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Murphy (MUSA) Q4 Earnings Beat Despite Lower Gasoline Prices

Motor fuel retailer Murphy USA Inc. MUSA announced fourth-quarter 2023 earnings per share of $7, which beat the Zacks Consensus Estimate of $6.31 and came ahead of the year-ago profit of $5.21. The outperformance primarily reflects higher fuel margins and robust merchandise sales.

However, Murphy USA’s operating revenues of $5.1 billion fell 5.5% year over year and missed the consensus mark by $291 million due to a fall in the retail gasoline price.

Merchandise sales, at $1 billion, rose 2.9% year over year and came in line with our estimate. Revenues from petroleum product sales came in at $4 billion, below our estimate of $4.4 billion and down 7.2% from the fourth 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

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Key Takeaways

MUSA’s total fuel contribution rose 6.4% year over year to $393 million due to margin expansion. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 32.5 cents per gallon, 6.2% higher than the fourth quarter of 2022.

Retail fuel contribution increased 10.2% year over year to $376 million as margins widened to 31.1 cents per gallon from 28.3 cents in the corresponding period of 2022. Retail gallons edged up 0.2% from the year-ago period to 1,208.4 million in the quarter under review but missed our estimate by 2%. Volumes on an SSS basis (or fuel gallons per store) declined 1.5% from the fourth quarter of 2022 to 237.9 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $2.97 per gallon, down from $3.19 per gallon a year ago.

Contribution from Merchandise increased 4.6% to $197.7 million on higher sales and a rise in unit margins from 19.1% a year ago to 19.4% in the fourth quarter of 2023. On an SSS basis, total merchandise contribution was up 3.2% year over year, primarily on the back of 7.1% higher tobacco margins. Meanwhile, merchandise sales increased 1.4% on an SSS basis, again due to an increase in tobacco sales.

The Zacks Rank #2 (Buy) company’s monthly fuel gallons were down 1.4% from the prior-year period, though merchandise sales increased 1.8% 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 Dec 31, Murphy USA — which opened 10 new retail locations in the quarter to take its store count to 1,733 — had cash and cash equivalents of $117.8 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 68.3%.

During the quarter, MUSA bought back shares worth $162 million.

Guidance

The company projects 2024 fuel volume in the range of 240-245 thousand gallons on an APSM basis. Further, Murphy USA’s 2024 guidance includes 30-35 new stores and 35-40 raze-and-rebuilds, $860-$880 million in merchandise margin contribution, and $400-$450 million in capital expenditures.

Some Key Refining Earnings

While we have discussed MUSA’s third-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 $3.09, comprehensively beating the Zacks Consensus Estimate of $2.37. The outperformance can be primarily attributed to lower costs. This was partially offset by PSX’s declining refining margins worldwide.

For the reported quarter, Phillips 66 generated $2.2 billion of net cash from operations, down from $4.8 billion a year ago. PSX’s capital expenditure and investments totaled $634 million. It paid out dividends of $457 million in the reported quarter. As of Dec 31, 2023, cash and cash equivalents were $3.3 billion. Meanwhile, Phillips 66 reported a total debt of $19.4 billion, reflecting a consolidated debt to capitalization of 34%.

Meanwhile, another refining giant — Valero Energy VLO —  reported better-than-expected fourth-quarter earnings. EPS of $3.55 per share came in above the Zacks Consensus Estimate of $2.95. This was on account of VLO’s lower costs. Bringing more good news, the company increased its quarterly cash dividend on common stock by 5% to $1.07 per share.

At the end of 2023, VLO had cash and cash equivalents of $5.4 billion, while the company’s total debt and finance lease obligations amounted to $11.5 billion. Valero’s fourth-quarter capital investment was $540 million. Of the total, $460 million was allotted for sustaining the business.

Finally, we have Marathon Petroleum’s MPC fourth-quarter adjusted earnings per share of $3.98, which comfortably beat the Zacks Consensus Estimate of $2.36. The outperformance primarily reflects the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $1.2 billion, above the consensus mark of $812 million.

MPC’s total refined product sales volumes were 3,612 thousand barrels per day (mbpd), up from 3,532 mbpd in the year-ago quarter. Also, throughput rose from 2,895 mbpd in the year-ago quarter to 2,931 mbpd and outperformed the Zacks Consensus Estimate of 2,891 mbpd.

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Murphy USA Inc. (MUSA) : Free Stock Analysis Report

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