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| 8-K - 8-K Q4 2017 EARNINGS RELEASE - Murphy USA Inc. | form8-kq42017earningsrelea.htm |
Exhibit 99.1
Murphy USA Inc. Reports Preliminary Fourth Quarter 2017 Results
El Dorado, Arkansas, Jan. 31, 2018 (GLOBE NEWSWIRE) – Murphy USA Inc. (NYSE: MUSA), a leading marketer of retail motor fuel products and convenience merchandise, today announced preliminary financial results for the three and twelve months ended December 31, 2017.
Key Highlights:
• | Net income was $124.8 million, or $3.58 per diluted share, in Q4 2017 compared to net income of $43.8 million, or $1.14 per diluted share, in Q4 2016. The fourth quarter included an estimated deferred tax benefit of $89 million as a result of the enactment of the Tax Cuts and Jobs Act in December 2017, which increased net income. For the full year, net income was $245.3 million, or $6.78 per diluted share, compared to 2016 net income of $221.5 million, or $5.59 per diluted share. |
• | Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results including RINs) for Q4 2017 was 16.5 cpg compared to 15.4 cpg in Q4 2016. For the full year, total fuel contribution was 16.4 cpg compared to 15.4 cpg in 2016. |
• | Total retail gallons declined 2.6% to 1.0 billion gallons for the network during Q4 2017 while volumes on an average per store month ("APSM") basis declined 5.9% versus prior year quarter. For the full year, total retail gallons declined 1.3% to 4.1 billion gallons, while APSM volumes were down 5.3%. |
• | Merchandise contribution dollars grew 8.1% during the quarter to $97.0 million on average unit margins of 16.3%, which was a new quarterly record and up 100 basis points from 15.3% in Q4 of 2016. For the full year, merchandise contribution dollars were up 4.7% on average unit margins of 16.1%, a full year record and a 50 basis point increase versus 2016. |
• | During the quarter, 23 new stores opened, in addition to 4 raze-and-rebuild locations. For the full year, 45 new stores were opened, in addition to 21 raze-and-rebuild locations. Our year-end store count is 1,446. |
• | Common shares repurchased during the fourth quarter were approximately 712 thousand for $54 million at an average price of $76 per share. Full year 2017 common shares repurchased totaled 3.0 million shares for $206 million at an average price of $69 per share. |
"We are extremely pleased with the company’s performance in 2017," said President and CEO Andrew Clyde. "The business was resilient against continued headwinds, challenging macroeconomic conditions, and especially in the first quarter, regulatory uncertainty that resulted in a change to our guidance early in the year. However, our focused strategy and operating discipline generated full-year results that were within the original guidance range for Adjusted EBITDA and well above our guidance for net income thanks to the passage of the Tax Cuts and Jobs Act, which will provide continued tangible benefits into 2018.” Clyde concluded, "Although challenges and regulatory uncertainty persist, Murphy USA has repeatedly proven its resilience to external factors and its ability to add value to its business. We enter 2018 with an attractive free cash flow profile to continue executing our balanced capital allocation strategy to create long-term shareholder value."
Consolidated Results
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
Key Operating Metrics | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income ($ Millions) | $ | 124.8 | $ | 43.8 | $ | 245.3 | $ | 221.5 | |||||||
Earnings per share (diluted) | $ | 3.58 | $ | 1.14 | $ | 6.78 | $ | 5.59 | |||||||
Adjusted EBITDA ($ Millions) | $ | 99.0 | $ | 103.2 | $ | 405.9 | $ | 400.1 | |||||||
Net income and earnings per share in Q4 2017 were above prior year levels due primarily to the impact of the enactment of the Tax Cuts and Jobs Act in December 2017. This tax law change resulted in the existing net deferred tax liabilities being revalued to lower corporate tax rates for future periods and generated an estimated benefit to income tax expense of $88.9 million in Q4 2017. The estimate is based on currently available information and is a non-cash benefit. Adjusted EBITDA for the current quarter was slightly lower than the prior year quarter primarily because of increased charitable donations of $10 million in SG&A expense that were accelerated into December 2017 in advance of lower future corporate tax rates as part of a tax planning strategy. Net income and earnings per share in the twelve-month period ended December 31, 2016 reflect $56.0 million of after-tax gains from the sale of the CAM pipeline system recorded in the first quarter of 2016.
