EL DORADO, Ark. — During recent earnings calls, Murphy USA Inc. has shared its continued strength throughout quarters punctuated by multiple severe events. During the second quarter of 2023, however, the company reported something different: further success during a period in which it faced few to no external interruptions.
"If I take a step back and consider the relatively benign external operating environment of the second quarter with nothing extraordinary taking place and then think about the high bar we are lapping from the prior year period, I view our results as even more exceptional," said Murphy USA President and CEO Andrew Clyde during the company's most recent earnings call.
Clyde noted that when considering fuel margins, the past three years could be categorized by exogenous events such as pandemic-driven demand destruction, geopolitical instability, severe volatility, steeply rising prices and precipitous price fall offs. The only constant was higher fuel margins, which some investors and analysts were hesitant to believe were sustainable during a more normal period.
"Well, following three years of macro uncertainty and one-time events, there was absolutely nothing remarkable about the environment in Q2. In fact, the only thing you may find remarkable about the quarter is that we are once again reporting all-in fuel margins on the high end of our range at $0.295 per gallon," he said. "In recent months, more investors and analysts have asked me, 'Are we really still debating higher fuel margins?' My answer, of course, is, no, we are not. There is no internal debate at Murphy USA. The answer, to us, appears quite clear."
Outside of fuel margins, Murphy USA leadership reported continued strength across all major categories. Merchandise sales and margin momentum were led by total volume and market share gains in tobacco, along with sales and contribution growth in nontobacco categories.
Food and beverage also saw performance improve during the quarter, with their sales and margins up 6 percent and 3 percent, respectively.
Q2 BY THE NUMBERS
El Dorado-based Murphy USA reported net income of $132.8 million during Q2 2023, compared to net income of $183.3 million during Q2 2022. Revenue was $5.6 billion compared to $6.8 billion during the same quarter one year ago. Adjusted EBITDA was $257 million vs. $317 million the previous year.
The average price at the fuel pump was $3.21 per gallon during the quarter, down from $4.21 per gallon during Q2 2022. Total retail gallons increased 2.3 percent during Q2 2023 compared to Q2 2022, while volumes declined 1.8 percent on a same store sales basis.
Merchandise contribution dollars for the quarter rose 5.1 percent to $206.8 million on average unit margins of 19.7 percent for the quarter, compared to the prior-year quarter's contribution dollars of $196.7 million on unit margins of 19.8 percent.
During the quarter, Murphy USA opened seven new-to-industry convenience stores and reopened four raze-and-rebuilds. Ten new stores and 14 raze-and-rebuilds were under construction at the end of the quarter.
"Murphy USA results show continued momentum in the second quarter, maintaining fuel market share while delivering incremental in-store growth against exceptional 2022 performance," said Clyde. "Our strong year-to-date performance in an environment with markedly less volatility reaffirms our belief that the structural change in fuel margins is not only sustainable, but also closer to the high-end of our expectations. We remain confident in our ability to track favorably against our full-year guidance and are well-positioned to capitalize on the opportunities ahead."
El Dorado-based Murphy USA's network comprises more than 1,700 stations primarily in the Southwest, Southeast, Midwest and Northeast regions of the United States. The majority of Murphy USA's sites are located in close proximity to Walmart stores. The company also markets gasoline and other products at standalone stores under the Murphy Express and QuickChek brands.