Murphy USA Inc. (Form: 10-K, Received: 02/19/2019 16:44:50)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 001-35914

MURPHY USA INC.

(Exact name of registrant as specified in its charter)



Delaware	46-2279221
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

200 Peach Street
El Dorado, Arkansas	71730-5836
(Address of principal executive offices)	(Zip Code)

(870) 875-7600

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Name of each exchange on which registered
Common Stock, $0.01 Par Value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes __ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. __Yes þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes __ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes __ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ______

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange act.

Large accelerated filer þ Accelerated filer ___ Non-accelerated filer ___ Smaller reporting company ___ Emerging growth company___

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ___ Yes þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (as of June 30, 2018 ), based on the closing price on that date of $74.29 was $2,390,188,000 .

Number of shares of Common Stock, $0.01 par value, outstanding at January 31, 2019 was 32,261,729 .

Documents incorporated by reference:

Portions of the Registrant’s definitive Proxy Statement relating to the Annual Meeting of Stockholders on May 1, 2019 will be incorporated by reference in Part III herein.

MURPHY USA INC.

TABLE OF CONTENTS – 2018 Form 10-K




	Page

PART I




Item 1. Business	2
Item 1A. Risk Factors	11
Item 1B. Unresolved Staff Comments	22
Item 2. Properties	22
Item 3. Legal Proceedings	22
Supplemental Information. Executive Officers of the Registrant	22
Item 4. Mine Safety Disclosures	23
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Securities	24
Item 6. Selected Financial Data	26
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	40
Item 8. Financial Statements and Supplementary Data	41
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41
Item 9A. Controls and Procedures	41
Item 9B. Other Information	41
PART III
Item 10. Directors, Executive Officers and Corporate Governance	42
Item 11. Executive Compensation	42
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	42
Item 13. Certain Relationships and Related Transactions, and Director Independence	42
Item 14. Principal Accounting Fees and Services	42
PART IV
Item 15. Exhibits, Financial Statement Schedules	43
Item 16. Form 10-K Summary	45
Signatures	45

Part I

Item 1. BUSINESS

Our business consists primarily of the marketing of retail motor fuel products and convenience merchandise through a large chain of 1,472 (as of December 31, 2018 ) retail stores operated by us, almost all of which are in close proximity to Walmart stores. Our retail stores are located in 26 states, primarily in the Southeast, Southwest and Midwest United States. Of these stores, 1,160 are branded Murphy USA and 312 are standalone Murphy Express locations (as of December 31, 2018 ). The majority of our Murphy USA locations participate in a cents-off per gallon purchased discount program for fuel with Walmart when using specific payment methods.

Our business also includes certain product supply and wholesale assets, including product distribution terminals and pipeline positions. As an independent publicly traded company, we are a low-price, high volume fuel retailer selling convenience merchandise through low cost kiosks and small store formats with key strategic relationships and experienced management.

Murphy USA Inc. ("Murphy USA" or the "Company") was incorporated in Delaware on March 1, 2013 and holds, through its subsidiaries, the former U.S. retail marketing business of its former parent company, Murphy Oil Corporation (“Murphy Oil”), plus other assets and liabilities of Murphy Oil that supported the activities of the U.S. retail marketing operations.

Our business is subject to various risks. For a description of these risks, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.

Information about our operations, properties and business segments, including revenues by class of products and financial information by geographic area, are provided on pages 27 through 40, F-13, and F-28 of this Annual Report on Form 10-K.

Our Competitive Strengths

Our business foundation is built around five reinforcing strengths which we believe provide us a competitive advantage over our peers. These strengths support our Company vision which is to “Deliver every day the quickest, most friendly service and a low price value proposition to our growing customer base for the products and markets we serve.”

Strategic proximity to and complementary relationship with Walmart

Of our network of 1,472 retail gasoline stores (as of December 31, 2018 ), the majority are situated on prime locations located near Walmart stores. We believe our proximity to Walmart stores generates significant traffic to our existing retail stores while our competitively priced gasoline and convenience offerings appeal to our shared customers. We continue to collaborate with Walmart on a fuel discount program which we believe enhances the customer value proposition as well as the competitive position of both Murphy USA and Walmart. We have an active real estate development team that purchases and leases land from third parties near Walmart Supercenters and other high traffic locations that support our low-cost, high-volume model.

Winning proposition with value-conscious consumers

Our competitively priced fuel is a compelling offering for value-conscious consumers. Despite a flat long-term outlook in overall gasoline demand (vehicle miles traveled in a normal economy essentially offsetting increased fuel efficiency), we believe value-conscious consumers that prefer convenience and service are a growing demand segment. In combination with our high traffic locations, our competitive gasoline prices drive high fuel volumes and gross profit. In addition, we are an industry leader in per-site tobacco sales with our low-priced tobacco products and in total store sales per square foot as we also sell a growing assortment of single-serve/immediate consumption items. We continue to provide value opportunities to our customers including our new Murphy Drive Rewards loyalty program, currently being piloted in select locations, which rewards customers with discounted and free items based on purchases of qualifying fuel and merchandise.

Low cost retail operating model

We operate our retail gasoline stores with a strong emphasis on fuel sales complemented by a focused convenience offering that allows for a smaller store footprint than most of our competitors. Almost all of our recently constructed stores are standardized 1,200 square foot small store formats, which we believe have low capital expenditure, maintenance and utility requirements relative to our competitors. In the past, we have also developed standardized 208 square feet kiosks with external supercoolers when the available land or economics did not support the small store format. In addition, many of our stores require only one or two attendants to be present during business hours and 86% of our stores are located on Company-owned property and do not incur any rent expense. The combination of a focused convenience offering and standardized smaller footprint stores allows us to achieve lower overhead costs and on-site costs compared to competitors with a much larger store format. According to the 2017 National Association of Convenience Stores’ State of the Industry Survey, we operate at approximately 46% of the average monthly operating costs for top quartile performing stores in the industry. In addition, we operate among the highest industry safety standards and had a Total Recordable Incident Rate (TRIR) and Days Away from Work (DAW) rate that was substantially lower than the industry averages in 2017 using the most current published data by the Bureau of Labor Statistics. Our low cost operating model translates into a low cash fuel breakeven requirement that allows us to weather extended periods of low fuel margins and which has improved by more than 3 cpg since our spinoff in 2013.

Distinctive fuel supply chain capabilities

We source fuel at very competitive industry benchmark prices due to the diversity of fuel options available to us in the bulk and rack product markets, our shipper status on major pipeline systems, and our access to numerous terminal locations. In addition, we have a strong distribution system in which we analyze intra-day supply options and dispatch third-party tanker trucks to the most favorably priced terminal to load products for each Murphy site, further reducing our fuel product costs. By participating in the broader fuel supply chain, we believe our business model provides additional upside exposure to opportunities to enhance margins and volume, such as shifting non-contractual wholesale volumes to protect retail fuel supply during periods of constrained supply and elevated margins. These activities demonstrate our belief that participating in the broader fuel supply chain provides us with added flexibility to ensure reliable low-cost fuel supply in various market conditions especially during periods of significant price volatility. It would take substantial time and investment, both in expertise and assets, for a competitor to try and replicate our existing position, and we believe this continues to be a significant barrier to any attempt to emulate our business model.

Resilient financial profile and engaged team

Our predominantly fee-simple asset base, ability to generate attractive gross margins through our low-price, high volume strategy, and our low overhead costs should help us endure prolonged periods of unfavorable commodity price movements and compressed fuel margins. We also believe our conservative financial structure further protects us from the inherently volatile fuel environment. We expect that our strong cash position and availability under our credit facility will continue to provide us with a significant level of liquidity to help maintain a disciplined capital expenditure program focused on growing ratably through periods of both high and low fuel margins. In addition, we have acquired through share repurchase over $970 million of common stock in a little more than five years of operation. We also have more than 9,500 hardworking employees that are actively engaged to serve the customer, whether it is the external retail consumer or their internal co-workers. We believe our sustainable business model and stable organic growth opportunities support an employee value proposition that makes Murphy USA an attractive place to work.

Our Business Strategy

Our business strategy reflects a set of coherent choices that leverage our differentiated strengths and capabilities.

Grow organically

We intend for our independent growth plan to be a key driver of our organic growth over the next several years. We expect to build at a pace of 40 to 50 new sites per year, including raze-and-rebuild activity, targeting high-return locations either near Walmart Supercenters, other high traffic areas or by strategic infill in our core market areas complemented by our supply chain capabilities. While we were previously focused on smaller lot sizes, we now expect to build more stores larger than 1,200 square feet. Our real estate development team works to maintain a multi-year pipeline of projects that supports ratable expansion.

Diversify merchandise mix

We plan to continuously evaluate our kiosk strategy in an effort to maximize our site economics and return on investment, such as the installation of supercoolers to help drive outside beverage sales. Complementary to that strategy, we are continually refining, and increasingly constructing, our 1,200 square foot and larger store format design to create a foundation for increasing higher-margin non-tobacco sales and diversifying our merchandise offerings. For example, we continue to tailor our product offerings to complement the retail selection within Walmart stores, such as offering products in a variety of quantities and sizes, or stock keeping units ("SKUs"), which are more convenience-oriented. We expect to further expand merchandise revenue and margins through our primary supplier relationship with Core-Mark Holding Company, Inc. ("Core-Mark"), in addition to optimizing our promotional analytics, merchandise mix and workforce planning capabilities, in order to help boost overall site returns.

Sustain cost leadership position

We believe that sustaining our low cost position is a strategic advantage as a retailer of commodity products. We are undertaking several initiatives that have a purpose of increasing efficiency which will ultimately lead to lower costs per retail site. One of our goals is to beat inflation on per-site operating costs to help sustain low site level costs. We also believe that through our planned growth and efficiency initiatives, we can achieve reductions in overhead costs to support an overall improvement in site returns and keep costs properly scaled as we grow organically. In order to do this successfully, we will focus on the continued development of our employees and foster an operating culture aligned with business performance, including cost leadership.

Create advantage from market volatility

We plan to continue to focus our product supply and wholesale efforts on activities that enhance our ability to be a low-price retail fuel leader and our ability to take advantage of fuel price volatility. We will continue to invest in capabilities and asset positions that support our supply chain strategy. Our distinctive business model and supply chain advantage allows us to deliver consistent margins over time, helping the business to better withstand periods of volatility and uncertainty.

Invest for the long term

We maintain a portfolio of predominantly fee-simple assets and utilize what we believe to be an appropriate debt structure that will allow us to be resilient during times of fuel price and margin volatility. We believe our strong financial position should allow us to profitably execute our low-cost, high volume retail strategy through periods of both high and low fuel margins while preserving the ability to re-invest in and grow our existing sites, brand image and supporting capabilities. Furthermore, in addition to our site development capital and capability building investments we will continue to consider all alternatives for returning excess earnings or capital with a focus on maximizing shareholder value.

Industry Trends

We operate within the large, growing, competitive and highly fragmented U.S. retail fuel and convenience store industry. Several key industry trends and characteristics, include:


•	Sensitivity to gas prices among cost conscious consumers, and increasing customer demand for low-priced fuel;


•	Highly fragmented nature of the industry providing larger chain operators like Murphy USA with significant scale advantage;


•	Significantly increased fuel capacity in the marketplace by the addition of new-to-industry retail fuel and convenience stores, and


•	High levels of consumer traffic around supermarkets and large format hypermarkets, supporting complementary demand at nearby and cross-promoted retail fuel stores.

Corporate Information

Murphy USA was incorporated in Delaware on March 1, 2013 and our business consists of U.S. retail marketing operations. Our headquarters are located at 200 Peach Street, El Dorado, Arkansas 71730 and our general telephone number is (870) 875-7600. Our Internet website is www.murphyusa.com . Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this Annual

Report on Form 10-K. Shares of Murphy USA common stock are traded on the NYSE under the ticker symbol “MUSA”.

Description of Our Business

We market fueling products through a network of Company retail stores and unbranded wholesale customers. During 2018 , the Company sold approximately 4.2 billion gallons of motor fuel through our retail outlets. Below is a table that lists the states where we operate Company-owned stores at December 31, 2018 and the number of stores in each state.



State	No. of stores	State	No. of stores	State	No. of stores
Alabama	81	Kentucky	48	North Carolina	89
Arkansas	69	Louisiana	78	Ohio	44
Colorado	20	Michigan	27	Oklahoma	55
Florida	125	Minnesota	9	South Carolina	58
Georgia	99	Missouri	50	Tennessee	93
Iowa	22	Mississippi	55	Texas	312
Illinois	43	Nebraska	5	Utah	5
Indiana	39	Nevada	4	Virginia	22
Kansas	7	New Mexico	13	Total	1,472

The following table provides a history of our Company-owned station count during the three-year period ended December 31, 2018 :



	Years Ended December 31,
	2018	2017	2016
Start of period	1,446	1,401	1,335
New construction	26	45	67
Closed	—	—	(1	)
End of period	1,472	1,446	1,401

Since 2007, we have purchased from Walmart the properties underlying 1,052 of our Company stores. Each of our owned properties that were purchased from Walmart are also subject to Easements and Covenants with Restrictions Affecting Land (“ECRs”), which impose customary restrictions on the use of such properties, which Walmart has the right to enforce. In addition, pursuant to the ECRs, certain transfers involving these properties are subject to Walmart’s right of first refusal or right of first offer. Also, pursuant to the ECRs, we are prohibited from transferring such properties to a competitor of Walmart.

For risks related to our agreements with Walmart, including the ECRs, see “Risk Factors—Risks Relating to Our Business—Walmart retains certain rights in its agreements with us, which may adversely impact our ability to conduct our business.”

For the remaining stores located on or adjacent to Walmart property that are not owned, we have a master lease agreement that allows us to rent land from Walmart. The master lease agreement contains general terms applicable to all rental sites on Walmart property in the United States. The term of the leases is ten years at each station, with us holding four successive five-year extension options at each site. Approximately half of the leased sites have over 15 years of term remaining, including renewals, should the Company decide to exercise the renewal options. The agreement permits Walmart to terminate it in its entirety, or only as to affected sites, at its option under customary circumstances (including in certain events of bankruptcy or insolvency), or if we improperly transfer the rights under the agreements to another party. In addition, the master lease agreement prohibits us from selling a leased station or allowing a third party to operate a leased station without written consent from Walmart. As of December 31, 2018 , we are currently leasing 103 sites from Walmart. We also have five Murphy USA sites located near Walmart locations where we pay rent to other landowners.

As of December 31, 2018 , we have 218 Murphy Express sites where we own the land and 94 locations where we rent the underlying land.

We have numerous sources for our retail fuel supply, including nearly all of the major and large oil companies operating in the U.S. We purchase fuel from oil companies, independent refiners, and other marketers at rates that fluctuate with market prices and generally are reset daily, and we sell fuel to our customers at prices that we establish daily. All fuel is delivered by the truckload as needed to replenish supply at our Company stores. Our inventories of fuel on site turn approximately once daily. By establishing motor fuel supply relationships with several alternate suppliers for most locations, we believe we are able to effectively create competition for our purchases among various fuel suppliers. We also believe that purchasing arrangements with multiple fuel suppliers may help us avoid product outages during times of motor fuel supply disruptions. At some locations, however, there are limited suppliers for fuel in that market and we may have only one supplier. Our refined products are distributed through a few product distribution terminals that are wholly-owned and operated by us and from numerous terminals owned by others. About half of our wholly-owned terminals are supplied by marine transportation and the rest are supplied by pipeline. We also receive products at terminals owned by others either in exchange for deliveries from our terminals or by outright purchase.

In addition to the motor fuel sold at our Company stores, our stores carry a broad selection of snacks, beverages, tobacco products and non-food merchandise. In 2018 , we purchased more than 80% of our merchandise from a single vendor, Core-Mark, with whom we began a five year supply agreement in late January 2016.

A statistical summary of key operating and financial indicators for each of the five years ended December 31, 2018 are reported below.



	As of December 31,
	2018			2017			2016			2015			2014
Branded retail outlets:
Murphy USA ^®	1,160			1,158			1,152			1,111			1,056
Murphy Express	312			288			249			224			207
Total	1,472			1,446			1,401			1,335			1,263
Retail marketing:
Retail fuel margin per gallon (cpg) (1)	14.7			14.0			11.6			12.5			15.8
Gallons sold per store month (in thousands)	244.0			245.3			259.1			267.9			270.4
Merchandise sales revenue per store month	$	139.7		$	140.5		$	144.4		$	147.7		$	146.8
Merchandise margin as a percentage of merchandise sales	16.5		%	16.1		%	15.6		%	14.4		%	14.0		%

(1) Represents net sales prices for fuel less purchased cost of fuel.

Our business is organized into one reporting segment (Marketing). The Marketing segment includes our retail marketing sites and product supply and wholesale assets. For operating segment information, see Note 19 “Business Segments” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2018 .

Competition

The U.S. petroleum business is highly competitive, particularly with regard to accessing and marketing petroleum and other refined products. We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on the basis of convenience and consumer appeal. In addition, we may also face competition from other retail fueling stores that adopt marketing strategies similar to ours by associating with non-traditional retailers, such as supermarkets, discount club stores and hypermarkets, particularly in the geographic areas in which we operate. We expect that our industry will continue to trend toward this model, resulting in increased competition to us over time. Moreover, because we do not produce or refine any of the petroleum or other refined products that we market, we compete with retail gasoline companies that have ongoing supply relationships with affiliates or former affiliates that manufacture refined products. We also compete with integrated companies that have their own production and/or refining operations that are at times able to offset losses from marketing operations with profits from producing or refining operations, and may be better positioned to withstand periods of depressed retail margins or supply shortages. In addition, we compete with other retail and wholesale gasoline marketing companies that have more extensive retail outlets and greater brand name recognition. Some of our competitors have been in existence longer

than we have and have greater financial, marketing and other resources than we do. As a result, these competitors may have a greater ability to bear the economic risks inherent in all phases of our business and may be able to respond better to changes in the economy and new opportunities within the industry.

In addition, the retail gasoline industry in the United States is highly competitive due to ease of entry and constant change in the number and type of retailers offering similar products and services. With respect to merchandise, our retail sites compete with other convenience store chains, independently owned convenience stores, supermarkets, drugstores, discount clubs, gasoline service stations, mass merchants, fast food operations and other similar retail outlets. Non-traditional retailers, including supermarkets, discount club stores and mass merchants, now compete directly with retail gasoline sites. These non-traditional gasoline retailers have obtained a significant share of the gasoline market, and their market share is expected to grow, and these retailers may use promotional pricing or discounts, both at the fuel pump and in the convenience store, to encourage in-store merchandise sales and gasoline sales. In addition, some large retailers and supermarkets are adjusting their store layouts and product prices in an attempt to appeal to convenience store customers. Major competitive factors include: location, ease of access, product and service selection, gasoline brands, pricing, customer service, store appearance, cleanliness and safety.

Market Conditions and Seasonality

Market conditions in the oil and gas industry are cyclical and subject to global economic and political events and new and changing governmental regulations. Our operating results are affected by price changes in crude oil, natural gas and refined products, as well as changes in competitive conditions in the markets we serve.

Oil prices, wholesale motor fuel costs, motor fuel sales volumes, motor fuel gross margins and merchandise sales can be subject to seasonal fluctuations. For example, consumer demand for motor fuel typically increases during the summer driving season, and typically falls during the winter months. Therefore, our revenues and/or sales volumes are typically higher in the second and third quarters of our fiscal year. Travel, recreation and construction are typically higher in these months in the geographic areas in which we operate, increasing the demand for motor fuel and merchandise that we sell. A significant change in any of these factors, including a significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Trademarks

We sell gasoline primarily under the Murphy USA ^® and Murphy Express brands, which are trademarks of Murphy Oil. The Trademark License Agreement that we entered into with Murphy Oil in connection with the Separation contained a trademark license granting us the right to continue to use such Murphy Oil-owned trademarks throughout the term of that agreement subject to the terms and conditions therein.

In the highly competitive business in which we operate, our trade names, service marks and trademarks are important to distinguish our products and services from those of our competitors. We are not aware of any facts which would negatively impact our continuing use of any of the above trade names, service marks or trademarks.

Technology Systems

All of our Company stores use a standard hardware and software platform for point-of-sale (“POS”) that facilitates item level scanning of merchandise for sales and inventory, and the secure acceptance of all major payment methods – cash, check, credit, debit, fleet and mobile. Our standard approach to large scale and geographically dispersed deployments reduces total technology cost of ownership for the POS and inherently makes the system easier to use, support, and replace. This POS technology strategy reflects close alignment with our growth plan.

We use a combination of software as a service, commercial off the shelf software, and custom software applications developed using modern industry standard tools and methodologies to manage and run our business. For our financial systems, we use enterprise class systems which provide significant flexibility in managing corporate and store operations, as well as scalability for growth.

We invest in disaster recovery, system backups, redundancy, firewall, remote access security and virus and spam protection to ensure a high level of system security and availability. We have systems, business policies and processes around access controls, password expirations and file retention to ensure a high level of control within our technology network.

Environmental

We are subject to numerous federal, state and local environmental laws, regulations and permit requirements. Such environmental requirements have historically been subject to frequent change and tended to become more stringent over time. While we strive to comply with these environmental requirements, any violation of such requirements can result in litigation, increased costs or the imposition of significant civil and criminal penalties, injunctions or other sanctions. Compliance with these environmental requirements affects our overall cost of business, including capital costs to construct, maintain and upgrade equipment and facilities, and ongoing operating expenditures. We maintain sophisticated leak detection and remote monitoring systems for underground storage tanks at the vast majority of our retail fueling stores and install up-to-date tank, piping, and monitoring systems at our new stores. We operate above ground bulk petroleum tanks at our terminal locations and have upgraded product lines and conduct annual monitoring to help mitigate the risk of potential soil and groundwater contamination. We allocate a portion of our capital expenditure program to comply with environmental laws and regulations, and such capital expenditures are projected to be approximately $3 million in 2019 .

We could be subject to joint and several as well as strict liability for environmental contamination. Some of our current and former properties have been operated by third-parties whose handling and management of hazardous materials were not under our control, and substantially all of them have or previously had motor fuel or petroleum product storage tanks. Pursuant to certain environmental laws, we could be responsible for remediating contamination relating to such sites, including impacts attributable to prior site occupants or other third parties, and for implementing remedial measures to mitigate the risk of future contamination. We may also have liability for contamination and violations of environmental laws under contractual arrangements with third parties, such as landlords and former owners of our sites, including at our sites in close proximity to Walmart stores. Contamination has been identified at certain of our current and former terminals and retail fueling stores, and we are continuing to conduct investigation and remediation activities in relation to such properties. The discovery of additional contamination or the imposition of further remediation obligations at these or other properties could result in significant costs. In some cases, we may be eligible to receive money from state “leaking petroleum storage tank” trust funds to help fund remediation. However, receipt of such payments is subject to stringent eligibility requirements and other limitations that can significantly reduce the availability of such trust fund payments and may delay or increase the duration of associated cleanups. We could also be held responsible for contamination relating to third-party sites to which we or our predecessors have sent hazardous materials for recycling or disposal. We are currently identified as a potentially responsible party in connection with one such disposal site. Any such contamination, leaks from storage tanks or other releases of regulated materials could result in claims against us by governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury and property damage. From time to time, we are subject to legal and administrative proceedings governing the remediation of contamination or spills from current and past operations, including from our terminal operations and leaking petroleum storage tanks.

Consumer demand for our products may be adversely impacted by fuel economy standards as well as greenhouse gas (“GHG”) vehicle emission reduction measures. In 2010, the U.S. Environmental Protection Agency (“EPA”) and the U.S. Department of Transportation’s National Highway Traffic Safety Administration (“NHTSA”) finalized standards raising the required Corporate Average Fuel Economy of the nation’s passenger fleet to approximately 35 miles per gallon by the 2016 model year and imposing the first-ever federal GHG emissions standards on cars and light trucks. Further regulations require increases in fuel economy beginning with the 2017 through 2021 model year vehicles. NHTSA also published non-binding inaugural standards for model year 2022 through 2025 cars and trucks increasing fuel economy to the equivalent of 54.5 miles per gallon by 2025. The EPA and NHTSA also regulate GHG and fuel efficiency standards for medium and heavy-duty vehicles and in August 2016, jointly finalized "Phase 2" vehicle and engine performance standards covering model years 2021 through 2027, which apply to semi-trucks, large pick-up trucks and vans, and all types and sizes of buses and work trucks. These and any future increases in fuel economy standards or GHG emission reduction requirements could decrease demand for our products. In August 2018, NHTSA and EPA proposed to amend certain of these existing fuel economy standards for passenger cars and light trucks and establish new standards, covering model years 2021 through 2026. it is unclear if these proposals, called the Safer Affordable Fuel Efficient ("SAFE") Vehicles, which would require less stringent fuel economy standards than the existing standards, will be finalized in their current form or at all.

Air emissions from our facilities are also subject to regulation. For example, certain of our fueling stores may be required to install and maintain vapor recovery systems to control emissions of volatile organic compounds to the air during the vehicle fueling process. Recently proposed changes to requirements concerning ambient air quality standards for ground-level ozone may require additional equipment upgrades and operating controls that could increase our capital and operating expenses. Any future environmental regulatory changes may result in increased compliance costs.

Our business is also subject to increasingly stringent laws and regulations governing the content and characteristics of fuel. For example, the gasoline we sell generally must meet increasingly rigorous sulfur and benzene standards. In addition, renewable fuel standards generally require refiners and gasoline blenders to meet certain volume quotas or obtain representative trading credits for renewable fuels that are established as a percentage of their finished product production. Such fuel requirements and renewable fuel standards may adversely affect our wholesale fuel purchase costs.

Sale of Regulated Products

In certain areas where our retail sites are located, state or local laws limit the hours of operation for the sale of alcoholic beverages and restrict the sale of alcoholic beverages and tobacco products to persons younger than a certain age. State and local regulatory agencies have the authority to approve, revoke, suspend or deny applications for and renewals of permits and licenses relating to the sale of alcoholic beverages, as well as to issue fines to convenience stores for the improper sale of alcoholic beverages and tobacco products. Failure to comply with these laws may result in the loss of necessary licenses and the imposition of fines and penalties on us. Such a loss or imposition could have a material adverse effect on our business, liquidity and results of operations. In many states, retailers of alcoholic beverages have been held responsible for damages caused by intoxicated individuals who purchased alcoholic beverages from them. While the potential exposure for damage claims as a seller of alcoholic beverages and tobacco products is substantial, we have adopted procedures intended to minimize such exposure.

We also adhere to the rules governing lottery sales as determined by state lottery commissions in each state in which we make such sales.

Safety

We are subject to the requirements of the federal Occupational Safety and Health Act (“OSHA”) and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that certain information be maintained about hazardous materials used or produced in our operations and that this information be provided to employees, state and local government authorities and citizens.

Other Regulatory Matters

Our retail sites are also subject to regulation by federal agencies and to licensing and regulations by state and local health, sanitation, fire and other departments relating to the development and operation of retail sites, including regulations relating to zoning and building requirements and the preparation and sale of food. Difficulties in obtaining or failures to obtain the required licenses or approvals could delay or prevent the development of a new retail site in a particular area.

Our operations are also subject to federal and state laws governing such matters as wage rates, overtime and citizenship requirements. At the federal and state levels, there are proposals under consideration from time to time to increase minimum wage rates and periods of protected leaves. In compliance with U.S. health care reform legislation, we implemented in 2015 a “bronze level” offering to our eligible non-exempt field employees. The offering increased labor costs by an immaterial amount.

Employees

At December 31, 2018 , we had over 9,500 employees, including nearly 4,100 full-time employees and 5,400 part-time employees.

Properties

Our headquarters of approximately 120,000 square feet is located at 200 Peach Street, El Dorado, Arkansas. We also own and operate two other office buildings in El Dorado, Arkansas that house our store support center and technology services personnel. We have numerous owned and leased properties for our retail fueling stores as described under “—Description of Our Business,” as well as wholly-owned product distribution terminals.

Website access to SEC Reports

Interested parties may obtain the Company’s public disclosures filed with the Securities and Exchange Commission (SEC), including Form 10-K, Form 10-Q, Form 8-K and other documents, by accessing the Investor Relations section of Murphy USA Inc.’s website at ir.corporate.murphyusa.com .

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 are available on our website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. Alternatively, you may access these reports at the SEC’s website at http://www.sec.gov .

Item 1A. RISK FACTORS

You should carefully consider each of the following risks and all of the other information contained in this Annual Report on Form 10-K.

Our business, prospects, financial condition, results of operations or cash flows could be materially and adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline.

Risks Relating to our Company

Our operations present hazards and risks, which may not be fully covered by insurance, if insured. If a significant accident or event occurs for which we are not adequately insured, our operations and financial results could be adversely affected.

The scope and nature of our operations present a variety of operational hazards and risks, including explosions, fires, toxic emissions, and natural catastrophes that must be managed through continual oversight and control. These and other risks are present throughout our operations. As protection against these hazards and risks, we maintain insurance against many, but not all, potential losses or liabilities arising from such risks. Uninsured losses and liabilities arising from operating risks could reduce the funds available to us for capital and investment spending and could have a material adverse effect on our financial condition, results of operations and cash flows.

We have debt obligations that could restrict our business and adversely impact our financial condition, results of operations or cash flows; our leverage could increase the overall cost of debt funding and decrease the overall debt capacity and commercial credit available to us in the future.

We currently have $500 million of 6.00% Senior Notes due 2023 (the "2023 Senior Notes"), $300 million of 5.625% Senior Notes due 2027 (the"2027 Senior Notes", and together with the 2023 Senior Notes, the "Senior Notes") and a term loan with a remaining balance of $72 million as of December 31, 2018 . We also have undrawn capacity of up to $450 million on our credit facility, subject to the borrowing base limitation of $177 million as of December 31, 2018 . This outstanding debt could have significant consequences to our future operations, including:


•	making it more difficult for us to meet our payment and other obligations under our outstanding debt;


•	resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which event of default could result in all of our debt becoming immediately due and payable;


•	reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;


•	limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and


•	placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations.

In addition, our credit facilities and the indenture that governs the Senior Notes include restrictive covenants that, subject to certain exceptions and qualifications, restrict or limit our ability and the ability of our restricted subsidiaries to, among other things, incur additional indebtedness, pay dividends, make certain investments, sell certain assets and enter into certain strategic transactions, including mergers and acquisitions. These covenants and restrictions could affect our ability to operate our business, and may limit our ability to react to market conditions or take advantage of potential business opportunities as they arise.

Our leverage may increase the overall cost of debt funding and decrease the overall debt capacity and commercial credit available to us. Our leverage could increase with additional borrowings on our shelf registration statement. We have below investment-grade ratings from Moody’s and S&P based on our current capital structure. Our credit ratings could be lowered or withdrawn entirely by a ratings agency if, in its judgment, the circumstances warrant. If our existing ratings are lowered, or otherwise we do not obtain an investment grade rating in the future, or if we do and a rating agency were to downgrade us again to below investment grade, our borrowing costs would increase and our funding sources could decrease. Actual or anticipated changes or downgrades in our ratings, including any announcement that our ratings are under review for a downgrade, could adversely affect our business, cash flows, financial condition and operating results.

Our ability to meet our payment obligations under the Senior Notes and our other debt depends on our ability to generate significant cash flow in the future.

Our ability to meet our payment and other obligations under our debt instruments, including the Senior Notes, depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot provide assurance that our business will generate cash flow from operations, or that future borrowings will be available to us under our credit agreement or any future credit facilities or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Senior Notes and our other debt and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, including the Senior Notes, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Senior Notes and our other debt.

Despite our current indebtedness levels, we may be able to incur substantially more debt. This could exacerbate further the risks associated with our leverage.

We and our subsidiaries may incur substantial additional indebtedness, including secured indebtedness, in the future, subject to the terms of the indentures governing the Senior Notes and our credit agreement that limit our ability to do so. Such additional indebtedness may include additional notes, which will also be guaranteed by the guarantors, to the extent permitted by the indentures and our credit agreement. Although the indentures limit our ability and the ability of our subsidiaries to create liens securing indebtedness, there are significant exceptions to these limitations that will allow us and our subsidiaries to secure significant amounts of indebtedness without equally and ratably securing the notes. If we or our subsidiaries incur secured indebtedness and such secured indebtedness is either accelerated or becomes subject to a bankruptcy, liquidation or reorganization, our and our subsidiaries' assets would be used to satisfy obligations with respect to the indebtedness secured thereby before any payment could be made on the notes that are not similarly secured. In addition, the indentures governing the Senior Notes will not prevent us or our subsidiaries from incurring other liabilities that do not constitute indebtedness. If new debt or other liabilities are added to our current debt levels, the related risks that we now face could intensify.

In connection with our Separation from Murphy Oil, Murphy Oil has agreed to indemnify us for certain liabilities and we have agreed to indemnify Murphy Oil for certain liabilities. If we are required to act under these indemnities to Murphy Oil, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. The Murphy Oil indemnity may not be sufficient to insure us against the full amount of liabilities for which it will be allocated responsibility, and Murphy Oil may not be able to satisfy its indemnification obligations to us in the future.

Pursuant to the Separation and Distribution Agreement ("the Separation") and certain other agreements with Murphy Oil, Murphy Oil has agreed to indemnify us for certain liabilities, and we have agreed to indemnify Murphy Oil for certain liabilities. Indemnities that we may be required to provide Murphy Oil are not subject to any cap, may be significant and could negatively impact our business, particularly indemnities relating to our actions that could impact the tax-free nature of the distribution. Third parties could also seek to hold us responsible for any of the liabilities that Murphy Oil has agreed to retain, and under certain circumstances, we may be subject to continuing contingent liabilities of Murphy Oil following the Separation. Further, Murphy Oil may not be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Murphy Oil any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, results of operations and financial condition.

Risks Relating to Our Business

Volatility in the global prices of oil and petroleum products and general economic conditions that are largely out of our control, as well as seasonal variations in fuel pricing, can significantly affect our operating results.

Our net income is significantly affected by changes in the margins on retail and wholesale gasoline marketing operations. Oil and domestic wholesale gasoline markets are volatile. General political conditions, acts of war or terrorism, instability in oil producing regions, particularly in the Middle East and South America, and the value of U.S. dollars relative to other foreign currencies, particularly those of oil producing nations, could significantly affect oil supplies and wholesale gasoline costs. In addition, the supply of gasoline and our wholesale purchase costs could be adversely affected in the event of a shortage, which could result from, among other things, lack of capacity at oil refineries, sustained increase in global demand or the fact that our gasoline contracts do not guarantee an uninterrupted, unlimited supply of gasoline. Our wholesale purchase costs could also be adversely affected by increasingly stringent regulations regarding the content and characteristics of fuel products, including International Maritime Organization ("IMO") 2020 requirements. Significant increases and volatility in wholesale gasoline costs could result in lower gasoline gross margins per gallon. This volatility makes it extremely difficult to predict the effect that future wholesale cost fluctuations will have on our operating results and financial condition in future periods.

Except in limited cases, we typically do not seek to hedge any significant portion of our exposure to the effects of changing prices of commodities. Dramatic increases in oil prices reduce retail gasoline gross margins, because wholesale gasoline costs typically increase faster than retailers are able to pass them along to customers. We purchase refined products, particularly gasoline, needed to supply our retail stores. Therefore, our most significant costs are subject to volatility of prices for these commodities. Our ability to successfully manage operating costs is important because we have little or no influence on the sales prices or regional and worldwide consumer demand for oil and gasoline. Furthermore, oil prices, wholesale motor fuel costs, motor fuel sales volumes, motor fuel gross margins and merchandise sales can be subject to seasonal fluctuations. For example, consumer demand for motor fuel typically increases during the summer driving season, and typically falls during the winter months. Travel, recreation and construction are typically higher in these months in the geographic areas in which we operate, increasing the demand for motor fuel and merchandise that we sell. Therefore, our revenues and/or sales volumes are typically higher in the second and third quarters of our fiscal year. A significant change in any of these factors, including a significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further, recessionary economic conditions, higher interest rates, higher gasoline and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors may affect consumer spending or buying habits, and could adversely affect the demand for products we sell at our retail sites. Unfavorable economic conditions, higher gasoline prices and unemployment levels can affect consumer confidence, spending patterns and vehicle miles driven. These factors can lead to sales declines in both gasoline and general merchandise, and in turn have an adverse impact on our business, financial condition, results of operations and cash flows.

Walmart continues to be a key relationship with regard to our Murphy USA network.

At December 31, 2018 , our 1,472 Company stores were almost all located in close proximity to Walmart Supercenter stores. Therefore, our relationship with Walmart, the continued goodwill of Walmart and the integrity of Walmart’s brand name in the retail marketplace are all important drivers for our business. Any deterioration in our relationship with Walmart could have an adverse effect on operations of the stores that are branded Murphy USA and participate in a discount. In addition, our competitive posture could be weakened by negative changes at Walmart. Many of our Company stores benefit from customer traffic generated by Walmart retail stores, and if the customer traffic through these host stores decreases due to the economy or for any other reason, our sales could be materially and adversely affected.

The current level of revenue that is generated from RINs may not be sustainable.

