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Murphy USA's (MUSA) Q4 Earnings Beat on High Retail Margins

Murphy USA Inc. MUSA reported better-than-expected results in the fourth quarter of 2018 on the back of higher retail margins. The company’s adjusted net income per share came in at $2.38, topping the Zacks Consensus Estimate of $2.30. Further, the bottom line improved from the year-ago figure of $1.03 per share.
 
Murphy USA’s operating revenues of $3,501.6 million surpassed the Zacks Consensus Estimate of $3,497 million. Moreover, the top line increased around 4% from the year-ago figure of $3,379.5 million. Revenues from petroleum product sales came in at $2,875.6 million.

Murphy USA Inc. Price, Consensus and EPS Surprise

Murphy USA Inc. Price, Consensus and EPS Surprise | Murphy USA Inc. Quote

Key Takeaways

The company’s total fuel contribution was up 26.9% year over year to $218.1 million, primarily driven by higher retail fuel margins. Retail fuel contribution jumped around 73% year over year to $248.7 million amid higher margins, which increased 65.2% from the prior-year quarter. Retail gallons rose 4.8% from the year-ago periodto 1,088.8 billion gallons in the quarter under review. Volumes on a same-store sales (SSS) basis also rose 2.1% from the fourth quarter of 2017.

Contribution from Merchandise increased 5.2% to $102 million on higher unit margins, which increased to 16.6% from 16.3% a year ago. On SSS basis, total merchandise contribution was up 2.6% year over year in the quarter under review on the back of higher tobacco and non-tobacco margins that increased 2.1% and 5.6%, respectively.
 
Fuel gallons rose 2.9% and merchandise sales increased 1.5% on average per store month (or APSM) basis. Fuel gallons per month rose 2.1% and merchandise sales increased 1.3% on SSS basis.
 
Balance Sheet
 
As of Dec 31, Murphy USA — whose peers include Delek US Holdings, Inc. DK, HollyFrontier Corporation HFC and Marathon Petroleum Corporation MPC — had cash and cash equivalents of $184.5 million, and long-term debt (including lease obligations) of $842.1 million, with a debt-to-capitalization ratio of 51.2%.
 
Guidance
 
Murphy USA expects 2019 capex in the band of $225-$275 million versus $194 million incurred in 2018. The Zacks Rank #2 (Buy) company projects adjusted EBITDA of $405 million in 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
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