Murphy USA posts strong 2Q profit despite revenue dip as shares reach new high

by Roby Brock ([email protected]) 649 views 

Convenience store operator Murphy USA reported on Tuesday (July 21) a big dip in second quarter revenues compared to a year ago, but the El Dorado-based firm saw a huge leap in profitability. That led to its share price hitting a new high for the year.

Revenues during the quarter — which saw the full effects of the COVID-19 pandemic, slumping and rebounding oil and gas prices, and a sharp curtailment in economic activity — topped $2.379 billion. One year ago, Murphy USA reported second quarter revenue of $3.8 billion.

Net income was a quarterly record $168.9 million compared to just $32.7 million in the second quarter a year ago. Quarterly earnings were $5.73 per diluted share versus $1.01 per diluted share one year ago.

“Murphy USA’s record second quarter performance once again demonstrated the competitive advantages of our distinctive business model and customer positioning,” said Murphy USA President and CEO Andrew Clyde.

“Fuel margins significantly outpaced volume declines due to COVID-19 related demand destruction even as commodity prices rose sharply in May and June. As volume recovers in July to over 90% of prior year levels reflecting our every-day low price positioning and more favorable geographies and locations, robust fuel margins continue to generate higher than normal fuel contribution for Murphy USA,” Clyde added.

Other highlights of the quarter include:

  • Total fuel contribution for Q2 2020 was 38.3 cpg compared to 14.7 cpg in Q2 2019;
  • Total retail gallons decreased 25.7% in Q2 2020 compared to Q2 2019, while volumes on a same store sales basis decreased 27.4%; and
  • Merchandise contribution dollars grew 12.2% to $118.4 million compared to the prior-year quarter
  • During the quarter, Murphy USA opened three new stores and razed-and-rebuilt eight sites. In addition, the company divested all nine Minnesota stores to a private company for an immaterial gain.

Shares of Murphy USA (NYSE: MUSA) rose nearly 15% in morning trading to a new high of $133.34 per share. The company’s share price has traded as low as $78.75 during the past year.

“Our outlook for the remainder of 2020 and 2021 remains very positive as the underlying structural basis for these trends further solidifies,” Clyde said. “With a strong cash position and flexible balance sheet, Murphy USA remains well positioned to accelerate its balanced strategic capital allocation priorities over the next few years, including the previously announced growth in new-to-industry sites and front-loaded share repurchase program.”