Murphy USA (MUSA) Q3 Earnings Lag On Lower Retail Margins

Murphy USA Inc. (NYSE:MUSA) reported weaker-than-expected results in the third quarter of 2018 on lower retail margins. The company’s adjusted net income per share came in at $1.38, lagging the Zacks Consensus Estimate of $1.49. Further, the bottom line deteriorated from the year-ago figure of $1.90 per share.

Murphy USA’s operating revenues of $3,788 million lagged the Zacks Consensus Estimate of $3,826 million. However, the top line increased around 17% from the year-ago figure of $3,211.1 million. Revenues from petroleum product sales came in at $3,151.5 million.

Key Takeaways

The company’s total fuel contribution was down 18.2% year over year to $172.7 million. Retail fuel contribution declined 4.7% year over year to $151.4 million amid lower margins, which decreased 8.3% from the prior-year quarter. The results were partly offset by a rise in retail gallons, which increased 3.5% to 1,064 billion gallons in the quarter under review. Along with increased total retail gallons sold, volumes on a same-store sales (SSS) basis also rose 0.9% from the third quarter of 2017.

Contribution from Merchandise increased 7% to stand at $104.5 million on higher unit margins, which increased to 16.8% from 16.1% a year ago. On SSS basis, total merchandise contribution was up 5.6% year over year in the quarter under review on the back of active promotions and higher tobacco/non-tobacco margins. Tobacco and non-tobacco contributions increased 6.7% and 4%, respectively.

Fuel gallons rose 1.3% and merchandise sales increased 0.9% on an average per store month (or APSM) basis. However, fuel gallons per month declined 1.5% and merchandise sales decreased 0.7% on SSS basis.

Balance Sheet

As of Sep 30, Murphy USA — whose peers include Delek US Holdings, Inc. (NYSE:DK) , HollyFrontier Corporation (NYSE:HFC) and Marathon Petroleum Corporation (NYSE:MPC) — had cash and cash equivalents of $75.4 million, and long-term debt (including lease obligations) of $846.6 million, with a debt-to-capitalization ratio of 53.7%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>