Murphy USA Announces Share Repurchase Plan at Annual Meeting

by Luke Jones  on Wednesday, May. 7, 2014 4:00 pm  

Andrew Clyde, CEO of Murphy USA Inc.

Murphy USA Inc., the retail gas station spinoff of Murphy Oil Corp. of El Dorado, held its first shareholders' meeting Wednesday, announcing a $50 million share repurchase program.

"While the timing and number of shares to be repurchased under the program will be determined by management, and clearly is going to depend on a number of factors, we expect to complete the program by the year's end," Chairman R. Madison Murphy said. "We're extremely proud to be in this position so early in the company's life to make what we consider to be a meaningful statement to shareholders." 

In a presentation to shareholders, CEO Andrew Clyde detailed some of the fuel retailer's strategy for the coming year, noting that the company is in a highly competitive and volatile market. 

Clyde detailed three specific segments of fuel retail: "hypermarkets" that partner with large retailers; big-box convenience stores that profit increasingly from prepared food sales; and "consolidators" like 7-Eleven that benefit from a scale advantage.

"If you're not one of these three models, you're stuck in the middle, and you will gradually, through market forces, get consolidated," Clyde said. "We want to stay on top of the leading competitors."

Clyde characterized Murphy USA as a "hypermarket," in a segment that includes competitors like Kroger, Safeway and Costco.

"Their strength is low fuel prices with integrated offers that leverage the main store," Clyde said.
"Integrated offers" could include customer incentives. For example, in 2013, Murphy USA gave 10-cent per gallon fuel discounts with purchases of Coke or Pepsi products. 

Clyde said the company stands to build between 50 and 70 new sites in 2014. And it's rolling out many stores in a larger 1,200-SF format. The company could potentially raze and rebuild older sites to match that model.

He also said that Murphy USA is working on diversifying its merchandise mix. Traditionally, much of the company's non-fuel money comes from tobacco sales. In 2013, tobacco made up 78 percent of its merchandise dollars. But increasing regulation on those product means the company must look in other areas.

"In terms of this year, we expanded non-tobacco sales by almost 10 percent, and more importantly, increased margin dollars over 7 percent," he said. 

During the meeting's regular business, the company's shareholders elected directors; approved executive compensation and the frequency of voting on executive compensation; approved long-term incentive plans; and ratified KPMG LLP as the its independent accounting firm.



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