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Murphy USA Inc. (MUSA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was resilient but below internal plan and Street: diluted EPS $2.63 on net income $53.2M; retail fuel margins rose 2 cpg YoY to 23.7 cpg, while oversupplied product markets compressed PS&W margins; merchandise contribution rose 2.3% on 19.6% unit margins .
  • Relative to S&P Global consensus, MUSA missed on EPS ($2.63 vs $3.74*), revenue ($3.97B S&P actual vs $4.68B* consensus), and EBITDA ($157.4M vs $196.0M*), driven by lower supply margins and weather/holiday timing headwinds; SG&A fell YoY, partially offsetting higher store OPEX .
  • Management highlighted April/May retail-only margins near ~$0.28/gal and volumes normalizing; reiterated H2 2025 supply margin normalization and maintained tax-rate guidance (23–25%) .
  • Capital allocation and liquidity actions: $151.2M buybacks in Q1, revolver upsized to $750M and Term Loan B to $600M, and dividend raised to $0.50 per share (2% QoQ) .
  • Near-term stock catalysts: intra-quarter operations update with strong Q2-to-date margins (31.7 cpg all-in; retail 29.6 cpg) and commentary on second-half PS&W normalization .

What Went Well and What Went Wrong

What Went Well

  • Retail fuel margin expansion: retail margins up 2 cpg YoY to 23.7 cpg; total fuel contribution dollars +0.4% despite lower volumes, reflecting pricing discipline and flatter price environment .
  • Merchandise resilience and mix: contribution +2.3% to $195.9M with 19.6% unit margins; management emphasized “continued share gains in all nicotine and most center of store categories, including Packaged Beverages, Candy and General Merchandise” .
  • Cost discipline and early Q2 trajectory: SG&A down $2.0M YoY; April/May retail margins ~28 cpg and volumes at/above prior year, supporting H2 setup; “our business remains resilient and well positioned…we’re not pulling our second half guidance” .

What Went Wrong

  • Supply margin compression: PS&W including RINs contribution fell $16.5M YoY; total PS&W contribution $(15.3)M vs $6.7M a year ago, reflecting an oversupplied market .
  • Volume headwinds: total retail gallons down 1.9% and SSS gallons down 4.2%, impacted by leap day/Easter timing and severe storms that doubled store-days closed YoY .
  • Higher operating costs: store and other OPEX +$14.0M YoY; APSM OPEX up 5.7% on labor/maintenance and new-store mix; depreciation and interest expense also higher .

Financial Results

Headline P&L

MetricQ1 2024Q4 2024Q1 2025
Total operating revenues ($USD Millions)4,843.7 4,710.4 4,525.4
Net income ($USD Millions)66.0 142.5 53.2
Diluted EPS ($USD)3.12 6.96 2.63
Adjusted EBITDA ($USD Millions)164.3 278.3 157.4

Fuel Metrics

MetricQ1 2024Q4 2024Q1 2025
Total fuel contribution ($USD Millions)286.1 389.1 287.3
Retail fuel margin (cents per gallon)21.7 28.9 23.7
PS&W incl. RINs (cents per gallon)3.1 3.6 1.7
Retail fuel volume – chain (Million gallons)1,153.1 1,196.8 1,131.2
RINs ($USD Millions)29.4 38.6 34.9

Merchandise Metrics

MetricQ1 2024Q4 2024Q1 2025
Merchandise contribution ($USD Millions)191.6 208.8 195.9
Merchandise sales ($USD Millions)1,000.7 1,051.3 999.4
Unit margin (%)19.2% 19.9% 19.6%
SSS total merchandise contribution ($K)37.8 40.4 38.4
SSS nicotine contribution ($K)18.3 19.4 18.5

KPIs and Cost Metrics

MetricQ1 2024Q4 2024Q1 2025
Total store & other OPEX ($USD Millions)252.1 266.5 266.1
Store OPEX ex. payment fees & rent ($K APSM)33.2 34.9 35.1
SG&A ($USD Millions)62.1 54.2 60.1
Avg diluted shares (thousands)21,162 20,458 20,204
Store count (end of period)1,733 1,757 1,761

Estimates vs Actual (Q1 2025)

MetricConsensusActualDelta (Actual − Consensus)
EPS ($)3.74333*2.63 -1.11333
Revenue (S&P-defined, $USD Billions)4.68497*3.97360*-0.71137
EBITDA ($USD Millions)195.99*157.4 -38.59
EPS – # of estimates6*——
Revenue – # of estimates10*——

Values marked with an asterisk (*) retrieved from S&P Global.

Segment Breakdown (Marketing)

