Business Overview and History Murphy USA Inc. (MUSA) is a leading marketer of retail motor fuel products and convenience merchandise, operating a network of over 1,750 stores primarily in the Southwest, Southeast, Midwest, and Northeast regions of the United States. The company's impressive growth and financial performance over the years have positioned it as a formidable player in the highly competitive fuel retailing industry.
Murphy USA was incorporated in Delaware on March 1, 2013, as a spin-off from its former parent company, Murphy Oil Corporation. The company holds the former U.S. retail marketing business of Murphy Oil, along with other assets and liabilities that supported the activities of the U.S. retail marketing operations. The separation from Murphy Oil was approved by the Murphy Oil board of directors on August 7, 2013, and was completed on August 30, 2013, through the distribution of 100% of the outstanding capital stock of Murphy USA to holders of Murphy Oil common stock. Following the separation, Murphy USA became an independent, publicly traded company.
In January 2021, Murphy USA made a significant move to expand its geographic footprint by acquiring 100% of Quick Chek Corporation, a privately held convenience store chain with 156 stores located in New Jersey and New York at the time of acquisition. This all-cash transaction marked Murphy USA's entry into the Northeast region.
As of December 31, 2024, Murphy USA operated a total of 1,760 Company stores across 27 states, with 1,604 branded as Murphy USA or Murphy Express and 156 under the QuickChek brand. In addition to its retail operations, the company maintains product supply and wholesale assets, including product distribution terminals and pipeline positions.
Throughout its history, Murphy USA has faced various challenges, including the volatility in global oil and petroleum product prices, which are largely beyond its control. The company has also had to adapt to changes in consumer behavior and travel patterns, navigate new regulations, and contend with intense competition in the retail fuel and convenience store industry.
Financial Performance and Operational Efficiency Murphy USA's financial performance has been consistently strong, showcasing the company's ability to navigate the volatile fuel retail market. In 2024, the company reported net income of $502.5 million, or $24.11 per diluted share, on revenue of $20.24 billion. This reflects a slight decrease from the previous year's net income of $556.8 million, or $25.49 per diluted share, on revenue of $21.53 billion.
The company's operational efficiency is a key driver of its success. In 2024, Murphy USA's store operating expenses per month increased by 5.2%, with half of this increase attributable to the larger format stores that the company has been building. Despite this, the company has remained focused on cost control, with its selling, general, and administrative (SG&A) expenses decreasing by 2.1% in 2024 compared to the previous year.
In the most recent quarter (Q4 2024), Murphy USA reported revenue of $4.71 billion and net income of $142.5 million. This represents a 7.1% year-over-year decrease in revenue and a decrease in net income from $150.0 million in Q4 2023.
Balanced Capital Allocation Strategy Murphy USA's capital allocation strategy is a hallmark of its success, as the company has consistently balanced its investments in growth initiatives with returning capital to shareholders. In 2024, the company repurchased approximately 938,000 shares for a total of $446.6 million, underscoring its commitment to enhancing shareholder value.
The company's disciplined approach to capital spending is also evident, with total capital expenditures of $503.0 million in 2024, primarily focused on new store openings and raze-and-rebuild projects. Looking ahead, Murphy USA has guided for capital spending in the range of $450 million to $500 million in 2025, as it continues to execute its growth strategy.
Resilient Fuel Margins and Merchandise Performance One of the key strengths of Murphy USA's business model is its ability to maintain robust fuel margins, even in challenging market conditions. In 2024, the company's retail fuel margin was $0.281 per gallon, up 50 basis points from the previous year. This performance reflects the company's focus on operational excellence and its ability to effectively pass through cost increases to its customers.
Additionally, Murphy USA's merchandise business has been a consistent contributor to its overall financial performance. In 2024, the company's merchandise contribution dollars grew by 3.8% to $834 million, driven by strength in both nicotine and non-nicotine product categories. The company's focus on enhancing its merchandise offerings and optimizing its pricing and promotional strategies has been instrumental in driving this growth.
Navigating Challenges and Positioning for the Future While Murphy USA has delivered impressive results, the company has not been immune to the challenges faced by the broader industry. In 2024, the company experienced some delays in its new store openings, which impacted its fuel volumes and merchandise sales. Additionally, the company faced headwinds in its QuickChek business, where it operates convenience stores with a stronger focus on food and beverage offerings.
To address these challenges, Murphy USA has implemented several initiatives, including a focus on improving the productivity of its existing store network and enhancing its digital capabilities to better serve its customers. The company has also been actively seeking to optimize its QuickChek business, with the goal of improving its performance and aligning it with the broader Murphy USA brand.
