Murphy USA Inc

Previous wording

•Results of Operations— This section provides an analysis of our results of operations, including the results of our operating segment for the three and six months ended June 30, 2024 and 2023.

Current wording

•Results of Operations— This section provides an analysis of our results of operations, including the results of our operating segment for the three and nine months ended September 30, 2024 and 2023.

Previous wording

•Capital Resources and Liquidity— This section provides a discussion of our financial condition and cash flows as of and for the three and six months ended June 30, 2024 and 2023. It also includes a discussion of our capital structure and available sources of liquidity.

Current wording

•Capital Resources and Liquidity— This section provides a discussion of our financial condition and cash flows as of and for the three and nine months ended September 30, 2024 and 2023. It also includes a discussion of our capital structure and available sources of liquidity.

Previous wording

The Company owns and operates a chain of retail stores that market gasoline and other merchandise under the brand names of Murphy USA®and Murphy Express, most of which are located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United States. We also have a mix of convenience stores and retail gasoline stores located in New Jersey and New York that operate under the brand name of QuickChek®. At June 30, 2024, we had a total of 1,736 Company stores in 27 states, of which 1,582 were Murphy branded and 154 were under the QuickChek brand. We also market petroleum products to unbranded wholesale customers through a mixture of Company-owned and third-party terminals.

Current wording

The Company owns and operates a chain of retail stores that market gasoline and other merchandise under the brand names of Murphy USA®and Murphy Express, most of which are located in close proximity to Walmart stores, principally in the Southeast, Midwest and Southwest areas of the United States. We also have a mix of convenience stores and retail gasoline stores located in New Jersey and New York that operate under the brand name of QuickChek®and comprises our Northeast region. At September 30, 2024, we had a total of 1,740 Company stores in 27 states, of which 1,586 were Murphy branded and 154 were under the QuickChek brand. We also market petroleum products to unbranded wholesale customers through a mixture of Company-owned and third-party terminals.

Previous wording

Murphy USA was incorporated in March 2013, and until the separation from Murphy Oil Corporation was completed on August 30, 2013, it had not commenced operations and had no material assets, liabilities or commitments. The financial information presented in this Management’s Discussion and Analysis is derived from the consolidated financial statements of Murphy USA Inc. and its subsidiaries for all periods presented. Our QuickChek subsidiaries use a weekly retail calendar where each quarter typically has 13 weeks. For Q2 2024, the QuickChek results cover the period March 30, 2024 to June 28, 2024, and the 2024 year-to-date period began

Current wording

Murphy USA was incorporated in March 2013, and until the separation from Murphy Oil Corporation was completed on August 30, 2013, it had not commenced operations and had no material assets, liabilities or commitments. The financial information presented in this Management’s Discussion and Analysis is derived from the consolidated financial statements of Murphy USA Inc. and its subsidiaries for all periods presented. Our QuickChek subsidiaries use a weekly retail calendar where each quarter typically has 13 weeks. For Q3 2024,

Previous wording

December 30, 2023. For Q2 2023, the QuickChek results cover the period April 1, 2023 to June 30, 2023, and the 2023 year-to-date period began December 31, 2022. The difference in the timing of the period ends is immaterial to the overall consolidated results.

Current wording

the QuickChek results cover the period June 29, 2024 to September 27, 2024, and the 2024 year-to-date period began December 30, 2023. For Q3 2023, the QuickChek results cover the period July 1, 2023 to September 29, 2023, and the 2023 year-to-date period began December 31, 2022. The difference in the timing of the period ends is immaterial to the overall consolidated results.

Previous wording

Our operations are significantly impacted by the gross margins we receive on our fuel and merchandise sales. The fuel gross margins are commodity-based, change daily, and are volatile. While we generally expect our volume and gross margins to remain stable in a normalized environment, they can change rapidly due to many factors. These factors include, but are not limited to, the price of refined products, geopolitical events that disrupt the global supply, overall demand and prices of crude oil, interruptions in our fuel and merchandise supply chain caused by severe weather or pandemics, the effects from pandemics such as travel restrictions and stay-at-home orders imposed during a pandemic, new or changing legislation around tobacco and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures for an extended period of time, cyber-attacks against the Company or our vendors, changing economic conditions that lower consumer purchasing power such as inflation, and competition in the local markets in which we operate.

