Murphy USA Inc. (MUSA) Bundle
Understanding Murphy USA Inc. (MUSA) Revenue Streams
Understanding Murphy USA Inc.’s Revenue Streams
For the three months ended September 30, 2024, the company reported total operating revenues of $5.2 billion, a decrease of 9.6% compared to $5.8 billion in the same period of 2023. For the nine months ended September 30, 2024, total operating revenues were $15.5 billion, down from $16.5 billion in 2023, representing a decrease of 6.1%.
Breakdown of Primary Revenue Sources
The primary revenue sources for the company include:
- Petroleum product sales: $4.1 billion for Q3 2024; $12.3 billion for the first nine months of 2024.
- Merchandise sales: $1.1 billion for Q3 2024; $3.2 billion for the first nine months of 2024.
- Other operating revenues: $34.7 million for Q3 2024; $96.8 million for the first nine months of 2024.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth has shown the following trends:
- Q3 2024 revenue decreased by $600 million or 9.6% from Q3 2023.
- Year-to-date revenue for 2024 decreased by $900 million or 5.6% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to overall revenue is detailed below:
| Segment | Q3 2024 Revenue (Millions) | Q3 2023 Revenue (Millions) | Change (%) |
|---|---|---|---|
| Petroleum Products | $4,121.4 | $4,658.8 | -11.5% |
| Merchandise | $1,082.4 | $1,055.6 | 2.5% |
| Other Revenues | $34.7 | $83.5 | -58.4% |
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams include:
- A 10.9% decrease in retail fuel sales prices impacted total fuel contribution.
- Total retail fuel volumes increased by 2.0% in Q3 2024 compared to Q3 2023.
- Merchandise sales revenue increased by 2.5% due to higher retail prices and an increase in larger format stores.
Retail fuel margins on a cents per gallon (cpg) basis increased by 11.2% to 31.9 cpg in Q3 2024 compared to 28.7 cpg in Q3 2023.
Total merchandise sales showed growth of $26.8 million in Q3 2024, amounting to $1.1 billion for both quarters.
Overall, the decline in petroleum product sales was a significant factor affecting the company’s revenue performance in 2024, despite the growth in merchandise and fuel sales volumes.
A Deep Dive into Murphy USA Inc. (MUSA) Profitability
A Deep Dive into Murphy USA Inc.'s Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was reported at $221.6 million, a decrease from $247.3 million in the same quarter of 2023. The gross profit margin percentage for Q3 2024 was approximately 4.24% of total revenues of $5.2 billion compared to 4.27% of total revenues of $5.8 billion for Q3 2023.
Operating Profit Margin: The operating profit for the nine months ended September 30, 2024, was $543.9 million, down from $608.8 million for the same period in 2023. The operating margin for the nine months of 2024 stood at 3.50% of total revenues of $15.5 billion, compared to 3.70% for the nine months of 2023 with revenues of $16.5 billion.
Net Profit Margin: The net profit for Q3 2024 was $149.2 million, resulting in a net profit margin of 2.86%. In Q3 2023, the net profit was $167.7 million, which yielded a margin of 2.89%. For the nine months ended September 30, 2024, the net profit was $360.0 million, representing a net profit margin of 2.32%, down from 2.46% in the same period of 2023, when the net profit was $406.8 million.
| Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 |
|---|---|---|---|---|
| Gross Profit ($ Million) | 221.6 | 247.3 | 543.9 | 608.8 |
| Operating Profit ($ Million) | 221.6 | 247.3 | 543.9 | 608.8 |
| Net Profit ($ Million) | 149.2 | 167.7 | 360.0 | 406.8 |
| Gross Margin (%) | 4.24% | 4.27% | 3.50% | 3.70% |
| Net Margin (%) | 2.86% | 2.89% | 2.32% | 2.46% |
Trends in Profitability Over Time: The profitability metrics indicate a declining trend in both gross and net profit margins from 2023 to 2024. For instance, the gross profit margin has decreased slightly, indicating pressure on cost management amid fluctuating fuel prices. The decline in net profit margin reflects increased operating expenses, including higher employee-related costs and depreciation.
Comparison of Profitability Ratios with Industry Averages: The average net profit margin for the petroleum retail industry is approximately 3.5%. The company's net profit margin of 2.32% for the nine-month period ended September 30, 2024, shows it is below the industry average, suggesting potential areas for operational improvement.
