Murphy USA second quarter earnings jump 77%, keeps focus on new store build-out

Murphy USA Inc.’s second quarter profits rose nearly 77% as the El Dorado convenience store operator doubled down on its strategy to grow away from Walmart parking lots and build more company-branded gas stations.

For the period ended June 30, the Arkansas gasoline marketer and retailer reported second quarter earnings of $46.3 million, or $1.17 per share, compared to year ago earnings of $26.2 million, or 59 cents per share. Total revenues declined 10.7% to $3 billion, compared to nearly $3.36 billion in the same period of 2015.

Wall Street analysts had forecasted the former Murphy Oil subsidiary to report second quarter earnings of 99 cents per share on sales of $3.15 billion a year ago, according to Thomson Reuters.

“Second quarter results showcased the benefits of our differentiated fuel-driven business model,” said Murphy USA President and CEO Andrew Clyde.  “We continue to demonstrate tangible progress among the core elements of our formula for value creation as we accelerate new store additions, generate record merchandise margins, and diligently focus on cost control initiatives, all of which result in strong improvement to our fuel breakeven metric.”

During the quarter, Murphy USA repurchased approximately 244,000 shares for $17 million, closing the three-month period ended June 30 with 39,163,458 common shares outstanding.

“On top of strong organic earnings growth and other corporate initiatives, we continue to allocate capital in a manner consistent with maximizing shareholder returns through high-quality organic growth opportunities and share repurchases,” Clyde noted.

Murphy USA opened eight retail locations in second quarter, bringing the quarter end store count to 1,344 – 1,118 Murphy USA sites and 226 Murphy Express sites. A total of 40 stores are under construction along with three kiosks undergoing a raze and rebuild which will return to operation as 1,200-square-foot stores during third quarter.

Following are other key highlights of Murphy USA’s first quarter results.
• Retail fuel contribution grew 22.5% as higher unit margins of 10.8 (cents per gallon) cpg offset a 1.3% decline in same store fuel gallons; total gallons grew 2.2% to 1.03 billion gallons for the network.

• Product supply and wholesale (PS&W) contribution was $61.2 million in second quarter or a combined 5.9 cents per gallon on a retail gallon equivalent basis.

• Merchandise contribution dollars grew 10.8% year over year to $92.7 million at average unit margins of 15.7%, which is a second consecutive quarterly record.

At the close of business on Wednesday, Murphy USA shares (NYSE: MUSA) were up 31 cents at $74.78 as more than 341,000 shares traded hands. The company’s shares have traded in the range of $47.73 and $78.93 over the past 52 weeks.