Active Stock Evaluation: Murphy USA Inc. (NYSE: MUSA)

Gary Cummings
Latest posts by Gary Cummings (see all)

EL DORADO, Ark, April 10, 2020 – Shares of Murphy USA Inc. (NYSE: MUSA) inclined 5.99% to $105.85. The stock grabbed the investor’s attention and traded 299.850K shares as compared to its average daily volume of 512.78K shares. The stock’s institutional ownership stands at 89.30%.

Murphy USA Inc. (NYSE: MUSA) reported total fuel contribution dollars increased 30.6%, or $52.90M, in the third quarter of 2019. Retail fuel margins of 18.4 cpg of a 29.6% improvement from the third quarter 2018, which combined with higher same store volumes improved total retail contribution dollars by $55.00M to $206.40M. Q3 2019 PS&W margins (counting RINs) were $2.10M lower when contrast to Q3 2018 because of reduced RIN sales volumes partially offset by a higher PS&W contribution.

Total merchandise contribution increased 6.4% to $111.20M in the third quarter 2019, because of higher sales across the chain and strong new store performance.  The continued higher contribution from the lower-margin tobacco categories and improved promotional activities lowered the average unit margins by 50 basis points as compared to the prior year quarter to 16.3%. Total merchandise contribution dollars per store increased 6.0% to $25.7 thousand on a SSS basis from growth in the tobacco category.

Cash balances as of September 30, 2019 totaled $247.70M. Long-term debt consisted of about $493.0M in carrying value of 4.75% senior notes due in 2029, $296.0M in carrying value of 5.625% senior notes due in 2027 and $200.0M of term debt less $20.0M of current maturities, which is reflected in current liabilities.  The asset-based revolving facility (the “ABL”) was undrawn and had a borrowing capacity of $258.0M as of September 30, 2019.

Common shares repurchased during the current quarter were about 1.20M for $109.00M, of which 1.10M shares for about $98.40M were made under the $400.0M share repurchase program approved by the Board of Directors in July 2019, with about $301.60M remaining in the plan at September 30, 2019.   At September 30, 2019, the Company had common shares outstanding of 30,759,651.  The effective income tax rate for Q3 2019 was 24.2% contrast to 21.1% in Q3 2018.  The lower rate in Q3 2018 was because of a discrete tax item related to excess tax benefits from share-based payments.

Financing Update:

On August 27, 2019, the credit agreement was amended and restated which provides for an ABL borrowing availability of up to $325.0M.  Up to $150.0M of additional borrowing capacity under the ABL facility may be extended at the request of the borrowers and with the consent of the lenders.  The ABL facility is planned to mature in August 2024.  In addition to the ABL facility, the credit agreement provides for a $250.0M term facility that will mature in August 2023.  In connection with the new credit agreement, the previous outstanding term loan balance was paid off and $200.0M was borrowed under the new term facility.

The 6.0% Senior Notes due 2023 (the “2023 Notes”) were called and $500.0M aggregate principal amount of 4.75% Senior Notes due 2029 (the “2029 Notes”) were issued following an indenture dated as of September 13, 2019.  The 2029 Notes bear interest at a rate of 4.75% per annum, interest is payable on April 7 and September 15 of each year, and the Notes will mature on September 15, 2029.

A pre-tax loss on early debt extinguishment of $14.80M was recorded within other income (expense), related to the amount paid to retire the 2023 Notes in excess of its carrying value and from recognizing unamortized discounts, deferred financing and other cash costs at the time of the debt extinguishment of the 2023 Notes.

MUSA has a market value of $3.19B while its EPS was booked as $4.90 in the last 12 months. The stock has 30.69M shares outstanding. In the profitability analysis, the company has gross profit margin of 8.00% while net profit margin was 1.10%. Beta value of the company was 0.76; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.60.

Leave a Reply

Your email address will not be published. Required fields are marked *