Fuel
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
Key Operating Metrics | 2017 | 2016 | 2017 | 2016 | |||||||||||
Total fuel contribution ($ Millions) | $ | 171.9 | $ | 164.2 | $ | 677.7 | $ | 647.2 | |||||||
Total fuel contribution (including retail, PS&W and RINs) (cpg) | 16.5 | 15.4 | 16.4 | 15.4 | |||||||||||
Total retail fuel contribution ($ Millions) | $ | 143.9 | $ | 112.7 | $ | 581.0 | $ | 485.8 | |||||||
Retail fuel volume - chain (Million gal) | 1,039.3 | 1,066.5 | 4,140.9 | 4,195.2 | |||||||||||
Retail fuel volume - per site (K gal APSM) | 242.1 | 257.3 | 245.3 | 259.1 | |||||||||||
Retail fuel margin (cpg excl credit card fees) | 13.8 | 10.6 | 14.0 | 11.6 | |||||||||||
PS&W including RINs contribution (cpg) | 2.7 | 4.8 | 2.4 | 3.8 | |||||||||||
Total fuel contribution dollars increased 4.7% in Q4 2017 due primarily to a 27.7% increase in retail margin dollars, partially offset by lower contribution from PS&W including RINs. For the full year, total fuel contribution dollars also increased 4.7%. APSM volumes declined 5.9% quarter-over-quarter to 242,106, primarily due to continued competitive pressures and to a lesser extent, the impact of hurricanes Harvey and Irma. The contribution from PS&W including RINs continues to deliver in the guided range of 2 cpg to 3 cpg.
Merchandise
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
Key Operating Metrics | 2017 | 2016 | 2017 | 2016 | |||||||||||
Total merchandise contribution ($ Millions) | $ | 97.1 | $ | 89.8 | $ | 381.2 | $ | 364.1 | |||||||
Total merchandise sales ($ Millions) | $ | 595.6 | $ | 588.4 | $ | 2,372.7 | $ | 2,338.6 | |||||||
Total merchandise sales ($K APSM) | $ | 138.7 | $ | 141.9 | $ | 140.5 | $ | 144.4 | |||||||
Merchandise unit margin (%) | 16.3 | % | 15.3 | % | 16.1 | % | 15.6 | % | |||||||
Tobacco contribution ($K APSM) | $ | 13.6 | $ | 13.1 | $ | 13.3 | $ | 13.3 | |||||||
Non-tobacco contribution ($K APSM) | $ | 9.0 | $ | 8.6 | $ | 9.3 | $ | 9.2 | |||||||
Total merchandise contribution ($K APSM) | $ | 22.6 | $ | 21.7 | $ | 22.6 | $ | 22.5 | |||||||
Merchandise performance was strong in the fourth quarter with total merchandise contribution dollars increasing 8.1% at 16.3% margins, a new quarterly record, driven by growth in both the tobacco and non-tobacco categories. For the full year, total merchandise contribution dollars were up 4.7%, at 16.1% unit margins, which was a new annual record.
Other areas
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
Key Operating Metrics | 2017 | 2016 | 2017 | 2016 | |||||||||||
Total station and other operating expense ($ Millions) | $ | 130.3 | $ | 123.4 | $ | 514.9 | $ | 493.3 | |||||||
Station OPEX excl credit card fees ($K APSM) | $ | 20.6 | $ | 20.6 | $ | 20.8 | $ | 21.4 | |||||||
Total SG&A cost ($ Millions) | $ | 40.0 | $ | 28.1 | $ | 141.2 | $ | 122.7 | |||||||
Total station and other operating expenses increased $6.9 million for the quarter, reflecting new store additions and slightly higher payment fees due to 12% higher retail fuel prices. However, on a per store basis, operating expenses excluding payment fees were essentially flat. SG&A was higher for the quarter due primarily to accelerated charitable donations of $10 million that were made as part of a tax planning strategy. For the full year, operating expenses excluding credit card fees declined 2.6% on an APSM basis, driven by lower employee related expense.
Station Openings
Murphy USA opened 23 retail locations in Q4 2017, in addition to 4 raze-and-rebuild locations, bringing the year end store count to 1,446, consisting of 1,158 Murphy USA sites and 288 Murphy Express sites. For the full year, we opened 45 new stores and completed 21 raze-and-rebuilds.
