Murphy USA Inc. Reports Fourth Quarter 2015 Results

El Dorado, Arkansas, February 3, 2016 – Murphy USA Inc. (NYSE: MUSA), a leading marketer of retail motor fuel products and convenience merchandise, today announced financial results for the three and twelve months ended December 31, 2015.
Key Highlights:
•
Net income was $66.7 million or $1.58 per diluted share in Q4-2015, with income from continuing operations of $29.2 million or $0.69 per diluted share

•
Sale of Hereford ethanol plant finalized for $98.2 million, contributing the majority of $37.5 million in income from discontinued operations, or $0.89 per diluted share

•
Retail fuel volume grew 3.4% for the chain overall at 12.4 cpg margins as average per store month (APSM) volumes declined 1.4% against the record Q4-2014 environment

•
Merchandise sales increased 6.7% overall (1.7% APSM) at a 14.3% unit margin led by non-tobacco sales and margins, up 9.8% and 8.2%, respectively on an APSM basis

•
Added 44 new stores in the quarter, bringing the chain total to 1,335 stores at year end

•
Subsequent to quarter end, announced a Board approved strategic allocation of capital to pursue new additional growth opportunities and to undertake a share repurchase program of up to $500 million by December 31, 2017

•
Announced concurrently today an agreement to sell CAM Crude Pipeline System in South Louisiana for $85 million to an investment-grade buyer to be completed in the first half of 2016
"Murphy USA ended 2015 on an impressive trajectory, achieving our aggressive new store and merchandise growth plans for the year. While fuel performance moderated from the record 4th quarter 2014 environment, we grew total volume and market share for the year," said Andrew Clyde President and CEO. "The Company enters 2016 with strong earnings momentum from our major initiatives along with the clear focus of our independent growth plans and a sustained commitment to delivering value to our shareholders."
Consolidated Results
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
Key Operating Metrics
 
2015
 
2014
 
2015
 
2014
Net income ($ Millions)
 
$
66.7

 
$
98.3

 
$
176.3

 
$
243.9

Earnings per share (diluted)
 
$
1.58

 
$
2.13

 
$
4.02

 
$
5.26

Net income from continuing operations ($ Millions)
 
$
29.2

 
$
94.3

 
$
137.6

 
$
223.0

Earnings per share from continuing operations (diluted)
 
$
0.69

 
$
2.04

 
$
3.14

 
$
4.81

Adjusted EBITDA ($ Millions)
 
$
77.3

 
$
160.7

 
$
342.9

 
$
445.7



Income from continuing operations and Adjusted EBITDA for the quarter ending December 31, 2015 declined as retail fuel margins moderated to more historical levels when compared to the record margins earned in Q4-2014. The impact of lower retail fuel margins was offset in part by higher total fuel volume from new store additions, higher merchandise sales and margins, and improved product supply and wholesale contributions. Discontinued operations included a pre-tax gain of $60.8 million on the final adjusted sale of the Hereford Ethanol Plant.
The full year results and comparison primarily reflect the same factors, with the 2014 year also containing an after-tax benefit of $10.9 million from a LIFO decrement and a state tax benefit of $6.8 million.
Fuel
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
Key Operating Metrics
2015
 
2014
 
2015
 
2014
Retail fuel volume - chain (Million gal per year)
1,074.3

 
1,038.9

 
4,123.8

 
3,980.8

Retail fuel volume - per site (K gal APSM)
273.4

 
277.2

 
267.9

 
270.4

Retail fuel margin (cpg excl credit card fees)
12.4

 
24.6

 
12.5

 
15.8

Retail fuel contribution ($K APSM)
$
33.9

 
$
68.3

 
$
33.5

 
$
42.8

PS&W contribution ($ Millions excl RINs)
$
(7.8
)
 
$
(46.3
)
 
$
(16.8
)
 
