EL DORADO, Ark., Jan. 31, 2018 (GLOBE NEWSWIRE) -- Murphy USA Inc. (NYSE:MUSA), a leading marketer of retail motor fuel products and convenience merchandise, today announced preliminary financial results for the three and twelve months ended December 31, 2017. 

Key Highlights:
  • Net income was $124.8 million, or $3.58 per diluted share, in Q4 2017 compared to net income of $43.8 million, or $1.14 per diluted share, in Q4 2016.  The fourth quarter included an estimated deferred tax benefit of $89 million as a result of the enactment of the Tax Cuts and Jobs Act in December 2017, which increased net income.  For the full year, net income was $245.3 million, or $6.78 per diluted share, compared to 2016 net income of $221.5 million, or $5.59 per diluted share. 
  • Total fuel contribution (retail fuel margin plus product supply and wholesale ("PS&W") results including RINs) for Q4 2017 was 16.5 cpg compared to 15.4 cpg in Q4 2016.  For the full year, total fuel contribution was 16.4 cpg compared to 15.4 cpg in 2016. 
  • Total retail gallons declined 2.6% to 1.0 billion gallons for the network during Q4 2017 while volumes on an average per store month ("APSM") basis declined 5.9% versus prior year quarter.  For the full year, total retail gallons declined 1.3% to 4.1 billion gallons, while APSM volumes were down 5.3%. 
  • Merchandise contribution dollars grew 8.1% during the quarter to $97.0 million on average unit margins of 16.3%, which was a new quarterly record and up 100 basis points from 15.3% in Q4 of 2016.  For the full year, merchandise contribution dollars were up 4.7% on average unit margins of 16.1%, a full year record and a 50 basis point increase versus 2016. 
  • During the quarter, 23 new stores opened, in addition to 4 raze-and-rebuild locations. For the full year, 45 new stores were opened, in addition to 21 raze-and-rebuild locations.  Our year-end store count is 1,446.  
  • Common shares repurchased during the fourth quarter were approximately 712 thousand for $54 million at an average price of $76 per share.  Full year 2017 common shares repurchased totaled 3.0 million shares for $206 million at an average price of $69 per share.

"We are extremely pleased with the company's performance in 2017," said President and CEO Andrew Clyde.  "The business was resilient against continued headwinds, challenging macroeconomic conditions, and especially in the first quarter, regulatory uncertainty that resulted in a change to our guidance early in the year.  However, our focused strategy and operating discipline generated full-year results that were within the original guidance range for Adjusted EBITDA and well above our guidance for net income thanks to the passage of the Tax Cuts and Jobs Act, which will provide continued tangible benefits into 2018."  Clyde concluded, "Although challenges and regulatory uncertainty persist, Murphy USA has repeatedly proven its resilience to external factors and its ability to add value to its business.  We enter 2018 with an attractive free cash flow profile to continue executing our balanced capital allocation strategy to create long-term shareholder value."

Consolidated Results

  Three Months Ended December 31,   Twelve Months Ended December 31,
Key Operating Metrics 2017   2016   2017   2016
Net income ($ Millions) $ 124.8     $ 43.8     $ 245.3     $ 221.5  
Earnings per share (diluted) $ 3.58     $ 1.14     $ 6.78     $ 5.59  
Adjusted EBITDA ($ Millions) $ 99.0     $ 103.2     $ 405.9     $ 400.1  

Net income and earnings per share in Q4 2017 were above prior year levels due primarily to the impact of the enactment of the Tax Cuts and Jobs Act in December 2017.  This tax law change resulted in the existing net deferred tax liabilities being revalued to lower corporate tax rates for future periods and generated an estimated benefit to income tax expense of $88.9 million in Q4 2017.  The estimate is based on currently available information and is a non-cash benefit.  Adjusted EBITDA for the current quarter was slightly lower than the prior year quarter primarily because of increased charitable donations of $10 million in SG&A expense that were accelerated into December 2017 in advance of lower future corporate tax rates as part of a tax planning strategy.  Net income and earnings per share in the twelve-month period ended December 31, 2016 reflect $56.0 million of after-tax gains from the sale of the CAM pipeline system recorded in the first quarter of 2016.

