Increased total retail and branded stores 31% year-over-year to 3,255 stores.
Andeavor reported a strong fourth quarter, where its merchandise margin increased to $47 million from $1 million in 2016 driven by the Western Refining acquisition.
Andeavor continued to grow its network of branded stores, increasing by 763 stores, or 31% year-over-year, to 3,255. This was primarily driven by the Western acquisition, the acquisition of retail stores in northern California and the continued execution of the company’s organic growth plan, including rebranding and expansion into Mexico. Andeavor opened 28 ARCO stores in Mexico as of Jan. 31, 2018.
It’s fourth quarter earnings were $879 million, or $5.61 per diluted share, compared to $78 million, or $0.66 per diluted share a year ago. Consolidated net earnings were $908 million for the fourth quarter 2017 compared to $101 million for the same period last year. EBITDA for the fourth quarter 2017 was $445 million compared to $468 million last year.
“2017 was an excellent year for Andeavor; we closed the Western and WNRL acquisitions, expanded into Mexico and achieved investment grade credit ratings at both companies,” said Greg Goff, Chairman and CEO. “We delivered $505 million of improvements to operating income and returned over $1 billion to shareholders in the form of dividends and share repurchases in 2017.”
“Looking ahead, we remain well-positioned to deliver on the strategic plans outlined at our 2017 Investor and Analyst Day that we expect to grow EBITDA by $1.4 billion over the next three years. We continue to focus on driving strong operational performance and disciplined allocation of capital, further enhancing our integrated business model and returning cash to shareholders,” added Goff.
Marketing Highlights
The marketing segment operating income was $236 million and segment EBITDA was $255 million in the fourth quarter 2017. This compares to segment operating income of $169 million and segment EBITDA of $192 million last year. Overall fuel margins for the fourth quarter 2017 were 12.2 cents per gallon compared to 11.4 cents per gallon last year, and Retail and Branded fuel margins were 23.4 cents per gallon compared to 19.6 cents per gallon in 2016. A stronger market along with positive contributions from the Western Refining stores added to Andeavor’s portfolio resulted in increased margins.
2018 Outlook
In December 2017, Andeavor issued its expectations for 2018, which include an Andeavor Index of $12 to $14 per barrel and Marketing segment fuel margins of 11 to 14 cents per gallon. The Company expects total capital expenditures for 2018 of approximately $1.5 billion, consisting of $1.1 billion at Andeavor and $430 million at Andeavor Logistics. Turnaround expenditures for the full year 2018 are expected to be $575 million.
“We are excited about the opportunities we see in our business to increase gross margin, improve productivity and deliver synergies from our acquisitions, which support our plan to generate $9 to $12 billion of cash over the next three years, inclusive of the benefits from tax reform. Additionally, we also see the potential for significant opportunities from IMO 2020,” said Goff. “As always, we remain focused on disciplined capital allocation that delivers the most value to our shareholders.”