$
13.4

RIN sales ($ Millions)
$
23.6

 
$
26.8

 
$
117.5

 
$
92.9

Total network retail gallons sold in the quarter increased by 3.4%, ahead of demand growth in Murphy USA marketing areas. Per store volumes declined 1.4% APSM and 1.5% same store sales (SSS) reflecting a relatively more stable price environment in 2015 versus the steeply falling price environment witnessed throughout Q4 of 2014. For the full year, per site gallons declined 0.9% APSM and 1.0% SSS reflecting both the difference in Q4 volatility and the lack of the enhanced Walmart summer fuel discount program in 2015.
Product supply and wholesale margin dollars excluding RINs improved in the quarter as Q4 experienced a drop in Gulf Coast gasoline prices of 22 cents in Q4-2015 compared to 115 cent drop in 2014. The improvement for the quarter reflected improved inventory and timing variances offset by weaker supply-to-retail transfer prices due to the different market conditions.
Adding $23.6 million to the total fuel contribution was the sale of 53 million RINs at an average price of $0.45 per RIN in the current period. For the full year, RINs added $117.5 million to the bottom line as 218 million RINs were sold at an average price of $0.54 per RIN compared to 196 million RINs sold at an average price of $0.48 in 2014. For the full year, the combined contribution from PS&W and RINs effectively contributed an additional 2.44 cpg to the retail fuel contribution (e.g. dividing by retail gallons sold) in 2015 compared to 2.67 cpg in 2014.




Merchandise
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
Key Operating Metrics
2015
 
2014
 
2015
 
2014
Total merchandise sales ($ Millions)
$
586.0

 
$
549.4

 
$
2,273.9

 
$
2,161.4

Total merchandise contribution ($ Millions)
$
83.9

 
$
79.0

 
$
327.5

 
$
301.6

Total merchandise sales ($K APSM)
$
149.1

 
$
146.6

 
$
147.7

 
$
146.8

Merchandise unit margin (%)
14.3
%
 
14.4
%
 
14.4
%
 
14.0
%
Tobacco contribution ($K APSM)
$
12.70

 
$
13.08

 
$
12.53

 
$
12.45

Non-tobacco contribution ($K APSM)
$
8.65

 
$
8.00

 
$
8.74

 
$
8.04

Total merchandise contribution ($K APSM)
$
21.35

 
$
21.08

 
$
21.27

 
$
20.49

Total merchandise sales increased 6.7% in Q4 (up 5.2% full-year), driven both by new store additions and 2.6% SSS growth. Total merchandise margin contribution increased 6.2% for the quarter (up 8.6% full-year), as per store improvements and effective promotional sales helped drive better system-wide performance. While merchandise unit margins were down by 0.1% for the quarter, on a full-year basis unit margins were up 0.4%.
Tobacco contribution per store for the quarter was down 2.9% (down 1.2% SSS) primarily due to rebate adjustments in the Other Tobacco category. Cigarette margin dollars increased per site on relatively flat sales for the quarter. For the full year, the improvement in cigarette margin dollars led to the overall increase in tobacco contribution.
Non-tobacco contribution per store increased 8.2% APSM (6.2% SSS) for the quarter, driven by increases in beverages, general merchandise and lotto/lottery categories. Beverages continue to benefit from larger stores, enhanced product mix and promotions, and refresh/super-cooler improvements.
Other areas
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
Key Operating Metrics
2015
 
2014
 
2015
 
2014
Total station and other operating expense ($ Millions)
$
127.9

 
$
125.6

 
$
486.4

 
$
486.8

Station OPEX excl credit card fees ($K APSM)
$
23.36

 
$
23.03

 
$
22.44

 
$
22.45

Total SG&A cost ($ Millions)
$
32.3

 
$
32.6

 
$
129.3

 
$
119.3


Total station and other operating expenses increased $2.3 million for the quarter while retail station operating expenses on an APSM basis declined 3.0%, primarily due to lower credit card


fees associated with lower average fuel prices. For the full year, total operating expenses on a per store month basis remained flat, excluding credit card fees.
Total SG&A was relatively flat for the quarter. For the full year, higher SG&A reflects professional fees and other costs associated with the company's business improvement initiatives.
Station Openings
Murphy USA opened 44 retail locations in Q4-2015, bringing the year end store count to 1,335 locations that include 1,111 Murphy USA sites and 224 Murphy Express sites. A total of 73 stores were opened during the year and one Murphy USA location at a Neighborhood Market location was closed with the real estate sold to a third party.
Cash Flow and Financial Resources
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
Key Metrics (Millions except average shares)
2015
 
