El DORADO, Ark. -- While the beginning of the year saw a slump in traffic count, officials with Murphy USA Inc. reported a “resilient” first-quarter performance, with fuel volumes only slightly down and merchandise sales and in-store efficiencies helping shore up the company's quarterly numbers.
On a May 3 investor call, Andrew Clyde, president and CEO for the El Dorado, Ark.-based Murphy, said net income for the first quarter of 2018 was $39.3 million, including a $35.5 million after-tax settlement from damages connected to the 2010 Deepwater Horizon oil spill, compared to a net loss of $3 million in the first quarter of 2017.
“Our fuel business showed resilience on many fronts this quarter,” Clyde said. “From a year-over-year perspective, we saw higher all-in margins on a cents-per-gallon basis, 11.4 cents per gallon vs. 10.1 [and] fuel-contribution dollars of $114.6 million vs. $102.7 million in the first quarter of 2017.”
Describing customer traffic as slow in January and February, followed by a rebound in March, Clyde said total retail gallons declined 1% to 1 billion gallons for the network during first-quarter 2018, while volumes on a same-store-sales basis declined 4% vs. the prior year’s first quarter.
However, merchandise-contribution dollars grew 3% during the quarter to $91.5 million on average unit margins of 16.1% vs. 15.7% in first-quarter 2017.
Better merchandising along with improved efficiencies in labor, supply and maintenance helped the company reduce its fuel-breakeven metric by nearly 50 basis points—14.7 cents per gallon in 2018 from 19.5 cents per gallon in the first quarter of last year.
Those savings will continue to grow as the company sees benefits from a new, scan-based trading program, launched recently with several items in the general-merchandise category. “This initiative strengthens our product mix, improves our margins, eliminates shrink, further reduces store labor … reduces working capital and eliminates inventory complexity both at the store level and [with] back-office functions,” Clyde said.
Murphy also opened two new stores in the first quarter and construction is ongoing at 22 locations, including 12 raze-and-rebuild sites, Clyde said.
Murphy USA Inc. is a marketer of retail motor fuel products and convenience merchandise. It operates more than 1,400 retail stations in 26 U.S. states under the Murphy USA and Murphy Express brands. The majority of its units are positioned near Walmart locations and serve about 1.6 million customers a day. The chain ranked No. 5 in a year-end update of CSP’s 2017 Top 202 list of the largest c-store chains in the United States.