Murphy USA Inc.

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 in New Jersey and New York that operate under the QuickChek® brand, comprising our Northeast region. At December 31, 2024, we had a total of 1,757 Company stores in 27 states, of which 1,601 were Murphy branded and 156 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 in New Jersey and New York that operate under the QuickChek® brand, comprising our Northeast region. At December 31, 2025, we had a total of 1,800 Company stores in 27 states, of which 1,649 were Murphy branded and 151 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 has 13 weeks. For 2024, the QuickChek results cover the period December 30, 2023 to December 27, 2024. For 2023, the QuickChek results cover the period December 31, 2022 to December 29, 2023. The difference in the timing of the period ends is immaterial to the overall consolidated results.

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 previously used a weekly retail calendar where each quarter had 13 weeks until November 2025, when its period end was aligned with the rest of the Company. For 2025, the QuickChek results cover the period December 28, 2024 to December 31, 2025. For 2024, the QuickChek results cover the period December 30, 2023 to December 27, 2024. The difference in the timing of the period ends is immaterial to the overall consolidated results and all future periods will be aligned.

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 volumes 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, 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.

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 volumes 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 including the impact of potential tariffs, 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, 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. Crude oil prices in 2024 experienced less volatility during the year with prices ranging from $67 per barrel to $88 per barrel, with an average price of $77 per barrel, compared to prices in 2023 that ranged from $67 per barrel to $94 per barrel with an average of $78 per barrel. Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results which include Renewable Identification Numbers ("RINs")) was 30.5 cpg in 2024, compared to 31.4 cpg in 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. Crude oil prices in 2025 experienced continued downward pressure due to oversupply during the year with prices ranging from $55 per barrel to $81 per barrel, with an average price of $65 per barrel, compared to prices in 2024 that ranged from $67 per barrel to $88 per barrel with an average of $77 per barrel. Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results that include Renewable Identification Numbers ("RINs")) was 30.7 cpg in 2025, compared to 30.5 cpg in 2024.

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 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 number 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. On June 21, 2023, EPA announced a final rule to establish biofuel volume requirements and associated percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel for 2023 to 2025. The rule includes steady growth of biofuels for use in the United States' fuel supply for 2023, 2024, and 2025, however the projected growth of Renewable Diesel production could outstrip the statutory mandated biofuel blending requirements. As a result, the amount of renewable credits available could outpace the demand, resulting in lower prices. Litigation and potentially changing political regimes could impact the RFS program as well as the successful completion or abandonment of planned renewable fuel production expansion. There are other market related factors that can offset 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 $0.59 per RIN for the year 2024 compared to $1.35 per RIN in 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) to capture and subsequently sell RINs. Under the Energy Policy Act of 2005, the 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 number 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 offset the revenue received for RINs on a company-wide basis either favorably or unfavorably. The RFS program continues to be unpredictable and prices received by us for ethanol RINs averaged $0.97 per RIN for the year 2025 compared to $0.59 per RIN in 2024. 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 minimize 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 December 31, 2024, we had $1.3 billion of Senior Notes and a $386 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 $56.0 million of outstanding borrowings as of December 31, 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.

Current wording

As of December 31, 2025, we had $1.3 billion of Senior Notes, $183.0 million outstanding under our revolving credit facility and a $600 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 our revolving credit facility, which provides for up to $750 million of borrowings. 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 2025 to range from approximately $450 million to $500 million depending on how many new stores are completed. We intend to fund our capital program in 2025 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facility.

Current wording

The Company currently anticipates total capital expenditures (including land for future developments) for the full year 2026 to range from approximately $475 million to $525 million depending on new store construction activity and planned maintenance capital investments. We intend to fund our capital program in 2026 primarily using operating cash flow but will supplement funding where necessary through borrowings under our revolving credit facility.

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 operating segment information, see Note 22 “Business Segments” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2024. Our QuickChek subsidiaries use a weekly retail calendar where each quarter has 13 weeks. For 2024, the QuickChek results cover the period December 30, 2023 to December 27, 2024. For 2023, the QuickChek results cover the period December 31, 2022 to December 29, 2023. The difference in the timing of the period ends is immaterial to the overall consolidated results.

