Oil refiner and marketer,
Western Refining Inc.
), reported better-than-expected second-quarter 2013 earnings
owing to reduced operating expenses and higher throughput.
The company reported earnings per share (excluding special items)
of $1.25, beating the Zacks Consensus Estimate of $1.21 per
share. The figure, however, fell 33.9% short of the year-ago
adjusted profit of $1.89 per share, primarily due to
significantly lower refining margins.
Quarterly net sales of $2.43 billion marginally failed to beat
the Zacks Consensus Estimate of $2.45 billion. The results were
also lower than the year-ago $2.47 billion.
Refining Segment: Analysis
The total refining throughput averaged 161,985 barrels per day
(Bbl/d), compared with 157,960 Bbl/d in the year-ago quarter.
Overall, throughput volumes at the El Paso refinery were up 2.6%
year over year to 135,636 Bbl/d, while the Gallup unit recorded
throughput volumes of 26,349 Bbl/d which also increased by 2.1%
from the year-ago level.
Gross refining margin (excluding unrealized losses on hedging)
was down 36.3% year over year to $20.40 per barrel. In terms of
different regions, refining margin was down 39.0% to $19.46 per
barrel at El Paso and down 24.1% to $24.26 per barrel at Gallup.
Direct operating expenses at El Paso during the quarter averaged
$3.30 per barrel, down 15.6% year over year. Western Refining's
expenses fell due to the refund of an overpaid property tax for
Direct operating expenses at Gallup were up 30.5% from the
year-ago period to $10.41 per barrel, owing to rising maintenance
and environment expenditures.
Direct operating expenses at Western Refining's units were $4.98
per barrel for the three months ended Jun 30, 2013, down from
$5.33 per barrel in the year-ago period.
Capital Expenditure & Balance Sheet
El Paso, Texas-headquartered Western Refining's total capital
spending during the quarter was $36.2 million, lower than $37.2
million in the second quarter of 2012. As of Jun 30, 2013,
Western Refining had cash and cash equivalents of $372.3 million
and total debt of approximately $550.8 million, representing a
debt-to-capitalization ratio of 37.9%.
Dividend & Share Repurchase
Western Refining announced 18 cents per share of dividend for
third-quarter 2013, representing a 50% sequential hike. The
dividend is payable on Aug 15, 2013, to shareholders of record as
of Jul 31, 2013.
Western Refining has repurchased roughly 10.7 million shares from
the start of the share repurchase program, till Jul 26, 2013, for
an average $29.43 per share.
For the third quarter of 2013, the total refinery throughput
is anticipated to be approximately 130,000 - 134,000 Bbl/d at the
El Paso refinery and 26,000 - 28,000 Bbl/d at the Gallup
refinery. Western Refining maintains its expected capital
spending for 2013 at $206 million.
FERRELLGAS -LP (FGP): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
WESTERN REFING (WNR): Free Stock Analysis
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Western Refining currently retains a Zacks Rank #5 (Strong Sell),
implying that it is expected to significantly underperform the
broader U.S. equity market over the next 1 to 3 months.
However, one can look at energy firms like
Ferrellgas Partners LP
Range Resources Corporation
) that offer value. All the firms sport a Zacks Rank #1 (Strong