Fuel

  Three Months Ended December 31,   Twelve Months Ended December 31,
Key Operating Metrics 2017   2016   2017   2016
Total fuel contribution ($ Millions) $ 171.9     $ 164.2     $ 677.7     $ 647.2  
Total fuel contribution (including retail, PS&W and RINs) (cpg) 16.5     15.4     16.4     15.4  
Total retail fuel contribution ($ Millions) $ 143.9     $ 112.7     $ 581.0     $ 485.8  
Retail fuel volume - chain (Million gal) 1,039.3     1,066.5     4,140.9     4,195.2  
Retail fuel volume - per site (K gal APSM) 242.1     257.3     245.3     259.1  
Retail fuel margin (cpg excl credit card fees) 13.8     10.6     14.0     11.6  
PS&W including RINs contribution (cpg) 2.7     4.8     2.4     3.8  

Total fuel contribution dollars increased 4.7% in Q4 2017 due primarily to a 27.7% increase in retail margin dollars, partially offset by lower contribution from PS&W including RINs.  For the full year, total fuel contribution dollars also increased 4.7%. APSM volumes declined 5.9% quarter-over-quarter to 242,106, primarily due to continued competitive pressures and to a lesser extent, the impact of hurricanes Harvey and Irma.  The contribution from PS&W including RINs continues to deliver in the guided range of 2 cpg to 3 cpg.

Merchandise

  Three Months Ended December 31,   Twelve Months Ended December 31,
Key Operating Metrics 2017   2016   2017   2016
Total merchandise contribution ($ Millions) $ 97.1     $ 89.8     $ 381.2     $ 364.1  
Total merchandise sales ($ Millions) $ 595.6     $ 588.4     $ 2,372.7     $ 2,338.6  
Total merchandise sales ($K APSM) $ 138.7     $ 141.9     $ 140.5     $ 144.4  
Merchandise unit margin (%) 16.3 %   15.3 %   16.1 %   15.6 %
Tobacco contribution ($K APSM) $ 13.6     $ 13.1     $ 13.3     $ 13.3  
Non-tobacco contribution ($K APSM) $ 9.0     $ 8.6     $ 9.3     $ 9.2  
Total merchandise contribution ($K APSM) $ 22.6     $ 21.7     $ 22.6     $ 22.5  

Merchandise performance was strong in the fourth quarter with total merchandise contribution dollars increasing 8.1% at 16.3% margins, a new quarterly record, driven by growth in both the tobacco and non-tobacco categories. For the full year, total merchandise contribution dollars were up 4.7%, at 16.1% unit margins, which was a new annual record.

Other areas

  Three Months Ended December 31,   Twelve Months Ended December 31,
Key Operating Metrics 2017   2016   2017   2016
Total station and other operating expense ($ Millions) $ 130.3     $ 123.4     $ 514.9     $ 493.3  
Station OPEX excl credit card fees ($K APSM) $ 20.6     $ 20.6     $ 20.8     $ 21.4  
Total SG&A cost ($ Millions) $ 40.0     $ 28.1     $ 141.2     $ 122.7  

Total station and other operating expenses increased $6.9 million for the quarter, reflecting new store additions and slightly higher payment fees due to 12% higher retail fuel prices.  However, on a per store basis, operating expenses excluding payment fees were essentially flat.  SG&A was higher for the quarter due primarily to accelerated charitable donations of $10 million that were made as part of a tax planning strategy.  For the full year, operating expenses excluding credit card fees declined 2.6% on an APSM basis, driven by lower employee related expense.

Station Openings

Murphy USA opened 23 retail locations in Q4 2017, in addition to 4 raze-and-rebuild locations, bringing the year end store count to 1,446, consisting of 1,158 Murphy USA sites and 288 Murphy Express sites.  For the full year, we opened 45 new stores and completed 21 raze-and-rebuilds.

