Yahoo Finance Murphy (MUSA) Q1 Earnings Miss on Weak Margins, Product Sales
Motor fuel retailer Murphy USA Inc. MUSA announced first-quarter 2024 earnings per share of $3.13, which missed the Zacks Consensus Estimate of $4.09 and came in below the year-ago profit of $4.80. The underperformance primarily reflects lower fuel margins and weak petroleum product sales.
Meanwhile, Murphy USA’s operating revenues of $4.8 billion fell 4.6% year over year and missed the consensus mark by $25 million.
Revenues from petroleum product sales came in at $3.8 billion, below our estimate of $3.9 billion and down 4.6% from the first quarter of 2023. On the other hand, merchandise sales, at $1 billion, rose 3.6% year over year and came ahead of our estimate of $895.6 million.
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 13.3% year over year to $286.1 million due to margin contraction. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 24.8 cents per gallon, 14.2% lower than the first quarter of 2023.
Retail fuel contribution decreased 5.6% year over year to $250 million as margins narrowed to 21.7 cents per gallon from 23.2 cents in the corresponding period of 2023. Retail gallons edged up 1% from the year-ago period to 1,153.1 million in the quarter under review but just missed our estimate of 1,155.8 million. Volumes on an SSS basis (or fuel gallons per store) declined 0.2% from the first quarter of 2023 to 227.3 thousand.
Contribution from Merchandise increased 2.4% to $191.6 million on higher sales that offset a drop in unit margins from 19.4% a year ago to 19.2% in the first quarter of 2024. On an SSS basis, total merchandise contribution was up 2.2% year over year, primarily on the back of 6.2% higher tobacco margins. Meanwhile, merchandise sales increased 3.2% on an SSS basis, again due to an increase in tobacco sales.
The Zacks Rank #3 (Hold) company’s monthly fuel gallons were essentially unchanged from the prior-year period, though merchandise sales increased 3.1% on an average per store monthly basis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Balance Sheet
As of Mar 31, Murphy USA — which opened three new retail locations in the quarter to take its store count to 1,733 — had cash and cash equivalents of $56.7 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 69.5%.
During the quarter, MUSA bought back shares worth $86.9 million.
Some Key Refining Earnings
While we have discussed MUSA’s first-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 $1.90, which missed the Zacks Consensus Estimate of $2.05. The underperformance was primarily due to lower refining margins worldwide and increased expenses. Total costs and expenses in the first quarter increased to $35.5 billion from $32.4 billion in the year-ago period. The reported figure for PSX lagged our projection of $38.4 billion.
For the reported quarter, Phillips 66 generated $236 million of net cash from operations, significantly down from $1.2 billion a year ago. The company’s capital expenditure and investments totaled $628 million. It paid out dividends of $448 million in the first quarter. As of Mar 31, 2024, cash and cash equivalents were $1.6 billion. Total debt was $20.2 billion, reflecting a debt-to-capitalization of 40%.
Meanwhile, another refining giant — Valero Energy VLO — reported first-quarter 2024 adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.18, driven by a decline in total cost of sales. Adjusted operating income in the Refining segment totaled $1.7 billion, down from $4.1 billion in the year-ago quarter. The figure also missed our estimate of $1.6 billion.
Valero’s total cost of sales declined to $29.8 billion from the year-ago figure of $32.1 billion. The figure is also below our estimate of $30.4 billion, primarily due to lower material costs and operating expenses. The first-quarter capital investment totaled $661 million, of which $563 million was allotted for sustaining the business.
Finally, we have Marathon Petroleum’s MPC first-quarter adjusted earnings per share of $2.78, which comfortably beat the Zacks Consensus Estimate of $2.53. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $766 billion, surpassing the consensus mark of $660 million.
MPC’s total refined product sales volumes were 3,277 thousand barrels per day (mbpd), down from 3,352 mbpd in the year-ago quarter. Also, throughput dropped from 2,837 mbpd in the year-ago quarter to 2,664 mbpd and underperformed the Zacks Consensus Estimate of 2,728 mbpd. MPC’s operating costs per barrel increased from $5.68 in the year-ago quarter to $6.14.
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