EL DORADO, Ark. — Murphy USA Inc. ended the second quarter of 2021 with strong results despite a myriad of significant obstacles. Disruptions to the supply chain, a tight labor market, and the continuing impact of the COVID-19 pandemic contributed to what President and CEO Andrew Clyde labeled "the most challenging quarter in company history." Despite this, he stated that from a financial perspective, it was also the second strongest quarter in company history.
"Supply chain issues, labor shortages and Colonial Pipeline interruptions were just a few of the challenges around which our teams were forced to navigate and overcome," Clyde said. "Nevertheless, results were resilient despite these challenges and underpinned by strong fundamentals, including a recovery in attached merchandise categories as customer transactions and fuel volumes trended higher in June, coupled with robust all-in fuel margins despite another quarter of rising product prices."
The retailer's net income for Q2 2021 was $128.8 million, compared to net income of $168.9 million during Q2 2020, while adjusted EBITDA was $244.5 million, compared to $274.2 million a year ago.
Total retail gallons sold during the quarter increased 32.6 percent year over year, while fuel volumes on a same-store sales basis rose 22.4 percent.
Merchandise sales were also up. Total merchandise contribution increased 55.8 percent to $184.5 million during Q2 2021, up from $118.4 million during Q2 2020. This was primarily due to the inclusion of QuickChek Corp. as Q2 was the first full quarter to pass since Murphy USA took ownership of the Whitehouse Station, N.J.-based chain; and higher same-store sales, which increased 2.4 percent during the quarter.
The inclusion of QuickChek also prompted the food and beverage contribution margin to jump to 15.2 percent of total merchandise contribution dollars, compared to 0.8 percent the previous year. Tobacco contribution also saw positive results, increasing 2.2 percent on a same-store sales basis.
Clyde called the end results "impressive," especially considering that the quarter was, from an operations and executions standpoint, "by far, the single most challenging quarter" the company has experienced. The chief executive noted that the Q2 results were also noteworthy against the strength of the prior-year comparison, which he said highlights the advantage of Murphy USA's low-cost, high-volume business model.
"[This] differentiates our performance potential and better positions Murphy USA to compete and win in a challenging environment," he said.
Clyde stressed that the quarter's strong results were not based on chance, but rather were the outcome of "a deliberate set of choices and intentional actions" that were themselves built on decisions and capabilities developed since the company's 2013 spinoff from Murphy Oil Corp.
El Dorado-based Murphy USA opened three new-to-industry retail locations and closed one existing location during the quarter, bringing its total store count to 1,662. This includes 1,151 Murphy USA stores, 356 Murphy Express stores, and 155 QuickChek stores.
Twenty-nine stores are currently under construction, including nine new 2,800-square foot Murphy Express stores, six QuickChek stores, and 14 raze-and-rebuilds.
One challenge the company hasn't overcome is the effect of supply chain disruptions on its plan for organic growth. While Murphy USA originally expected to add 50 new stores this year, including five QuickChek stores, its build schedule is experiencing delays due to supply chain limitations — primarily a lack of the protective coating resin needed for underground fuel tanks.
As a result, the company is pushing back many store openings to 2022, with delays expected to continue into 2023. The retailer now anticipates adding approximately 30 new Murphy Express stores, six QuickChek stores and 31 raze-and-rebuild projects this year. Early indications for 2022 are 50 to 55 new Murphy Express stores, six to eight new QuickChek stores, and 25 raze-and-rebuilds.