Financial Resources
As of December 31, | |||||||
Key Metrics | 2017 | 2016 | |||||
Cash and cash equivalents ($ Millions) | $ | 170.0 | $ | 153.8 | |||
Long-term debt ($ Millions) | $ | 860.9 | $ | 629.6 | |||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
Key Metrics | 2017 | 2016 | 2017 | 2016 | |||||||
Average shares outstanding (diluted) (in thousands) | 34,898 | 38,297 | 36,156 | 39,646 | |||||||
Cash balances on December 31, 2017 totaled $170.0 million. Long-term debt consisted of approximately $494 million in carrying value of 6% senior notes due in 2023, $295 million in carrying value of 5.625% senior notes due in 2027 and $92 million of term debt less $20 million of current maturities, which is reflected in current liabilities. Remaining undrawn borrowing capacity under the ABL was $258 million as of December 31, 2017.
Common shares repurchased during the current quarter were approximately 712 thousand for $54.0 million. The company completed its previously announced $500 million share repurchase plan during Q4 2017. We remain committed to an ongoing program of share repurchases. In the past, our Board of Directors has typically allocated capital for this purpose at a rate of up to $50 to $100 million per quarter, depending on upcoming liquidity needs and other relevant factors. The amount purchased in any given quarter fluctuates, as we may execute the entire allocation or only a portion, depending on market and other considerations. We expect to continue to conduct share repurchases under quarterly allocations in line with our past practice; however, depending on market conditions and other factors, only a portion may be executed. In addition, there may be certain quarters in which no allocation is made due to competing capital or other business priorities. At December 31, 2017, the Company had common shares outstanding of 34,091,534.
2017 Guidance Update and 2018 Guidance Ranges
2018 Guidance | 2017 Updated Guidance Range | 2017 Actual Results | 2018 Guidance Range | |||
Organic Growth | ||||||
New Stores | 45 to 50 | 45 | Up to 30 | |||
Raze and Rebuilds | 15 to 20 | 21 | Up to 25 | |||
Fuel Contribution | ||||||
Total fuel contribution ($ Millions) | N/A | $678 | $575 to $700 | |||
Annual retail volume (Billion gallons) | 4.3 to 4.5 | 4.1 | 4.1 to 4.3 | |||
Retail fuel volume per store (K gallons APSM) | 255 to 265 | 245.3 | 235 to 245 | |||
Total fuel contribution (cpg) | 12.5 to 15 | 16.4 | 14 to 16.5 | |||
Fuel Breakeven | ||||||
Merchandise contribution ($ Millions) | $380 to $390 | $381 | $390 to $400 | |||
Total merchandise sales ($ Millions) | $2,400 to $2,450 | $2,373 | $2,400 to $2,450 | |||
Retail station OPEX excluding credit cards (APSM % YOY change) | Flat to -2% | (2.6)% | Flat to +2% | |||
Corporate Costs | ||||||
SG&A ($ Millions per year) | $135 to $140 | $141 | $135 to $140 | |||
Effective Tax Rate | N/A | (2.2)% | 24% to 26% | |||
Capital Allocation | ||||||
Capital expenditures ($ Millions) | $250 to $300 | $274 | $225 to $275 | |||
Net income ($ Millions) | $90 to $160 | $245 | $155 to $195 | |||
Adjusted EBITDA (non-GAAP) ($ Millions) | $340 to $410 | $406 | $390 to $440 | |||
Management's annual guidance for 2018 reflects the Company's economic and market environment assessment, business improvement initiatives and potential headwinds. Key 2018 guidance ranges include the following assumptions and are subject to the uncertainties noted below:
Organic Growth:
• | New store additions and raze-and-rebuild sites reflect a disciplined capital approach to the highest return opportunities |
Fuel Contribution:
• | Total fuel contribution guidance reflects a potentially wide range of outcomes given historical volatility in margins |
• | Total network fuel volumes are expected to be flat or higher, as the impact from new site additions could be offset by lower per store volumes, and reflect a variety of market scenarios around competitive dynamics |
• | Fuel margin guidance of 14 to 16.5 cpg reflects management expectations for the combined results of our retail business and PS&W business, including RIN income |
Fuel Breakeven:
• | Merchandise contribution represents a range of outcomes based on management's expectations around higher merchandise sales and margin rates bracketing 2017 actuals |
• | Store operating expense per site, before credit card fees, are expected to be flat to slightly higher |
Corp Costs:
• | SG&A costs reflect investments in IT related enhancements and other corporate projects, subject to timing and allocation of resources |
• | The effective tax rate in 2018 is expected to be in a range of 24% to 26% |
Capital Allocation:
• | Capital expenditures reflect new store growth, raze-and-rebuild activity, store maintenance and improvements, land acquisition, and continued implementation of various corporate infrastructure projects |
• | The Net Income range presented above is subject to additional uncertainties which could cause actual results to differ meaningfully from forecast results, including without limitation (1) the unpredictability of special tax items, changes in profitability mix to states with or without income tax and timing of settlement of outstanding tax matters; (2) the timing of new store development or amount of capital expended to develop these stores; and (3) the existence and/or timing of raze-and-rebuild activity |
• | Net Income and Adjusted EBITDA ranges provided reflect the impact of the above guidance components as adjusted for management's expected interactions across the components |
* * * * *
Earnings Call Information
The Company will host a conference call on February 1, 2018 at 10:00 a.m. Central time to discuss fourth quarter 2017 results. The conference call number is 1 (844) 613-1037 and the conference number is 5467727. The earnings and investor related materials, including reconciliations of any non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the Murphy USA website (http://ir.corporate.murphyusa.com). Approximately one hour after the conclusion of the conference, the webcast will be available for replay. Shortly thereafter, a transcript will be available.