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 operating segment information, see Note 22 “Business Segments” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2025. Our QuickChek subsidiaries previously used a weekly retail calendar where each quarter had 13 weeks until November 2025, when its period end was aligned with the rest of the Company. For 2025, the QuickChek results cover the period December 28, 2024 to December 31, 2025. For 2024, the QuickChek results cover the period December 30, 2023 to December 27, 2024. The difference in the timing of the period ends is immaterial to the overall consolidated results and all future periods will be aligned.

Previous wording

For the year ended December 31, 2024, the Company reported net income of $502.5 million, or $24.11 per diluted share, on revenue of $20.2 billion. Net income was $556.8 million for 2023, or $25.49 per diluted share, on revenue of $21.5 billion.

Current wording

For the year ended December 31, 2025, the Company reported net income of $470.6 million, or $24.10 per diluted share, on revenue of $19.4 billion. Net income was $502.5 million for 2024, or $24.11 per diluted share, on $20.2 billion of revenue.

Previous wording

Revenues for the year ended December 31, 2024 decreased $1.3 billion, or 6.0%, compared to 2023. The decrease in revenue was primarily due to 5.8% lower average retail fuel sales prices, which decreased 19 cpg, and lower PS&W revenues, which were partially offset by a 3.1% increase in merchandise sales revenues and an increase of 0.4% in fuel sales volumes.

Current wording

Revenues for the year ended December 31, 2025 decreased approximately $0.9 billion, or 4.2%, compared to 2024. The decrease in revenues was primarily due to 7.5% lower average retail fuel sales prices, which decreased 23 cpg, which were partially offset by a 2.1% increase in merchandise sales revenues, an increase of 0.6% in fuel sales volumes and higher PS&W revenues.

Previous wording

Cost of sales decreased $1.3 billion, or 6.7%, compared to 2023. The lower costs were primarily due to lower fuel cost, which decreased 8.6%, and was partially offset by a 2.9% increase in merchandise cost of goods sold and the 0.4% increase in fuel volumes sold.

Current wording

Cost of sales decreased $0.9 billion, or 5.1%, compared to 2024. The lower costs were primarily due to lower fuel cost, which decreased 6.6%, and was partially offset by a 1.6% increase in merchandise cost of goods sold.

Previous wording

Store and other operating expenses increased $49.8 million, or 4.9%, in 2024 due primarily to higher employee related expenses and maintenance costs at existing stores combined with increases in net new store operating expenses. On an average per store month ("APSM") basis, store operating expenses excluding payment fees and rent increased 5.4% in 2024, primarily attributable to increased employee related expenses and higher maintenance costs.

Current wording

Store and other operating expenses increased $43.9 million, or 4.1%, in 2025 due primarily to higher employee related expenses and maintenance costs at existing stores combined with increases in net new store operating expenses. On an average per store month ("APSM") basis, store operating expenses excluding payment fees and rent increased 3.1% in 2025, primarily attributable to increased employee related expenses and higher maintenance costs.

Previous wording

Depreciation and amortization expense in 2024 increased $19.3 million, or 8.4%, due primarily to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity during the year.

Current wording

Depreciation and amortization expense in 2025 increased $28.8 million, or 11.6%, due primarily to the increased number of Murphy branded stores with larger formats and raze-and-rebuild activity during the year.

Previous wording

In 2024, we recorded an impairment of properties charge of $8.2 million compared to none in 2023, primarily due to competitive pressures in a few Northeast markets.

Current wording

In 2025, we recorded an impairment of properties charge of $5.3 million compared to $8.2 million in 2024, primarily due to competitive pressures in certain Northeast markets.

Previous wording

SG&A expenses for 2024 were lower by $5.1 million, or 2.1%, primarily due to a reduction in employee incentive costs, which were partially offset by higher wages and employee related costs.

Current wording

SG&A expenses for 2025 were lower by $3.9 million, or 1.7%, primarily due to lower professional fees, which were partially offset by higher incentive costs.

Previous wording

The effective income tax expense rate in 2024 was approximately 22.9% compared to approximately 24.2% for 2023. The lower rate for the current year was primarily due to a discrete state tax benefit recorded in 2024.

Current wording

The effective income tax expense rate in 2025 was approximately 22.8% compared to approximately 22.9% for 2024.