Financial Resources
  As of December 31,
Key Metrics 2017   2016
Cash and cash equivalents ($ Millions) $ 170.0     $ 153.8  
Long-term debt ($ Millions) $ 860.9     $ 629.6  

  Three Months Ended December 31,   Twelve Months Ended December 31,
Key Metrics 2017   2016   2017   2016
Average shares outstanding (diluted)  (in thousands) 34,898     38,297     36,156     39,646  

Cash balances on December 31, 2017 totaled $170.0 million.  Long-term debt consisted of approximately $494 million in carrying value of 6% senior notes due in 2023, $295 million in carrying value of 5.625% senior notes due in 2027 and $92 million of term debt less $20 million of current maturities, which is reflected in current liabilities.  Remaining undrawn borrowing capacity under the ABL was $258 million as of December 31, 2017.

Common shares repurchased during the current quarter were approximately 712 thousand for $54.0 million. The company completed its previously announced $500 million share repurchase plan during Q4 2017.  We remain committed to an ongoing program of share repurchases.  In the past, our Board of Directors has typically allocated capital for this purpose at a rate of up to $50 to $100 million per quarter, depending on upcoming liquidity needs and other relevant factors.  The amount purchased in any given quarter fluctuates, as we may execute the entire allocation or only a portion, depending on market and other considerations.  We expect to continue to conduct share repurchases under quarterly allocations in line with our past practice; however, depending on market conditions and other factors, only a portion may be executed.  In addition, there may be certain quarters in which no allocation is made due to competing capital or other business priorities.  At December 31, 2017, the Company had common shares outstanding of 34,091,534. 

2017 Guidance Update and 2018 Guidance Ranges
2018 Guidance   2017 Updated Guidance Range   2017 Actual Results   2018 Guidance Range
Organic Growth            
New Stores   45 to 50     45     Up to 30
Raze and Rebuilds   15 to 20     21     Up to 25
Fuel Contribution            
Total fuel contribution ($ Millions)   N/A   $678     $575 to $700
Annual retail volume (Billion gallons)   4.3 to 4.5     4.1     4.1 to 4.3
Retail fuel volume per store(K gallons APSM)   255 to 265     245.3     235 to 245
Total fuel contribution (cpg)   12.5 to 15     16.4     14 to 16.5
Fuel Breakeven            
Merchandise contribution ($ Millions)   $380 to $390   $381     $390 to $400
Total merchandise sales ($ Millions)   $2,400 to $2,450   $2,373     $2,400 to $2,450
Retail station OPEX excluding credit cards  (APSM % YOY change)   Flat to -2%     (2.6 )%   Flat to +2%
Corporate Costs            
SG&A ($ Millions per year)   $135 to $140   $141     $135 to $140
Effective Tax Rate   N/A     (2.2 )%   24% to 26%
Capital Allocation            
Capital expenditures ($ Millions)   $250 to $300   $274     $225 to $275
Net income ($ Millions)   $90 to $160   $245     $155 to $195
Adjusted EBITDA (non-GAAP)($ Millions)   $340 to $410   $406     $390 to $440

Management's annual guidance for 2018 reflects the Company's economic and market environment assessment, business improvement initiatives and potential headwinds.  Key 2018 guidance ranges include the following assumptions and are subject to the uncertainties noted below:

Organic Growth:

  • New store additions and raze-and-rebuild sites reflect a disciplined capital approach to the highest return opportunities

Fuel Contribution:
  • Total fuel contribution guidance reflects a potentially wide range of outcomes given historical volatility in margins
  • Total network fuel volumes are expected to be flat or higher, as the impact from new site additions could be offset by lower per store volumes, and reflect a variety of market scenarios around competitive dynamics
  • Fuel margin guidance of 14 to 16.5 cpg reflects management expectations for the combined results of our retail business and PS&W business, including RIN income

Fuel Breakeven:
  • Merchandise contribution represents a range of outcomes based on management's expectations around higher merchandise sales and margin rates bracketing 2017 actuals
  • Store operating expense per site, before credit card fees, are expected to be flat to slightly higher

