EL DORADO, Ark., Aug. 01, 2018 (GLOBE NEWSWIRE) — Murphy USA Inc. (NYSE: MUSA), a leading marketer of retail motor fuel products and convenience merchandise, today announced financial results for the three and six months ended June 30, 2018.
Key Highlights:
- Net income was $51.8 million, or $1.58 per diluted share in Q2 2018 compared to a net income of $55.5 million, or $1.51 per diluted share, in Q2 2017
- Total fuel contribution (retail fuel margin plus product supply and wholesale (“PS&W”) results including RINs) for Q2 2018 was 16.7 cpg compared to 18.1 cpg in Q2 2017
- Total retail gallons increased 1.6% to 1.1 billion gallons for the network during Q2 2018 while volumes on a same store sales (“SSS”) basis declined 1.5% versus prior year quarter
- Merchandise contribution dollars grew 4.6% during the current year quarter to $102.3 million on average unit margins of 16.6%, a new quarterly record, versus 16.1% average unit margins in the prior year quarter
- Six new stores opened and nine raze-and-rebuild sites re-opened in the second quarter and construction is ongoing as of today at 37 locations, including 17 raze-and-rebuild sites
- Repurchased 1.1 million common shares during the second quarter for approximately $72.7 million at an average price of $68.22 per share
- Effective income tax rate of 25.0% in Q2 2018, a 13.2% lower effective rate than Q2 2017 due to Federal tax reform favorably impacting 2018
“Second quarter financial results showed improvement across all major parts of the business,” said President and CEO Andrew Clyde. “Customer traffic was solid as retail fuel volumes moderated year-over-year declines, PS&W activities continued to deliver strong results reducing fuel margin volatility, merchandising efforts exhibited robust comps against prior year results, and store-level operations demonstrated further cost saving improvements. We increased our competitive advantage, reducing our fuel break-even requirement by 42 basis points per gallon, with line of sight to additional top and bottom line improvements, further demonstrating tangible proof of our ongoing commitment towards operational excellence.” Clyde concluded, “We continued to allocate capital in a disciplined manner repurchasing an additional 1.1 million shares, further leveraging the future earnings potential of the business for the benefit of long-term investors.”
Consolidated Results
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| Key Operating Metrics | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income (loss) ($ Millions) | $ | 51.8 | $ | 55.5 | $ | 91.1 | $ | 52.5 | ||||||||
| Earnings per share (diluted) | $ | 1.58 | $ | 1.51 | $ | 2.72 | $ | 1.42 | ||||||||
| Adjusted EBITDA ($ Millions) | $ | 112.7 | $ | 129.2 | $ | 157.7 | $ | 159.5 | ||||||||
Net income and Adjusted EBITDA in Q2 2018 were lower than prior year levels due primarily to lower retail fuel margins that were partially offset by improved PS&W contribution and a lower effective income tax rate. Earnings per share improved with fewer shares outstanding.
Fuel
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| Key Operating Metrics | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Total fuel contribution ($ Millions) | $ | 180.1 | $ | 191.9 | $ | 294.8 | $ | 294.5 | ||||||||
| Total fuel contribution (including retail, PS&W and RINs) (cpg) | 16.7 | 18.1 | 14.2 | 14.2 | ||||||||||||
| Total retail fuel contribution ($ Millions) | $ | 140.3 | $ | 176.0 | $ | 224.1 | $ | 278.1 | ||||||||
| Retail fuel volume – chain (Million gal) | 1,076.4 | 1,059.5 | 2,079.3 | 2,072.9 | ||||||||||||
| Retail fuel volume – per site (K gal SSS) | 249.1 | 252.8 | 240.8 | 247.5 | ||||||||||||
| Retail fuel margin (cpg excl credit card fees) | 13.0 | 16.6 | 10.8 | 13.4 | ||||||||||||
| PS&W including RINs contribution (cpg) | 3.7 | 1.5 | 3.4 | 0.8 | ||||||||||||
Total fuel contribution dollars decreased 6.1% in Q2 2018 due primarily to lower year-over-year retail margin, partially offset by higher contribution from PS&W including RINs. Total retail fuel contribution decreased 20.3% during the quarter in part due to a less favorable retail margin environment partially offset by the 1.6% increase in total retail gallons sold due to new store growth since Q2 2017. PS&W contribution including RINs demonstrated strong improvement year-over-year despite lower RIN’s pricing, achieving 3.7 cpg of retail-equivalent margin.
Merchandise
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| Key Operating Metrics | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Total merchandise contribution ($ Millions) | $ | 102.3 | $ | 97.8 | $ | 193.8 | $ | 186.6 | ||||||||
| Total merchandise sales ($ Millions) | $ | 616.1 | $ | 605.7 | $ | 1,183.8 | $ | 1,171.5 | ||||||||
| Total merchandise sales ($K SSS) | $ | 143.5 | $ | 145.0 | $ | 138.0 | $ | 140.3 | ||||||||
| Merchandise unit margin (%) | 16.6 | % | 16.1 | % | 16.4 | % | 15.9 | % | ||||||||
| Tobacco contribution ($K SSS) | $ | 13.9 | $ | 13.6 | $ | 13.4 | $ | 13.1 | ||||||||
| Non-tobacco contribution ($K SSS) | $ | 10.0 | $ | 9.8 | $ | 9.2 | $ | 9.2 | ||||||||
| Total merchandise contribution ($K SSS) | $ | 23.9 | $ | 23.4 | $ | 22.6 | $ | 22.3 | ||||||||
Total merchandise contribution increased 4.6% to $102.3 million in the second quarter 2018, while average unit margins increased to 16.6% from 16.1%, a new quarterly record. In addition, merchandise contribution exceeded $100 million in a quarter for the first time. On a SSS basis, total merchandise contribution improved 2.0%, largely due to more effective promotions, driving both tobacco and non-tobacco margin contribution higher in the current quarter.
