+ Watch MUSA
on My Watchlist
Murphy USA is the recent Murphy Oil spinoff that was inspired by Dan Loeb's activist position in the company. What we have here is a retail gas station chain that is both cheap and growing...a nice combination.With approximately 1,200 locations right now, MUSA has another 22 currently under construction and has plans to build another 200 or so at or near Wal-Mart locations over the next three years. I like the tie in with a high-traffic retailer like Wal-Mart.Trading at an EV/EBITDA multiple of around x5.2, a P/E multiple of around x9.6, and a free cash flow yield of 18.3% the company looks pretty cheap. Plus its former parent didn't load it up with debt before the spinoff, which is often the case. MUSA has a market cap of $1.8 billion and only $221 million in net debt with plenty of working capital.There's tons of room for MUSA to raise its dividend in the future. Were it to use 30% of its free cash flow for dividends it would equate to a yield of 5.6% using the company's current share price. Kudos to FNN31 for bringing a great ValueWalk article on the company to my attention.Jason
Assuming this Is Murphy USA and not the metals company, I am looking at yet another profitable spin-off opportunity for investors.- P/B is right around 1, providing the company with a limited downside.- Looks to expand revenue by roughly 5% a year for the intermediate future.- Underfollowed and unloved by the institutional investing community, hence its cheap P/B versus CST, PSX, and CASY.- Both a pro and a con being tied in with Walmart, but a great expansion catalyst.- Tiny stores require low capital and deliver enormous sales per square footAll in all, Murphy USA has strong downside protection and could easily move up 50% or more from here.
this is either the new Murphy USA spinoff, or it's not. If it's Metals USA, I take it back.
Metals USA Holdings Corp $MUSA…Not all American Manufacturing is Dead!This company just reported a very profitable and frankly surprising to most (except me) third quarter 2011. Closed today @ $10.03 (+11.1%). EPS of $0.45 on revenues of $492 million. Not an easy task by any stretch, in the base metals sector and it’s businesses the last few months. They did meet and even exceed a bit, previous guidance of 2Q. They did what they said, so they get some props/kudos for that in my book. Especially those companies with predominantly domestic manufacturing exposure. They also were aided by some very savvy feed stock buying/stoking, to lay away in inventory/stockpiling it seems. And used it and managed it well as to not have over hang inventory. Also a “vast diversification of produced products mixture that is not only beneficial, but defensive of profit margins.” This in Plates and Shapes added to core ferrous business that was before. They managed to mitigate the cyclically nature of the business it seems. They stepped in and filled the supply gap created by some others going out of business during these tough economic conditions. They did this for a major HVAC maker just recently in fact.This below from thereMetals USA Holdings Corp · 424B4 · On 4/9/10 http://www.secinfo.com/d14D5a.r2Emj.htmOur Competitive Strengths Value-Added Services Generate Premium Margins Over Metal. Metal service centers generally earn a margin over the cost of metal, which provides stability to metal service centers’ cash flows relative to primary metal producers through pricing cycles. In addition to our warehouse and distribution capabilities, we offer our customers a wide range of value-added metal processing and inventory management services, which enable us to earn a premium margin over the cost of metal. Our ability to earn premium margins is further supported by an enhanced product mix across our metal service center business, which includes supplementing our core carbon offerings with non-ferrous volumes. Over the last several years, we have also taken steps to improve our ability to earn premium margins by increasing our exposure to higher growth end-markets including energy, infrastructure, and aerospace and expanding our service offerings through investments in our facilities and targeted acquisitions.Wow…did they ever nail that strategy spot on!The number of clients MUSA has across a vast array of industries really makes them a good proxy for the overall parts and manufacturing macro picture in the USA. 14 different markets they touch. 25% of revenues come from non ferrous sales this Q. That is up 20% from last year alone. (PCP) Precision Cast Parts should be looking at this company IMO. As well as Harold Simmons from Contran Corps Valhi Inc. (VHI). One analyst on the call today asked the CEO if he (the CEO) had any intentions of acquiring anything else soon. I felt that was the wrong question to ask. I would have asked > “Anybody been sniffing around looking to buy MUSA?” Because they are a target rich M&A canidate here at this market cap….. for sure in my book. (RS) (NUE) (AA) (CMC)(STLD)…all potential buyersThey supply Boeing (BA) and it’s 787 Dream-Liner (uses twice as much aluminum sheeting as rest of BA’s models), among other aerospace companies that will be refurbishing fleets over the next decade, the oil and gas service industry, The trucking industry, Farm and agriculture equipment, Major Appliance Manufacturers, General Electric (GE), They make some electrical components and cabinets for them. Like the aluminum cabinets you see on street corners that house the traffic light controllers. That is bullish in itself for USA infrastructure revamp. This company has a monopoly on many specific things used in a lot of specific industries that will be seeing increased sales and demand soon. They also have some very lucrative Federal Government contracts both military and non. They also make ‘heat exchangers’ for geothermal wells/alternative energy and home heating industry. I personally would give this company any credit facility they needed or wanted and send them on a shopping spree to grow some more. I also see a dividend in future