Source: Murphy USA Inc. (NYSE: MUSA)
Forward-Looking Statements
Certain statements in this news release contain or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to anticipated store openings, fuel margins, merchandise margins, sales of RINs and trends in our operations. Such statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, disruptions in our supply chain and our ability to control costs; the impact of severe weather events, such as hurricanes, floods and earthquakes; the impact of any systems failures, cybersecurity and/or security breaches, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or
company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins; efficient and proper allocation of our capital resources; compliance with debt covenants; availability and cost of credit; and changes in interest rates. Our SEC reports, including our Annual Report on our Form 10-K for the year ended December 31, 2016 contain other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
Investor Contact: Christian Pikul (870) 875-7683 Director, Investor Relations christian.pikul@murphyusa.com Cell 870-677-0278 | Media/ Public Relations Contact: Jerianne Thomas (870) 875-7770 Director, Corporate Communications jerianne.thomas@murphyusa.com Cell 870-866-6321 |
Murphy USA Inc.
Consolidated Statements of Income
(Unaudited, except for twelve months in 2016)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||
(Thousands of dollars except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||
Operating Revenues | |||||||||||||
Petroleum product sales (a) | $ | 2,736,898 | $ | 2,415,653 | $ | 10,287,856 | $ | 9,070,623 | |||||
Merchandise sales | 595,595 | 588,424 | 2,372,658 | 2,338,586 | |||||||||
Other operating revenues | 47,031 | 51,714 | 166,039 | 185,344 | |||||||||
Total operating revenues | 3,379,524 | 3,055,791 | 12,826,553 | 11,594,553 | |||||||||
Operating Expenses | |||||||||||||
Petroleum product cost of goods sold (a) | 2,611,579 | 2,302,401 | 9,773,211 | 8,603,953 | |||||||||
Merchandise cost of goods sold | 498,543 | 498,617 | 1,991,404 | 1,974,486 | |||||||||
Station and other operating expenses | 130,321 | 123,410 | 514,873 | 493,320 | |||||||||
Depreciation and amortization | 33,452 | 25,863 | 116,966 | 98,610 | |||||||||
Selling, general and administrative | 40,043 | 28,120 | 141,171 | 122,669 | |||||||||
Accretion of asset retirement obligations | 450 | 414 | 1,785 | 1,650 | |||||||||
Total operating expenses | 3,314,388 | 2,978,825 | 12,539,410 | 11,294,688 | |||||||||
Gain (loss) on sale of assets | (524 | ) | (428 | ) | (3,950 | ) | 88,212 | ||||||
Income from operations | 64,612 | 76,538 | 283,193 | 388,077 | |||||||||
Other income (expense) | |||||||||||||
Interest income | 478 | 104 | 1,309 | 578 | |||||||||
Interest expense | (12,792 | ) | (9,924 | ) | (46,660 | ) | (39,704 | ) | |||||
Other nonoperating income (expense) | (1,089 | ) | 114 | 2,180 | 3,080 | ||||||||
Total other income (expense) | (13,403 | ) | (9,706 | ) | (43,171 | ) | (36,046 | ) | |||||
Income before income taxes | 51,209 | 66,832 | 240,022 | 352,031 | |||||||||
Income tax expense (benefit) | (73,631 | ) | 23,015 | (5,242 | ) | 130,539 | |||||||
Net Income | $ | 124,840 | $ | 43,817 | $ | 245,264 | $ | 221,492 | |||||
Basic and Diluted Earnings Per Common Share | |||||||||||||
Basic | $ | 3.62 | $ | 1.16 | $ | 6.85 | $ | 5.64 | |||||
Diluted | $ | 3.58 | $ | 1.14 | $ | 6.78 | $ | 5.59 | |||||
Weighted-average shares outstanding (in thousands): | |||||||||||||
Basic | 34,518 | 37,930 | 35,816 | 39,269 | |||||||||
Diluted | 34,898 | 38,297 | 36,156 | 39,646 | |||||||||
Supplemental information: | |||||||||||||
(a) Includes excise taxes of: | $ | 499,671 | $ | 495,131 | $ | 1,973,112 | $ | 1,961,478 | |||||
Murphy USA Inc.
