Murphy USA Inc. has announced financial results for the three and nine months ended September 30, 2023.
Key Highlights:
— Net income was $167.7 million, or $7.69 per diluted share, in Q3 2023 compared to net income of $219.5 million, or $9.28 per diluted share, in Q3 2022
— Total fuel contribution (retail fuel margin plus product supply and wholesale (“PS&W”) results including RINs) for Q3 2023 was 34.5 cpg, compared to 37.6 cpg in Q3 2022
— Total retail gallons decreased 2.5% in Q3 2023 compared to Q3 2022, while volumes on a same store sales (“SSS”) basis declined 4.7%
— Merchandise contribution dollars for Q3 2023 increased 3.0% to $211.8 million on average unit margins of 20.1%, compared to the prior-year quarter contribution dollars of $205.7 million on unit margins of 20.0%
— During Q3 2023, the company repurchased approximately 201.1 thousand common shares for $65.3 million at an average price of $325.00 per share
— The company recently published its 2022 Environmental, Social and Governance Summary Report and it is available for download and can be accessed from Murphy USA’s investor relations website
• On October 26, the company announced a quarterly cash dividend of 41 cents per share, or $1.64 per share on an annualized basis, reflecting a 5.1% increase from the prior quarter. The dividend is payable on December 1, 2023, to stockholders of record as of November 6, 2023
“We are very pleased with third quarter performance as we comp last year’s extraordinary earnings,” said President and CEO Andrew Clyde. “On a two-year stack basis, Murphy USA demonstrated industry leading fuel volume and tobacco gains, while current year fuel margins highlight the sustainability of elevated industry margins in a less volatile setting. Momentum carried through to October especially at QuickChek where new promotions and initiatives have contributed to record food and beverage profits.”
Total fuel contribution dollars of $419.0 million decreased $49.1 million, or 10.5%, in Q3 2023 compared to Q3 2022 due to lower total fuel contribution margins and retail volumes sold during the period. Retail fuel contribution dollars decreased $140.9 million, or 28.8%, to $348.6 million compared to Q3 2022 due to lower retail fuel margins and volumes sold. Current quarter retail fuel margins were strong at 28.7 cpg, although it was a 27.0% decline when compared to Q3 2022, which benefited from a declining commodity price environment.
Overall, retail volumes were slightly lower by 2.5% when compared to the prior-year quarter. PS&W margins (including RINs) improved $91.8 million, when compared to Q3 2022, reflecting higher contribution from inventory pricing adjustments partially offset by weaker spot-to-rack spreads.
Total merchandise contribution increased $6.1 million, or 3.0%, to $211.8 million in Q3 2023 compared to the prior-year quarter due primarily to higher unit sales volumes. Total tobacco contribution dollars in Q3 2023 increased 3.1% and non-tobacco contribution dollars increased 3.3% compared to Q3 2022.
Total store and other operating expenses were $11.1 million higher in Q3 2023 versus Q3 2022, mainly due to employee related expenses, store maintenance costs, and inventory shrink costs partially offset by lower payment fees. Store OPEX excluding payment fees and rent on an APSM basis were 5.8% higher versus Q3 2022, primarily attributable to increased employee related expenses, maintenance, and inventory shrink costs. Total SG&A costs for Q3 2023 were $7.6 million higher than Q3 2022 primarily due to higher employee and incentive costs and professional and technology fees from business improvement initiatives.
Cash balances as of September 30, 2023 totaled $124.8 million, and the company also had total marketable securities of $15.9 million. Long-term debt consisted of approximately $298.3 million in carrying value of 5.625% senior notes due in 2027, $495.5 million in carrying value of 4.75% senior notes due in 2029, $494.4 million in carrying value of 3.75% senior notes due in 2031, and $380.9 million of term debt. In addition, the company has approximately $117.3 million in long-term capital leases. The revolving cash flow facility was undrawn as of September 30, 2023.
At September 30, 2023, the company had common shares outstanding of 21,277,031. Common shares repurchased during the quarter were approximately 201.1 thousand shares for $65.3 million, which were purchased under the 2021 share repurchase plan. Common shares purchased during the nine months ended September 30, 2023, were approximately 584.1 thousand shares for a total of $174.1 million. As of September 30, 2023, approximately $41.0 million remained available under the $1 billion 2021 plan, along with the entire balance of up to $1.5 billion 2023 plan.
The effective income tax rate for Q3 2023 was 24.9% compared to 24.5% in Q3 2022.
The company paid a quarterly cash dividend on September 7, 2023 of 39 cents per share, or $1.56 per share on an annualized basis, a 2.6% increase from the previous quarter for a total cash payment of $8.4 million. The total amount paid in dividends year-to-date is $24.7 million, or $1.14 per share.
The company is updating specific guidance metrics initially provided in January. Due to ongoing challenges in permitting new sites, contractor delays, and other supply chain hurdles, the forecast is now 27-30 new stores to open in 2023, versus the “up to 45” in the original guidance.
The company successfully redirected capital to slightly increase raze-and-rebuild activity, planning to end the year at 33 stores, above the initial guidance of “up to 30” stores. Accordingly, as some of the growth capital is deferred into 2024 due to delays in new store growth, the expected range of capital expenditures should approximate $325 million to $375 million, from $375 million to $425 million previously.
