EL DORADO, Ark. -- Murphy USA Inc. “started 2015 with a solid first quarter” carrying over from fourth-quarter 2014, president and CEO Andrew Clyde said during the company’s first-quarter earnings call.
“Retail fuel margins benefited from record January performance as the major wholesale price decline in December created a healthy environment early in the quarter before crude and product prices began to expected run-up,” he told analysts. “Merchandise sales and margin continued positive trends as non-tobacco margin dollars offset tobacco declines.”
He added that low gas prices have led consumers to upgrade their merchandise choices.
Average retail fuel prices for first-quarter 2015 were $2.10 per gallon versus $3.23 per gallon in the same period of 2014. The increase in earnings reflects higher retail fuel margins and volumes, higher RIN sales proceeds and lower product supply and wholesale contribution.
Quarterly retail fuel sales increased 5.8% to 962.7 million gallons sold in 2015 compared to 910.1 million gallons sold in 2014. Retail fuel volumes grew 5.8% overall for the quarter and 1% on an average-per-store-month basis to 253,663 gallons.
Retail fuel margins (before credit card expenses) increased 3.2 cents per gallon (CPG) to 10 CPG in the 2015 quarter compared to 6.8 CPG in the 2014 period.
Quarterly merchandise revenues rose $21.4 million to $524.1 million from $502.7 million in the 2014 period. Merchandise unit margins held constant at 14%. For the current quarter, total non-tobacco sales dollars increased 11.7% with the largest increases shown in dispensed beverages, alternative snacks and lottery, while margin dollars increased 8.1%. On an average-per-store-month basis, merchandise sales decreased 0.5% as tobacco products fell 2.4%, mostly offset by a 6.7% increase in non-tobacco sales. Quarterly merchandise margin dollars on an average-per-store-month basis were flat overall with tobacco margin dollars down 2.1%, offset by an increase in non-tobacco margin dollars of 3.2%.
El Dorado, Ark.-based Murphy USA is one of the largest independent retailers of gasoline products and convenience-store merchandise with more than 1,200 locations in 23 states across the South and Midwest. The stores are 100% company operated and 90% company owned; most are adjacent to Walmart stores. Murphy USA also markets gasoline and other products at standalone stations under the Murphy Express brand.
During first-quarter 2015, Murphy USA opened five new 1,200-square-foot stores. Through early May 2015, the company has opened an additional three sites. With the addition of all these stores, Murphy USA has 1,271 total locations that include 1,062 Murphy USA sites and 209 Murphy Express sites. It also has 16 sites under construction.
“We expect to complete the majority of the store refresh activities in the second quarter, and we’ll deliver most of our new-site growth in the third and fourth quarters; this is typical due to our build calendar with Wal-Mart where construction essentially halts prior to the Thanksgiving holiday,” said Clyde.
He added, “We are not opening any Murphy USA stores in front of Neighborhood Markets. We have around 30 that we opened into prior years, but all of our future growth with Wal-Mart is in front of Supercenters.”
Neighborhood Market sites do not generate the same level of traffic or fuel sales as Supercenters sites, he said.
For the three month period ended March 31, 2015, the company reported net income of $22.9 million on revenues of $3 billion. Net income was $9.6 million for the comparable period in 2014 on revenues of $4.2 billion.
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