Murphy USA Shifts Gears
Details begin to emerge on post-Wal-Mart strategy, including expansion into three new states
EL DORADO, Ark. --Murphy USA Inc. “enters 2016 with strong earnings momentum” from its major initiatives “along with the clear focus of [its] independent growth plans,” Andrew Clyde, president and CEO of Murphy USA, said during the company’s fourth-quarter 2015 earnings call.
- Click here to view the earnings report
Those growth plans involves entering three new states.
The market “is just starting to see the potential” of the gas-station and convenience-store retailer following its 2013 spinoff from Murphy Oil Corp., he said.
“We're extremely confident in our independent growth plan,” said Clyde. “We're very well prepared to take this path and now that we're on it, we will continue to maximize our potential and the value of Murphy USA.”
The strategic energy and optimism behind this plan was dictated in part by the news in late January that executives with Wal-Mart Stores Inc.--Murphy USA’s retail partner in operating more than 1,000 gas stations at the retail giant’s Supercenters--told Murphy USA that going forward, they will build and operate their own gas stations. The decision follows a pitch by Murphy USA, rejected by Wal-Mart, to deepen their ties. The partnership will continue at existing sites.
But Murphy USA is not dependent on Wal-Mart, and it is not dwelling on that not-unexpected decision, Clyde has said.
“We have seen this fork in the road coming for some time,” he said on a conference call last week. “This decision, while surprising to many people for different reasons, has not taken us by surprise. We've been preparing for this, and we are ready to execute our plan.”
With this latest quarterly earnings call on Thursday, the company’s focus is clearly on growth.
“By the time we finish 2016, we will be operating in three additional states, Nevada, Utah and Nebraska, as we open Murphy Express stores in those markets as part of our independent growth plan where we target high-return unit growth in attractive markets,” said Clyde.
He said that since the spinoff, Murphy USA has “fundamentally improved the competitiveness” of its business, but that “focus on performance improvement didn't compromise [its] ability to deliver robust unit growth.” The company in 2015 opened stores at the fastest pace since 2006, adding 73 to the network, 44 of which it delivered in the fourth quarter.
On the call, Mindy West, executive vice president and CFO, laid out Murphy USA’s capital expenditure plans for 2016.
“We have established a budget between $250 million and $300 million this year. … The main share, of course, goes to new store growth, and we're allocating roughly $175 million to $225 million for the addition of 60 to 80 stores … [and] $40 million for maintenance CapEx, which includes a continuation of our refresh program at 300 stores, along with doubling our super-cooler installations to 120 locations this year, as well as ongoing normal maintenance.”
El Dorado, Ark.-based Murphy USA has 1,335 gas stations in 24 states.