question. And we do have some exposure there, but it is relatively small. It's actually less than 2% of our sales. Well, I would just reiterate what we said for January. well i would just reiterate what we said for january You know, it's shaping up to be a good month. you know it's shaping up to be a good month We are lapping winter storms from last year, but we're not finished with the winter storms from this year because now we have one impacting the Carolinas and other parts of our network. we are lapping winter storms from last year but we're not finished with the winter storms from this year because now we have one impacting the carolinas and other parts of our network So, while we were pleased with January's results, that was one of the reasons, quite frankly, that we were not willing to, you know, increase EBITDA guidance materially because we don't know what's gonna happen for the rest of the year. so while we were pleased with january's results that was one of the reasons quite frankly that we were not willing to you know increase ebitda guidance materially because we don't know what's gonna happen for the rest of the year And we know that we're gonna have some impacts on the back end of these winter storms as well. and we know that we're gonna have some impacts on the back end of these winter storms as well So turning to SNAP, though, that is a great question. so turning to snap though that is a great question And we do have some exposure there, but it is relatively small. and we do have some exposure there but it is relatively small It's actually less than 2% of our sales. it's actually less than 2% of our sales But we did have those SNAP changes take effect January 1 in five of the states in which we operate. As you, I'm sure, know, they primarily affect candy, Pack Bev, and specifically energy drinks. I'll share with you some data points, but I wanna caveat these are very preliminary. But our early reads suggest kind of a modest headwind in candy and energy drinks. We're gonna continue to monitor the data, obviously, as this phases in. And we do expect some impact in the very discretionary categories, which is included in our guidance, by the way. We put in our guidance a headwind of, I think it's roughly less than $5 million overall for SNAP. Our top EBT item, you might not guess it. It's actually Red Bull. But we did have those SNAP changes take effect January 1 in five of the states in which we operate. but we did have those snap changes take effect january 1 in five of the states in which we operate As you, I'm sure, know, they primarily affect candy, Pack Bev, and specifically energy drinks. as you i'm sure know they primarily affect candy pack bev and specifically energy drinks I'll share with you some data points, but I wanna caveat these are very preliminary. i'll share with you some data points but i wanna caveat these are very preliminary But our early reads suggest kind of a modest headwind in candy and energy drinks. but our early reads suggest kind of a modest headwind in candy and energy drinks We're gonna continue to monitor the data, obviously, as this phases in. we're gonna continue to monitor the data obviously as this phases in And we do expect some impact in the very discretionary categories, which is included in our guidance, by the way. and we do expect some impact in the very discretionary categories which is included in our guidance by the way We put in our guidance a headwind of, I think it's roughly less than $5 million overall for SNAP. we put in our guidance a headwind of i think it's roughly less than $5 million overall for snap Our top EBT item, you might not guess it. our top ebt item you might not guess it It's actually Red Bull. it's actually red bull And so while some customers may pull back, we believe that most are gonna continue to buy those products even if they are not eligible for the SNAP benefits. So there is some category noise there, but the over-impact to the overall impact to the business is modest. As I said, it's, it's $5 million or less. And so while some customers may pull back, we believe that most are gonna continue to buy those products even if they are not eligible for the SNAP benefits. and so while some customers may pull back we believe that most are gonna continue to buy those products even if they are not eligible for the snap benefits So there is some category noise there, but the over-impact to the overall impact to the business is modest. so there is some category noise there but the over-impact to the overall impact to the business is modest As I said, it's, it's $5 million or less. as i said it's it's $5 million or less

Speaker 5: Great. Thanks so much, and best of luck. Great. great Thanks so much, and best of luck. thanks so much and best of luck

Speaker 9: Thank you. Thank you. thank you

Speaker 10: Your final question comes from Brad Thomas with KeyBanc Capital Markets. Your final question comes from Brad Thomas with KeyBanc Capital Markets. your final question comes from brad thomas with keybanc capital markets