Corp Costs:
  • SG&A costs reflect investments in IT related enhancements and other corporate projects, subject to timing and allocation of resources
  • The effective tax rate in 2018 is expected to be in a range of 24% to 26%

Capital Allocation:
  • Capital expenditures reflect new store growth, raze-and-rebuild activity, store maintenance and improvements, land acquisition, and continued implementation of various corporate infrastructure projects
  • The Net Income range presented above is subject to additional uncertainties which could cause actual results to differ meaningfully from forecast results, including without limitation (1) the unpredictability of special tax items, changes in profitability mix to states with or without income tax and timing of settlement of outstanding tax matters; (2) the timing of new store development or amount of capital expended to develop these stores; and (3) the existence and/or timing of raze-and-rebuild activity
  • Net Income and Adjusted EBITDA ranges provided reflect the impact of the above guidance components as adjusted for management's expected interactions across the components

Earnings Call Information

The Company will host a conference call on February 1, 2018 at 10:00 a.m. Central time to discuss fourth quarter 2017 results.  The conference call number is 1 (844) 613-1037 and the conference number is 5467727. The earnings and investor related materials, including reconciliations of any non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the Murphy USA website (http://ir.corporate.murphyusa.com).  Approximately one hour after the conclusion of the conference, the webcast will be available for replay.  Shortly thereafter, a transcript will be available.

Source:  Murphy USA Inc. (NYSE:MUSA)

Forward-Looking Statements

Certain statements in this news release contain or may suggest "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risk and uncertainties, including, but not limited to anticipated store openings, fuel margins, merchandise margins, sales of RINs and trends in our operations. Such statements are based upon the current beliefs and expectations of the company's management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: our ability to continue to maintain a good business relationship with Walmart; successful execution of our growth strategy, including our ability to realize the anticipated benefits from such growth initiatives, and the timely completion of construction associated with our newly planned stores which may be impacted by the financial health of third parties; our ability to effectively manage our inventory, disruptions in our supply chain and our ability to control costs; the impact of severe weather events, such as hurricanes, floods and earthquakes; the impact of any systems failures, cybersecurity and/or security breaches, including any security breach that results in theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; successful execution of our information technology strategy; future tobacco or e-cigarette legislation and any other efforts that make purchasing tobacco products more costly or difficult could hurt our revenues and impact gross margins; efficient and proper allocation of our capital resources; compliance with debt covenants; availability and cost of credit; and changes in interest rates. Our SEC reports, including our Annual Report on our Form 10-K for the year ended December 31, 2016 contain other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
Investor Contact: Christian Pikul (870) 875-7683 Director, Investor Relations christian.pikul@murphyusa.com  Cell  870-677-0278 Media/ Public Relations Contact: Jerianne Thomas (870) 875-7770 Director, Corporate Communications jerianne.thomas@murphyusa.com  Cell  870-866-6321

 
Murphy USA Inc.
Consolidated Statements of Income
(Unaudited, except for twelve months in 2016)
 
  Three Months Ended December 31, Twelve Months Ended December 31,
(Thousands of dollars except per share amounts)   2017 2016 2017 2016
Operating Revenues          
  Petroleum product sales (a)   $ 2,736,898   $ 2,415,653   $ 10,287,856   $ 9,070,623  
  Merchandise sales   595,595   588,424   2,372,658   2,338,586  
  Other operating revenues   47,031   51,714   166,039   185,344  
Total operating revenues   3,379,524   3,055,791   12,826,553   11,594,553  
           
Operating Expenses          
  Petroleum product cost of goods sold (a)   2,611,579   2,302,401   9,773,211   8,603,953  
  Merchandise cost of goods sold   498,543   498,617   1,991,404   1,974,486  
  Station and other operating expenses   130,321   123,410   514,873   493,320  
  Depreciation and amortization   33,452   25,863   116,966   98,610  
  Selling, general and administrative   40,043   28,120   141,171   122,669  
  Accretion of asset retirement obligations   450   414   1,785   1,650  
Total operating expenses   3,314,388   2,978,825   12,539,410   11,294,688  
           
