Murphy USA (NYSE:MUSA) executives used the company’s fourth-quarter 2025 Q&A call to expand on themes from prepared remarks released the prior day, including competitive conditions in fuel, the pace and economics of its new-store pipeline, plans to increase proactive maintenance spending, and near-term expectations for key merchandise categories.
Competition and same-store fuel trends
CEO Mindy West said competitive pressures continue to vary by market, with states in different phases of “competitive intrusion and pricing behaviors.” She noted that in 2025, some markets performed better than others: average per-store-month volumes were higher in nine states, and margins were higher in 10 states. She cited Texas as a state that had both higher margins and higher volumes, while Colorado and Florida experienced lower volumes and lower margins.
Maintenance capital step-up aimed at preventing downtime
West also discussed the company’s plan to step up maintenance capital spending, framing it as a shift from a historical “break-fix mode” toward proactive replacement of equipment nearing end-of-life. She said proactive investment should make maintenance expenses more predictable and improve equipment uptime, which she tied to customer experience and loyalty.
Examples of equipment targeted for proactive replacement included dispensers, HVAC units, and safes. West said the company expects projected savings of “roughly” $6 million to $8 million in maintenance expense that could be avoided through this approach, in addition to benefits associated with more consistent service to customers.
Path to longer-term EBITDA targets and new-store ramp dynamics
In response to questions about the company’s longer-term outlook through 2028 and how that relates to nearer-term guidance, West said the EBITDA profile reflects the timing and scale of the new-store program. She emphasized that scaling to “50+ NTIs a year” creates a dynamic where a large cohort opening in a single year can be a “temporary drag” on EBITDA, even if the stores themselves are performing, because new sites incur full operating costs immediately while fuel and merchandise take time to ramp.
West reiterated the company’s expectation that a class of 50 new-to-industry stores can contribute approximately $35 million to $40 million of EBITDA after completing a three-year ramp. She said that as the company sustains 50-plus openings annually and cohorts mature, the EBITDA contribution becomes more visible.
She described three primary levers in reaching a longer-term EBITDA target of $1.2 billion:
- A more “normalized” and more volatile fuel environment (which management said it cannot control).
- Sustaining 50+ NTIs annually (which management said it can control).
- Execution on internal initiatives to improve the business and earnings power.
West said the company believes in the quality of its new-store pipeline and in its ability to execute initiatives, but added that reaching the $1.2 billion level “does depend on a little bit more volatility” in the macro environment. She also said that, looking back, 2026 may be viewed as an “inflection point” in the company’s ability to deliver sustained EBITDA as multiple store cohorts contribute simultaneously.
Fuel margin outlook, cost-to-serve, and PS&W/RINs commentary
On fuel, West said the company’s outlook reflects what it views as the “highest probability” environment—characterized by relatively low volatility and stable, still-low fuel prices. She said Murphy USA believes an all-in fuel margin of “$0.30-ish” is appropriate in that base-case environment and argued that holding margins at that level despite putting “$0.01 or $0.02 on the street” reflects structural support in industry margins.
Regarding break-even economics, West said the “cost to serve is really not going down,” and that the break-even component is “still alive and well” across the industry. She contended that flat margins in a low-volatility environment indicate that marginal retailers still need higher margins to break even.
Addressing product supply and wholesale (PS&W) results and renewable identification numbers (RINs), West said the fourth quarter benefited from “stronger arbitrage” and “stronger line-space values,” aided by more volatility than in the third quarter, though she noted some downward movement in price. For the first quarter, she said it was “too early to say” where PS&W would land due to potentially dramatic swings, but she reiterated expectations that the full-year result should stay within the company’s prior band unless volatility becomes more sustained. On RINs, she said that while quick moves can create temporary dislocations, “over the sweep of time, it all balances out,” because RIN costs are embedded in the price paid for fuel.
Merchandise, nicotine promotions, and SNAP changes
On nicotine, West said Murphy USA expects to remain highly promotion-driven and described the company as an “ideal retailer” for manufacturers as consumers move “down the risk spectrum” from cigarettes to other products. She said the company continues to take share in cigarettes and expects other nicotine categories to keep growing. However, she cautioned that the company is lapping a “very special one-off promotion” and is not assuming it can duplicate that benefit, while also noting that guidance includes “accelerated promotional funding” versus last year.
When asked about tobacco margin trends in the quarter, West attributed the quarterly dynamics to the “timing of promotional dollars” affecting cigarette margins and volumes. She said that despite volume declines, Murphy USA grew share in the cigarette category in both the four-week and 13-week periods ending January 4. She added that the business had “already normalized in January,” while emphasizing that quarterly performance can be “lumpy” due to promotion timing.
West also addressed changes to Supplemental Nutrition Assistance Program (SNAP) rules that took effect January 1 in five states where the company operates. She said Murphy USA’s exposure is “relatively small,” representing “less than 2%” of sales. The changes primarily affect candy and packaged beverages, “specifically energy drinks,” and she said early reads suggest a “modest headwind” in candy and energy drinks. West said the company included a guidance headwind of “roughly less than $5 million overall” related to SNAP. She also noted that the company’s top EBT item is Red Bull and said the company believes many customers will continue buying those products even if they are no longer eligible for SNAP benefits.
In closing comments, West said the company remains committed to strengthening its core business while pursuing additional sources of value “that endure across the fuel cycle,” adding that leadership is focused on unlocking the company’s “next level of potential.”
About Murphy USA (NYSE:MUSA)
Murphy USA is a leading downstream marketer of gasoline, diesel and convenience store products in the United States. Headquartered in El Dorado, Arkansas, the company was originally established as part of Murphy Oil Corporation and was spun off as an independent public entity in 2013. Since its separation, Murphy USA has focused on retail fueling services and convenience offerings designed to deliver value and convenience to consumers.
The company’s primary operations center on two retail formats.
