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Murphy (MUSA) Q4 Earnings Falter on Light Petroleum Sales

Motor fuel retailer Murphy USA Inc. MUSA announced fourth-quarter 2022 earnings per share of $5.21, which missed the Zacks Consensus Estimate of $6.16. The underperformance could be attributed to lower-than-expected petroleum product sales.

However, MUSA’s bottom line was significantly above the year-earlier quarter’s adjusted profit of $4.23 per share, backed by a rise in the retail gasoline price and a higher retail margin of 30.6 cents per gallon, up 11.3% year over year.

Meanwhile, Murphy USA’s operating revenues of $5.4 billion rose 12.6% year over year and brushed past the consensus mark by $47 million, primarily due to improved merchandise sales.

Merchandise sales, at $989.4 million, rose 6.7% year over year and outperformed the consensus mark of $970 million. However, revenues from petroleum product sales came in at $4.3 billion, falling 1.8% short of the Zacks Consensus Estimate but up 13.6% from the fourth quarter of 2021.

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 20.1% year over year to $369.3 million due to margin expansion and higher volumes. Total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 30.6 cents per gallon, which improved more than 11% from the fourth quarter of 2021.

Retail fuel contribution increased 19.6% year over year to $341.2 million as margins widened to 28.3 cents per gallon from 25.5 cents in the corresponding period of 2021. Retail gallons rose 7.8% from the year-ago period to 1,206.3 million in the quarter under review and edged past the Zacks Consensus Estimate by 0.4%. Volumes on an SSS basis (or fuel gallons per store) improved 5.2% from the fourth quarter of 2021 to 241.6 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.19 per gallon, up from $3.05 per gallon a year ago.

Contribution from Merchandise increased 4.2% to $189 million on higher sales, which more than offset the fall in unit margins, from 19.6% a year ago to 19.15% in the fourth quarter of 2022. On an SSS basis, total merchandise contribution was up 3.1% year over year, primarily on the back of 5.5% higher tobacco margins. Meanwhile, merchandise sales increased 4.4% on an SSS basis due to an increase in tobacco as well as non-tobacco sales.

The Zacks Rank #1 (Strong Buy) company’s monthly fuel gallons were up 5.4% from the prior-year period, while merchandise sales increased 4.7% 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 13 new retail locations in the quarter to take its store count to 1,712 — had cash and cash equivalents of $60.5 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 73.7%.

During the quarter, MUSA bought back shares worth $239.5 million.

Guidance

The company projects 2023 fuel volume in a range of 240 to 245 thousand gallons on an APSM basis. Further, Murphy USA’s 2023 guidance includes up to 45 new stores and up to 30 raze-and-rebuilds, $795-$815 million in merchandise margin contribution, and $375-$425 million in capital expenditures.

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, missing the Zacks Consensus Estimate of $4.34. However, the bottom line improved significantly from a profit of $2.94 per share in the year-ago quarter.

PSX’s worldwide margins improved to $19.73 per barrel from the year-ago quarter’s $11.95. The same in the Central Corridor and Atlantic Basin/Europe increased to $25.03 and $19.58 per barrel from the year-ago levels of $12.60 and $11, respectively. In the Gulf Coast, the metric registered an improvement to $16.35 per barrel from $10.16 in the prior-year quarter. The West Coast witnessed an increase in margins from $15.80 per barrel in the year-ago quarter to $16.77 in the December-end quarter of 2022.

But another refining giant, Valero Energy VLO, reported strong fourth-quarter earnings. The bottom line of $8.45 per share came in well above the Zacks Consensus Estimate of $7.45. The outperformance reflects increased refinery throughput volumes and a higher refining margin. In particular, adjusted operating income in the Refining unit amounted to $4.4 billion, surging from $1.1 billion in the year-ago quarter.

At the end of 2022, VLO had cash and cash equivalents of $4.9 billion, while the company’s total debt and finance lease obligations amounted to $11.4 billion. Valero’s fourth-quarter capital investment was $640 million. Of the total, $349 million was allotted for sustaining the business.

Marathon Petroleum MPC, also a downstream biggie, reported adjusted earnings per share of $6.65, which comfortably beat the Zacks Consensus Estimate of $5.54 and compared with a profit of merely $1.30 per share in the year-ago period. MPC’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3.9 billion, ahead of its Zacks Consensus Estimate by 38%.

In the reported quarter, Marathon Petroleum spent $849 million on capital programs (59% on Refining & Marketing and 35% on the Midstream segment) compared to $651 million in the year-ago period. As of Dec 31, MPC had cash and cash equivalents of $8.6 billion and total debt, including that of MPLX, of $26.7 billion, with a debt-to-capitalization of 43.9%.

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Valero Energy Corporation (VLO) : Free Stock Analysis Report

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

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Phillips 66 (PSX) : Free Stock Analysis Report

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