Murphy USA's business is impacted by its ability to generate revenues from capturing and subsequently selling Renewable Identification Numbers ("RINs"), a practice enabled through the blending of petroleum-based fuels with renewable fuels. RIN prices also have an impact on our cost of goods sold for petroleum products, which can be positive or negative depending on the movement of RIN prices. The market price for RINs fluctuates based on a variety of factors, including but not limited to governmental and regulatory action and market dynamics. In 2018, RIN prices were unstable, in part due to rumored changes to the Renewable Fuel Standard program and to the rules regulating the RINs market itself. Although a decline in RIN prices could have a material impact on the Company's revenues, Murphy USA's business model is not dependent on its ability to generate revenues from the sale of RINs.

In 2017, independent refiners filed suit to pursue a fundamental change to the Renewable Fuel Standard program, the regulatory means by which the federal government requires the introduction of an increasing amount of renewable fuel into the fuel supply. Specifically, the independent refiners seek a shift of the burden for compliance—the point of obligation, as it is known—from refiners to blenders. This litigation is ongoing. As it is, refiners are obligated to obtain—either by blending biofuels into petroleum-based fuels or through purchase on the open market--and then retire with the federal government RINs to satisfy their individual obligations. If this burden were to be shifted, Murphy USA would potentially have to utilize the RINs that it obtains through its blending activities to satisfy a new obligation and would therefore be unable to sell those RINs to third parties. This could have a significant impact on the Company's current business model, unless it were able to pass along these costs to consumers or other parties.

We are exposed to risks associated with the interruption of supply and increased costs as a result of our reliance on third-party supply and transportation of refined products.

We utilize key product supply and wholesale assets, including our pipeline positions and product distribution terminals, to supply our retail fueling stores. Much of our competitive advantage arises out of these proprietary arrangements which, if disrupted, could materially and adversely affect us. In addition to our own operational risks discussed above, we could experience interruptions of supply or increases in costs to deliver refined products to market if the ability of the pipelines or vessels to transport petroleum or refined products is disrupted because of weather events, accidents, governmental regulations or third-party actions. Furthermore, at some of our locations there are very few suppliers for fuel in that market.

Changes in credit card expenses could reduce our gross margin, especially on gasoline.

A significant portion of our retail sales involve payment using credit cards. We are assessed credit card fees as a percentage of transaction amounts and not as a fixed dollar amount or percentage of our gross margins. Higher gasoline prices result in higher credit card expenses, and an increase in credit card use or an increase in credit card fees would have a similar effect. Therefore, credit card fees charged on gasoline purchases that are more expensive as a result of higher gasoline prices are not necessarily accompanied by higher gross margins. In fact, such fees may cause lower gross margins. Lower gross margins on gasoline sales caused by higher credit card fees may decrease our overall gross margin and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Walmart retains certain rights in its agreements with us, which may adversely impact our ability to conduct our business.

Our owned properties that were purchased from Walmart are subject to Easements with Covenants and Restrictions Affecting Land (the “ECRs”) between us and Walmart. The ECRs impose customary restrictions on the use of our properties, which Walmart has the right to enforce. The ECRs also provide that if we propose to sell a fueling station property or any portion thereof (other than in connection with the sale of all or substantially all of our properties that were purchased from Walmart or in connection with a bona fide financing), Walmart has a right of first refusal to purchase such property or portion thereof on similar terms. Subject to certain exceptions (including a merger in which we participate, the transfer of any of our securities or a change in control of us), if we market for sale to a third party all or substantially all of our properties that were purchased from Walmart, or if we receive an unsolicited offer to purchase such properties that we intend to accept, we are required to notify Walmart. Walmart then has the right, within 90 days of receipt of such notice, to make an offer to purchase such properties. If Walmart

makes such an offer, for a period of one year we will generally only be permitted to accept third-party offers where the net consideration to us would be greater than that offered by Walmart.

The ECRs also prohibit us from transferring all or substantially all of our fueling station properties that were purchased from Walmart to a “competitor” of Walmart, as reasonably determined by Walmart. The term “competitor” is generally defined in the ECRs as an entity that owns, operates or controls grocery stores or supermarkets, wholesale club operations similar to that of a Sam’s Club, discount department stores or other discount retailers similar to any of the various Walmart store prototypes or pharmacy or drug stores.

Similarly, some of our leased properties are subject to certain rights retained by Walmart. Our master lease agreement states that if Murphy Oil USA, Inc. is acquired or becomes party to any merger or consolidation that results in a material change in the management of the stores, Walmart will have the option to purchase the stores at fair market value. The master lease also prohibits us from selling all or any portion of a station without first offering to sell all or such portion to Walmart on the same terms and conditions. These provisions may restrict our ability to conduct our business on the terms and in the manner we consider most favorable and may adversely affect our future growth.

An inability to maintain a multi-year new store project pipeline may cause our Company's growth to slow in 2020 and beyond.

While we have a high confidence level that our growth of 40 to 50 new constructions for 2019 (including raze-and-rebuild) is secure due to our existing pipeline of land closures, the future development relies on the continued growth of our project pipeline. We have a very active Asset Development group that works to focus on our key target areas to locate suitable traffic count locations for this future growth. If the Asset Development group is unable to locate suitable locations or is unable to close the purchase of those locations in a timely fashion, the Company could find that it does not have sufficient land to fulfill its pipeline.

We currently have one primary supplier for over 80% of our merchandise. A disruption in supply could have a material effect on our business.

In 2018, over 80% of our merchandise, including most tobacco products and grocery items, was purchased from a single wholesale grocer, Core-Mark. We began a five year supply contract with Core-Mark in late January 2016. If Core-Mark is unable to fulfill its obligations under our contract, alternative suppliers that we could use in the event of a disruption may not be immediately available. A disruption in supply could have a material effect on our business, financial condition, results of operations and cash flows.

We may be unable to protect or maintain our rights in the trademarks we use in our business.

We expect to use the Murphy USA ^® and Murphy Express trademarks under the Trademark License Agreement that we entered into with Murphy Oil, which will continue to own those trademarks. Murphy Oil’s actions and our actions to protect our rights in those trademarks may not be adequate to prevent others from using similar marks or otherwise violating our rights in those trademarks. Furthermore, our right to use those trademarks is limited to the marketing business and can be terminated by Murphy Oil upon the occurrence of certain events, such as our uncured material breach, insolvency or change of control.

Capital financing may not always be available to fund our activities.

We usually must spend and risk a significant amount of capital to fund our activities. Although most capital needs are funded from operating cash flow, the timing of cash flows from operations and capital funding needs may not always coincide, and the levels of cash flow may not fully cover capital funding requirements.

From time to time, we may need to supplement our cash generated from operations with proceeds from financing activities. We have entered into a credit facility to provide us with available financing for working capital and other general corporate purposes. This credit facility is intended to meet any ongoing cash needs in excess of internally generated cash flows. Uncertainty and illiquidity in financial markets may materially impact the ability of the participating financial institutions to fund their commitments to us under our credit facility. Accordingly, we may not be able to obtain the full amount of the funds available under our credit facility to satisfy our cash requirements, and our failure to do so could have a material adverse effect on our operations and financial position. Further, since the credit facility is secured by receivables and inventories, low commodity prices can limit the borrowing base to an

amount substantially less than its ceiling as the resulting collateral for the loan is required to be valued at then current pricing on a monthly basis.

We could be adversely affected if we are not able to attract and retain highly qualified senior personnel.

We are dependent on our ability to attract and retain highly qualified senior personnel. If, for any reason, we are not able to attract and retain qualified senior personnel, our business, financial condition, results of operations and cash flows could be adversely affected.

Risks Relating to Our Industry

We operate in a highly competitive industry, which could adversely affect us in many ways, including our profitability, our ability to grow, and our ability to manage our businesses.

We operate in the oil and gas industry and experience intense competition from other independent retail and wholesale gasoline marketing companies. The U.S. marketing petroleum business is highly competitive, particularly with regard to accessing and marketing petroleum and other refined products. We compete with other chains of retail fuel stores for fuel supply and in the retail sale of refined products to end consumers, primarily on the basis of price, but also on the basis of convenience and consumer appeal. In addition, we may also face competition from other retail fueling stores that adopt marketing strategies similar to ours by associating with non-traditional retailers, such as supermarkets, discount club stores and hypermarkets, particularly in the geographic areas in which we operate. We expect that our industry will continue to trend toward this model, resulting in increased competition to us over time. Moreover, because we do not produce or refine any of the petroleum or other refined products that we market , we compete with retail gasoline companies that have ongoing supply relationships with affiliates or former affiliates that manufacture refined products. We also compete with integrated companies that have their own production and/or refining operations that are at times able to offset losses from marketing operations with profits from producing or refining operations, and may be better positioned to withstand periods of depressed retail margins or supply shortages. In addition, we compete with other retail and wholesale gasoline marketing companies that have more extensive retail outlets and greater brand name recognition. Some of our competitors have been in existence longer than we have and have greater financial, marketing and other resources than we do. As a result, these competitors may have a greater ability to bear the economic risks inherent in all phases of our business and may be able to respond better to changes in the economy and new opportunities within the industry. Such competition could adversely affect us, including our profitability, our ability to grow and our ability to manage our business.

Changes in consumer behavior and travel as a result of changing economic conditions, the development of alternative energy technologies or otherwise could affect our business.

In the retail gasoline industry, customer traffic is generally driven by consumer preferences and spending trends, growth rates for commercial truck traffic and trends in travel and weather. Changes in economic conditions generally, or in the regions in which we operate, could adversely affect consumer spending patterns and travel in our markets. In particular, weakening economic conditions may result in decreases in miles driven and discretionary consumer spending and travel, which affect spending on gasoline and convenience items. In addition, changes in the types of products and services demanded by consumers may adversely affect our merchandise sales and gross margin. Additionally, negative publicity or perception surrounding gasoline suppliers could adversely affect their reputation and brand image, which may negatively affect our gasoline sales and gross margin. Our success

depends on our ability to anticipate and respond in a timely manner to changing consumer demands and preferences while continuing to sell products and services that remain relevant to the consumer and thus will positively impact overall retail gross margin.

Similarly, advanced technology, improved fuel efficiency and increased use of “green” automobiles (e.g., those automobiles that do not use gasoline or that are powered by hybrid engines) would reduce demand for gasoline. Developments regarding climate change and the effects of greenhouse gas emissions on climate change and the environment may lead to increased use of “green” automobiles. Consequently, attitudes toward gasoline and its relationship to the environment may significantly affect our sales and ability to market our products. Reduced consumer demand for gasoline could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our operations and earnings have been and will continue to be affected by worldwide political developments.

Many governments, including those that are members of the Organization of Petroleum Exporting Countries (“OPEC”), unilaterally intervene at times in the orderly market of petroleum and natural gas produced in their countries through such actions as setting prices, determining rates of production, and controlling who may buy and sell the production. In addition, prices and availability of petroleum, natural gas and refined products could be influenced by political unrest and by various governmental policies to restrict or increase petroleum usage and supply. Other governmental actions that could affect our operations and earnings include tax changes, royalty increases and regulations concerning: currency fluctuations, protection and remediation of the environment, concerns over the possibility of global warming being affected by human activity including the production and use of hydrocarbon energy, restraints and controls on imports and exports, safety, and relationships between employers and employees. As a retail gasoline marketing company, we are significantly affected by these factors. Because these and other factors are subject to changes caused by governmental and political considerations and are often made in response to changing internal and worldwide economic conditions and to actions of other governments or specific events, it is not practical to attempt to predict the effects of such factors on our future operations and earnings.

Our business is subject to operational hazards and risks normally associated with the marketing of petroleum products.

We operate in many different locations around the United States. The occurrence of an event, including but not limited to acts of nature such as hurricanes, floods, earthquakes and other forms of severe weather, and mechanical equipment failures, industrial accidents, fires, explosions, acts of war and intentional terrorist attacks could result in damage to our facilities, and the resulting interruption and loss of associated revenues; environmental pollution or contamination; and personal injury, including death, for which we could be deemed to be liable, and which could subject us to substantial fines and/or claims for punitive damages.

We store gasoline in storage tanks at our retail sites. Our operations are subject to significant hazards and risks inherent in storing gasoline. These hazards and risks include, but are not limited to, fires, explosions, spills, discharges and other releases, any of which could result in distribution difficulties and disruptions, environmental pollution, governmentally imposed fines or cleanup obligations, personal injury or wrongful death claims and other damage to our properties and the properties of others. Any such event could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Certain of our assets such as gasoline terminals and certain retail fueling stores lie near the U.S. coastline and are vulnerable to hurricane and tropical storm damages, which may result in shutdowns. The U.S. hurricane season runs from June through November, but the most severe storm activities usually occur in late summer, such as with Hurricanes Katrina and Rita in 2005 and Hurricanes Harvey and Irma in 2017. Although we maintain insurance for certain of these risks as described below, due to policy deductibles and possible coverage limits, weather-related risks are not fully insured.

We are subject to various environmental laws, regulations and permit requirements, which could expose us to significant expenditures, liabilities or obligations and reduce product demand.

We are subject to stringent federal, state and local environmental laws and regulations governing, among other things, the generation, storage, handling, use and transportation of petroleum products and hazardous materials; the emission and discharge of such substances into the environment; the content and characteristics of fuel products; the process safety of our facilities; and human health and safety. Pursuant to such environmental laws and regulations, we are also required to obtain permits from governmental authorities for certain of our operations. While we strive to abide by these requirements, we cannot assure you that we have been or will be at all times in compliance with such laws, regulations and permits. If we violate or fail to comply with these requirements, we could be subject to litigation, costs, fines or other sanctions. Environmental requirements, and the enforcement and interpretation thereof, change frequently and have generally become more stringent over time. Compliance with existing and future environmental laws, regulations and permits may require significant expenditures. In addition, to the extent fuel content and characteristic standards increase our wholesale purchase costs, we may be adversely affected if we are unable to recover such costs in our pricing.

We could be subject to joint and several as well as strict liability for environmental contamination, without regard to fault or the legality of our conduct. In particular, we could be liable for contamination relating to properties that we own, lease or operate or that we or our predecessors previously owned, leased or operated. Substantially all of these properties have or in the past had storage tanks to store motor fuel or petroleum products. Leaks from such tanks may impact soil or groundwater and could result in substantial costs. We could also be held responsible for contamination relating to third-party sites to which we or our predecessors have sent regulated materials. In addition to potentially significant investigation and remediation costs, any such contamination, leaks from storage tanks or other releases of regulated materials can give rise to claims from governmental authorities and other third parties for fines or penalties, natural resource damages, personal injury and property damage.

Our business is also affected by fuel economy standards and GHG vehicle emission reduction measures. As such fuel economy and GHG reduction requirements become more stringent over time, demand for our products may be adversely affected. In addition, some of our facilities are subject to GHG regulation. We are currently required to report annual GHG emissions from certain of our operations, and additional GHG emission-related requirements that may affect our business have been finalized or are in various phases of discussion or implementation. Any existing or future GHG emission requirements could result in increased operating costs and additional compliance expenses.

Our expenditures, liabilities and obligations relating to environmental matters could have a material adverse effect on our business, product demand, reputation, results of operations and financial condition.

Future tobacco legislation, campaigns to discourage smoking, increases in tobacco taxes and wholesale cost increases of tobacco products could have a material adverse impact on our retail operating revenues and gross margin.

Sales of tobacco products have historically accounted for an important portion of our total sales of convenience store merchandise. Significant increases in wholesale cigarette costs and tax increases on tobacco products, as well as future legislation and national and local campaigns to discourage smoking in the United States, may have an adverse effect on the demand for tobacco products, and therefore reduce our revenues and profits. Also, increasing regulations, including those for e-cigarettes and vapor products could offset some of the recent gains we have experienced from selling these products. Competitive pressures in our markets can make it difficult to pass price increases on to our customers. We also operate in some jurisdictions that have recently raised the minimum age to purchase tobacco products to 21. These factors could materially and adversely affect our retail price of cigarettes, cigarette unit volume and sales, merchandise gross margin and overall customer traffic. Reduced sales of tobacco products or smaller gross margins on the sales we make could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Currently, major cigarette manufacturers offer substantial rebates to retailers. We include these rebates as a component of our gross margin. In the event these rebates are no longer offered, or decreased, our profit from cigarette sales will decrease accordingly. In addition, reduced retail display allowances on cigarettes offered by cigarette manufacturers would negatively affect gross margins. These factors could materially affect our retail price of cigarettes, cigarette unit volume and revenues, merchandise gross margin and overall customer traffic, which could in turn have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our retail operations are subject to extensive government laws and regulations, and the cost of compliance with such laws and regulations can be material.

Our retail operations are subject to extensive local, state and federal governmental laws and regulations relating to, among other things, the sale of alcohol, tobacco, employment conditions, including minimum wage requirements, and public accessibility requirements. The cost of compliance with these laws and regulations can have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, failure to comply with local, state and federal laws and regulations to which our operations are subject may result in penalties and costs that could adversely affect our business, financial condition, results of operations and cash flows.

In certain areas where our retail sites are located, state or local laws limit the retail sites’ hours of operation or sale of alcoholic beverages, tobacco products, possible inhalants and lottery tickets, in particular to minors. Failure to comply with these laws could adversely affect our revenues and results of operations because these state and local regulatory agencies have the power to revoke, suspend or deny applications for and renewals of permits and licenses relating to the sale of these products or to seek other remedies, such as the imposition of fines or other penalties.

Regulations related to wages also affect our business. Any appreciable increase in the statutory minimum wage or changes in overtime rules would result in an increase in our labor costs and such cost increase, or the penalties for failing to comply with such statutory minimums, could adversely affect our business, financial condition, results of operations and cash flows.

In compliance with U.S. health care reform legislation, we implemented in 2015 a “bronze level” health care offering to our eligible non-exempt field employees. The offering of health care increased labor costs by an immaterial amount.

Any changes in the laws or regulations described above that are adverse to us and our properties could affect our operating and financial performance. In addition, new regulations are proposed from time to time which, if adopted, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Future consumer or other litigation could adversely affect our business, financial condition, results of operations and cash flows.

Our retail operations are characterized by a high volume of customer traffic and by transactions involving a wide array of product selections. These operations carry a higher exposure to consumer litigation risk when compared to the operations of companies operating in many other industries. Consequently, we have been, and may in the future be from time to time, involved in lawsuits seeking cash settlements for alleged personal injuries, property damages and other business-related matters, as well as energy content, off-specification gasoline, products liability and other legal actions in the ordinary course of our business. While these actions are generally routine in nature and incidental to the operation of our business, if our assessment of any action or actions should prove inaccurate, our business, financial condition, results of operations and cash flows could be adversely affected. For more information about our legal matters, see Note 17 “Contingencies” to the consolidated historical financial statements for the three years ended December 31, 2018 included in this Annual Report on Form 10-K. Further, adverse publicity about consumer or other litigation may negatively affect us, regardless of whether the allegations are true, by discouraging customers from purchasing gasoline or merchandise at our retail sites.

We rely on our technology systems and network infrastructure to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business.

We depend on our technology systems and network infrastructure to manage numerous aspects of our business and provide analytical information to management. These systems are an essential component of our business and growth strategies, and a serious disruption to them could significantly limit our ability to manage and operate our business efficiently. These systems are vulnerable to, among other things, damage and interruption from power loss or natural disasters, computer system and network failures, loss of telecommunications services, physical and electronic loss of data, security breaches and computer viruses, which could result in a loss of sensitive business information, systems interruption or the disruption of our business operations. To protect against unauthorized access or attacks, we have implemented infrastructure protection technologies and disaster recovery plans, but there can be no assurance that a technology systems breach or systems failure, which may occur and go undetected, will not have a material adverse effect on our financial condition or results of operations. In addition,

there is a deadline of October 1, 2020 to install Europay, Mastercard, and Visa ("EMV") chip readers at automated fuel pumps. The failure to migrate to chip readers would cause the Company to be financially responsible for any fraud and counterfeit chargebacks occurring at the point of sale.

Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or vendor data or to comply with applicable regulations relating to data security and privacy.

In the normal course of our business as a gasoline and merchandise retailer, we obtain large amounts of personal data, including credit and debit card information from our customers. While we have invested significant amounts in the protection of our technology systems and maintain what we believe are adequate security controls over individually identifiable customer, employee and vendor data provided to us, a breakdown or a breach in our systems that results in the unauthorized release of individually identifiable customer or other sensitive data could nonetheless occur and have a material adverse effect on our reputation, operating results and financial condition. Such a breakdown or breach could also materially increase the costs we incur to protect against such risks. Also, a material failure on our part to comply with regulations relating to our obligation to protect such sensitive data or the privacy rights of our customers, employees and others could subject us to fines or other regulatory sanctions and potentially to lawsuits and adversely affect our brand name.

Compliance with and changes in tax laws could adversely affect our performance.

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. Tax laws and regulations are dynamic and subject to change as new laws are passed and new interpretations of existing laws are issued and applied. This activity could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

Risks Relating to Our Common Stock

The price of our common stock may fluctuate significantly and if securities or industry analysts publish unfavorable research reports about our business or if they downgrade their rating on our common stock, the price of our common stock could decline.

The price at which our common stock trades may fluctuate significantly. The trading price of our common stock could be subject to wide fluctuations in response to a number of factors, including, but not limited to:


•	fluctuations in quarterly or annual results of operations, especially if they differ from our previously announced guidance or forecasts made by analysts;


•	announcements by us of anticipated future revenues or operating results, or by others concerning us, our competitors, our customers, or our industry;


•	our ability to execute our business plan;


•	competitive environment;


•	regulatory developments; and


•	changes in overall stock market conditions, including the stock prices of our competitors.

Provisions in our Certificate of Incorporation and Bylaws and certain provisions of Delaware law could delay or prevent a change in control of us.

The existence of some provisions of our Certificate of Incorporation and Bylaws and Delaware law could discourage, delay or prevent a change in control of us that a stockholder may consider favorable. These include provisions:


•	providing for a classified board of directors;


•	providing that our directors may be removed by our stockholders only for cause;


•	establishing supermajority vote requirements for our shareholders to amend certain provisions of our Certificate of Incorporation and our Bylaws;


•	authorizing a large number of shares of stock that are not yet issued, which would allow our board of directors to issue shares to persons friendly to current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us;


•	prohibiting stockholders from calling special meetings of stockholders or taking action by written consent; and


•	establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted on by stockholders at the annual stockholder meetings.

In addition, we are subject to Section 203 of the Delaware General Corporation Law, which may have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that could have resulted in a premium over the market price for shares of our common stock.

These provisions apply even if a takeover offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in our and our stockholders’ best interests.

We may issue preferred stock with terms that could dilute the voting power or reduce the value of our common stock.

Our Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, powers, preferences and relative, participating, optional and other rights, and such qualifications, limitations or restrictions as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or dividend, distribution or liquidation preferences we could assign to holders of preferred stock could affect the residual value of the common stock.

Our Bylaws designate a state or federal court located within the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a preferred judicial forum for disputes with us or our directors, officers or other employees.

Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of Delaware General Corporation Law, our Certificate of Incorporation (including any certificate of designations for any class or series of our preferred stock) or our Bylaws, in each case, as amended from time to time, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the State of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provision. This forum selection provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable or cost-effective for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.

We may not achieve the intended benefits of having an exclusive forum provision if it is found to be unenforceable.

We have included an exclusive forum provision in our Bylaws as described above. However, the enforceability of similar exclusive jurisdiction provisions in other companies’ bylaws or certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the exclusive jurisdiction provision contained in our Bylaws to be inapplicable or unenforceable in such action. Although in June 2013 the Delaware Court of Chancery upheld the statutory and contractual validity of exclusive forum-selection bylaw provisions, and in 2015 the Delaware General Corporation Law was amended to permit forum-selection provisions applicable to "integral corporate claims", the validity of forum-selection provisions continues to be tested with litigation. Furthermore, the Delaware Court of Chancery emphasized that such provisions may not be enforceable under circumstances where they are found to operate in an unreasonable or unlawful manner or in a manner inconsistent with a board’s fiduciary duties. Also, it is uncertain whether non-Delaware courts consistently will enforce such exclusive forum-selection bylaw provisions. If a court were to find our choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions and we may not obtain the benefits of limiting jurisdiction to the courts selected.

Item 1B. UNRESOLVED STAFF COMMENTS

The Company had no unresolved comments from the staff of the U.S. Securities and Exchange Commission as of December 31, 2018 .

Item 2. PROPERTIES

Descriptions of the Company’s properties are included in Item 1 of this Annual Report on Form 10-K beginning on page 2.

Item 3. LEGAL PROCEEDINGS

Murphy USA and its subsidiaries are engaged in a number of legal proceedings, all of which Murphy USA considers incidental to its business. See Note 17 “Contingencies” in the accompanying consolidated financial statements for the three years ended December 31, 2018 . Based on information currently available to the Company, the ultimate resolution of matters referred to in this item is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.

SUPPLEMENTAL INFORMATION; Executive Officers of the Registrant

The age at January 1, 2019 , present corporate office and length of service in office of each of the Company’s executive officers, as of December 31, 2018 , are reported in the following listing. Executive officers are elected annually but may be removed from office at any time by the Board of Directors.

R. Andrew Clyde – Age 55; President and Chief Executive Officer, Director and Member of the Executive Committee since August 2013. Mr. Clyde has led Murphy USA's successful value-creation strategy since its spin-off in 2013. Mr. Clyde served Booz & Company (and prior to August 2008, Booz Allen Hamilton) in its global energy practice. He joined the firm in 1993, was elected vice president in 2000 and held leadership roles as North American Energy Practice Leader and Dallas office Managing Partner and served on the firm’s Board Nominating Committee. Mr. Clyde received a master’s degree in Management with Distinction from the Kellogg Graduate School of Management at Northwestern University. He received a BBA in Accounting and a minor in Geology from Southern Methodist University.

Mindy K. West – Age 49; Executive Vice President, Fuels, Chief Financial Officer, and Treasurer since August 2013. Ms. West joined Murphy Oil in 1996 and has held positions in Accounting, Employee Benefits, Planning and Investor Relations. In 2007, she was promoted to Vice President & Treasurer for Murphy Oil. She holds a bachelor’s degree in Finance from the University of Arkansas and a bachelor’s degree in Accounting from Southern Arkansas University. She is a Certified Public Accountant and a Certified Treasury Professional.

John A. Moore – Age 51; Senior Vice President and General Counsel since August 2013. Mr. Moore joined Murphy Oil in 1995 as Associate Attorney in the Law Department. He was promoted to Attorney in 1998 and Senior Attorney in 2005. He was promoted to Manager, Law and assumed the role of Corporate Secretary for Murphy Oil in 2011. Mr. Moore holds a bachelor’s degree in Philosophy from Ouachita Baptist University and a Law degree from the University of Arkansas.

Robert J. Chumley – Age 54; Senior Vice President, Merchandising and Marketing since September 2016. Mr. Chumley joined the Company from 7-Eleven Inc., where he served as Senior Product Director, Vice President of Merchandising and Senior Vice President of Innovation. His previous experience includes Sales and Marketing leadership roles with Procter and Gamble, Coca-Cola, Kellogg's and Gillette. Mr. Chumley graduated from the Royal Military College of Canada with a Bachelors of Engineering degree. After graduation he served as a commissioned officer in the Royal Canadian Navy. Mr. Chumley also holds an MBA from Dalhousie University.

Terry P. Hatten – Age 52; Senior Vice President, Human Resources since June 2018. Mr. Hatten joined the Company from Commercials Metal Company where he served as Chief Human Resources Officer. His previous experience includes Human Resources leadership roles at General Nutrition Centers (GNC), Dean Foods, and Pepsi Bottling Group. He graduated with a bachelor of arts degree from Gannon University. Mr. Hatten also holds a master's degree in industrial and labor relations from Indiana University of Pennsylvania.

Item 4. MINE SAFETY DISCLOSURES

Not applicable

Part II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is traded on the New York Stock Exchange using “MUSA” as the trading symbol. There were 1,987 stockholders of record as of December 31, 2018 .

The declaration and amount of any dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and other factors the board of directors deems relevant.

We are a holding company and have no direct operations. As a result, we will be able to pay dividends on our common stock only from available cash on hand and distributions received from our subsidiaries. There can be no assurance we will continue to pay any dividend even if we commence the payment of dividends. We did not declare any cash dividends on our common stock for the two years ended December 31, 2018 .

The indenture governing the Senior Notes and the credit agreement governing our credit facilities and term loan contain restrictive covenants that limit, among other things, the ability of Murphy USA and the restricted subsidiaries to make certain restricted payments, which as defined under both agreements, include the declaration or payment of any dividends of any sort in respect of its capital stock and repurchase of shares of our common stock. See “Management's Discussion and Analysis of Financial Condition and Operating Results—Capital Resources and Liquidity—Debt” and Note 7 “Long-Term Debt” to the accompanying audited consolidated financial statements for the three years ended December 31, 2018 .

In May 2014, the Company’s Board of Directors authorized a stock repurchase plan of up to $50 million of the Company’s common stock. This plan was completed in May 2014. In October 2014, the Company’s Board of Directors authorized a second stock repurchase plan of up to $250 million of the Company’s common stock which was completed by September 30, 2015.

In January 2016, the Board of Directors approved a strategic allocation of capital for the Company to pursue its independent growth plan and to undertake a share repurchase program of up to $500 million for the two capital programs through December 31, 2017. The Company completed its $500 million share repurchase plan in December 2017.

During 2018, the company purchased an additional $144 million of its common stock as approved by the Board of Directors in small tranches during the first and second quarters.

Equity Compensation Plan Information

The table below contains information about securities authorized for issuance under equity compensation plans. The features of these plans are discussed further in Note 10 “Incentive Plans” to our audited consolidated financial statements.



Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2)
	(a)	(b)	(c)
Equity compensation plans approved by security holders	669,269	$65.71	3,835,958
Equity compensation plans not approved by security holders	—	—	—
Total	669,269	$65.71	3,835,958


(1)	Amounts in this column include outstanding restricted stock units.


(2)	Number of shares available for issuance includes 3,446,501 available shares under the 2013 Long-Term Incentive Plan as of December 31, 2018 plus 389,457 available shares under the 2013 Stock Plan for Non-Employee Directors as of December 31, 2018 . Assumes each restricted stock unit is equivalent to one share and each performance unit is equal to two shares.

SHAREHOLDER RETURN PERFORMANCE PRESENTATION

The following graph presents a comparison of cumulative total shareholder returns (including the reinvestment of dividends) as if a $100 investment was made on December 31, 2013, the Standard and Poor’s 500 Stock Index Fund (S&P 500 Index) and the S&P 400 Midcap Index. This performance information is “furnished” by the Company and is not considered as “filed” with this Annual Report on Form 10-K and is not incorporated into any document that incorporates this Annual Report on Form 10-K by reference.

Murphy USA Inc.

Comparison of Cumulative Shareholder Returns

Shareholder Return Performance Table



	Murphy USA Inc.		S&P 500 Index		S&P 400 Midcap Index
December 31, 2013	$	100	$	100	$	100
December 31, 2014	$	166	$	111	$	108
December 31, 2015	$	146	$	111	$	104
December 31, 2016	$	148	$	121	$	124
December 31, 2017	$	193	$	145	$	142
December 31, 2018	$	184	$	136	$	124

Item 6. SELECTED FINANCIAL DATA



(Millions of dollars, except per share data)	2018			2017			2016			2015			2014
Results of Operations for the Year
Net sales and other operating revenues	$	14,362.9		$	12,826.6		$	11,594.6		$	12,699.4		$	16,986.0
Net cash provided by operating activities	$	398.7		$	283.6		$	337.4		$	215.8		$	305.6
Income from continuing operations	$	213.6		$	245.3		$	221.5		$	137.6		$	223.0
Net income (loss)	$	213.6		$	245.3		$	221.5		$	176.3		$	243.9
Per Common Share - diluted
Income (loss) from continuing operations	$	6.48		$	6.78		$	5.59		$	3.14		$	4.81
Income (loss) from discontinued operations	$	—		$	—		$	—		$	0.88		$	0.45
Net income (loss)	$	6.48		$	6.78		$	5.59		$	4.02		$	5.26

Capital Expenditures for the Year
Marketing	$	169.2		$	234.0		$	239.1		$	202.4		$	131.1
Corporate and other	24.6			39.7			24.8			9.5			4.2
Subtotal	$	193.8		$	273.7		$	263.9		$	211.9		$	135.3
Discontinued operations	—			—			—			3.7			3.6
Total capital expenditures	$	193.8		$	273.7		$	263.9		$	215.6		$	138.9

Financial condition at December 31
Current ratio	1.19			1.15			1.00			1.11			1.67
Working capital	$	92.0		$	80.9		$	1.0		$	43.4		$	277.6
Net property, plant and equipment	$	1,748.2		$	1,679.5		$	1,532.7		$	1,369.3		$	1,248.1
Total assets	$	2,360.8		$	2,331.0		$	2,088.7		$	1,886.2		$	1,949.3
Long-term debt	$	842.1		$	860.9		$	629.6		$	490.2		$	488.3
Stockholders' equity	$	807.3		$	738.4		$	697.1		$	792.3		$	858.7
Long-term debt - percent of capital employed (1)	51.1		%	53.8		%	47.5		%	38.2		%	36.2		%

Notes:
(1) Calculated as Long-Term Debt on the Balance Sheet divided by the sum of Long-Term Debt plus Stockholders' Equity.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Management’s Discussion and Analysis of Results of Operations and Financial Condition (“Management’s Discussion and Analysis”) is the Company’s analysis of its financial performance and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes included in this Annual Report on Form 10-K. It contains forward-looking statements including, without limitation, statements relating to the Company’s plans, strategies, objectives, expectations and intentions. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. The Company does not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the Company’s disclosures under “Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

For purposes of this Management’s Discussion and Analysis, references to “Murphy USA”, the “Company”, “we”, “us” and “our” refer to Murphy USA Inc. and its subsidiaries on a consolidated basis.

Management’s Discussion and Analysis is organized as follows:


•	Executive Overview— this section provides an overview of our business and the results of operations and financial condition for the periods presented. It includes information on the basis of presentation with respect to the amounts presented in the Management’s Discussion and Analysis and a discussion of the trends affecting our business.


•	Results of Operations— this section provides an analysis of our results of operations, including the results of our business segments for the three years ended December 31, 2018 .


•	Capital Resources and Liquidity— this section provides a discussion of our financial condition and cash flows as of and for the three years ended December 31, 2018 . It also includes a discussion of our capital structure and available sources of liquidity.


•	Critical Accounting Policies— this section describes the accounting policies and estimates that we consider most important for our business and that require significant judgment.

Executive Overview

Our Business and Separation from Murphy Oil

Our business consists primarily of the U.S. retail marketing business that was separated from Murphy Oil, our former parent company, plus other assets, liabilities and operating expenses of Murphy Oil that are associated with supporting the activities of the U.S. retail marketing operations. We market refined products through a network of retail gasoline stores and unbranded wholesale customers. Our owned retail stores are almost all located near Walmart stores and use the brand name Murphy USA ^® . We also market gasoline and other products at stand alone stores under the Murphy Express brand. At December 31, 2018 , we had a total of 1,472 Company stores in 26 states, principally in the Southeast, Southwest and Midwest United States.

Basis of Presentation

Murphy USA was incorporated in March 2013 in contemplation of the Separation, and until the Separation was completed on August 30, 2013, it had not commenced operations and had no material assets, liabilities or commitments. Accordingly, the financial information presented in this Management’s Discussion and Analysis and the accompanying consolidated financial statements reflect the historical results of operations, financial position and cash flows of Murphy USA.

Trends Affecting Our Business

Our operations are significantly impacted by the gross margins we receive on our fuel sales. These gross margins are commodity-based, change daily and are volatile. While we expect our total fuel sales volumes to grow over time and the gross margins we realize on those sales to remain strong, these gross margins can change rapidly due to many factors. These factors include, but are not limited to, the price of refined products, interruptions in supply caused by severe weather, severe refinery mechanical failures for an extended period of time, and competition in the local markets in which we operate.

The cost of our main sales products, gasoline and diesel, is greatly impacted by the cost of crude oil in the United States. Generally, rising prices for crude oil increase the Company’s cost for wholesale fuel products purchased. When wholesale fuel costs rise, the Company is not always able to immediately pass these price increases on to its retail customers at the pump, which in turn squeezes the Company’s sales margin. Also, rising prices tend to cause our customers to reduce discretionary fuel consumption, which tends to reduce our fuel sales volumes. Crude oil prices in 2018 started the year in the $60 per barrel range and climbed to approximately $75 per barrel in October before dropping in November and December to approximately $45 per barrel by year end 2018. Margins in 2018 were above our recent historical average of 13.6 cents per gallon due to the volatility in the price environment.

In addition, our revenues are impacted by our 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 ethanol and bio-diesel to capture and subsequently sell Renewable Identification Numbers (“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 amount of RINs to the EPA. RINs in excess of the set quota can then 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 net benefit we receive for RINs on a company-wide basis either favorably or unfavorably. RIN prices slid downward in 2018, opening the year in the high $0.60 range, declining quickly to below the $0.30 range by mid year and then decreasing through the latter part of the year to the $0.10 range before ending the year in the $0.20 range. Our business model does not depend on our ability to generate revenues from RINs. Revenue from the sales of RINs is included in “Other operating revenues” in the Consolidated Income Statements.

As of December 31, 2018 , we have $800 million of Senior Notes and $72 million of term loan outstanding. We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements. We expect to use the credit facilities to provide us with available financing intended to meet any 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. At December 31, 2018 , we have additional available capacity under the committed $450 million credit facilities (subject to the borrowing base), together with capacity under a $150 million incremental uncommitted facility. 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 and/or obtain and draw upon other credit facilities.