Gain (loss) on sale of assets   (524 ) (428 ) (3,950 ) 88,212  
Income from operations   64,612   76,538   283,193   388,077  
           
Other income (expense)          
Interest income   478   104   1,309   578  
Interest expense   (12,792 ) (9,924 ) (46,660 ) (39,704 )
Other nonoperating income (expense)   (1,089 ) 114   2,180   3,080  
Total other income (expense)   (13,403 ) (9,706 ) (43,171 ) (36,046 )
Income before income taxes   51,209   66,832   240,022   352,031  
Income tax expense (benefit)   (73,631 ) 23,015   (5,242 ) 130,539  
Net Income   $ 124,840   $ 43,817   $ 245,264   $ 221,492  
           
Basic and Diluted Earnings Per Common Share          
Basic   $ 3.62   $ 1.16   $ 6.85   $ 5.64  
Diluted   $ 3.58   $ 1.14   $ 6.78   $ 5.59  
Weighted-average shares outstanding (in thousands):          
Basic   34,518   37,930   35,816   39,269  
Diluted   34,898   38,297   36,156   39,646  
Supplemental information:          
(a) Includes excise taxes of:   $ 499,671   $ 495,131   $ 1,973,112   $ 1,961,478  
                           

 
Murphy USA Inc.
Segment Operating Results
(Unaudited)
 
(Thousands of dollars, except volume per store month, margins and store counts)   Three Months Ended December 31,   Twelve Months Ended December 31,
Marketing Segment   2017 2016   2017 2016
             
Operating Revenues            
Petroleum product sales   $ 2,736,898   $ 2,415,653     $ 10,287,856   $ 9,070,623  
Merchandise sales   595,595   588,424     2,372,658   2,338,586  
Other operating revenues   46,958   51,699     165,714   185,102  
Total operating revenues   3,379,451   3,055,776     12,826,228   11,594,311  
             
Operating expenses            
Petroleum products cost of goods sold   2,611,579   2,302,401     9,773,211   8,603,953  
Merchandise cost of goods sold   498,543   498,617     1,991,404   1,974,486  
Station and other operating expenses   130,318   123,410     514,866   493,320  
Depreciation and amortization   31,870   24,270     110,530   92,242  
Selling, general and administrative   40,042   28,120     141,170   122,669  
Accretion of asset retirement obligations   449   414     1,784   1,650  
Total operating expenses   3,312,801   2,977,232     12,532,965   11,288,320  
             
Gain (loss) on sale of assets   (524 ) (428 )   (3,950 ) 88,212  
Income from operations   66,126   78,116     289,313   394,203  
             
Other income            
Interest expense   (24 ) (18 )   (83 ) (53 )
Other nonoperating income     86     3,169   2,857  
Total other income (expense)   (24 ) 68     3,086   2,804  
             
Income from continuing operations            
before income taxes   66,102   78,184     292,399   397,007  
Income tax expense (benefit)   (89,076 ) 27,016     (2,923 ) 147,217  
Income from continuing operations   $ 155,178   $ 51,168     $ 295,322   $ 249,790  
             
Total tobacco sales revenue per store month   $ 101,659   $ 106,640     $ 102,998   $ 108,713  
Total non-tobacco sales revenue per store month   37,078   35,291     37,551   35,697  
Total merchandise sales revenue per store month   $ 138,737   $ 141,931     $ 140,549   $ 144,410  
             
Store count at end of period   1,446   1,401     1,446   1,401  
Total store months during the period   4,293   4,146     16,880   16,194  

Same store sales information (compared to APSM metrics)
  Variance from prior year quarter
  Three months ended
  December 31, 2017
  SSS APSM
Fuel gallons per month (5.2 )% (5.9 )%
     
Merchandise sales (2.0 )% (2.3 )%
Tobacco sales (3.6 )% (4.7 )%
Non tobacco sales 2.8 % 5.1 %
     
Merchandise margin 4.6 % 4.4 %
Tobacco margin 6.0 % 4.2 %
Non tobacco margin 2.5 % 4.6 %
         

  Variance from prior year
  Twelve months ended
  December 31, 2017
  SSS APSM
Fuel gallons per month (4.7 )% (5.3 )%
     
Merchandise sales (1.6 )% (2.7 )%
Tobacco sales (3.2 )% (5.3 )%
Non tobacco sales 3.3 % 5.2 %
     
Merchandise margin 1.3 % 0.5 %
Tobacco margin 2.3 % (0.2 )%
Non tobacco margin (0.2 )% 1.4 %

Note

Average Per Store Month (APSM) metric includes all stores open through the date of the calculation.

