Murphy USA, Inc. (MUSA): Differentiation
Murphy differentiates itself from its competitors primarily through:
Murphy plans to continue its long-term growth strategy by:
Mr. Andrew Clyde will serve as president and CEO of Murphy USA. Mr. Clyde previously was employed at Booz & Company in its global energy practice. He joined the firm in 1993 and was elected partner in 2000, holding leadership roles as North American Energy Practice Leader and Dallas office Managing Partner and serving on the firm’s board nominating committee. The CEO will hold stock worth roughly five times his annual salary.
Mindy K. West serves as CFO and treasurer of Murphy. Ms. West joined Murphy Oil in 1996 and has held positions in Accounting, Employee Benefits, Planning and Investor Relations. In 2007, she was promoted to vice president and treasurer for Murphy Oil.
MUSA’s board is aligned with shareholders, as they collectively hold ~6% of the outstanding stock. Additionally, since the spin-off, management and a couple board members purchased ~$150 thousand to $200 thousand worth of shares each.
Murphy owns 90% of its retail locations, which enables the company to have lower operating costs versus its peers (elimination of rental expense). The Company paid $9.4 million in fiscal year 2012 to lease roughly ~10% of its store base and other assets.
A back-of-the-envelope calculation with ~50% of the stores leased equates to “normalized” rent expense and TTM 2013 EBITDA of ~$47MM or $322MM (1.9% margin), respectively. Further, the ownership of real estate allows for the management to have flexible financing options going forward (i.e. sales-leaseback or ABL financing). The excess cash from a potential transaction involving real estate could be used to finance growth capex or return cash to shareholders
The Market Realist Take
The company said in its 10K filing that it increased its refining and marketing capital expenditures for the six months ended June 2013 to $105.2 million, compared to $55.4 million for the same period the prior year. This rise is primarily due to higher spending on land acquired for future stations to be built adjacent to Walmart stores in the US.
Murphy’s competitors in the convenience store space include Susser Holdings Corporation (SUSS), Casey’s General Stores (CASY), Alimentation Couche-Tard (ATD), The Pantry, Inc. (PTRY), TravelCenters of America (TA), and CST Brands, Inc. (CST)—spun off from Valero (VLO) in April.
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