2014
 
2015
 
2014
Cash flow from continuing operations
$
95.8

 
$
86.0

 
$
233.7

 
$
276.7

Capital expenditures (cash)
$
(53.7
)
 
$
(51.0
)
 
$
(205.2
)
 
$
(135.3
)
Free cash flow (non-GAAP)
$
42.1

 
$
35.0

 
$
28.5

 
$
141.4

Cash and cash equivalents
 
 
 
 
$
102.3

 
$
327.2

Long-term debt
 
 
 
 
$
490.2

 
$
488.3

Average shares outstanding, thousands (diluted)
 
 
 
 
43,794

 
46,417

Free cash flow from the quarter increased by $7 million as the increase in net cash from continuing operations exceeded the increase in capital expenditures. For the full year, free cash flow decreased by $113 million as net cash from continuing operations was down $43 million while capital expenditures increased $70 million.
Not included in the 2015 year-end cash balance is restricted cash of $68.6 million related to unspent sales proceeds from the Hereford ethanol plant sale that are currently being held by a third party trustee in order for the Company to participate in like-kind exchange transactions to defer tax gain on the sale of the plant. This restricted cash is included in non-current assets on the balance sheet at December 31, 2015.
The Company's asset-based loan facility remains undrawn with a borrowing base of $134.5 million as of January 2016.
No shares were repurchased during the current quarter. For the full year, $248.7 million was used for the share repurchase program, leading to the reduction in shares outstanding.






2015 Guidance Update and 2016 Guidance Highlights
 
 
2015 Original Guidance Range
2015 Actual Results
2016 Guidance Range
Annual retail fuel volume (Billion gallons per year)
 
4.1 to 4.3
4.12
4.2 to 4.4
Retail fuel volume per store (K gallons APSM)
 
267 to 273
267.9
265 to 270
Retail fuel unit margin (cpg)
 
9.0 to 13.0
12.5
12.25 to 13.25
Product Supply & Wholesale contribution ($ Million per year)
 
$40 to $60
$(16.8)
$25 to $45
RINs (cents per RIN)
 
10 to 15
54
30 to 50
Total merchandise sales ($ Millions per year)
 
$2,250 to $2,300
$2,274
$2,320 to $2,370
Merchandise contribution ($ Millions per year)
 
$315 to $325
$327
$340 to $360
Retail station OPEX excluding credit cards (APSM %YOY change)
 
Below Inflation 2015: < +2.1%
0.0%
-2% to -4%
SG&A ($ Millions per year)
 
$120 to $125
$129
$130 to $135
New store additions
 
60 to 80
73
60 to 80
Capital expenditures ($ Millions per year)
 
$230 to $270
$216
$250 to $300
Adjusted EBITDA (non-GAAP)
 
Not provided
$343
$400 to $440
Performance relative to the 2015 original guidance has been highlighted previously in this release. Management's annual guidance for 2016 reflects the Company's independent growth strategy and results of its business improvement initiatives. Key 2016 guidance highlights include:
•
Network fuel volume growth reflects new site additions coupled with +/- 1% per site growth, reflecting market and competitive dynamics
•
Long-run retail fuel margin outlook increase of 25 bps reflects benefits from executing various improvement initiatives against an annual outlook with normal volatility
•
PS&W contribution decrease reflects reduction in CAM earnings and expected long refined product market; RIN outlook projects no major changes to RFS mandates
•
Merchandise sales growth reflects new site additions of mostly 1,200 sq. ft. stores and continued store upgrade investments
•
Merchandise contribution increase reflects higher sales and benefits of implementing the Core-Mark supply chain contract
•
Store operating expense per site reduction reflect benefits of ASaP first wave initiatives
•
Sustained SG&A costs reflect continued investments in systems and process upgrades
•
New store additions reflect current pipeline of available locations and land bank additions
•
Capital expenditures reflect sustained store growth, increase in store improvements and implementation of various corporate infrastructure projects
•
EBITDA improvements reflect the ranges of individual guidance components, adjusted for management's expected interactions across the components.
* * * * *


