Value proposition

Murphy USA’s value proposition propels it through Q1 2022

EL DORADO, Ark. – Murphy USA Inc.’s low-cost business model helped the retailer propel the first quarter of 2022 as its value proposition continues to attract customers, according to the company’s chief executive.

“We continue to learn more and more about our customers and their needs, and by analyzing the behavior of approximately 100,000 Murphy Drive Rewards customers who have shopped with us every month since 2019, we are learning a lot about how which they navigate in today’s environment.” said CEO Andrew Clyde during the company Call for Q1 2022 resultsheld earlier this month.

As Clyde pointed out, customers spend more as fuel prices rise, but their consumption remains relatively stable, as fewer gallons per trip are offset by increased trip frequency.

“As such, we represent a growing percentage of their household income, which tells us that their purchases from Murphy USA are not discretionary. to the store because most of them don’t have the luxury of working remotely and shopping online,” he explained, adding that the extra trips drive extra merchandise sales, especially in the tobacco category.

In addition to existing loyal members, the retailer gains new customers who seek greater value through tailored consumer packaged goods promotions.

“Due to increased fuel volume and traffic, merchandise sales and associated category margins continue to grow,” Clyde said. “The benefit of being more affordable and increasingly relevant to consumers is that we profitably gain market share for both established and emerging categories. This applies not only to our Murphy-branded stores, but also to the QuickChek brand given [its] attractive value-for-money deals in food and beverages, convenience items and low-cost fuel. »

Murphy USA acquired Whitehouse Station, NJ-based QuickChek in January 2021. $645 million transaction added nearly 160 convenience stores to the Murphy USA network.

Q1 in numbers

In the first three months of 2022, Murphy USA reported net income of $152.4 million, compared to net income of $55.3 million in the same period of 2021. Current year results include three full months of QuickChek contribution compared to only two months in the prior year period.

Revenue for the first quarter of 2022 was $5.1 billion, compared to $3.5 billion a year ago. Adjusted EBITDA was $277 million in the quarter compared to $154.8 million a year ago. ​​​​​​Average retail gasoline prices were $3.43 per gallon compared to $2.37 per gallon in the first quarter of 2021.

Additionally, the company reported that total retail gallons increased 7.8% to 1.1 billion gallons in the quarter compared to the same three-month period last year, while same-store volumes increased by 3.8%.

Commodity contribution dollars for the first quarter of 2022 increased 18.4% to $175.7 million on average unit margins of 19.7%, compared to contribution dollars for the prior year quarter of $148.4 million on unit margins of 17.8%.

Food and beverage contribution margin increased to 14.6% of total commodity contribution dollars from 11.5% in the prior year period.

During the quarter, El Dorado-based Murphy USA opened six new Murphy Express stores and one QuickChek store, bringing its store count to 1,686 locations. There are 17 new Murphy Express stores, two new QuickChek stores, and 17 razed and rebuilt Murphy USA stores currently under construction.

“I believe this quarter’s results underscore that the benefits built into our model are growing and that many structural factors are unlikely to dissipate in the near future as smaller retailers in the industry face heightened challenges.” , Clyde said. “While we are certainly not immune to some of these factors, we believe our scale, business model, customer positioning and continuous improvement mindset better position us to mitigate these pressures, increasing thus our relative cost advantage.”