The Company currently anticipates total capital expenditures (including land for future development) for the full year 2019 to range from approximately $225 million to $275 million depending on how many new sites are completed. We intend to fund our capital program in 2019 primarily using operating cash flow, but will supplement funding where necessary using borrowings under available credit facilities.

We believe that our business will continue to grow in the future as we expect to build additional locations chosen by our real estate development team that have the characteristics we look for in a strong site. 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.

Seasonality

Our business has inherent seasonality due to the concentration of our retail sites in certain geographic areas, as well as customer behaviors during different seasons. In general, sales volumes and operating incomes are highest in the second and third quarters during the summer activity months and lowest during the winter months.

Business Segments

Results of Operations

Consolidated Results

For the year ended December 31, 2018 , the Company reported net income of $213.6 million or $6.48 per diluted share on revenue of $14.4 billion . Net income was $245.3 million for 2017 or $6.78 per diluted share on revenue of $12.8 billion .

A summary of the Company’s earnings by business segment follows:



	Year ended December 31,
(millions of dollars)	2018			2017			2016
Marketing	$	214.2		$	295.3		$	249.8
Corporate and other assets	(0.6		)	(50.0		)	(28.3		)
Net income	$	213.6		$	245.3		$	221.5

Net income for 2018 decreased compared to 2017 , primarily due to:


•	No recognition of deferred tax benefits related to the passage of the Tax Cuts and Jobs Act in 2017;


•	Higher station and other operating expenses;


•	Higher depreciation

The items below partially offset the decrease in earnings in the current period:


•	Higher total fuel contribution due to improved retail fuel margins combined with higher product supply and wholesale margins, excluding RINs;


•	Net settlement proceeds from Deepwater Horizon oil spill recorded in Corporate and other assets;


•	Higher merchandise contribution

Net income for 2017 increased compared to 2016 primarily due to:


•	Recognition of deferred tax benefits related to the passage of the Tax Cuts and Jobs Act in 2017;


•	Higher total fuel contribution due to improved retail fuel margins;


•	Higher merchandise contribution

2018 versus 2017

Revenues for the year ended December 31, 2018 increased $1.5 billion , or 12.0% , compared to 2017 . The improvement was primarily due to an increase in retail fuel prices of 29 cents per gallon (cpg) for the full year, in addition, total retail volumes increased 2.2% due primarily to an increase in the number of stores.

Cost of sales increased $1.5 billion , or 12.8% , compared to 2017 . This increase was due to higher volumes of retail fuel sold at a higher average cost, higher wholesale costs, higher merchandise costs and increased store count.

Station and other operating expenses increased $26.4 million , or 5.1% in 2018 due primarily to the addition of 26 new stores, along with 27 larger stores under our raze-and-rebuild program. On an average per store month (APSM) basis, the station operating expenses applicable to the retail marketing business increased 0.7% in 2018 . The largest area of increase was in maintenance expense.

Selling, general and administrative expenses for 2018 were lower by $5.0 million . The decrease was mainly due to lower charitable donation expenses in 2018, partially offset by higher labor and employee benefit costs.

Net settlement proceeds for 2018 were $50.4 million (before tax), which represented the net settlement of damages incurred in connection with the 2010 Deepwater Horizon oil spill.

Interest expense in 2018 increased by $6.2 million compared to 2017 due primarily to expense for the full year 2018 for the 2027 Senior Notes which were issued early in the second quarter of 2017 combined with a lower amount of capitalized interest.

Income tax expense is higher in 2018 by $65.5 million due to the benefit recognized in 2017 related to the enactment of the Tax Cuts and Jobs Act which resulted in the existing net deferred tax liabilities being revalued to lower Corporate tax rates. The effective income tax expense rate in 2018 was 22.0% compared to a tax benefit of 2.2% for 2017 .

2017 versus 2016

Revenues for the year ended December 31, 2017 declined $1.2 billion , or 10.6% , compared to 2016 . Leading the improvement was an increase in retail fuel prices of six cents per gallon (cpg) for the full year. Partially offsetting the higher retail prices were lower total retail volumes of 1.3% due to increasing competition.

Cost of sales increased $1.2 billion , or 11.2% , compared to 2016 . This increase was due to higher wholesale prices of motor fuel for both retail and wholesale as a result of the increase in crude oil prices in the latter half of the year.

Station and other operating expenses were higher in 2017 than in 2016 due primarily to the addition of 45 new stores in 2017 , along with 21 larger stores under our raze-and-rebuild program, compared to 67 stores added in 2016 . On an average per store month (APSM) basis, the expenses applicable to the retail marketing business decreased 2.6% in 2017 . The largest area of decrease was in labor and benefits which were improved in the current year due to initiatives undertaken over the prior two years.

Selling, general and administrative expenses for 2017 were higher by $18.5 million . The 2017 amount contained higher labor and benefits due to increased head count combined with a $10 million charitable donation made as part of a tax planning strategy.

Net interest expense in 2017 increased by $7.0 million compared to 2016 due to the issuance of the 2027 Senior Notes early in the second quarter of 2017.

Income tax expense (benefit) was lower in 2017 by $135.8 million due to the enactment of the Tax Cuts and Jobs Act which resulted in the existing net deferred tax liabilities being revalued to lower Corporate tax rates. The effective rate in 2017 was a benefit of 2.2% compared to an effective rate of 37.1% for 2016.

Segment Results

Marketing

Income from continuing operations before income taxes in the Marketing segment for 2018 decreased $8.7 million , or 3.0% , from 2017 due to increased operating costs with the addition of new sites not fully offset by higher margins. Net income in 2018 was $81.1 million lower because 2017 had a one-time revaluation of existing net deferred tax liabilities that generated an $88.9 million deferred tax benefit.

The tables below show the results for the Marketing segment for the three years ended December 31, 2018 along with certain key metrics for the segment.



(Millions of dollars, except revenue per store month (in thousands) and store counts)	Years Ended December 31,
Marketing Segment	2018			2017			2016
Operating revenues
Petroleum product sales	$	11,858.4		$	10,287.9		$	9,070.6
Merchandise sales	2,423.0			2,372.6			2,338.6
Other	80.9			165.7			185.1
Total operating revenues	$	14,362.3		$	12,826.2		$	11,594.3

Operating expenses
Petroleum product cost of goods sold	11,251.1			9,773.2			8,604.0
Merchandise cost of goods sold	2,022.5			1,991.4			1,974.5
Station and other operating expenses	541.3			514.9			493.3
Depreciation and amortization	124.5			110.5			92.2
Selling, general and administrative	136.2			141.2			122.7
Accretion of asset retirement obligations	2.0			1.8			1.6
Total operating expenses	$	14,077.6		$	12,533.0		$	11,288.3
Gain (loss) on sale of assets	(1.1		)	(3.9		)	88.2
Income from operations	283.6			289.3			394.2

Other income (expense)
Interest expense	(0.1		)	(0.1		)	(0.1		)
Other nonoperating income	0.2			3.2			2.9
Total other income (expense)	$	0.1		$	3.1		$	2.8

Income from continuing operations
before income taxes	283.7			292.4			397.0
Income tax expense (benefit)	69.5			(2.9		)	147.2
Income from continuing operations	$	214.2		$	295.3		$	249.8

Total tobacco sales revenue per same store sales*	$	101.2		$	105.5		$	112.0
Total non-tobacco sales revenue per same store sales*	39.1			37.1			35.5
Total merchandise sales revenue per same store sales*	$	140.3		$	142.6		$	147.5
*2017 amounts not revised for 2018 raze-and-rebuild activity

Store count at end of period	1,472			1,446			1,401
Total store months during the period	17,343			16,880			16,194



	Twelve Months Ended December 31,
Key Fuel Operating Metrics	2018		2017		2016
Total fuel contribution ($ Millions)	$	685.6	$	677.7	$	647.2
Total fuel contribution (including retail, PS&W and RINS) (cpg)	16.2		16.4		15.4
Total retail fuel contribution ($ Millions)	$	624.2	$	581.0	$	485.8
Retail fuel volume - chain (Million gal)	4,232.2		4,140.9		4,195.2
Retail fuel volume - per site (K gals APSM)	244.0		245.3		259.1
Retail fuel volume - per site (K gal SSS)*	242.6		245.3		260.5
Retail fuel margin (cpg excluding credit card fees)	14.7		14.0		11.6
PS&W including RINs contribution (cpg)	1.5		2.4		3.8
*2017 amounts not revised for 2018 raze-and-rebuild activity



	Twelve Months Ended December 31,
Key Merchandise Operating Metrics	2018			2017			2016
Total merchandise contribution ($ Millions)	$	400.4		$	381.2		$	364.1
Total merchandise sales ($ Millions)	$	2,423.0		$	2,372.7		$	2,338.6
Total merchandise sales ($K SSS)*	$	140.3		$	142.6		$	147.5
Merchandise unit margin (%)	16.5		%	16.1		%	15.6		%
Tobacco contribution ($K SSS)*	$	13.7		$	13.7		$	13.8
Non-tobacco contribution ($K SSS)*	$	9.6		$	9.2		$	9.1
Total merchandise contribution ($K SSS)*	$	23.3		$	22.9		$	22.9
*2017 amounts not revised for 2018 raze-and-rebuild activity

2018 versus 2017

Total fuel volumes for the year ended December 31, 2018 were up 2.2% . Retail fuel volumes in 2018 on a same store sales ("SSS") basis were low er by 0.6% compared to 2017 . The decline in retail volumes on an SSS basis was related to restrained retail demand and ongoing competitive pressures.

The Marketing segment had total revenues of $14.4 billion in 2018 compared to approximately $12.8 billion in 2017 , an increase of $1.6 billion . Revenue amounts included excise taxes collected and remitted to government authorities of $1.8 billion in 2018 and $2.0 billion in 2017 . The Company adopted ASC Topic 606 as of January 1, 2018 using the modified retrospective method. The impact of the excise and sales taxes collected and remitted to government authorities included in petroleum product sales that would have been recognized under previous revenue recognition guidance would have increased 2018 petroleum product sales (at retail) by $25.4 million and petroleum product sales (at wholesale) by $171.2 million for a total increase in petroleum product sales of $196.5 million .

Total fuel sales volumes on an SSS basis were 242,562 gallons per month in 2018 , down 0.6% from 245,289 gallons per month in the prior year. Retail fuel margin increased in 2018 to 14.7 cpg, compared to 14.0 cpg in the prior year. The higher fuel margins in the period were attributed to more price volatility in 2018 compared to 2017 . Total product supply and wholesale margin dollars before RINs increased in the current year, but was offset by a decline in the contribution from RINs sales. During 2018 , operating income included $75.2 million from the sale of 227 million RINs at an average selling price of $0.33 per RIN compared to 2017 's $160.3 million for the sale of 224 million RINs at an average price of $0.72 per RIN.

Merchandise sales were up 2.1% in 2018 to $2.4 billion . Merchandise margins increased 40 basis points, to 16.5% in 2018 from 16.1% in 2017 . This improvement in margin was primarily caused by optimizing promotional programs and manufacturer price increases in tobacco along with new products at better margins. On an SSS basis, total merchandise sales were down 0.2% with tobacco products down 1.6% , partially offset by a 3.8%

increase in non-tobacco sales. Total margins on an SSS basis for 2018 were up 2.9% with tobacco margins higher 3.1% , combined with a 2.6% increase in non-tobacco margins.

Station and other operating expenses increased $26.4 million in 2018 compared to 2017 levels, an increase of 5.1% . This increase in total dollars was due mainly to increased store count. Excluding credit card fees on an APSM basis, station and other operating expenses at the retail level were higher in 2018 by 1.1% compared to 2017 levels. This increase was due primarily to higher maintenance related expenses.

Depreciation and amortization increased $14.0 million in 2018 , an increase of 12.7% . This increase was caused by more stores operating in the 2018 period compared to the prior year.

Selling, general and administrative expenses decreased $5.0 million in 2018 compared to 2017 . The lower SG&A costs were primarily due to decreased donations expense in 2018 partially offset by higher incentive awards expense.

2017 versus 2016

Total fuel volumes for the year ended December 31, 2017 were down 1.3% . Retail fuel volumes in 2017 on an SSS basis were lower by 4.8% compared to 2016. The decline in retail volumes on an SSS basis was due primarily to subdued retail demand and increased competitive pressures.

The Marketing segment had total revenues of $12.8 billion in 2017 compared to approximately $11.6 billion in 2016 , an increase of $1.2 billion . Revenue amounts included excise taxes collected and remitted to government authorities of $2.0 billion in 2017 and 2016 . Total fuel sales volumes on an SSS basis averaged 245,289 gallons per month in 2017 , down 5.8% from 260,519 gallons per month in the prior year. Retail fuel margin increased in 2017 to 14 cpg, compared to 11.6 cpg in the prior year. The higher fuel margins in the period were attributed to more volatility in 2017 compared to 2016. Total product supply and wholesale margin dollars excluding RINs declined in the current year but this decline was more than offset by the sale of RINs. During 2017, operating income included $160.3 million from the sale of 224 million RINs at an average selling price of $0.72 per RIN compared to the 2016 inclusion of $181.1 million for the sale of 221 million RINS at an average price of $.82 per RIN.

Merchandise sales were up 1.5% in 2017 to $2.4 billion . Merchandise margins increased 50 basis points, from 15.6% in 2016 to 16.1% in 2017 . This improvement in margin was primarily caused by optimizing promotional programs and manufacturer price increases in tobacco along with new products at slightly better margins. On an SSS basis, total merchandise sales were down1.6% primarily to lower tobacco products sales, partially offset by a 3.3% increase in non-tobacco sales. Total margins on an SSS basis were up 1.3% with tobacco products up 2.3%, partially offset by a 0.2% decrease in non-tobacco margin.

Station and other operating expenses increased $21.5 million in 2017 compared to 2016 levels, an increase of 4.4%. This increase in total dollars was due manly to increased store count. On an APSM basis, amounts were lower in 2017. This decline was due primarily to lower labor and benefits costs due to the Company's labor initiatives in the year. Excluding credit card fees on an APSM basis, station and other operating expenses at the retail level were lower by 2.6% compared to 2016 levels.

Depreciation and amortization increased $18.3 million in 2017 , an increase of 19.8%. This increase was caused by more stores operating in the 2017 period compared to the prior year.

Selling, general and administrative expenses increased $18.5 million in 2017 compared to 2016 . The higher SG&A costs in 2017 reflect higher costs associated with the Company's business improvement initiatives, including technology projects.

Corporate and other assets

2018 versus 2017

Income from continuing operations for Corporate and other assets in 2018 was a loss of $0.6 million , or $49.4 million improved when compared to a loss of $50.0 million in 2017 . The improvement was due to recording net settlement proceeds of approximately $39.3 million (after tax) from the 2010 Deepwater Horizon oil spill. Net interest expense was higher in the current year by $6.2 million primarily due to the addition of the $300 million Senior Notes on April 25, 2017 and lower capitalized interest. Depreciation and amortization expense for 2018 was $3.1 million more than in the prior year.

2017 versus 2016

Income from continuing operations for Corporate and other assets declined in 2017 to a loss of $50.0 million compared to a loss of $28.3 million in 2016 . The 2017 year included net interest expense of $46.7 million compared to interest expense in 2017 of $39.7 million. The increase in net interest expense in 2018 was primarily due to the new 2027 Senior Notes of $300 million that were issued in early 2017. The remainder of the change between years was related to tax impacts from the adoption of the Tax Cuts and Jobs Act in 2017 that resulted from the revaluation of net deferred tax liabilities.

Non-GAAP Measures

The following table sets forth the Company’s EBITDA and Adjusted EBITDA for the three years ended December 31, 2018 . EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, gain (loss) on sale of assets and other non-operating expense (income)). EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).

We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure is useful to eliminate certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. Adjusted EBITDA is also used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance. We believe that the presentation of Adjusted EBITDA provides useful information to investors because it allows understanding of a key measure that we evaluate internally when making operating and strategic decisions, preparing our annual plan and evaluating our overall performance. However, non-GAAP measures are not a substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.

The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:



	Years Ended December 31,
(Millions of dollars)	2018			2017			2016

Net income	$	213.6		$	245.3		$	221.5
Income tax expense (benefit)	60.3			(5.2		)	130.5
Interest expense, net of interest income	51.4			45.4			39.1
Depreciation and amortization	134.0			116.9			98.6
EBITDA	459.3			402.4			489.8
Net settlement proceeds	(50.4		)	—			—
Accretion of asset retirement obligations	2.0			1.8			1.7
(Gain) loss on sale of assets	1.1			3.9			(88.2		)
Other nonoperating (income) expense	(0.2		)	(2.2		)	(3.1		)
Adjusted EBITDA	$	411.8		$	405.9		$	400.1

Capital Resources and Liquidity

Significant sources of capital

As of December 31, 2018 , we had $184.5 million of cash and cash equivalents. Our cash management policy provides that cash balances in excess of a certain threshold are reinvested in certain types of low-risk investments.

We have borrowing capacity under a committed $450 million asset based loan facility (the "ABL facility") (subject to the borrowing base) and a $72 million term loan, as well as a $150 million incremental uncommitted facility. At December 31, 2018 we had $450 million of borrowing capacity that we could utilize for working capital and other general corporate purposes under our existing facility, including to support our operating model as

described herein. Our borrowing base limit for the facility is approximately $177 million based on December 31, 2018 balance sheet information. See “Debt – Credit Facilities” for the calculation of our borrowing base.

We also have a shelf registration on file with the SEC for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitations on the amount of debt to be issued under this shelf registration statement.

We believe our short-term and long-term liquidity is adequate to fund not only our operations, but also our anticipated near-term and long-term funding requirements, including capital spending programs, execution of announced share repurchase programs, potential dividend payments, repayment of debt maturities and other amounts that may ultimately be paid in connection with contingencies.

Operating Activities

Net cash provided by operating activities was $398.7 million for the year ended December 31, 2018 and $283.6 million for the comparable period in 2017 , an increase of 40.6% , primarily because of changes in deferred income taxes, changes in noncash working capital, and depreciation. Net income decreased $31.7 million in 2018 compared to 2017 and benefits from changes in deferred and non-current income tax changes were $88.3 million. In addition, the amount of cash generated from drawdown of working capital in the 2018 period improved by $39.2 million .

Net cash provided by operating activities was $337.4 million in 2016 . The primary reason for changes in the amounts between 2017 and 2016 related to higher net income, offset by changes in deferred income taxes and changes in noncash working capital.

Investing Activities

For the year ended December 31, 2018 , cash required by investing activities was $209.1 million compared to cash required by investing activities of $262.1 million in 2017 . The investing cash decrease of $53.0 million in 2018 was primarily due to lower capital expenditures in the current year. Capital expenditures in 2018 required cash of $204.3 million compared to $258.3 million in 2017 .

In 2017 , cash required by investing activities was $262.1 million while 2016 required cash from investing activities of $134.8 million due primarily to capital expenditures in 2017 having no offset by asset sales or restricted cash when compared to 2016.

Financing Activities

Financing activities in the year ended December 31, 2018 required net cash of $175.1 million compared to a net cash required of $5.3 million in the year ended December 31, 2017 . The increase in financing cash requirements was due to no new debt issuances, partially offset by lower repayments of the term loan and less spent on share repurchases in 2018 . Net cash required by financing activities in 2016 was $151.1 million . In 2016 the differences were due to the amount of stock repurchases and debt issuances.

Debt

Our long-term debt at December 31, 2018 and 2017 was as set forth below:



	December 31,
(Millions of dollars)	2018			2017
6.00% senior notes due 2023 (net of unamortized discount of $4.1 at 2018 and $5.0 at 2017)	$	495.9		$	495.0
5.625% senior notes due 2027 (net of unamortized discount of $3.1 at 2018 and $3.5 at 2017)	296.9			296.5
Term loan due 2020 (effective rate of 5.0% at 2018 and 4.15% at 2017 )	72.0			92.0
Capitalized lease obligations, vehicles, due through 2022	2.3			2.4
Unamortized debt issuance costs	(3.8		)	(5.1		)
Total long-term debt	863.3			880.8
Less current maturities	21.2			19.9
Total long-term debt, net of current	$	842.1		$	860.9

Senior Notes

On August 14, 2013, Murphy Oil USA, Inc., our primary operating subsidiary, issued the 6.00% Senior Notes due 2023 (the"2023 Senior Notes") in an aggregate principal amount of $500 million. The 2023 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities. The indenture governing the 2023 Senior Notes contains restrictive covenants that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc. and the restricted subsidiaries to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates or merge with or into other entities.

On April 25, 2017, Murphy Oil USA, Inc., issued $300 million of 5.625% Senior Notes due 2027 (the "2027 Senior Notes") under its existing shelf registration statement. The 2027 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities. The indenture governing the 2027 Senior Notes contains restrictive covenants that are essentially identical to the covenants for the 2023 Senior Notes.

The 2023 and 2027 Senior Notes and the guarantees rank equally with all of our and the guarantors’ existing and future senior unsecured indebtedness and effectively junior to our and the guarantors’ existing and future secured indebtedness (including indebtedness with respect to the credit facilities) to the extent of the value of the assets securing such indebtedness. The 2023 and 2027 Senior Notes are structurally subordinated to all of the existing and future third-party liabilities, including trade payables, of our existing and future subsidiaries that do not guarantee the notes.

Credit Facilities and Term Loan

On August 30, 2013, we entered into a credit agreement, which provided for a committed $450 million asset-based loan (ABL) facility (with availability subject to the borrowing base described below) and a $150 million term facility. It also provided for a $200 million uncommitted incremental facility. On September 2, 2014, we amended the credit agreement to extend the maturity date to September 2, 2019 and amend the terms of the various covenants. On March 10, 2016, we amended the agreement to extend the effective date of the ABL to March 10, 2021, added a $200 million term loan facility that was immediately drawn down and is due on March 10, 2020 and requires quarterly principal payments of $10 million that began July 1, 2016 (now $5 million per quarter), and reduced the uncommitted incremental facility to $150 million.

The borrowing base is expected, at any time of determination, to be an amount (net of reserves) equal to the sum of:


•	100% of eligible cash at such time, plus


•	90% of eligible credit card receivables at such time, plus


•	90% of eligible investment grade accounts, plus


•	85% of eligible other accounts, plus


•	80% of eligible product supply/wholesale refined products inventory at such time, plus


•	75% of eligible retail refined products inventory at such time, plus

the lesser of (i) 70% of the average cost of eligible retail merchandise inventory at such time and (ii) 85% of the net orderly liquidation value of eligible retail merchandise inventory at such time.

The ABL facility includes a $200 million sublimit for the issuance of letters of credit. Letters of credit issued under the ABL facility reduce availability under the ABL facility.

Interest payable on the credit facilities is based on either:


•	the London interbank offered rate, adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”); or


•	the Alternate Base Rate, which is defined as the highest of (a) the prime rate, (b) the federal funds effective rate from time to time plus 0.50% per annum and (c) the one-month Adjusted LIBO Rate plus 1.00% per annum,

plus, (A) in the case Adjusted LIBO Rate borrowings, (i) with respect to the ABL facility, spreads ranging from 1.50% to 2.00% per annum depending on a total debt to EBITDA ratio under the ABL facility or (ii) with respect to the term facility, spreads ranging from 2.50% to 2.75% per annum depending on a total debt to EBITDA ratio and (B) in the case of Alternate Base Rate borrowings, (i) with respect to the ABL facility, spreads ranging from 0.50% to 1.00% per annum depending on a total debt to EBITDA ratio under the ABL facility or (ii) with respect to the term facility, spreads ranging from 1.50% to 1.75% per annum depending on a total debt to EBITDA ratio.

The interest rate period with respect to the Adjusted LIBO Rate interest rate option can be set at one-, two-, three-, or six-months as selected by us in accordance with the terms of the credit agreement.

The credit agreement contains certain covenants that limit, among other things, the ability of us and our 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. In addition, the credit agreement requires us to maintain a minimum fixed charge coverage ratio of a minimum of 1.0 to 1.0 when availability for at least three consecutive business days is less than the greater of (a) 17.5% of the lesser of the aggregate ABL facility commitments and the borrowing base and (b) $70,000,000 (including as of the most recent fiscal quarter end on the first date when availability is less than such amount) as well as a maximum secured debt to EBITDA ratio of 4.5 to 1.0 at any time when term facility commitments or term loans thereunder are outstanding. As of December 31, 2018 , our fixed charge coverage ratio was 1.10 . Our secured debt to EBITDA ratio as of December 31, 2018 was 0.16 to 1.0.

The credit agreement contains restrictions on certain payments, including dividends, when availability under the credit agreement is less than or equal to the greater of $100 million and 25% of the lesser of the revolving commitments and the borrowing base and our fixed charge coverage ratio is less than 1.0 to 1.0 (unless availability under the credit agreement is greater than $100.0 million and 40% of the lesser of the revolving commitments and the borrowing base). As of December 31, 2018 , our ability to make restricted payments was not limited as our fixed charge coverage ratio was greater than 1.0 to 1.0.

All obligations under the credit agreement are guaranteed by Murphy USA and the subsidiary guarantors party thereto, and all obligations under the credit agreement, including the guarantees of those obligations, are secured by certain assets of Murphy USA, Murphy Oil USA, Inc. and the guarantors party thereto.

Contractual Obligations

The following table summarizes our aggregate contractual fixed and variable obligations as of December 31, 2018 .



(Millions of dollars)	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years

Debt obligations (a)	$	874.8	$	21.4	$	53.4	$	500.0	$	300.0
Operating lease obligations	184.9		13.7		25.9		22.8		122.5
Purchase obligations (b)	279.8		197.0		82.8		—		—
Asset retirement obligations	159.2		—		—		—		159.2
Other long-term obligations, including interest on long-term debt	302.8		68.0		96.2		82.4		56.2
Total	$	1,801.5	$	300.0	$	258.2	$	605.2	$	638.0


(a)	For additional information, see Note 7 “Long-Term Debt” in the accompanying audited consolidated financial statements.


(b)	Primarily includes ongoing new retail station construction in progress at December 31, 2018 , commitments to purchase land, take-or-pay supply contracts and other services. See Note 16 “Commitments” in the audited consolidated financial statements for the year ended December 31, 2018 .

Capital Spending

Capital spending and investments in our Marketing segment relate primarily to the acquisition of land and the construction of new Company stores. Our Marketing capital is also deployed to improve our existing sites, which we refer to as sustaining capital. We use sustaining capital in this business as needed to ensure reliability and continued performance of our sites. We also invest in our Corporate and other assets segment which is primarily technology related. The following table outlines our capital spending and investments by segment for the three years ended December 31, 2018 :



(Millions of dollars)	2018		2017		2016
Marketing:
Company stores	$	134.1	$	182.9	$	199.5
Terminals	0.6		2.3		1.8
Sustaining capital	34.5		48.9		37.8
Corporate and other assets	24.6		39.7		24.8
Total	$	193.8	$	273.7	$	263.9

We currently expect capital expenditures for the full year 2019 to range from approximately $225 million to $275 million, including $140 million for retail growth, approximately $30 million for maintenance capital, with the remaining funds earmarked for other corporate investments, including EMV compliance and other strategic initiatives. See Note 16 “Commitments” in the audited consolidated financial statements for the three years ended December 31, 2018 included in this Annual Report on Form 10-K.

Critical Accounting Policies

Impairment of Long-Lived Assets

Individual retail sites are reviewed for impairment periodically or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Our primary indicator that operating store assets may not be recoverable is consistent negative cash flow over a twenty-four month period for those retail sites that have been open in the same location for a sufficient period to allow for meaningful analysis of ongoing results. We also monitor other factors when evaluating retail sites for impairment, including individual site execution of operating plans and local market conditions.

When an evaluation is required, the projected future undiscounted cash flows to be generated from each retail site over its remaining economic life are compared to the carrying value of the long-lived assets of that site to determine if a write-down of the carrying value to fair value is required. When determining future cash flows associated with an individual retail site, we make assumptions about key variables such as sales volume, gross margins and expenses. Cash flows vary for each retail site year to year. Changes in market demographics, traffic patterns, competition and other factors impact the overall operations of certain of our individual retail site locations. Similar changes may occur in the future that will require us to record impairment charges. We have not made any material change in the methodology used to estimate future cash flows of retail site locations during the past three years.

Our impairment evaluations are based on assumptions we deem to be reasonable. If the actual results of our retail sites are not consistent with the estimates and judgments we have made in estimating future cash flows and determining fair values, our actual impairment losses could vary positively or negatively from our estimated impairment losses. Providing sensitivity analysis if other assumptions were used in performing the impairment evaluations is not practical due to the significant number of assumptions involved in the estimates.

Tax Matters

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use, and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities that cannot be predicted at this time. In addition, we have received claims from various jurisdictions related to certain tax matters. Tax liabilities include potential assessments of penalty and interest amounts.

We record tax liabilities based on our assessment of existing tax laws and regulations. A contingent loss related to a transactional tax claim is recorded if the loss is both probable and estimable. The recording of our tax liabilities requires significant judgments and estimates. Actual tax liabilities can vary from our estimates for a variety of reasons, including different interpretations of tax laws and regulations and different assessments of the amount of tax due. In addition, in determining our income tax provision, we must assess the likelihood that our deferred tax assets will be recovered through future taxable income. Significant judgment is required in estimating the amount of valuation allowance, if any, that should be recorded against those deferred income tax assets. If our actual results of operations differ from such estimates or our estimates of future taxable income change, the valuation allowance may need to be revised. However, an estimate of the sensitivity to earnings that would result from changes in the assumptions and estimates used in determining our tax liabilities is not practicable due to the number of assumptions and tax laws involved, the various potential interpretations of the tax laws, and the wide range of possible outcomes. The Company is occasionally challenged by taxing authorities over the amount and/or timing of recognition of revenues and deductions in its various income tax returns. Although the Company believes it has adequate accruals for matters not resolved with various taxing authorities, gains or losses could occur in future years from changes in estimates or resolution of outstanding matters. See Note 9 “Income Taxes” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2018 for a further discussion of our tax liabilities.

Asset Retirement Obligations

We operate above ground and underground storage tanks at our facilities. We recognize the estimated future cost to remove these underground storage tanks (“USTs”) over their estimated useful lives. We record a discounted liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset at the time a UST is installed. We depreciate the amount added to cost of the property and recognize accretion expense in connection with the discounted liability over the remaining life of the UST.

We have not made any material changes in the methodology used to estimate future costs for removal of a UST during the past three years. We base our estimates of such future costs on our prior experience with removal and normal and customary costs we expect to incur associated with UST removal. We compare our cost estimates with our actual removal cost experience, if any, on an annual basis, and if the actual costs we experience exceed our original estimates, we will recognize an additional liability for estimated future costs to remove the USTs. Because these estimates are subjective and are currently based on historical costs with adjustments for estimated future changes in the associated costs, the dollar amount of these obligations could change as more information is obtained. There were no material changes in our asset retirement obligation estimates during 2018, 2017 or 2016.

See also Note 8 “Asset Retirement Obligation” in the accompanying audited consolidated financial statements for the three-year period ended December 31, 2018 .

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain statements 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, manage disruptions in our supply chain and control costs; the impact of severe weather events, such as hurricanes, floods and earthquakes; the impact of any systems failures, cybersecurity and/or security breaches, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult which may 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. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We are exposed to market risks related to the volatility in the price of crude oil and refined products (primarily gasoline and diesel) used in our operations. These fluctuations can affect our revenues and purchases, as well as the cost of operating, investing and financing activities. We make limited use of derivative instruments to manage certain risks related to commodity prices. The use of derivative instruments for risk management is covered by operating policies and is closely monitored by our middle-office function and the Company’s senior management.

As described in Note 12 “Financial Instruments and Risk Management” in the accompanying audited consolidated financial statements, there were short-term commodity derivative contracts in place at December 31, 2018 to hedge the purchase price of refined products. A 10% increase or decrease in the respective benchmark price of the commodities underlying these derivative contracts would have been immaterial to the Company. Changes in the fair value of these derivative contracts generally offset the changes in the value for an equivalent volume of these products.

For additional information about our use of derivative instruments, see Note 12 “Financial Instruments and Risk Management” in our audited consolidated financial statements for the three year period ended December 31, 2018 included in this Annual Report on Form 10-K.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item appears on pages F-1 through F-40, which follow the exhibit index of this Annual Report on Form 10-K.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Our management has evaluated, with the participation of our principal executive and financial officers, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective and appropriately allowed for timely decisions regarding required disclosures as of December 31, 2018 .

Internal Control over Financial Reporting

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules that generally require every company that files reports with the SEC to evaluate its effectiveness of internal controls over financial reporting.

Management has conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2018 . Management’s report is included on page F-1 of this Annual Report on Form 10-K. KPMG LLP, an independent registered public accounting firm, has made an independent assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018 and their report is included on page F-3 of this Annual Report on Form 10-K.

There were no changes in the Company’s internal controls over financial reporting that occurred during the fourth quarter of 2018 that have affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. OTHER INFORMATION

None

Part III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Certain information regarding executive officers of the Company is included under the caption “Executive Officers of the Registrant” in Part I of this Annual Report on Form 10-K. Other information required by this item is incorporated by reference to the Registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders on May 1, 2019 under the captions “Election of Directors” and “Committees”.

Murphy USA has adopted a Code of Business Conduct and Ethics, which can be found under the Corporate Governance tab at http://ir.corporate.murphyusa.com . Stockholders may also obtain free of charge a copy of the Code of Business Conduct and Ethics by writing to the Company’s Secretary at P.O. Box 7300, El Dorado, AR 71730-5836. Any future amendments to or waivers of the Company’s Code of Business Conduct and Ethics will be posted on the Company’s Internet Web site.

Item 11. EXECUTIVE COMPENSATION

Information required by this item is incorporated by reference to Murphy USA’s definitive Proxy Statement for the Annual Meeting of Stockholders on May 1, 2019 under the captions “Compensation Discussion and Analysis” and “Compensation of Directors” and in various compensation schedules.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this item is incorporated by reference to Murphy USA’s definitive Proxy Statement for the Annual Meeting of Stockholders on May 1, 2019 under the captions “Security Ownership of Certain Beneficial Owners,” “Security Ownership of Management,” and “Equity Compensation Plan Information.”

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this item is incorporated by reference to Murphy USA’s definitive Proxy Statement for the Annual Meeting of Stockholders on May 1, 2019 under the caption “Review, Approval or Ratification of Transactions with Related Persons.”

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Part IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements – The consolidated financial statements of Murphy USA Inc. and consolidated subsidiaries are located or begin on the pages of this Annual Report on Form 10-K as indicated below.





	Page No.
Report of Management - Financial Statements	F-1
Report of Management - Internal Controls	F-1
Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets	F-4
Consolidated Income Statements	F-5
Consolidated Statements of Cash Flows	F-6
Consolidated Statements of Changes in Equity	F-7
Notes to Consolidated Financial Statements	F-8
Supplemental Quarterly Information (Unaudited)	F-39

2. Financial Statement Schedules



Schedule II – Valuation Accounts and Reserves	F-40

All other financial statement schedules are omitted because they are either not applicable or the required information is included in the consolidated financial statements or notes thereto.

3. Exhibits – The following is an index of exhibits that are hereby filed as indicated by asterisk (*), that are considered furnished rather than filed, or that are incorporated by reference. Exhibits other than those listed have been omitted since they either are not required or are not applicable.