Earnings Call Information
The Company will host a conference call on February 4, 2016, at 10:00 a.m. Central time to discuss fourth quarter 2015 results. The conference call number is 1 (877) 291-1367 and the conference number is 22207109. A live audio webcast of the conference call and the earnings and investor related materials, including reconciliations of any non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the Murphy USA website (http://ir.corporate.murphyusa.com). Online replays of the earnings call will be available through Murphy USA’s web site and a recording of the call will be available through February 8, 2016, by dialing 1(855) 859-2056 and referencing conference number 22207109.
Forward-Looking Statements
Certain statements in this news release contain or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to anticipated store openings, fuel margins, merchandise margins, sales of RINs and trends in our operations. Such statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, disruptions in our supply chain and our ability to control costs; the impact of any systems failures, cybersecurity and/or security breaches, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins; efficient and proper allocation of our capital resources; compliance with debt covenants; availability and cost of credit; and changes in interest rates. Our SEC report, including our Annual Report on our Form 10-K for the year ended December 31, 2015 (when available) contains other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
Investor Contact:
Christian Pikul (870) 875-7683
Director, Investor Relations
christian.pikul@murphyusa.com
Cell 870-677-0278
Media/ Public Relations Contact:
Jerianne Thomas (870) 875-7770
Director, Corporate Communications
jerianne.thomas@murphyusa.com
Cell - 870-866-6321




Murphy USA Inc.
Consolidated Statements of Income
(Unaudited, except for twelve months in 2014)

 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
(Thousands of dollars except per share amounts)
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
 
Petroleum product sales (a)
 
$
2,317,531

 
$
2,977,080

 
$
10,304,689

 
$
14,728,527

Merchandise sales
 
586,003

 
549,403

 
2,273,888

 
2,161,378

Other operating revenues
 
24,620

 
27,518

 
120,834

 
96,109

Total revenues
 
2,928,154

 
3,554,001

 
12,699,411

 
16,986,014

Costs and Operating Expenses
 
 
 
 
 
 
 
 
Petroleum product cost of goods sold (a)
 
2,188,514

 
2,764,686

 
9,794,475

 
14,074,579

Merchandise cost of goods sold
 
502,130

 
470,420

 
1,946,423

 
1,859,732

Station and other operating expenses
 
127,920

 
125,579

 
486,383

 
486,762

Depreciation and amortization
 
22,555

 
20,199

 
86,568

 
79,087

Selling, general and administrative
 
32,282

 
32,640

 
129,277

 
119,266

Accretion of asset retirement obligations
 
384

 
303

 
1,521

 
1,200

Total costs and operating expenses
 
2,873,785

 
3,413,827

 
12,444,647

 
16,620,626

Income from operations
 
54,369

 
140,174

 
254,764

 
365,388

Other income (expense)
 
 
 
 
 
 
 
 
Interest income
 
269

 
203

 
2,177

 
244

Interest expense
 
(8,491
)
 
(8,412
)
 
(33,531
)
 
(36,646
)
Gain (loss) on sale of assets
 
(567
)
 
24

 
(4,658
)
 
194

Other nonoperating income (expense)
 
(1,079
)
 
9,845

 
(463
)
 
10,166

Total other income (expense)
 
(9,868
)
 
1,660

 
(36,475
)
 
(26,042
)
Income before income taxes
 
44,501

 
141,834

 
218,289

 
339,346

Income tax expense
 
15,268

 
47,544

 
80,698

 
116,386

Income from continuing operations
 
29,233

 
94,290

 
137,591

 
222,960

Income from discontinued operations, net of taxes
 
37,453

 
4,057

 
38,749

 
20,903

Net Income
 
$
66,686

 
$
98,347

 
$
176,340

 
$
243,863

Earnings per share - basic:
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
0.70

 
$
2.06

 
$
3.17

 
$
4.84

Income from discontinued operations
 
0.90

 
0.09

 
0.89

 
0.45

Net Income - basic
 
$
1.60

 
$
2.15

 
$
4.06

 
$
5.29

Earnings per share - diluted:
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
0.69