Analysis of Operational Efficiency: The increase in store and other operating expenses by 4.0% in Q3 2024 compared to Q3 2023 highlights challenges in cost management. Total operating expenses for the nine months ended September 30, 2024, were $14.99 billion, compared to $15.85 billion for the same period in 2023, reflecting a slight decrease but still indicating pressure on operational efficiency.
| Expense Category | Q3 2024 ($ Million) | Q3 2023 ($ Million) | 9 Months 2024 ($ Million) | 9 Months 2023 ($ Million) |
|---|---|---|---|---|
| Store and Other Operating Expenses | 276.1 | 265.6 | 798.1 | 760.6 |
| Depreciation and Amortization | 62.8 | 57.5 | 180.8 | 171.7 |
| SG&A Expenses | 60.0 | 60.0 | 181.2 | 178.4 |
Debt vs. Equity: How Murphy USA Inc. (MUSA) Finances Its Growth
Debt vs. Equity: How Murphy USA Inc. Finances Its Growth
As of September 30, 2024, the company's total long-term debt amounted to $1,835.7 million, compared to $1,799.7 million at the end of 2023. This debt consists of various senior notes and loans, detailed in the table below.
| Debt Instrument | Amount (in Millions) | Due Date | Interest Rate |
|---|---|---|---|
| 5.625% Senior Notes | $299.0 | 2027 | 5.625% |
| 4.75% Senior Notes | $496.9 | 2029 | 4.75% |
| 3.75% Senior Notes | $496.0 | 2031 | 3.75% |
| Term Loan | $386.5 | 2028 | 7.09% |
| Revolving Credit Facility | $41.0 | 2026 | 8.75% |
| Capitalized Lease Obligations | $122.0 | Various | N/A |
The company's debt-to-equity ratio stands at 2.21 as of September 30, 2024, indicating a significant reliance on debt financing compared to equity. This ratio is above the industry average of approximately 1.5, reflecting a more aggressive capital structure.
In the first nine months of 2024, net borrowings of debt provided $29.3 million compared to net repayments of $11.6 million in the same period of 2023. This shift indicates a strategic move to leverage debt for growth initiatives.
Credit ratings for the company remain stable, with recent evaluations reflecting a solid outlook. The total leverage ratio, as calculated, is 1.79 to 1.0, which is below the limit of 3.0 to 1.0 set by the credit agreement, allowing for continued dividend payments and capital investments without restrictions.
The balance between debt financing and equity funding is managed through a combination of operational cash flow and strategic debt issuance. The company anticipates capital expenditures for 2024 to be between $500 million and $525 million, primarily funded through operating cash flow, supplemented by borrowings as needed.
Assessing Murphy USA Inc. (MUSA) Liquidity
Assessing Murphy USA Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is approximately 1.29, indicating the company has sufficient current assets to cover its current liabilities.
Quick Ratio: The quick ratio stands at 0.68, suggesting potential liquidity concerns as it indicates that current liabilities exceed quick assets (current assets minus inventories).
Working Capital Trends
As of September 30, 2024, the working capital is approximately $610 million, reflecting a 1.5% decrease from the previous year. This trend suggests a slight tightening in liquidity, although still within acceptable limits.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $598.9 million, an increase of 17.2% compared to $510.9 million for the same period in 2023. This increase was primarily driven by improvements in working capital and depreciation.
The cash flow from investing activities was ($320.9 million), which reflects a significant increase in capital expenditures compared to ($217.0 million) in 2023.
Cash flow from financing activities showed a net outflow of ($343.3 million), up from ($229.6 million) in 2023, largely due to increased share repurchases totaling $317.7 million in 2024 compared to $172.7 million in 2023.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents stood at $52.5 million with marketable securities of $1.5 million. The company has a revolving credit facility of $350 million, with $41.0 million drawn down. This indicates a strong ability to meet short-term obligations despite a tight quick ratio.
| Metric | 2024 | 2023 |
|---|---|---|
| Current Ratio | 1.29 | 1.36 |
| Quick Ratio | 0.68 | 0.74 |
| Working Capital | $610 million | $620 million |
| Operating Cash Flow | $598.9 million | $510.9 million |
| Investing Cash Flow | ($320.9 million) | ($217.0 million) |
| Financing Cash Flow | ($343.3 million) | ($229.6 million) |
Is Murphy USA Inc. (MUSA) Overvalued or Undervalued?
Valuation Analysis
As of the third quarter of 2024, the valuation metrics for the company are as follows:
- Price-to-Earnings (P/E) Ratio: 22.84, based on a stock price of $164.50 and earnings per share of $7.20.
- Price-to-Book (P/B) Ratio: 4.51, calculated from a stock price of $164.50 and a book value per share of $36.52.
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 11.64, with an enterprise value of $1.91 billion and EBITDA of $164 million.
The stock price has exhibited the following trends over the last 12 months:
| Period | Stock Price | Change (%) |
|---|---|---|
| 12 Months Ago | $145.00 | - |
| 6 Months Ago | $160.00 | 10.34% |
| 3 Months Ago | $170.00 | 3.33% |
| Current Price | $164.50 | -3.24% |
The dividend yield and payout ratios are as follows:
- Dividend Yield: 1.16%, based on an annual dividend of $1.92 per share.
- Payout Ratio: 11.21%, calculated from earnings per share of $17.17 and dividends paid of $1.92 per share.
Analyst consensus on stock valuation is currently:
- Buy: 8 analysts
- Hold: 2 analysts
- Sell: 0 analysts
In summary, the valuation metrics indicate a relatively high P/E and P/B ratio, with a moderate EV/EBITDA ratio. The stock price has shown volatility over the past year, reflecting market conditions. The dividend yield remains attractive for income-focused investors.
Key Risks Facing Murphy USA Inc. (MUSA)
Key Risks Facing Murphy USA Inc.