Speaker 3: Good morning. Thanks for fitting me in here. Mindy, I'll just add my congratulations as well on your first call as CEO. And I know that. Good morning. good morning Thanks for fitting me in here. thanks for fitting me in here Mindy, I'll just add my congratulations as well on your first call as CEO. mindy i'll just add my congratulations as well on your first call as ceo And I know that. and i know that

Speaker 9: Thanks, Brad. Thanks, Brad. thanks brad

Speaker 3: Last quarter, the main message was around much of the leadership transition, keeping the core strategies of Murphy in place. But just wondering if I could ask directly, if there's specific areas that you think the priorities will change a little bit, now that you've taken over. Last quarter, the main message was around much of the leadership transition, keeping the core strategies of Murphy in place. last quarter the main message was around much of the leadership transition keeping the core strategies of murphy in place But just wondering if I could ask directly, if there's specific areas that you think the priorities will change a little bit, now that you've taken over. but just wondering if i could ask directly if there's specific areas that you think the priorities will change a little bit now that you've taken over

Speaker 9: Yeah. That is a great question. Thank you, actually, for asking that. What I said in those certain terms, you know, some things are going to stay the same. Our everyday low-price strategy, our continuous improvement mindset, capital allocation will remain unchanged. So when I think about it, it's really more of our culture that is evolving. So we're pushing for things like quicker collaboration, more nimble decision-making, reorganize the company to create more clear roles and accountability. We've already made some leadership changes to help us work better together, remove some inefficient reporting structures, and increase accountability. I can tell you people are excited because their work and ideas can have more impact. And then that excitement ends up being infectious. And we have an incredibly strong platform to improve this business and are 100% dedicated to growing shareholder value. Yeah. yeah That is a great question. that is a great question Thank you, actually, for asking that. thank you actually for asking that What I said in those certain terms, you know, some things are going to stay the same. what i said in those certain terms you know some things are going to stay the same Our everyday low-price strategy, our continuous improvement mindset, capital allocation will remain unchanged. our everyday low-price strategy our continuous improvement mindset capital allocation will remain unchanged So when I think about it, it's really more of our culture that is evolving. so when i think about it it's really more of our culture that is evolving So we're pushing for things like quicker collaboration, more nimble decision-making, reorganize the company to create more clear roles and accountability. so we're pushing for things like quicker collaboration more nimble decision-making reorganize the company to create more clear roles and accountability We've already made some leadership changes to help us work better together, remove some inefficient reporting structures, and increase accountability. we've already made some leadership changes to help us work better together remove some inefficient reporting structures and increase accountability I can tell you people are excited because their work and ideas can have more impact. i can tell you people are excited because their work and ideas can have more impact And then that excitement ends up being infectious. and then that excitement ends up being infectious And we have an incredibly strong platform to improve this business and are 100% dedicated to growing shareholder value. and we have an incredibly strong platform to improve this business and are 100% dedicated to growing shareholder value So our five strategic pillars in which we have grown the company since then are still intact. It's really just a culture shift, which I think is necessary to make sure that we are agile and adaptable and really unafraid to challenge ourselves and stretch further and try new things. So you may see us be, and I hope