• Fuel Volumes: Total in APSM volumes up 2% and 1.1%, respectively.
• Retail Margins: Increased by over $0.03 compared to the prior year.
• All-in Fuel Margins: About $0.02 lower than the previous year.
• Nicotine Market Share: Eclipsed 20% share in Murphy markets.
• Packaged Beverage Sales and Margin Growth: 2.9% and 6.2%, respectively.
• Non-Nicotine Total Sales and Margin Growth: 2.7% and 4.8%, respectively.
• QuickChek Fuel Volumes: Up 2.9% in the Northeast.
• QuickChek Fuel Margin Dollars: Increased by 9.2%.
• Operating Expense: Average per store month OpEx up 4% in Q3.
• Store Openings: Four new stores opened in Q3, totaling 10 year-to-date.
• Raze-and-Rebuild Projects: 16 completed in Q3, 27 year-to-date.
• Capital Expenditure Guidance: Increased to $500 million to $525 million for 2024.
• Share Repurchase: 244,000 shares bought back in Q2, nearly 700,000 shares for $320 million year-to-date.
• SG&A Guidance: Reduced to $240 million to $250 million.

• Warning! GuruFocus has detected 5 Warning Signs with MCS.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Murphy USA Inc (NYSE:MUSA) delivered strong third-quarter results, benefiting from its everyday low price positioning and attracting value-focused consumers.
• The company is experiencing acceleration in organic growth with numerous construction projects underway, setting a strong foundation for new store openings and earnings growth in 2025.
• Murphy USA Inc (NYSE:MUSA) has seen continued outperformance in core nondiscretionary categories, including fuel and nicotine, with increased fuel volumes and retail margins.
• The company is expanding its store network with up to 40 new stores and 47 raze-and-rebuilds scheduled for completion in 2024, demonstrating strong organic growth.
• Murphy USA Inc (NYSE:MUSA) is implementing process improvements and leveraging analytics-driven pricing strategies to optimize its offerings and drive sales growth.

Negative Points

• QuickChek stores faced competition from QSR value pricing, which continued to pressure food and beverage traffic and margins.
• Operating expenses per store month increased by 4% in the third quarter, partly due to a higher mix of larger new stores and raze-and-rebuild stores.
• The company expects same-store costs to increase at about a 3% clip, translating into network-wide per store cost growth in the 5% to 6% range going forward.
• Murphy USA Inc (NYSE:MUSA) experienced a modest 50 basis points increase in same-store fuel volumes, despite an easy year-over-year comparison.
• The company is facing persistent inflation and competitive price wars in the QuickChek food and beverage segment, impacting sales and margins.

Q & A Highlights

Q: Can you discuss the increase in NTI stores and plans for 2025? A: Andrew Clyde, CEO, explained that they have built a strong pipeline and improved the permitting process, allowing them to exceed their target. They aim for a 50-store per year build class in the future. Galagher Jeff, CFO, added that the cadence of openings is crucial, and while they haven't set 2025 guidance, they are moving towards the 50 NTIs a year goal.

Q: What is driving the expected acceleration in inside contribution for Q4? A: Andrew Clyde, CEO, noted that the Murphy banner benefits from traffic-driving categories like fuel and nicotine, which help the center of the store. QuickChek faces competitive pressures in food and beverage, but promotional activities and the launch of QuickChek rewards are expected to build momentum into 2025.

Q: Can you elaborate on the fuel volume trends and any impact from recent hurricanes? A: Andrew Clyde, CEO, stated that despite modest growth, they are maintaining market share gains from previous years. The hurricanes had minimal impact due to effective store and terminal management, with no significant damage or disruption to fuel volumes.

Q: What are the prospects for the nicotine category and potential changes to the back bar? A: Andrew Clyde, CEO, highlighted growth in the nicotine category, especially in oral nicotine products. They are optimizing back bar space but do not foresee a complete revamp. Upside potential exists in traditional products, oral nicotine, and addressing illicit market issues.

Q: How is consumer behavior evolving, and what are the expectations for 2025? A: Andrew Clyde, CEO, observed stabilization in consumer behavior, with value-focused customers remaining consistent. Competitive pressures in QSRs may persist into early 2025, but Murphy's core categories continue to drive consumer traffic.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.