Exhibit Number	Description
2.1	Separation and Distribution Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)
3.1	Murphy USA Inc. Amended and Restated Certificate of Incorporation (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013)
3.2	Murphy USA Inc. Amended and Restated Bylaws (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013)
4.1	Indenture (including form of notes), dated August 14, 2013, among Murphy Oil USA, Inc., as the Issuer, Murphy USA Inc., as a guarantor, the other guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed August 16, 2013)
4.2	Registration Rights Agreement, dated August 14, 2013, among Murphy Oil USA, Inc., Murphy USA Inc., certain subsidiaries of Murphy USA Inc. and J.P. Morgan Securities LLC, as representative of the initial purchasers named therein (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed August 16, 2013)
4.3	Indenture (including form of notes) dated as of April 25, 2017 among Murphy Oil USA, Inc., Murphy USA Inc., as a guarantor, the other guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Murphy USA's Current Report on Form 8-K filed April 25, 2017)
10.1	Tax Matters Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)
10.2	Trademark License Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)
10.3	Hangar Rental Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’s current report on Form 8-K filed September 5, 2013)
10.4	Aircraft Maintenance Labor Pooling Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)
10.5	Airplane Interchange Agreement, dated August 30, 2013, between Murphy Oil Corporation and Murphy USA Inc. (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)
10.6	Credit Agreement, dated August 30, 2013, among Murphy USA Inc., Murphy Oil USA, Inc., the Borrowing Subsidiaries, the Lenders party thereto and JPMorgan Chase Bank, N.A. (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed September 5, 2013)
10.7	Severance Protection Agreement dated as of August 20, 2013 between Murphy USA and R. Andrew Clyde, (incorporated by reference to Murphy USA’s Current Report on Form 8-K filed August 22, 2013)†
10.8	Murphy USA Inc. 2013 Long-Term Incentive Plan, as amended and restated effective as of February 9, 2017)† (incorporated by reference to Murphy USA Inc's Annual Report on Form 10-K filed February 22, 2017)
10.9	Form of Murphy USA Inc. 2013 Annual Incentive Plan, as amended and restated effective as of February 12, 2014)†
10.10	Murphy USA Inc. 2013 Stock Plan for Non-Employee Directors (incorporated by reference to Murphy USA’s Registration Statement on Form S-8 (File No. 333-191131) filed September 12, 2013)†
10.11*	Murphy USA Inc. Supplemental Executive Retirement Plan, as amended and restated, on October 1, 2018, and effective January 1, 2019 * †
10.12	Form of Murphy USA 2013 Long-Term Incentive Plan Option Grant Agreement (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013) †



10.13	Form of Murphy USA 2013 Long-Term Incentive Plan RSU Agreement (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013)†
10.14	Form of Murphy USA 2013 Long-Term Incentive Plan Performance Share Agreement (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013)†
10.15	Form of Murphy USA 2013 Non-Employee Director Award (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 8, 2013) †
10.16	Third Amendment, dated as of September 2, 2014, to the Credit Agreement, dated as of August 30, 2013, among Murphy Oil USA, Inc. as borrower, Murphy USA Inc. and certain subsidiaries, and JP Morgan Chase Bank, N.A. as administrative agent and the other lenders party thereto (incorporated by reference to Murphy USA’s Quarterly Report on Form 10-Q filed November 6, 2014)
10.17	Amended and Restated Credit Agreement, dated as of March 10, 2016 among Murphy Oil USA, Inc., as the borrower, Murphy USA Inc., certain subsidiaries of Murphy Oil USA, Inc., as borrowing subsidiaries, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Form 8-K as filed on March 16, 2016)
10.18	Consulting Agreement with former officer John Corrigan (incorporated by reference to Exhibit 10.1 to Murphy USA's Quarterly Report on Form 10-Q filed May 3, 2018) †
10.19	Consulting Agreement with former officer Daryl Schofield (incorporated by reference to Exhibit 10.2 to Murphy USA's Quarterly Report on Form 10-Q filed August 2, 2018) †
10.20*	Murphy USA Inc. 2019 Annual Incentive Plan, as amended and restated, on February 7, 2019 and effective as of January 1, 2019*†
21*	List of Subsidiaries of Murphy USA
23.1*	Consent of KPMG LLP, Independent Registered Public Accounting Firm
31.1*	Certification required by Rule 13a-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer



31.2*	Certification required by Rule 13a-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer
32.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer
32.2*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer
101. INS*	XBRL Instance Document
101. SCH*	XBRL Taxonomy Extension Schema Document
101. CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101. DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101. LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101. PRE*	XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

† Management contract or compensatory plan or arrangement

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MURPHY USA INC.




By:	/s/ R. Andrew Clyde	Date:	February 19, 2019
	R. Andrew Clyde, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on

February 19, 2019 by the following persons on behalf of the registrant and in the capacities indicated.




	/s/ R. Madison Murphy		/s/ James W. Keyes
	R. Madison Murphy, Chairman and Director		James W. Keyes, Director



	/s/ R. Andrew Clyde		/s/ Diane N. Landen
	R. Andrew Clyde, President and Chief		Diane N. Landen, Director
	Executive Officer and Director
	(Principal Executive Officer)


	/s/ Claiborne P. Deming		/s/ David B. Miller
	Claiborne P. Deming, Director		David B. Miller, Director


	/s/ Thomas M. Gattle, Jr.		/s/ Jack T. Taylor
	Thomas M. Gattle, Jr, Director		Jack T. Taylor, Director


	/s/ Fred L. Holliger		/s/ Mindy K. West
	Fred L. Holliger, Director		Mindy K. West, Executive Vice President,
			Treasurer, and Chief Financial Officer
			(Principal Financial Officer)

	/s/ Jeanne L. Phillips		/s/ Donald R. Smith, Jr.
	Jeanne L. Phillips, Director		Donald R. Smith, Jr.
			Vice President and Controller
			(Principal Accounting Officer)

REPORT OF MANAGEMENT- CONSOLIDATED FINANCIAL STATEMENTS

The management of Murphy USA Inc. is responsible for the preparation and integrity of the accompanying consolidated financial statements and other financial data. The statements were prepared in conformity with U.S. generally accepted accounting principles appropriate in the circumstances and include some amounts based on informed estimates and judgments, with consideration given to materiality.

An independent, registered public accounting firm, KPMG LLP, has audited the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and provides an objective, independent opinion about the Company’s consolidated financial statements. The Audit Committee of the Board of Directors appoints the independent registered public accounting firm; ratification of the appointment is solicited annually from the shareholders. KPMG LLP’s opinion covering the Company’s consolidated financial statements can be found on page F-2.

The Board of Directors appoints an Audit Committee annually to implement and to support the Board’s oversight function of the Company’s financial reporting, accounting policies, internal controls and independent registered public accounting firm. This Committee is composed solely of directors who are not employees of the Company. The Committee meets routinely with representatives of management, the Company’s internal audit team and the independent registered public accounting firm to review and discuss the adequacy and effectiveness of the Company’s internal controls, the quality and clarity of its financial reporting, the scope and results of independent and internal audits, and to fulfill other responsibilities included in the Committee’s Charter. The independent registered public accounting firm and the Company’s internal audit team have unrestricted access to the Committee, without management presence, to discuss audit findings and other financial matters.

REPORT OF MANAGEMENT – INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). The Company’s internal controls have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles. All internal control systems have inherent limitations, and therefore, can provide only reasonable assurance with respect to the reliability of financial reporting and preparation of consolidated financial statements.

Management has conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on the results of this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2018 .

KPMG LLP has performed an audit of the Company’s internal control over financial reporting and their opinion thereon can be found on page F-3.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Murphy USA Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Murphy USA Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated income statements, statements of cash flows, and statements of changes in equity for each of the years in the three‑year period ended December 31, 2018, and the related notes and financial statement Schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2019 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2013.

Shreveport, Louisiana

February 19, 2019

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Murphy USA Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Murphy USA Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated income statements, statements of cash flows, and statements of changes in equity for each of the years in the three-year period ended December 31, 2018, and the related notes and financial statement Schedule II (collectively, the consolidated financial statements), and our report dated February 19, 2019 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management - Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Shreveport, Louisiana

February 19, 2019

F-3

Murphy USA Inc.

Consolidated Balance Sheets



	December 31,
(Millions of dollars, except share amounts)	2018			2017
Assets
Current assets
Cash and cash equivalents	$	184.5		$	170.0
Accounts receivable—trade, less allowance for doubtful accounts of $1.1 in 2018 and 2017	138.8			225.2
Inventories, at lower of cost or market	221.5			182.5
Prepaid expenses and other current assets	25.3			36.5
Total current assets	570.1			614.2
Property, plant and equipment, at cost less accumulated depreciation and amortization of $974.2 in 2018 and $874.7 in 2017	1,748.2			1,679.5
Other assets	42.5			37.3
Total assets	$	2,360.8		$	2,331.0
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt	$	21.2		$	19.9
Trade accounts payable and accrued liabilities	456.9			513.4
Total current liabilities	478.1			533.3
Long-term debt, including capitalized lease obligations	842.1			860.9
Deferred income taxes	192.2			154.2
Asset retirement obligations	30.7			28.2
Deferred credits and other liabilities	10.4			16.0
Total liabilities	1,553.5			1,592.6
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 shares issued at December 31, 2018 and 2017, respectively)	0.5			0.5
Treasury stock (14,505,681 and 12,675,630 shares held at
December 31, 2018 and 2017, respectively)	(940.3		)	(806.5		)
Additional paid in capital (APIC)	539.0			549.9
Retained earnings	1,208.1			994.5
Total stockholders' equity	807.3			738.4
Total liabilities and stockholders' equity	$	2,360.8		$	2,331.0

See accompanying notes to consolidated financial statements.

F-4

Murphy USA Inc.

Consolidated Income Statements



	Years Ended December 31,
(Millions of dollars except per share amounts)	2018			2017			2016
Operating Revenues
Petroleum product sales (a)	$	11,858.4		$	10,287.9		$	9,070.6
Merchandise sales	2,423.0			2,372.7			2,338.6
Other operating revenues	81.5			166.0			185.4
Total operating revenues	14,362.9			12,826.6			11,594.6
Operating Expenses
Petroleum product cost of goods sold (a)	11,251.1			9,773.2			8,604.0
Merchandise cost of goods sold	2,022.5			1,991.4			1,974.5
Station and other operating expenses	541.3			514.9			493.3
Depreciation and amortization	134.0			116.9			98.6
Selling, general and administrative	136.2			141.2			122.7
Accretion of asset retirement obligations	2.0			1.8			1.6
Total operating expenses	14,087.1			12,539.4			11,294.7
Net settlement proceeds	50.4			—			—
Gain (loss) on sale of assets	(1.1		)	(3.9		)	88.2
Income from operations	325.1			283.3			388.1
Other income (expense)
Interest income	1.5			1.3			0.6
Interest expense	(52.9		)	(46.7		)	(39.7		)
Other nonoperating income (expense)	0.2			2.2			3.1
Total other income (expense)	(51.2		)	(43.2		)	(36.0		)
Income before income taxes	273.9			240.1			352.1
Income tax expense (benefit)	60.3			(5.2		)	130.6
Net Income	$	213.6		$	245.3		$	221.5
Basic and Diluted Earnings Per Common Share
Basic	$	6.54		$	6.85		$	5.64
Diluted	$	6.48		$	6.78		$	5.59
Weighted-average shares outstanding (in thousands):
Basic	32,674			35,816			39,269
Diluted	32,983			36,156			39,646
Supplemental information:
(a) Includes excise taxes of:	$	1,838.9		$	1,973.1		$	1,961.5

See accompanying notes to consolidated financial statements.

F-5

Murphy USA Inc.

Consolidated Statements of Cash Flows



	Years Ended December 31,
(Millions of dollars)	2018			2017			2016
Operating Activities
Net income	$	213.6		$	245.3		$	221.5
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	134.0			116.9			98.6
Deferred and noncurrent income tax charges (benefits)	37.9			(50.4		)	40.4
Accretion of asset retirement obligations	2.0			1.8			1.6
Pretax (gains) losses from sale of assets	1.1			3.9			(88.2		)
Net decrease (increase) in noncash operating working capital	2.3			(36.9		)	53.7
Other operating activities - net	7.8			3.0			9.8
Net cash provided by operating activities	398.7			283.6			337.4
Investing Activities
Property additions	(204.3		)	(258.3		)	(262.1		)
Proceeds from sale of assets	1.2			0.9			85.3
Changes in restricted cash	—			—			68.6
Other investing activities - net	(6.0		)	(4.7		)	(29.0		)
Other	—			—			2.4
Net cash required by investing activities	(209.1		)	(262.1		)	(134.8		)
Financing Activities
Purchase of treasury stock	(144.4		)	(206.0		)	(323.3		)
Repayments of long-term debt	(21.3		)	(131.4		)	(20.4		)
Additions to long-term debt	—			338.8			200.0
Debt issuance costs	—			(1.1		)	(3.2		)
Amounts related to share-based compensation	(9.4		)	(5.6		)	(4.2		)
Net cash required by financing activities	(175.1		)	(5.3		)	(151.1		)
Net change in cash and cash equivalents	14.5			16.2			51.5
Cash, cash equivalents, and restricted cash at January 1	170.0			153.8			102.3
Cash, cash equivalents, and restricted cash at December 31	$	184.5		$	170.0		$	153.8

Reconciliation of Cash, Cash Equivalents and Restricted Cash
Cash and Cash equivalents at beginning of period	$	170.0		$	153.8		$	33.7
Restricted cash at beginning of period	—			—			68.6
Cash, cash equivalents, and restricted cash at beginning of period	$	170.0		$	153.8		$	102.3

Cash and cash equivalents at end of period	$	184.5		$	170.0		$	153.8
Restricted cash at end of period	—			—			—
Cash, cash equivalents, and restricted cash at end of period	$	184.5		$	170.0		$	153.8

See accompanying notes to consolidated financial statements.

F-6

Murphy USA Inc.

Consolidated Statements of Changes in Equity



	Common Stock
(Millions of dollars, except share amounts)	Shares	Par		Treasury Stock			APIC			Retained Earnings		Total
Balance as of December 31, 2015	46,767,164	$	0.5	$	(294.1	)	$	558.1		$	527.7	$	792.2
Net income	—	—		—			—			221.5		221.5
Purchase of treasury stock	—	—		(323.3		)	—			—		(323.3		)
Issuance of common stock	—	—		—			—			—		—
Issuance of treasury stock	—	—		9.4			(9.4		)	—		—
Amounts related to share-based compensation	—	—		—			(2.7		)	—		(2.7		)
Share-based compensation expense	—	—		—			9.3			—		9.3
Balance as of December 31, 2016	46,767,164	0.5		(608.0		)	555.3			749.2		697.0
Net income	—	—		—			—			245.3		245.3
Purchase of treasury stock	—	—		(206.0		)	—			—		(206.0		)
Issuance of common stock	—	—		—			—			—		—
Issuance of treasury stock	—	—		7.5			(7.4		)	—		0.1
Amounts related to share-based compensation	—	—		—			(5.6		)	—		(5.6		)
Share-based compensation expense	—	—		—			7.6			—		7.6
Balance as of December 31, 2017	46,767,164	0.5		(806.5		)	549.9			994.5		738.4
Net income	—	—		—			—			213.6		213.6
Purchase of treasury stock	—	—		(144.4		)	—			—		(144.4		)
Issuance of common stock	—	—		—			—			—		—
Issuance of treasury stock	—	—		10.6			(10.6		)	—		—
Amounts related to share-based compensation	—	—		—			(9.4		)	—		(9.4		)
Share-based compensation expense	—	—		—			9.1			—		9.1
Balance as of December 31, 2018	46,767,164	$	0.5	$	(940.3	)	$	539.0		$	1,208.1	$	807.3

See accompanying notes to consolidated financial statements.

F-7

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Description of Business and Basis of Presentation

The business of Murphy USA Inc. and its subsidiaries (“Murphy USA” or the “Company”) primarily consists of the U.S. retail marketing business that was separated from its former parent company, Murphy Oil Corporation (“Murphy Oil”), plus other assets, liabilities and operating expenses of Murphy Oil that were associated with supporting the activities of the U.S. retail marketing operations. Murphy USA was incorporated in March 2013. The separation was approved by the Murphy Oil board of directors on August 7, 2013, and was completed on August 30, 2013 through the distribution of 100% of the outstanding capital stock of Murphy USA to holders of Murphy Oil common stock on the record date of August 21, 2013. Following the separation, Murphy USA is an independent, publicly traded company, and Murphy Oil retains no ownership interest in Murphy USA.

Murphy USA markets refined products through a network of retail gasoline stores and unbranded wholesale customers. Murphy USA’s owned retail stores are almost all located in close proximity to Walmart stores in 26 states and use the brand name Murphy USA®. Murphy USA also markets gasoline and other products at standalone stores under the Murphy Express brand. At December 31, 2018 , Murphy USA had a total of 1,472 Company stores. The Company also has certain product supply and wholesale assets, including product distribution terminals and pipeline positions.

Note 2 – Significant Accounting Policies

PRINCIPLES OF CONSOLIDATION – These consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of Murphy USA Inc. and its subsidiaries for all periods presented. All significant intercompany accounts and transactions within the consolidated financial statements have been eliminated.

REVENUE RECOGNITION – Revenue is recognized when obligations under the terms of a contract with our customers are satisfied; generally, this occurs with the transfer of control of our petroleum products, convenience merchandise, Renewable Identification Numbers ("RINs") and other assets to our third-party customers. Revenue is measured as the amounts of consideration we expect to receive in exchange for transferring goods or providing services. Excise and sales tax that we collect where we have determined we are the principal in the transaction have been recorded as revenue on a jurisdiction-by-jurisdiction basis.

The Company enters into buy/sell and similar arrangements when petroleum products are held at one location but are needed at a different location. The Company often pays or receives funds related to the buy/sell arrangement based on location or quality differences. The Company accounts for such transactions on a net basis in its Consolidated Income Statements. See Note 3 "Revenues" for additional information.

SHIPPING AND HANDLING COSTS – Costs incurred for the shipping and handling of motor fuel are included in Petroleum product cost of goods sold in the Consolidated Income Statements. Costs incurred for the shipping and handling of convenience store merchandise are included in Merchandise cost of goods sold in the Consolidated Income Statements.

TAXES COLLECTED FROM CUSTOMERS AND REMITTED TO GOVERNMENT AUTHORITIES – Excise and other taxes collected on sales of refined products and remitted to governmental agencies are included in operating revenues and operating expenses in the Consolidated Income Statements. Excise taxes on petroleum products collected and remitted were $1.8 billion in 2018 , $2.0 billion in 2017 , and $2.0 billion in 2016 .

CASH EQUIVALENTS – Short-term investments, which include government securities, money market funds and other instruments with government securities as collateral, that have an original maturity of three months or less from the date of purchase are classified as cash equivalents.

ACCOUNTS RECEIVABLE – The Company’s accounts receivable are recorded at the invoiced amount and do not bear interest. The accounts receivable primarily consists of amounts owed to the Company from credit card companies and by customers for wholesale sales of refined petroleum products. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses on these receivables. The Company reviews this allowance for adequacy at least quarterly and bases its assessment on a combination of current information about its customers and historical write-off experience. Any trade accounts receivable balances

F-8

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

written off are charged against the allowance for doubtful accounts. The Company has not experienced any significant credit-related losses in the past three years.

INVENTORIES – Inventories of most finished products are valued at the lower of cost, generally applied on a last-in, first-out (“LIFO”) basis, or market. Any increments to LIFO inventory volumes are valued based on the first purchase price for these volumes during the year. Merchandise inventories held for resale are carried at average cost. Materials and supplies are valued at the lower of average cost or estimated value.

VENDOR ALLOWANCES AND REBATES – Murphy USA receives payments for vendor allowances, volume rebates and other related payments from various suppliers of its convenience store merchandise. Vendor allowances for price markdowns are credited to merchandise cost of goods sold during the period the related markdown is recognized. Volume rebates of merchandise are recorded as reductions to merchandise cost of goods sold when the merchandise qualifying for the rebate is sold. Slotting and stocking allowances received from a vendor are recorded as a reduction to cost of sales over the period covered by the agreement.

PROPERTY, PLANT AND EQUIPMENT – Additions to property, plant and equipment, including renewals and betterments, are capitalized and recorded at cost. Certain marketing facilities are primarily depreciated using the composite straight-line method with depreciable lives ranging from 16 to 25 years. Gasoline stations, improvements to gasoline stations and other assets are depreciated over 3 to 50 years by individual unit on the straight-line method. The Company capitalizes interest costs as a component of construction in progress on individually significant projects based on the weighted average interest rates incurred on its long-term borrowings. Total interest cost capitalized in 2018 was $2.2 million and $3.8 million in 2017.

The Company has undertaken like-kind exchange ("LKE") transactions under the Federal tax code in an effort to acquire and sell real and personal property in a tax efficient manner. The Company generally enters into forward transactions, in which property is sold and the proceeds are reinvested by acquiring similar property; and reverse transactions, in which property is acquired and similar property is subsequently sold. A qualified LKE intermediary is used to facilitate these LKE transactions. Proceeds from forward LKE transactions are held by the intermediary and are classified as restricted cash on the Company's balance sheet because the funds must be reinvested in similar properties. If the acquisition of suitable LKE properties is not completed within 180 days of the sale of the Company-owned property, the proceeds are distributed to the Company by the intermediary and are reclassified as available cash and applicable income taxes are determined. An exchange accommodation titleholder, a type of variable interest entity, is used to facilitate reverse like-kind exchanges. The acquired assets are held by the exchange accommodation titleholder until the exchange transactions are complete. If the Company determines that it is the primary beneficiary of the exchange accommodation titleholder, the replacements assets held by the exchange accommodation titleholder are consolidated and recorded in Property, Plant and Equipment on the Consolidated Balance Sheets. The unspent proceeds that are held in trust with the intermediary are recorded as noncurrent assets in the Consolidated Balance Sheet as the cash was restricted for the acquisition of property, plant and equipment. At December 31, 2018 and December 31, 2017 , the Company had no open LKE transactions with an intermediary.

IMPAIRMENT OF ASSETS – Long-lived assets, which include property and equipment and finite-lived intangible assets, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods.

ASSET RETIREMENT OBLIGATIONS – The Company records a liability for asset retirement obligations (“ARO”) equal to the fair value of the estimated cost to retire an asset. The ARO liability is initially recorded in the period in which the obligation meets the definition of a liability, which is generally when the asset is placed in service. The ARO liability is estimated using existing regulatory requirements and anticipated future inflation rates. When the liability is initially recorded, the Company increases the carrying amount of the related long-lived asset by an amount equal to the original liability. The liability is increased over time to reflect the change in its present value, and the capitalized cost is depreciated over the useful life of the related long-lived asset. The Company reevaluates the adequacy of its recorded ARO liability at least annually. Actual costs of asset retirements such as dismantling service stations and site restoration are charged against the related liability. Any difference between costs incurred

F-9

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

upon settlement of an asset retirement obligation and the recorded liability is recognized as a gain or loss in the Company’s Consolidated Income Statements.

ENVIRONMENTAL LIABILITIES – A liability for environmental matters is established when it is probable that an environmental obligation exists and the cost can be reasonably estimated. If there is a range of reasonably estimated costs, the most likely amount will be recorded, or if no amount is most likely, the minimum of the range is used. Related expenditures are charged against the liability. Environmental remediation liabilities have not been discounted for the time value of future expected payments. Environmental expenditures that have future economic benefit are capitalized.

INCOME TAXES – The Company accounts for income taxes using the asset and liability method. Under this method, income taxes are provided for amounts currently payable and for amounts deferred as tax assets and liabilities based on differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred income taxes are measured using the enacted tax rates that are assumed will be in effect when the differences reverse. The Company routinely assesses the realizability of deferred tax assets based on available positive and negative evidence including assumptions of future taxable income, tax planning strategies and other pertinent factors. A deferred tax asset valuation allowance is recorded when evidence indicates that it is more likely than not that all or a portion of these deferred tax assets will not be realized in a future period. The accounting principles for income tax uncertainties permit recognition of income tax benefits only when they are more likely than not to be realized.

The Company’s results of operations were included in the consolidated federal income tax return of Murphy Oil prior to the separation, while in most cases, these results have been included in the various state tax returns of Murphy USA historically. The Company has elected to classify any interest expense and penalties related to the underpayment of income taxes in Income tax expense in the Consolidated Income Statements.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – The fair value of a derivative instrument is recognized as an asset or liability in the Company’s Consolidated Balance Sheets. Upon entering into a derivative contract, the Company may designate the derivative as either a fair value hedge or a cash flow hedge, or decide that the contract is not a hedge, and therefore, recognize changes in the fair value of the contract in earnings. The Company documents the relationship between the derivative instrument designated as a hedge and the hedged items as well as its objective for risk management and strategy for use of the hedging instrument to manage the risk. See Note 12 and Note 15 for further information about the Company’s derivatives.

STOCK-BASED COMPENSATION – The fair value of awarded stock options, restricted stock, restricted stock units and performance stock units is determined based on a combination of management assumptions for awards issued. The Company uses the Black-Scholes option pricing model for computing the fair value of stock options. The primary assumptions made by management included the expected life of the stock option award and the expected volatility of the Company’s common stock prices. The Company uses both historical data and current information to support its assumptions. Stock option expense is recognized on a straight-line basis over the requisite service period of three years. The Company uses a Monte Carlo valuation model to determine the fair value of performance-based stock units that are based on performance compared against a peer group and the related expense is recognized over the three -year requisite service period. Management estimates the number of all awards that will not vest and adjusts its compensation expense accordingly. Differences between estimated and actual vested amounts are accounted for as an adjustment to expense when known. See Note 10 for a discussion of the basis of allocation of such costs.

USE OF ESTIMATES – In preparing the financial statements of the Company in conformity with U.S. GAAP, management has made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from the estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

F-10

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 – Revenues

Adoption of ASC Topic 606, "Revenue from Contracts with Customers"

On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting policies under Topic 605.

There was no material impact to opening retained earnings as a result of adoption of Topic 606 that resulted in a cumulative effect adjustment.

The following tables disaggregates our revenue by major source for the years ended December 31, 2018 and 2017 and 2016.



	Years Ended December 31,
(Millions of dollars)	2018		2017		2016
Marketing Segment
Petroleum product sales (at retail) ¹	$	10,459.2	$	9,041.5	$	8,087.4
Petroleum product sales (at wholesale) ¹	1,399.2		1,246.4		980.5
Other Petroleum product sales	—		—		2.7
Total petroleum product sales	11,858.4		10,287.9		9,070.6
Merchandise sales	2,423.0		2,372.6		2,338.6
Other operating revenues:
RINs	75.2		160.3		181.2
Other revenues ²	5.7		5.4		3.9
Total marketing segment revenues	14,362.3		12,826.2		$	11,594.3
Corporate and Other Assets	0.6		0.4		$	0.3
Total revenues	$	14,362.9	$	12,826.6	$	11,594.6

¹ Includes excise and sales taxes that remain eligible for inclusion under Topic 606

² Primarily includes collection allowance on excise and sales taxes and other miscellaneous items

The Company adopted ASC Topic 606 as of January 1, 2018 using the modified retrospective method. The impact of the excise and sales taxes collected and remitted to government authorities included in petroleum product sales that would have been recognized under previous revenue recognition guidance would have increased 2018 petroleum product sales (at retail) by $25.4 million and petroleum product sales (at wholesale) by $171.2 million for a total increase in petroleum product sales of $196.5 million .

Marketing segment

Petroleum product sales (at retail). For our retail store locations, the revenue related to petroleum product sales is recognized as the fuel is pumped to our customers. The transaction price at the pump typically includes some portion of sales or excise taxes as levied in the respective jurisdictions. Those taxes that are collected for remittance to governmental entities on a pass through basis are not recognized as revenue and they are recorded to a liability account until they are paid. Our customers typically use a mixture of cash, checks, credit cards and debit cards to pay for our products as they are received. We have accounts receivable from the various credit/debit card providers at any point in time related to product sales made on credit cards and debit cards. These receivables are typically collected in two to seven days, depending on the terms with the particular credit/debit card providers. Payment fees retained by the credit/debit card providers are recorded as station and other operating expenses.

F-11

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Petroleum product sales (at wholesale). Our sales of petroleum products at wholesale are generally recorded as revenue when the deliveries have occurred and legal ownership of the product has transferred to the customer. Title transfer for bulk refined product sales typically occurs at pipeline custody points and upon trucks loading at product terminals. For bulk pipeline sales, we record receivables from customers that are generally collected within a week from custody transfer date. For our rack product sales, the majority of our customers' accounts are drafted by us within 10 days from product transfer.

Merchandise sales. For our retail store locations, the revenue related to merchandise sales is recognized as the customer completes their purchase at our locations. The transaction price typically includes some portion of sales tax as levied in the respective jurisdictions. Those taxes that are collected for remittance to governmental entities on a pass through basis are not recognized as revenue and they are recorded to a liability account until they are paid. As noted above, a mixture of payment types are used for these revenues and the same terms for credit/debit card receivables are realized.

The most significant judgment with respect to merchandise sales revenue is determining whether we are the principal or agent for some categories of merchandise such as lottery tickets, lotto tickets, newspapers and other small categories of merchandise. For scratch-off lottery tickets, we have determined we are the principal in the majority of the jurisdictions and therefore we record those sales on a gross basis. We have some categories of merchandise (such as lotto tickets) where we are the agent and the revenues recorded for those transactions are our net commission only.

In June 2018 the Company initiated a loyalty pilot program through a limited number of its retail locations. The customers earn rewards based on their spending or other promotional activities. This program creates a performance obligation which requires us to defer a portion of sales revenue to the loyalty program participants until they redeem their rewards. The rewards may be redeemed for merchandise or cash discounts on fuel purchases. Earned rewards expire after an account is inactive for a period of 90 days. We recognize loyalty revenue when a customer redeems an earned reward. Deferred revenue associated with Murphy Rewards is included in trade accounts payable and accrued liabilities in our consolidated balance sheet. Due to the limited nature of the pilot program and the short amount of time the program has been in effect, the deferred revenues recorded in the year 2018 were immaterial.

RINs sales. For the sale of RINs, we recognize revenue when the RIN is transferred to the counter-party and the sale is completed. Receivables from our counter-parties related to the RIN sales are typically collected within five days of the sale.

Other revenues. Items reported as other operating revenues include collection allowances for excise and sales tax and other miscellaneous items and are recognized as revenue when the transaction is completed.

Accounts receivable

Trade accounts receivable on the balance sheet represents both receivables related to contracts with customers and other trade receivables. At December 31, 2018 and December 31, 2017, we had $79.4 million and $145.6 million of receivables, respectively, related to contracts with customers recorded. All of the trade accounts receivable related to contracts with customers outstanding at December 31, 2018 and December 31, 2017 were considered to be short term. These receivables were generally related to credit and debit card transactions along with short term bulk and wholesale sales from our customers, which have a very short settlement window.

F-12

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 — Inventories

Inventories consisted of the following:



	December 31,
(Millions of dollars)	2018			2017
Finished products - FIFO basis	$	219.4		$	231.9
Less LIFO reserve - finished products	(115.5		)	(167.2		)
Finished products - LIFO basis	103.9			64.7
Store merchandise for resale	107.2			104.8
Materials and supplies	10.4			13.0
Total inventories	$	221.5		$	182.5

At December 31, 2018 and 2017 , the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded the LIFO carrying value by $115.5 million and $167.2 million , respectively.

Note 5 – Property, Plant and Equipment



		December 31, 2018				December 31, 2017
(Millions of dollars)	Estimated Useful Life	Cost		Net		Cost		Net
Land		$	591.9	$	591.9	$	586.5	$	586.5
Pipeline and terminal facilities	16 to 25 years	73.1		41.6		72.0		43.0
Retail gasoline stations	3 to 50 years	1,890.6		1,018.5		1,752.6		968.9
Buildings	20 to 45 years	55.0		41.8		54.6		42.9
Other	3 to 20 years	111.8		54.4		88.5		38.2
		$	2,722.4	$	1,748.2	$	2,554.2	$	1,679.5

Depreciation expense of $133 million , $115 million and $97 million was recorded for the years ended December 31, 2018 , 2017 and 2016 , respectively.

Note 6 – Accounts Payable and Accrued Liabilities

Trade accounts payable and accrued liabilities consisted of the following:



	December 31,
(Millions of dollars)	2018		2017
Trade accounts payable	$	274.9	$	339.6
Excise taxes/withholdings payable	89.7		89.4
Accrued insurance obligations	21.8		21.4
Accrued taxes other than income	26.6		25.3
Other	43.9		37.7
Accounts payable and accrued liabilities	$	456.9	$	513.4

F-13

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 — Long-Term Debt

Long-term debt consisted of the following:



	December 31,
(Millions of dollars)	2018			2017
6.00% senior notes due 2023 (net of unamortized discount of $4.1 at 2018 and $5.0 at 2017)	$	495.9		$	495.0
5.625% senior notes due 2027 (net of unamortized discount of $3.1 at 2018 and $3.5 at 2017)	296.9			296.5
Term loan due 2020 (effective rate of 5.0% at 2018 and 4.15% at 2017 )	72.0			92.0
Capitalized lease obligations, vehicles, due through 2022	2.3			2.4
Unamortized debt issuance costs	(3.8		)	(5.1		)
Total long-term debt	863.3			880.8
Less current maturities	21.2			19.9
Total long-term debt, net of current	$	842.1		$	860.9

Senior Notes

On August 14, 2013, Murphy Oil USA, Inc., our primary operating subsidiary, issued 6.00% Senior Notes due 2023 (the “2023 Senior Notes”) in an aggregate principal amount of $500 million . The 2023 Senior Notes are fully and unconditionally guaranteed by Murphy USA, and are guaranteed by certain 100% owned subsidiaries that guarantee our credit facilities. The indenture governing the 2023 Senior Notes contains restrictive covenants that limit, among other things, the ability of Murphy USA, Murphy Oil USA, Inc. and the restricted subsidiaries to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates or merge with or into other entities.

Credit Facilities and Term Loan

On August 30, 2013, we entered into a credit agreement, which provides for a committed $450 million asset-based loan (ABL) facility (with availability subject to the borrowing base described below) and a $150 million term facility. It also provided for a $200 million uncommitted incremental facility. On September 2, 2014, we amended the credit agreement to extend the maturity date to September 2, 2019 and amend the terms of the various covenants. On March 10, 2016, we amended the agreement to extend the effective date of the ABL to March 10, 2021 , added a $200 million term loan facility that was immediately drawn down and is due on March 10, 2020 and requires quarterly principal payments of $10 million that began July 1, 2016 (now $5 million per quarter), and reduced the uncommitted incremental facility to $150 million .

The borrowing base is expected, at any time of determination, to be an amount (net of reserves) equal to the sum of:


•	100% of eligible cash at such time, plus


•	90% of eligible credit card receivables at such time, plus


•	90% of eligible investment grade accounts, plus

F-14

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


•	85% of eligible other accounts, plus


•	80% of eligible product supply/wholesale refined products inventory at such time, plus


•	75% of eligible retail refined products inventory at such time, plus

The ABL facility includes a $200 million sublimit for the issuance of letters of credit. Letters of credit issued under the ABL facility reduce availability under the ABL facility.

Interest payable on the credit facilities is based on either:


•	the London interbank offered rate, adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”); or


•	the Alternate Base Rate, which is defined as the highest of (a) the prime rate, (b) the federal funds effective rate from time to time plus 0.50% per annum and (c) the one-month Adjusted LIBO Rate plus 1.00% per annum,

The interest rate period with respect to the Adjusted LIBO Rate interest rate option can be set at one -, two -, three -, or six -months as selected by us in accordance with the terms of the credit agreement.

The credit agreement contains restrictions on certain payments, including dividends, when availability under the credit agreement is less than or equal to the greater of $100 million and 25% of the lesser of the revolving commitments and the borrowing base and our fixed charge coverage ratio is less than 1.0 to 1.0 (unless availability under the credit agreement is greater than $100 million and 40% of the lesser of the revolving commitments and the borrowing base). As of December 31, 2018 , our ability to make restricted payments was not limited as our fixed charge coverage ratio was greater than 1.0 to 1.0.

F-15

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 — Asset Retirement Obligations (ARO)

The majority of the ARO recognized by the Company at December 31, 2018 and 2017 related to the estimated costs to dismantle and abandon certain of its retail gasoline stations. The Company has not recorded an ARO for certain of its marketing assets because sufficient information is presently not available to estimate a range of potential settlement dates for the obligation. These assets are consistently being upgraded and are expected to be operational into the foreseeable future. In these cases, the obligation will be initially recognized in the period in which sufficient information exists to estimate the obligation.

A reconciliation of the beginning and ending aggregate carrying amount of the ARO is shown in the following table.



	December 31,
(Millions of dollars)	2018			2017
Balance at beginning of period	$	28.2		$	26.2
Accretion expense	2.0			1.8
Settlements of liabilities	(0.3		)	(0.3		)
Liabilities incurred	0.8			0.5
Balance at end of period	$	30.7		$	28.2

The estimation of future ARO is based on a number of assumptions requiring professional judgment. The Company cannot predict the type of revisions to these assumptions that may be required in future periods due to the lack of availability of additional information.

Note 9 — Income Taxes

The components of income from continuing operations before income taxes for each of the three years ended December 31, 2018 and income tax expense (benefit) attributable thereto were as follows:



	Years Ended December 31,
(Millions of dollars)	2018		2017			2016
Income (loss) from continuing operations before income taxes	$	273.9	$	240.1		$	352.1
Income tax expense (benefit)
Federal - Current	$	18.4	39.2			74.9
Federal - Deferred	31.0		(50.7		)	38.8
State - Current and deferred	10.9		6.3			16.9
Total	$	60.3	$	(5.2	)	$	130.6

The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax expense (benefit).



	Years Ended December 31,
(Millions of dollars)	2018			2017			2016
Income tax expense based on the U.S. statutory tax rate	$	57.5		$	84.0		$	123.2
State income taxes, net of federal benefit	8.3			3.0			11.5
Effect of U.S. tax law change	—			(88.9		)	—
Other, net	(5.5		)	(3.3		)	(4.1		)
Total	$	60.3		$	(5.2	)	$	130.6

F-16

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

An analysis of the Company’s deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017 showing the tax effects of significant temporary differences is as follows:



	December 31,
(Millions of dollars)	2018			2017
Deferred tax assets
Property costs and asset retirement obligations	$	3.3		$	2.8
Employee benefits	6.3			4.4
Other deferred tax assets	2.6			3.5
Total gross deferred tax assets	12.2			10.7
Deferred tax liabilities
Accumulated depreciation and amortization	(171.6		)	(142.1		)
State deferred taxes	(25.9		)	(18.9		)
Other deferred tax liabilities	(6.9		)	(3.9		)
Total gross deferred tax liabilities	(204.4		)	(164.9		)
Net deferred tax liabilities	$	(192.2	)	$	(154.2	)

In management’s judgment, the net deferred tax assets in the preceding table will more likely than not be realized as reductions of future taxable income or by utilizing available tax planning strategies.

In December 2017, the Tax Cuts and Jobs Act ("the Act") was enacted, which made major changes to the Federal income tax system for corporations and individuals. Two key corporate provisions of the Act that impacted the Company in 2017 were the reduction of the Federal corporate income tax rate from 35% to 21% and the increase of Federal bonus depreciation from 50% to 100% on certain qualifying assets retroactive to September 27, 2017. As a result, the Company calculated the impact of the Act in its year-end income tax provision in accordance with its understanding of the Act and guidance available as of the date of the filing and as a result recorded $88.9 million as a tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount related primarily to the remeasurement of certain deferred tax assets and liabilities based on the rates of which they are expected to reverse in the future.