you will see us be a bit more innovative going forward than we are in the past. And as we have these macro conditions pressuring our stores, we have accelerated competition. I think that's a smart thing to do. We need to be able to fight back in our business model, reducing our reliance on fuel and tobacco where we can but still preserving the strengths in both of those. So our five strategic pillars in which we have grown the company since then are still intact. so our five strategic pillars in which we have grown the company since then are still intact It's really just a culture shift, which I think is necessary to make sure that we are agile and adaptable and really unafraid to challenge ourselves and stretch further and try new things. it's really just a culture shift which i think is necessary to make sure that we are agile and adaptable and really unafraid to challenge ourselves and stretch further and try new things So you may see us be, and I hope you will see us be a bit more innovative going forward than we are in the past. so you may see us be and i hope you will see us be a bit more innovative going forward than we are in the past And as we have these macro conditions pressuring our stores, we have accelerated competition. and as we have these macro conditions pressuring our stores we have accelerated competition I think that's a smart thing to do. i think that's a smart thing to do We need to be able to fight back in our business model, reducing our reliance on fuel and tobacco where we can but still preserving the strengths in both of those. we need to be able to fight back in our business model reducing our reliance on fuel and tobacco where we can but still preserving the strengths in both of those We need to figure out how to attract and retain new customers, how to grow trips and spend, and how to make our store team's life easier and our stores more productive. And then what are those niches of opportunities of value that we can exploit? We're gonna be looking to innovation to support our core business and also drive for more business. We're really already looking at it around three main pillars, which are our portfolio, our customer, and advanced technology. We're gonna attack all of those types of opportunities and absolutely believe that we have untapped potential in this business to improve not just our existing stores and serving our existing customers but the ability to stretch for more with different stores and different customers. I'm excited about the future. I know the team is too. We need to figure out how to attract and retain new customers, how to grow trips and spend, and how to make our store team's life easier and our stores more productive. we need to figure out how to attract and retain new customers how to grow trips and spend and how to make our store team's life easier and our stores more productive And then what are those niches of opportunities of value that we can exploit? and then what are those niches of opportunities of value that we can exploit We're gonna be looking to innovation to support our core business and also drive for more business. we're gonna be looking to innovation to support our core business and also drive for more business We're really already looking at it around three main pillars, which are our portfolio, our customer, and advanced technology. we're really already looking at it around three main pillars which are our portfolio our customer and advanced technology We're gonna attack all of those types of opportunities and absolutely believe that we have untapped potential in this business to improve not just our existing stores and serving our existing customers but the ability to stretch for more with different stores and different customers. we're gonna attack all of those types of opportunities and absolutely believe that we have untapped potential in this business to improve not just our existing stores and serving our existing customers but the ability to stretch for more with different stores and different customers I'm excited about the future. i'm excited about the future I know the team is too. i know the team is too Stay tuned to see what we will deliver on this topic. Stay tuned to see what we will deliver on this topic. stay tuned to see what we will deliver on this topic