Current wording

Our operations are significantly impacted by the gross margins we receive on our fuel and merchandise sales. The fuel gross margins are commodity-based, change daily, and are volatile. While we generally expect our volume and gross margins to remain stable in a normalized environment, they can change rapidly due to many factors. These factors include, but are not limited to, the price of refined products, geopolitical events that disrupt the global supply, overall demand and prices of crude oil, interruptions in our fuel and merchandise supply chain caused by severe weather or pandemics, the effects from pandemics such as travel restrictions and stay-at-home orders imposed during a pandemic, new or changing legislation around nicotine products and e-cigarettes as well as fuel economy and vehicle emission standards, severe refinery mechanical failures for an extended period of time, cyber-attacks against the Company or our vendors, changing economic conditions that lower consumer purchasing power such as inflation, and competition in the local markets in which we operate.

Previous wording

The cost of our main fuel products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States. Historically, a rising price environment for crude oil increases the Company’s cost for wholesale fuel products purchased and increases retail fuel prices. Rising prices can cause consumers to reduce discretionary fuel consumption, however our low-price model can also serve as a hedge to draw new customers which can offset the potential loss of discretionary volumes. In Q2 2024, crude oil prices were relatively stable with prices ranging from $74 per barrel to $88 per barrel with an average price of $82 per barrel in Q2 2024, compared to a average price of $74 per barrel in Q2 2023. Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results which include Renewable Identification Numbers ("RINs")) was 31.7 cents per gallon ("cpg") in Q2 2024, compared to 29.5 cpg in Q2 2023. Retail fuel margin dollars increased 9.1% in the current quarter while retail fuel volumes decreased 0.6% when compared to Q2 2023.

Current wording

The cost of our main fuel products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States. Historically, a rising price environment for crude oil increases the Company’s cost for wholesale fuel products purchased, which in turn increases retail fuel prices. Rising prices can cause consumers to reduce discretionary fuel consumption, however our low-price model can also serve as a hedge to draw new customers which can offset the potential loss of discretionary volumes. In Q3 2024, crude oil prices were more volatile than Q2 2024 with prices ranging from $67 per barrel to $85 per barrel with an average price of $76 per barrel in Q3 2024, compared to a average price of $82 per barrel in Q3 2023. Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results which include Renewable Identification Numbers ("RINs")) was 32.6 cents per gallon ("cpg") in Q3 2024, compared to 34.5 cpg in Q3 2023. Retail fuel margin dollars increased 13.5% in the current quarter and retail fuel volumes increased 2.0% when compared to Q3 2023.

Previous wording

Our revenues are impacted by the ability to leverage our diverse supply infrastructure in pursuit of obtaining the lowest cost of fuel supply available; for example, activities such as blending bulk fuel with renewable fuels (ethanol and bio-diesel) to capture and subsequently sell RINs. Under the Energy Policy Act of 2005, the Environmental Protection Agency (“EPA”) is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels. Obligated parties are required to demonstrate that they have met any applicable quotas by submitting a certain amount of RINs to the EPA. RINs in excess of the set quota can be sold in a market for RINs at then-prevailing prices. The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action. There are other market related factors that can impact the revenue received for RINs on a company-wide basis either favorably or unfavorably. The Renewable Fuel Standard ("RFS") program continues to be unpredictable and prices received by us for ethanol RINs averaged $0.52 per RIN in Q2 2024 compared to $1.49 per RIN in Q2 2023. Our business model does not depend on our ability to generate revenues from RINs, and we have historically observed that changes in revenue are typically coupled with offsetting changes in cost of goods that minimizes the majority of any revenue movement. Revenue from the sales of RINs is included in “Other operating revenues” in the Consolidated Statements of Income.

