Murphy USA 3Q earnings top Wall Street views despite hurricane woes

Even with Hurricane-related store closures and fuel supply woes, Murphy USA Inc.’s third quarter profits were 50% better than a year ago and easily beat Wall Street expectations, the El Dorado-based convenience store operator reported Wednesday (Nov. 1).

For the period ended Sept. 30, the Murphy Oil spin-off posted net income of $67.9 million, $1.90 per share, compared to year ago net income of $45.5 million, or $1.16 per share. Total revenue jumped 6.7% to $3.2 billion, compared to $3 billion in the same period a year ago.

Analysts surveyed by Thomson Reuters had forecasted the company to report third quarter earnings of $1.32 per share on revenues of $3.4 billion. Company President and CEO Andrew Clyde applauded the quarterly results, noting that the company’s earnings were “impacted by the severity and devastation wrought by hurricanes Harvey and Irma.”

“Our first priority was to help ensure the safety and well-being of our employees, who not only persevered during these crises, but remained eager and engaged to re-open stores for our customers as soon as possible, as we retained 100% of our store managers and assistant managers,” Clyde said in a statement. “ While per-store metrics were negatively impacted from both a fuel volume and merchandise perspective, once prices had reached equilibrium following the refinery shutdowns, the retreat in wholesale prices contributed to a robust margin environment in September which helped offset a period of negative margins as Harvey made landfall.”

The Murphy USA CEO added that as the company exits the third quarter, the “convenience store industry and the Arkansas publicly traded concern’s own operations are showing signs of returning to normalized operations and overcoming significant logistical challenges throughout the month of September and into October.

“Wholesale gasoline and diesel product flows resumed in both the storm-impacted areas and adjacent regions that incurred extended fuel supply outages, consumer demand returned, and the citizens of Texas and Florida began the process of rebuilding,” he said.

Murphy USA officials said net income and earnings were both above prior year levels due to higher total margin contribution from both fuel and merchandise. Total retail fuel sales grew to nearly $159 million, up from $149 million a year ago. Total merchandise sales increased 1.1% to $605.6 million in the 2017 third quarter from $599 million in the prior year’s quarter, with margins increasing to 16.1% versus 16%, respectively. On a per-store-month basis, total merchandise contribution declined 2.3%, largely due to accelerated traffic declines, which were primarily storm-related, and lower tobacco contribution.

Total station and other operating expenses increased $2.4 million for the quarter, reflecting new store additions and slightly higher payment fees due to higher retail fuel prices. However, on a per store basis, operating expenses excluding payment fees declined 5.4%.

In the third quarter, Murphy USA opened 12 retail locations, bringing the company’s store count to 1,423, consisting of 1,154 Murphy USA sites and 269 Murphy Express sites. Also, 23 stores are under construction, which includes three kiosks undergoing a raze and rebuild which will return to operation as 1,200 square foot stores before year end.

Murphy USA also repurchased nearly 1.3 million of the company’s common shares during the third quarter at a cost of $85.7 million. Company officials said nearly $25 million remains under the previously authorized $500 million stock buyback program.

Murphy USA shares (NYSE: MUSA) closed Wednesday up 93 cents at $75.29. The company’s shares have traded in the range of $57.13 to $79.98 during the past 52 weeks.