Segment Operating Results
(Unaudited)
(Thousands of dollars, except volume per store month, margins and store counts) | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||
Marketing Segment | 2017 | 2016 | 2017 | 2016 | ||||||||||
Operating Revenues | ||||||||||||||
Petroleum product sales | $ | 2,736,898 | $ | 2,415,653 | $ | 10,287,856 | $ | 9,070,623 | ||||||
Merchandise sales | 595,595 | 588,424 | 2,372,658 | 2,338,586 | ||||||||||
Other operating revenues | 46,958 | 51,699 | 165,714 | 185,102 | ||||||||||
Total operating revenues | 3,379,451 | 3,055,776 | 12,826,228 | 11,594,311 | ||||||||||
Operating expenses | ||||||||||||||
Petroleum products cost of goods sold | 2,611,579 | 2,302,401 | 9,773,211 | 8,603,953 | ||||||||||
Merchandise cost of goods sold | 498,543 | 498,617 | 1,991,404 | 1,974,486 | ||||||||||
Station and other operating expenses | 130,318 | 123,410 | 514,866 | 493,320 | ||||||||||
Depreciation and amortization | 31,870 | 24,270 | 110,530 | 92,242 | ||||||||||
Selling, general and administrative | 40,042 | 28,120 | 141,170 | 122,669 | ||||||||||
Accretion of asset retirement obligations | 449 | 414 | 1,784 | 1,650 | ||||||||||
Total operating expenses | 3,312,801 | 2,977,232 | 12,532,965 | 11,288,320 | ||||||||||
Gain (loss) on sale of assets | (524 | ) | (428 | ) | (3,950 | ) | 88,212 | |||||||
Income from operations | 66,126 | 78,116 | 289,313 | 394,203 | ||||||||||
Other income | ||||||||||||||
Interest expense | (24 | ) | (18 | ) | (83 | ) | (53 | ) | ||||||
Other nonoperating income | — | 86 | 3,169 | 2,857 | ||||||||||
Total other income (expense) | (24 | ) | 68 | 3,086 | 2,804 | |||||||||
Income from continuing operations | ||||||||||||||
before income taxes | 66,102 | 78,184 | 292,399 | 397,007 | ||||||||||
Income tax expense (benefit) | (89,076 | ) | 27,016 | (2,923 | ) | 147,217 | ||||||||
Income from continuing operations | $ | 155,178 | $ | 51,168 | $ | 295,322 | $ | 249,790 | ||||||
Total tobacco sales revenue per store month | $ | 101,659 | $ | 106,640 | $ | 102,998 | $ | 108,713 | ||||||
Total non-tobacco sales revenue per store month | 37,078 | 35,291 | 37,551 | 35,697 | ||||||||||
Total merchandise sales revenue per store month | $ | 138,737 | $ | 141,931 | $ | 140,549 | $ | 144,410 | ||||||
Store count at end of period | 1,446 | 1,401 | 1,446 | 1,401 | ||||||||||
Total store months during the period | 4,293 | 4,146 | 16,880 | 16,194 | ||||||||||
Same store sales information (compared to APSM metrics)
Variance from prior year quarter | ||||
Three months ended | ||||
December 31, 2017 | ||||
SSS | APSM | |||
Fuel gallons per month | (5.2 | )% | (5.9 | )% |
Merchandise sales | (2.0 | )% | (2.3 | )% |
Tobacco sales | (3.6 | )% | (4.7 | )% |
Non tobacco sales | 2.8 | % | 5.1 | % |
Merchandise margin | 4.6 | % | 4.4 | % |
Tobacco margin | 6.0 | % | 4.2 | % |
Non tobacco margin | 2.5 | % | 4.6 | % |
Variance from prior year | ||||
Twelve months ended | ||||
December 31, 2017 | ||||
SSS | APSM | |||
Fuel gallons per month | (4.7 | )% | (5.3 | )% |
Merchandise sales | (1.6 | )% | (2.7 | )% |
Tobacco sales | (3.2 | )% | (5.3 | )% |
Non tobacco sales | 3.3 | % | 5.2 | % |
Merchandise margin | 1.3 | % | 0.5 | % |
Tobacco margin | 2.3 | % | (0.2 | )% |
Non tobacco margin | (0.2 | )% | 1.4 | % |
Note
Average Per Store Month (APSM) metric includes all stores open through the date of the calculation.
