EL DORADO, Ark. — Murphy USA 's efforts to build a strong foundation for long-term success continued to drive results in the third quarter of 2019. The company's net income was $69.2 million, compared to $45 million in Q3 2018. Adjusted EBITDA was $158.7 million, also up from one year ago.
President and CEO Andrew Clyde called the quarter "rewarding and fulfilling" on financial and strategic levels, and said it was one of the company's best quarters since its 2013 spinoff from Murphy Oil Corp., in his personal estimation.
"The third-quarter performance clearly demonstrates some of the benefits of recent investments as adjusted EBITDA grew 51 percent over the prior year, capitalizing on market share gains in both the fuels and merchandise businesses," Clyde reported during the company's recent Q3 earnings call. "New stores are also outperforming the network, which gives us a high level of confidence ahead of an increase in our organic growth over the next several years."
The chief executive also noted that Murphy USA refinanced its balance sheet to accelerate its share repurchase activity in Q3 and jumpstart the benefits it expects from its previously announced share repurchase program (up to $400 million).
Both fuel and merchandise turned in strong Q3 results year over year. Total retail gallons increased 5.3 percent, while volumes on a same-store basis rose 2.7 percent. Merchandise contribution dollars increased 6.4 percent to $111.2 million, due to higher sales across the chain and strong new store performance.
While sales were strong for both tobacco and non-tobacco products, Clyde specifically highlighted general merchandise, snacks and beer as helping to drive purchases in the latest quarter.
Five new stores opened during the third quarter, bringing El Dorado-based Murphy USA's total store count to 1,479 locations. This includes 1,160 Murphy USA sites and 319 Murphy Express sites.
Currently, 21 additional stores are under construction, including 11 new retail locations and 10 kiosks undergoing the raze-and-rebuild process. The latter sites will reopen as 1,400-square-foot stores. All but three of the new sites are expected to begin operation during Q4 2019.
Murphy USA is reaping the benefits of improving its site selection capabilities, which has resulted in higher-performing stores, Clyde said.
He also touted the benefits of its 2,800-square-foot store format, which will make up the bulk of new stores moving forward.
Murphy Drive Rewards, the company's new loyalty program, is also contributing to its positive sales. Since the program's launch, which kicked off with a national rollout in March, enrollment has reached 2.6 million, and significantly more non-members can still engage with certain program benefits.
The retailer is already seeing signs of behavior change, such as more frequent trips, higher gallon purchases, and more merchandise sales.