Looking ahead, Murphy USA remains well-positioned for continued growth and success. The company's strong balance sheet, disciplined capital allocation, and focus on operational excellence position it to navigate industry challenges and capitalize on emerging opportunities. With a robust pipeline of new store openings and a steadfast commitment to delivering value to its shareholders, Murphy USA is poised to maintain its position as a leading player in the retail fuel and convenience store industry.
Financials Murphy USA's financial performance has been consistently strong, as evidenced by its 2024 results. The company reported net income of $502.5 million, or $24.11 per diluted share, on revenue of $20.24 billion. This performance, while slightly lower than the previous year, demonstrates the company's ability to maintain profitability in a challenging market environment. The company's focus on operational efficiency is reflected in its control of SG&A expenses, which decreased by 2.1% in 2024 compared to the previous year.
For the fiscal year 2024, Murphy USA generated annual operating cash flow of $847.6 million and annual free cash flow of $389.5 million. These strong cash flow figures underscore the company's ability to generate substantial liquidity from its operations.
Liquidity Murphy USA maintains a strong liquidity position, which is crucial for its ongoing operations and growth initiatives. The company's balanced capital allocation strategy, which includes share repurchases and disciplined capital expenditures, is supported by its robust cash flow generation. In 2024, the company repurchased approximately 938,000 shares for a total of $446.6 million, while also investing $503.0 million in capital expenditures. This demonstrates Murphy USA's ability to both return value to shareholders and invest in future growth opportunities.
As of December 31, 2024, Murphy USA had a debt-to-equity ratio of 2.82, cash and cash equivalents of $47.0 million, and a $350 million committed cash flow revolving credit facility, of which $56.0 million was outstanding. The company's current ratio stood at 0.79, and its quick ratio was 0.37, indicating a relatively tight liquidity position that is typical for retailers with high inventory turnover.
Operational Performance Murphy USA operates in one reportable segment - Marketing, which includes its retail marketing stores and product supply and wholesale assets. In 2024, the company's retail fuel volumes reached 4.82 billion gallons, a 0.4% increase compared to 2023. The retail fuel margin, a key profitability metric, improved to 28.1 cents per gallon in 2024, up from 27.6 cents per gallon in 2023.
Merchandise sales also showed strong performance, reaching $4.21 billion in 2024, up 3.1% from the prior year. Merchandise margins remained robust at 19.8% in 2024, compared to 19.7% in 2023, reflecting the company's effective merchandising strategies.
The product supply and wholesale business, which includes pipeline positions, product distribution terminals, and wholesale fuel sales to unbranded customers, contributed to a total fuel contribution of $1.47 billion in 2024. This figure, which combines retail fuel margin and product supply and wholesale results, was down 2.5% from 2023 due to lower wholesale margins.
Industry Trends and Competition The U.S. petroleum business is highly competitive, particularly with regard to accessing and marketing petroleum and other refined products. Murphy USA faces increased competition from non-traditional retailers such as supermarkets and discount clubs. Demand for motor fuel can be affected by various factors, including economic conditions, fuel prices, and the development of alternative energy technologies.
Despite these challenges, Murphy USA's diverse fuel supply capabilities and infrastructure allow it to source fuel at competitive prices and deliver reliable low-cost fuel supply to its retail stores. This integration of the fuel supply chain is a key competitive advantage that supports the company's low-price, high-volume retail strategy.
Forward Guidance and Outlook For 2025, Murphy USA has provided comprehensive guidance across various operational and financial metrics. The company is targeting up to 50 new store openings, a significant increase from the 32 opened in 2024. Total fuel volumes are expected to grow 4.5% to just over 5 billion gallons, with average per store fuel volumes remaining in the 240-245 thousand gallon range.
In terms of merchandise performance, Murphy USA is guiding for merchandise contribution dollars in the range of $855 million to $875 million, representing nearly 4% growth at the midpoint. Operating expenses per store month are expected to be in the range of $36,500 to $37,000, representing a 4-6% increase.
The company anticipates SG&A expenses to be in the range of $245 million to $255 million for 2025. Capital expenditures are projected to be between $450 million and $500 million, supporting the company's growth initiatives.
Murphy USA is guiding for EBITDA in the range of $1 billion to $1.12 billion for 2025, based on an all-in fuel margin range of 30.5 to 32.5 cents per gallon. This guidance reflects the company's confidence in its ability to continue delivering strong financial results while executing its growth strategy.
Conclusion Murphy USA's impressive track record of financial and operational performance, coupled with its strategic initiatives and balanced capital allocation approach, make it a compelling investment opportunity in the retail fuel and convenience store space. As the company continues to execute its growth strategy and optimize its existing operations, investors can expect Murphy USA to maintain its status as a formidable and well-respected player in the industry. With a clear focus on expanding its store network, improving operational efficiency, and enhancing its merchandise offerings, Murphy USA is well-positioned to navigate the challenges of the competitive fuel retail market and deliver long-term value to its shareholders.