Murphy USA Inc. (MUSA - Free Report) reported stronger-than-expected results in the second quarter on higher merchandise margins. As a result, the company’s adjusted net income per share came in at $1.58, surpassing the Zacks Consensus Estimate of $1.21. Further, the bottom line also improved from the year-ago figure of $1.51 per share on the back of higher petroleum product and merchandise sales.
Murphy’s operating revenues of $3,829 million beat the Zacks Consensus Estimate of $3,550 million on higher-than-expected petroleum product sales. Revenues from petroleum product sales came in at $3,193.7 million, surpassing the Zacks Consensus Estimate of $2,881 million. The top line also increased around 19% from the year-ago figure of $3,211.1 million.
The company’s total fuel contribution was down 6.1% year over year to $180.1 million amid lower retail fuel contribution, partly offset by solid contribution from Product Supply and Wholesale Business (PS&W).
Retail fuel contribution declined 20.3% year over year to $140.3 million amid lower margins, which decreased 21.7% from the prior-year quarter. The results were partly offset by rise in retail gallons, which increased 1.6% to 1.1 billion gallons in the quarter under review. While total retail gallons sold increased, volumes on a same-store sales (SSS) basis declined 1.5% from the second quarter of 2017.
Contribution from Merchandise set a new record, increasing 4.6% to stand at $102.3 million on higher unit margins, which increased to 16.6% from 16.1% a year ago. On SSS basis, total merchandise contribution was 2% higher in the quarter under review on the back of active promotions and higher tobacco/non-tobacco margins. Tobacco and non-tobacco margins increased 1.9% and 2.2%, respectively.
On an average per store month (or APSM) basis, fuel gallons fell 1.7% and merchandise sales declined 1.6%. On SSS basis, fuel gallons per month declined 1.5% and merchandise sales decreased 1%.
Balance Sheet & Stock Buyback
As of Jun 30, the company had cash and cash equivalents of $71.9 million and long-term debt (including lease obligations) of $850.8 million, with a debt-to-capitalization ratio of 55.4%.
During the quarter under review, Murphy returned $72.7 million of capital to its shareholders. The company repurchased 1.1 million shares at an average price of $68.22 per share.
Zacks Rank and Key Picks
Murphy currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the same industry include Bonanza Creek Energy, Inc. (BCEI - Free Report) , Northern Oil and Gas, Inc. (NOG - Free Report) , and Penn Virginia Corporation (PVAC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bonanza Creek surpassed earnings estimates in each of the trailing four quarters, with an average of 215.36%.
Northern Oil and Gas delivered an average positive earnings surprise of 160.42% in the preceding four quarters.
Penn Virginia topped estimates in each of the last four quarters, delivering an average positive earnings surprise of 18.03%.
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