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One-Time Gain Boosts Murphy USA to $86M 1Q Net Income | Arkansas Business News | ArkansasBusiness.com
"First-quarter results demonstrate tangible progress on our 2016 initiatives as we executed our formula for value creation," President and CEO Andrew Clyde said in a statement, noting that construction started the year at a quick pace.
He also praised the success of the chain's supply contract with Core Mark, a San Francisco-based distributor of fresh, refrigerated and frozen merchandise to convenience stores.
TAGGED: Murphy USA Inc., Andrew Clyde
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.
EL DORADO - Murphy USA
's newest direction came as the result of Wal-Mart's decision to develop its own gasoline program on sites not already committed to Murphy USA.
However, the abrupt change in the former business relationship did not catch Murphy USA CEO Andrew Clyde totally unprepared.
In an interview Tuesday, Clyde
said that for the past few years the company has considered the possibility of no new locations with Wal-Mart
and has prepared for that eventuality.
"This was a Wal-Mart decision," he
The company was prepared for this decision," Clyde
Over the past few years, Murphy USA
has purchased the property under its gas stations and plans to purchase more sites to continue building the anticipated 60 to 80 stations in the next couple years.
While still planning to work with Wal-Mart
says Murphy USA
had set aside $500 million for future purchases that will not be redirected at re-purchasing stock.
For a stockholder with a 1 percent hold on the company, they will then own 1.2 percent of the company.
"We have a stronger fuel supply chains than the typical retailers, including Wal-Mart," Clyde said.
TAGGED: Wal-Mart Stores Inc., Andrew Clyde, Murphy USA Inc.
"The strategic value of the CAM ...
"The strategic value of the CAM system has increased significantly with the successful development of onshore oil-shale in conjunction with enhanced economics and optionality for refiners in the current price environment," President and CEO Andrew Clyde said in a news release.
"We are excited to execute on our last meaningful non-core asset inherited from the spinoff in 2013, the proceeds of which will free up capital that can be used to help fund our independent growth plan, including our recently announced $500 million share repurchase program."
TAGGED: Andrew Clyde, Murphy USA Inc.