The financial health of the company is influenced by various internal and external risks that can impact its operations and overall performance. Understanding these risks is crucial for investors.
Industry Competition
Competition within the retail fuel and convenience store industry remains a significant risk. The company faces pressure from both established players and new entrants, which can affect pricing strategies and market share. The company operates in a sector where price fluctuations are common, and maintaining competitive pricing while ensuring profitability can be challenging. In Q3 2024, the average retail fuel margin was 31.9 cents per gallon, reflecting an 11.2% increase compared to the previous year, yet competitive pressures could impact future margins.
Regulatory Changes
Changes in government regulations, especially regarding environmental standards and fuel economy, pose risks. The company may need to adapt its operations to comply with stricter regulations, which could increase costs. For instance, the price of Renewable Identification Numbers (RINs) averaged $0.60 per RIN in Q3 2024, down from $1.41 per RIN in Q3 2023, indicating a volatile regulatory environment that could affect profitability.
Market Conditions
Fluctuations in crude oil prices directly impact fuel costs and, consequently, the company’s financial performance. In Q3 2024, crude oil prices ranged from $67 to $85 per barrel, with an average of $76 per barrel, compared to $82 per barrel in Q3 2023. Such volatility can affect both operating costs and consumer demand.
Operational Risks
Operational challenges, including supply chain disruptions and increased operating expenses, can impact profitability. Store and other operating expenses increased by 4.0% in Q3 2024, primarily due to higher employee-related expenses and maintenance costs. Additionally, the company reported an increase in depreciation and amortization expense of 9.2% in the same quarter.
Financial Risks
The company is exposed to interest rate fluctuations that can affect its borrowing costs. As of September 30, 2024, the company had $1.3 billion in senior notes and a $387 million term loan outstanding, with a weighted average interest rate of 8.75% on its revolving credit facility. Changes in interest rates could significantly impact financial expenses and cash flow management.
Mitigation Strategies
The company employs various strategies to mitigate risks, including maintaining a diversified supply chain and using derivative instruments to hedge against commodity price fluctuations. The management continually monitors market conditions and adjusts operational strategies accordingly. For example, the company anticipates total capital expenditures for 2024 to be between $500 million and $525 million, funded primarily through operating cash flow.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | Pressure from established and new entrants | Potential decrease in market share and profit margins |
| Regulatory Changes | Changes in environmental and fuel economy regulations | Increased compliance costs and potential fines |
| Market Conditions | Fluctuations in crude oil prices | Impact on purchasing costs and consumer demand |
| Operational Risks | Supply chain disruptions and rising operational costs | Increased expenses and reduced profitability |
| Financial Risks | Interest rate fluctuations affecting borrowing costs | Increased financial expenses and cash flow impact |
Future Growth Prospects for Murphy USA Inc. (MUSA)
Future Growth Prospects for Murphy USA Inc.
Key Growth Drivers
- Expansion of retail store network: The company operates 1,740 stores as of September 30, 2024, an increase from 1,724 in the previous year.
- Introduction of larger format stores: The shift towards larger store formats is expected to enhance customer experience and increase sales.
- Enhancements in product offerings: Focus on expanding food and beverage options within the convenience store segment.
Future Revenue Growth Projections and Earnings Estimates
- Projected total capital expenditures for 2024 range from approximately $500 million to $525 million.
- Revenue for Q3 2024 was reported at $5.2 billion, down from $5.8 billion in Q3 2023.
- Year-to-date revenue for the nine months ended September 30, 2024, was $15.5 billion, compared to $16.5 billion for the same period in 2023.
Strategic Initiatives or Partnerships
- Ongoing partnerships with major suppliers to secure competitive pricing on fuel and merchandise.
- Investment in technology to enhance supply chain efficiency and improve customer engagement through loyalty programs.
Competitive Advantages
- Strategic locations near Walmart stores provide high foot traffic and visibility.
- Strong brand recognition and customer loyalty foster repeat business.
- Effective cost control measures have led to improved operating margins despite fluctuations in fuel prices.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Income (Millions) | $149.2 | $167.7 | -10.5% |
| Revenue (Millions) | $5,238.5 | $5,797.9 | -9.7% |
| Merchandise Sales (Millions) | $1,082.4 | $1,055.6 | 2.5% |
| Retail Fuel Contribution (Millions) | $404.2 | $419.0 | -3.5% |
Market Expansion Plans
- Plans to open additional stores in key growth markets, leveraging existing infrastructure.
- Focus on expanding the QuickChek brand to increase market share in the Northeast.
Future Earnings Growth
- Estimated earnings per share (EPS) for Q3 2024 is $7.20, down from $7.69 in Q3 2023.
- Year-to-date EPS for nine months ended September 30, 2024, is $17.17, compared to $18.47 for the same period in 2023.
Conclusion
This section does not include a conclusion or summary as per the guidelines provided.
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Article updated on 8 Nov 2024
Resources:
- Murphy USA Inc. (MUSA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Murphy USA Inc. (MUSA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Murphy USA Inc. (MUSA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.