In conjunction with the effectiveness of the Act, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the implications of U.S. GAAP in situations where the registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company made its best estimate and recorded provisional amounts related to certain equity and fixed asset temporary differences based on available information as of December 31, 2017. These amounts were finalized in the fourth quarter of 2018 and with immaterial adjustments being recorded as a component of tax expense.

The Company was included in Murphy Oil’s tax returns for the periods prior to separation and include state jurisdictions that are subject to audit by taxing authorities. These audits often take years to complete and settle. As of December 31, 2018 , the earliest year remaining open for Federal audit and/or settlement is 2015 and for the states it ranges from 2013 - 2017 . Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future periods from resolution of outstanding unsettled matters.

The FASB’s rules for accounting for income tax uncertainties clarify the criteria for recognizing uncertain income tax benefits and require additional disclosures about uncertain tax positions. Under U.S. GAAP the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement. Liabilities associated with uncertain income tax positions are included in Deferred Credits and Other Liabilities in the Consolidated Balance Sheets.

F-17

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the year ended December 31, 2018 and 2017 is shown in the following table.



	Year Ended December 31,
(Millions of dollars)	2018			2017
Balance at January 1	$	4.4		$	7.9
Additions for tax positions related to prior years	—			4.4
Additions for tax positions related to current year	0.2			—
Settlements with taxing authorities	(3.9		)	(5.5		)
Expiration of statutes of limitation	—			(2.4		)
Balance at December 31	$	0.7		$	4.4

All additions or reductions to the above liability affect the Company’s effective tax rate in the respective period of change. The Company accounts for any applicable interest and penalties on uncertain tax positions as a component of income tax expense. Income tax expense for the years ended December 31, 2018 , 2017 and 2016 included interest and penalties of $(1.6) million , $0.4 million , and $1.5 million , respectively, associated with uncertain tax positions.

During the next twelve months, the Company currently expects to add immaterial amounts to the liability for uncertain taxes for 2019 events. Although existing liabilities could be reduced by settlement with taxing authorities or lapse due to statute of limitations, the Company believes that the changes in its unrecognized tax benefits due to these events will not have a material impact on the Consolidated Income Statement during 2019 .

We adopted ASU 2016-09 on January 1, 2017, which requires the excess tax benefits or deficiencies to be reflected in the Consolidated Statements of Income as a component of the provision for income taxes whereas they previously were recognized in paid-in-capital. Total excess tax benefits recognized in the twelve months ended December 31, 2018 and 2017 was $2.5 million and $2.2 million , respectively.

Note 10 — Incentive Plans

Prior to the separation, our employees participated in the Murphy Oil 2007 Long-Term Incentive Plan (the “2007 Plan”) and the Murphy Oil 2012 Long-Term Incentive Plan (the “2012 Plan”) and received Murphy Oil restricted stock awards and options to purchase shares of Murphy Oil common stock. While participating in these two plans, costs resulting from share-based payment transactions were allocated and recognized as an expense in the financial statements using a fair value-based measurement method over the periods that the awards vested.

2013 Long-Term Incentive Plan

Effective August 30, 2013, certain of our employees began to participate in the Murphy USA 2013 Long-Term Incentive Plan, which was subsequently amended and restated effective as of February 12, 2014 (the “MUSA 2013 Plan”). The MUSA 2013 Plan authorizes the Executive Compensation Committee of our Board of Directors (“the Committee”) to grant non-qualified or incentive stock options, stock appreciation rights, stock awards (including restricted stock and restricted stock unit awards), cash awards, and performance awards to our employees. Prior to the amendment and restatement of the MUSA 2013 Plan on February 12, 2014, 10 million shares of MUSA common stock were authorized to be delivered under the MUSA 2013 Plan over the life of the plan. Pursuant to the amendment and restatement of the plan effective as of February 12, 2014, this was reduced to 5.5 million shares of common stock. No more than 1 million shares of common stock may be awarded to any one employee, subject to adjustment for changes in capitalization. The maximum cash amount payable pursuant to any “performance-based” award to any participant in any calendar year is $5 million .

In connection with the separation, stock compensation awards granted under the 2007 Plan and the 2012 Plan by Murphy Oil (pre-separation awards) were adjusted or substituted as follows:


•	Vested stock options were equitably adjusted so that the grantee holds more options to purchase Murphy Oil common stock at a lower strike price.

F-18

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


•	Unvested stock options and stock appreciation rights held by MUSA employees were replaced with substitute awards of options to purchase shares of MUSA common stock.


•	Unvested restricted stock units will be replaced with adjusted, substitute awards for restricted stock units of MUSA common stock. The new awards of restricted stock are intended to generally preserve the intrinsic value of the original award determined as of the separation and distribution date.


•	Vesting periods of awards were unaffected by the adjustment and substitution, except that for vested Murphy Oil stock options the MUSA employees have until the earlier of two years from the date of the separation or the stated expiration date of the option to exercise the award.

Awards granted in connection with the adjustment and substitution of awards originally issued under the 2007 Plan and the 2012 Plan are a part of the MUSA 2013 Plan and reduce the maximum number of shares of common stock available for delivery under the MUSA 2013 Plan. During the period from August 30, 2013 to December 31, 2018 , the Company granted a total of 2,053,499 awards from the MUSA 2013 Plan which leaves 3,446,501 remaining shares to be granted in future years (after consideration of the amendments made to the MUSA 2013 Plan in February 2014 by the Board of Directors). At present, the Company expects to issue all shares that vest out of existing treasury shares rather than issuing new common shares.

2013 Stock Plan for Non-employee Directors

Effective August 8, 2013, Murphy USA adopted the 2013 Murphy USA Stock Plan for Non-employee Directors (the “Directors Plan”). The directors for Murphy USA are compensated with a mixture of cash payments and equity-based awards. Awards under the Directors Plan may be in the form of restricted stock, restricted stock units, stock options, or a combination thereof. An aggregate of 500,000 shares of common stock shall be available for issuance of grants under the Directors Plan. Since 2013, 110,543 time-based restricted stock units have been granted under the terms of the Directors Plan which leaves 389,457 shares available to be granted in the future.

Amounts recognized in the financial statements by the Company with respect to all share-based plans are shown in the following table. All expense prior to August 30, 2013 was incurred under the 2007 Plan and the 2012 Plan while all amounts after August 30, 2013 were incurred in the MUSA 2013 Plan and the Directors Plan.



	December 31,
(Millions of dollars)	2018		2017		2016
Compensation charged against income before income tax benefit	$	9.2	$	7.5	$	9.3
Related income tax benefit recognized in income	$	1.9	$	2.6	$	3.3

As of December 31, 2018 , there was $12.2 million in compensation costs to be expensed over approximately the next 1.7 years related to unvested share-based compensation arrangements granted by the Company. Employees who have stock options are required to net settle their options in shares, after applicable statutory withholding taxes are considered, upon each stock option exercise. Therefore, no cash is received upon exercise. Total income tax benefits realized from tax deductions related to stock option exercises under share-based payment arrangements were $2.1 million , $0.6 million , and $1.6 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively.

STOCK OPTIONS – The Committee fixes the option price of each option granted at no less than fair market value (FMV) on the date of the grant and fixes the option term at no more than 7 years from such date. Each option granted through December 31, 2013 under the MUSA 2013 Plan was nonqualified and was issued to replace awards of Murphy Oil that were previously granted to employees of the Company prior to the separation from Murphy Oil. The remaining term of each option granted mirrored the remaining term of the original award that it replaced and the exercise price was adjusted based on the terms of the Employee Matters Agreement entered into between the Company and Murphy Oil in connection with the separation. Post separation in 2013, the only awards issued were to replace the unvested awards of Murphy Oil that were forfeited in conjunction with the separation. Therefore, the accounting for those awards was a continuation of the Murphy Oil fair value that was previously calculated using the Black-Scholes pricing model and used the following original assumptions to calculate the fair value used for expense purposes.

F-19

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Following are the assumptions used originally by Murphy Oil to value the original awards.



	Years Ended December 31,
	2012 and 2011
Fair value per option grant	12.37 - 20.34
Assumptions
Dividend yield	1.80% - 2.27%
Expected volatility	37.00% - 39.62%
Risk-free interest rate	0.55% - 2.10%
Expected life	4.00 yrs. - 5.20 yrs.

As a result of the separation from Murphy Oil, the unvested Murphy Oil options were replaced with an appropriate number of Company options bearing an exercise price that was adjusted to preserve the intrinsic value near the date of the separation in connection with the terms of the Employee Matters Agreement. The grant date fair values of the options replaced with MUSA 2013 Plan awards ranged from $32.53 to $40.25 . Because of these adjustments, no further Black-Scholes fair values were required to be calculated for the post separation period. The adjustment and substitution of the stock compensation awards occurred in conjunction with the distribution of MUSA common stock to Murphy Oil stockholders. As a result, no grant, exercise, or cancellation activity occurred on MUSA stock compensation awards during the year ended December 31, 2013.

In February 2018 , the Committee granted nonqualified stock options to certain employees of the Company.

Following are the assumptions used by the Company to value the original awards:



	Year Ended December 31,
	2018			2017			2016
Fair value per option grant	$	17.32		$	15.45		$	16.08
Assumptions
Dividend yield	—			—			—
Expected volatility	27.0		%	26.0		%	26.1		%
Risk-free interest rate	2.43		%	1.65		%	1.26		%
Expected life	3.9 years			4.2 years			5.7 years

Changes in options outstanding for Company employees during the period from December 31, 2015 to December 31, 2018 are presented in the following table:



	Number of Shares		Average Exercise Price
Outstanding at December 31, 2015	465,756		$	42.22
Granted at FMV	96,500		59.11
Vested and issued	(126,969	)	34.48
Forfeited	(14,350	)	58.28
Outstanding at December 31, 2016	420,937		47.88
Granted at FMV	114,800		65.75
Exercised	(43,887	)	37.41
Forfeited	(25,950	)	63.63
Outstanding at December 31, 2017	465,900		52.39
Granted at FMV	97,600		71.07
Exercised	(220,938	)	39.48
Forfeited	(32,200	)	69.21
Outstanding at December 31, 2018	310,362		$	65.71

Exercisable at December 31, 2016	218,937		$	38.32
Exercisable at December 31, 2017	254,375		$	42.80
Exercisable at December 31, 2018	100,662		$	64.17

F-20

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional information about stock options outstanding at December 31, 2018 is shown below:



	Options Outstanding				Options Exercisable
Range of Exercise Prices per Option	No. of Options	Avg. Life Remaining in Years	Aggregate Intrinsic Value		No. of Options	Avg. Life Remaining in Years	Aggregate Intrinsic Value
$32.53 to $39.99	7,062	3.2	$	280,472	7,062	3.2	$	280,472
$40.00 to $59.99	74,800	4.1	1,311,244		35,500	4.1	622,315
$60.00 to $69.99	94,000	5.1	1,023,660		—	0.0	—
$70.00 to $79.99	134,500	4.8	776,363		58,100	3.0	352,667
	310,362	4.7	$	3,391,739	100,662	3.4	$	1,255,454

RESTRICTED STOCK UNITS (MUSA 2013 Plan) – The Committee has granted time based restricted stock units (RSUs) as part of the compensation plan for its executives and certain other employees since its inception. During 2018 , the Committee granted time-based restricted stock units to certain employees and the weighted average grant date fair value was determined to be $71.91 per unit. These awards were granted under the MUSA 2013 Plan and vest over 3 years . Changes in restricted stock units outstanding for Company employees during the period from December 31, 2015 to December 31, 2018 are presented in the following table:



(Number of units)	Employee RSU's
Outstanding at December 31, 2015	356,300
Granted at FMV	74,325
Vested and issued	(142,392	)
Forfeited	(18,888	)
Outstanding at December 31, 2016	269,345
Granted at FMV	111,471
Vested and issued	(60,688	)
Forfeited	(61,112	)
Outstanding at December 31, 2017	259,016
Granted FMV	69,179
Vested and issued	(96,815	)
Forfeited	(37,902	)
Outstanding at December 31, 2018	193,478

PERFORMANCE-BASED RESTRICTED STOCK UNITS (MUSA 2013 Plan) – In February 2018 , the Committee awarded performance-based restricted stock units (performance units) to certain employees. Half of the performance units vest based on a 3 -year return on average capital employed (ROACE) calculation and the other half vest based on a 3 -year total shareholder return (TSR) calculation that compares MUSA to a group of 16 peer companies. The portion of the awards that vest based on TSR qualify as a market condition and must be valued using a Monte Carlo valuation model. For the TSR portion of the awards, the fair value was determined to be $87.60 per unit. For the ROACE portion of the awards, the valuation was based on the grant date fair value of $71.00 per unit and the number of awards will be periodically assessed to determine the probability of vesting.

F-21

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in performance-based restricted stock units outstanding for Company employees during the period from December 31, 2015 to December 31, 2018 are presented in the following table:



(Number of units)	Employee PSU's
Outstanding at December 31, 2015	102,394
Granted	53,300
Vested and issued	—
Forfeited	(7,954	)
Outstanding at December 31, 2016	147,740
Granted	53,800
Vested and issued	(60,816	)
Forfeited	(16,000	)
Outstanding at December 31, 2017	124,724
Granted	66,284
Vested and issued	(51,296	)
Forfeited	(15,300	)
Outstanding at December 31, 2018	124,412

RESTRICTED STOCK UNITS (Directors Plan) – The Committee has also granted time based RSUs to the non-employee directors of the Company as part of their overall compensation package for being a member of the Board of Directors and the grant fair value was $69.42 per unit. These awards typically vest at the end of three years . Changes in restricted stock units outstanding for Company non-employee directors during the period from December 31, 2015 to December 31, 2018 are presented in the following table:



(Number of units)	Director RSU's
Outstanding at December 31, 2015	63,774
Granted at FMV	19,900
Vested and issued	(34,332	)
Forfeited	—
Outstanding at December 31, 2016	49,342
Granted at FMV	15,948
Vested and issued	(19,944	)
Forfeited	—
Outstanding at December 31, 2017	45,346
Granted at FMV	10,921
Vested and issued	(15,250	)
Forfeited	—
Outstanding at December 31, 2018	41,017

Note 11 — Employee and Retiree Benefit Plans

THRIFT PLAN – At the time of the spin-off, Murphy USA set up a new qualified defined contribution plan for full-time employees with an asset transfer from the Murphy Oil defined contribution plan. Most full-time employees of the Company may participate in savings plans by contributing up to a specified percentage of their base pay. The Company matches contributions at 100% of each employee’s contribution with a maximum match of 6% . In addition, the Company makes profit sharing contributions on an annual basis. Eligible employees receive a stated percentage of their base and incentive pay of 5% , 7% , or 9% determined on a formula that is based on a combination of age and years of service. The Company’s combined expenses related for this plan were $9.7 million in 2018 , $12.1 million in 2017 and $10.5 million in 2016 .

F-22

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROFIT SHARING PLAN – Eligible part-time employees may participate in the Company’s noncontributory profit sharing plan. Each year, the Company may make a discretionary employer contribution in an amount determined and authorized at the discretion of the Board of Directors. Eligible employees receive an allocation based on their compensation earned for the year the contribution is allocated. The Company’s expenses related to this plan were $(0.8) million in 2018 , $2.2 million in 2017 and $1.8 million in 2016 .

Note 12 — Financial Instruments and Risk Management

DERIVATIVE INSTRUMENTS — The Company makes limited use of derivative instruments to manage certain risks related to commodity prices. The use of derivative instruments for risk management is covered by operating policies and is closely monitored by the Company’s senior management. The Company does not hold any derivatives for speculative purposes and it does not use derivatives with leveraged or complex features. Derivative instruments are traded primarily with creditworthy major financial institutions or over national exchanges such as the New York Mercantile Exchange (“NYMEX”). As of December 31, 2018 , all current derivative activity is immaterial.

At December 31, 2018 and 2017 cash deposits of $1.0 million and $2.7 million , respectively, related to commodity derivative contracts were reported in Prepaid expenses and other current assets in the Consolidated Balance Sheets. These cash deposits have not been used to reduce the reported net liabilities on the derivative contracts at December 31, 2018 and 2017 .

Note 13 – Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average of common shares outstanding during the period. Diluted earnings per common share adjusts basic earnings per common share for the effects of stock options and restricted stock in the periods where such items are dilutive.

On August 30, 2013, 46,743,316 shares of our common stock were distributed to the shareholders of Murphy Oil in connection with the separation. For comparative purposes, we have assumed this amount to be outstanding as of the beginning of each prior period prior to the separation presented in the calculation of weighted average shares outstanding.

During May 2014, the Company authorized a share repurchase program that was approved by the Board of Directors for approximately $50 million worth of common stock of the Company. At the completion of this program, the Company had acquired 1,040,636 shares of common stock for an average price of $48.07 per share including brokerage fees. In October 2014, the Company announced a $250 million share repurchase program that was completed prior to the end of 2015. In this repurchase, 4,196,349 shares were repurchased for an average price of $59.58 per share.

On January 25, 2016, the Company announced that it would proceed with an independent growth plan in which we will concentrate on acquiring land from third parties rather than acquiring land directly from Walmart. In conjunction with this announcement, the Board of Directors approved a strategic allocation of capital for the Company to pursue new additional growth opportunities and to undertake a share repurchase program of the Company's common stock. The Board authorized up to $500 million in total for the two capital programs through December 31, 2017. For the year ended December 31, 2017, the Company acquired 2,586,190 shares of common stock for an average price of $68.34 per share including brokerage fees which included completion of the $500 million repurchase program. Based on market conditions and other factors, the Company repurchased an additional 379,054 common shares for $29 million , with an average price of $77.20 , during the fourth quarter of 2017. Upon completion of the most recent repurchase plan authorized by the Murphy USA Inc. Board of Directors in December 2017, the Company remains committed to share repurchases under quarterly allocations in line with its past practice, subject to market conditions and cash availability. During 2018 the Company acquired 1,994,632 common shares for $144.4 million , with an average price of $72.39 per share including brokerage fees.

F-23

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of basic and diluted earnings per share computations for the years ended December 31, 2018 , 2017 and 2016 (in millions, except per share amounts):



	Years ended December 31,
(Millions of dollars except per share amounts)	2018		2017		2016
Earnings per common share:
Net income per share - basic
Net income attributable to common stockholders	$	213.6	$	245.3	$	221.5

Weighted average common shares outstanding (in thousands)	32,674		35,816		39,269
Earnings per common share	$	6.54	$	6.85	$	5.64

Earnings per common share - assuming dilution:
Net income per share - diluted
Net income attributable to common stockholders	$	213.6	$	245.3	$	221.5
Weighted average common shares outstanding (in thousands)	32,674		35,816		39,269
Common equivalent shares:
Share-based awards	309		340		377
Weighted average common shares outstanding - assuming dilution (in thousands)	32,983		36,156		39,646

Earnings per common share assuming dilution	$	6.48	$	6.78	$	5.59

We have excluded from the earnings-per-share calculation certain stock options and shares that are considered to be anti-dilutive under the treasury stock method. For the reported periods, the number of time-based restrictive stock units, performance based units and non-qualified stock options that are excluded due to their anti-dilutive nature is immaterial.

Note 14 — Other Financial Information

CASH FLOW DISCLOSURES — Cash income taxes paid (collected), net of refunds, were $17.4 million , $51.7 million and $70.8 million for the three years ended December 31, 2018 , 2017 and 2016 , respectively. Interest paid, net of amounts capitalized, was $50.4 million , $41.5 million and $37.1 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.

CHANGES IN WORKING CAPITAL -



(Millions of dollars)	2018			2017			2016
Accounts receivable	$	86.6		$	(41.7	)	$	(47.2	)
Inventories	(39.0		)	(16.3		)	2.1
Prepaid expenses and other current assets	11.4			(5.2		)	13.7
Accounts payable and accrued liabilities	(56.7		)	26.9			83.4
Income taxes payable	—			(0.6		)	1.7
Net decrease (increase) in noncash operating working capital	$	2.3		$	(36.9	)	$	53.7

Note 15 — Assets and Liabilities Measured at Fair Value

The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheets. The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality. Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

F-24

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Level 2 inputs are observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.

At the balance sheet date, the fair value of derivatives contracts was determined using NYMEX quoted values but were immaterial. The carrying value of the Company’s Cash and cash equivalents, Accounts receivable-trade, and Trade accounts payable and accrued liabilities approximates fair value.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at December 31, 2018 and 2017 . The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The table excludes Cash and cash equivalents, Accounts receivable-trade, and Trade accounts payable and accrued liabilities, all of which had fair values approximating carrying amounts. The fair value of Current and Long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities. The Company has off-balance sheet exposures relating to certain financial guarantees and letters of credit. The fair value of these, which represents fees associated with obtaining the instruments, was nominal.



	December 31, 2018						December 31, 2017
	Carrying						Carrying
(Millions of dollars)	Amount			Fair Value			Amount			Fair Value
Financial liabilities
Current and long-term debt	$	(863.3	)	$	(866.7	)	$	(880.8	)	$	(904.9	)

Note 16 – Commitments

The Company leases land, gasoline stations, and other facilities under operating leases. During the next five years, expected future rental payments under all operating leases are approximately $13.7 million in 2019 , $13.3 million in 2020 , $12.5 million in 2021 , $11.7 million in 2022 , and $11.1 million in 2023 . Rental expense for noncancelable operating leases, including contingent payments when applicable, was $15.2 million in 2018 , $14.0 million in 2017 and $23.2 million in 2016 .

Commitments for capital expenditures were approximately $240.5 million at December 31, 2018 , including $219.5 million approved for potential construction of future Murphy USA and Murphy Express gasoline stations (including land) at year-end, along with $15.4 million for improvements of existing stations, to be financed with our operating cash flow and/or incurrence of indebtedness.

The Company has certain take-or-pay contracts primarily to supply our terminals with a noncancelable remaining term of 2.7 years . At December 31, 2018 , our minimum annual payments under our take-or-pay contracts are estimated to be $7.9 million in 2019 , $7.9 million in 2020 and $4.9 million in 2021 .

Note 17 — Contingencies

The Company’s operations and earnings have been and may be affected by various forms of governmental action. Examples of such governmental action include, but are by no means limited to: tax increases and retroactive tax claims; import and export controls; price controls; allocation of supplies of crude oil and petroleum products and other goods; laws and regulations intended for the promotion of safety and the protection and/or remediation of the environment; governmental support for other forms of energy; and laws and regulations affecting the Company’s relationships with employees, suppliers, customers, stockholders and others. Because governmental actions are often motivated by political considerations, may be taken without full consideration of their consequences, and may be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.

ENVIRONMENTAL MATTERS AND LEGAL MATTERS — Murphy USA is subject to numerous federal, state and local laws and regulations dealing with the environment. Violation of such environmental laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions and other sanctions. A discharge of hazardous substances into the environment could, to the extent such event is not insured, subject the Company to substantial expense, including both the cost to comply with applicable regulations and claims by

F-25

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

neighboring landowners and other third parties for any personal injury, property damage and other losses that might result.

The Company currently owns or leases, and has in the past owned or leased, properties at which hazardous substances have been or are being handled. Although the Company believes it has used operating and disposal practices that were standard in the industry at the time, hazardous substances may have been disposed of or released on or under the properties owned or leased by the Company or on or under other locations where they have been taken for disposal. In addition, many of these properties have been operated by third parties whose management of hazardous substances was not under the Company’s control. Under existing laws, the Company could be required to remediate contaminated property (including contaminated groundwater) or to perform remedial actions to prevent future contamination. Certain of these contaminated properties are in various stages of negotiation, investigation, and/or cleanup, and the Company is investigating the extent of any related liability and the availability of applicable defenses. With the sale of the U.S. refineries in 2011, Murphy Oil retained certain liabilities related to environmental matters. Murphy Oil also obtained insurance covering certain levels of environmental exposures. With respect to the previously owned refinery properties, Murphy Oil retained those liabilities in the Separation and Distribution agreement that was entered into related to the separation on August 30, 2013. With respect to any remaining potential liabilities, the Company believes costs related to these sites will not have a material adverse effect on Murphy USA’s net income, financial position or liquidity in a future period.

Certain environmental expenditures are likely to be recovered by the Company from other sources, primarily environmental funds maintained by certain states. Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries at December 31, 2018 , however certain jurisdictions provide reimbursement for these expenses which have been considered in recording the net exposure. The U.S. Environmental Protection Agency (EPA) currently considers the Company a Potentially Responsible Party (PRP) at one Superfund site. As to the site, the potential total cost to all parties to perform necessary remedial work at this site may be substantial. However, based on current negotiations and available information, the Company believes that it is a de minimis party as to ultimate responsibility at the Superfund site. Accordingly, the Company has not recorded a liability for remedial costs at the Superfund site at December 31, 2018 . The Company could be required to bear a pro rata share of costs attributable to nonparticipating PRPs or could be assigned additional responsibility for remediation at this site or other Superfund sites. The Company believes that its share of the ultimate costs to clean-up this site will be immaterial and will not have a material adverse effect on its net income, financial position or liquidity in a future period.

Based on information currently available to the Company, the amount of future remediation costs to be incurred to address known contamination sites is not expected to have a material adverse effect on the Company’s future net income, cash flows or liquidity. However, there is the possibility that additional environmental expenditures could be required to address contamination, including as a result of discovering additional contamination or the imposition of new or revised requirements applicable to known contamination.

Murphy USA is engaged in a number of other legal proceedings, all of which the Company considers routine and incidental to its business. Based on information currently available to the Company, the ultimate resolution of those other legal matters is not expected to have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.

The Company was contacted by the State of Mississippi to settle alleged violations of the state's Petroleum Underground Storage Tank system requirements at several of the Company's facilities. We have settled this matter with the state's Department of Environmental Quality and paid a civil penalty in June 2018 of $0.1 million . The resolution of this matter did not have a material impact on our results of operations or financial condition.

INSURANCE — The Company maintains insurance coverage at levels that are customary and consistent with industry standards for companies of similar size. Murphy USA maintains statutory workers compensation insurance with a deductible of $1.0 million per occurrence, general liability insurance with a deductible of $3.0 million per occurrence, and auto liability insurance with a deductible of $0.3 million per occurrence. As of December 31, 2018 , there were a number of outstanding claims that are of a routine nature. The estimated incurred but unpaid liabilities relating to these claims are included in Trade account payables and accrued liabilities on the Consolidated Balance Sheets. While the ultimate outcome of these claims cannot presently be determined, management believes that the accrued liability of $19.8 million will be sufficient to cover the related liability and that the ultimate disposition of these claims will have no material effect on the Company’s financial position and results of operations.

F-26

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has obtained insurance coverage as appropriate for the business in which it is engaged, but may incur losses that are not covered by insurance or reserves, in whole or in part, and such losses could adversely affect our results of operations and financial position.

TAX MATTERS — Murphy USA is subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities because of these audits may subject us to interest and penalties.

OTHER MATTERS — In the normal course of its business, the Company is required under certain contracts with various governmental authorities and others to provide financial guarantees or letters of credit that may be drawn upon if the Company fails to perform under those contracts. At December 31, 2018 , the Company had contingent liabilities of $16.1 million on outstanding letters of credit. The Company has not accrued a liability in its balance sheet related to these financial guarantees and letters of credit because it is believed that the likelihood of having these drawn is remote.

Note 18 — Recent Accounting and Reporting Rules

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. The Company will adopt ASU 2016-02 January 1, 2019 using the modified retrospective transition approach, including certain practical expedients, and is in the process of implementing changes to its systems and processes in conjunction with its review of lease agreements. We have implemented a third-party software solution to assist with the accounting under the new standard and are nearing completion of our testing and optimization of the system. The Company is also finalizing procedures to validate the completeness of its inventory of arrangements that meet the new definition of an operating lease, in parallel to documenting internal policy decisions and permitted elections. The most significant change at the date of adoption will be the recognition of both right-of-use assets and deferred lease liabilities of between $100 - $115 million on its balance sheet primarily for existing real estate operating leases as well as additional required disclosures.

F-27

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 19 — Business Segments

Our operations include the sale of retail motor fuel products and convenience merchandise along with the wholesale and bulk sale capabilities of our product supply and wholesale group. As the primary purpose of the product supply and wholesale group is to support our retail operations and provide fuel for their daily operation, the bulk and wholesale fuel sales are secondary to the support functions played by these groups. As such, they are all treated as one segment for reporting purposes as they sell the same products. This Marketing segment contains essentially all of the revenue generating activities of the Company. Results not included in the reportable segment include Corporate and Other Assets. The reportable segment was determined based on information reviewed by the Chief Operating Decision Maker.



Segment Information				Corporate and
(Millions of dollars)	Marketing			Other Assets		Consolidated
Year ended December 31, 2018
Segment income (loss)	$	214.2		(0.6	)	$	213.6
Revenues from external customers	14,362.3			0.6		14,362.9
Interest income	—			1.5		1.5
Interest expense	(0.1		)	(52.8	)	(52.9		)
Income tax expense (benefit)	69.5			(9.2	)	60.3
Significant noncash charges (credits)
Depreciation and amortization	124.5			9.5		134.0
Accretion of asset retirement obligations	2.0			—		2.0
Deferred and noncurrent income taxes (benefits)	39.0			(1.1	)	37.9
Additions to property, plant and equipment	169.2			24.6		193.8
Total assets at year-end	$	2,012.0		348.8		$	2,360.8



Year ended December 31, 2017
Segment income (loss)	$	295.3		(50.0	)	$	245.3
Revenues from external customers	12,826.2			0.4		12,826.6
Interest income	—			1.3		1.3
Interest expense	(0.1		)	(46.6	)	(46.7		)
Income tax expense (benefit)	(2.9		)	(2.3	)	(5.2		)
Significant noncash charges (credits)
Depreciation and amortization	110.5			6.4		116.9
Accretion of asset retirement obligations	1.8			—		1.8
Deferred and noncurrent income taxes (benefits)	(61.3		)	10.9		(50.4		)
Additions to property, plant and equipment	234.0			39.7		273.7
Total assets at year-end	$	2,023.4		307.6		$	2,331.0

Year ended December 31, 2016
Segment income (loss)	$	249.8		(28.3	)	$	221.5
Revenues from external customers	11,594.3			0.3		11,594.6
Interest income	—			0.6		0.6
Interest expense	(0.1		)	(39.6	)	(39.7		)
Income tax expense (benefit)	147.2			(16.6	)	130.6
Significant noncash charges (credits)
Depreciation and amortization	92.2			6.4		98.6
Accretion of asset retirement obligations	1.6			—		1.6
Deferred and noncurrent income taxes (benefits)	51.3			(10.9	)	40.4
Additions to property, plant and equipment	239.1			24.8		263.9
Total assets at year-end	$	1,858.0		230.7		$	2,088.7

F-28

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 20 – Guarantor Subsidiaries

Certain of the Company’s 100% owned, domestic subsidiaries (the “Guarantor Subsidiaries”) fully and unconditionally guarantee, on a joint and several basis, certain of the outstanding indebtedness of the Company, including the 6.00% senior notes due 2023 and the 5.625% senior notes due 2027. The following consolidating schedules present financial information on a consolidated basis in conformity with the SEC’s Regulation S-X Rule 3-10(d):

CONSOLIDATING BALANCE SHEET



(Millions of dollars)	December 31, 2018
Assets	Parent Company			Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—		$	184.0	$	0.5		$	—		$	—		$	184.5
Accounts receivable—trade, less allowance for doubtful accounts of $1.1 in 2018	—			138.8		—			—			—			138.8
Inventories, at lower of cost or market	—			221.5		—			—			—			221.5
Prepaid expenses and other current assets	—			25.1		0.2			—			—			25.3
Total current assets	—			569.4		0.7			—			—			570.1
Property, plant and equipment, at cost less accumulated depreciation and amortization of $974.2 in 2018	—			1,745.9		2.3			—			—			1,748.2
Investments in subsidiaries	2,437.0			144.4		—			—			(2,581.4		)	—
Other assets	—			42.5		—			—			—			42.5
Total assets	$	2,437.0		$	2,502.2	$	3.0		$	—		$	(2,581.4	)	$	2,360.8
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt	$	—		$	21.2	$	—		$	—		$	—		$	21.2
Inter-company accounts payable	(0.1		)	203.0		(48.6		)	(154.3		)	—			—
Trade accounts payable and accrued liabilities	—			456.9		—			—			—			456.9
Total current liabilities	(0.1		)	681.1		(48.6		)	(154.3		)	—			478.1
Long-term debt, including capitalized lease obligations	—			842.1		—			—			—			842.1
Deferred income taxes	—			192.2		—			—			—			192.2
Asset retirement obligations	—			30.7		—			—			—			30.7
Deferred credits and other liabilities	—			10.4		—			—			—			10.4
Total liabilities	(0.1		)	1,756.5		(48.6		)	(154.3		)	—			1,553.5
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 shares issued at December 31, 2018)	0.5			—		0.1			—			(0.1		)	0.5
Treasury stock (14,505,681 shares held at December 31, 2018)	(940.3		)	—		—			—			—			(940.3		)
Additional paid in capital (APIC)	1,195.1			572.8		52.0			87.5			(1,368.4		)	539.0
Retained earnings	2,181.8			172.9		(0.5		)	66.8			(1,212.9		)	1,208.1
Total stockholders' equity	2,437.1			745.7		51.6			154.3			(2,581.4		)	807.3
Total liabilities and stockholders' equity	$	2,437.0		$	2,502.2	$	3.0		$	—		$	(2,581.4	)	$	2,360.8

F-29

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING BALANCE SHEET



(Millions of dollars)	December 31, 2017
Assets	Parent Company			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—		$	169.9		$	0.1		$	—		$	—		$	170.0
Accounts receivable—trade, less allowance for doubtful accounts of $1.1 in 2017	—			225.2			—			—			—			225.2
Inventories, at lower of cost or market	—			182.5			—			—			—			182.5
Prepaid expenses and other current assets	—			36.5			—			—			—			36.5
Total current assets	—			614.1			0.1			—			—			614.2
Property, plant and equipment, at cost less accumulated depreciation and amortization of $874.7 in 2017	—			1,678.3			1.2			—			—			1,679.5
Investments in subsidiaries	2,223.4			144.9			—			—			(2,368.3		)	—
Other assets	—			37.3			—			—			—			37.3
Total assets	$	2,223.4		$	2,474.6		$	1.3		$	—		$	(2,368.3	)	$	2,331.0
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt	$	—		$	19.9		$	—		$	—		$	—		$	19.9
Inter-company accounts payable	829.2			(624.1		)	(50.8		)	(154.3		)	—			—
Trade accounts payable and accrued liabilities	—			513.4			—			—			—			513.4
Total current liabilities	829.2			(90.8		)	(50.8		)	(154.3		)	—			533.3
Long-term debt, including capitalized lease obligations	—			860.9			—			—			—			860.9
Deferred income taxes	—			154.2			—			—			—			154.2
Asset retirement obligations	—			28.2			—			—			—			28.2
Deferred credits and other liabilities	—			16.0			—			—			—			16.0
Total liabilities	829.2			968.5			(50.8		)	(154.3		)	—			1,592.6
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 shares issued at December 31, 2017)	0.5			—			0.1			—			(0.1		)	0.5
Treasury stock (12,675,630 shares held at December 31, 2017)	(806.5		)	—			—			—			—			(806.5		)
Additional paid in capital (APIC)	1,205.7			573.1			52.0			87.5			(1,368.4		)	549.9
Retained earnings	994.5			933.0			—			66.8			(999.8		)	994.5
Total stockholders' equity	1,394.2			1,506.1			52.1			154.3			(2,368.3		)	738.4
Total liabilities and stockholders' equity	$	2,223.4		$	2,474.6		$	1.3		$	—		$	(2,368.3	)	$	2,331.0

F-30

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING INCOME STATEMENT



(Millions of dollars)	Year ended December 31, 2018
Operating Revenues	Parent Company		Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Petroleum product sales	$	—	$	11,858.4		$	—		$	—	$	—		$	11,858.4
Merchandise sales	—		2,423.0			—			—		—			2,423.0
Other operating revenues	—		81.5			—			—		—			81.5
Total operating revenues	—		14,362.9			—			—		—			14,362.9
Operating expenses
Petroleum product cost of goods sold	—		11,251.1			—			—		—			11,251.1
Merchandise cost of goods sold	—		2,022.5			—			—		—			2,022.5
Station and other operating expenses	—		541.3			—			—		—			541.3
Depreciation and amortization	—		134.0			—			—		—			134.0
Selling, general and administrative	—		136.2			—			—		—			136.2
Accretion of asset retirement obligations	—		2.0			—			—		—			2.0
Total operating expenses	—		14,087.1			—			—		—			14,087.1
Net settlement proceeds	—		50.4			—			—		—			50.4
Gain (loss) on sale of assets	—		(1.1		)	—			—		—			(1.1		)
Income from operations	—		325.1			—			—		—			325.1
Other income (expense)
Interest income	—		1.5			—			—		—			1.5
Interest expense	—		(52.9		)	—			—		—			(52.9		)
Other nonoperating income/expense	973.7		(972.9		)	(0.6		)	—		—			0.2
Total other income (expense)	973.7		(1,024.3		)	(0.6		)	—		—			(51.2		)
Income from continuing operations before income taxes	973.7		(699.2		)	(0.6		)	—		—			273.9
Income tax expense (benefit)	—		60.4			(0.1		)	—		—			60.3
Income (loss)	973.7		(759.6		)	(0.5		)	—		—			213.6
Equity earnings in affiliates, net of tax	213.6		(0.5		)	—			—		(213.1		)	—
Net Income (Loss)	$	1,187.3	$	(760.1	)	$	(0.5	)	$	—	$	(213.1	)	$	213.6