Previous wording

Income before income taxes in the Marketing segment for 2024 decreased $81.7 million, or 9.8%, from 2023 due primarily to lower total fuel contribution, higher store and other operating expenses, higher depreciation and amortization and an impairment charge, which were partially offset by higher merchandise contribution and decreased SG&A expenses.

Current wording

Income before income taxes in the Marketing segment for 2025 decreased $3.1 million, or 0.4%, from 2024 due primarily to higher store and other operating expenses and higher depreciation and amortization, which were partially offset by higher merchandise contribution, higher total fuel contribution and decreased SG&A expenses.

Previous wording

Average Per Store Month ("APSM") metric includes all stores open through the date of the calculation, including stores acquired during the period.

Current wording

APSM metric includes all stores open through the date of the calculation, including stores acquired during the period.

Previous wording

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. Newly constructed stores do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2023, for the stores being compared in the 2024 versus 2023 comparison). Acquired stores are not included in the calculation of same stores for the first 12 months after the acquisition. When prior period SSS volumes or sales are presented, they have not been revised for current year activity for raze-and-rebuilds, asset acquisitions and asset dispositions.

Current wording

(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. Newly constructed stores do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2024, for the stores being compared in the 2025 versus 2024 comparison). Acquired stores are not included in the calculation of same stores for the first 12 months after the acquisition. When prior period SSS volumes or sales are presented, they have not been revised for current year activity for raze-and-rebuilds, asset acquisitions and asset dispositions.

Previous wording

The Marketing segment had total revenues of $20.2 billion in 2024 compared to $21.5 billion in 2023, a decrease of $1.3 billion, due primarily to a lower average retail fuel sales price and lower PS&W revenues, which were partially offset by higher merchandise sales revenue and an increase in fuel volumes sold. Revenue amounts included excise taxes collected and remitted to government authorities of $2.3 billion in both 2024 and 2023.

Current wording

The Marketing segment had total revenues of $19.4 billion in 2025 compared to $20.2 billion in 2024, a decrease of approximately $0.9 billion, due primarily to a lower average retail fuel sales price, which were partially offset by higher merchandise sales revenue, an increase in fuel volumes sold and higher PS&W revenues. Revenue amounts included excise taxes collected and remitted to governmental authorities of $2.4 billion in 2025 and $2.3 billion in 2024.

Previous wording

Total fuel contribution for the year ended December 31, 2024 decreased $38.0 million, or 2.5%, compared to 2023. This reduction was primarily due to lower contribution from PS&W margins, and was partially offset by higher retail fuel contribution and fuel volumes sold for the year. Retail fuel margin on a cpg basis increased 1.8% in 2024 to 28.1 cpg, compared to 27.6 cpg in the prior year. Total retail fuel volumes increased 0.4%, while fuel sales on an SSS basis decreased 1.1%. Total PS&W contribution including RINs decreased by $70.7 million in the current year, primarily due to timing and pricing impacts related to market conditions. During 2024, other operating revenue included the sales of 221.4 million RINs compared to the 242.7 million of sales in 2023.

Current wording

Total fuel contribution for the year ended December 31, 2025 increased $19.0 million, or 1.3%, compared to 2024. This increase was primarily due to higher total retail fuel contribution margins and higher retail fuel volumes sold for the year. Retail fuel margins, on a cpg basis, of 28.1 cpg in 2025 were flat compared to the prior year. Total retail fuel volumes increased 0.6%, while fuel sales on an SSS basis decreased 2.6%. Total PS&W contribution including RINs increased by $11.4 million in the current year, primarily due to timing and pricing impacts related to market conditions and improved spot-to-rack margins. During 2025, other operating revenue included the sales of 218.3 million RINs compared to the 221.4 million of sales in 2024.

Previous wording

Merchandise sales were up 3.1% in 2024 to $4.2 billion compared to $4.1 billion in 2023 primarily due to higher retail prices across the chain in most categories and an increased number of stores with larger formats. Total merchandise contribution in 2024 increased $30.3 million, or 3.8%, to $833.7 million compared to $803.4 million in 2023. Merchandise unit margins increased to 19.8% in 2024 from 19.7% in 2023. On an SSS basis, total merchandise sales were up 2.3%, due to a 4.3% increase in nicotine product sales partially offset by a 1.0% decline in non-nicotine product sales. Total merchandise contribution dollars on a SSS basis improved 2.7%, with an increase of 7.3% in nicotine product margins and was partially offset by a 1.0% decrease in non-nicotine product margins.

