Murphy USA Proves Durable and Resilient Amidst Turbulent Market Conditions

As reported by the company in their Q1 2025 conference call transcript, Murphy USA has demonstrated its ability to withstand various market challenges. Despite a 4.2% decline in same-store gallons, the company's business model has proven resilient against inflation, recession, and other consumer weakness.

In his opening remarks, CEO Andrew Clyde highlighted that the company's business model is somewhat "inflation proof," "recession resistant," and "relatively immune to other periods of consumer weakness." He also noted that the company has added "tariff resistance" to its lexicon, further emphasizing its ability to navigate turbulent market conditions.

Clyde attributed the decline in same-store gallons to a combination of temporal factors, including a non-repeating leap year and Easter in March, which had a 1.5% impact on sales. Additionally, storms affected same-store gallons by another 50 basis points, accounting for almost half of the Q1 decline. These temporal factors are less relevant to the long-term performance potential of the business.

However, the cyclical factor of lower absolute price levels in the quarter also contributed to the decline. Clyde noted that when prices are high, consumers tend to switch and gain shares, but when prices subside, some consumers trade off price for locational convenience.

Despite these challenges, Murphy USA's focus on making the business better has allowed it to deliver results and value to shareholders in almost any environment. The company's EDLP (Every Day Low Price) offer and relatively simple yet evolving business model have been key factors in its success.

Clyde emphasized that every quarter is different, much like the weather in South Arkansas, where "if you don't like the weather right now, just wait a few minutes." He encouraged investors to consider Murphy USA's Q1 results under three headings: temporal factors, cyclical factors, and structural factors.

The company's CEO believes that by overlaying its Q1 results with customer behavior in real-time, investors can gain greater insights into the more enduring and resilient business. This suggests that despite the current challenges, Murphy USA remains well-positioned for long-term success.