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Basic Materials

Earnings Roundup: Andeavor (NYSE: ANDV)

Michael Hunt

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On Friday, Shares of Andeavor (NYSE: ANDV) inclined 0.62% to $150.61. The stock opened its trade at $150.08 and after floating in a price range of $149.81 to $151.88, the stock grabbed the investor’s attention and traded 1,377,925 shares as compared to its average daily volume of 2.24M shares. The stock’s institutional ownership stands at 84.30%.

Andeavor (ANDV) recently stated first quarter earnings of $164.0M, or $1.07 per diluted share, contrast to $50.0M, or $0.42 per diluted share a year ago. Consolidated net earnings were $237.0M for the first quarter 2018 contrast to $87.0M for the same period last year. EBITDA for the first quarter 2018 was $680.0M contrast to $432.0M last year.

First quarter 2018 results included the following pre-tax items: $19.0M of acquisition and integration costs mainly related to the Western Refining acquisition and about $100.0M net benefit mainly related to a reduction in the RINs obligation from prior years. First quarter 2017 results included $16.0M of acquisition costs.

Segment Results:

Marketing:

Marketing segment operating income was $128.0M and segment EBITDA was $152.0M in the first quarter 2018. This compares to segment operating income of $133.0M and segment EBITDA of $146.0M last year. Overall fuel margins for the first quarter 2018 were 9.1 cents per gallon contrast to 9.6 cents per gallon last year, and Retail and Branded fuel margins were 16.2 cents per gallon contrast to 17.4 cents per gallon in 2017. Marketing margins were lower as a result of the lag in street prices increasing relative to the rapidly rising spot market prices during the quarter.

For the first quarter, merchandise margin increased to $50.0M from $3.0M in 2017 mainly because of the Western Refining acquisition and the conversion of MSO sites (multi-site operators) to company owned sites, which allow for the capture of non-fuel margin. Andeavor continued to grow its network of retail and branded stations, increasing by 787 stations, or 31% year-over-year, to 3,300. This was mainly driven by the Western acquisition, the acquisition of retail stations accomplished in Northern California in July 2017, and the continued execution of the Company`s organic growth plan, counting rebranding and expansion into Mexico. Andeavor has 57 branded stations and 25 unbranded stations in Mexico as of April 30, 2018.

Logistics:

Logistics segment operating income increased to $188.0M in the first quarter 2018 from $150.0M a year ago and segment EBITDA increased to $271.0M from $212.0M last year. The increase in segment operating income and segment EBITDA was mainly driven by contributions from the Western Refining Logistics acquisition and the 2017 drop down as well as organic growth.

Refining:

Refining segment operating income was $205.0M for the first quarter 2018 contrast to $34.0M in 2017. Segment EBITDA was $387.0M contrast to $181.0M in 2017. Refining margin was $1.00B, or $10.85 per barrel, for the first quarter 2018. This compares to a refining margin of $701.0M, or $9.44 per barrel, in the first quarter 2017. Refining Inland regional results included a net, pre-tax benefit of about $100.0M mainly related to a reduction in the RINs obligation for the 2016 and 2017 compliance periods for some of the Company`s Inland refineries. Refining utilization was 90% for the first quarter 2018 contrast to 92% for 2017 because of the Company`s planned turnarounds at the Los Angeles and Martinez refineries during the quarter. These turnarounds were executed successfully and the refineries are back to normal operations.

Corporate and Other:

Corporate and unallocated costs for the first quarter 2018 were $151.0M and included $19.0M of acquisition and integration costs mainly related to the Western Refining acquisition. Net interest expense was $102.0M in the first quarter 2018. The effective tax rate for the first quarter was 20%.

Balance Sheet and Cash Flow:

Andeavor ended the quarter with $433.0M in cash and cash equivalents, down from $543.0M at the end of 2017. Andeavor presently has about $2.20B of availability under its revolving credit facility. Total debt, net of unamortized issuance costs, was $8.70B at the end of the first quarter. Excluding Andeavor Logistics, total debt was $4.60B.

Capital spending for the first quarter 2018 was $420.0M, consisting of $337.0M for Andeavor and $83.0M for Andeavor Logistics. Turnaround expenditures for the first quarter were $203.0M.

Andeavor repurchased 2.60M shares for about $256.0M in the first quarter. The Company paid cash dividends of $92.0M in the first quarter. Moreover, Andeavor recently declared that the board of directors has declared a quarterly cash dividend of $0.59 per share payable on June 15, 2018 to all holders of record as of May 31, 2018.

ANDV has a market value of $21.83B while its EPS was booked as $4.62 in the last 12 months. The stock has 145.82M shares outstanding. In the profitability analysis, the company has gross profit margin of 17.60% while net profit margin was 4.30%. Beta value of the company was 1.33; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.40.

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I am Michael Hunt and I’m passionate about business and finance news with over 4 years in the industry starting as a writer working my way up into senior positions. I am the driving force behind irnpost.com with a vision to broaden the company’s readership throughout 2016. I am an editor and reporter of “Basic Materials” category.

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