Murphy USA CEO Points to Three Drivers of Q2 2022 Strength

EL DORADO, Ark. — Murphy USA Inc.'s value proposition continues to prove its worth as an advantaged business model, according to CEO Andrew Clyde, who touted it as the reason for the second straight quarter of strong financial results.

The chief executive listed three key elements behind the success of Murphy's second quarter 2022 performance:

• Its high-volume, everyday low-price fuel model, which Clyde noted becomes more effective in a higher margin environment.
• The resilience of its customers. "Despite known pressures impacting take-home pay, we are clearly seeing our low-price offer resonate to more and more value-seeking customers," he said.
• The investments Murphy made to engage its staff, which have delivered the targeted results of increased engagement, reduced turnover and higher applicant flow without permanently impacting its cost structure.

"With inflation above its 40-year high, consumers need affordable everyday low prices on goods and services now more than ever," Clyde said. "Q2 results affirm that Murphy USA is one of the top value brands that consumers trust to meet their needs."

The value is notable on the forecourt. Over the past six months, Murphy USA's fuel business gained market share despite the rising price environment, which Clyde said would have been difficult to accomplish in an economically viable manner in previous lower margin environments.

A review of nearly 100,000 Murphy Drive Rewards loyalty program members found that they are buying a few gallons less per month. The fact that the Murphy is still growing overall volume indicates it is adding new customers, he noted.

"Our low-price strategy is effective across a wide range of different price and margin environment but is most economically impactful when industry margins are more robust, all else being equal," Clyde said.

Inside its convenience stores, Murphy USA reported strong growth in packaged beverages and improved performance from other center-store categories. Additionally, the retailer is seeing new tobacco customers in search of greater value, Clyde added.

The company is also seeing positive results from product innovation, such as the proprietary made-to-order ice and frozen energy drinks offered at QuickChek locations.

Murphy USA closed on its $645-million acquisition of QuickChek Corp. in early 2021. The deal for the Whitehouse Station, N.J.-based retailer added 157 c-stores in the Northeast to Murphy USA's portfolio.

Q2 BY THE NUMBERS

During the second three months of 2022, Murphy USA reported net income of $183.3 million, compared to net income of $128.8 million during the second quarter of 2021. Revenue was $6.8 billion, compared to $4.5 billion during the same time period one year ago. EBITDA was $317 million vs. $245 million the previous year.

Looking at fuels, average retail gasoline prices were $4.21 per gallon, well above the $2.73 per gallon average in the second quarter of 2021. Total retail gallons were up 7.8 percent to reach 1.2 billion gallons in Q2 2022, compared to 1.1 billion gallons during Q2 2021. Volumes on a same-store sales basis increased 4.8 percent.

Inside the store, merchandise contribution dollars for the quarter increased 6.6 percent to $196.7 million on average unit margins of 19.8 percent, compared to the prior-year quarter's contribution dollars of $184.5 million on unit margins of 19.2 percent.

Food and beverage contribution margin increased 5 percent from the prior-year period and sales dollars improved 10.5 percent.

During the second quarter, El Dorado-based Murphy USA opened nine new Murphy Express stores, increasing its store count to 1,695 locations. On a year-to-date basis, the company has opened 15 new Murphy Express stores, one new QuickChek store and 12 raze-and-rebuild Murphy USA locations.

Seventeen new Murphy Express stores, six new QuickChek stores and 15 raze-and-rebuild Murphy USA stores are currently under construction. The company is on track to complete a total of 35 raze-and-rebuilds this year, which Clyde expects to help diversify Murphy's merchandise mix and grow contribution margin.