F-31

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING INCOME STATEMENT



(Millions of dollars)	Year ended December 31, 2017
Operating Revenues	Parent Company		Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Petroleum product sales	$	—	$	10,287.9		$	—	$	—	$	—		$	10,287.9
Merchandise sales	—		2,372.7			—		—		—			2,372.7
Ethanol sales and other	—		166.0			—		—		—			166.0
Total operating revenues	—		12,826.6			—		—		—			12,826.6
Operating Expenses
Petroleum product cost of goods sold	—		9,773.2			—		—		—			9,773.2
Merchandise cost of goods sold	—		1,991.4			—		—		—			1,991.4
Station and other operating expenses	—		514.9			—		—		—			514.9
Depreciation and amortization	—		116.9			—		—		—			116.9
Selling, general and administrative	—		141.2			—		—		—			141.2
Accretion of asset retirement obligations	—		1.8			—		—		—			1.8
Total operating expenses	—		12,539.4			—		—		—			12,539.4
Gain (loss) on sale of assets	—		(3.9		)	—		—		—			(3.9		)
Income from operations	—		283.3			—		—		—			283.3
Other income (expense)
Interest income	—		1.3			—		—		—			1.3
Interest expense	—		(46.7		)	—		—		—			(46.7		)
Other nonoperating income	—		2.2			—		—		—			2.2
Total other income (expense)	—		(43.2		)	—		—		—			(43.2		)
Income from continuing operations before income taxes	—		240.1			—		—		—			240.1
Income tax expense (benefit)	—		(5.2		)	—		—		—			(5.2		)
Income from continuing operations	—		245.3			—		—		—			245.3
Equity earnings in affiliates, net of tax	245.3		—			—		—		(245.3		)	—
Net Income	$	245.3	$	245.3		$	—	$	—	$	(245.3	)	$	245.3

F-32

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING INCOME STATEMENT



(Millions of dollars)	Year ended December 31, 2016
Operating Revenues	Parent Company		Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Petroleum product sales	$	—	$	9,070.6		$	—	$	—	$	—		$	9,070.6
Merchandise sales	—		2,338.6			—		—		—			2,338.6
Ethanol sales and other	—		185.4			—		—		—			185.4
Total operating revenues	—		11,594.6			—		—		—			11,594.6
Operating expenses
Petroleum product cost of goods sold	—		8,604.0			—		—		—			8,604.0
Merchandise cost of goods sold	—		1,974.5			—		—		—			1,974.5
Station and other operating expenses	—		493.3			—		—		—			493.3
Depreciation and amortization	—		98.6			—		—		—			98.6
Selling, general and administrative	—		122.7			—		—		—			122.7
Accretion of asset retirement obligations	—		1.6			—		—		—			1.6
Total operating expenses	—		11,294.7			—		—		—			11,294.7
Gain (loss) on sale of assets	—		88.2			—		—		—			88.2
Income from operations	—		388.1			—		—		—			388.1
Other income (expense)
Interest income	—		0.6			—		—		—			0.6
Interest expense	—		(39.7		)	—		—		—			(39.7		)
Other nonoperating income	—		3.1			—		—		—			3.1
Total other income (expense)	—		(36.0		)	—		—		—			(36.0		)
Income from continuing operations before income taxes	—		352.1			—		—		—			352.1
Income tax expense (benefit)	—		130.6			—		—		—			130.6
Income from continuing operations	—		221.5			—		—		—			221.5
Equity earnings in affiliates, net of tax	221.5		—			—		—		(221.5		)	—
Net Income	$	221.5	$	221.5		$	—	$	—	$	(221.5	)	$	221.5

F-33

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF CASH FLOWS



(Millions of dollars)	Year ended December 31, 2018
Operating Activities	Parent Company			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	1,187.3		$	(760.1	)	$	(0.5	)	$	—	$	(213.1	)	$	213.6
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	—			134.0			—			—		—			134.0
Deferred and noncurrent income tax charges (benefits)	—			37.9			—			—		—			37.9
Accretion of asset retirement obligations	—			2.0			—			—		—			2.0
(Gain) loss from sale of assets	—			1.1			—			—		—			1.1
Net decrease (increase) in noncash operating working capital	—			2.4			(0.1		)	—		—			2.3
Equity in earnings	(213.6		)	0.5			—			—		213.1			—
Other operating activities - net	—			7.8			—			—		—			7.8
Net cash provided by (required by) operating activities	973.7			(574.4		)	(0.6		)	—		—			398.7
Investing Activities
Property additions	—			(203.1		)	(1.2		)	—		—			(204.3		)
Proceeds from sale of assets	—			1.2			—			—		—			1.2
Other investing activities - net	—			(6.0		)	—			—		—			(6.0		)
Net cash provided by (required by) investing activities	—			(207.9		)	(1.2		)	—		—			(209.1		)
Financing Activities
Purchase of treasury stock	(144.4		)	—			—			—		—			(144.4		)
Repayments of long-term debt	—			(21.3		)	—			—		—			(21.3		)
Amounts related to share-based compensation	—			(9.4		)	—			—		—			(9.4		)
Net distributions to parent	(829.3		)	827.1			2.2			—		—			—
Net cash provided by (required by) financing activities	(973.7		)	796.4			2.2			—		—			(175.1		)
Net change in cash and cash equivalents	—			14.1			0.4			—		—			14.5
Cash, cash equivalents, and restricted cash at January 1	—			169.9			0.1			—		—			170.0
Cash, cash equivalents, and restricted cash at December 31	$	—		$	184.0		$	0.5		$	—	$	—		$	184.5

F-34

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF CASH FLOWS



(Millions of dollars)	Year ended December 31, 2017
Operating Activities	Parent Company			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	245.3		$	245.3		$	—		$	—	$	(245.3	)	$	245.3
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	—			116.9			—			—		—			116.9
Deferred and noncurrent income tax charges (credits)	—			(50.4		)	—			—		—			(50.4		)
Accretion of asset retirement obligations	—			1.8			—			—		—			1.8
(Gains) loss from sale of assets	—			3.9			—			—		—			3.9
Net decrease (increase) in noncash operating working capital	—			(36.9		)	—			—		—			(36.9		)
Equity in earnings	(245.3		)	—			—			—		245.3			—
Other operating activities - net	—			3.0			—			—		—			3.0
Net cash provided by (required by) operating activities	—			283.6			—			—		—			283.6
Investing Activities
Property additions	—			(257.1		)	(1.2		)	—		—			(258.3		)
Proceeds from sale of assets	—			0.9			—			—		—			0.9
Other investing activities - net	—			(4.7		)	—			—		—			(4.7		)
Net cash provided by (required by) investing activities	—			(260.9		)	(1.2		)	—		—			(262.1		)
Financing Activities
Purchase of treasury stock	(206.0		)	—			—			—		—			(206.0		)
Repayments of long-term debt	—			(131.4		)	—			—		—			(131.4		)
Additions to long-term debt	—			338.8			—			—		—			338.8
Debt issuance costs	—			(1.1		)	—			—		—			(1.1		)
Amounts related to share-based compensation	—			(5.6		)	—			—		—			(5.6		)
Net distributions to parent	206.0			(207.3		)	1.3			—		—			—
Net cash provided by (required by) financing activities	—			(6.6		)	1.3			—		—			(5.3		)
Net change in cash and cash equivalents	—			16.1			0.1			—		—			16.2
Cash, cash equivalents, and restricted cash at January 1	—			153.8			—			—		—			153.8
Cash, cash equivalents, and restricted cash at December 31	$	—		$	169.9		$	0.1		$	—	$	—		$	170.0

F-35

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF CASH FLOWS



(Millions of dollars)	Year ended December 31, 2016
Operating Activities	Parent Company			Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	221.5		$	221.5		$	—	$	—	$	(221.5	)	$	221.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	—			98.6			—		—		—			98.6
Deferred and noncurrent income tax charges (credits)	—			40.4			—		—		—			40.4
Accretion of asset retirement obligations	—			1.6			—		—		—			1.6
(Gains) loss from sale of assets	—			(88.2		)	—		—		—			(88.2		)
Net decrease (increase) in noncash operating working capital	—			53.7			—		—		—			53.7
Equity in earnings	(221.5		)	—			—		—		221.5			—
Other operating activities - net	—			9.8			—		—		—			9.8
Net cash provided by (required by) operating activities	—			337.4			—		—		—			337.4
Investing Activities
Property additions	—			(262.1		)	—		—		—			(262.1		)
Proceeds from sale of assets	—			85.3			—		—		—			85.3
Changes in restricted cash	—			68.6			—		—		—			68.6
Other investing activities - net	—			(29.0		)	—		—		—			(29.0		)
Other	—			2.4			—		—		—			2.4
Net cash provided by (required by) investing activities	—			(134.8		)	—		—		—			(134.8		)
Financing Activities
Purchase of treasury stock	(323.3		)	—			—		—		—			(323.3		)
Repayments of long-term debt	—			(20.4		)	—		—		—			(20.4		)
Additions to long-term debt	—			200.0			—		—		—			200.0
Debt issuance costs	—			(3.2		)	—		—		—			(3.2		)
Amounts related to share-based compensation	—			(4.2		)	—		—		—			(4.2		)
Net distributions to parent	323.3			(323.3		)	—		—		—			—
Net cash provided by (required by) financing activities	—			(151.1		)	—		—		—			(151.1		)
Net change in cash and cash equivalents	—			51.5			—		—		—			51.5
Cash, cash equivalents and restricted cash at January 1	—			102.3			—		—		—			102.3
Cash, cash equivalents and restricted cash at December 31	$	—		$	153.8		$	—	$	—	$	—		$	153.8

Reconciliation of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period	$	—		$	33.7		$	—	$	—	$	—		$	33.7
Restricted cash at beginning of period	—			68.6			—		—		—			68.6
Cash, cash equivalents and restricted cash at beginning of period	$	—		$	102.3		$	—	$	—	$	—		$	102.3

Cash and cash equivalents at end of period	$	—		$	153.8		$	—	$	—	$	—		$	153.8
Restricted cash at end of period	—			—			—		—		—			$	—
Cash, cash equivalents and restricted cash at end of period	$	—		$	153.8		$	—	$	—	$	—		$	153.8

F-36

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENT OF CHANGES IN EQUITY



(Millions of dollars)	Year ended December 31, 2018
Statement of Stockholders' Equity	Parent Company			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Common Stock
Balance as of December 31, 2017	$	0.5		$	—		$	0.1		$	—	$	(0.1	)	$	0.5
Issuance of common stock	—			—			—			—		—			—
Balance as of December 31, 2018	$	0.5		$	—		$	0.1		$	—	$	(0.1	)	$	0.5
Treasury Stock
Balance as of December 31, 2017	$	(806.5	)	$	—		$	—		$	—	$	—		$	(806.5	)
Issuance of common stock	10.6			—			—			—		—			10.6
Repurchase of common stock	(144.4		)	—			—			—		—			(144.4		)
Balance as of December 31, 2018	$	(940.3	)	$	—		$	—		$	—	$	—		$	(940.3	)
APIC
Balance as of December 31, 2017	$	1,205.7		$	573.1		$	52.0		$	87.5	$	(1,368.4	)	$	549.9
Issuance of common stock	(10.6		)	—			—			—		—			(10.6		)
Amounts related to share-based compensation	—			(9.4		)	—			—		—			(9.4		)
Share-based compensation expense	—			9.1			—			—		—			9.1
Balance as of December 31, 2018	$	1,195.1		$	572.8		$	52.0		$	87.5	$	(1,368.4	)	$	539.0
Retained Earnings
Balance as of December 31, 2017	$	994.5		$	933.0		$	—		$	66.8	$	(999.8	)	$	994.5
Net income	1,187.3			(760.1		)	(0.5		)	—		(213.1		)	213.6
Balance as of December 31, 2018	$	2,181.8		$	172.9		$	(0.5	)	$	66.8	$	(1,212.9	)	$	1,208.1

CONSOLIDATING STATEMENTS OF CHANGES IN EQUITY



(Millions of dollars)	Year ended December 31, 2017
Statement of Stockholders' Equity	Parent Company			Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Common Stock
Balance as of December 31, 2016	$	0.5		$	—		$	0.1	$	—	$	(0.1	)	$	0.5
Issuance of common stock	—			—			—		—		—			—
Balance as of December 31, 2017	$	0.5		$	—		$	0.1	$	—	$	(0.1	)	$	0.5
Treasury Stock
Balance as of December 31, 2016	$	(608.0	)	$	—		$	—	$	—	$	—		$	(608.0	)
Issuance of common stock	7.5			—			—		—		—			7.5
Repurchase of common stock	(206.0		)	—			—		—		—			(206.0		)
Balance as of December 31, 2017	$	(806.5	)	$	—		$	—	$	—	$	—		$	(806.5	)
APIC
Balance as of December 31, 2016	$	1,213.1		$	571.1		$	52.0	$	87.5	$	(1,368.4	)	$	555.3
Issuance of common stock	(7.4		)	—			—		—		—			(7.4		)
Amounts related to share-based compensation	—			(5.6		)	—		—		—			(5.6		)
Reclassification of equity	—			—			—		—		—			—
Share-based compensation expense	—			7.6			—		—		—			7.6
Balance as of December 31, 2017	$	1,205.7		$	573.1		$	52.0	$	87.5	$	(1,368.4	)	$	549.9
Retained Earnings
Balance as of December 31, 2016	$	749.2		$	687.7		$	—	$	66.8	$	(754.5	)	$	749.2
Net income	245.3			245.3			—		—		(245.3		)	245.3
Balance as of December 31, 2017	$	994.5		$	933.0		$	—	$	66.8	$	(999.8	)	$	994.5

F-37

Murphy USA Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



(Millions of dollars)	Year ended December 31, 2016
Statement of Stockholders' Equity	Parent Company			Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Common Stock
Balance as of December 31, 2015	$	0.5		$	—		$	0.1	$	—	$	(0.1	)	$	0.5
Issuance of common stock	—			—			—		—		—			—
Balance as of December 31, 2016	$	0.5		$	—		$	0.1	$	—	$	(0.1	)	$	0.5
Treasury Stock
Balance as of December 31, 2015	$	(294.1	)	$	—		$	—	$	—	$	—		$	(294.1	)
Issuance of common stock	9.4			—			—		—		—			9.4
Repurchase of common stock	(323.3		)	—			—		—		—			(323.3		)
Balance as of December 31, 2016	$	(608.0	)	$	—		$	—	$	—	$	—		$	(608.0	)
APIC
Balance as of December 31, 2015	$	1,222.5		$	564.5		$	52.0	$	87.5	$	(1,368.4	)	$	558.1
Issuance of common stock	(9.4		)	—			—		—		—			(9.4		)
Amounts related to share-based compensation	—			(2.7		)	—		—		—			(2.7		)
Share-based compensation expense	—			9.3			—		—		—			9.3
Balance as of December 31, 2016	$	1,213.1		$	571.1		$	52.0	$	87.5	$	(1,368.4	)	$	555.3
Retained Earnings
Balance as of December 31, 2015	$	527.7		$	466.2		$	—	$	66.8	$	(533.0	)	$	527.7
Net income	221.5			221.5			—		—		(221.5		)	221.5
Balance as of December 31, 2016	$	749.2		$	687.7		$	—	$	66.8	$	(754.5	)	$	749.2

F-38

Murphy USA Inc.

Supplemental Quarterly Information (Unaudited)



	First			Second		Third		Fourth
(Millions of dollars except per share amounts)	Quarter			Quarter		Quarter		Quarter		Year
Year Ended December 31, 2018
Sales and other operating revenues	$	3,244.2		$	3,829.0	$	3,788.0	$	3,501.7	$	14,362.9
Income (loss) from continuing operations before income taxes	$	47.3		$	69.1	$	57.0	$	100.5	$	273.9
Income (loss) from continuing operations	$	39.3		$	51.8	$	45.0	$	77.5	$	213.6
Net income (loss)	$	39.3		$	51.8	$	45.0	$	77.5	$	213.6
Income (loss) from continuing operations (per Common share)
Basic	$	1.17		$	1.59	$	1.40	$	2.40	$	6.54
Diluted	$	1.16		$	1.58	$	1.38	$	2.38	$	6.48
Net income (loss) (per Common share)
Basic	$	1.17		$	1.59	$	1.40	$	2.40	$	6.54
Diluted	$	1.16		$	1.58	$	1.38	$	2.38	$	6.48

Year Ended December 31, 2017
Sales and other operating revenues	$	2,999.6		$	3,211.2	$	3,236.3	$	3,379.5	$	12,826.6
Income (loss) from continuing operations before income taxes	$	(9.8	)	$	89.9	$	108.8	$	51.2	$	240.1
Income (loss) from continuing operations	$	(3.0	)	$	55.5	$	67.9	$	124.9	$	245.3
Net income (loss)	$	(3.0	)	$	55.5	$	67.9	$	124.9	$	245.3
Income (loss) from continuing operations (per Common share)
Basic	$	(0.08	)	$	1.52	$	1.92	$	3.62	$	6.85
Diluted	$	(0.08	)	$	1.51	$	1.90	$	3.58	$	6.78
Net income (loss) (per Common share)
Basic	$	(0.08	)	$	1.52	$	1.92	$	3.62	$	6.85
Diluted	$	(0.08	)	$	1.51	$	1.90	$	3.58	$	6.78

F-39

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

Murphy USA Inc.

Valuation Accounts and Reserves



(Millions of dollars)	Balance at January 1,		Charged (Credited) to Expense		Deductions		Balance at December 31,

2018
Deducted from assets accounts
Allowance for doubtful accounts	$	1.1	0.5		(0.5	)	1.1

2017
Deducted from assets accounts
Allowance for doubtful accounts	$	1.9	(0.8	)	—		1.1

2016
Deducted from assets accounts
Allowance for doubtful accounts	$	2.0	—		(0.1	)	1.9

F-40

Exhibit 10.11

MURPHY USA INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Amended and Restated Effective as of January 1, 2019)

TABLE OF CONTENTS

Page

ARTICLE ONE ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN 1

1.1. Establishment of Plan 1

1.2. Purpose of Plan 1

1.3. Status of Plan 1

ARTICLE TWO DEFINITIONS 1

2.1. Account 1

2.2. Active Participant 2

2.3. Actuarially Equivalent 2

2.4. Affiliated Entity 2

2.5. Applicable Code Limitations 3

2.6. Base Salary 3

2.7. Basic Pension Plan Benefit 3

2.8. Basic Profit Sharing Contribution 3

2.9. Beneficiary 3

2.10. Board 3

2.11. Bonus 3

2.12. Code 3

2.13. Committee 3

2.14. Company 3

2.15. Deferral Agreement 3

2.16. Deferred Compensation Ledger 4

2.17. Designated Beneficiary 4

2.18. Determination Date 4

2.19. Dispute 4

2.20. Effective Date 4

2.21. Elective Deferral Account 4

2.22. Elective Deferral Contribution 4

2.23. Election Form 5

2.24. Employee 5

2.25. Employer 5

2.26. Employer Contribution 5

2.27. Employer Contribution Account 5

2.28. Employment 5

2.29. ERISA 5

2.30. Excess Matching Contribution 5

2.31. Excess Profit Sharing Contribution 5

2.32. Fund 5

2.33. In-Service Determination Date 6

2.34. Insolvent 6

2.35. Investment Experience 6

2.36. Maximum Savings Plan Deferral Limitation 6

2.37. Murphy Oil SERP 6

2.38. Participant 6

2.39. Pension Plan 6

2.40. Person 6

2.41. Plan 6

2.42. Plan Year 6

2.43. Restored Pension Death Benefit 6

2.44. Restored Pension Plan Benefit 7

2.45. Restored Thrift Plan Benefit 7

2.46. Savings Plan 7

2.47. Service 7

2.48. Separation from Service 7

2.49. Trust 7

2.50. Trust Agreement 7

2.51. Trustee 7

2.52. Valuation Date 7

ARTICLE THREE ADMINISTRATION 8

3.1. Composition of Committee 8

3.2. Administration of Plan 8

3.3. Action by Committee 8

3.4. Delegation 8

3.5. Reliance Upon Information 8

3.6. Indemnity of Plan Administration Employees 9

3.7. Plan Expenses 10

ARTICLE FOUR PARTICIPATION, CONTRIBUTIONS AND ELECTIONS 10

4.1. Eligibility of Employees 10

4.2. Notification of Eligible Employees 10

4.3. Base Salary and Bonus Deferral Agreement 10

4.4. Leave of Absence 12

4.5. Employer Contributions 12

4.6. Vesting 13

4.7. Application of Forfeitures 13

4.8. Election of Time and Manner of Payment for Contributions 13

4.9. Restored Pension Plan Benefit 14

ARTICLE FIVE COMPENSATION DEFERRAL AND ACCOUNTS 15

5.1. Deferral of Base Salary and/or Bonus 15

5.2. Allocation of Investment Experience to Accounts 15

5.3. Investment of Accounts 15

5.4. Determination of Account 16

ARTICLE SIX DISTRIBUTIONS 17

6.1. Amount of Deferred Base Salary Subject to Distribution 17

6.2. Forms of Distribution 17

6.3. Timing of Distributions 19

6.4. Investment Experience and Other Terms Pending Distribution 22

6.5. Trust and Payor of Deferred Base Salary 22

6.6. Facility of Payments 23

6.7. Beneficiary Designations 23

6.8. Withholding of Taxes 24

6.9. Overpayment Recoupment 24

ARTICLE SEVEN RIGHTS OF PARTICIPANTS 24

7.1. Annual Statement to Participants 24

7.2. Limitation of Rights 25

7.3. Nonalienation of Benefits 25

7.4. Claims Procedures 26

ARTICLE EIGHT MISCELLANEOUS 29

8.1. Amendment or Termination of the Plan 29

8.2. Powers of the Employer 29

8.3. Affiliated Entity 29

8.4. Compliance with Code Section 409A 29

8.5. Funding and Liability of Employer 30

8.6. No Effect on Employment Relationship 30

8.7. Notice 30

8.8. No Guarantee of Tax Consequences 31

8.9. Waiver 31

8.10. Severability 31

8.11. Interpretive Matters 31

8.12. Governing Law; Jurisdiction; Forum 32

8.13. Waiver of Jury Trial 32

APPENDIX A 34

MURPHY USA INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Amended and Restated Effective January 1, 2019)

iii

ARTICLE 1

ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN


1.1.	Establishment of Plan . Murphy USA Inc., a corporation organized and existing under the laws of the State of Delaware (the “ Company ”), established the “Murphy USA Inc. Supplemental Executive Retirement Plan”, effective as of August 30, 2013 (the “ Plan ”). The Plan is hereby amended and restated effective as of January 1, 2019.

1.2.

Purpose of Plan . The purpose of this Plan is to (i) provide deferred compensation for a “select group of management or highly compensated employees” and (ii) provide for the payment of certain amounts that were previously deferred under the Murphy Oil Corporation Supplemental Executive Retirement Plan, which was a predecessor to the Plan at the time that the Company was spun-off from Murphy Oil Corporation.

1.3.

Status of Plan . The Plan is intended to continue to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” within the meaning of such phrase for purposes of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), and as such it is intended that the Plan will continue to be exempt from the participation and vesting, funding, and fiduciary responsibility requirements of Title I of ERISA. The Plan is also intended to qualify for simplified reporting under U.S. Department of Labor Regulation Section 2530.104-23, which provides for an alternative method of compliance for plans described in such regulation.

The Plan is not intended to satisfy the tax qualification requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”). The Plan is subject to the requirements of Code Section 409A for nonqualified deferred compensation plans and is to be construed in accordance with such requirements in order to preclude taxation under Code Section 409A.

ARTICLE 2

DEFINITIONS

In addition to the terms defined in the text hereof, each term below shall have the meaning assigned thereto for all purposes of the Plan unless the context reasonably requires a broader, narrower or different meaning.


2.1.	Account . “Account” means, with respect to each Participant, the Account reflecting his interest under the Plan under the Deferred Compensation Ledger, as established and maintained pursuant to Article Five . The Account shall be comprised of the following subaccounts, which may be subdivided into additional subaccounts as the Committee deems appropriate:

(a) Elective Deferral Account;

(b) Employer Contribution Account;

(d) Any other subaccount that the Committee may establish for Participants

under their Accounts as it deems appropriate from time to time.

A Participant’s Restored Pension Plan Benefit, if any, shall not be considered part of the Participant’s Account.

2.2.

Active Participant . “Active Participant” means a Participant who is currently eligible under the terms of the Plan to authorize a Deferral Agreement or to receive an allocation of Employer Contributions to his Account. An Employee who was selected to be a Participant shall be considered an Active Participant while he remains in Employment unless and until the Committee determines that he no longer is eligible to be an Active Participant pursuant to Section 4.1 .


2.3.	Actuarially Equivalent . “Actuarially Equivalent” means a benefit of equivalent actuarial value determined in accordance with the following factors:

(a) For purposes of computing the alternative periodic forms of annuity payments under Appendix A :


(1)	Interest : seven and one-half percent (7.5%).


(2)	Mortality : UP-1984 Mortality Table with a three (3) year setback for Designated Beneficiaries.

(b) For purposes of computing the Actuarially Equivalent lump sum of a Restored Pension Plan Benefit under Section 6.2(b)(1)(A) :


(1)	Interest : the “applicable interest rate” as defined in Code Section 417(e)(3)(C) for the month of November of the year immediately preceding the Plan Year in which the distribution is to be made.


(2)	Mortality : the “applicable mortality table” as defined in Code Section 417(e)(3)(B).

2.4.

Affiliated Entity . “Affiliated Entity” means, with respect to the Company, any Person, directly or indirectly controlling, controlled by, or under common control with the Company. For the purposes of this definition, the terms “ controlling, controlled by, or under common control ” means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person, as determined and designated in the discretion of either the Board or the Committee.


2.5.	Applicable Code Limitations . “Applicable Code Limitations” means any limitation under Code Section 40l(a)(l7) or Code Section 415 that is applicable for limiting contributions or accrued benefits for a Participant under the Savings Plan or the Pension Plan, as applicable, for a particular Plan Year.

2.6.

Base Salary . “Base Salary” means, for each Participant, the base salary as defined by the Company’s normal payroll practices and procedures, paid during a Plan Year (or which would have been paid during a Plan Year but for salary reductions and elective deferrals under Code Sections 125 and 401(k) and Base Salary deferrals under this Plan). In no event shall Base Salary include a Bonus or any other compensation, whether paid or deferred, pursuant to an incentive plan maintained by the Company.


2.7.	Basic Pension Plan Benefit . “Basic Pension Plan Benefit” means the amount of pension payable in the normal form to the Participant under the Pension Plan, as accrued through August 30, 2013.


2.8.	Basic Profit Sharing Contribution . “Basic Profit Sharing Contributions” means the “Profit Sharing Contribution” that is allocated to an Active Participant’s account under the Savings Plan after reduction to comply with the Applicable Code Limitations.


2.9.	Beneficiary . “Beneficiary” means the beneficiary or beneficiaries designated by the Participant, on an Election Form or as otherwise determined in accordance with Section 6.7 or Appendix A , to receive any amounts distributable under the Plan upon his death.


2.10.	Board . “Board” means the Board of Directors of the Company.


2.11.	Bonus . “Bonus” means any cash amount that is payable to the Participant as a bonus awarded under an annual cash bonus program maintained by an Employer.


2.12.	Code . “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and other authority issued thereunder by the appropriate governmental authority.


2.13.	Committee . “Committee” means the committee described in Article Three . References herein to the Committee shall include, when appropriate, any Person who has been delegated the appropriate authority by the Committee to take an action with respect to the Plan or the Trust.


2.14.	Company . “Company” means Murphy USA Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor in interest thereto.

2.15.

Deferral Agreement . “Deferral Agreement” means a written agreement between the Employer and an Active Participant in accordance with Article Four for a Plan Year, which agreement describes the terms and conditions of such Active Participant’s deferral of Base Salary and/or Bonus hereunder for such Plan Year. The Deferral Agreement shall be executed and dated by the Active Participant and shall specify the amount of Base Salary and/or Bonus related to services to be performed during the Plan Year (or applicable portion thereof, in the case of a newly-eligible Participant), by percentage or dollar amount, to be deferred as an Elective Deferral Contribution. The Committee shall determine the form of any Deferral Agreement, which may be electronic.

2.16.

Deferred Compensation Ledger . “Deferred Compensation Ledger” means the appropriate accounting records maintained by the Committee which set forth the name of each Participant and his Account transactions reflecting (a) the amount of Base Salary and Bonus deferred pursuant to Article Four , (b) the amount of Employer Contributions made on behalf of the Participant pursuant to Article Four , (c) the amount of Investment Experience credited or charged to the Participant’s Account pursuant to Article Five , and (d) the amount of any distributions or withdrawals pursuant to Article Six . The Deferred Compensation Ledger shall be utilized solely as a device for the measurement and determination of the contingent amounts to be paid to Participants under the Plan. The Deferred Compensation Ledger shall not constitute or be treated as an escrow, trust fund, or any other type of funded account of whatever kind for Code or ERISA purposes and, moreover, contingent amounts credited thereto shall not be considered “plan assets” for ERISA purposes. In addition, no economic benefit or constructive receipt of income shall be provided to any Participant for purposes of the Code unless and until cash payments under the Plan are actually made to the Participant. The Deferred Compensation Ledger merely provides a record of the bookkeeping entries relating to the contingent benefits that the Employer intends to provide to Participants and thus reflects a mere unsecured promise to pay such amounts in the future.

2.17.

Designated Beneficiary . “Designated Beneficiary” means (a) with respect to a Participant’s Account, the Person or Persons designated under Section 6.7 , and (b) with respect to a Participant’s Restored Pension Plan Benefit, the Person or Persons designated by the Participant to receive payments after the Participant’s death under the form of a Certain and Life Pension or a Non-Spousal Joint and Survivor Pension.


2.18.	Determination Date . “Determination Date” means, with respect to a Participant, the earlier of (a) the date of his Separation from Service or (b) the In-Service Determination Date as elected by the Participant pursuant to Section 4.8 .


2.19.	Dispute . “Dispute” means any dispute, disagreement, claim or controversy arising in connection with, or relating to, the Plan.


2.20.	Effective Date . “Effective Date” means January 1, 2019, i.e. , the effective date of this amendment and restatement of the Plan.


2.21.	Elective Deferral Account . “Elective Deferral Account” means the subaccount established under an Account, as described in Section 2.1 .


2.22.	Elective Deferral Contribution . “Elective Deferral Contribution” means any amount of a Participant’s Base Salary and/or Bonus which he elects to defer under the Plan and to have such deferred amount credited to his Elective Deferral Account.


2.23.	Election Form . “Election Form” means the paper or electronic form or web-based platform, as applicable, which the Committee shall prescribe for use by Participants in making any elections required or permitted hereunder.


2.24.	Employee . “Employee” means any individual who is employed by an Employer as a common law employee.


2.25.	Employer . “Employer” means the Company or any Affiliated Entity that is a participating employer under the Savings Plan.


2.26.	Employer Contribution . “Employer Contribution” means a contribution that is made by the Employer and allocated to a Participant’s Employer Contribution Account pursuant to Section 4.5 .


2.27.	Employer Contribution Account . “Employer Contribution Account” means the subaccount established under an Account, as described in Section 2.1 .

2.28.

Employment . “Employment” means employment with an Employer. In this regard, except as may be determined by the Committee in accordance with Code Section 409A, neither the transfer of a Participant from employment by an Employer to employment by an Affiliated Entity, nor the transfer of a Participant from employment by an Affiliated Entity to employment by an Employer, shall be deemed to be a Separation from Service by the Participant. Moreover, except as may be determined by the Committee in accordance with the rules under Code Section 409A, a Participant shall not be deemed to have incurred a Separation from Service because of his authorized temporary absence from active employment on account of illness or vacation, or during another temporary leave of absence authorized by the Employer.

The Employment of a Participant shall not be deemed to have been terminated because of any leave of absence for any period that is required by the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (“ USERRA ”) (if the Participant returns to active Employment within the period required by USERRA after termination of military leave), or during any period required to be treated as a leave of absence under any applicable statute (such as the Family and Medical Leave Act of 1993, as amended), Employer personnel policy, or employment agreement between the Participant and the Employer.


2.29.	ERISA . “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and other authority issued thereunder by the appropriate governmental authority.


2.30.	Excess Matching Contribution . “Excess Matching Contribution” means the Employer Contribution described in Section 4.5(a) .


2.31.	Excess Profit Sharing Contribution . “Excess Profit Sharing Contribution” means the Employer Contribution described in Section 4.5(b) .


2.32.	Fund . “Fund” means each investment fund designated from time to time for the deemed investment of Accounts pursuant to Article Five .

2.33.

In-Service Determination Date . “In-Service Determination Date” means a designated date selected by the Participant in accordance with Section 4.8 that is the first day of a calendar quarter, but not earlier than the start of the second Plan Year following the Plan Year for which the contribution was deferred under the Plan. A Participant may elect, in his discretion, an In-Service Determination Date for all Elective Deferral Contributions and Employer Contributions made to his Account with respect to a single Plan Year, on a Plan Year by Plan Year basis, plus all Investment Experience that is allocated to such contributions.


2.34.	Insolvent . “Insolvent” means either (a) the Employer is unable to pay its debts as they become due, or (b) the Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.


2.35.	Investment Experience . “Investment Experience” means the hypothetical amounts credited (as income or appreciation on any hypothetical investments) or charged (as losses or depreciation on any such hypothetical investments) to the Participant’s Account balance, as described in Article Five .

2.36.

Maximum Savings Plan Deferral Limitation . “Maximum Savings Plan Deferral Limitation” means the maximum amount of before-tax contributions that may be contributed to the Savings Plan under Code Section 402(g) for the applicable Plan Year, plus, to the extent applicable to the Participant, the maximum amount of “catch-up” contributions that may be contributed to the Savings Plan under Code Section 414(v) for the Plan Year.


2.37.	Murphy Oil SERP . “Murphy Oil SERP” means the Murphy Oil Corporation Supplemental Executive Retirement Plan, as in effect as of August 30, 2013.


2.38.	Participant . “Participant” means an Employee who has been selected pursuant to Section 4.1 to participate in the Plan. An Employee or former Employee (or a Beneficiary thereof in the event of death) who still has an Account balance shall be deemed a Participant hereunder regardless of whether he is then an Active Participant.


2.39.	Pension Plan . “Pension Plan” means the Retirement Plan of Murphy Oil Corporation, as it may be amended from time to time.


2.40.	Person . “Person” means any individual, firm, corporation, partnership, company, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization, or other entity.


2.41.	Plan . “Plan” means the Murphy USA Inc. Supplemental Executive Retirement Plan, as set forth herein and as it may be amended from time to time.


2.42.	Plan Year . “Plan Year” means the calendar year commencing on January 1 and ending on December 31.


2.43.	Restored Pension Death Benefit . “Restored Pension Death Benefit” means the amount of a Participant’s Restored Pension Plan Benefit that is payable to a Designated Beneficiary as a result of the Participant’s death, where such amount is determined in the same manner as death benefits are calculated under the Pension Plan.

2.44.

Restored Pension Plan Benefit . “Restored Pension Plan Benefit” means a Participant’s benefit, if any, determined as of August 30, 2013 under the Murphy Oil SERP with respect to the Pension Plan, the liabilities for which were transferred to this Plan. The Restored Pension Plan Benefit was calculated as the difference, determined as of August 30, 2013, between the normal form of pension that would be payable to the Participant under the Pension Plan without regard to the Applicable Code Limitations and such Participant’s Basic Pension Plan Benefit. No Investment Experience or other amounts may be added to any Participant’s Restored Pension Plan Benefit after August 30, 2013.

2.45.

Restored Thrift Plan Benefit . “Restored Thrift Plan Benefit” means a Participant’s benefit, if any, determined as of August 30, 2013 under the Murphy Oil SERP with respect to the Thrift Plan for Employees of Murphy Oil Corporation, the liabilities for which were transferred to this Plan. No additional contributions may be added to any Participant’s Restored Thrift Plan Benefit Account after August 30, 2013; provided, however, that a Participant’s Restored Thrift Plan Benefit shall be adjusted for any allocable Investment Experience that is credited or charged to such Account.


2.46.	Savings Plan . “Savings Plan” means the Murphy USA Inc. Savings Plan, as it may be amended from time to time.


2.47.	Service . “Service” means a Participant’s “Vesting Service” under the Savings Plan.


2.48.	Separation from Service . “Separation from Service” means the Participant’s termination from Employment with the Company and all Affiliated Entities, and shall be construed to have the same meaning of such term as set forth in Code Section 409A, as determined by the Committee with respect to any affected Participant.

2.49.

Trust . “Trust” means a grantor trust, as described in Code Sections 671-677, of the type commonly referred to as a “rabbi trust” which has been created under the Trust Agreement and pursuant to which the Employer may place assets to “informally fund” benefits that are payable under the Plan. Regardless of whether a Trust is used, the Plan is “unfunded” for purposes of ERISA and the Code. There is no requirement to establish a Trust to hold assets under the Plan.


