Andeavor's (ANDV) Q3 Earnings, Revenues Miss Estimates
Zacks Investment Research | Nov 09, 2017 11:02PM ET
Independent refiner and marketer Andeavor (NYSE:ANDV) reported third-quarter 2017 adjusted earnings from continuing operations of $2.70 per share, which missed the Zacks Consensus Estimate of $3.03. A decline in Retail and Branded fuel margins margins and increased operating expenses resulted in the earnings miss. The bottom line, however, increased from the year-ago quarter figure of $1.43 per share on strong performance of the refining segment.
Andeavor reported quarterly revenues of $9,836 million compared with $6,544 million in the year-ago quarter, reflecting growth of 50.3%, based on increased refined product sales. However, the top line missed the Zacks Consensus Estimate of $11,588 million.
Segmental Analysis
Refining: The segment posted operating income of $762 million compared with $58 million in the year-ago quarter. High crude oil and feedstock throughput along with reliable operations led to the tremendous performance. Increasing refining margins also played a major role.
Total refining throughput averaged 1,141 thousand barrels per day (MBbl/d) compared with 874 MBbl/d in the prior-year quarter.
Overall, throughput volumes in California (consisting of Martinez and Los Angeles refineries) fell from 533MBbl/d in the year-ago quarter to 521 MBbl/d. Throughput in Andeavor's Pacific Northwest (Alaska and Washington) operations was 204 MBbl/d, compared with 191 MBbl/d in third-quarter 2016. Throughput volumes in the Mid-Continent (North Dakota, Utah, New Mexico, Texas, and Minnesota) were up 179.2% to 416 MBbl/d in the reported quarter.
Refining margin increased 66.2% year over year to $15.09 per barrel.
Region-wise, refining margin was up almost 44.7% to $13.37 per barrel in California, 109.6% to $15.03 in the Pacific Northwest and about 57.9% to $17.27 in Mid-Continent on a year-over-year basis.
Logistics: During the third quarter, this segment generated operating profit of $164 million compared with $127 million in the year-ago quarter. The performance was driven by contributions from the acquisitions of the North Dakota Gathering and Processing Assets, sturdy California refinery utilization and high summer demand.
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Marketing: The segment recorded $175 million in revenues compared with $273 million in third-quarter 2016. Performance in the quarter was negatively impacted by lower fuel margins. Retail and Branded fuel margins were down 23.7%. Riding the Western Refining acquisition, Merchandise margin rose to $54 million in this quarter from $3 million in the year-ago period.
Realized Costs & Prices
Manufacturing costs excluding depreciation and amortization decreased 1.6% from the year-earlier level to $5.03 per barrel.
Total refined product sales averaged 1,324 Mbbl/d in the reported quarter compared with 1,016 Mbbl/d in third-quarter 2016.
Operating Cost
Andeavor's operating costs (excluding depreciation and amortization) in the reported quarter were $899 million compared with $648 million in third-quarter 2016.
Capital Expenditure & Balance Sheet
Andeavor’s total capital spending in the reported quarter including Andeavor Logistics LP (NYSE:ANDX) totaled $398 million. Turnaround expenditures for the third quarter were $98 million.
As of Sep 30, 2017, the company had $528 million of cash and cash equivalents. Excluding Andeavor Logistics’ debt and equity, total debt was $3.6 billion.
Dividend
The board of directors declared a quarterly cash dividend of 59 cents per share, payable on Dec 15, to all holders of record as of Nov 30.
Guidance
Andeavor expects throughput level for the fourth quarter between 1,070 MBbl/d and 1,125 MBbl/d. Region wise, California expects throughput volumes between 520 and 545 MBbl/d. Pacific Northwest and Mid Continent expects throughput levels within 165–175 MBbl/d and 385 –405 MBbl/d, respectively.
The company expects total capital expenditures to be around $1.3 billion in 2017. Turnaround expenditures for full year 2017 are expected to be $540 million.
Q3 Price Performance
Andeavor has gained 10.2% in the third quarter compared with 10.5% growth of its industry .
Zacks Rank and Stocks to Consider
Andeavor currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the oil and energy sector are Braskem S.A. (NYSE:BAK) and Par Pacific Holdings, Inc. (NYSE:PARR) . Both sport a Zacks Rank #2 (Buy). You can see .
Braskem’s 2017 earnings are expected to grow 12.1% year over year. The company delivered a positive earnings surprise of 68.5% in the second quarter of 2017.
Par Pacific’s sales for 2017 are expected to increase 28.5% year over year. The company delivered an average positive earnings surprise of 203% in the last four quarters.
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