Murphy USA NYSE: MUSA said its outlook reflects a deliberately conservative view of fuel margins and same-store fuel volumes amid elevated price volatility, while management pointed to resilient customer demand, expanding loyalty engagement and continued investment in new stores and existing assets.
During the company’s earnings Q&A call, President and Chief Executive Officer Mindy West said retail fuel margins have maintained a higher floor even as the broader market remains difficult to predict. She cited rational competitor pricing and the need for marginal retailers to maintain required returns as factors supporting margins.
“What we are saying is reflective of what we have high confidence that we can deliver at this point,” West said of the company’s margin outlook. She added that Murphy USA is not assuming a pronounced decline in fuel prices in its forecast, even though such a decline could create opportunities for incremental volumes and wider retail margins.
Fuel Supply Conditions and Margin Outlook
West said the current geopolitical situation has created a supply shock affecting inventories and fuel flows globally, unlike prior periods of volatility that had less impact on domestic fuel availability. She said the company does not expect a near-term return to normal supply conditions and suggested the situation could take well into next year to begin unwinding.
The company’s supply-chain assets and capabilities have become more valuable in a tighter environment, according to West. Murphy USA can acquire fuel at the Houston Ship Channel directly from refineries, transport it through pipelines and store it at company terminals or at roughly 100 third-party terminals where it has access.
West said the company’s “controllables” fuel-supply contribution exceeded $0.07 per gallon in the second quarter, compared with about $0.025 per gallon in the comparable period a year earlier, when fuel was more readily available.
Management said it sees a stable retail-margin structure supporting its outlook for approximately $0.35 per gallon in all-in margins during the second half. West said margins may decline more quickly from peaks, but they have been stabilizing at higher levels than in the past. She said a sustained fuel-price decline could allow the company to outperform on both margin and volume.
Volume Trends and Customer Retention
Murphy USA reported that same-store fuel volume increased 0.5% in the second quarter. West said pricing direction can influence the company’s ability to create separation from competitors: rising prices tend to compress market spreads, while declining wholesale prices can create opportunities to differentiate on price.
- In May, when RBOB declined 16%, same-store volume increased 1.6%.
- During the latter half of May, RBOB fell 18% and same-store volume rose more than 2% year over year.
- For the first five days of August, same-store volume was up 1.5%, according to West.
West said the company opened August with fuel margins in the high-$0.30s per gallon. However, Murphy USA retained its same-store volume outlook of a 1% to 3% decline, citing uncertainty about fuel-price movements during the remainder of the year.
The company also said its loyalty program is producing higher sign-ups and greater engagement. Monthly enrollments exceeded 600,000 during the second quarter, compared with roughly 400,000 previously. Nearly 46% of recent enrollees were new or lapsed customers, up from 40% in the first quarter.
Murphy USA has used automated offers to encourage engagement and store visits. West said an offer giving customers a $0.05-per-gallon fuel discount for spending $5 inside the store has been successful in encouraging pump-to-store conversion.
Store Growth, Capital Spending and Merchandise
The company expects to deliver about 45 new-to-industry stores this year, toward the lower end of its stated range and excluding potential tuck-in acquisitions. West said the lower figure reflects the current organic pipeline rather than construction delays or reduced development activity. Some stores planned for 2027 are being pulled forward, and management expects a typical new store to take about three years to reach full ramp.
Capital expenditures are trending toward the high end of the company’s range as Murphy USA supports its new-store program, builds its land bank and makes lifecycle investments at existing locations. Those investments include proactive replacement of fuel dispensers, HVAC units and safes. West said the company intends to continue disciplined share repurchases while funding growth initiatives.
On merchandise, management said budget pressure is affecting some non-discretionary categories, though customers have remained resilient. The company expects results toward the low end of its merchandise outlook after winter storms disrupted operations in the first quarter, at one point closing about half of its network.
West said nicotine should remain a second-half tailwind, despite a difficult third-quarter comparison related to a prior ZYN promotion. She cited strength in cigarettes, including the value-priced Cowboy Cut brand, as well as expected new-generation pouch and flavored vape-product opportunities.
For non-nicotine merchandise, Murphy USA said it held or gained share across major categories and grew merchandise contribution dollars and margins. Packaged beverages, particularly energy drinks, were a source of strength, while lottery and beer remained pressured by constrained consumer spending and changing preferences.
QuickChek Stabilization Efforts
West said QuickChek performance is stabilizing, with food-and-beverage sales and margins turning positive. The company is working to grow sandwich sales, improve offer economics, expand bakery products and strengthen coffee performance. QuickChek also relaunched Free Coffee Fridays and has focused on a sales-first culture, promotional execution, labor, shrink and operating-model simplification.
“Is it back to where we want it to be? No,” West said. “I think we’re turning and headed in the right direction, focused on the right things with the right leadership in place.”
About Murphy USA (NYSE:MUSA)
Murphy USA is a leading downstream marketer of gasoline, diesel and convenience store products in the United States. Headquartered in El Dorado, Arkansas, the company was originally established as part of Murphy Oil Corporation and was spun off as an independent public entity in 2013. Since its separation, Murphy USA has focused on retail fueling services and convenience offerings designed to deliver value and convenience to consumers.
The company's primary operations center on two retail formats.
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