Murphy (MUSA) Q3 Earnings Beat Despite Lower Gasoline Prices
Motor fuel retailer Murphy USA Inc. MUSA announced third-quarter 2023 earnings per share of $7.69, which beat the Zacks Consensus Estimate of $6.08. The outperformance reflects higher-than-expected petroleum product sales.
However, the company’s bottom line fell from the year-ago adjusted profit of $9.28 due to a fall in the retail gasoline price and fuel contribution.
Meanwhile, Murphy USA’s operating revenues of $5.8 billion fell 6.4% year over year and came below the consensus mark by $31 million.
Merchandise sales, at $1.1 billion, rose 2.8% year over year and outperformed our estimate of $1 billion. Revenues from petroleum product sales came in at $4.7 billion, ahead of our estimate of $4.5 billion but down 8.3% from the third quarter of 2022.
In important news for investors, MUSA’s board of directors recently declared a quarterly cash dividend of 41 cents per share to its common shareholders of record on Nov 6. The payout, which represents a 5.1% sequential increase, will be made on Dec 1.
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 10.5% year over year to $419 million due to margin contraction. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 34.5 cents per gallon, 8.2% lower than the third quarter of 2022.
Retail fuel contribution decreased 28.8% year over year to $348.6 million as margins, at 28.7 cents per gallon, fell 27% from the corresponding period of 2022. Retail gallons fell 2.5% from the year-ago period to 1,214.9 million in the quarter under review and missed our projection of 1,271.9 million. Volumes on an SSS basis (or fuel gallons per store) dropped 4% from the third quarter of 2022 to 241.7 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.41 per gallon, down from $3.67 per gallon a year ago.
Contribution from Merchandise increased 3% to $211.8 million on higher sales and a marginal rise in unit margins, from 20% a year ago to 20.1% in the third quarter of 2023. On an SSS basis, total merchandise contribution was up 1.2% year over year, primarily on the back of 3.1% higher tobacco margins. Meanwhile, merchandise sales increased 1% on an SSS basis, again due to an increase in tobacco sales.
The Zacks Rank #2 (Buy) company’s monthly fuel gallons were down 4.2% from the prior-year period, though merchandise sales increased 1.4% on an average per store month basis.
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Balance Sheet
As of Sep 30, Murphy USA — which opened three new retail locations in the quarter to take its store count to 1,724 — had cash and cash equivalents of $124.8 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 68.1%.
During the quarter, MUSA bought back shares worth $65.3 million.
Some Key Refining Earnings
While we have discussed MUSA’s third-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 $4.63, missing the Zacks Consensus Estimate of $4.78. The underperformance can be primarily attributed to declining refining margins worldwide. This was partially offset by PSX’s lower costs.
For the reported quarter, Phillips 66 generated $2.7 billion of net cash from operations, down from $3.1 billion a year ago. PSX’s capital expenditure and investments totaled $855 million. It paid out dividends of $465 million in the reported quarter. As of Sep 30, 2023, cash and cash equivalents were $3.5 billion. Meanwhile, Phillips 66 reported a total debt of $19.4 billion, reflecting a consolidated debt to capitalization of 39%.
Meanwhile, another refining giant — Valero Energy VLO — reported better-than-expected third-quarter earnings. EPS of $7.49 per share came in above the Zacks Consensus Estimate of $7.36. This was on account of VLO’s increased refining throughput volumes and a decline in total costs of sales.
At the end of the third quarter, VLO had cash and cash equivalents of $5.8 billion, while the company’s total debt and finance lease obligations amounted to $11.4 billion. Valero’s third-quarter capital investment was $394 million. Of the total, $303 million was allotted for sustaining the business.
Finally, we have Marathon Petroleum MPC. It reported adjusted earnings per share of $8.14, which comfortably beat the Zacks Consensus Estimate of $7.79 on the back of lower costs and expenses, which offset the effect of a drop in refining margin. In an important development for investors, MPC’s board of directors declared a quarterly cash dividend of 82.50 cents per share to its common shareholders of record on Nov 16. The payout, which represents a 10% sequential increase, will be made on Dec 11.
In the reported quarter, Marathon Petroleum spent $522 million on capital programs (49% on Refining & Marketing and 45% on the Midstream segment) compared to $789 million in the year-ago period. As of Sep 30, MPC had cash and cash equivalents of $8.5 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 46.2%.
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