Current wording

Merchandise sales were up 2.1% in 2025 to $4.3 billion compared to $4.2 billion in 2024 primarily due to higher retail prices across the chain in most categories and an increased number of stores with larger formats. Total merchandise contribution in 2025 increased $35.3 million, or 4.2%, to $869.0 million compared to $833.7 million in 2024. Merchandise unit margins increased to 20.2% in 2025 from 19.8% in 2024. On an SSS basis, total merchandise sales were down 0.3%, due to a 0.3% decline in nicotine product sales and a 0.4% decline in non-nicotine product sales. Total merchandise contribution dollars on a SSS basis improved 2.3%, with an increase of 5.0% in nicotine product margins and was partially offset by a 0.1% decrease in non-nicotine product margins.

Previous wording

Store and other operating expenses increased $49.8 million, or 4.9%, in 2024 compared to 2023 levels. This increase was due primarily 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 increased 5.4% in 2024 compared to 2023, primarily due to employee related expenses and maintenance costs.

Current wording

Store and other operating expenses increased $43.9 million, or 4.1%, in 2025 compared to 2024 levels. This increase was due primarily to increases in net new store operating expenses combined with higher employee related expenses and maintenance costs at existing stores. On an APSM basis, expenses applicable to store OPEX excluding payment fees and rent increased 3.1% in 2025 compared to 2024, primarily due to employee related expenses and maintenance costs (an increase of 2.2% on a same-store basis).

Previous wording

Depreciation and amortization expense increased $17.9 million in 2024, an increase of 8.4%. This was due primarily to the increased number of new larger store formats for Murphy branded stores combined with raze-and-rebuild activities in the 2024 period.

Current wording

Depreciation and amortization expense increased $21.0 million in 2025, an increase of 9.1%. This was due primarily to the increased number of new larger store formats for Murphy branded stores combined with raze-and-rebuild activities in the 2025 period.

Previous wording

Loss from continuing operations for Corporate and other assets in 2024 was $77.7 million, compared to a loss of $74.1 million in 2023. The $3.6 million increase from the previous year was mainly due to $1.4 million more in depreciation and amortization expense and a $2.5 million reduction in the income tax benefit attributable to the period over period tax rate reduction, which was partially offset by $0.8 million less in net interest expense.

Current wording

Loss from continuing operations for Corporate and other assets in 2025 was $106.7 million, compared to a loss of $77.7 million in 2024. The $29.0 million increase from the previous year was mainly due to a $14.2 million increase in net interest expense, a $12.6 million restructuring charge, $7.8 million more in depreciation and amortization expense and a $6.2 million reduction in investment income, which was partially offset by a $10.3 million increase in the income tax benefit and a $2.0 million increase in other nonoperating income period over period.

Previous wording

The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three years ended December 31, 2024. 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, net settlement proceeds, (gain) loss on sale of assets, loss on early debt extinguishment, transaction and integration costs related to acquisitions, and other non-operating (income) expense). EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).

Current wording

The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three years ended December 31, 2025. 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, net settlement proceeds, (gain) loss on sale of assets, loss on early debt extinguishment, transaction and integration costs related to acquisitions, restructuring expenses, and other non-operating (income) expense). EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).

Previous wording

As of December 31, 2024, we had $47.0 million of cash and cash equivalents. Our cash management policy provides that cash balances in excess of a certain threshold may be reinvested in certain types of low-risk investments. We have a committed cash flow revolving credit facility (the "Revolving Facility") of $350 million, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein. Additional borrowing capacity under the Revolving Facility may be extended at our request and with the consent of the participating lenders. As of December 31, 2024, there was $56.0 million of outstanding borrowings under our Revolving Facility reported in Long-term debt in the Consolidated Balance Sheet. The Revolving Facility was undrawn at December 31, 2023.

Current wording

As of December 31, 2025, we had $28.9 million of cash and cash equivalents. Our cash management policy provides that cash balances in excess of a certain threshold may be reinvested in certain types of low-risk investments. Following the refinancing effective as of April 7, 2025, we have a committed cash flow revolving credit facility (the "Revolving Facility") providing for aggregate borrowings of $750 million, which can be utilized for working capital and other general corporate purposes, including supporting our operating model as described herein. As of December 31, 2025, there was $183.0 million of outstanding borrowings under our Revolving Facility reported in Long-Term debt in the Consolidated Balance Sheet. The Revolving Facility had $56.0 million of outstanding borrowings at December 31, 2024.