from the cash flow creation taking shape here. They make a lot of the steel for the automotive business (flat rolled steel) from their Ohio Valley recent acquisition. This is a USA jobs producer company (that goes milessssssssss in my trading book) Look below. They are paying less in taxes and employing more people. All USA companies should take note and lessons!7. Accrued LiabilitiesAccrued liabilities consist of the following:June 30, December 31, 2011 2010 Salaries and employee benefits $ 14.2 $ 10.8 Income taxes 2.3 3.1 June 29, 2010Metals USA Holdings announced the acquisition of J. Rubin & Co.. A well-established metal service center with locations in Illinois, Wisconsin and Minnesota, J. Rubin’s broad product range consists of carbon steel bars, carbon plate and laser-cut flat-rolled products. J. Rubin’s product mix and value-added services are provided to a diverse range of end-markets.March 11, 2011Acquires The Richardson Trident Company. It’s third acquisition since its IPO last April. With sales for the twelve months ending December 31, 2010 at approximately $148 million on 23,000 shipped tons, Trident is also the largest company acquired by Metals USA so far. With the addition of Trident’s eight processing centers located in Texas, Oklahoma, Georgia, California, and Massachusetts, Metals USA significantly increases its geographic coverage toward desired target markets in the Southeast, South central, Northeast and the West Coast of the United StatesFlag Intermediate Holdings Corporation (“Flag Intermediate”) and its 100% wholly owned subsidiary Metals USA, Inc. (“Metals USA”) and the 100% wholly owned subsidiaries of Metals USA are referred to collectively herein as the “Company,” “we” or “our.” Metals USA prior to its November 30, 2005 acquisition by Apollo Management V L.P. (“Apollo Management” and together with its affiliated investment entities “Apollo” or “Apollo V”) (the “Merger”) is referred to herein as the “Predecessor Company.” The condensed consolidated financial statements include the accounts of Flag Intermediate, and Metals USA and its subsidiaries. Intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. Flag Intermediate and Metals USA are 100% wholly owned subsidiaries of Metals USA Holdings Corp. (“Metals USA Holdings”).“Trident provides a broad range of metals and processing services with a product mix that emphasizes aluminum, stainless steel and nickel. The majority of Trident’s customer base operates in the oil and gas services sector. Trident also serves customers in the aerospace, defense and transportation industries. Processing services include precision sawing, boring, honing, slitting, sheeting, shearing and tuning. Trident also offers supply chain solutions such as just-in-time delivery and value-added components required by original equipment manufacturers. As a result of the acquisition, we expect to increase our non-ferrous and value-added processing product and service offerings in the geographic areas and end markets that Trident currently serves.”http://www.sec.gov/Archives/edgar/data/1038363/000119312511223280/d10q.htmThis from the CEO’s comments today in the 3Q conference call. Who by the way, while on the call was very adamant as to how MUSA managed to do so well this past quarter. And the PE the market is currently treating MUSA with is utterly ridiculous. He seemed actually mad in his speaking tone about this. I think he is justified in his sentiment based upon the growth MUSA has exhibited in it’s recent acquisitions within the space. I also took note how he was very stern and repetitive towards the 3 analyst who were on the call (GS, JMP, JEF). Who all congratulated him on a ‘beat’ on earnings this Q. I am expecting an upgrade or two in the net few days from someone beside myself.The cash flow machine created here will be paying off and down acquisition debt here in no time. Plus a little company debt is a good thing right now on balance sheets. He also stated he had ‘BIG’ clients who have recently moved some of their manufacturing businesses from abroad to grow operations domestically now. It seems the (MADE IN THE USA) protectionist trading thesis is also hitting MUSA here of late. He stated that because the cost of production in some cases is no longer significantly more beneficial to do outside the USA. DID I JUST HEAR THEY/WE ARE STEELING JOB BACK FROM OVERSEAS? Niiceeee……re patriot-ising America JOBS JOBS JOBS they are!Metal shipments were 340,600 tons for the third quarter of 2011, up 25% from metal shipments of 272,600 tons in the third quarter of 2010. Metal shipments for the first nine months of 2011 were 1,069,000 tons, up 35% compared to metal shipments of 791,600 tons for the first nine months of 2010. Toll processed tonnage was 36,900 tons during the third quarter of 2011 compared to 15,500 tons for the third quarter of 2010. Toll processed tonnage was 123,600 tons during the first nine months of 2011 compared to 36,000 tons for the first nine months of 2010.Lourenco Goncalves, the Company’s Chairman, President and C.E.O., stated: “Our third quarter results confirm we are succeeding with our plan to make Metals USA the most efficient company in the service center industry. We operate with a mentality to constantly go after profitable business, regardless of the economic headwinds, and have shifted our business to support markets that are doing well. Growth in automotive, energy, lawn and garden, heavy equipment, and agriculture, to name a few, have all contributed to offset end-markets that continue to struggle with recession overhang, such as non-residential construction.”*YOY a 25% increase in shipp
Extremely Low Price for Sales
this distributor sold out for public IPO since private equity firm could not make money,,, to much competition for it to thrive.
The pullback from the original IPO pricing makes this valuation more accurate in comparison to industry peers. As markets continue to [slowly] climb so will this company's share price.
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