MetricQ1 2024Q4 2024Q1 2025
Petroleum product sales ($USD Millions)3,811.7 3,618.2 3,489.8
Merchandise sales ($USD Millions)1,000.7 1,051.3 999.4
Other operating revenues ($USD Millions)31.2 40.5 36.1
Total operating revenues ($USD Millions)4,843.6 4,710.0 4,525.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / CommentaryChange
New stores (NTI)FY2025Up to 50 8 NTIs opened in Q1; 18 NTIs under construction; cadence remains second-half weighted Maintained
Raze-and-rebuildsFY2025Up to 30 17 under construction at Q1 end Maintained
Merchandise contribution ($M)FY2025$855–$875 Strong nicotine and center-store share gains expected to support results; QuickChek promotions ongoing Maintained
Store OPEX ex fees & rent ($K APSM)FY2025$36.5–$37.0 Q1 APSM $35.1; performing better than internal plan YTD Maintained
SG&A ($M)FY2025$245–$255 Q1 SG&A $60.1; cost discipline ongoing Maintained
Effective tax rateFY202523%–25% Q1 effective rate 14.1% (credits/stock comp); full-year expected within 23%–25% Maintained
All-in fuel margins (modeling)FY202530.5–32.5 cpg (modeling only) Q2-to-date all-in 31.7 cpg; retail 29.6 cpg Maintained; tracking strong
Capital expenditures ($M)FY2025$450–$500 Q1 property additions $87.8 Maintained
DividendQ2 2025$0.49 paid in March Declared $0.50 (2% increase) payable June 2 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Retail fuel margins structurally higherRetail margins up ~50 bps in 2024; industry equilibrium trending higher Retail margins +2 cpg YoY; April/May retail ~28 cpg; breakeven economics pushing margins up Improving structurally
PS&W/supply marginsLong/loose supply; PS&W at low end; timing effects matter Oversupplied environment compressing PS&W; plan to normalize H2 2025 Headwind near-term, normalize H2
Consumer behavior & loyaltyValue-seeking consumers; MDR personalization; QuickChek Rewards relaunch Loyalty membership up 11% (MDR) and 30% (QC); higher-income mix rising; lower-income stable Favorable loyalty, durable demand
QuickChek food & beverageQSR value pressure; relaunch QC Rewards; targeted promos Sandwich units +8%; breakfast traffic improving; summer plan with bundles Gradual improvement; still pressured
Operating expenses & store productivityOPEX growth from larger formats; SPE initiatives beginning Record applicants; labor/overtime easing; dispenser uptime program pilots Execution improving
NTI cadence/pipelineMoving toward ~50 NTIs/year; strong pipeline Q1 NTIs 8; pipeline ~250 stores across stages; H2 weighted Accelerating builds

Management Commentary

  • “Murphy USA’s Q1 results fell slightly short of internal expectations… Retail fuel margins grew by 2 cents year-over-year… supply margins were lower than expected due to the oversupplied product market. Continued share gains in all nicotine and most center of store categories… should help drive results through the rest of the year.” – Andrew Clyde, CEO .
  • “Our plan calls for supply margins to normalize in the second half of 2025… Ultimately, the retail margin is the largest component of our fuel margin and our structural advantage continues to benefit our results.” – Andrew Clyde .
  • “Cash flow from operations was $129M in Q1… free cash flow of $41M. Additionally, we repurchased 321,000 shares for $151M… first quarter effective income tax rate was 14.1%… we do expect our all-in tax to remain within our guided range of 23% to 25% going forward.” – Galagher Jeff, CFO .
  • “Retail margins in April were a little over $0.28 per gallon… May retail-only margins are also averaging about $0.28.” – Andrew Clyde .

Q&A Highlights

  • Inside sales dynamics: Non-nicotine categories benefited from digital pricing/promos; nicotine noncombustibles +7% SSS sales, +15% SSS margins; second-half promotional weighting expected in nicotine .
  • Retail margin environment: Marginal retailers trading volume for margin; industry acting rationally; structural margin uplift viewed as durable .
  • NTI cadence and breakeven: New larger stores take ~3 years to merchandise breakeven; aggressive opening pricing lowers early fuel margin; pipeline robust, H2-weighted .
  • OPEX management: Record store applications, reduced overtime and shrink; dispenser uptime and self-maintenance initiatives targeting cost savings and revenue lift .
  • Tax and guidance: Q1 effective tax 14.1% due to credits; full-year tax rate to remain 23–25%; no pullback of H2 guidance despite tariffs/macro headlines .

Estimates Context

  • Q1 2025 EPS missed Street: $2.63 vs $3.74333*, driven by lower PS&W margins and weather/holiday timing; merchandise and retail fuel margin strength partially offset .
  • Revenue and EBITDA below consensus: S&P-defined revenue $3.9736B vs $4.68497B*; EBITDA $157.4M vs $195.99M* .
  • Implications: Near-term models likely lower supply-margin assumptions and reflect higher OPEX mix from larger-store openings; H2 normalization and strong Q2-to-date margins may temper negative revisions .
    Values marked with an asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Retail margin strength persists; structural forces support elevated equilibrium margins even in lower absolute price environments—watch intra-quarter margin prints (Q2-to-date all-in 31.7 cpg) as a positive catalyst .
  • PS&W headwinds are cyclical; management expects normalization in H2 2025—stock may respond to signs of rack tightening/refinery outages or tariff impacts that rebalance supply .
  • Merchandise momentum and loyalty growth underpin inside profits; second-half promotional cadence (especially nicotine) should aid margins/baskets .
  • OPEX and capex mix reflect accelerated NTI growth; expect near-term expense pressure with later-year ramp to breakeven and incremental EBITDA from larger formats .
  • Capital returns remain robust: continued buybacks, dividend raised to $0.50, and enhanced liquidity via revolver/TLB upsizing support flexibility through cycles .
  • Modeling updates: reduce Q1 base, hold FY guidance ranges (tax 23–25%, OPEX APSM), bias fuel margins toward midpoint-to-high end if Q2 trends persist; monitor QuickChek comps vs QSR value environment .
  • Narrative: resilient EDLP + loyalty flywheel, H2 supply normalization, and NTI acceleration are the pillars; stock-sensitive data points include weekly margin/volume and progress on dispenser uptime/maintenance savings .