Previous wording

Net cash provided by operating activities was $847.6 million for the year ended December 31, 2024 and was $784.0 million in 2023, an increase of $63.6 million, or 8.1%. The increase was mainly due to an increase in the amount of cash provided from changes in noncash working capital in 2024 of $74.9 million, increased depreciation of $19.3 million and higher deferred and noncurrent tax charges of $12.0 million, partially offset by a decrease in net income of $54.3 million in 2024.

Current wording

Net cash provided by operating activities was $813.9 million for the year ended December 31, 2025 and was $847.6 million in 2024, a decrease of $33.7 million, or 4.0%. The decrease was mainly due to a decrease in the amount of cash required from changes in noncash working capital in 2025 of $65.9 million, a decrease in net income of $31.9 million, partially offset by higher deferred and noncurrent tax charges of $31.1 million and increased depreciation of $28.8 million in 2025.

Previous wording

For the current year, operating cash provided by changes in non-cash operating working capital of $32.8 million was due to a decrease of $65.4 million in accounts receivable due to the timing of receipts, an increase of $34.6 million in income taxes payable due in part to phase-out of federal bonus depreciation resulting in higher current tax expense and the timing of estimated tax payments, and was partially offset by an increase of $60.2 million in inventories due to higher prices and volumes, a decrease of $3.9 million in accounts payable and accrued liabilities which was due to the timing of payments and an increase of $3.1 million in prepaid expenses. See also Note 16 "Other Financial Information" in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2024.

Current wording

For the current year, operating cash required by changes in non-cash operating working capital of $33.1 million was due to a decrease of $12.9 million in income taxes payable due in part to the recognition of federal energy tax credits in the current year period, an increase of $11.4 million in inventories due to increased volumes and pricing impacts, an increase of $8.1 million in accounts receivable due to the timing of collecting receipts and a decrease of $4.3 million in accounts payable and accrued liabilities due to the timing of payments, which was partially offset by a decrease of $3.6 million in prepaid expenses. See also Note 16 "Other Financial Information" in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2025.

Previous wording

For the year ended December 31, 2024, cash required by investing activities was $445.8 million compared to cash required by investing activities of $323.6 million in 2023. The increase in cash required by investing activities of $122.2 million compared to the previous year was primarily due to the increase in capital expenditures of $122.5 million and lower proceeds from the sale of assets of $0.4 million. The increase in cash required by investing activities was partially offset by the cash required for other investing activities which were lower by $0.4 million and the change in redemptions of marketable securities net of new investments of $0.3 million.

Current wording

For the year ended December 31, 2025, cash required by investing activities was $436.0 million compared to cash required by investing activities of $445.8 million in 2024. The decrease in cash required by investing activities of $9.8 million compared to the previous year was primarily due to a decrease in capital expenditures of $18.5 million, other investing activities provided $2.4 million and higher proceeds from the sale of assets of $0.4 million. The decrease in cash required by investing activities was partially offset by the change in redemptions of marketable securities, net of new investments, of $11.5 million.

Previous wording

Financing activities in the year ended December 31, 2024 required net cash of $472.6 million compared to net cash required of $403.1 million in 2023. The $69.5 million increase in financing cash required was due to an increase of $112.5 million in share repurchases, an increase of $9.3 million in amounts related to share-based compensation, and an increase of $3.4 million in cash dividends paid. During 2024 there were net borrowings of $40.3 million compared to net repayments of borrowings of $15.4 million in 2023.

Current wording

Financing activities in the year ended December 31, 2025 required cash of $396.0 million compared to net cash required of $472.6 million in 2024, a decrease of $76.6 million. The year 2025 included payments of $649.9 million for the repurchase of common shares, an increase of $204.2 million compared to repurchases of $445.7 million in 2024. Dividend payments increased $4.7 million in 2025. Net borrowings of debt provided $327.9 million in 2025 compared to net borrowings of debt providing $40.3 million in 2024. Debt issuance cost related to financing activities increased $9.0 million in 2025. Amounts related to share-based compensation required $6.9 million less in cash during 2025 than in 2024.