 
$
2.04

 
$
3.14

 
$
4.81

Income from discontinued operations
 
0.89

 
0.09

 
0.88

 
0.45

Net Income - diluted
 
$
1.58

 
$
2.13

 
$
4.02

 
$
5.26

Weighted-average shares outstanding (in thousands):
 
 
 
 
 
 
 
 
Basic
 
41,678

 
45,724

 
43,434

 
46,104

Diluted
 
42,066

 
46,170

 
43,794

 
46,417

Supplemental information:
 
 
 
 
 
 
 
 
(a) Includes excise taxes of:
 
$
508,758

 
$
500,262

 
$
1,968,629

 
$
1,930,608





Murphy USA Inc.
Segment Operating Results
(Unaudited)

 
 
 
 
 
 
 
 
 
(Thousands of dollars, except volume per store month, margins and store counts)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
Marketing Segment
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Petroleum product sales
 
$
2,317,531

 
$
2,977,080

 
$
10,304,689

 
$
14,728,527

Merchandise sales
 
586,003

 
549,403

 
2,273,888

 
2,161,378

Other operating revenues
 
24,601

 
27,516

 
120,547

 
95,998

Total revenues
 
2,928,135

 
3,553,999

 
12,699,124

 
16,985,903

 
 
 
 
 
 
 
 
 
Costs and operating expenses
 
 
 
 
 
 
 
 
Petroleum products cost of goods sold
 
2,188,514

 
2,764,685

 
9,794,475

 
14,074,579

Merchandise cost of goods sold
 
502,130

 
470,420

 
1,946,423

 
1,859,732

Station and other operating expenses
 
127,920

 
125,579

 
486,383

 
486,761

Depreciation and amortization
 
21,104

 
19,069

 
81,348

 
74,906

Selling, general and administrative
 
32,282

 
32,640

 
129,277

 
119,266

Accretion of asset retirement obligations
 
384

 
303

 
1,521

 
1,200

Total costs and operating expenses
 
2,872,334

 
3,412,696

 
12,439,427

 
16,616,444

 
 
 
 
 
 
 
 
 
Income from operations
 
55,801

 
141,303

 
259,697

 
369,459

 
 
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
 
 
Interest expense
 
(7
)
 
—

 
(20
)
 
—

Gain (loss) on sale of assets
 
(567
)
 
24

 
(4,658
)
 
194

Other nonoperating income
 
102

 
117

 
434

 
438

Total other income
 
(472
)
 
141

 
(4,244
)
 
632

 
 
 
 
 
 
 
 
 
Income from continuing operations
 
 
 
 
 
 
 
 
before income taxes
 
55,329

 
141,444

 
255,453

 
370,091

Income tax expense
 
19,541

 
47,020

 
95,657

 
127,657

Income from continuing operations
 
$
35,788

 
$
94,424

 
$
159,796

 
$
242,434

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total tobacco sales revenue per store month
 
$
113,706

 
$
114,350

 
$
112,954

 
$
114,727

Total non-tobacco sales revenue per store month
 
35,424

 
32,256

 
34,772

 
32,096

Total merchandise sales revenue per store month
 
$
149,130

 
$
146,606

 
$
147,726

 
$
146,823

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Store count at end of period
 
1,335

 
1,263

 
1,335

 
1,263

Total store months during the period
 
3,929

 
3,747

 
15,393

 
14,721





 
 
 
 
 
 
 
 
 
 
 

Same store sales information (compared to APSM metrics)

 
Variance from prior period
 
SSS
APSM
 
SSS
APSM
 
Three months ended
 
Twelve months ended
 
December 31, 2015
 
December 31, 2015
Fuel gallons per month
(1.5
)%
(1.4
)%
 
(1.0
)%
(0.9
)%
 
 
 
 
 
 
Merchandise sales
2.6
 %
1.7
 %
 
1.6
 %
0.6
 %
Tobacco sales
1.0
 %
(0.6
)%
 
0.1
 %
(1.5
)%
Non tobacco sales
8.6
 %
9.8
 %
 
7.0
 %
8.3
 %
 
 
 
 
 
 
Merchandise margin
1.6
 %
1.3
 %
 
4.2
 %
3.8
 %
Tobacco margin
(1.2
)%
(2.9
)%
 
2.5
 %
0.7
 %
Non tobacco margin
6.2
 %
8.2
 %
 
7.0
 %
8.7
 %



Murphy USA Inc.
Consolidated Balance Sheets


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Thousands of dollars)
 