Current wording

Our revenues are impacted by the ability to leverage our diverse supply infrastructure in pursuit of obtaining the lowest cost of fuel supply available; for example, activities such as blending bulk fuel with renewable fuels (ethanol and bio-diesel) to capture and subsequently sell RINs. Under the Energy Policy Act of 2005, the Environmental Protection Agency (“EPA”) is authorized to set annual quotas establishing the percentage of motor fuels consumed in the United States that must be attributable to renewable fuels. Obligated parties are required to demonstrate that they have met any applicable quotas by submitting a certain amount of RINs to the EPA. RINs in excess of the set quota can be sold in a market for RINs at then-prevailing prices. The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action. There are other market related factors that can impact the revenue received for RINs on a company-wide basis either favorably or unfavorably. The Renewable Fuel Standard ("RFS") program continues to be unpredictable and prices received by us for ethanol RINs averaged $0.60 per RIN in Q3 2024 compared to $1.41 per RIN in Q3 2023. Our business model does not depend on our ability to generate revenues from RINs, and we have historically observed that changes in revenue are typically coupled with offsetting changes in cost of goods that minimizes the majority of any revenue movement. Revenue from the sales of RINs is included in “Other operating revenues” in the Consolidated Statements of Income.

Previous wording

As of June 30, 2024, we had $1.3 billion of Senior Notes and a $388 million term loan outstanding. We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements and service our debt obligations. At June 30, 2024, we had additional available capacity under the committed $350 million cash flow revolving credit facility, with none drawn. We expect to use the credit facilities to provide us with available financing to meet any short-term ongoing cash needs in excess of internally generated cash flows. To the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements and other corporate initiatives. There can be no assurances, however, that we will generate sufficient cash from operations or be able to draw on the credit facilities, obtain commitments for our incremental facility, or obtain and draw upon other credit facilities. For additional information, see Significant Sources of Capital in the Capital Resources and Liquidity section.

Current wording

As of September 30, 2024, we had $1.3 billion of Senior Notes and a $387 million term loan outstanding. We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements and service our debt obligations. We had additional available capacity under the committed $350 million cash flow revolving credit facility, which had $41.0 million of outstanding borrowings as of September 30, 2024. We expect to use the credit facilities to provide us with available financing to meet any short-term ongoing cash needs in excess of internally generated cash flows. To the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements and other corporate initiatives. There can be no assurances, however, that we will generate sufficient cash from operations or be able to draw on the credit facilities, obtain commitments for our incremental facility, or obtain and draw upon other credit facilities. For additional information, see Significant Sources of Capital in the Capital Resources and Liquidity section.

Previous wording

The Company currently anticipates total capital expenditures (including land for future developments) for the full year 2024 to range from approximately $400 million to $450 million depending on how many new stores are completed. We intend to fund the remainder of our capital program in 2024 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facilities.

Current wording

completed. We intend to fund the remainder of our capital program in 2024 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facilities.

Previous wording

We believe that our business will continue to grow in the future as we expand additional capabilities such as food and beverage within our network. We maintain a pipeline of desirable future store locations for development. The pace of this growth is continually monitored by our management, and these plans can be altered based on operating cash flows generated and the availability of debt facilities.

Current wording

We believe that our business will continue to grow in the future as we maintain a pipeline of desirable future store locations for development. The pace of this growth is continually monitored by our management, and these plans can be altered based on operating cash flows generated and the availability of debt facilities. In addition, the Company looks to expand additional capabilities such as food and beverage within our network.

Previous wording

Our business has inherent seasonality due to the concentration of our retail stores in certain geographic areas, as well as customer behaviors during different seasons. In general, sales volumes and operating incomes are typically highest in the second and third quarters during the summer-activity months and lowest during the winter months. As a result, operating results for the three and six months ended June 30, 2024, may not necessarily be indicative of the results that may be expected for the remainder of the year ending December 31, 2024.

Current wording

Our business has inherent seasonality due to the concentration of our retail stores in certain geographic areas, as well as customer behaviors during different seasons. In general, sales volumes and operating incomes are typically highest in the second and third quarters during the summer-activity months and lowest during the winter months. As a result, operating results for the three and nine months ended September 30, 2024, may not necessarily be indicative of the results that may be expected for the remainder of the year ending December 31, 2024.