Previous wording

The Company paid dividends of $1.79 per common share during 2024 for total payments of $36.8 million, compared to $1.55 per common share, or $33.4 million in 2023. As part of our capital allocation strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time.

Current wording

The Company paid dividends of $2.15 per common share during 2025 for total payments of $41.5 million, compared to $1.79 per common share, or $36.8 million, in 2024. As part of our capital allocation strategy, the Company's intention is to deliver targeted double-digit growth in the per share dividend over time.

Previous wording

On February 13, 2025, the Board of Directors declared a quarterly cash dividend of $0.49 per common share, or $1.96 per share on an annualized basis. The dividend is payable on March 5, 2025, to shareholders of record as of February 24, 2025.

Current wording

On February 12, 2026, the Board of Directors declared a quarterly cash dividend of $0.63 per common share, or $2.52 per share on an annualized basis. The dividend is payable on March 5, 2026, to shareholders of record as of February 23, 2026.

Previous wording

On December 1, 2021, our Board of Directors approved a share repurchase authorization of up to $1 billion, that we began to utilize upon the completion of our 2020 $500 million share repurchase authorization. The 2021 authorization was completed in October 2023. On May 2, 2023, the Board of Directors approved a new share repurchase authorization of up to $1.5 billion to be executed by December 31, 2028. The authorization value excludes any excise tax that may be incurred. Purchases may be effected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management. Purchases will be made subject to available cash, market conditions and compliance with our financing arrangements at any time during the period of authorization. We may use cash from operations as well as draws under our credit facilities to effect purchases.

Current wording

On May 2, 2023, the Board of Directors approved a share repurchase authorization of up to $1.5 billion to be executed by December 31, 2028. The authorization value excludes any excise tax that may be incurred. On October 29, 2025, the Company announced that the Board of Directors approved a new share repurchase authorization of up to $2.0 billion to be executed by December 31, 2030. This authorization will commence at the conclusion of the existing 2023 authorization. Purchases may be effected in the open market, through privately negotiated transactions, through one or more accelerated stock repurchase programs, through a combination of the foregoing or in any other manner in the discretion of management. Purchases will be made subject to available cash, market conditions and compliance with our financing arrangements at any time during the period of authorization. We may use cash from operations as well as draws under our credit facilities to effect purchases.

Previous wording

During the year 2024, the Company repurchased a total of 938,528 common shares for approximately $446.6 million, at an average price of $475.86 per share, including accrued excise taxes. Repurchases in 2024 were made pursuant to our $1.5 billion 2023 authorization. As of December 31, 2024, we had approximately $937.8 million remaining under our 2023 authorization.

Current wording

During the year 2025, the Company repurchased a total of 1,536,701 common shares for approximately $652.0 million, at an average price of $424.28 per share, including brokerage fees and accrued excise taxes. Repurchases in 2025 were made pursuant to our $1.5 billion 2023 authorization. As of December 31, 2025, we had approximately $291.9 million remaining under our 2023 authorization.

Previous wording

The credit agreement provides for a senior secured term loan in an aggregate principal amount of $400 million (the “Term Facility”) (which was borrowed in full on January 29, 2021) and revolving credit commitments in an aggregate amount equal to $350 million (the “Revolving Facility”, and together with the Term Facility, the “Credit Facilities”). The outstanding balance of the term loan was $386 million at December 31, 2024. The term loan is due January 2028, and we are required to make quarterly principal payments of $1 million, which began on July 1, 2021. As of December 31, 2024, we had $56.0 million of outstanding borrowings under the Revolving Facility and $6.2 million of outstanding letters of credit (which reduces the amount available to borrow under the Revolving Facility).

Current wording

Following a refinancing effective as of April 7, 2025, the credit agreement provides for a senior secured term loan in an aggregate principal amount of $600.0 million (the “Term Facility”) (which was borrowed in full on April 7, 2025) and revolving credit commitments in an aggregate amount equal to $750.0 million (the “Revolving Facility”, and together with the Term Facility, the “Credit Facilities”). The term loan is due April 2032, and we are required to make quarterly principal payments of $1.5 million, which began on January 1, 2026. The outstanding balance of the term loan was $600.0 million at December 31, 2025 and at December 31, 2024, prior to the refinancing, the outstanding balance of our term loan was $386.0 million. As of December 31, 2025, we had $183.0 million of outstanding borrowings under the Revolving Facility and $6.2 million of outstanding letters of credit (which reduces the amount available to borrow under the Revolving Facility).

