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Murphy (MUSA) Q1 Earnings Beat Despite Lower Gasoline Prices

Motor fuel retailer Murphy USA Inc. MUSA announced first-quarter 2023 earnings per share of $4.80, which beat the Zacks Consensus Estimate of $4.06. The outperformance could be attributed to higher volumes and retail fuel contribution.

However, MUSA’s bottom line was significantly below the year-earlier quarter’s adjusted profit of $6.08 per share, dragged down by a fall in the retail gasoline price.

Meanwhile, Murphy USA’s operating revenues of $5.1 billion edged down 0.8% year over year but breezed past the consensus mark by $118 million, primarily due to improved merchandise sales.

Merchandise sales, at $966.2 million, rose 8.3% year over year and outperformed the consensus mark of $887 million. However, revenues from petroleum product sales came in at $4 billion, falling 3.4% short of the Zacks Consensus Estimate and declining 3.7% from the first quarter of 2022.

Murphy USA Inc. Price, Consensus and EPS Surprise


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

Murphy USA Inc. price-consensus-eps-surprise-chart | Murphy USA Inc. Quote


Key Takeaways

MUSA’s total fuel contribution fell 10.8% year over year to $329.9 million due to margin contraction. On a bearish note, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 28.9 cents per gallon, which dropped 15% from the first quarter of 2022.

Retail fuel contribution increased 4.4% year over year to $264.7 million even as margins, at 23.2 cents per gallon, remained essentially unchanged from the corresponding period of 2022. Retail gallons rose 4.9% from the year-ago period to 1,141.8 million in the quarter under review but missed the Zacks Consensus Estimate of 1,147 million. Volumes on an SSS basis (or fuel gallons per store) improved 2.2% from the first quarter of 2022 to 227.8 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.15 per gallon, down from $3.43 per gallon a year ago.

Contribution from Merchandise increased 6.5% to $187.1 million on higher sales, which more than offset the fall in unit margins, from 19.7% a year ago to 19.4% in the first quarter of 2023. On an SSS basis, total merchandise contribution was up 5% year over year, primarily on the back of 5.6% higher non-tobacco margins. Meanwhile, merchandise sales increased 6% on an SSS basis due to an increase in tobacco as well as non-tobacco sales.

The Zacks Rank #2 (Buy) company’s monthly fuel gallons were up 2.4% from the prior-year period, while merchandise sales increased 6% on an average per store month basis.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Balance Sheet

As of Dec 31, Murphy USA — which opened eight new retail locations in the quarter to take its store count to 1,720 — had cash and cash equivalents of $102.1 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 71.4%.

During the quarter, MUSA bought back shares worth $13.7 million.

Some Key Refining Earnings

While we have discussed MUSA’s fourth-quarter results in detail, let’s see how some other refining companies have fared this earnings season.

Phillips 66 PSX reported adjusted earnings per share of $4.21, beating the Zacks Consensus Estimate of $3.58. Moreover, the bottom line improved significantly from a profit of $1.32 per share in the year-ago quarter.

PSX’s worldwide margins almost doubled to $20.72 per barrel from the year-ago quarter’s $10.83. The same in the Central Corridor and Atlantic Basin/Europe increased to $26.86 and $16.13 per barrel from the year-ago levels of $7.89 and $11.71, respectively. In the Gulf Coast, the metric registered an improvement to $21.28 per barrel from $8.59 in the prior-year quarter. However, the West Coast witnessed a decline in margins from $17.74 per barrel in the year-ago quarter to $16.53 in the March-end quarter of 2023.

Another refining giant, Valero Energy VLO, also reported strong first-quarter earnings. The bottom line of $8.27 per share came in well above the Zacks Consensus Estimate of $7.24. The outperformance reflects increased refinery throughput volumes and a higher refining margin. In particular, adjusted operating income in the Refining unit amounted to $4.1 billion, surging from $1.5 billion in the year-ago quarter.

At the end of the first quarter, VLO had cash and cash equivalents of $5.5 billion, while the company’s total debt and finance lease obligations amounted to $11.4 billion. Valero’s first-quarter capital investment was $524 million. Of the total, $341 million was allotted for sustaining the business.

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