December 31, 2015
 
December 31, 2014
 
 
(unaudited)
 
 
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
102,335

 
$
327,163

Accounts receivable—trade, less allowance for doubtful accounts of $1,963 in 2015 and $4,456 in 2014
 
136,253

 
138,466

Inventories, at lower of cost or market
 
155,906

 
157,046

Prepaid expenses and other current assets
 
41,173

 
11,710

Current assets held for sale
 
—

 
56,328

Total current assets
 
435,667

 
690,713

Property, plant and equipment, at cost less accumulated depreciation and amortization of $724,486 in 2015 and $663,067 in 2014
 
1,369,318

 
1,248,081

Restricted cash
 
68,571

 
—

Other assets
 
12,685

 
10,543

Noncurrent assets held for sale
 
—

 
—

Total assets
 
$
1,886,241

 
$
1,949,337

Liabilities and Stockholders' Equity
 
 
 
 
Current liabilities
 
 
 
 
Current maturities of long-term debt
 
$
222

 
$
—

Trade accounts payable and accrued liabilities
 
390,341

 
381,271

Income taxes payable
 
—

 
18,362

Deferred income taxes
 
1,729

 
522

Current liabilities held for sale
 
—

 
12,925

Total current liabilities
 
392,292

 
413,080

 
 
 
 
 
Long-term debt, including capitalized lease obligations
 
490,160

 
488,250

Deferred income taxes
 
161,236

 
137,882

Asset retirement obligations
 
24,345

 
22,245

Deferred credits and other liabilities
 
25,918

 
29,175

Total liabilities
 
1,093,951

 
1,090,632

Stockholders' Equity
 
 
 
 
Preferred Stock, par $0.01 (authorized 20,000,000 shares,
 
 
 
 
none outstanding)
 
—

 
—

Common Stock, par $0.01 (authorized 200,000,000 shares,
 
 
 
 
46,767,164 and 46,767,164 shares issued at
 
 
 
 
2015 and 2014, respectively)
 
468

 
468

Treasury stock (5,088,434 and 1,056,689 shares held at
 
 
 
 
December 31, 2015 and 2014, respectively)
 
(294,139
)
 
(51,073
)
Additional paid in capital (APIC)
 
558,182

 
557,871

Retained earnings
 
527,779

 
351,439

Total stockholders' equity
 
792,290

 
858,705

Total liabilities and stockholders' equity
 
$
1,886,241

 
$
1,949,337



Murphy USA Inc.
Consolidated Statement of Cash Flows
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended
December 31,
(Thousands of dollars)
 
2015
 
2014
 
2015
 
2014
Operating Activities
 
 
 
 
 
 
 
 
Net income
 
$
66,686

 
$
98,347

 
$
176,340

 
$
243,863

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
 
 
 
 
 
Income from discontinued operations, net of taxes
 
(37,453
)
 
(4,057
)
 
(38,749
)
 
(20,903
)
Depreciation and amortization
 
22,555

 
20,199

 
86,568

 
79,087

Deferred and noncurrent income tax credits
 
52,495

 
19,605

 
40,556

 
(4,403
)
Accretion on discounted liabilities
 
384

 
303

 
1,521

 
1,200

Pretax (gains) losses from sale of assets
 
567

 
(24
)
 
4,658

 
(194
)
Net (increase) decrease in noncash operating working capital
 
(13,392
)
 
(51,872
)
 
(46,586
)
 
(36,475
)
Other operating activities - net
 
3,989

 
3,546

 
9,417

 
14,531

Net cash provided by continuing operations
 
95,831

 
86,047

 
233,725

 
276,706

Net cash provided by discontinued operations
 
(28,835
)
 
3,085

 
(17,887
)
 
28,876

Net cash provided by operating activities
 
66,996

 
89,132

 
215,838

 
305,582

Investing Activities
 
 
 
 
 
 
 
 
Property additions
 
(53,704
)
 
(50,984
)
 
(205,225
)
 
