Murphy USA Inc. (MUSA)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 EPS was $7.36, a clear beat versus Wall Street consensus of $6.56*; revenue printed $5.005B reported ($4.406B excluding excise taxes per S&P methodology), a miss versus $5.173B*; Adjusted EBITDA rose to $286.0M, up slightly year over year .
• All-in fuel margin held resilient at 32.0 cpg, with retail margin at 29.2 cpg; RINs were $59.8M, and total fuel contribution dollars increased 0.7% YoY despite slightly lower volumes .
• Cost control was a bright spot: SG&A fell $8.2M YoY and store OPEX metrics improved; merchandise contribution increased 1.0% to $218.7M and center store categories ex-cigarettes/lottery were strong per management .
• Capital allocation remained aggressive: 470.7K shares repurchased for $211.9M; the quarterly dividend paid in Q2 was $0.50, followed by a post-quarter increase to $0.53 on Aug 14, a 6% QoQ raise .

What Went Well and What Went Wrong

What Went Well

• Fuel margins and supply contribution held up: “Supply margins improved modestly... driving all-in fuel margins of 32 cents per gallon, up 30 basis points versus the prior-year quarter” (CEO Andrew Clyde) .
• Merchandise contribution grew 1.0% to $218.7M; management highlighted center-store strength (candy, packaged beverages) and loyalty-led uplift, with Murphy-branded contribution up 8.9% ex-cigarettes/lottery in Q2 .
• Operating discipline: SG&A decreased to $50.9M (down $8.2M YoY), and store OPEX metrics improved, with executives citing labor optimization, loss prevention, and maintenance productivity .

What Went Wrong

• Traffic and volumes: retail gallons declined 0.2% chainwide and SSS volumes fell 3.2%; retail fuel margin dipped 1.7% YoY to 29.2 cpg .
• PS&W contribution was negative (-$25.9M) in Q2, reflecting timing/inventory/pricing dynamics, partially offset by RINs .
• Near-term guidance mix shift: management expects fuel volumes “slightly below the low end” of the annual range and merchandise contribution “toward the low end,” despite OPEX and SG&A trending below the low end, implying mixed EPS drivers into 2H .

Financial Results

Segment breakdown (Marketing segment):

KPIs:

Consensus vs Actual (S&P Global):

Values marked with * retrieved from S&P Global. Note: S&P Global’s revenue excludes excise tax; company-reported total operating revenues were $5.005B, including $599.5M excise taxes .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Supply margins improved modestly... driving all-in fuel margins of 32 cents per gallon, up 30 basis points versus the prior-year quarter... NTI store program is gaining momentum... poised to deliver 50 new stores over the next 12 month period” — Andrew Clyde, CEO .
• “Second half outlook... volumes could fall slightly below the low end... merchandise contribution... toward the low end... store operating expenses at or below the low end... SG&A trending below the low end” — Gallagher, CFO .
• “Retail margins... up 80 bps YTD along with 13 bps from lower credit card fees... industry headwinds are translating to higher retail margins over time” — Andrew Clyde .
• “Multiple activities underway to improve store productivity... OpEx at the low end despite new stores incurring full expenses day one” — Mindy West (COO) .

Q&A Highlights

• Volumes and margins: Management noted June deceleration versus April-May base, but July volumes rebounded to 100% of prior year; retail margins improved with lower card fees even as pricing was a penny more aggressive to support demand .
• Guidance interplay: Net effect of lower merch and volume versus lower OpEx/SG&A suggests outcomes hinge on 2H fuel margins; no explicit EBITDA guidance is provided .
• Store build confidence: >45 NTIs in construction for Q3, ~40 NTI openings in 2025, 50 openings over next 12 months; pipeline >250 sites and recent classes outperforming pro forma .
• PS&W dynamics: Q1 PS&W weakness tied to very low volatility and long supply; Q2 remained long/loose but improved; pricing direction and inventory timing key to noncontrollables .
• Capital allocation: Active repurchase; comfortable leverage around ~2.0x; maintain 50/50 framework between growth and shareholder returns .

Estimates Context

• EPS beat: $7.36 actual vs $6.56 consensus (+$0.80) for Q2 2025*.
• Revenue miss: $4.406B actual (ex-excise per S&P) vs $5.173B consensus (-$0.77B)*; company-reported revenue including excise was $5.005B .
• Estimate implications: Management’s lower OPEX and SG&A likely support upward revisions to margin assumptions; volumes/merch skew to low end temper near-term top-line expectations .
  Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Q2 delivered a quality EPS beat on resilient fuel margins and disciplined cost control despite softer traffic; Adjusted EBITDA rose YoY and all-in fuel margin held at 32.0 cpg .
• Near-term narrative: top-line headwinds from volumes and cigarettes/lottery are offset by center-store strength and cost actions; July volumes at 100% of prior year suggest stabilization into 2H .
• Structural margin thesis: management sees sustained upward pressure on retail margins and lower payment fees, enhancing EBITDA per gallon as the cost base tightens .
• NTI ramp is a medium-term catalyst: ~40 NTIs in 2025 with 50 openings over next 12 months and a deep pipeline (90 in design/permitting), positioning for 2026+ EBITDA growth .
• Capital returns remain robust: $211.9M repurchases in Q2; dividend raised to $0.53 post-quarter, indicating confidence in cash generation .
• Watch PS&W/RINs mix and volatility: timing/pricing can swing supply contribution; RINs were strong in Q2, but normalization is expected over time .
• Guidance mix: volumes and merchandise at low end but OPEX/SG&A below low end—net EPS in 2H will hinge on realized fuel margins; positioning supports defensiveness and upside if volatility normalizes .