Murphy USA (MUSA) - 2025 Q2 - Quarterly Results

Executive Summary & Key Highlights Murphy USA reported resilient second-quarter 2025 results, with net income and diluted EPS slightly increasing year-over-year to $145.6 million and $7.36, respectively, driven by stronger all-in fuel margins and continued momentum in its new-to-industry (NTI) store program - CEO Andrew Clyde emphasized the company's resilient business model, which delivered stronger financial results despite low fuel price volatility and weaker traffic[5] Key focuses include store profitability, cost control, and EBITDA growth driven by the NTI store program[5] Q2 2025 Consolidated Results Highlights | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income ($ Millions) | $145.6 | $144.8 | | Earnings per share (diluted) | $7.36 | $6.92 | | Adjusted EBITDA ($ Millions) | $286.0 | $278.6 | - Fuel Contribution: Total fuel contribution was 32.0 cpg, up from 31.7 cpg in Q2 2024[7] - Retail Gallons: Total retail gallons decreased by 0.2% (3.2% on a same-store sales basis)[7] - Merchandise: Merchandise contribution increased 1.0% to $218.7 million with stable unit margins at 20.0%[7] - Share Repurchases: Repurchased 470.7 thousand common shares for $211.9 million[7] - Dividends: Paid a quarterly dividend of $0.50 per share, a 2.0% increase from March 2025[7] Consolidated Financial Performance For Q2 2025, both Net Income and Adjusted EBITDA improved compared to the prior-year quarter, driven by higher contributions from fuel and merchandise, alongside lower general and administrative expenses, partially offset by increased depreciation, store operating expenses, and interest expenses Consolidated Results (Three & Six Months) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | Key Operating Metrics | 2025 | 2024 | 2025 | 2024 | | Net income ($ Millions) | $145.6 | $144.8 | $198.8 | $210.8 | | Earnings per share (diluted) | $7.36 | $6.92 | $9.95 | $10.02 | | Adjusted EBITDA ($ Millions) | $286.0 | $278.6 | $443.4 | $442.9 | - Higher net income in Q2 2025 was a result of increased fuel and merchandise contributions and reduced G&A expenses, which more than compensated for higher depreciation, store operating costs, and interest expense[8] Segment Performance The company's segment performance in Q2 2025 was characterized by a slight increase in total fuel contribution, driven by improved margins that offset lower volumes, while the merchandise segment also saw growth with a 1.0% increase in contribution dollars supported by higher sales and stable margins Fuel Total fuel contribution in Q2 2025 rose by 0.7% to $393.0 million, primarily due to a higher total fuel contribution margin of 32.0 cpg, despite a 0.2% decrease in overall retail volumes and a 1.7% decline in retail fuel contribution dollars, as improved PS&W contribution (including RINs) offset the retail weakness Q2 2025 Fuel Operating Metrics | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total fuel contribution ($ Millions) | $393.0 | $390.3 | | Retail fuel volume (Million gal) | 1,229.3 | 1,231.6 | | Total fuel contribution (cpg) | 32.0 | 31.7 | | Retail fuel margin (cpg) | 29.2 | 29.7 | - The increase in total fuel contribution was driven by higher margins and an $8.8 million increase in PS&W contribution (including RINs), which compensated for a $6.1 million decrease in retail fuel contribution dollars caused by lower margins and volumes[9] Merchandise Merchandise contribution increased by 1.0% to $218.7 million in Q2 2025, driven by higher overall sales volumes, with unit margins remaining flat year-over-year at 20.0%, and both nicotine and non-nicotine categories contributing to the growth Q2 2025 Merchandise Operating Metrics | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total merchandise contribution ($ Millions) | $218.7 | $216.5 | | Total merchandise sales ($ Millions) | $1,092.4 | $1,080.4 | | Merchandise unit margin (%) | 20.0% | 20.0% | - The growth in merchandise contribution was attributed to higher sales volumes, with both nicotine and non-nicotine categories showing increased contribution dollars compared to Q2 2024[11] Operating Expenses and Other Areas In Q2 2025, total store and other operating expenses increased by $5.3 million year-over-year, driven by new store openings and higher employee and maintenance costs, while total SG&A costs saw a significant decrease of $8.2 million, primarily due to lower professional fees and incentive costs Q2 2025 Expense Summary | Key Operating Metrics | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total store and other operating expenses ($ Millions) | $275.2 | $269.9 | | Store OPEX excl. payment fees & rent ($K APSM) | $36.1 | $35.5 | | Total SG&A cost ($ Millions) | $50.9 | $59.1 | - The rise in store operating expenses was mainly due to new stores and increased employee-related and maintenance costs[12] The decline in SG&A was attributed to lower professional fees, incentive costs, and other employee-related costs[12] Store Portfolio Update During Q2 2025, Murphy USA expanded its network with a net addition of 5 stores, bringing the total count to 1,766, having opened 6 new-to-industry (NTI) stores and reopened 9 raze-and-rebuild locations, with 39 stores under construction supporting the goal of opening 50 new stores in the next year Store Count Changes as of June 30, 2025 | Category | Q2 2025 Net Change | YTD 2025 Net Change | Total Stores | | :--- | :--- | :--- | :--- | | New-to-industry (NTI) | 6 | 14 | - | | Closed | (1) | (5) | - | | Net Change | 5 | 9 | - | | Raze-and-rebuilds reopened | 9 | 9 | - | | Total Store Count | - | - | 1,766 | | Total Under Construction | - | - | 39 | - The company is poised to deliver 50 new stores over