Previous wording

The Company has one operating segment which is Marketing. The Marketing segment includes our retail marketing stores and product supply and wholesale assets. For additional operating segment information, see Note 22 “Business Segments” in the audited combined financial statements for the year ended December 31, 2023 included with our Annual Report on Form 10-K and Note 16 “Business Segments” in the accompanying unaudited consolidated financial statements for the three and six months ended June 30, 2024.

Current wording

The Company has one operating segment which is Marketing. The Marketing segment includes our retail marketing stores and product supply and wholesale assets. For additional operating segment information, see Note 22 “Business Segments” in the audited combined financial statements for the year ended December 31, 2023 included with our Annual Report on Form 10-K and Note 16 “Business Segments” in the accompanying unaudited consolidated financial statements for the three and nine months ended September 30, 2024.

Previous wording

For the three months ended June 30, 2024, the Company reported net income of $144.8 million, or $6.92 per diluted share, on revenue of $5.5 billion. Net income was $132.8 million for the same period in 2023, or $6.02 per diluted share, on $5.6 billion of revenue. The increase in net income was primarily due to higher total fuel contribution and higher overall merchandise contributions, which were partially offset by lower retail fuel sales volumes, increases in store operating expenses, and higher income tax expense.

Current wording

For the three months ended September 30, 2024, the Company reported net income of $149.2 million, or $7.20 per diluted share, on revenue of $5.2 billion. Net income was $167.7 million for the same period in 2023, or $7.69 per diluted share, on $5.8 billion of revenue. The decrease in net income was primarily due to lower total fuel contribution with increases in store operating expenses and depreciation and amortization expense, which were partially offset by higher retail fuel sales volumes, higher overall merchandise contributions and lower income tax expense.

Previous wording

For the six months ended June 30, 2024, the Company reported net income of $210.8 million, or $10.02 per diluted share, on revenue of $10.3 billion. Net income for the same period in 2023 was $239.1 million, or $10.82 per diluted share, on $10.7 billion of revenue. The decrease in net income is primarily due to lower total fuel contribution combined with increases in store operating expenses, general and administrative expenses, and depreciation and amortization expense, which were partially offset by higher overall merchandise contributions, slightly higher fuel sales volumes, and lower income tax expense.

Current wording

For the nine months ended September 30, 2024, the Company reported net income of $360.0 million, or $17.17 per diluted share, on revenue of $15.5 billion. Net income for the same period in 2023 was $406.8 million, or $18.47 per diluted share, on $16.5 billion of revenue. The decrease in net income is primarily due to lower total fuel contribution combined with increases in store operating expenses, depreciation and amortization expenses, and general and administrative expenses, which were partially offset by higher overall merchandise contributions, higher fuel sales volumes and lower income tax expense.

Previous wording

Revenues for Q2 2024 decreased $0.1 billion, or 2.4%, compared to the same quarter in 2023. The decrease in revenues was due to 0.3% lower retail fuel sales prices, 0.6% lower fuel sales volumes and lower PS&W revenues, which were partially offset by a 3.0% increase in merchandise sales revenue.

Current wording

Revenues for Q3 2024 decreased $0.6 billion, or 9.6%, compared to the same quarter in 2023. The decrease in revenues was due to 10.9% lower retail fuel sales prices and lower PS&W revenues, which were partially offset by an increase of 2.0% in fuel sales volumes and a 2.5% increase in merchandise sales revenue.

Previous wording

Cost of sales in Q2 2024 decreased $0.2 billion, or 3.4%, when compared to Q2 2023. In the current-year quarter, the decrease was primarily due to lower fuel cost and lower fuel volumes sold and was partially offset by higher merchandise costs.

Current wording

Cost of sales in Q3 2024 decreased $0.5 billion, or 10.6%, when compared to Q3 2023. In the current-year quarter, the decrease was primarily due to lower fuel cost and was partially offset by higher fuel volumes sold and higher merchandise costs.

Previous wording

Store and other operating expenses increased $13.2 million, or 5.1%, in Q2 2024 from Q2 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with increases from net new store operating expenses.