2.50.	Trust Agreement . “Trust Agreement” means the trust agreement, which embodies the terms and conditions of the Trust, to the extent that the Company has established the Trust in order to informally fund benefits payable under the Plan.


2.51.	Trustee . “Trustee” means the duly appointed and acting trustee of the Trust, or any successor thereto.


2.52.	Valuation Date . “Valuation Date” means the date on which a Participant’s Account balance is valued, which date shall not be more often than daily and not less often than as of the last day of each calendar quarter during the Plan Year.

ARTICLE 3

ADMINISTRATION


3.1.	Composition of Committee . The Committee shall be comprised of such officers or other employees of an Employer as chosen by the Board to constitute the Committee. Each member of the Committee shall serve at the pleasure of the Board, and the Board may remove or replace a member of the Committee pursuant to procedures established by the Board.

A member of the Committee may also be a Participant. A member of the Committee who is also a Participant shall not vote or otherwise act on any matter relating directly to himself under the Plan, such as his individual eligibility or benefits and, in any such instance, he shall recuse himself from any deliberation and vote on such matter.

The members of the Committee shall not receive any special compensation for serving in their capacities as members of the Committee, but shall be reimbursed by the Company for any reasonable expenses incurred in connection therewith. No bond or other security need be required of the Committee or any member thereof.

3.2.

Administration of Plan . The Committee shall operate, administer, interpret, construe and construct the Plan in its discretion including, without limitation, correcting any defect, supplying any omission or reconciling any discrepancy or inconsistency. The Committee shall have all powers necessary or appropriate to implement and administer the terms and provisions of the Plan, including the power to make findings of fact. The determination of the Committee as to the proper interpretation, construction, or application of any term or provision of the Plan shall be final, binding, and conclusive with respect to all interested persons.

The Trustee, if any, may take investment directions from the Committee, in which case the Committee shall implement the provisions of Section 5.3 regarding investment of Account balances. The Committee shall have the authority to select any fund or other prudent investment vehicles that are available for hypothetical investment by Participants of their Account balances in assets held by the Trust. Furthermore, the Committee shall direct the Trustee in matters relating to the distribution to Participants of amounts credited to their Accounts in accordance with the terms of the Plan.

3.3.

Action by Committee . A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting at which a quorum is present shall decide any question brought before the meeting and shall be the act of the Committee. In addition, the Committee may take any other action otherwise proper under the Plan by an affirmative vote, taken without a meeting, of a majority of its members.


3.4.	Delegation . The Committee may, in its discretion, delegate one or more of its duties to its designated agents or to employees of an Employer, but may not delegate its authority to make the determinations specified in the first paragraph of Section 3.2 .

3.5.

Reliance Upon Information . No member of the Committee shall be liable for any decision, action, omission, or mistake in judgment, provided that he acted in good faith in connection with the administration of the Plan. Without limiting the generality of the foregoing, any decision or action taken by the Committee in reasonable reliance upon any information supplied to it by the Board, any Participant or Employee, the Employer’s legal counsel, or the Employer’s independent accountants, shall be deemed to have been taken in good faith.

The Committee may consult with legal counsel, who may be counsel for the Employer or other counsel, with respect to its obligations or duties hereunder, or with respect to any action, proceeding or question at law, and shall not be liable with respect to any action taken or omitted, in good faith, pursuant to the advice of such counsel.


3.6.	Indemnity of Plan Administration Employees . To the full extent permitted by law, the Company and its Affiliated Entities shall, jointly and severally, defend,

indemnify and hold harmless each past, present and future member of the Committee and each other employee who acts in the capacity of an agent, delegate or representative of the Committee under the Plan (hereafter, all such indemnified persons shall be jointly and severally referred to as “ Plan Administration Employee ”) from and against, and each Plan Administration Employee shall be entitled without further act on his part to indemnity from the Employer for, any and all losses, claims, damages, judgments, settlements, liabilities, expenses and costs (and all actions in respect thereof and any legal or other costs and expenses in giving testimony or furnishing documents in response to a subpoena or otherwise), including the cost of investigating, preparing or defending any pending, threatened or anticipated action, claim, suit or other proceeding, whether or not in connection with litigation in which the Plan Administration Employee is a party (collectively, the “ Losses ”), as and when incurred, directly or indirectly, relating to, based upon, arising out of, or resulting from his being or having been a Plan Administration Employee; provided, however, that such indemnity shall not include any Losses incurred by such Plan Administration Employee (a) with respect to any matters as to which he is finally adjudged in any such action, suit or other proceeding to have been guilty of, or responsible for, gross negligence, or intentional misconduct in the performance of his duties as a Plan Administration Employee, or (b) with respect to any matter to the extent that a settlement thereof is effected in an amount in excess of the amount approved by the Company (which approval shall not be unreasonably withheld). The foregoing right of indemnification shall be in addition to any liability that the Employer may otherwise have to the Plan Administration Employee.

The Plan Administration Employee shall have the right to retain counsel of his own choice to represent him provided that such counsel is acceptable to the Company, which acceptance shall not be unreasonably withheld. The Company shall pay the fees and expenses of such counsel, and such counsel shall, to the full extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by it. The Company and the Affiliated Entities shall be liable for any settlement of any claim against a Plan Administration Employee made with the written consent of the Company, which consent shall not be unreasonably withheld.

The foregoing right of indemnification shall inure to the benefit of the successors and assigns, and the heirs, executors, administrators and personal representatives of each Plan Administration Employee, and shall be in addition to all other indemnification and other rights to which the Plan Administration Employee may be entitled, as a matter of law, contract, or otherwise.

3.7. Plan Expenses . All expenses incident to the administration, termination or protection of the Plan and Trust, including but not limited to, actuarial, legal, accounting, and Trustee’s fees, shall be paid by the Employer, or if so directed by the Employer in its discretion, by the Trustee.

ARTICLE 4

PARTICIPATION, CONTRIBUTIONS AND ELECTIONS

4.1.

Eligibility of Employees . The Board and Committee shall have the authority and discretion to designate, at any time, those Employees who are eligible to participate in the Plan as Active Participants. However, only Employees who are members of “a select group of management or highly compensated employees”, within the meaning of such phrase for purposes of ERISA, shall be eligible for selection by the Board to be Active Participants or to continue to be Active Participants. The Board or Committee shall have no obligation to select any Employee to participate in the Plan for any Plan Year.

The Board and Committee shall also have the authority and discretion to deem any Employee as no longer an Active Participant who is eligible to make Elective Deferral Contributions or receive an allocation of an Employer Contribution pursuant to Section 4.5 , effective as of a designated date. Any Participant whose Employment is terminated, for whatever reason, shall not be an Active Participant effective as of his Separation from Service date. A person who is no longer an Active Participant shall still be considered a Participant for other purposes hereunder until he has received a total distribution of his Account balance.


4.2.	Notification of Eligible Employees . Prior to the beginning of each Plan Year, the Committee shall notify the selected Employees, if any, who are eligible to make Elective Deferral Contributions as Active Participants for the next Plan Year. The Committee shall also have the right to designate Employees to be new Active Participants at any time during a Plan Year.

An Employee (or in the event of his death, his Beneficiary) shall be a Participant hereunder as long as he has any balance credited to his Account. However, only Employees who are designated as Active Participants for a Plan Year may be eligible to authorize Elective Deferral Contributions or have Employer Contributions made on their behalf.


4.3.	Base Salary and Bonus Deferral Agreement .

(a) Initial Deferral Elections . After an Employee has been notified by the Committee that he is eligible to participate in the Plan for the relevant Plan Year as an Active Participant, he must, in order to defer Base Salary and/or Bonus with respect to services to be performed during such Plan Year, notify the Committee of his Elective Deferral Contribution election by completing and executing a Deferral Agreement prior to the end of the Plan Year that immediately precedes the Plan Year to which such Deferral Agreement relates, subject to the special rules described below for (1) newly-eligible Employees and (2) “performance-based compensation” (as defined under Code Section 409A).

If an Employee first becomes eligible to participate in the Plan after the commencement of a Plan Year, the newly eligible Active Participant, in order to defer Base Salary and/or Bonus hereunder for the remainder of the Plan Year, must complete and execute a Deferral Agreement and return it to the Committee within thirty (30) days from the effective date on which the Employee first became eligible to participate in the Plan. Such Deferral Agreement, if received and accepted by the Committee within such 30-day period, shall only apply to defer Base Salary and/or Bonus for services to be performed by the Active Participant for the remainder of the Plan Year; provided, however, such services must be performed subsequent to receipt and approval of such Deferral Agreement by the Committee.

With respect to a Bonus that is considered “performance-based compensation” (as defined under Code Section 409A), the Participant’s deferral election must be made by no later than June 30 of the Plan Year to which such Bonus relates; provided, however, that in no event may a deferral election be made after the Bonus has become “readily ascertainable” (as determined under Code Section 409A by the Committee).

If the Committee does not timely receive a completed and signed Deferral Agreement, the Participant shall be deemed to have affirmatively elected not to make any Elective Deferral Contribution election for that Plan Year. In no event may a Participant make a change to his deferral election for a particular Plan Year after the last permissible date provided under this Section 4.3 for making such deferral election.

A Participant may elect to defer up to fifty percent (50%) of his Base Salary, and up to one hundred percent (100%) of his Bonus, for services performed during the Plan Year while an Active Participant (or, if applicable, for services performed during the portion of the Plan Year following his initial deferral election), subject to the initial deferral election rules described in this Section 4.3 .

(b) Timing of Deferrals . The amount of Base Salary elected to be deferred pursuant to a Deferral Agreement shall be withheld on a pro rata basis from the Active Participant’s regular payments of Base Salary for each pay period during the Plan Year (or portion thereof) during which such Deferral Agreement is in effect, unless otherwise designated by the Active Participant in his Deferral Agreement.

Regardless of any services performed during a Plan Year on behalf of the Company or an Affiliated Entity, no Participant will accrue any earned and vested right to receive any Bonus unless and until it is actually awarded and paid to him by the Employer. The dollar amount or percentage of a Bonus elected to be deferred under this Section 4.3 shall be (1) deferred in one lump sum and (2) deemed to have been deferred on the date that the deferred portion of the Bonus would otherwise have been paid to the Active Participant in the absence of his deferral election. Any Bonus deferral election made hereunder shall be void and ineffective to the extent that no Bonus is awarded to the Active Participant with respect to services performed by the Active Participant during the Plan Year for which the Bonus deferral election is in effect.

To the extent required under the Code, the elective deferral amount of any Base Salary or Bonus hereunder may be reduced by the Committee in order to provide taxable, non-deferred wages sufficient to cover any required tax or other withholding obligation.

4.4.

Leave of Absence . If an Active Participant is authorized by his Employer for any reason to take a paid leave of absence, the Participant shall continue to be considered in Employment and his Elective Deferral Contributions shall continue to be withheld during such paid leave of absence. If an Active Participant is authorized by his Employer for any reason to take an unpaid leave of absence, the Participant shall continue to be considered in Employment and the Participant shall be excused from making Elective Deferral Contributions from his Base Salary until the Participant returns to a paid Employment status. Upon his return from the unpaid leave, Elective Deferral Contributions shall resume for the remaining portion of the Plan Year in which such expiration or return occurs, based on the Participant’s Deferral Agreement, if any, as in effect for that Plan Year, i.e. , the same percentage or dollar amount that was being withheld prior to the unpaid leave of absence shall resume after return to active service, but no make-up contributions shall be made for the unpaid leave period. A leave of absence shall not affect any previously elected Bonus deferral. Nothing in this Section 4.4 shall be construed to affect the determination of whether a Participant has incurred a Separation from Service.


4.5.	Employer Contributions .

(a) Excess Matching Contributions . The Company maintains the Savings Plan, pursuant to which Employees are permitted to make before tax contributions with respect to which the Employer makes certain matching contributions, based on the Employee’s deferral election. It is the Company’s intention to provide Excess Matching Contributions under this Plan to the Employer Contribution Account of any Participant for whom matching contributions have been limited under the Savings Plan due to the application of any Applicable Code Limitations; provided, however, that such Participant makes before tax contributions to the Savings Plan in an amount not less than the Maximum Savings Plan Deferral Limitation for that Plan Year. Accordingly, for each Plan Year, such Participant’s Account shall receive an Excess Matching Contribution that is equal to the amount computed using the following formula (but not less than zero):

(The lesser of A or B) minus C.

Where:

A = six percent (6%) multiplied by the Participant’s Base Salary for the Plan Year;

B = the sum of the Participant’s actual before tax elective deferrals under the Savings Plan for the Plan Year, plus the Participant’s actual Base Pay Elective Deferral Contributions credited to the Participant’s Account under this Plan during the Plan Year pursuant to Section 4.3 ; and

C = the matching contribution credited to the Participant’s account under the Savings Plan for the Plan Year.

The Employer shall credit the Excess Matching Contributions described under this Section 4.5(a) on behalf of each eligible Active Participant no later than thirty (30) days after the earlier of (1) the Participant’s Separation from Service or (2) the end of the Plan Year. Excess Matching Contributions shall be allocated and credited to the Active Participant’s Employer Contribution Account by the Committee.

In no event may a Participant receive matching contributions under this Plan with respect to Bonus Elective Deferral Contributions.

(b) Excess Profit Sharing Contributions . For each Plan Year for which an Employer makes a Basic Profit Sharing Contribution to the Savings Plan on behalf of an Active Participant, such Active Participant’s Employer Contribution Account shall be credited with an Excess Profit Sharing Contribution equal to the amount by which (i) the amount of the Basic Profit Sharing Contribution that would have been made to the Savings Plan for such Participant for such Plan Year if the Savings Plan had been administered without regard to the Applicable Code Limitations, exceeds (ii) the amount of the Basic Profit Sharing Contribution actually credited to such Participant’s account under the Savings Plan for such Plan Year. Any Excess Profit Sharing Contributions shall be credited to the

Participant’s Employer Contribution Account as soon as administratively feasible after the Basic Profit Sharing Contribution is allocated to the Participant’s Savings Plan account.

(c) Special Contributions . The Company may, from time to time, in its sole discretion, direct that a special Employer Contribution in such amount as the Company shall determine be made to a specified Participant’s Employer Contribution Account in order to (i) mitigate an unintended shortfall in matching contribution credit, (ii) implement provisions of an employment agreement, or (iii) provide for other discretionary contributions as the Company may desire. A special Employer Contribution may be awarded subject to such vesting requirements as the Company shall determine and, notwithstanding any provision of this Plan to the contrary, to the extent any such special credit has not become vested, it shall not be paid under the Plan.


4.6.	Vesting . All Participants’ Elective Deferral Contributions, Excess Matching Contributions, and all Investment Experience thereon that is allocated to their Accounts, shall be 100% vested at all times. Furthermore, all amounts (including Investment Experience) allocated to a Participant’s Restored Thrift Plan Benefit Account shall be 100% vested at all times.

Any Excess Profit Sharing Contributions (and Investment Experience thereon) shall be subject to such vesting schedule, if any, that is prescribed by the Savings Plan for vesting of Basic Profit Sharing Contributions thereunder.

A Participant’s Restored Pension Plan Benefit is 100% vested at all times.


4.7.	Application of Forfeitures . Any forfeiture of Employer Contributions pursuant to Section 4.6 shall be applied as determined by the Company in its discretion.

4.8.

Election of Time and Manner of Payment for Contributions . An In-Service Determination Date may be selected by the Participant for each Plan Year, on an individual Plan Year by Plan Year basis, with respect to all Elective Deferral Contributions and Employer Contributions (and Investment Experience thereon) that is allocated to his Account for that Plan Year. At the time a Participant submits his deferral election under Section 4.3 for a given Plan Year, he shall also elect on an Election Form his In-Service Determination Date, or to have no In-Service Determination Date apply with respect to the portion of his Account balance that is attributable to Elective Deferral Contributions and Employer Contributions (and Investment Experience thereon) for the particular Plan Year. If a Participant does not make a timely election of an In-Service Determination Date in accordance with this Section 4.8 for a Plan Year, he shall be deemed to have affirmatively elected to have no In-Service Determination Date apply with respect to the portion of his Account balance that is attributable to Elective Deferral Contributions and Employer Contributions (and Investment Experience thereon) for the particular Plan Year.

At the time a Participant submits his deferral election under Section 4.3 for a given Plan Year, the Participant shall also elect the manner in which the portion of his Account that is attributable to Elective Deferral Contributions and Employer Contributions (and Investment Experience thereon) for that particular Plan Year, shall be distributed upon his Separation from Service. The Participant shall thus elect on an Election Form to have one of the following forms of distribution apply upon his Separation from Service:

(a) A single lump sum payment;

(b) Five (5) annual installments; or

A Participant’s election as to the form of distribution of his Account balance pursuant to this Section 4.8 must be made prior to earning the compensation to which such election relates, in accordance with Code Section 409A, and such elections shall become irrevocable as of the date that such compensation is earned.

A Participant’s election pursuant to this Section 4.8 may be changed only in accordance with and to the extent permitted by Section 6.3(b) .

With respect to amounts deferred under the Plan prior to the Effective Date (including amounts under the Restored Thrift Plan Benefit Account), the Participant’s election(s) as to form and timing of payment shall continue in effect as of the Effective Date.


4.9.	Restored Pension Plan Benefit . A Participant’s benefits under the Plan shall include the amount, if any, of the Participant’s Restored Pension Plan Benefit. Restored Pension Plan Benefits shall not be adjusted for allocable Investment Experience. All distributions of Restored Pension Plan Benefits shall be made in accordance with Article Six .

ARTICLE 5

COMPENSATION DEFERRAL AND ACCOUNTS

5.1.

Deferral of Base Salary and/or Bonus . If an Active Participant has elected to make an Elective Deferral Contribution for a Plan Year, the deferred amounts shall not be paid when they otherwise would have been paid in the absence of such election. A bookkeeping entry to reflect the deferred amounts shall be credited by the Committee to his Elective Deferral Account. With respect to Elective Deferral Contributions and any Employer Contributions for a Plan Year, each deferred amount shall be credited to his Account as of the date it otherwise would have been paid to the Active Participant and shall reflect a mere unsecured promise by the Employer to pay such amount in the future.

5.2.

Allocation of Investment Experience to Accounts . As of each Valuation Date, the Committee shall determine the Investment Experience for the applicable accounting period and, as soon as administratively practicable after such period, shall post the amount of Investment Experience to each Participant’s Account effective as of the end of such period. Each Account for which there was a positive balance at any time during the applicable valuation period shall be entitled to an allocation of Investment Experience for that valuation period regardless of whether the Participant is still an Active Participant.

5.3.

Investment of Accounts . The Committee shall direct the investment of all amounts credited to each Participant’s Account (or any subaccount thereunder) in any one or a combination of Funds which have been designated by the Committee as available for hypothetical investments under the Plan. The Investment Experience that is charged or credited to each Participant’s Account shall be based upon the Investment Experience of the investments in which the Account balance is hypothetically invested.

The Investment Experience posted to each Participant’s Account shall be based solely on the Investment Experience of the Fund (or other hypothetical investment authorized by the Committee or Trustee, as applicable), in which the Account balance is deemed to be invested. Investment Experience shall be allocated to the Participant’s Account as directed by the Committee.

Subject to such limitations as may from time to time be required by law, imposed by the Committee, or contained elsewhere in the Plan, and subject to such operating rules and procedures as may be imposed from time to time by the Committee, each Participant may communicate directions regarding the deemed investment of his Account balance between and among the designated Funds. Investment directions shall designate the percentage (in any whole percent multiples) of each portion of the Participant’s Account balance that is requested to be deemed to be invested in such Funds and shall be subject to the following rules:

(a) Any initial or subsequent deemed investment direction must be made on an Election Form, and shall be effective as soon as administratively practicable after such filing.

(b) Each Participant may make no more than the number of deemed investment directions during a specified period, such as a calendar quarter, as determined by the Committee, from time to time, and applied on a uniform basis to all Participants.

(c) All amounts credited to the Participant’s Account shall be deemed to be invested in accordance with the Participant’s then effective deemed investment direction, and, as of the effective date of any new deemed investment direction, all or a portion of the Participant’s Account at that date shall be reallocated among the designated deemed investment Funds according to the percentages specified in the new deemed investment direction, unless and until a subsequent deemed investment direction shall be filed and become effective. An election concerning deemed investment choices shall continue indefinitely unless and until changed by the Participant in accordance with applicable procedures under the Plan as in effect at that time.

(d) If the Committee receives an initial or revised deemed investment direction that it deems to be incomplete, unclear, or improper, the Participant’s investment direction as then in effect shall remain in effect.

(e) Each Participant, as a condition to his participation in the Plan, agrees to indemnify and hold harmless the Board, Committee and the Employer, and its and their delegates, agents and representatives, from any losses or damages of any kind relating to, or arising from, the deemed investment of the Participant’s Account balance hereunder.

No commitments or assurances are provided by any person or entity that any investment results will be favorable and, as with most investments, there is a risk of loss.

5.4.

Determination of Account . The total amount credited to a Participant’s Elective Deferral Account shall consist of (a) the aggregate amount of Elective Deferral Contributions made pursuant to Article Four , (b) plus (or minus) the aggregate amount of any Investment Experience allocated to such Elective Deferral Account pursuant to Article Five , and (c) minus the aggregate amount of any distributions or withdrawals made from such Elective Deferral Account pursuant to Article Six .

The total amount credited to a Participant’s Employer Contribution Account shall consist of (a) the aggregate amount of Employer Contributions made pursuant to Article Four , (b) plus (or minus) the aggregate amount of any Investment Experience allocated to such Employer Contribution Account pursuant to Article Five , and (c) minus the aggregate amount of any distributions or withdrawals made from such Employer Contribution Account pursuant to Article Six .

The total amount credited to a Participant’s Restored Thrift Plan Benefit Account shall consist of (a) the Restored Thrift Plan Benefit, (b) plus (or minus) the aggregate amount of any Investment Experience allocated to such Restored Thrift Plan Benefit Account pursuant to Article Five , and (c) minus the aggregate amount of any distributions or withdrawals made from such Restored Thrift Plan Benefit Account pursuant to Article Six . In no event may any additional contributions be credited to a Participant’s Restored Thrift Plan Benefit Account.

ARTICLE 6

DISTRIBUTIONS


6.1.	Amount of Deferred Base Salary Subject to Distribution . As of the Participant’s Determination Date, the vested amount credited to his Account shall become distributable in accordance with Sections 6.2 and 6.3 . All distributions hereunder will be made in cash.


6.2.	Forms of Distribution .

(a) Distribution of Accounts . Except as provided in Section 6.2(a)(1) , upon the occurrence of the Participant’s Determination Date, the Participant’s Account balance shall become distributable in the lump sum or installments form of payment that was previously elected by the Participant under Section 4.8 . A Participant cannot elect to retain the distributable portion of his Account balance in the Plan following his Determination Date, except for any unpaid installments during the remaining installment period.


(1)	Automatic Lump Sum Distributions .


(A)	In-Service Distributions. All amounts distributable as a result of the occurrence of an In-Service Determination Date shall be made in a lump sum form of payment.

(B)

Small Benefit Lump Sum. The Committee may, in its sole discretion, require a Participant to receive a mandatory lump-sum distribution of amounts deferred under the Plan, provided that such payment (i) results in the termination and liquidation of the entirety of the Participant’s interest under the Plan, including all agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Treas. Reg. § 1.409A-1(c)(2), and (ii) such payment does not exceed the applicable dollar amount for the year of the payment under Code Section 402(g)(1)(B) ($18,500 for 2018, as may be adjusted for inflation in future years). Any exercise of discretion by the Committee to require a mandatory lump-sum distribution under this Section 6.2(a)(1) must be evidenced by a writing that is executed on or before the date that the mandatory lump-sum distribution is made. This Section 6.2(a)(1) shall be administered and interpreted in accordance with the de minimis cashout exception as set forth in Treas. Reg. §1.409A-3(j)(4)(v).


(C)	No Distribution Election. If there is no form of distribution election for the Participant pursuant to Section 4.8 , the form of distribution upon a Determination Date shall automatically be a lump sum payment.

(D)

Form of Death Distribution . If the Determination Date results from the death of the Participant, or if he dies before receiving all elected installment payments, his Beneficiary shall automatically be entitled to receive the Participant’s remaining Account balance in a single lump sum following the Participant’s death and no prior installment election shall be recognized under the terms of the Plan.


(2)	Distributions not Suspended upon Rehire . In the event that a Participant is receiving installment distributions of his Account balance following a Separation from Service, and he is subsequently rehired by the Company or an Affiliated Entity, the Participant shall continue to receive such installment distributions on the same schedule.

(b) Distribution of Restored Pension Plan Benefits . Except as provided in Section 6.2(b)(1) , upon the occurrence of the Participant’s Separation from Service, the Participant’s Restored Pension Plan Benefit shall become distributable in one of the monthly annuity options described in Appendix A , as elected by the Participant. The Participant’s election of such monthly annuity option must be made on an Election Form, which must be submitted to the Committee within the timeframe specified by the Committee, but in no event later than the date on which distribution of the Participant’s Restored Pension Plan Benefit is required to commence under Section 6.3 . If the Participant is married on the date he makes his election under this Section 6.2(b) , his Election Form must include a valid written consent from his spouse, in the manner prescribed under the Plan, if the Participant has elected a form of payment other than a Qualified Joint and Survivor Pension. If such consent is not provided in a form acceptable to the Committee, then the Participant will be treated as not having made an election under this Section 6.2(b) .


(1)	Automatic Forms of Payment .

(A)

Small Benefit Lump Sum. The Committee may, in its sole discretion, require a Participant to receive a mandatory Actuarially Equivalent lump-sum distribution of his Restored Pension Plan Benefit, provided that such payment (i) results in the termination and liquidation of the entirety of the Participant’s interest under the Plan, including all agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Treas. Reg. § 1.409A-1(c)(2), and (ii) such payment does not exceed the applicable dollar amount for the year of the payment under Code Section 402(g)(1)(B) ($18,500 for 2018, as may be adjusted for inflation in future years). Any exercise of discretion by the Committee to require a mandatory lump-sum distribution under this Section 6.2(b)(1) must be evidenced by a writing that is executed on or before the date that the mandatory lump-sum distribution is made. This Section 6.2(b)(1) shall be administered and interpreted in accordance with the de minimis cashout exception as set forth in Treas. Reg. §1.409A-3(j)(4)(v).

(B)

No Distribution Election. If the Participant has not made a valid election under the first paragraph of this Section 6.2(b) prior to the required benefit commencement date, then the Participant will be paid the monthly annuity described in Paragraph A of Appendix A , unless the Participant is married, in which case the Participant will be paid the monthly annuity described in Paragraph B of Appendix A .


(2)	Distributions not Suspended upon Rehire . In the event that a Participant has commenced receiving his Restored Pension Plan Benefit following a Separation from Service, and he is subsequently rehired by the Company or an Affiliated Entity, the Participant shall continue to receive his monthly annuity payments on the same schedule.

(c) Distribution of Restored Pension Plan Death Benefits . Upon the occurrence of the Participant’s death prior to the date that the Participant’s Restored Pension Plan Benefits have commenced to be distributed to the Participant, the Participant’s Restored Pension Death Benefit shall become payable to the Participant’s Designated Beneficiary as a single lump sum payment.


6.3.	Timing of Distributions .

(a) Distribution of Accounts .

(1)

Lump Sum Distribution . A lump sum distribution from a Participant’s Account shall be made within sixty (60) days following the In-Service Determination Date with respect to an in-service distribution. Any lump sum distribution payable to a Participant due to his Separation from Service (for any reason except due to his death) shall be paid within thirty (30) days after the first day of the seventh month following the date of his Separation from Service. In the event of a Participant’s death, any lump sum distribution shall be paid to his Designated Beneficiary within one (1) year following the date of death. Notwithstanding the foregoing, if (A) a Participant’s Account is credited with an Excess Profit Sharing Contribution during the Plan Year next following the Plan Year containing the Participant’s Separation from Service date, and (B) such amount is credited after the date that the Participant receives an initial installment payment distribution from his Account, then such Excess Profit Sharing Contribution shall be distributed as a single lump sum payment as soon as practicable following the crediting of such Excess Profit Sharing Contribution to the Account, but in no event later than the last day of the Plan Year next following the Plan Year containing the Participant’s Separation from Service date.

(2)

Installment Payments . Annual installment payments due shall commence to be distributed to the Participant within thirty (30) days after the first day of the seventh month next following the date of his Separation from Service. Thereafter, each remaining installment payment shall be distributed within thirty (30) days of each anniversary of the first installment date until fully paid. Notwithstanding the foregoing, if (A) a Participant’s Account is credited with an Excess Profit Sharing Contribution during the Plan Year next following the Plan Year containing his Separation from Service date, and (B) such amount is credited after the date that the Participant receives an initial installment payment from his Account, then such Excess Profit Sharing Contribution shall be distributed as a single lump sum payment as soon as practicable following the crediting of such Excess Profit Sharing Contribution to his Account, but in no event later than the last day of the Plan Year next following the Plan Year containing his Separation from Service date, without regard to any election made by the Participant to receive installment payments from his Account generally.

In the event that annual installments are made under the Plan from the Participant’s Account or any subaccount, this paragraph shall determine the amount of each installment amount. The initial installment will be based on the amount credited to the Participant’s vested Account as of the last day of the calendar month coincident with or next preceding that date of payment. Thereafter, the remaining installment payments shall be made as of the annual anniversary of the first installment date and will be based on the Participant’s remaining vested Account balance as of the anniversary of the valuation date coincident with or next preceding the date of such installment payment. Installment payments shall be computed by determining the Participant’s remaining vested Account balance as of the relevant anniversary date and multiplying the Participant’s remaining vested Account balance as of the relevant anniversary date by a fraction, the numerator of which is one and the denominator of which is the remaining number of years of the term for which payments have not been made.

(b) Changes in Time and Form of Distribution . If a Participant has not commenced receiving payments under this Section 6.3 for the portion of his Account balance that is attributable to a particular Plan Year which commences on or after the Effective Date, the Participant may petition the Committee in writing to request that the form of distribution be changed from a lump sum distribution to an installment payment option; provided, however, any such election to change the form of payment:


(1)	will not take effect until at least twelve (12) months after the date on which the election is made,


(2)	will not be effective unless made at least twelve (12) months before the date that the payment is scheduled to be paid; and


(3)	in the case of an election related to a payment other than a payment made due to the Participant’s death, the first payment with respect to which such election is made is deferred for a period of not less than five (5) years from the date that such payment would otherwise have been made.

Any change in the time or form of distribution shall be administered in accordance with the terms of the Plan and Code Section 409A, as determined by the Committee.

(1)

Restored Pension Plan Benefits . If the Participant has at least ten (10) years of Service as of his Separation from Service date, then the Restored Pension Plan Benefit will commence within thirty (30) days following the later of: (A) the first day of the seventh month following the Participant’s Separation from Service and (B) age 55. If the Participant has less than ten (10) years of Service as of his Separation from Service date, then the Restored Pension Plan Benefit will commence within thirty (30) days following the later of: (A) the first

day of the seventh month following the Participant’s Separation from Service and (B) age 65. If payments are made on account of Separation from Service (and not on account of attainment of age 55 or 65, as applicable, following Separation from Service), then the first payment will include an additional amount equal to the six monthly payments that would have been made but for the six month delay, along with interest credited at the 10-Year Treasury rate applicable for the month of December of the Plan Year immediately preceding the Participant’s date of Separation from Service.


(2)	Restored Pension Death Benefits . Any Restored Pension Death Benefits will be paid to the Participant’s Designated Beneficiary within one (1) year following the Participant’s date of death.

6.4.

Investment Experience and Other Terms Pending Distribution . Investment Experience shall continue to be credited to undistributed amounts credited to the Participant’s Account. Pending receipt of a complete distribution of his Account balance or his Restored Pension Plan Benefit or Restored Pension Death Benefit, as applicable, the Participant (or Beneficiary in the event of his death) shall remain subject to Section 7.4 and other applicable provisions of the Plan.

6.5.

Trust and Payor of Deferred Base Salary . Benefits payable under the Plan with respect to a Participant’s Account, Restored Pension Plan Benefit or Restored Pension Death Benefit shall be the obligation of, and payable by, the Company; provided, however, the Company may, in its discretion, obtain reimbursement for any amount that it pays on behalf of a Participant from any adopting Employer that is the employer of the particular Participant.

In order to meet its contingent obligations under the Plan, the Employer shall not set aside any assets or otherwise create any type of fund in which any Participant (or any person claiming under such Participant) has an interest other than that of an unsecured general creditor of the Employer or which would provide any Participant, or any person claiming under such Participant, with a legally enforceable right to priority over any general creditor of the Employer in the event that the Employer becomes Insolvent.

The Employer intends for the Plan to recognize the value to the Employer of the past and present services of Participants and to encourage and assure their continued service with the Employer by making more adequate provision for their future retirement security. The Plan constitutes an unfunded, unsecured plan of deferred compensation for a select group of management or highly compensated employees of the Employer. Plan benefits herein provided are to be paid out of the Company’s general assets. Nevertheless, subject to the terms of the Plan and the Trust Agreement, if applicable, the Company may transfer money or other property to the Trustee, and the Trustee shall pay Plan benefits to Participants and their beneficiaries out of the Trust Fund.

The Company may enter into the Trust Agreement in its discretion. In such event, the Company shall remain the owner of all assets in the Trust and the assets shall be subject to the claims of the Employer’s creditors if the Employer ever becomes Insolvent. If the Employer becomes Insolvent, the Trustee shall suspend payments to the Participants and hold the assets for the benefit of the Employer’s general creditors. If the Trustee receives a written allegation that the Employer is Insolvent, the Trustee shall suspend payments to the Participants and hold the Trust Fund for the benefit of the Employer’s general creditors, and shall determine within the period specified in the Trust Agreement whether the Employer is Insolvent. If the Trustee determines that the Employer is not Insolvent, the Trustee shall resume payments to the Participants. No Participant or Beneficiary shall have any preferred claim to, or any beneficial ownership interest in, any assets of the Trust Fund.

During any period in which a Trust is in existence, benefits payable under the Plan shall be payable by the Trustee in accordance with the terms, provisions, conditions and limitations of the Plan and Trust Agreement. To the extent that any distribution described in the immediately preceding sentence does not fully satisfy the obligation for any benefit due under the Plan, the Employer shall remain fully liable and obligated for full payment of any unpaid benefit due and payable under the Plan.

6.6.

Facility of Payments . If the Committee determines that any person entitled to payment under the Plan is physically or mentally incompetent to receive or properly receipt for such payments, the Company shall make such payment or, if applicable, the Committee shall direct the Trustee to make the payment, to the legal guardian or other personal representative of such person for the use and benefit of such person. If the Committee for any reason is unable to determine with reasonable certainty the proper person to pay pursuant to the immediately preceding sentence, the Company shall pay or, if applicable, the Committee shall direct the Trustee to pay, any amount due hereunder into a court of competent jurisdiction in an interpleader proceeding for purposes of being directed by such court as to the proper disposition of such amount. Any such payment so made by the Company or the Trustee, to the extent of the amount thereof, shall be a full and complete discharge of any liability or obligation under the Plan.

6.7.

Beneficiary Designations . Each Employee, upon becoming a Participant, shall file with the Committee a designation of one or more Beneficiaries to whom benefits otherwise payable to the Participant shall be made in the event of his death prior to the complete distribution of his Account balance or his Restored Pension Plan Benefit. A Beneficiary designation shall be on an Election Form and shall be effective when received and accepted by the Committee. A Participant may, from time to time, revoke or change his Beneficiary designation by filing a new designation form with the Committee. The last valid designation that was received and accepted by the Committee prior to the Participant’s death shall be controlling; provided, however, that no Beneficiary designation, or change or revocation thereof, shall be effective unless received prior to the Participant’s death, and shall not be effective as of a date prior to its receipt and acceptance by the Committee.

Notwithstanding any contrary provision of this Section 6.7 , no Beneficiary designation made by a married Participant, other than one under which the surviving lawful spouse of such Participant is designated as the sole 100% primary Beneficiary, shall be valid and effective without the prior written consent of such spouse to the designation of another primary Beneficiary on an Election Form. However, in the event of Participant’s divorce, any designation of his former spouse as his primary Beneficiary shall be automatically revoked hereunder, without the necessity of any further action, unless and until the Participant affirmatively re-designates his former spouse as his primary Beneficiary hereunder.

If no valid and effective Beneficiary designation exists at the time of the Participant’s death, or if no Designated Beneficiary survives the Participant, or if such designation conflicts with applicable law, the payment of the Participant’s Account balance shall be made to the Participant’s surviving lawful spouse, if any. If there is no surviving spouse, then payment of the Account balance shall be made to the executor or administrator of the Participant’s estate, or if there is no administration on Participant’s estate, to the Participant’s heirs at law as determined by a court of competent jurisdiction, in such proportion as determined by such court in its signed court order that is received by, and satisfactory to, the Committee. If the Committee is in doubt as to the right of any person to receive any payment amount, it may direct that the amount be paid into any court of competent jurisdiction in an interpleader action, and such payment shall be a full and complete discharge of any liability or obligation under the Plan or Trust Agreement to the full extent of such payment.

For purposes of clarity, the provisions of this Section 6.7 shall not apply with respect to a Participant’s Restored Pension Plan Benefit.


6.8.	Withholding of Taxes . The Employer or, if appropriate, the Trustee, shall withhold from the amount of benefits payable under the Plan all federal, state and local taxes required to be withheld under any applicable law or governmental regulation or ruling.