(135,339
)
Proceeds from sale of assets
 
4

 
97

 
729

 
376

Purchase of intangible assets
 
—

 
—

 
(2,889
)
 
(10,631
)
Changes in restricted cash
 
(68,571
)
 
—

 
(68,571
)
 
—

Investing activities of discontinued operations
 
 
 
 
 
 
 
 
Sales proceeds
 
93,765

 
—

 
93,765

 
1,097

Other
 
(2,498
)
 
(3,246
)
 
(7,443
)
 
(4,918
)
Net cash required by investing activities
 
(31,004
)
 
(54,133
)
 
(189,634
)
 
(149,415
)
Financing Activities
 
 
 
 
 
 
 
 
Purchase of treasury stock
 
—

 
(1,327
)
 
(248,695
)
 
(51,348
)
Repayments of long-term debt
 
(57
)
 
—

 
(146
)
 
(70,000
)
Debt issuance costs
 
—

 
75

 
(58
)
 
(875
)
Amounts related to share-based compensation
 
(39
)
 
94

 
(3,075
)
 
(580
)
Net cash required by financing activities
 
(96
)
 
(1,158
)
 
(251,974
)
 
(122,803
)
Net increase (decrease) in cash and cash equivalents
 
35,896

 
33,841

 
(225,770
)
 
33,364

Cash and cash equivalents at beginning of period
 
65,302

 
293,066

 
328,105

 
294,741

Cash and cash equivalents at end of period
 
101,198

 
326,907

 
102,335

 
328,105

Less: Cash and cash equivalents held for sale
 
(1,137
)
 
(256
)
 
—

 
942

Cash and cash equivalents of continuing operations at end of period
 
$
102,335

 
$
327,163

 
$
102,335

 
$
327,163



Supplemental Disclosure Regarding Non-GAAP Financial Information
The following table sets forth the Company’s Adjusted EBITDA for the twelve months ended December 31, 2015 and 2014. EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, gain (loss) on sale of assets and other non-operating expense (income)). EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).
We use this Adjusted EBITDA in our operational and financial decision-making, believing that such measure is useful to eliminate certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. Adjusted EBITDA is also used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance. However, non-GAAP measures are not a substitute for GAAP disclosures, and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.
The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:


 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(Thousands of dollars)
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net income
 
$
66,686

 
$
98,347

 
$
176,340

 
$
243,863

 
 
 
 
 
 
 
 
 
Income taxes
 
15,268

 
47,544

 
80,698

 
116,386

Interest expense, net of interest income
 
8,222

 
8,209

 
31,354

 
36,402

Depreciation and amortization
 
22,555

 
20,199

 
86,568

 
79,087

EBITDA
 
$
112,731

 
$
174,299

 
$
374,960

 
$
475,738

 
 
 
 
 
 
 
 
 
(Income) loss from discontinued operations, net of tax
 
(37,453
)
 
(4,057
)
 
(38,749
)
 
(20,903
)
Accretion of asset retirement obligations
 
384

 
303

 
1,521

 
1,200

(Gain) loss on sale of assets
 
567

 
(24
)
 
4,658

 
(194
)
Other nonoperating (income) expense
 
1,079

 
(9,845
)
 
463

 
(10,166
)
Adjusted EBITDA
 
$
77,308

 
$
160,676

 
$
342,853

 
$
445,675

 
 
 
 
 
 
 
 
 

The Company also considers Free Cash Flow in the operation of its business. Free cash flow is defined as net cash provided by operating activities in a period minus payments for property and equipment made in that period. Free cash flow is also considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for us in evaluating the Company’s performance. Free cash flow should be considered in addition to, rather than as a substitute for consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.


Numerous methods may exist to calculate a company’s free cash flow. As a result, the method used by our management to calculate our free cash flow may differ from the methods other companies use to calculate their free cash flow. The following table provides a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow:
 

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(Thousands of dollars)
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net cash provided by continuing operations
 
$
95,831

 
$
86,047

 
$
233,725

 
$
276,706

Payments for property and equipment
 
(53,704
)
 
(50,984
)
 
(205,225
)
 
(135,339
)
Free cash flow
 
$
42,127

 
$
35,063

 
$
28,500

 
$
141,367