Current wording

Store and other operating expenses increased $10.5 million, or 4.0%, in Q3 2024 from Q3 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with increases from net new store operating expenses, partially offset by a reduction in payment fees.

Previous wording

Depreciation and amortization expense increased $1.5 million in Q2, or 2.6%, when compared to the same period of 2023, primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity in the period.

Current wording

Depreciation and amortization expense increased $5.3 million in Q3, or 9.2%, when compared to the same period of 2023, primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity in the quarter.

Previous wording

The effective income tax rate was approximately 25.1% for Q2 2024 compared to approximately 24.4% in Q2 2023.

Current wording

The effective income tax rate was approximately 24.9% for both Q3 2024 and Q3 2023.

Previous wording

Year-to-date revenues decreased $0.4 billion, or 3.4%, compared to the same period in 2023. The decrease in revenues was due to 2.8% lower retail fuel sales prices and lower PS&W revenues, which was partially offset by a 3.3% increase in merchandise sales revenue and a 0.2% increase in retail fuel sales volumes.

Current wording

Year-to-date revenues decreased $0.9 billion, or 5.6%, compared to the same period in 2023. The decrease in revenues was due to 5.8% lower retail fuel sales prices and lower PS&W revenues, which was partially offset by a 3.0% increase in merchandise sales revenue and a 0.8% increase in retail fuel sales volumes.

Previous wording

Year-to-date cost of sales decreased $0.4 billion, or 3.8%, compared to the same period in 2023. In the current-year period, the lower costs were primarily due to lower fuel cost, partially offset by higher fuel volumes sold and higher merchandise costs.

Current wording

Year-to-date cost of sales decreased $0.9 billion, or 6.2%, compared to the same period in 2023. In the current-year period, the lower costs were primarily due to lower fuel cost, partially offset by higher fuel volumes sold and higher merchandise costs.

Previous wording

Year-to-date store and other operating expenses increased $27.0 million, or 5.5%, compared to the same period in 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with increases in net new store operating expenses.

Current wording

Year-to-date store and other operating expenses increased $37.5 million, or 4.9%, compared to the same period in 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with increases in net new store operating expenses, partially offset by slightly lower payment fees.

Previous wording

SG&A expenses for the first six months of 2024 increased $2.8 million, or 2.4%, compared to the first six months of 2023. The increase in SG&A costs is primarily due to higher wages and employee related costs incurred in the period versus the same period of 2023.

Current wording

SG&A expenses for the first nine months of 2024 increased $2.8 million, or 1.6%, compared to the first nine months of 2023. The increase in SG&A costs is primarily due to higher wages, employee related costs, and professional and technology services for business improvement initiatives, which were partially offset by a reduction in incentive cost, versus the same period of 2023.

Previous wording

Depreciation and amortization expense increased $3.8 million, or 3.3%, year-to-date from the same period of 2023 primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity during the period.

Current wording

Depreciation and amortization expense increased $9.1 million, or 5.3%, year-to-date from the same period of 2023 primarily due to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity during the period.

Previous wording

The effective income tax rate was approximately 23.4% for the six months ended June 30, 2024 versus approximately 24.0% for the same period of 2023.

Current wording

The effective income tax rate was approximately 24.0% for the nine months ended September 30, 2024 versus approximately 24.4% for the same period of 2023.

Previous wording

Marketing segment net income for the three months ended June 30, 2024 was higher compared to the same period in 2023 primarily due to:

Current wording

Marketing segment net income for the three months ended September 30, 2024 was lower compared to the same period in 2023 primarily due to:

Previous wording

The items below partially offset the increase in net income in the current period:

Current wording

The items below partially offset the decrease in net income in the current period:

Previous wording

Marketing segment net income for the six months ended June 30, 2024 was lower compared to the same six-month period in 2023 primarily due to:

Current wording

Marketing segment net income for the nine months ended September 30, 2024 was lower compared to the same nine-month period in 2023 primarily due to:

Previous wording

The items below partially offset the decrease in net income in the six-month period:

Current wording

The items below partially offset the decrease in net income in the nine-month period:

Previous wording

Net income in the Marketing segment for Q2 2024 increased $12.1 million, to $163.8 million when compared to the Q2 2023 period. The increase was primarily due to higher total fuel and merchandise contribution, which were partially offset by lower fuel sales volumes and increased store operating expenses.

