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EL DORADO, Ark. — Murphy USA Inc. reported generally good results for the third quarter of 2016, despite net income that declined year over year and numerous external challenges that affected the industry.
Murphy USA generated a net profit of $45.5 million during the quarter, down from $60.5 million during Q3 2015.
"Our business performed well during a challenging third quarter," President and CEO Andrew Clyde remarked during the company's Nov. 3 earnings call. "We continue to see record levels of merchandise margins in conjunction with lower store operating expenses, resulting in continued improvement to our fuel breakeven metric."
During Q3, flooding in Louisiana and the September shutdown of the Colonial Pipeline, which was "unprecedented in its duration," challenged both fuel volume and margin, Clyde noted. Rising crude oil and wholesale prices were also factors.
Total retail fuel volume increased 1.2 percent year over year to 1.09 billion gallons during the quarter, but retail fuel margins fell to 13.7 cents per gallon from 18.1 cents per gallon during Q3 2015.
Total merchandise sales rose 1.2 percent to $599 million during the quarter, and merchandise unit margins increased to 16 percent from 14.6 percent. However, same-store sales fell 2.6 percent year over year due to a decline in cigarette sales and volume. The overall increase in merchandise sales was driven primarily by new store additions, the company said.
"Volatility will always play a role in the markets where we operate and will remain impactful to our bottom-line results, but the initiatives we have taken to improve our core business against this backdrop of uncertainty help to mitigate short-term earnings variability and ultimately drive superior long-term performance," Clyde commented.
Unlike the last two years, Murphy USA expects to enter 2017 with positive momentum on its side, the chief executive added.
The company opened 21 new retail stores during its latest quarter, three of which were raze-and-rebuild projects that converted kiosk locations to 1,200-square-foot stores. At the end of the third quarter, Murphy's total store count was 1,364 locations. This included 1,134 Murphy USA sites and 230 Murphy Express sites.
Since the end of Q3, the company has opened another 10 new stores, and 28 are currently under construction. Most of the in-progress stores are expected to open during the final quarter of this year.