Murphy USA Sees Future in Value-Seeking Consumers
EL DORADO, Ark. — Murphy USA Inc. expects the company's business model to carry it past a challenging first quarter of 2025 to yield long-term positive effects, President and CEO Andrew Clyde said during a recent earnings call.
"We've always said the Murphy USA business model is somewhat inflation proof, recession resistant and relatively immune to other periods of consumer weakness. We can now add tariff resistance to our lexicon," Clyde commented. "Our business model has proven durable and resilient against a wide-ranging variety of challenges over the last 12 years as a public company speaks to serving value-oriented customers products that are largely nondiscretionary with an [everyday low-price] offer to a relatively simple but always evolving business model."
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Calendar effects, such as no Leap Day or Easter during Q1 2025, storms in Murphy USA's operating area and a lack of a $1 billion lottery jackpot contributed to lower traffic during the quarter vs. the year-ago period. At the same time, Murphy USA outperformed in candy during the lead-up to Easter.
The food and beverage offerings at the company's QuickChek banner were a bright spot during the quarter, with menu innovation, the relaunched QuickChek Rewards program and other targeted promotions driving sandwich unit growth up 8% while boosting breakfast traffic, Clyde shared. Total food and beverage sales were up nearly 1% during the quarter.
"One thing remains clear to us. The hard data is telling us that our customer is resilient and continues to seek value from Murphy USA. This hard data derived from nearly 50 million loyalty customer transactions just in the first quarter of this year speaks to a pressured yet durable Murphy USA customer," the chief executive said. "We continue to see more and more people seeking value and trading down into Murphy USA for their nondiscretionary needs as evidenced by growing membership in our Murphy Drive Rewards and QuickChek Rewards loyalty programs, up 11% and 30%, respectively, in the first quarter."
By the Numbers
The retailer added eight new stores to the Murphy USA network during Q1 and its construction activity remains "robust," said Executive Vice President and Chief Financial Officer Galagher Jeff, with 18 new stores and 20 raze-and-rebuilds in the pipeline.
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"Our new stores continue to perform well with our 2022 and 2023 build classes outperforming the fleet average by nearly 20% in gallons and nearly 40% in merchandising margin while producing EBITDA 18% higher than the chain on a per store basis in Q1," Jeff said. "These new stores are driving value and winning new customers, which is why we're aggressively working on our new store pipeline to deliver more high-quality stores in 2025 and 2026."
Murphy USA reported net income of $53.2 million during Q1 2025, down from $66 million during the same quarter one year ago. Merchandise contribution dollars for the quarter increased 2.3% to $195.9 million on average unit margins of 19.6%, up from contribution dollars of $191.6 million on unit margins of 19.2% during Q1 2024.
Total retail gallons decreased 1.9%, while volume on a same-store sales basis were down 4.2% for the quarter.
"Murphy USA's Q1 results fell slightly short of internal expectations, but all in all, the business performed admirably despite a 2% comparison headwind from temporal factors including the timing of Leap Day and the Easter holiday along with the relative severity of storms," Clyde said. "While retail fuel margins grew by 2 cents year over year, in line with expectations given a flatter price environment in the first quarter of 2025, supply margins were lower than expected due to the oversupplied product market.
"Continued share gains in all nicotine and most center of store categories, including packaged beverages, candy and general merchandise, should help drive results through the rest of the year," he continued. "As always, we remain focused on cost discipline, as evidenced by lower Q1 G&A expense, and our long-term capital allocation strategy built around new store growth, business improvements and consistent share repurchase."
El Dorado-based Murphy USA has more than 1,500 stores located primarily in the Southwest, Southeast, Midwest and Northeast United States. The company and its team of nearly 15,000 employees serve an estimated 2 million customers each day through its retail network in 27 states. The company also markets gasoline and other products at standalone stores under the Murphy Express and QuickChek brands.
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