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Andeavor’s 1Q18 Earnings Beat Estimates

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May. 8 2018, Published 7:05 a.m. ET

Andeavor’s 1Q18 estimated and actual performance

Andeavor (ANDV) posted its 1Q18 results on May 7 after the market closed. ANDV reported revenues of $10.3 billion, which surpassed Wall Street analysts’ estimate. Also, the company’s 1Q18 adjusted EPS (earnings per share) stood at $0.65 compared to its estimated EPS of $0.58. ANDV’s 1Q18 adjusted EPS stood 18% higher than its 1Q17 adjusted EPS.

Andeavor stock could see a positive impact due to its better-than-expected 1Q18 earnings. Andeavor stock has risen 14% since April 30, the day ANDV announced its merger with Marathon Petroleum (MPC). For more on this, read, Marathon Petroleum to Acquire Andeavor: ANDV Opens 10% Higher.

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Andeavor’s 1Q18 earnings review

Andeavor’s net earnings attributable to its shareholders rose from $50 million in 1Q17 to $172 million in 1Q18, which included $100 million of benefits associated with the reduction in RINs (renewable identification numbers) expenses from earlier years. Also, the earnings included $19 million in costs associated with acquisition and integration of Western Refining.

ANDV’s operating income increased 64% YoY to $521 million due to a YoY rise in the operating income of the Refining and the Logistics segments, partially offset by a YoY fall in the operating income of the Marketing segment.

The Refining segment’s operating earnings rose from $34 million in 1Q17 to $205 million in 1Q18 mainly on account of expansion in the refining margin. Plus, the RINs benefit from prior-year expenses added to the refining earnings in 1Q18. Also, ANDV’s gross refining margin rose 15% YoY to $10.9 per barrel.

The Logistics segment’s operating income rose 25% YoY to $188 million in 1Q18 mainly due to dropdowns, the integration of Western Refining’s logistics assets, and organic growth activities.

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However, ANDV’s marketing segment’s operating income fell 4% compared to 1Q17 to $128 million in 1Q18 due to a year-over-year fall in overall fuel sales margins including retail and branded fuel margins. Also, merchandise margins fell year-over-year in 1Q18. However, Andeavor’s total number of retail and branded stations grew by 31% YoY to 3,300 in 1Q18.

Peers’ performance in 1Q18

In comparison, Valero Energy (VLO) posted 47% YoY higher EPS in 1Q18. Also, Phillips 66’s (PSX) 1Q18 EPS stood a whopping 86% higher than its 1Q17 adjusted EPS. However, Marathon Petroleum’s (MPC) 1Q18 EPS stood 33% lower than its 1Q17 adjusted EPS.

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