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Murphy USA Inc. (MUSA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 EPS was $6.96 on revenue of $4.71B; EPS declined slightly YoY ($7.00) and sequentially from Q3 ($7.20) as retail fuel margins compressed vs Q3, while merchandise contribution rose 5.6% YoY to $208.8M .
  • Fuel metrics normalized: retail fuel margin was 28.9 cpg (Q3: 31.9; Q4’23: 31.1), with total all-in fuel contribution steady at 32.5 cpg; gallons were -1.0% YoY, and SSS volumes -2.8% YoY; Adjusted EBITDA was $278.3M (+1.1% YoY) .
  • 2025 outlook: up to 50 NTIs; merchandise contribution guided to $855–$875M; store OpEx APSM guided to $36.5–$37.0K; capex $450–$500M; tax rate 23–25%. For modeling, management frames 2025 net income at $474–$551M and Adjusted EBITDA at $1.0–$1.12B at 30.5–32.5 cpg all-in margins .
  • Strategic narrative: management reiterated a “normal” fuel margin band of ~$0.30–$0.32/gal and structural upward pressure over time; Q4 benefited from robust nicotine and center-store initiatives, while QuickChek food traffic faced QSR value pressure; weather and low volatility limited price separation late in quarter .

What Went Well and What Went Wrong

  • What Went Well

    • Merchandise strength: Q4 merchandise contribution +5.6% YoY to $208.8M; unit margin 19.9% (vs 19.4% LY); nicotine +6.1% and non‑nicotine +4.4% YoY in Q4 .
    • Fuel profitability resilient: total fuel contribution steady at 32.5 cpg YoY; Adjusted EBITDA +$3.1M YoY to $278.3M despite lower retail margins vs Q3 .
    • Management conviction and execution: “delivered just over $1 billion of EBITDA in 2024,” with Q4 non‑nicotine margin up 7.2% YoY and tangible benefits from digital/assortment initiatives in center store .

  • What Went Wrong

    • Margin/gallons pressure: retail fuel margin fell to 28.9 cpg (Q3: 31.9; Q4’23: 31.1) and retail gallons -1.0% YoY; SSS gallons -2.8% YoY, reflecting flat price profile and limited volatility .
    • QuickChek headwinds: value competition in QSR continued to pressure food-led offer; management expects QC to be slightly down YoY in 2025 contribution despite a rewards relaunch .
    • OpEx inflation and one-timers: store OpEx APSM +4.2% YoY in Q4; depreciation +$10.2M YoY; impairment of $8.2M in Q4; these weighed on net income despite lower SG&A and tax rate .

Financial Results

  • Core P&L and Profitability
MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$5.07 $5.24 $4.71
Diluted EPS ($)$7.00 $7.20 $6.96
Adjusted EBITDA ($USD Millions)$275.2 $285.6 $278.3
  • Fuel
Fuel MetricQ4 2023Q3 2024Q4 2024
Total Fuel Contribution (cpg)32.5 32.6 32.5
Retail Fuel Margin (cpg)31.1 31.9 28.9
Retail Gallons – Chain (Million gal)1,208.4 1,239.3 1,196.8
Total Fuel Contribution ($M)$393.0 $404.2 $389.1
  • Merchandise
Merchandise MetricQ4 2023Q3 2024Q4 2024
Merchandise Contribution ($M)$197.7 $216.8 $208.8
Merchandise Unit Margin (%)19.4% 20.0% 19.9%
Merchandise Sales ($M)$1,018.5 $1,082.4 $1,051.3
  • KPIs and Costs
KPIQ4 2023Q3 2024Q4 2024
Store OpEx APSM (ex fees & rent, $K)$33.5 $36.1 $34.9
SG&A ($M)$62.1 $60.0 $54.2
Avg Diluted Shares (000s)21,425 20,735 20,458
  • Segment/Category Mix
Contribution ($M)Q4 2023Q3 2024Q4 2024
Fuel (Total)$393.0 $404.2 $389.1
Merchandise$197.7 $216.8 $208.8