Previous wording

plus, (A) in the case of Adjusted Term SOFR Rate borrowings, a spread of 1.75% per annum and (B) in the case of Alternate Base Rate borrowings, a spread of 0.75% per annum.

Current wording

The Term Facility amortizes in quarterly installments, which commenced on January 1, 2026, at a rate of 1.00% per annum. Pursuant to the credit agreement, the applicable margin, (A) in the case of Adjusted SOFR Rate borrowings, (i) with respect to the Revolving Facility, ranges from 1.25% to 2.00% per annum depending on a total debt to EBITDA ratio and (ii) with respect to the Term Facility, is 1.75% per annum and (B) in the case of Alternate Base Rate borrowings (i) with respect to the Revolving Facility, ranges from 0.25% to 1.00% per annum depending on a total debt to EBITDA ratio or (ii) with respect to the Term Facility, is 0.75% per annum.

Previous wording

The credit agreement contains certain covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes. The Revolving Facility credit agreement also imposes total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly. Pursuant to the total leverage ratio financial maintenance covenant, the Company must maintain a total leverage ratio of not more than 5.0 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 5.5 to 1.0 and a maximum secured net leverage ratio of not more than 3.75 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 4.25 to 1.0. The Credit Agreement also contains customary events of default.

Current wording

The credit agreement contains certain covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or liens, to make certain investments, to enter into sale-leaseback transactions, to make certain restricted payments, to enter into consolidations, mergers or sales of material assets and other fundamental changes, to transact with affiliates, to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends, or to make certain accounting changes. The Revolving Facility credit agreement also imposes total leverage ratio and secured net leverage ratio financial maintenance covenants which are tested quarterly. Pursuant to the total leverage ratio financial maintenance covenant, the Company must maintain a total leverage ratio of not more than 5.0 to 1.0 with an ability in certain circumstances to temporarily increase that limit to 5.5 to 1.0 and a consolidated cash interest coverage ratio of not less than 2.50 to 1.0. The credit agreement also contains customary events of default.

Previous wording

Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0, could be limited. At December 31, 2024, our total leverage ratio was 1.80 to 1.0 which meant our ability at that date to make restricted payments was not limited. If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed the greater of $119.6 million, or 4.5% of consolidated net tangible assets over the life of the credit agreement.

Current wording

Pursuant to the credit agreement's covenant limiting certain restricted payments, certain payments in respect of our equity interests, including dividends, when the total leverage ratio, calculated on a pro forma basis, is greater than 3.0 to 1.0, could be limited. At December 31, 2025, our total leverage ratio was 2.11 to 1.0 which meant our ability at that date to make restricted payments was not limited. If our total leverage ratio, on a pro forma basis, exceeds 3.0 to 1.0, any restricted payments made following that time until the ratio is once again, on a pro forma basis, below 3.0 to 1.0 would be limited by the covenant, which contains certain exceptions, including an ability to make restricted payments in cash in an aggregate amount not to exceed the greater of (a) $400.0 million, or (b) 15.0% of consolidated net tangible assets, estimated at $424.3 million as of December 31, 2025, over the life of the credit agreement.

Previous wording

The following is a description of the guarantees with respect to the Senior Notes and the Credit Facilities, for which MOUSA is primary obligor, and for which the Company and certain subsidiaries provide full and unconditional guarantees on a joint and several basis. See "—Debt" above for additional information concerning the Company's outstanding indebtedness, all of which is guaranteed as described below. See also Note 9 "Long-Term Debt" in the accompanying consolidated financial statements for the three years ended December 31, 2024.

Current wording

The following is a description of the guarantees with respect to the Senior Notes and the Credit Facilities, for which MOUSA is primary obligor, and for which the Company and certain subsidiaries provide full and unconditional guarantees on a joint and several basis. See "Debt" above for additional information concerning the Company's outstanding indebtedness, all of which is guaranteed as described below. See also Note 9 "Long-Term Debt" in the accompanying audited consolidated financial statements for the three years ended December 31, 2025.