Murphy USA Inc., a marketer of retail motor fuel products and convenience merchandise, has announced financial results for the three and nine months ended September 30.
The company has its headquarters in El Dorado.
Net income was $69.2 million, or $2.18 per diluted share, in Q3 2019 compared to net income of $45.0 million, or $1.38 per diluted share, in Q3 2018.
Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results including RINs) for Q3 2019 was 20.1 cpg compared to 16.2 cpg in Q3 2018
Total retail gallons increased 5.3% in Q3 2019 compared to Q3 2018 and volumes on a same store sales ("SSS") basis improved 2.7 percent.
Merchandise contribution dollars grew 6.4 percent to $111.2 million compared to the prior-year quarter, on average unit margins of 16.3 percent in the 2019 third quarter and on a SSS basis improved 6.0 percent.
The credit agreement was amended and restated to extend the maturity date to August 2024 and provided for a $250 million term facility that will mature August 2023, of which $200 million was outstanding at September 30, 2019.
Called $500 million 6% Senior Notes due 2023, which resulted in a loss on early debt extinguishment of $14.8 million, and issued $500 million of 4.75 percent Senior Notes due 2029.
Common shares repurchased during the third quarter of 2019 were approximately 1.2 million for $109.0 million at an average price of $89.51 per share.
"The third quarter performance clearly demonstrates some of the benefits of recent investments as Adjusted EBITDA grew 51 percent over the prior year, capitalizing on market share gains in both the fuels and merchandise business," said President and CEO Andrew Clyde. "New stores are also outperforming the network, which gives us a high level of confidence ahead of an increase in our organic growth over the next several years. Finally, we re-financed the balance sheet to accelerate our share repurchase activity in the third quarter, jumpstarting the benefits we expect from our previously announced up to $400 million share repurchase program."
Net income, Adjusted EBITDA, and diluted EPS in Q3 2019 were greater than Q3 2018 levels primarily due to higher all-in fuel contribution combined with higher merchandise contribution, partially offset by higher operating expenses. The current quarter included a loss on early debt extinguishment of $14.8 million pre-tax.
Total fuel contribution dollars increased 30.6 percent, or $52.9 million, in the third quarter of 2019. Retail fuel margins of 18.4 cpg were a 29.6% improvement from the third quarter 2018, which combined with higher same store volumes improved total retail contribution dollars by $55.0 million to $206.4 million. Q3 2019 PS&W margins (including RINs) were $2.1 million lower when compared to Q3 2018 due to decreased RIN sales volumes partially offset by a higher PS&W contribution.
Total merchandise contribution increased 6.4 percent to $111.2 million in the third quarter 2019, due to higher sales across the chain and strong new store performance. The continued higher contribution from the lower-margin tobacco categories and enhanced promotional activities lowered the average unit margins by 50 basis points versus the prior year quarter to 16.3%. Total merchandise contribution dollars per store increased 6.0% to $25.7 thousand on a SSS basis from growth in the tobacco category.
Total station and other operating expenses, excluding payment fees, increased 1.7 percent on an APSM metric primarily due to higher employee related costs. Total SG&A costs were $3.4 million higher in Q3 2019 when compared to 2018, primarily due to increased professional fees and incentive award expenses.
Murphy USA opened five new retail locations in Q3 2019, bringing the store count to 1,479, consisting of 1,160 Murphy USA sites and 319 Murphy Express sites. A total of 21 stores are currently under construction and include 11 new retail locations and 10 kiosks undergoing raze-and-rebuild that will return to operation as 1,400 square foot stores and all but 3 new retail locations are expected to be in operation in Q4.
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