To the extent required under payroll tax law or regulation, the deferred amount of any Base Salary or Bonus elected hereunder may be automatically reduced, without the necessity of advance notice to the Active Participant, in order to provide taxable, non-deferred wages sufficient to cover any required tax or other withholding obligation, and the Active Participant, by participation in the Plan, hereby affirmatively consents to such action.

6.9.

Overpayment Recoupment . In the event of an overpayment made to a Participant, (a) such Participant shall be obligated to remit to the Plan the amount of such overpayment, together with any allocable interest or other earnings thereon, as directed by the Committee, (b) the Plan and the Committee are authorized to recoup overpayments plus allocable interest or other earnings thereon, and (c) the Plan and the Committee are authorized to offset any overpayments (including allocable interest and other earnings thereon) that are not timely returned to the Plan by the Participant against any other Plan benefits to which the Participant is or may become entitled.

ARTICLE 7

RIGHTS OF PARTICIPANTS


7.1.	Annual Statement to Participants . As soon as practicable after the end of each Plan Year, or at such other time as the Committee determines to be appropriate, the Committee shall cause to be prepared and delivered to each Participant a written statement showing the following information and such other information that the Committee decides is appropriate:

(a) the beginning balances in the Participant’s Account, and any subaccounts, under the Deferred Compensation Ledger as of the first day of the Plan Year;

(b) the amount of any Base Salary and Bonus deferred for the Plan Year and credited to the Participant’s Elective Deferral Account for the Plan Year;

(c) the amount of any Employer Contributions for the Plan Year that were credited to the Participant’s Employer Contribution Account for the Plan Year;

(d) the adjustments to the Participant’s Account and any subaccounts to reflect the crediting or charging of Investment Experience and any distributions or withdrawals made during the Plan Year; and

(e) the ending balances in the Participant’s Account, and any subaccounts, as of the last day of the Plan Year.


7.2.	Limitation of Rights . Nothing in this Plan shall be construed to:

(a) give any individual who is employed by an Employer any right to be an Active Participant unless and until such person is selected by the Board;

(b) give any Participant or Beneficiary any interests or rights, other than as an unsecured general creditor of the Employer with respect to the Base Salary, Bonuses, Employer Contributions and Investment Experience credited or charged to his Account until such amounts are actually distributed to him;

(d) give a Participant or any other person any interest in any fund or in any specific asset of the Employer;

(e) be evidence of any agreement or understanding, express or implied, that the Employer will employ a Participant in any particular position, at any particular rate of remuneration, or for any particular time period; or

(f) create a fiduciary relationship between the Participant and the Employer, Board or Committee.

7.3.

Nonalienation of Benefits . No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same will be void and without effect. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If any Participant or Beneficiary hereunder shall become bankrupt or attempt to anticipate, alienate, assign, sell, pledge, encumber, or charge any right or benefit hereunder, or if any creditor shall attempt to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such right or benefit shall be held by the Company for the sole benefit of the Participant or Beneficiary, his spouse, children, or other dependents, or any of them, in such manner as the Committee shall deem proper, free and clear of the claims of any party.

The withholding of taxes from benefit payments hereunder; the recovery under the Plan of overpayments of benefits previously made to a Participant; the transfer of benefit rights from the Plan to another plan; the direct deposit of benefit payments to an account in a banking institution (if not actually part of an arrangement constituting an assignment or alienation); or an in-service distribution hereunder, shall not be construed as an assignment or alienation for purposes of the first paragraph of this Section.

The first paragraph of this Section shall not preclude (a) the Participant from designating a Beneficiary to receive any benefit payable hereunder upon his death, or (b) the executors, administrators, or other legal representatives of the Participant or his estate from assigning any rights hereunder to the person or persons entitled thereto.

In the event that any Participant’s or Beneficiary’s benefits hereunder are garnished or attached by order of any court, the Company or Trustee may bring an action or a declaratory judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to be paid under the Plan. During the pendency of said action, any benefits that become payable shall be held by the Company on behalf of the Participant, or if the Company prefers, paid into the court as they become payable, to be distributed by the court to the recipient as the court deems proper at the close of said action.


7.4.	Claims Procedures .

(a) Filing a Claim . A Participant or his authorized representative may file a claim for benefits under the Plan (hereafter, referred to as a “ Claimant ”). Any such claim must be in writing and submitted to the Committee at such address as may be specified from time to time. The Claimant will be notified in writing of an approved claim, which will be processed accordingly. A claim is considered approved only if its approval is communicated in writing to the Claimant.

(b) Denial of Claim . In the case of the denial of a claim respecting benefits paid or payable with respect to a Participant, a written notice will be furnished to the Claimant within 90 days of the date on which the claim is received by the Committee. If special circumstances (such as for a hearing) require a longer period, the Claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time; provided, however, that no extensions will be permitted beyond 90 days after the expiration of the initial 90-day period.

(c) Reasons for Denial . A denial or partial denial of a claim will be dated and signed by the Committee and will clearly set forth:


(1)	the specific reason or reasons for the denial;


(2)	specific reference to pertinent Plan provisions on which the denial is based;


(3)	a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and


(4)	an explanation of the procedure for review of the denied or partially denied claim set forth below, including the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

(d) Review of Denial . Upon denial of a claim, in whole or in part, the Claimant or his duly authorized representative will have the right to submit a written request to the Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Committee within 60 days of the receipt by the Claimant of written notice of the denial of the claim. A Claimant or the Claimant’s authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits and may submit issues and comments in writing. The review will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

If the Claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the Claimant precluded from reasserting it. If the Claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.

(e) Decision Upon Review . The Committee will provide a prompt written decision on review to the Claimant. If the claim is denied on review, the decision shall set forth:


(1)	the specific reason or reasons for the adverse determination;


(2)	specific reference to pertinent Plan provisions on which the adverse determination is based;


(3)	a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and


(4)	a statement describing any voluntary appeal procedures offered by the Plan and the Claimant’s right to obtain the information about such procedures, as well as a statement of the Claimant’s right to bring an action under ERISA Section 502(a).

A decision will be rendered no more than 60 days after the Committee’s receipt of the request for review, except that such period may be extended for an additional 60 days if the Committee determines that special circumstances (such as for a hearing) require such extension. If an extension of time is required, written notice of the extension will be furnished to the Claimant before the end of the initial 60-day period.

To the extent of its responsibility to review the denial of benefit claims, the Committee will have full authority to interpret and apply in its discretion the provisions of the Plan. The decision of the Committee will be final and binding upon any and all Claimants, including, but not limited to, the Participant and any other individual making a claim through him.

(f) Other Procedures . Notwithstanding the foregoing, the Committee may, in its discretion, adopt different procedures for different claims without being bound by past actions. Any procedures adopted, however, shall be designed to afford a Claimant a full and fair review of his claim and shall comply with applicable regulations under ERISA.

(g) Finality of Determinations; Exhaustion of Remedies . To the extent permitted by law, decisions reached under the claims procedures set forth in this Section 7.4 shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the Claimant has exhausted his remedies under this Section. In any such legal action, the Claimant may only present evidence and theories which the Claimant presented during the claims procedure. Any claims which the Claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a Claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the Claimant presented during the claims procedure. Any suit or legal action initiated by a Claimant under the Plan must be brought by the Claimant no later than two (2) years following a final decision on the claim for benefits by the Committee. The two-year limitation on suits for benefits will apply in any forum where a Claimant initiates such suit or legal action.

(h) Effect of Committee Action . The Plan shall be interpreted by the Committee in accordance with the terms of the Plan and their intended meanings. However, the Committee shall have the discretion to make any findings of fact needed in the administration of the Plan, and shall have the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any fashion that it deems to be appropriate in its sole judgment. The validity of any such finding of fact, interpretation, construction or decision shall not be given de novo review if challenged in court, by arbitration or in any other forum, and shall be upheld unless clearly arbitrary or capricious. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Committee, in its sole and exclusive judgment, the provision shall be considered ambiguous and shall be interpreted by the Committee in a fashion consistent with its intent, as determined by the Committee in its sole discretion. The Committee may amend the Plan retroactively to cure any such ambiguity. This Section 7.4(h) may not be invoked by any person to require the Plan to be interpreted in a manner which is inconsistent with its interpretation by the Committee. All actions taken and all determinations made in good faith by the Committee shall be final and binding upon all persons claiming any interest in or under the Plan.

ARTICLE 8

MISCELLANEOUS

8.1.

Amendment or Termination of the Plan . The Board may, in its absolute discretion, from time to time, amend, suspend or terminate, in whole or in part, and if terminated, reinstate, any or all of the provisions of the Plan, except that no amendment, suspension or termination may apply so as to decrease the payment to any Participant (or Beneficiary) of any benefit under the Plan that was accrued prior to the effective date of such amendment, suspension or termination without the Participant’s advance consent. Any such amendment, suspension, or termination shall become effective on such date as shall be specified by the Board and, except as expressly limited in this Section 8.1 , shall include such provisions and have such effect as the Board, in its absolute discretion, deems desirable.

Any termination of the Plan shall be made in accordance with Code Section 409A and the authoritative guidance thereunder.

Notwithstanding the preceding paragraphs of this Section 8.1 , the Plan may be amended at any time if required to ensure that (a) the Plan is characterized as a “top-hat plan” of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), or to conform the Plan to the requirements of ERISA, for “top-hat plans” or “supplemental executive retirement plans”, or (b) the requirements of the Code for nonqualified deferred compensation plans, including Code Section 409A. No such amendment for this exclusive purpose shall be considered prejudicial to the interest of a Participant or a Beneficiary hereunder.

8.2.

Powers of the Employer . The existence of outstanding and unpaid benefits under the Plan shall not affect in any way the right or power of the Employer to make or authorize any adjustments, recapitalization, reorganization or other changes in the Employer’s capital structure or in its business, or any merger or consolidation of the Employer, or any issue of bonds, debentures, common or preferred stock, or the dissolution or liquidation of the Employer, or any sale or transfer of all or any part of their assets or business, or any other act or corporate proceeding, whether of a similar character or otherwise.


8.3.	Affiliated Entity . Each Affiliated Entity shall automatically adopt the Plan. Each Affiliated Entity shall not be responsible for the administration of the Plan, and its Employees who are eligible to participate shall be selected as provided herein.

8.4.

Compliance with Code Section 409A . To the extent that Code Section 409A (“ Section 409A ”) is applicable to any provision of the Plan, the Plan and such provision are intended to comply with Section 409A (or an exemption thereunder) and any ambiguous provision will be construed in a manner that is compliant with, or exempt from, the application of Section 409A in order to preclude taxation under Section 409A. The Plan is thus intended to be drafted, administered, interpreted and construed in a manner such that no benefit under the Plan becomes subject to (a) the gross income inclusion set forth in Section 409A(a)(1)(A) or (b) the interest and additional tax set forth in Section 409A(a)(1)(B) (collectively, “ Section 409A Penalties ”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. The Participants, by participation in the Plan, consent to any amendment of the Plan that the Company may reasonably make in furtherance of such intention, and the Company shall provide, or make available to, the Participants a copy of any such amendment. Further, to the extent that any terms of the Plan are ambiguous, such terms shall be interpreted as necessary to comply with Section 409A, or an exemption under Section 409A, to the full extent permitted.

8.5.

Funding and Liability of Employer . The Plan shall be “unfunded” for purposes of ERISA and the Code. No provision of the Plan shall require the Employer, for the purpose of satisfying any obligations under the Plan, to purchase assets or to place any assets in a trust or other entity to which contributions are made, or otherwise to segregate any assets. In addition, the Employer shall not be required to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for purposes of the Plan. Any liability or obligation of the Employer to any Participant shall be based solely upon any obligations created by the Plan, and no such liability or obligation of the Employer shall be deemed to be secured by any pledge or other encumbrance on any property of the Employer.

Any cash or other property that may be set aside by the Employer to meet its obligations under the Plan shall remain the exclusive property of the Employer subject to the claims of the general unsecured creditors of the Employers. The rights of any Participant, or any Person claiming under a Participant, to any payment or other benefit under the Plan shall not rise above or exceed those of an unsecured general creditor of any Employer. No Employer shall be required to give any security or bond for the performance of any obligation that may be created by the Plan.

8.6.

No Effect on Employment Relationship . Participation in the Plan shall not confer upon any Employee any right to continue in the employ of the Employer, nor interfere in any way with the rights of (a) the Employer to terminate the Employment of any Employee at any time or (b) the Employee to terminate his own Employment at any time. Such rights shall exist to the same extent as if the Plan had not been adopted. No Participant shall have any rights as a partner or an equity owner of any Employer as the result of being a Participant under the Plan. In addition, no equity interests shall be issued pursuant to the Plan.

8.7.

Notice . Each notice or other communication required or permitted under the Plan (“ Notice ”) shall be in writing and transmitted, delivered, or sent by personal delivery, prepaid courier or messenger service (whether overnight or same-day), prepaid telecopy or facsimile, or prepaid certified United States mail (with return receipt requested), addressed (in any case) to the other party at the current address for that party, or at such other address as the recipient has designated by Notice to the other party.

Each Notice so transmitted, delivered, or sent (a) in person, by in-hand delivery, by courier, by messenger service, or by certified United States mail, shall be deemed given, received, and effective on the date delivered to or refused by the intended recipient (with the return receipt, or the equivalent record of the courier or messenger, being deemed conclusive evidence of delivery or refusal), or (b) by telecopy or facsimile shall be deemed given, received, and effective on the date of actual receipt (with the confirmation of transmission being deemed conclusive evidence of receipt, except where the intended recipient has promptly provided Notice to the other party that the transmission is illegible). Nevertheless, if the date of delivery or transmission is not a business day, or if the delivery or transmission is after 4:00 p.m. (local time) on a business day at the receiving location, the Notice shall be deemed given, received, and effective on the next business day.


8.8.	No Guarantee of Tax Consequences . The Employer and the Committee do not make any commitment or guarantee that any federal, state, local or international tax treatment will apply or be available to any Participant or any other Person with any right to benefits hereunder.

8.9.

Waiver . No term or condition of the Plan shall be deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of the Plan, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. Any waiver by any party of a breach of any provision of the Plan by another party shall not operate or be construed as a waiver by such party of any subsequent breach thereof.

8.10.

Severability . In the event that any term or provision of the Plan shall be held illegal, invalid or unenforceable for any reason by a final action, such term or provision shall be severed or modified to the extent deemed necessary or appropriate so that it is not inconsistent with applicable law as determined by the Committee in its discretion; provided, however, such severance or modification shall not affect the remaining terms and provisions of the Plan which shall remain fully effective.


8.11.	Interpretive Matters . In the interpretation of the Plan , except where the context reasonably otherwise requires:

(a) “ including ” or “ include ” does not denote or imply any limitation;

(b) “ or ” has the inclusive meaning “ and/or ”;

(d) captions or headings are only for reference and are not to be considered in interpreting the Plan;

(e) “ Section ” refers to a Section of the Plan, unless otherwise stated in the Plan; and

(f) a reference to any statute, rule, or regulation includes any amendment thereto or any statute, rule, or regulation enacted or promulgated in replacement thereof, as well as any regulation or other authoritative guidance issued by the appropriate governmental entity under or with respect thereto.

8.12.

Governing Law; Jurisdiction; Forum . All matters or issues relating to the interpretation, construction, validity, and enforcement of the Plan shall be governed by the laws of the State of Arkansas, without giving effect to any choice-of-law principle that would cause the application of the laws of any jurisdiction other than the State of Arkansas. Unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for any action or proceeding relating to the Plan, or any dispute with respect thereto, shall be a state or federal court located within the State of Arkansas, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Any Person on whose behalf an amount is credited under the Plan shall be deemed to have notice of and to have consented to the provisions of this Section 8.12 and Section 8.13 .

8.13.

Waiver of Jury Trial . THE COMPANY AND EACH PARTICIPANT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE OR PROCEEDING ARISING OUT OF OR RELATING TO THE PLAN, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE COMPANY AND EACH PARTICIPANT AGREES THAT EITHER OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES TO IRREVOCABLY WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THE PLAN SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION HEREUNDER BY A JUDGE SITTING WITHOUT A JURY.

[Signature page follows.]

IN WITNESS WHEREOF, this amended and restated Plan is hereby approved, confirmed and executed by a duly authorized officer of the Company, on behalf of the Company, on this __ 1st __ day of __ October_ __________ 2018, to be effective as of January 1, 2019.




Attest:	MURPHY USA INC.


By: /s/ Terry Hatten	By: /s/ R. Andrew Clyde

Name: Terry Hatten	Name: R. Andrew Clyde

Title: SVP, Human Resources	Title: President & CEO

APPENDIX A


•	(A) Single Life Pension ---monthly payments equal to the Participant’s Restored Pension Plan Benefit are made to the Participant during the remaining lifetime of the Participant. No payments will be made after the Participant’s death.

•

(B) Qualified Joint and Survivor Pension --- monthly payments which are Actuarially Equivalent to the Restored Pension Plan Benefit are made to the Participant for his lifetime; and the spouse (to whom the Participant was married on the date as of which his pension commenced), if surviving at the Participant’s death, will receive for his lifetime a monthly payment equal to fifty percent (50%) of the adjusted monthly amount being paid to the Participant at the time of his death. The last payment will be made as of the first day of the month in which occurs the death of the last surviving of the Participant and his spouse.

•

(C) Qualified Joint and More than Fifty Percent (50%) Survivor Pension --- monthly payments which are Actuarially Equivalent to the Restored Pension Plan Benefit are made in the same manner as described in paragraph (B) of this Appendix A , but with the percentage continued to the spouse, as designated by the Participant to be greater than fifty percent (50%) but not greater than one hundred percent (100%).

•

(D) Certain and Life Pension --- monthly payments which are Actuarially Equivalent to the Restored Pension Plan Benefit are made to the Participant for his lifetime; provided, however, that if the Participant dies after his Restored Pension Plan Benefit begins but before receiving a guaranteed number of monthly payments (which shall be elected by the Participant and approved by the Committee but not to exceed the lesser of (i) one hundred twenty (120) and (ii) the months of joint life expectancy of the Participant and his Designated Beneficiary at the date of commencement), then monthly payments, in the same amount, will continue to his Designated Beneficiary until the total number of payments made (including those to the Participant and those to the Designated Beneficiary) equals such guaranteed number. If the Designated Beneficiary, should die before such total guaranteed number of payments have been made, the remaining payments will be made to the estate of such Designated Beneficiary, either in an Actuarially Equivalent single sum, payable immediately, or as a continuation of the monthly payments, as selected by the Committee. If there is no Designated Beneficiary at the time of the Participant’s death during the certain period, then the remaining guaranteed payments will be paid to the Participant’s estate.

•

(E) Non-Spousal Joint and Survivor Pension--- monthly payments which are Actuarially Equivalent to the Restored Pension Plan Benefit are made in the same manner as described in paragraph (B) of this Appendix A but the percentage to be continued to a surviving Designated Beneficiary for his lifetime can be any specified percentage (which is elected by the Participant but not to exceed one hundred percent (100%)). The last payment will be made as of the first day of the month in which occurs the death of the last surviving of the Participant and his Designated Beneficiary.

Exhibit 10.20

MURPHY USA INC.
2019 ANNUAL INCENTIVE PLAN, effective as of
January 1, 2019

Section 1. Purpose of the Plan . The purpose of the 2019 Annual Incentive Compensation Plan for Murphy USA Inc. is to provide incentive compensation to those officers, executives, and Key Employees who, in the opinion of the Company, contribute significantly to the growth and success of the Company; to attract and retain individuals of outstanding ability; and to align the interests of those who hold positions of major responsibility in the Company with the interests of Company shareholders.

Section 2. Definitions . Unless the context otherwise indicates, the following definitions shall be applicable:

“ Award ” shall mean a right granted to a Participant pursuant to ‎Section 5 of the Plan to receive a cash payment from the Company (or a Subsidiary) based upon the extent to which the Participant’s Performance Goal(s) are achieved during the relevant Performance Period, subject to the Committee’s discretion pursuant to ‎Section 5(d) of the Plan.

“ Base Salary ” shall mean, with respect to a Participant, the base salary actually paid to the Participant during the Plan Year as shown in the payroll/personnel records of the Company.

“ Board ” shall mean the Board of Directors of Murphy USA Inc.

“Cause” shall mean a (i) Participant’s willful failure or refusal to satisfactorily perform Participant’s duties or obligations in connection with Participant’s employment, (ii) Participant’s having engaged in willful misconduct, gross negligence or a breach of fiduciary duty, or Participant’s material breach of Participant’s employment agreement, if any, or any Company policy, (iii) Participant’s conviction of, or a plea of nolo contendere to, (x) a felony or (y) any other criminal offense involving moral turpitude, fraud or dishonesty, (iv) Participant’s unlawful use or possession of illegal drugs on the Company’s premises or while performing his duties and responsibilities hereunder or (v) Participant’s commission of an act of fraud, embezzlement or misappropriation, in each case, against the Company or any of its affiliates.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time; references to particular sections of the Code include references to regulations and rulings thereunder and to successor provisions.

“ Committee ” shall mean the Executive Compensation Committee of the Board or any other committee of the Board designated by resolution of the Board to administer the Plan.

“ Company ” shall mean Murphy USA Inc. (a Delaware corporation), its successors and assigns, and each of its Subsidiaries designated by the Committee for participating in this Plan.

“ Disability ” shall mean a physical or mental impairment sufficient to make a Participant eligible for benefits under the Company’s Long-Term Disability Plan.

“ Employee ” shall mean any regular employee of the Company.

“ GAAP ” shall mean generally accepted accounting principles set forth in the opinions, statements and pronouncements of the Financial Accounting Standards Board, United States (or predecessors or successors thereto or agencies with similar functions), or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination and in any event applied in a manner consistent with the application thereof used in the preparation of the Company’s financial statements.

“ Key Employee ” shall mean an Employee with a title of director or above.

“ Maximum Performance Level ” shall mean the level of performance achievement of the Performance Goals which results in the payment of up to 200 percent (200%) of the Target Award Opportunity for a Participant, as determined by the Committee in its sole discretion.

“ Participant ” shall mean any officer, executive, or Key Employee of the Company selected by the Committee to receive an Award under the Plan.

“ Performance Goal ” shall mean a performance objective established by the Committee for a particular Participant for a Performance Period pursuant to ‎Section 5 of the Plan for the purpose of determining the extent to which an Award has been earned for such Performance Period. Each Performance Goal may consist of (a) “Performance Criteria,” as defined in ‎Section 5(b) of the Plan, which are one or more measures related to individual, business unit, or Company performance, and (b) a “Performance Target,” which is the level at which the relevant Performance Criteria must be achieved for purposes of determining whether a cash payment is to be made under an Award, which may be stated as a threshold level below which no payment will be made, a maximum level at or above which full payment will be made, and intermediate targets which will result in payment between such threshold and maximum level.

“ Performance Period ” shall mean a Plan Year or, for a Participant who becomes a Participant after the first day of the Plan Year because he or she was promoted, newly hired or otherwise selected by the Committee to receive an Award under the Plan after the first day of the Plan Year, such portion of the Plan Year as determined by the Committee.

“ Plan ” shall mean the 2019 Murphy USA Inc. Annual Incentive Compensation Plan, as may be amended from time to time.

“ Plan Year ” shall mean the fiscal year of the Company.

“ Retirement ” shall mean retirement under the applicable Company benefit plan or as may be approved by the Committee.

“ Subsidiary ” shall mean any entity that is directly or indirectly controlled by the Company, as determined by the Committee.

“ Target Award Opportunity ” shall mean the percent of Base Salary to be awarded to each Participant in the Plan upon achievement of 100 percent (100%) of the Performance Goals at 100 percent (100%) performance attainment established within the Performance Criteria of the Plan.

“ Threshold Performance Level ” shall mean the level of achievement of the Performance Goals within the Performance Criteria below which no awards may be paid to a Participant.

Section 3. Plan Administration.

(a) The Committee. The Plan will be administered by the Committee. In accordance with and subject to the provisions of the Plan, the Committee will have full authority and discretion with respect to Awards made under the Plan, including without limitation the following: (a) selecting the officers, executives, or other Key Employees to be Participants; (b) establishing the terms of each Award; (c) determining the time or times when Awards will be granted; and (d) establishing the restrictions and other conditions to which the payment of Awards may be subject. The Committee will have no authority under the Plan to amend or modify, in any manner, the terms of any outstanding Award; provided, however , that the Committee shall have the authority to reduce or eliminate the compensation or other economic benefit otherwise due pursuant to an Award. Each determination, interpretation, or other action made or taken by the Committee pursuant to the provisions of the Plan will be conclusive and binding for all purposes and on all persons, and no member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Award granted under the Plan.

(b) Adjustments. In the event of (a) any merger, reorganization, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, special or extraordinary cash dividend, combination of shares, rights, offering, extraordinary dividend (including a spin-off), or other similar change affecting the Company’s shares; (b) any purchase, acquisition, sale, or disposition of a significant amount of assets other than in the ordinary course of business, or of a significant business; (c) any change resulting from the accounting effects of discontinued operations, extraordinary income or loss, changes in accounting as determined under GAAP, or restatement of earnings; or (d) any charge or credit resulting from an item which is classified as “non-recurring,” “restructuring,” or similar unusual item on the Company’s audited annual Statement of Income which, in the case of (a) – (d), results in a change in the components of the

calculations of any of the Performance Criteria, as established by the Committee, in each case with respect to the Company or any other entity whose performance is relevant to the achievement of any Performance Goal included in an Award, the Committee (or, if the Company is not the surviving corporation in any such transaction, a committee of the Board of Directors of the surviving corporation) shall, without the consent of any affected Participant, amend or modify the terms of any outstanding Award that includes any Performance Goal based in whole or in part on the financial performance of the Company (or any Subsidiary or division thereof) or such other entity so as equitably to reflect such event or events, such that the criteria for evaluating such financial performance of the Company or such other entity (and the achievement of the corresponding Performance Goal) will be substantially the same (as determined by the Committee or the committee of the Board of Directors of the surviving corporation) following such event as prior to such event.

Section 4. Participation . The Participants for any Performance Period shall be those officers, executives, and Key Employees who are granted Awards by the Committee under the Plan for such Performance Period.

Section 5. Grant of Awards .

(a) Nature of Awards. An Award granted under the Plan shall provide for a cash payment to be made solely on account of the attainment of one or more Performance Goals included in such Award, subject to the Committee’s authority pursuant to ‎Section 3 and ‎Section 6 of the Plan.

(b) Performance Criteria. The “ Performance Criteria ” for Awards made under the Plan shall be determined in the sole discretion of the Committee and may include, without limitation, the following measurements, or changes in such measurements between different Plan Years (or combination thereof) as applied to the Company or a Subsidiary, and in either case either on an absolute basis or relative basis (as compared to an external benchmark or performance of a designated peer group of companies).

(i) Earnings (either in aggregate or on a per-share basis);

(ii) Net income;

(iii) Operating income;

(iv) Operating profit;

(v) Cash flow;

(vi) Stockholder returns including return on assets, investment, invested capital, and equity, (including income applicable to common stockholders or other class of stockholders);

(vii) Return measures (including return on assets, equity, or invested capital);

(viii) Earnings before or after either, or any combination of, interest, taxes, depreciation, or amortization (“ EBITDA ”);

(ix) Adjusted EBITDA as reflected in the Company’s financial statements;

(x) Gross revenues;

(xi) Share price (including growth measures and total stockholder return or attainment by the shares of a specified value for a specified period of time);

(xii) Reduction in expense levels in each case, where applicable, determined either on a Company-wide basis or in respect of any one or more Subsidiaries or business units thereof;

(xiii) Economic value;

(xiv) Market share;

(xv) Annual net income to common stock;

(xvi) Earnings per share;

(xvii) Annual cash flow provided by operations;

(xviii) Changes in annual revenue

(xix) Strategic business criteria, consisting of one or more objectives based on meeting specified revenue, market penetration, geographic business expansion goals, objectively identified project milestones, production volume levels, cost targets, and goals relating to acquisitions or divestitures;

(xx) Operational performance measures tied to, environmental compliance and safety and accident rates;

(xxi) Operational measures tied to marketing and retail operations including sales volume increases, sales volume increases per existing retail store, retail margins, special product volumes, and increases in specific product volumes;

(xxii) Operating and maintenance cost management; and

(xxiii) Individual and/or departmental performance, including the impact of individual and/or departmental performance on the Company.

The Committee, on the grant date of an Award, may designate whether a particular performance measure is to be measured on a pre-tax basis or post-tax basis. Further, the Committee may select any one or more of the Performance Criteria applicable to a Participant and Performance Criteria may differ for Awards for one Participant to the next.

(i) the Performance Goal(s) for the Participant, which may include one or more of the Performance Criteria set forth in ‎Section 5(b) of the Plan, and the Performance Target for each Performance Criteria;

(ii) if more than one Performance Goal is specified for a Participant, the relative weight assigned to each Performance Goal; and

(iii) the cash award expressed as a percentage of the base salary for the Participant for the Performance Period, provided that the Committee shall also place a maximum dollar amount on such Awards which may not exceed $5,000,000 for each Participant.

(d) Individual Award Targets. (i) Each Participant shall have a Target Award Opportunity expressed as a percentage of the Participant’s Base Salary. In addition, the Plan shall stipulate for each Participant a Target Award Opportunity as well as, if applicable, a Threshold Performance Level and Maximum Performance Level associated with each Performance Goal established for the Plan Year.

(ii) Individual Target Award Opportunities, Threshold Performance Levels, and Maximum Performance Levels may vary by Participant and may reflect the Participant’s position, level of responsibility, areas of accountability, and other considerations. No Award earned by a Participant under the Plan may exceed two hundred percent (200%) of the Target Award Opportunity or $5,000,000, whichever amount is less.

Section 6. Payment of Awards. As soon as practicable after the Committee has received the appropriate financial and other data after the end of a Plan Year, the Committee will for each Participant certify in writing the extent to which the applicable Performance Goals for such Participant have been met and the corresponding amount of the Award earned by such Participant. Payment of each Award in a cash lump sum, less applicable withholding taxes pursuant to ‎Section 7 of the Plan, shall be made in the calendar year immediately following the applicable Plan Year as soon as practicable after the Committee’s certification of the Performance Goals (such payment date, the “ Payment Date ”). Notwithstanding anything in the Plan to the contrary, no payment made to any Participant in respect of any Performance Period shall exceed $5,000,000.

Section 7. Effect of Termination of Employment.

(a) Termination Due to Death, Disability, or Retirement. In the event a Participant’s employment with the Company and all Subsidiaries is terminated by reason of death, Disability, or Retirement during a Performance Period, the Participant (or the Participant’s estate) (subject to the Committee’s discretion as allowed by ‎Section 3(a) of the Plan) shall be paid (pursuant to ‎Section 6 of the Plan after the completion of the Plan Year) a percentage of the amount earned according to the terms of the Award equal to the portion of the Performance Period through the Participant’s death, Disability, or Retirement, as the case may be, as determined by the Committee.

(b) Termination for Reasons Other than Death, Disability, or Retirement. In the event a Participant’s employment is terminated with the Company and all Subsidiaries prior to the end of the Performance Period for any reason other than death, Disability, or Retirement, including termination by the Company with or without Cause or the Participant’s resignation for any reason, or a Participant is in the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ of the Company or another Subsidiary), the Participant’s Award for such Performance Period shall be immediately forfeited and the Participant shall have no right to any payment thereafter; provided, however , that under such circumstances, except in the event of the termination of the Participant’s employment by the Company for Cause, the Committee may, in its sole discretion, pay the Participant an amount not to exceed a percentage of the amount earned according to the terms of the Award equal to the portion of the Performance Period through the Participant’s termination.

(c) Termination for Cause. In the event a Participant’s employment is terminated by the Company for Cause prior to the Payment Date for an Award, the Participant shall immediately forfeit and shall have no right to any payment thereafter with respect to such Award.

Section 8. Payment of Withholding Taxes . The Company shall withhold and deduct from the payment made pursuant to an Award or from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, state, and local withholding and employment-related tax requirements attributable to any payment made pursuant to an Award.

Section 9. Plan Amendment, Modification, and Termination . The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company. Any termination, suspension, or amendment of the Plan may adversely affect any outstanding Award without the consent of the affected Participant.

Section 10. Non-Funded, Unsecured Obligation . A Participant’s only interest under the Plan shall be the right to receive a cash payment under an Award pursuant to the terms of the Award and the Plan (subject to the authority of the Committee pursuant to ‎Section 3, ‎Section 8 and ‎Section 9 of the Plan). No portion of the amount payable to Participants under the Plan shall be held by the Company or any Subsidiary in trust or escrow or any other form of asset segregation. To the extent that a Participant acquires a right to receive such a cash payment under the Plan, such right shall be no greater than the right of any unsecured, general creditor of the Company.

Section 11. Term and Duration of the Plan . The Plan became effective upon its adoption by the Board on February 7, 2019, and will remain in effect until such time as the Plan is terminated by the Board. Any payments pursuant to Awards outstanding upon termination of the Plan may continue to be made in accordance with the terms of the Awards, subject to the authority of the Committee pursuant to ‎Section 3 and ‎Section 9 of the Plan.

Section 12. Section 409A of the Code . With respect to Awards subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code, and the provisions of the Plan and any Award shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly. If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict. Notwithstanding anything in the Plan to the contrary, if the Board considers a Participant to be a “specified employee” under Section 409A of the Code at the time of such Participant’s “separation from service” (as defined in Section 409A of the Code), and any amount hereunder is “deferred compensation” subject to Section 409A of the Code, any distribution of such amount that otherwise would be made to such Participant with respect to an Award as a result of such “separation from service” shall not be made until the date that is six months after such “separation from service,” except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code. If an Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Participant’s right to such series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment. Notwithstanding the foregoing, the tax treatment of the benefits provided under the Plan or any Award is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by any Participant on account of non-compliance with Section 409A of the Code.

Section 13. Miscellaneous .

(a) Employment. Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or otherwise modify the terms and conditions of the employment of any Employee or Participant at any time, nor confer upon any Employee or Participant any right to continue in the employ of the Company or any Subsidiary.

(b) Restrictions or Transfer. Except pursuant to testamentary will or the laws of descent and as otherwise expressly permitted by the Plan, no right or interest of any Participant in an Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.

(c) Governing Law. The validity, construction, interpretation, administration, and effect of the Plan and any rules, regulations, and actions relating to the Plan will be governed by and construed exclusively in accordance with the internal, substantive laws of the State of Delaware, without regard to the conflict of law rules of the State of Delaware or any other jurisdiction.

(d) Successors. The Plan will be binding upon and inure to the benefit of the successors of the Company and the Participants.

Section 14. Clawback. A Participant whose negligent, intentional, or gross misconduct contributes to the Company’s having to restate all or a portion of its financial statements shall immediately forfeit any portion of an Award earned in the period covered by such financial statements that would not have otherwise been earned under such restated financial statements, as determined in each case, by the Committee in good faith.

Exhibit 21



Murphy USA Inc.
List of Subsidiaries
		Percentage of Voting
	State or Other	Securities owned by
	Jurisdiction	Immediate
Name of Company	of Incorporation	Parent
Murphy Oil USA, Inc.	Delaware	100	%
591 Beverage, Inc.	Nebraska	100	%
864 Holdings, Inc.	Delaware	100	%
864 Beverage, Inc.	Texas	100	%
Hankinson Holding, LLC	Delaware	100	%
Murphy Oil Trading Company (Eastern)	Delaware	100	%
Spur Oil Corporation	Delaware	100	%
Superior Crude Trading Company	Delaware	100	%
El Dorado Properties, LLC	Arkansas	100	%

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Murphy USA Inc.:

We consent to the incorporation by reference in the registration statement (No. 333-191131) on Form S-8 and in the registration statement (No. 333-213416) on Form S-3 of Murphy USA Inc. of our reports dated February 19, 2019 , with respect to the consolidated balance sheets of Murphy USA Inc. and subsidiaries as of December 31, 2018 and 2017 , and the related consolidated income statements, statements of cash flows, and statements of changes in equity for each of the years in the three-year period ended December 31, 2018 , and the related notes and financial statement Schedule II (collectively, the consolidated financial statements), and the effectiveness of internal control over financial reporting as of December 31, 2018 , which reports appear in the December 31, 2018 annual report on Form 10-K of Murphy USA Inc.

/s/ KPMG LLP

Shreveport, Louisiana

February 19, 2019

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. Andrew Clyde, certify that:

1. I have reviewed this annual report on Form 10-K of Murphy USA Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: February 19, 2019

/s/ R. Andrew Clyde ________

R. Andrew Clyde

Principal Executive Officer

Ex. 31.1

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mindy K. West, certify that:


1.	I have reviewed this annual report on Form 10-K of Murphy USA Inc;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: February 19, 2019

/s/ Mindy K. West _______

Mindy K. West

Principal Financial Officer

Ex. 31.2

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Murphy USA Inc. (the “Company”) on Form 10-K for the period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Andrew Clyde, Principal Executive Officer of the Company, certify, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 19, 2019

/s/ R. Andrew Clyde

R. Andrew Clyde

Principal Executive Officer

Ex. 32.1

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Murphy USA Inc. (the “Company”) on Form 10-K for the period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mindy K. West, Principal Financial Officer of the Company, certify, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 19, 2019

/s/ Mindy K. West

Mindy K. West

Principal Financial Officer

Ex. 32.2