SAN ANTONIO -- "2017 was an excellent year for Andeavor,” Chairman and CEO Greg Goff said on Andeavor’s fourth-quarter and full-year 2017 earnings call on Feb. 16.
Through its $4.1 billion acquisition of Western Refining Inc. in June 2017, Andeavor (then Tesoro) increased its branded and retail store count by 31%, or 763 stores, in 2017 to 3,255 locations, he said. Western Refining’s retail operations included gas stations and c-stores under the Giant, Howdy's and SuperAmerica brands.
“We are focused on driving growth and improvements in our market business by placing products into the highest-value branded distribution channels, adding new retail sites to the network, implementing strong improvements to enhance our convenience-store position and extending our value chain into new geographies such as Mexico,” said Goff.
“We are supplying approximately 60 stores in Mexico, including 28 under the ARCO brand as of Jan. 31, and we are experiencing strong customer acceptance at these sites. We expect to increase our marketing presence across the entire northern part of Mexico with an estimated 250 to 300 stores planned through 2020.”
He said that the company continues to see strong demand in each of its geographic regions. “We remain excited about the growth prospects in our marketing business as we expand our network of stations by leveraging our extensive brand portfolio and converting more stations to company owned and operated, which allows us to capture more value,” he said.
Financial Results
Andeavor reported fourth-quarter 2017 earnings of $879 million, compared to $78 million for the same period a year ago.
Marketing segment operating income was $236 million, and segment earnings before interest, taxes, depreciation and amortization (EBITDA) was $255 million in fourth-quarter 2017. This compares to segment operating income of $169 million and segment EBITDA of $192 million in 2016. Overall fuel margins for fourth-quarter 2017 were 12.2 cents per gallon vs. 11.4 cents per gallon in 2016, and retail and branded fuel margins were 23.4 cents per gallon vs. 19.6 cents per gallon in 2016.
A stronger market, along with positive contributions from the Western Refining c-stores added to Andeavor's portfolio, resulted in increased margins.
Marketing fuel margins were $20.09 per gallon for the retail and branded channels for the full year.
For the fourth quarter, merchandise margin increased to $47 million from $1 million in 2016 driven by the Western acquisition. Andeavor continued to grow its network of branded stores, increasing by 763 stores, or 31% year over year, to 3,255 stores. 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.
"Looking ahead, we remain well-positioned to deliver on [our] strategic plans,” Goff said. “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.”
San Antonio-based Andeavor is an integrated marketing, logistics and refining company with 10 refineries in the midcontinent and western United States. Its retail-marketing system includes about 3,200 gas stations and convenience stores marketing fuel under brands such as Arco, SuperAmerica, Shell, Exxon, Mobil, Tesoro, USA Gasoline and Giant.
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