Current wording

Net income in the Marketing segment for Q3 2024 decreased $19.2 million, to $168.0 million when compared to the Q3 2023 period. The decrease was primarily due to lower total fuel contribution combined with increases in store operating expenses and depreciation and amortization expenses, which were partially offset by higher fuel sales volumes, higher merchandise contributions and lower income tax expense.

Previous wording

Retail fuel margins on a cpg basis increased 10.0% in Q2 2024 to 29.7 cpg, compared to 27.0 cpg in the prior year period. Total retail fuel volumes decreased 0.6%, while fuel sales volumes on an SSS basis decreased 1.3% to 244.3 thousand gallons per store in Q2 2024 when compared to Q2 2023. Total product supply and wholesale contribution dollars, including RINs, decreased $6.0 million in Q2 2024 when compared to Q2 2023, primarily due to a regional supply imbalance that offset improved spot-to-rack spreads seen in other regions.

Current wording

Total fuel contribution for Q3 2024, was $404.2 million, a decrease of $14.8 million, or 3.5%, compared to Q3 2023. This decrease was due to lower contribution from PS&W margins, which were partially offset by higher retail fuel contribution and higher fuel volumes sold in the period when compared to Q3 of 2023. Retail fuel margins on a cpg basis increased 11.2% in Q3 2024 to 31.9 cpg, compared to 28.7 cpg in the prior year period. Total retail fuel volumes increased 2.0%, and fuel sales volumes on an SSS basis increased 0.5% in Q3 2024 when compared to Q3 2023. Total product supply and wholesale contribution dollars, including RINs, decreased $61.9 million in Q3 2024 when compared to Q3 2023, primarily due to negative impacts of timing and inventory pricing adjustments in a falling market.

Previous wording

Total merchandise sales were $1.1 billion in Q2 2024 and $1.0 billion in Q2 2023. Total merchandise contribution in Q2 2024 improved 4.7% compared to Q2 2023 primarily due to higher retail prices, up 3.5%, and net increased number of larger format stores. Total SSS merchandise contribution dollars grew 5.0%, which included an increase of 12.1% in tobacco products and was partially offset by a 0.5% decrease in non-tobacco products.

Current wording

Total merchandise sales were $26.8 million higher in Q3 2024 vs Q3 2023, coming in at $1.1 billion in both quarters. Total merchandise contribution in Q3 2024 improved 2.4% compared to Q3 2023 primarily due to higher retail prices, up 7.8%, and net increased number of larger format stores. Total SSS merchandise contribution dollars grew 1.2%, which included an increase of 6.1% in nicotine products, partially offset by a 2.7% decrease in non-nicotine products.

Previous wording

Store and other operating expenses increased $13.0 million in Q2 2024 compared to Q2 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with net new store operating expenses. On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent were 6.0% higher, primarily attributable to increased employee related expenses and maintenance costs.

Current wording

Store and other operating expenses increased $10.6 million in Q3 2024 compared to Q3 2023, primarily due to higher employee related expenses and maintenance costs at existing stores combined with net new store operating expenses, partially offset by a reduction in payment fees. On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent were 4.0% higher, primarily attributable to increased employee related expenses and maintenance costs.

Previous wording

Depreciation and amortization expense increased $2.5 million, or 4.7%, in Q2 2024 compared to Q2 2023 due to the increased number of larger format Murphy branded stores and raze-and-rebuild activity in the quarter.

Current wording

Depreciation and amortization expense increased $5.2 million, or 9.8%, in Q3 2024 compared to Q3 2023 due to the increased number of larger format Murphy branded stores and raze-and-rebuild activity in the quarter.

Previous wording

Net income in the Marketing segment for the six months ended June 30, 2024 decreased $28.3 million compared to the six months ended June 30, 2023. The decrease was primarily due to lower total fuel contributions, increased store operating expenses and higher SG&A expenses, which were partially offset by higher fuel sales volumes and higher merchandise contributions.