Same store sales (SSS) metric includes aggregated individual store results for all stores open throughout both periods presented. For all periods presented, the store must have been open for the entire calendar year to be included in the comparison. Remodeled stores that remained open or were closed for just a very brief time (less than a month) during the period being compared remain in the same store sales calculation. If a store is replaced either at the same location (raze and rebuild) or relocated to a new location, it will be excluded from the calculation during the period it is out of service. New constructed sites do not enter the calculation until they are open for each full calendar year for the periods being compared (open by January 1, 2016 for the sites being compared in the 2017 versus 2016 compared)

 
Murphy USA Inc.
Consolidated Balance Sheets
 
         
(Thousands of dollars)   December 31, 2017   December 31, 2016
    (unaudited)    
Assets        
Current assets        
Cash and cash equivalents   $ 170,028     $ 153,813  
Accounts receivable—trade, less allowance for doubtful accounts of $1,094 in 2017 and $1,891 in 2016   225,268     183,519  
Inventories, at lower of cost or market   182,477     153,351  
Prepaid expenses and other current assets   36,521     24,871  
Total current assets   614,294     515,554  
Property, plant and equipment, at cost less accumulated depreciation and amortization of $874,675 in 2017 and $780,426 in 2016   1,679,470     1,532,655  
Other assets   37,275     40,531  
Total assets   $ 2,331,039     $ 2,088,740  
Liabilities and Stockholders' Equity        
Current liabilities        
Current maturities of long-term debt   $ 19,887     $ 40,596  
Trade accounts payable and accrued liabilities   513,464     473,370  
Income taxes payable       594  
Total current liabilities   533,351     514,560  
         
Long-term debt, including capitalized lease obligations   860,864     629,622  
Deferred income taxes   154,245     204,656  
Asset retirement obligations   28,159     26,200  
Deferred credits and other liabilities   16,018     16,626  
Total liabilities   1,592,637     1,391,664  
Stockholders' Equity        
Preferred Stock, par $0.01 (authorized 20,000,000 shares,        
none outstanding)        
Common Stock, par $0.01 (authorized 200,000,000 shares,        
46,767,164 and 46,767,164 shares issued at        
2017 and 2016, respectively)   468     468  
Treasury stock (12,675,630 and 9,831,196 shares held at        
December 31, 2017 and December 31, 2016, respectively)   (806,511 )   (608,001 )
Additional paid in capital (APIC)   549,910     555,338  
Retained earnings   994,535     749,271  
Total stockholders' equity   738,402     697,076  
Total liabilities and stockholders' equity   $ 2,331,039     $ 2,088,740  
                 

 
Murphy USA Inc.
Consolidated Statement of Cash Flows
(Unaudited)
 