Other Areas
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| Key Operating Metrics | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Total station and other operating expense ($ Millions) | $ | 134.8 | $ | 129.4 | $ | 262.2 | $ | 254.2 | ||||||||
| Station OPEX excluding credit card fees ($K APSM) | $ | 20.7 | $ | 21.2 | $ | 20.4 | $ | 20.8 | ||||||||
| Total SG&A cost ($ Millions) | $ | 35.2 | $ | 31.4 | $ | 69.7 | $ | 69.6 | ||||||||
Total station and other operating expenses increased 4.2% for the current year quarter, reflecting new store additions and slightly higher payment fees due to higher retail fuel prices and merchandise sales. However, on a per store basis, operating expenses excluding payment fees declined 2.5% from ongoing improvement initiatives. Total SG&A costs were higher by $3.8 million in the second quarter of the current year primarily due to higher salaries, associated benefits, and incentive award expenses.
Station Openings
Murphy USA opened six new retail locations in Q2 2018 and re-opened nine raze-and-rebuilds, bringing the quarter end store count to 1,454, consisting of 1,159 Murphy USA sites and 295 Murphy Express sites. A total of 37 stores are currently under construction, which includes 17 kiosks undergoing raze-and-rebuild which will return to operation as 1200 sq. ft. stores. At this time, the full year build plan is already under construction totaling 54 new and raze-and-rebuild sites.
Financial Resources
| As of June 30, | ||||||||
| Key Financial Metrics | 2018 | 2017 | ||||||
| Cash and cash equivalents ($ Millions) | $ | 71.9 | $ | 197.1 | ||||
| Long-term debt ($ Millions) | $ | 850.8 | $ | 869.1 | ||||
Cash balances as of June 30, 2018 totaled $71.9 million. Long-term debt consisted of approximately $494 million in carrying value of 6% senior notes due in 2023, $296 million in carrying value of 5.625% senior notes due in 2027 and $80 million of term debt less $20 million of current maturities, which is reflected in current liabilities. The ABL facility remains undrawn with a borrowing capacity of $310 million as of June 30, 2018.
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| Key Financial Metric | 2018 | 2017 | 2018 | 2017 | ||||||||
| Average shares outstanding (diluted) (in thousands) | 32,842 | 36,861 | 33,448 | 37,018 | ||||||||
Common shares repurchased during the current quarter were approximately 1.1 million for $72.7 million. At June 30, 2018, the Company had common shares outstanding of 32,175,669. The effective tax rate for Q2 2018 was 25.0% due primarily to the lower Federal tax rate in effect for 2018.
Earnings Call Information
The Company will host a conference call on August 2, 2018 at 10:00 a.m. Central time to discuss second quarter 2018 results. The conference call number is 1 (844) 613-1037 and the conference number is 4684214. The earnings and investor related materials, including reconciliations of any non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the Murphy USA website (http://ir.corporate.murphyusa.com). Approximately one hour after the conclusion of the conference, the webcast will be available for replay. Shortly thereafter, a transcript will be available.
Source: Murphy USA Inc. (NYSE: MUSA)
Forward-Looking Statements
Certain statements in this news release contain or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to anticipated store openings, fuel margins, merchandise margins, sales of RINs and trends in our operations. Such statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, disruptions in our supply chain and our ability to control costs; the impact of severe weather events, such as hurricanes, floods and earthquakes; the impact of any systems failures, cybersecurity and/or security breaches, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins; efficient and proper allocation of our capital resources; compliance with debt covenants; availability and cost of credit; and changes in interest rates. Our SEC report, including our Annual Report on our Form 10-K for the year ended December 31, 2017 contains other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
| Investor Contact:
Christian Pikul (870) 875-7683 Sr. Director, Investor Relations christian.pikul@murphyusa.com |
Murphy USA Inc.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| (Millions of dollars, except per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Operating Revenues | ||||||||||||||||
| Petroleum product sales (a) | $ | 3,193.7 | $ | 2,567.8 | $ | 5,831.3 | $ | 4,970.0 | ||||||||
| Merchandise sales | 616.1 | 605.7 | 1,183.8 | 1,171.5 | ||||||||||||
| Other operating revenues | 19.2 | 37.6 | 58.1 | 69.2 | ||||||||||||
| Total operating revenues | 3,829.0 | 3,211.1 | 7,073.2 | 6,210.7 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Petroleum product cost of goods sold (a) | 3,032.5 | 2,413.2 | 5,593.6 | 4,742.5 | ||||||||||||
| Merchandise cost of goods sold | 513.8 | 507.9 | 990.0 | 984.9 | ||||||||||||
| Station and other operating expenses | 134.8 | 129.4 | 262.2 | 254.2 | ||||||||||||
| Depreciation and amortization | 33.0 | 27.5 | 64.8 | 54.5 | ||||||||||||
| Selling, general and administrative | 35.2 | 31.4 | 69.7 | 69.6 | ||||||||||||
| Accretion of asset retirement obligations | 0.5 | 0.5 | 1.0 | 0.9 | ||||||||||||
| Total operating expenses | 3,749.8 | 3,109.9 | 6,981.3 | 6,106.6 | ||||||||||||
| Net settlement proceeds | 3.4 | — | 50.4 | — | ||||||||||||
| Gain (loss) on sale of assets | (0.5 | ) | 0.1 | (0.2 | ) | (3.4 | ) | |||||||||
| Income (loss) from operations | 82.1 | 101.3 | 142.1 | 100.7 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 0.3 | 0.4 | 0.6 | 0.4 | ||||||||||||