Additional notes: Q4 included an $8.2M impairment, higher D&A (+$10.2M YoY), and lower effective tax rate (19.9% vs 23.6% LY) which influenced GAAP EPS; Adjusted EBITDA reconciles these non-GAAP items per the company’s schedule .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New Stores (NTI)20252024 guide: 30–35Up to 50Raised vs prior year’s plan
Raze and Rebuilds20252024 guide: >40Up to 30Lowered vs prior year’s plan
Retail Fuel Volume per Store (APSM, K gal)2025240–245 (2024 guide)240–245Maintained
Merchandise Contribution ($M)2025$830–$840 (2024 guide, revised in Q2) $855–$875Raised
Store OpEx APSM ($K, ex fees & rent)2025$35.0–$35.5 (2024 guide)$36.5–$37.0Raised
SG&A ($M)2025$240–$250 (2024 revised from $255–$265) $245–$255Slightly higher vs 2024 actual; consistent with ongoing investment
Effective Tax Rate202524%–26% (2024 guide)23%–25%Lowered
Capital Expenditures ($M)2025$500–$525 (2024 revised) $450–$500Lower vs 2024 run-rate
2025 Modeling: Net Income ($M)2025—$474–$551 (at 30.5–32.5 cpg)New modeling framework
2025 Modeling: Adj. EBITDA ($B)2025—$1.00–$1.12 (at 30.5–32.5 cpg)New modeling framework

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Fuel margins/PS&WQ2: record retail fuel contribution; PS&W/RINs headwinds; all-in ~28–32 cpg context . Q3: retail margins +3 cpg YoY; PS&W down in falling market; “normal” all-in ~$0.30–$0.32 .Reinforced “normal” all-in $0.30–$0.32, structural upward pressure over time; January retail margins +~2c vs LY .Stable normalization; supportive structural view.
Merchandise/nicotineQ2: merch +4.7% YoY; nicotine strong . Q3: nicotine and center-store strength at Murphy; QC still pressured .Q4 merch +5.6% YoY; non‑nicotine margin +7.2% YoY; vendor partnerships and EDLP leveraged .Improving momentum in Murphy center-store; QC mixed.
QuickChek value pressureQ2: adjusted merch guidance lower; QC traffic pressured . Q3: QSR value war; QC rewards relaunch .Expect QC slight YoY decline in 2025 contribution; value offers ($3.99 subs, $5 breakfast) continue .Headwinds persist near-term; loyalty ramp may help.
Store growth pipelineQ2: accelerating NTIs; higher 2024 capex . Q3: “toward 50 NTIs/year”; front-loading .2025 guide “up to 50” NTIs; 3-year ramp to maturity emphasized .Acceleration and improved cadence.
OpEx/productivityQ2: OpEx APSM +6% YoY . Q3: same-store cost ~3%; network 5–6% with larger formats .2025 OpEx APSM +4–6%; dispenser uptime/store productivity initiatives in pilot .Ongoing investment with targeted productivity.
Macro/volatility/weatherQ3: benign volatility; margin normalization .Low volatility in Nov/Dec constrained price separation; January storms; margins offset volume dips .External factors muted volumes; margins cushioned.
Regulatory (illicit vapor)—Management calls for FDA/DOJ enforcement; sees upside if illicit trade is curbed .Potential positive optionality.
Digital/loyaltyQ3: QC Rewards relaunch; MDR personalization effective .QC Rewards traction early; vendor collaboration leveraging volumes .Capability-led uplift continuing.