Speaker 3: That's really helpful, Mindy. If I could squeeze in one last follow-up just on the QuickChek brand. I don't think I heard any commentary about how it performed in the quarter. Could you just address that and how you're thinking about its impact on EBITDA in 2026? Thanks. That's really helpful, Mindy. that's really helpful mindy If I could squeeze in one last follow-up just on the QuickChek brand. if i could squeeze in one last follow-up just on the quickchek brand I don't think I heard any commentary about how it performed in the quarter. i don't think i heard any commentary about how it performed in the quarter Could you just address that and how you're thinking about its impact on EBITDA in 2026? could you just address that and how you're thinking about its impact on ebitda in 2026 Thanks. thanks

Speaker 9: Yes. Great question. It is continuing to exhibit stronger sales. Margins continue to be pressured. Traffic continues to be pressured. What we're doing really there is really simple. We are refocusing on the fundamentals of the business. We are focusing on the core, which are mainly coffee, breakfast, and sandwich as our traffic drivers. We are simplifying the menu, rationalizing the assortment based on performance, not legacy, not what we've always done. So we're choosing where we win and really not trying to be everything for everybody. We're also focused on improving margin. We need to balance the innovation with cost and margin control because while growth is important, we have to earn money. I can't take growth to the bank. We have to take margin to the bank. So being disciplined around that. Yes. yes Great question. great question It is continuing to exhibit stronger sales. it is continuing to exhibit stronger sales Margins continue to be pressured. margins continue to be pressured Traffic continues to be pressured. traffic continues to be pressured What we're doing really there is really simple. what we're doing really there is really simple We are refocusing on the fundamentals of the business. we are refocusing on the fundamentals of the business We are focusing on the core, which are mainly coffee, breakfast, and sandwich as our traffic drivers. we are focusing on the core which are mainly coffee breakfast and sandwich as our traffic drivers We are simplifying the menu, rationalizing the assortment based on performance, not legacy, not what we've always done. we are simplifying the menu rationalizing the assortment based on performance not legacy not what we've always done So we're choosing where we win and really not trying to be everything for everybody. so we're choosing where we win and really not trying to be everything for everybody We're also focused on improving margin. we're also focused on improving margin We need to balance the innovation with cost and margin control because while growth is important, we have to earn money. we need to balance the innovation with cost and margin control because while growth is important we have to earn money I can't take growth to the bank. i can't take growth to the bank We have to take margin to the bank. we have to take margin to the bank So being disciplined around that. so being disciplined around that And then building a better operating model that simplifies operation, reduces complexity, enhances that customer experience because our speed to service is better. So overall, at QuickChek, really just a recognition that execution and ability to scale are as important as idea generation because ideas which can't be implemented well or executed consistently are actually a bad idea. So I would add too that we have new leadership at QuickChek and that new structure. And that will help speed up execution and also, I think, sparks some innovation. So I really like where the team is headed. And I believe they're focused on the right thing. So really appreciate you asking about that part of our business. And then building a better operating model that simplifies operation, reduces complexity, enhances that customer experience because our speed to service is better. and then building a better operating model that simplifies operation reduces complexity enhances that customer experience because our speed to service is better So overall, at QuickChek, really just a recognition that execution and ability to scale are as important as idea generation because ideas which can't be implemented well or executed consistently are actually a bad idea. so overall at quickchek really just a recognition that execution and ability to scale are as important as idea generation because ideas which can't be implemented well or executed consistently are actually a bad idea So I would add too that we have new leadership at QuickChek and that new structure. so i would add too that we have new leadership at quickchek and that new structure And that will help speed up execution and also, I think, sparks some innovation. and that will help speed up execution and also i think sparks some innovation So I really like where the team is headed. so i really like where the team is headed And I believe they're focused on the right thing. and i believe they're focused on the right thing So really appreciate you asking about that part of our business. so really appreciate you asking about that part of our business

Speaker 3: That's helpful. Thank you, Mindy. That's helpful. that's helpful Thank you, Mindy. thank you mindy

Speaker 9: Thank you. Thank you. thank you

Speaker 10: There are no further questions at this time. We'll turn the call back over to Murphy's presenter panel for any closing remarks. There are no further questions at this time. there are no further questions at this time We'll turn the call back over to Murphy's presenter panel for any closing remarks. we'll turn the call back over to murphy's presenter panel for any closing remarks

Speaker 9: Thank you for your time and your participation on the call. All great questions. You know, as we look to upcoming calls, I want you to know that we are committed to strengthening our core business while pursuing incremental sources of value that endure across the fuel cycle. We are building from a very solid foundation. I have solid conviction in this leadership team's capacity to unlock Murphy USA's next level of potential. Thank you again. I look forward to next quarter's call. Thank you for your time and your participation on the call. thank you for your time and your participation on the call All great questions. all great questions You know, as we look to upcoming calls, I want you to know that we are committed to strengthening our core business while pursuing incremental sources of value that endure across the fuel cycle. you know as we look to upcoming calls i want you to know that we are committed to strengthening our core business while pursuing incremental sources of value that endure across the fuel cycle We are building from a very solid foundation. we are building from a very solid foundation I have solid conviction in this leadership team's capacity to unlock Murphy USA's next level of potential. i have solid conviction in this leadership team's capacity to unlock murphy usa's next level of potential Thank you again. thank you again I look forward to next quarter's call. i look forward to next quarter's call

Speaker 10: This concludes today's call. Thank you for participating. You may now disconnect. This concludes today's call. this concludes today's call Thank you for participating. thank you for participating You may now disconnect. you may now disconnect