A more than 30% decline in fuel sales during the third quarter pushed net income lower for El Dorado-based Murphy USA, with net income per share of $2.27 for the convenience store operator falling short of the $2.53 consensus estimate among analysts.
Net income in the third quarter was $66.9 million, down from $69.2 million in the same quarter of 2019. Revenue during the quarter totaled $2.839 billion, down from $3.657 billion in the same quarter of 2019 and below the consensus estimate of $2.93 billion.
The company posted its third quarter earnings report Wednesday (Oct. 28) after the markets closed.
Fuel sales during the quarter totaled $2.056 billion, down 30.65% compared with fuel sales of $2.965 billion in the same quarter of 2019. However, merchandise sales totaled $756.8 million during the quarter, up 11.1% compared with the same period in 2019.
Murphy USA President and CEO Andrew Clyde said traffic and same-store fuel sales were improving by the end of the third quarter.
“Murphy USA delivered strong third quarter performance as continued improvements in customer traffic, sustained gains and double digit sales growth in key merchandise categories, along with higher total fuel margins in a rising price environment shaped performance for the past three months,” Clyde said in the earnings report. “These trends have continued into October where traffic continues to rebound and same store fuel gallons have recovered to 94% of prior year. As we begin to put 2020 in the rear view mirror, we are excited about our accelerated 2021 growth plans and our enhanced shareholder friendly capital allocation strategy.”
Net income in the first nine months of the year totaled $325.1 million, well ahead of the $107.2 million in during the same period of 2019. Much of the difference in income is attributed to $2.695 billion, or 33.2%, more in fuel costs during the first nine months of 2019 compared with the same period in 2020.
Total revenue in the first nine months of the year was $8.403 billion, down from $10.574 billion during the same period of 2019. Fuel sales in the first nine months of the year totaled $6.125 billion, well below the $8.595 billion during the same period in 2019. Merchandise sales during the first nine months of the year totaled $2.211 billion, up from $1.946 billion during the same period of 2019.
The company ended the third quarter with 1,488 operating stores. Following are other items noted in the third-quarter report.
• The current quarter included a $10 million increase to SG&A expense related to a donation to the Company’s charitable foundation while Q3 2019 included a loss on early debt extinguishment of $14.8 million.
• Total retail gallons decreased 11.9% in Q3 2020 compared to Q3 2019, while volumes on a same store sales basis decreased 12.7%.
• Merchandise contribution dollars increased 6.2% to $118.1 million compared to the prior-year quarter, on average unit margins of 15.6% in the current quarter.
• During the third quarter, 4 new stores opened and 5 raze-and-rebuilds reopened, while 1 store closed. Since the quarter ended, 1 additional new site and 6 raze-and-rebuilds have opened; there are 13 new retail sites and 14 raze-and-rebuild sites currently under construction.
Company shares (NYSE: MUSA) closed Wednesday at $123.50, down 92 cents. During the past 52 weeks the share price has ranged between $144.09 and $78.75.