Murphy USA Inc ((MUSA)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Murphy USA’s recent earnings call presented a mixed performance for the year 2024. The company experienced significant growth in areas such as EBITDA, merchandise sales, and retail fuel margins. However, it also faced challenges such as a slow start to the year, food inflation pressures affecting QuickCheck Markets, and not meeting internal targets for new store openings. The balanced presentation of these achievements and setbacks suggests a neutral outlook for the company.
Strong EBITDA Performance
Murphy USA reported an impressive achievement by delivering over $1 billion in EBITDA for 2024. This figure underscores the sustainability and potential of the company’s earnings, highlighting a robust financial performance.
Merchandise Sales Growth
The Murphy branded network experienced a growth in per store merchandise sales by 3.5% and margin dollars by 5.9% for 2024. This increase demonstrates the company’s effective strategies in boosting in-store revenue and profitability.
Fuel Performance Improvement
In the face of historically challenging conditions, Murphy USA improved its retail margins by 50 basis points to $0.281 per gallon. This improvement indicates strong operational execution in optimizing fuel sales profitability.
New Store Growth
Murphy USA completed 32 new-to-industry stores in 2024 and opened four additional stores since year-end. The company plans to expand further by opening up to 50 new stores in 2025, showcasing its commitment to growth and market presence.
Merchandise Contribution Growth
The company generated $834 million in merchandise contribution dollars in 2024, marking a 3.8% increase over 2023. There was a notable acceleration in these contributions during the fourth quarter, indicating a strong finish to the year.
Capital Allocation and Share Repurchase
Murphy USA actively managed its capital, repurchasing approximately 938 thousand shares throughout 2024. At year-end, the company maintained a cash and cash equivalents balance of $47 million, reflecting disciplined financial strategies.
Disappointing Year Start
The year 2024 began slowly for Murphy USA due to rising prices and severe weather, which impacted transaction volumes across its network. These challenges contributed to a sluggish start to the fiscal year.
Pressure on Food Inflation and Market Challenges
Ongoing pressure from food inflation significantly affected QuickCheck Markets, resulting in lower than expected all-in margins for 2024. This issue highlights the external economic challenges facing the company.
Under-Delivery on New Store Targets
Despite opening more new stores than the previous year, Murphy USA fell short of its internal schedule targets for new store openings. This shortfall impacted both fuel gallons and merchandise sales, indicating room for improvement in project execution.
Soft Fuel Volumes
Average fuel volumes for 2024 were 240.6 thousand gallons per store month, aligning with the lower end of guidance due to softness in Q4 volumes. This trend indicates challenges in maintaining consistent fuel sales throughout the year.
Forward-Looking Guidance
Looking ahead to 2025, Murphy USA plans to open up to 50 new stores and continue with 30 raise and rebuild projects. Fuel volumes are projected to remain within 240 to 245 thousand gallons per store month, with total fuel sales expected to grow by 4.5%. Merchandise contribution dollars are forecasted to increase by nearly 4%, and operating expenses per store month are anticipated to rise by 4% to 6%. The company projects EBITDA between $1 billion and $1.12 billion, maintaining a balanced capital allocation strategy, including share repurchases.
In conclusion, Murphy USA’s earnings call revealed a performance in 2024 marked by both triumphs and trials. While the company achieved significant growth in EBITDA and merchandise sales, it also encountered several operational challenges. Moving forward, the company has outlined an optimistic strategy for growth and expansion in 2025, despite the external economic pressures it faces.
