San Antonio-based Andeavor earnings plunge 90 percent, miss estimates

August 9, 2017

San Antonio-based refiner Andeavor Corp.’s profit fell 90 percent in the second quarter, missing Wall Street estimates as the company took a $209 million “adjustment” to the value of its inventory and incurred higher expenses, the company said Tuesday.

Formerly known as Tesoro Corp., the company earned $40 million in the three months ended June 30, down from $418 million during the same period last year, Andeavor said in releasing its second-quarter results. The company made 31 cents a share, down from $3.47 a share during the same quarter last year.

Andeavor, now the nation’s fifth-largest refiner, missed Wall Street expectations of $1.59 cents a share, according to analysts surveyed by Bloomberg.

The company’s biggest losses came from a $209 million charge against its inventory as the market value dropped, the company said.

The company also paid $124 million in pre-tax acquisition and integration costs related to its $4.1 billion purchase of Western Refining. Andeavor also had to pay a tax expense of $12 million related to non-deductible acquisition costs.

The purchase of Western was valued at $6.4 billion after adding Western’s $1.7 billion in debt and a non-controlling interest in Western Refining Logistics, which managed Western’s pipeline, storage and transport infrastructure.

“Our results for the quarter were strong, driven by our highly integrated business model, continued execution of improvements to operating income and the contribution from the Western acquisition,” Greg Goff, Andeavor’s chairman and CEO, said in the news release. “We achieved several significant milestones during and shortly after the quarter, including an accelerated start to integrating Western, receiving the permits and beginning construction on our Los Angeles Refinery Integration and Compliance and Anacortes Isomerization projects, acquiring stores in Northern California for our Marketing system and commencing business in Mexico.”

Andeavor added 627 stores in the quarter, a 25.6 percent increase, through its Western acquisition and other growth. Andeavor now has more than 3,000 retail locations.

Andeavor Logistics, formerly Tesoro Logistics, the master limited partnership formed by Tesoro Corp. in 2010 to handle the company’s pipeline and storage infrastructure, earned $110 million, or 63 cents per unit, compared with $83 million, or 48 cents a unit during the second quarter of last year.

Analysts polled by Bloomberg expected Andeavor Logistics to earn 64 cents a unit.