Murphy USA Ends 2014 on a High Note

EL DORADO, Ark. — Murphy USA Inc. ended its first full year as a standalone company on a high note, with net income more than tripling in its 2014 fiscal fourth quarter vs. the same period in 2013.

Huge increases in retail fuel margins and merchandise gross margin dollars led Murphy USA to post a net profit of $98.3 million for the quarter ended Dec. 31, vs. a profit of $29.5 million in the same period one year prior.

Retail fuel margins more than doubled year over year to 24.6 cents per gallon, the highest quarterly margin achieved since 2008. A low gas price environment also helped retail fuel volume grow 2.7 percent per site.

The average retail fuel price for the fourth quarter — including taxes — was $2.67 per gallon, vs. $3.11 in the same period in 2013.

"Our fuel contribution was truly remarkable," Murphy USA President and CEO Andrew Clyde said Thursday during the company's earnings call.

Clyde did acknowledge that the low fuel price environment is sure to end in the near future, and retail fuel margins should normalize at a price of 12 to 13 cents per gallon.

"It's a question of when, not if," he said regarding the potential for fuel prices to rise.


Although some pundits correlate low gas prices to stronger in-store sales, Clyde stopped short of saying low gas prices were a primary reason for Murphy USA's blowout quarter in terms of merchandise sales. He said better weather in late 2014 helped, and the chief executive hypothesized that consumers with extra cash could very well be using the money at other retailers, to travel or pay down personal debt.

"It's hard to isolate if lower [gas] prices are improving our business," he said. "Consumers are spending money in many different areas."

The CEO added that he has studied consumer trends and found that consumers dramatically change their merchandise purchasing approach when gas prices rise above $4 per gallon, "but we don't see the same thing when prices get very low."

Total merchandise sales grew 11.3 percent year over year in Murphy USA's latest quarter, which Clyde attributed to robust promotions, such as a buy three, get 10 cents off marketing program, as well as a great team of employees who are skilled at upselling customers.

The only area exhibiting weakness inside Murphy USA and Murphy Express stores was cigarette sales, but Clyde noted smokeless and electronic vapor products helped offset some of the loss.

Every other in-store category was strong across the board in Murphy USA's most recent quarter, with dispensed beverage sales increasing 17 percent year over year, beer and wine by 8 percent, packaged beverages by 7 percent, salty snacks by 13 percent and candy by 6 percent.

Looking ahead, Murphy USA plans to continue its organic growth model. The company opened 24 new stores in its fourth quarter, and 60 for the 2014 calendar year. Forty-three of the 60 stores are large-format, 1,200-square-foot locations.

The El Dorado-based retailer has already opened two new stores in 2015, with six more currently under construction.

As of Dec. 31, Murphy USA operated 1,263 convenience stores and gas stations. The company was spun off from Murphy Oil Corp. in 2013.

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