Murphy (MUSA) Q2 Earnings Miss Due to Lower Gasoline Prices
Motor fuel retailer Murphy USA MUSA announced second-quarter 2023 earnings per share of $6.02, which missed the Zacks Consensus Estimate of $6.09 and fell from the year-ago profit of $7.53. The underperformance could be attributed to a fall in the retail gasoline price and fuel contribution, partly offset by higher-than-expected petroleum product sales.
Meanwhile, Murphy USA’s operating revenues of $5.6 billion fell 17.5% year over year and came below the consensus mark by $22 million.
Merchandise sales, at $1 billion, rose 5.5% year over year and outperformed our estimate of $994 million. Revenues from petroleum product sales came in at $4.5 billion, ahead of our estimate of $4.4 billion but down 21.8% from the second quarter of 2022.
Murphy USA Inc. Price, Consensus and EPS Surprise
Murphy USA Inc. price-consensus-eps-surprise-chart | Murphy USA Inc. Quote
Key Takeaways
MUSA’s total fuel contribution fell 13.5% year over year to $365.8 million despite a slight margin improvement. This could be attributed to a drop in total fuel contribution (including retail fuel margin plus product supply and wholesale results), which came in at 29.5 cents per gallon, 15.5% lower than the second quarter of 2022.
Retail fuel contribution increased 4.3% year over year to $334.7 million as margins, at 27 cents per gallon, edged up 1.9% from the corresponding period of 2022. Retail gallons rose 2.3% from the year-ago period to 1,238.8 million in the quarter under review but missed our projection of 1,241.9 million. Volumes on an SSS basis (or fuel gallons per store) dropped 1.1% from the second quarter of 2022 to 245.2 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.21 per gallon, down from $4.21 per gallon a year ago.
Contribution from Merchandise increased 5.1% to $206.8 million on higher sales, which more than offset the marginal fall in unit margins, from 19.8% a year ago to 19.7% in the second quarter of 2023. On an SSS basis, total merchandise contribution was up 2.8% year over year, primarily on the back of 2.9% higher non-tobacco margins. Meanwhile, merchandise sales increased 2.7% on an SSS basis due to an increase in tobacco as well as non-tobacco sales.
The Zacks Rank #2 (Buy) company’s monthly fuel gallons were down 0.6% from the prior-year period, though merchandise sales increased 2.9% on an average per store month basis.
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Balance Sheet
As of Jun 30, Murphy USA — which opened seven new retail locations in the quarter to take its store count to 1,725 — had cash and cash equivalents of $92.9 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 70.4%.
During the quarter, MUSA bought back shares worth $95.1 million.
Some Key Refining Earnings
While we have discussed MUSA’s second-quarter results in detail, let’s see how some other refining companies have fared this earnings season.
Phillips 66 PSX reported adjusted earnings per share of $3.87, beating the Zacks Consensus Estimate of $3.54. The outperformance can be primarily attributed to lower expenses. The positives were partially offset by PSX’s declining refining margins worldwide.
For the reported quarter, Phillips 66 generated $955 million of net cash from operations, down from $1.8 billion a year ago. PSX’s capital expenditure and investments totaled $551 million. It paid out dividends of $474 million in the reported quarter. As of Jun 30, 2023, cash and cash equivalents were $3 billion. Meanwhile, Phillips 66 reported total debt of $19.9 billion, reflecting a consolidated debt to capitalization of 39%.
Another refining giant, Valero Energy VLO, also reported better-than-expected second-quarter earnings. The EPS of $5.40 per share came in well above the Zacks Consensus Estimate of $5.08. This was on account of VLO’s increased renewable diesel sales volumes and a decline in total costs of sales.
At the end of the second quarter, VLO had cash and cash equivalents of $5.1 billion, while the company’s total debt and finance lease obligations amounted to $11.3 billion. Valero’s second-quarter capital investment was $458 million. Of the total, $382 million was allotted for sustaining the business.
Finally, we have Marathon Petroleum MPC. It reported adjusted earnings per share of $5.32, which comfortably beat the Zacks Consensus Estimate of $4.55 on the back of lower costs and expenses. In the second quarter, MPC repurchased $3.1 billion of shares and a further $800 million worth of shares in July. The company currently has a remaining authorization of $6.3 billion.
In the reported quarter, Marathon Petroleum spent $562 million on capital programs (43% on Refining & Marketing and 48% on the Midstream segment) compared to $577 million in the year-ago period. As of Jun 30, MPC had cash and cash equivalents of $7.3 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 46.3%.
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Valero Energy Corporation (VLO) : Free Stock Analysis Report
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