the next 12-month period, which is expected to drive future EBITDA growth[5] Financial Position and Capital Allocation The company maintained a solid financial position while actively returning capital to shareholders, with cash and cash equivalents at $54.1 million, long-term debt increasing to $2,066.7 million, and key capital allocation activities including $211.9 million in share repurchases and a $9.8 million dividend payment Financial Resources As of June 30, 2025, Murphy USA's cash balance was $54.1 million, with long-term debt totaling $2,066.7 million, composed of various senior notes, term debt, finance leases, and $88.0 million in borrowings under its revolving credit facility, and an effective income tax rate of 24.4% for the quarter Key Financial Metrics | Key Financial Metrics ($ Millions) | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $54.1 | $79.8 | | Long-term debt, including finance lease obligations | $2,066.7 | $1,781.4 | - Long-term debt includes senior notes due in 2027, 2029, and 2031, term debt due in 2032, finance leases, and $88.0 million outstanding on the revolving credit facility[14] Share Repurchases & Dividends In Q2 2025, the company repurchased 470.7 thousand shares for $211.9 million, leaving $578.0 million available under its current authorization, and paid a quarterly cash dividend of $0.50 per share, representing a 2.0% increase from the prior quarter and totaling a $9.8 million cash payment - During Q2 2025, the company repurchased approximately 470.7 thousand common shares for $211.9 million[15] Approximately $578.0 million remained available for repurchase under the existing authorization[15] - A quarterly cash dividend of $0.50 per share was paid on June 2, 2025, a 2.0% increase from March 2025, for a total cash payment of $9.8 million[16] Financial Statements The unaudited consolidated financial statements for Q2 2025, encompassing income, balance sheets, and cash flows, detail the company's financial performance and position Consolidated Statements of Income For Q2 2025, total operating revenues were $5.0 billion, a decrease from $5.5 billion in Q2 2024, driven by lower petroleum product sales, yet income from operations was slightly higher at $219.2 million, with net income at $145.6 million, or $7.36 per diluted share, compared to $144.8 million, or $6.92 per diluted share, in the prior-year quarter Q2 2025 Statement of Income Summary | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total operating revenues | $5,005.0 | $5,451.7 | | Total operating expenses | $4,785.8 | $5,233.2 | | Income from operations | $219.2 | $217.1 | | Net Income | $145.6 | $144.8 | | Diluted EPS | $7.36 | $6.92 | Consolidated Balance Sheets As of June 30, 2025, total assets stood at $4.62 billion, up from $4.54 billion at year-end 2024, while total liabilities increased to $3.98 billion from $3.70 billion, primarily due to a rise in long-term debt, consequently decreasing total stockholders' equity from $840.1 million to $646.1 million, largely impacted by treasury stock repurchases Balance Sheet Summary | (Millions of dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $776.4 | $748.1 | | Total assets | $4,622.2 | $4,541.6 | | Total current liabilities | $976.1 | $947.9 | | Long-term debt | $2,066.7 | $1,832.7 | | Total liabilities | $3,976.1 | $3,701.5 | | Total stockholders' equity | $646.1 | $840.1 | Consolidated Statements of Cash Flows For the first six months of 2025, the company generated $383.6 million in cash from operating activities, used $204.3 million in investing activities primarily for property additions, and used $172.2 million in financing activities driven by $363.8 million in treasury stock purchases, partially offset by net debt borrowings, resulting in a $7.1 million increase in cash position year-to-date Six Months 2025 Cash Flow Summary | (Millions of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $383.6 | $396.8 | | Net cash used in investing activities | ($204.3) | ($189.4) | | Net cash used in financing activities | ($172.2) | ($245.4) | | Net increase (decrease) in cash | $7.1 | ($38.0) | Supplemental Information Supplemental disclosures include a reconciliation of GAAP to non-GAAP financial measures, detailing adjustments to Net Income for Adjusted EBITDA, and forward-looking statements outlining potential risks impacting future performance Non-GAAP Reconciliation The company reconciles Net Income to the non-GAAP measure of Adjusted EBITDA, with Q2 2025 Net Income of $145.6 million adjusted for income tax, interest, and depreciation & amortization to arrive at EBITDA of $286.2 million, and further minor adjustments resulting in an Adjusted EBITDA of $286.0 million, compared to $278.6 million in Q2 2024 Reconciliation of Net Income to Adjusted EBITDA | (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $145.6 | $144.8 | | Income tax expense | $46.9 | $48.4 | | Interest expense, net | $27.7 | $24.0 | | Depreciation and amortization | $66.0 | $59.3 | | EBITDA | $286.2 | $276.5 | | Other adjustments | ($0.2) | $2.1 | | Adjusted EBITDA | $286.0 | $278.6 | Forward-Looking Statements Forward-looking statements address M&A, store openings, margins, dividends, and share repurchases, with actual results potentially differing due to risks such as the Walmart relationship, supply chain disruptions, geopolitical events, cybersecurity, EV adoption, and nicotine legislation - Key risks that could cause actual results to differ from expectations include: ability to maintain a good relationship with Walmart, successful execution of growth strategy, supply chain disruptions, geopolitical events impacting oil prices, cybersecurity breaches, and future legislation on nicotine products[19]