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Murphy USA (MUSA) Q3 Earnings Lag on Lower Retail Margins

Murphy USA Inc. MUSA reported weaker-than-expected results in the third quarter of 2018 on lower retail margins. The company’s adjusted net income per share came in at $1.38, lagging the Zacks Consensus Estimate of $1.49. Further, the bottom line deteriorated from the year-ago figure of $1.90 per share.

Murphy USA’s operating revenues of $3,788 million lagged the Zacks Consensus Estimate of $3,826 million. However, the top line increased around 17% from the year-ago figure of $3,211.1 million. Revenues from petroleum product sales came in at $3,151.5 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 down 18.2% year over year to $172.7 million. Retail fuel contribution declined 4.7% year over year to $151.4 million amid lower margins, which decreased 8.3% from the prior-year quarter. The results were partly offset by a rise in retail gallons, which increased 3.5% to 1,064 billion gallons in the quarter under review. Along with increased total retail gallons sold, volumes on a same-store sales (SSS) basis also rose 0.9% from the third quarter of 2017.

Contribution from Merchandise increased 7% to stand at $104.5 million on higher unit margins, which increased to 16.8% from 16.1% a year ago. On SSS basis, total merchandise contribution was up 5.6% year over year in the quarter under review on the back of active promotions and higher tobacco/non-tobacco margins. Tobacco and non-tobacco contributions increased 6.7% and 4%, respectively.

Fuel gallons rose 1.3% and merchandise sales increased 0.9% on an average per store month (or APSM) basis. However, fuel gallons per month declined 1.5% and merchandise sales decreased 0.7% on SSS basis.

Balance Sheet

As of Sep 30, Murphy USA — whose peers include Delek US Holdings, Inc. DK, HollyFrontier Corporation HFC and Marathon Petroleum Corporation MPC — had cash and cash equivalents of $75.4 million, and long-term debt (including lease obligations) of $846.6 million, with a debt-to-capitalization ratio of 53.7%.

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