Management Commentary

  • Strategic posture: “The business delivered just over $1 billion of EBITDA in 2024… we plan to grow the base of sustainable earnings… accelerate our new store program… and relentlessly… better serve our customers” .
  • Fuel margin framework: “We would expect margins to remain in a tighter $0.30 to $0.32 per gallon range in a normal somewhat benign environment… structural upward pressure on margins [is] highly unlikely to change” .
  • Merchandise initiatives: non‑nicotine margin growth of 7.2% YoY in Q4 with center-store initiatives and digital transformation contributing .
  • 2025 modeling: “At an all-in margin range of $0.305 to $0.325 per gallon… we would expect EBITDA of $1 billion to $1.12 billion” .
  • Capital returns: share count around 20M; buybacks as part of 50/50 capital allocation; leverage well below 2x .

Q&A Highlights

  • Buyback and leverage philosophy: Committed to 50/50 capital allocation; leverage may flex but not “leveraging up to buy back shares”; earnings volatility mostly fuel margins; program resilient even if margins are a cent below plan .
  • Capex cadence: 2024 near $500M; 2025 ~flat, mix shifting to more NTIs vs raze‑rebuilds; store timing slipped from late 2024 into 2025 .
  • Vendor support/promotions: High-volume platform valued by vendors; digital contracts improved; expect continued value focus; inflation and potential tariffs are wildcards .
  • New store performance: 2022/2023 NTI classes delivered ~310K–316K gal APSM and strong merch ramps; pipeline supports long-term ~50 NTIs/year target .
  • Gallons and weather/volatility: Q4 volumes hit by low volatility and midweek holidays; January affected by storms (hundreds of closures) but margins +~2c YoY offset volume softness .

Estimates Context

  • Wall Street consensus (S&P Global): Consensus EPS/revenue for Q4 2024 could not be retrieved due to an S&P Global daily request limit; as a result, we cannot present vs-consensus comparisons for this print. Values were unavailable from S&P Global at this time.
  • Where estimates may adjust: Management’s 2025 guidance implies merchandise contribution growth of ~3–5% ($855–$875M), OpEx APSM at $36.5–$37.0K, SG&A $245–$255M, tax 23–25%, capex $450–$500M; modeling at 30.5–32.5 cpg implies net income $474–$551M and Adj. EBITDA $1.0–$1.12B, which may anchor Street revisions near these ranges .

Key Takeaways for Investors

  • Fuel margin normalization with structural support: management pegs “normal” all-in at ~$0.30–$0.32/gal and sees structural upward pressure as marginal retailers pass through higher costs .
  • Accelerating unit growth: up to 50 NTIs in 2025 (vs 32 in 2024), with 3-year maturity ramp and above-network NTI economics; pipeline supports 2026+ continuation .
  • Merchandise momentum at Murphy, cautious on QuickChek: Q4 merch +5.6% YoY with nicotine and center-store strength; QC still faces QSR value pressure, though rewards relaunch shows early traction .
  • Cost/investment posture: 2025 OpEx APSM guided up (larger formats, tech, people), but productivity initiatives (e.g., dispenser uptime) are underway to offset over time .
  • Capital allocation remains shareholder-friendly: ~240K shares repurchased in Q4 ($126.2M); ~$937.8M authorization remaining at YE; dividend increased to $0.49 in Feb 2025 .
  • Macro sensitivity managed: limited volatility in Nov/Dec and severe January weather pressured volumes, but margin capture and low leverage support earnings/cash returns through cycles .
  • 2025 modeling guardrails: at 30.5–32.5 cpg and guidance midpoints, management’s NI and Adj. EBITDA ranges offer a clear baseline for Street models .

Appendix: Additional Context and Disclosures

  • Cash/debt at 12/31/24: cash $47.0M; long-term debt $1.83B; revolver borrowings $56.0M; avg diluted shares 20,458K in Q4 .
  • Tax: Q4 effective rate 19.9% (discrete state tax benefit); FY 22.9% .
  • Non-GAAP: Adjusted EBITDA reconciles to net income by adding back taxes, net interest, D&A, and other items (e.g., impairment, ARO accretion, gains/losses on asset sales) as disclosed .
  • Store base: 1,757 stores at 12/31/24; Q4 net adds +17; 2024 NTIs 32; raze‑rebuilds reopened 47 .