  Three Months Ended December 31, Twelve Months Ended December 31,
(Thousands of dollars) 2017 2016 2017 2016
Operating Activities        
Net income $ 124,840   $ 43,817   $ 245,264   $ 221,492  
Adjustments to reconcile net income to net cash provided by operating activities        
Depreciation and amortization 33,452   25,863   116,966   98,610  
Deferred and noncurrent income tax charges (benefits) (67,840 ) 2,771   (50,411 ) 40,407  
Accretion of asset retirement obligations 450   414   1,785   1,650  
Pretax (gains) losses from sale of assets 524   428   3,950   (88,212 )
Net (increase) decrease in noncash operating working capital 21,320   48,344   (36,954 ) 53,726  
Other operating activities - net 4,513   5,975   3,025   9,767  
Net cash provided by operating activities 117,259   127,612   283,625   337,440  
Investing Activities        
Property additions (56,725 ) (63,233 ) (258,257 ) (262,144 )
Proceeds from sale of assets 198   326   887   85,327  
Changes in restricted cash       68,571  
Other investing activities -  net (138 ) (75 ) (4,737 ) (28,963 )
Investing activities of discontinued operations - Other   2,355     2,355  
Net cash required by investing activities (56,665 ) (60,627 ) (262,107 ) (134,854 )
Financing Activities        
Purchases of treasury stock (53,983 ) (110,944 ) (205,992 ) (323,272 )
Borrowings of debt     338,750   200,000  
Repayments of debt (5,278 ) (10,157 ) (131,412 ) (20,438 )
Debt issuance costs     (1,100 ) (3,240 )
Amounts related to share-based compensation (319 ) 1,237   (5,549 ) (4,158 )
Net cash required by financing activities (59,580 ) (119,864 ) (5,303 ) (151,108 )
Net increase (decrease) in cash and cash equivalents 1,014   (52,879 ) 16,215   51,478  
Cash and cash equivalents at beginning of period 169,014   206,692   153,813   102,335  
Cash and cash equivalents at end of period $ 170,028   $ 153,813   $ 170,028   $ 153,813  

Supplemental Disclosure Regarding Non-GAAP Financial Information

The following table sets forth the Company's EBITDA and Adjusted EBITDA for the three and twelve months ended December 31, 2017 and 2016.  EBITDA means net income (loss) plus net interest expense, plus income tax expense, depreciation and amortization, and Adjusted EBITDA adds back (i) other non-cash items (e.g., impairment of properties and accretion of asset retirement obligations) and (ii) other items that management does not consider to be meaningful in assessing our operating performance (e.g., (income) from discontinued operations, gain (loss) on sale of assets and other non-operating expense (income)).  EBITDA and Adjusted EBITDA are not measures that are prepared in accordance with U.S. generally accepted accounting principles (GAAP).

We use Adjusted EBITDA in our operational and financial decision-making, believing that the measure is useful to eliminate certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations.  Adjusted EBITDA is also used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance.  We believe that the presentation of Adjusted EBITDA provides useful information to investors because it allows understanding of a key measure that we evaluate internally when making operating and strategic decisions, preparing our annual plan, and evaluating our overall performance.  However, non-GAAP measures are not a substitute for GAAP disclosures, and EBITDA and Adjusted EBITDA may be prepared differently by us than by other companies using similarly titled non-GAAP measures.

The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
(Thousands of dollars)   2017   2016   2017   2016
                 
Net income   $ 124,840     $ 43,817     $ 245,264     $ 221,492  
                 
Income tax expense (benefit)   (73,631 )   23,015     (5,242 )   130,539  
Interest expense, net of interest income   12,314     9,820     45,351     39,126  
Depreciation and amortization   33,452     25,863     116,966     98,610  
EBITDA   $ 96,975     $ 102,515     $ 402,339     $ 489,767  
                 
Accretion of asset retirement obligations   450     414     1,785     1,650  
(Gain) loss on sale of assets   524     428     3,950     (88,212 )
Other nonoperating (income) expense   1,089     (114 )   (2,180 )   (3,080 )
Adjusted EBITDA   $ 99,038     $ 103,243     $ 405,894     $ 400,125  
                 

2018 Full Year Guidance - GAAP to non-GAAP Reconciliation

An itemized reconciliation between projected Net Income and Adjusted EBITDA for the full year 2018 is as follows:
(Millions of dollars)   Fiscal Year 2018
Net Income   $155 to $195
    Mid-point
Income taxes   $58
Interest expense, net of interest income   $46
Depreciation and amortization   $133
Other operating and nonoperating expenses, net   $3
     
Adjusted EBITDA   $390 to $440

For purposes of this reconciliation, the midpoint of a range for each reconciling item was used, and therefore actual results for each of these reconciling items is expected to be higher or lower than the amounts shown above.  The size of the ranges varies based on the individual reconciling item and the assumptions made.

 

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