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Murphy USA Income Down in Third Quarter | Arkansas Business News | ArkansasBusiness.com
"Our business performed well during a challenging third quarter," President and CEO Andrew Clyde said.
"We continue to see record levels of merchandise margins in conjunction with lower store operating expenses, resulting in continued improvement to our fuel breakeven metric."
cited "atypical seasonal weakness in the fuels business" and attributed it to rising crude and wholesale prices and market disruptions created by the shutdown of a major fuel pipeline.
said that volatility is likely to continue affecting Murphy USA's
bottom line, but said the company had taken initiatives to "imporve our core business against this backdrop of uncertainty.
TAGGED: Murphy USA, Andrew Clyde
This new role aligns well with ...
This new role aligns well with our broader strategy and the work of Rob and his team will be a strong component of our independent growth plan," said Andrew Clyde, president and CEO, Murphy USA Inc.
President and CEO, Murphy USA Inc.
Speaking at the Raymond James 37th ...
Speaking at the Raymond James 37th Annual Institutional Investors Conference in New York on Tuesday morning, Andrew Clyde, president and CEO of El Dorado, Ark.-based Murphy USA - which has 1,135 sites, the majority located in close proximity to Walmart Supercenters in 23 states across the South and Midwest - explained that the retailer's strategy for winning in today's very competitive market has five elements:
"When you take that strategy together, we have a business model that has been resilient to and takes advantage of the underlying fuel price volatility," Clyde
"First, it's about growth.
It's about organic growth at the unit level and, with this independent growth plan, selecting sites that are going to be in the highest-return markets."
At the same time, Murphy USA
continues to make "meaningful upgrades" to its network, which is adding to its per-site comp.
According to Clyde
, Murphy USA's
core business is made up of its fuel contribution, fuel breakeven requirement and other corporate costs.
From the fuel contribution standpoint, in a flat to declining demand environment, growth is largely about growing share through new units.
The advantage the retailer has is in its cost of goods acquired through proprietary supply chain, and it captures margin through volatility, he
Murphy USA's fuel breakeven is a function of its merchandise gross-margin growth and cost leadership, he
"The balance of our growth this year, and the majority of your future growth, is going to be Express stores where we acquire locations from third parties, but they are still in proximity to supercenters, which is this great demand aggregator, traffic generation for these price-sensitive customers," Clyde
told investors at Tuesday's
Aside from new builds, the retailer has been, and will continue to, reinvest in its network.
Starting in 1997, most of Murphy USA's
stores were built on four-tenths of an acre, with four pumps and a 112-square-foot kiosk.
"...Our new [kiosk] stores are 200-square-foot kiosks with coolers in front, and most of our stores now are 1,200 square feet.
There's a great opportunity to do raze-and-rebuilds on the older stores," Clyde
noted, pointing out the company executed its first last year.
Initial raze-and-rebuild candidates will have higher traffic, better-than-average fuel margins, great potential for merchandise uplift, and the company can increase its fuel volume with more diesel dispensers and a better fuel mix.
has identified 135 sites for raze-and-rebuild, roughly 10 percent of its portfolio.
The company will do 10 stores this year and move to 20 stores a year starting in 2017, according to Clyde
It makes it a better look and feel for the customer and we've been able to demonstrate 1-percent uplift in store fuel volumes as well as our merchandise sales," Clyde
"And because of some of the improvements, we will have lower maintenance costs over a 10-year period."
Other reinvestment programs include: installing LED lighting; adding super coolers; and the rollout of a new security system networkwide.
"This is a business where you have to continually invest and many of the old legacy sites you see out there, their owners have taken a more invest-and-forget approach.
If you want to stay vital in this business, you have to continue to invest," Clyde
Concluding that Murphy USA
"has not been standing still; we've been very active since the spin," Clyde
also used Tuesday's investor presentation to highlight the company's new five-year supply contract with Core-Mark Holding Co.
, negotiated in 2015, and the installation of super coolers in front of its older kiosks, which double the capacity of beverages and add higher-margin products to the mix.
2014 April Luncheon Honors Legacy of Charles H. Murphy Jr.
Front row: Murphy Family Foundation President Madison Murphy, award-winning students Blair Roberson, Dakota Fetterly and Briana Hogbin, CEE President Nan Morrison and Murphy Oil President and CEO Andrew Clyde.