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EL DORADO, Ark. — Murphy USA Inc. has reported quarterly and yearly records for fuel and merchandise thanks to its acquisition of the QuickChek convenience-store chain, the company said on the first anniversary of the purchase. “QuickChek was a strategic acquisition with a very focused purpose,” Murphy USA President and CEO Andrew Clyde said on the company’s fourth-quarter and full-year 2021 earnings call.
“We achieved new milestones as the fuels business generated over $1 billion in margin and merchandise sales and margin eclipsed $3 billion and $700 million, respectively,” Clyde said. “These results were partially driven by QuickChek, where we surpassed our year-one target for synergy realization, even as we uncover additional potential beyond our $28 million of targeted synergies.”
In January 2021, Murphy USA Inc. completed its acquisition of QuickChek Corp., a $645 million all-cash transaction announced in December 2020. The purchase added 157 c-stores in the Northeast. Many of Murphy USA’s sites are smaller, kiosk-sized fuel locations adjacent to Walmart stores, with limited convenience offerings. The acquisition of QuickChek helps Murphy USA enhance its food and beverage offer, the company said.
“As we have begun to incorporate Murphy’s scale and thoughtful approach to business transformation, our excitement regarding the future potentials for both the Murphy and QuickChek brands continues to grow,” Clyde said. “Our confidence that we made the right acquisition of QuickChek has been validated through our due diligence of other [mergers and acquisitions] opportunities, none of which had the same quality of assets, the existing earnings power or the future potential we see in QuickChek.”
For fourth-quarter 2021, El Dorado, Ark.-based Murphy USA has reported net income of $108.8 million, compared to net income of $61 million in fourth-quarter 2020. For the year 2021, the company reported net income of $396.9 million, compared to $386.1 million in 2020.
Total fuel contribution—retail fuel margin plus product supply and wholesale results including renewable identification numbers (RINs)—for fourth-quarter 2021 was 27.5 cents per gallon (CPG), compared to 19.8 CPG in fourth-quarter 2020. For the year, total fuel contribution was 26.3 CPG, compared to 25.2 CPG in 2020.
Total retail gallons increased 10.5% to 1.1 billion gallons in the quarter compared to same period in the previous year’s quarter, while volumes on a same-store sales basis increased 1.4%. For the year, total retail gallons increased 11.6% to 4.4 billion gallons and increased 3% on a same-store basis.
“The fuel synergies have come primarily from implementing the same principles we leverage in our retail pricing excellence initiative within the Murphy network, better understanding store-by-store demand elasticity and QuickChek’s footprint and optimizing pricing tactics accordingly,” said Clyde. “We’ve been able to secure more favorable terms in renegotiating supply contracts while leveraging inventory management technology with our fuel carriers. Additionally, through leveraging scale with back-office processing and the elimination of QuickChek executive and advisory board costs, we have achieved $2 million of [general and administrative] synergies.”
Merchandise contribution dollars increased 57.2% to $181.4 million compared to the prior-year quarter. Average unit margins were 19.6% in the current quarter compared to 15.5% in the prior-year quarter. For the full year, merchandise contribution dollars increased 52.7% to $701.6 million on average unit margins of 19.1% in 2021. Increases in both contribution dollars and unit margins were primarily attributable to the QuickChek acquisition, the company said.
Food and beverage contribution margin increased significantly to 15.2% of total merchandise contribution dollars in fourth-quarter 2021 compared to 0.8% in fourth-quarter 2020, and for the year was 14.3% compared to 0.8% in 2020, primarily due to the acquisition of QuickChek.
Store operating expenses were an aggregate $54.7 million higher in fourth-quarter 2021 versus fourth-quarter 2020 and was $191.3 million higher for the year 2021, primarily attributable to the addition of QuickChek. While QuickChek locations have higher per store operating costs due to the larger format and prepared food offering, the Murphy USA network also experienced higher operating expenses, primarily due to higher employee-related expenses and higher maintenance costs, combined with more stores in the network, the company said. Total selling, general and administrative expenses costs for the quarter were $12.5 million higher than last year’s period, and for the year were $22.5 million higher because of increased professional fees and the inclusion of QuickChek in 2021 results.
“We are proud to report a second consecutive year of record [earnings before interest, taxes, depreciation and amortization] EBITDA and earnings, as our advantaged everyday low price business model enables us to grow market share in the current environment,” said Clyde. “While 2021 was not without its challenges that drove costs higher and impacted new store activity, we believe our position as a low-cost leader enables us to thrive in an environment in which consumers are increasingly price sensitive. We are focused on driving further process efficiencies in the core business to maintain our cost discipline.”
During fourth-quarter 2021, the company opened 12 new-to-industry retail locations, including 10 new Murphy Express stores and two QuickChek stores, for a year-end total of 1,679. It reopened nine raze-and-rebuilds and closed two QuickChek stores. This total consists of 1,151 Murphy USA stores, 370 Murphy Express stores and 158 QuickChek stores. There are a total of 17 stores under construction, including 13 new 2,800-square-foot Murphy Express stores, one QuickChek store and three raze-and-rebuilds. In addition, two new Murphy Express sites opened in January 2022.
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