Current wording

Net income in the Marketing segment for the nine months ended September 30, 2024 decreased $47.5 million compared to the nine months ended September 30, 2023. The decrease was primarily due to lower total fuel contributions, combined with increased store operating expenses, depreciation and amortization expenses, and SG&A expenses, which were partially offset by higher fuel sales volumes, higher overall merchandise contributions and lower income tax expense.

Previous wording

Total fuel contribution for the six-month period ended June 30, 2024, was $676.4 million, a decrease of $19.3 million or 2.8%, compared to the first six months of 2023. This decrease was primarily due to lower contribution from PS&W margins, and was partially offset by higher retail fuel contribution and fuel volumes sold in the period when compared to the first six months of 2023. Retail fuel margins on a cpg basis increased 2.4%, to 25.8 cpg, for the six-month period ended June 30, 2024, compared to 25.2 cpg in the same period of 2023. Total retail fuel sales volumes increased 0.2%, while volumes on an SSS basis decreased 1.1% to 235.7 thousand gallons per store, in the six-month period ended June 30, 2024 when compared to the same six-month period of 2023. Total product supply and wholesale contribution dollars, including RINs, decreased $35.1 million compared to the first six months of 2023, primarily due to timing of transactions, supply imbalances at the end of the period, and lower RIN sales volumes.

Current wording

Total fuel contribution for the nine-month period ended September 30, 2024 was $1.1 billion, a decrease of $34.1 million, or 3.1%, compared to the first nine months of 2023. This decrease was primarily due to lower contribution from PS&W margins, and was partially offset by higher retail fuel contribution and fuel volumes sold in the period when compared to the first nine months of 2023. Retail fuel margins on a cpg basis increased 5.7%, to 27.9 cpg, for the nine-month period ended September 30, 2024, compared to 26.4 cpg in the same period of 2023. Total retail fuel sales volumes increased 0.8%, while volumes on an SSS basis decreased 0.6% in the nine-month period ended September 30, 2024 when compared to the same nine-month period of 2023. Total product supply and wholesale contribution dollars, including RINs, decreased $97.0 million compared to the first nine months of 2023, primarily due to negative impacts of timing of transactions and regional supply imbalances.

Previous wording

Total merchandise sales increased 3.3% to $2.1 billion in the six months ended June 30, 2024 compared to $2.0 billion in the first six months of 2023 due to higher retail prices across the chain in most categories and increased number of stores with larger formats. Year-to-date total merchandise contribution in 2024 increased 3.6% compared to the same period of 2023. Total SSS merchandise contribution dollars improved 3.7% with an increase of 9.2% in tobacco products and was partially offset by a 0.9% decrease in non-tobacco products.

Current wording

Total merchandise sales increased 3.0% to $3.2 billion in the nine months ended September 30, 2024 compared to $3.1 billion in the first nine months of 2023 due to higher retail prices across the chain in most categories and increased number of stores with larger formats. Year-to-date total merchandise contribution in 2024 increased 3.2% compared to the same period of 2023. Total SSS merchandise contribution dollars improved 2.8% with an increase of 8.2% in nicotine products and was partially offset by a 1.5% decrease in non-nicotine products.

Previous wording

Store and other operating expenses increased $26.9 million in the current year compared to the same six-month period of 2023, primarily due to employee related expenses and maintenance expenses at existing stores combined with net new store operating expenses. On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 6.5%, primarily due to employee related expenses and maintenance costs.

Current wording

Store and other operating expenses increased $37.5 million in the current year compared to the same nine-month period of 2023, primarily due to employee related expenses and maintenance expenses at existing stores combined with net new store operating expenses. On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 5.7%, primarily due to employee related expenses and maintenance costs.

Previous wording

SG&A expenses increased $2.8 million in 2024 compared to the same six-month period of 2023 due primarily to higher employee salaries and benefits costs incurred.

Current wording

SG&A expenses increased $2.8 million in 2024 compared to the same nine-month period of 2023 due primarily to higher employee salaries and benefits costs incurred and professional and technology services for business improvement initiatives, partially offset by a reduction in employee incentive cost.