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How Andeavor Fared in 3Q17

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How Andeavor Fared in 3Q17 PART 1 OF 5

Andeavor’s 3Q17 Earnings Rise and Refining Margins Surge

Andeavor’s 3Q17 estimated and actual performance

Andeavor (ANDV) posted its 3Q17 results on November 8, 2017. It reported revenues of $9.8 billion, which surpassed Wall Street analysts’ estimates. However, the company’s 3Q17 adjusted EPS (earnings per share) stood at $2.9 compared to its estimated EPS of $3.0, missing the consensus estimates. But ANDV’s 3Q17 adjusted EPS stood 118% higher than its 3Q16 adjusted EPS.

Andeavor’s 3Q17 Earnings Rise and Refining Margins Surge

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Andeavor’s 3Q17 earnings review

Andeavor’s net earnings attributable to its shareholders from continuing operations rose from $170 million in 3Q16 to $551 million in 3Q17. This included $209 million of inventory valuation benefits. Plus, ANDV’s operating income rose 140% YoY to $1101 million, which was due to a YoY rise in the operating incomes of the Refining and the Logistics segments, partially offset by a YoY fall in operating income of the Marketing segment. Also, Andeavor closed the Western Refining acquisition in 2Q17. Thus, ANDV’s 3Q17 results reflected a full quarter of integrated performance of the merged entity.

The refining segment’s operating earnings rose from $58 million in 3Q16 to a whopping $762 million in 3Q17, which was due to the increased gross refining margin coupled with higher throughput. We’ll look at margins in the next part.

The logistics segment’s operating income rose 29% YoY to $164 million in 3Q17, which was mainly due to completed dropdowns, the integration of North Dakota gathering and processing assets, and the integration of Western Refining logistics assets.

ANDV’s marketing segment’s operating income fell 36% over 3Q16 to $175 million in 3Q17, which was due to a drop in fuel sales margins YoY. However, merchandise margins rose YoY. Also, Andeavor’s total number of retail and branded stations rose 27% YoY to 3,124 in 3Q17.

Peer performance in 3Q17

In comparison, Marathon Petroleum’s (MPC) 3Q17 EPS was three times higher than its 3Q16 adjusted EPS. Plus, Phillips 66’s (PSX) 3Q17 EPS stood 58% higher than its 3Q16 adjusted EPS. Also, Valero Energy (VLO) posted 54% higher EPS in 3Q17 over 3Q16.

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