Murphy USA: $1 billion of total debt by year-end; liquidity is strong

By Devika Patel

Knoxville, Tenn., July 21 – Murphy USA Inc. has plenty of liquidity to manage “even the most challenging” environments, and the company is on track to reduce its total debt to $1 billion by the end of the year.

“Our cash and liquidity position remain strong, with just over $400 million in cash on the balance sheet as of June 30, and a $168 million borrowing base available under our $325 million ABL facility and that does remain undrawn,” executive vice president, fuels, and chief financial officer Mindy West said on the company’s second quarter ended June 30 earnings conference call on Tuesday.

“In early April, we made our term loan repayment of $12.5 million, reducing our total debt to about $1,025,000,000 and in early July we made the next amortization payment, which reduced total debt to $1,012,500,000.

“So, if we continue on that pace, we will end the year with about $1 billion of debt,” West said.

The company is well-positioned to handle the slowdown in customer traffic due to the Covid-19 pandemic.

“While significant uncertainty remains with respect to an economic recovery and how quickly customer traffic will return to normal levels, our business remains free cash flow positive and we have a very strong cash balance and balance sheet liquidity, which is sufficient to carry us through even the most challenging environments that we can foresee,” West said.

Cash balances as of June 30, 2020 totaled $403.6 million.

Long-term debt consisted of approximately $493 million of 4.75% senior notes due in 2029, $297 million of 5.625% senior notes due in 2027 and $238 million of term debt less $50 million of current maturities.

As of the end of the second quarter, the company’s leverage ratio was approximately 1.4x, down from 1.9x as of the end of the first quarter and 2.1x as of the end of the second quarter of 2019.

Murphy USA is an El Dorado, Ark.-based retailer of gasoline and convenience merchandise.

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