Same store sales (SSS) metric includes aggregated individual store results for all stores open throughout both periods presented. For all periods presented, the store must have been open for the entire calendar year to be included in the comparison. Remodeled stores that remained open or were closed for just a very brief time (less than a month) during the period being compared remain in the same store sales calculation. If a store is replaced either at the same location (raze and rebuild) or relocated to a new location, it will be excluded from the calculation during the period it is out of service. New constructed sites do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2016 for the sites being compared in the 2017 versus 2016 compared).
Murphy USA Inc.
Consolidated Balance Sheets
(Thousands of dollars) | December 31, 2017 | December 31, 2016 | ||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 170,028 | $ | 153,813 | ||||
Accounts receivable—trade, less allowance for doubtful accounts of $1,094 in 2017 and $1,891 in 2016 | 225,268 | 183,519 | ||||||
Inventories, at lower of cost or market | 182,477 | 153,351 | ||||||
Prepaid expenses and other current assets | 36,521 | 24,871 | ||||||
Total current assets | 614,294 | 515,554 | ||||||
Property, plant and equipment, at cost less accumulated depreciation and amortization of $874,675 in 2017 and $780,426 in 2016 | 1,679,470 | 1,532,655 | ||||||
Other assets | 37,275 | 40,531 | ||||||
Total assets | $ | 2,331,039 | $ | 2,088,740 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Current maturities of long-term debt | $ | 19,887 | $ | 40,596 | ||||
Trade accounts payable and accrued liabilities | 513,464 | 473,370 | ||||||
Income taxes payable | — | 594 | ||||||
Total current liabilities | 533,351 | 514,560 | ||||||
Long-term debt, including capitalized lease obligations | 860,864 | 629,622 | ||||||
Deferred income taxes | 154,245 | 204,656 | ||||||
Asset retirement obligations | 28,159 | 26,200 | ||||||
Deferred credits and other liabilities | 16,018 | 16,626 | ||||||
Total liabilities | 1,592,637 | 1,391,664 | ||||||
Stockholders' Equity | ||||||||
Preferred Stock, par $0.01 (authorized 20,000,000 shares, | ||||||||
none outstanding) | — | — | ||||||
Common Stock, par $0.01 (authorized 200,000,000 shares, | ||||||||
46,767,164 and 46,767,164 shares issued at | ||||||||
2017 and 2016, respectively) | 468 | 468 | ||||||
Treasury stock (12,675,630 and 9,831,196 shares held at | ||||||||
December 31, 2017 and December 31, 2016, respectively) | (806,511 | ) | (608,001 | ) | ||||
Additional paid in capital (APIC) | 549,910 | 555,338 | ||||||
Retained earnings | 994,535 | 749,271 | ||||||
Total stockholders' equity | 738,402 | 697,076 | ||||||
Total liabilities and stockholders' equity | $ | 2,331,039 | $ | 2,088,740 | ||||
Murphy USA Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
(Thousands of dollars) | 2017 | 2016 | 2017 | 2016 | ||||||||
Operating Activities | ||||||||||||
Net income | $ | 124,840 | $ | 43,817 | $ | 245,264 | $ | 221,492 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||
Depreciation and amortization | 33,452 | 25,863 | 116,966 | 98,610 | ||||||||
Deferred and noncurrent income tax charges (benefits) | (67,840 | ) | 2,771 | (50,411 | ) | 40,407 | ||||||
Accretion of asset retirement obligations | 450 | 414 | 1,785 | 1,650 | ||||||||
Pretax (gains) losses from sale of assets | 524 | 428 | 3,950 | (88,212 | ) | |||||||
Net (increase) decrease in noncash operating working capital | 21,320 | 48,344 | (36,954 | ) | 53,726 | |||||||
Other operating activities - net | 4,513 | 5,975 | 3,025 | 9,767 | ||||||||
Net cash provided by operating activities | 117,259 | 127,612 | 283,625 | 337,440 | ||||||||
Investing Activities | ||||||||||||
Property additions | (56,725 | ) | (63,233 | ) | (258,257 | ) | (262,144 | ) | ||||
