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Western Refining (WNR) Misses Q1 Earnings and Revenues

Oil refiner and marketer Western Refining Inc.’s WNR first-quarter 2016 earnings per share (excluding special items) came in at 13 cents. The bottom line not only missed the Zacks Consensus Estimate of 31 cents per share but also decreased from the year-ago adjusted figure of $1.18 due to lower refining margins.

Quarterly net sales of $1,455.5 million lagged the Zacks Consensus Estimate of $1,612 million and also decreased 37.2% from the year-ago quarter level.

Refining Segment: Analysis

Throughput: Total refining throughput averaged 165,368 barrels per day (Bbl/d) as against 167,299 Bbl/d in the year-ago quarter. Overall, throughput volumes at the El Paso refinery inched up 2.7% year over year to 143,056 Bbl/d. The Gallup unit, on the other hand, recorded throughput volumes of 22,312Bbl/d, down 20.3% from the year-earlier level.    

Refining Margins: Gross refining margin recorded a year-over-year decline from $16.83 to $10.79 per barrel. Geographically, refining margin plunged 57.5% to $7.42 per barrel at El Paso and decreased nearly 33.8% to $9.3 per barrel at Gallup.       

Operating Expenses: Direct operating expenses at El Paso averaged $3.49 per barrel, down 14.5% year over year. However, direct operating expenses at Gallup increased about 24.8% year over year to $10.06 per barrel. Combined direct operating expenses at Western Refining’s units were $4.88 per barrel in the three months ended Mar 31, 2016. This is lower than $5.10 per barrel recorded in the year-ago period.  

Capital Expenditure & Balance Sheet

El Paso, TX-based Western Refining’s total capital spending during the quarter was $79 million. The capital spending was much higher than $53.2 million in the first quarter of 2015. As of Mar 31, 2016, Western Refining had cash and cash equivalents of $593.1 million and total debt of approximately $1,658.1 million. This represents a debt-to-capitalization ratio of 36.8%.

Dividend & Share Repurchases

In 2016, the company has returned roughly $145 million to its shareholders through dividends and share repurchases.

Zacks Rank and Other Key Picks

Western Refining currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space are Seadrill Partners LLC SDLP, Pembina Pipeline Corporation PBA and Braskem S.A. BAK. All these stocks sport a Zacks Rank #1(Strong Buy).

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WESTERN REFING (WNR): Free Stock Analysis Report
 
BRASKEM SA (BAK): Free Stock Analysis Report
 
PEMBINA PIPELN (PBA): Free Stock Analysis Report
 
SEADRILL PTNRS (SDLP): Free Stock Analysis Report
 
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