Proceeds from sale of assets | 198 | 326 | 887 | 85,327 | ||||||||
Changes in restricted cash | — | — | — | 68,571 | ||||||||
Other investing activities - net | (138 | ) | (75 | ) | (4,737 | ) | (28,963 | ) | ||||
Investing activities of discontinued operations - Other | — | 2,355 | — | 2,355 | ||||||||
Net cash required by investing activities | (56,665 | ) | (60,627 | ) | (262,107 | ) | (134,854 | ) | ||||
Financing Activities | ||||||||||||
Purchases of treasury stock | (53,983 | ) | (110,944 | ) | (205,992 | ) | (323,272 | ) | ||||
Borrowings of debt | — | — | 338,750 | 200,000 | ||||||||
Repayments of debt | (5,278 | ) | (10,157 | ) | (131,412 | ) | (20,438 | ) | ||||
Debt issuance costs | — | — | (1,100 | ) | (3,240 | ) | ||||||
Amounts related to share-based compensation | (319 | ) | 1,237 | (5,549 | ) | (4,158 | ) | |||||
Net cash required by financing activities | (59,580 | ) | (119,864 | ) | (5,303 | ) | (151,108 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 1,014 | (52,879 | ) | 16,215 | 51,478 | |||||||
Cash and cash equivalents at beginning of period | 169,014 | 206,692 | 153,813 | 102,335 | ||||||||
Cash and cash equivalents at end of period | $ | 170,028 | $ | 153,813 | $ | 170,028 | $ | 153,813 | ||||
Supplemental Disclosure Regarding Non-GAAP Financial Information
The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three and twelve months ended December 31, 2017 and 2016. EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, gain (loss) on sale of assets and other non-operating expense (income)). EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).
We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure is useful to eliminate certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. Adjusted EBITDA is also used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance. We believe that the presentation of Adjusted EBITDA provides useful information to investors because it allows understanding of a key measure that we evaluate internally when making operating and strategic decisions, preparing our annual plan, and evaluating our overall performance. However, non-GAAP measures are not a substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.
The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
(Thousands of dollars) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 124,840 | $ | 43,817 | $ | 245,264 | $ | 221,492 | ||||||||
Income tax expense (benefit) | (73,631 | ) | 23,015 | (5,242 | ) | 130,539 | ||||||||||
Interest expense, net of interest income | 12,314 | 9,820 | 45,351 | 39,126 | ||||||||||||
Depreciation and amortization | 33,452 | 25,863 | 116,966 | 98,610 | ||||||||||||
EBITDA | $ | 96,975 | $ | 102,515 | $ | 402,339 | $ | 489,767 | ||||||||
Accretion of asset retirement obligations | 450 | 414 | 1,785 | 1,650 | ||||||||||||
(Gain) loss on sale of assets | 524 | 428 | 3,950 | (88,212 | ) | |||||||||||
Other nonoperating (income) expense | 1,089 | (114 | ) | (2,180 | ) | (3,080 | ) | |||||||||
Adjusted EBITDA | $ | 99,038 | $ | 103,243 | $ | 405,894 | $ | 400,125 | ||||||||
2018 Full Year Guidance - GAAP to non-GAAP Reconciliation
An itemized reconciliation between projected Net Income and Adjusted EBITDA for the full year 2018 is as follows:
(Millions of dollars) | Fiscal Year 2018 | |
Net Income | $155 to $195 | |
Mid-point | ||
Income taxes | $58 | |
Interest expense, net of interest income | $46 | |
Depreciation and amortization | $133 | |
Other operating and nonoperating expenses, net | $3 | |
Adjusted EBITDA | $390 to $440 | |
For purposes of this reconciliation, the midpoint of a range for each reconciling item was used, and therefore actual results for each of these reconciling items is expected to be higher or lower than the amounts shown above. The size of the ranges varies based on the individual reconciling item and the assumptions made.