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Tesoro Corporation (TSO) Q4 Earnings and Revenue Beat

Independent refiner Tesoro CorporationTSO reported fourth-quarter 2016 adjusted loss from continuing operations of 2 cents per share, which surpassed the Zacks Consensus Estimate of loss of 18 cents. Significant contribution from the logistics segment supported the results. The bottom line, however, deteriorated from the year-ago quarter figure of $1.83 per share.

Tesoro Corporation reported quarterly revenues of $6,652 million as against $6,273 million in the comparable quarter last year. Also, the top line surpassed the Zacks Consensus Estimate of $6,573 million.

Segmental Analysis

Refining: The segment posted operating income of $43 million compared with $12 million in the year-earlier quarter. Increase in refining margins improved the quarterly result.

Logistics: During the fourth quarter, this segment generated operating profit of $123 million compared with $97 million in the year-ago quarter. The improvement can be attributed to growth in the volume of the unit's crude oil gathering and natural gas gathering and processing businesses as well as contributions from the Northern California Terminalling and Storage Assets and the Alaska Storage and Terminalling Assets completed in 2016.

Marketing: The segment earned $169 million compared with $175 million in the fourth quarter of 2015.

Throughput

Total refining throughput averaged 841 thousand barrels per day (MBbl/d) as against 807 MBbl/d in the prior-year quarter.

Overall, throughput volumes in California (consisting of Martinez and Los Angeles refineries) rose from 490 MBbl/d to 521 MBbl/d, on a year-over-year basis. Throughput in Tesoro Corporation's Pacific Northwest (Alaska and Washington) operations increased to 189 MBbl/d from 177 MBbl/d in the year-ago comparable quarter. Moreover, throughput volumes in the Mid-Continent (North Dakota and Utah) decreased to 131 MBbl/d from 140 MBbl/d in the year-ago comparable quarter.

Refining Margins

Gross refining margin increased 4.4% year over year to $9.45 per barrel.

Tesoro Corporation Price, Consensus and EPS Surprise

Tesoro Corporation Price, Consensus and EPS Surprise | Tesoro Corporation Quote

Region-wise, refining margin decreased almost 6.9% to $10.74 per barrel in California, was down 13.6% to $7.58 per barrel in the Mid-Continent and rose more than 191.7% to $7.13 per barrel in Pacific Northwest, all on a year-over-year basis.

Realized Costs & Prices

Manufacturing costs before depreciation and amortization decreased 3% from the year-earlier level to $5.43 per barrel.

Total refined product sales averaged 993 Mbbl/d as against 984 Mbbl/d in the fourth quarter of 2015.

Operating Cost

Tesoro Corporation's operating costs in the reported quarter were $680 million compared with $649 million in the fourth quarter of 2015.

Capital Expenditure & Balance Sheet

Tesoro Corporation's total capital spending in the reported quarter (including TLLP) totaled $324 million.

As of Dec 31, 2016, the company had $3,295 million of cash and cash equivalents and long-term debt (excluding TLLP) of $2.9 billion, representing a debt-to-capitalization ratio of 35%.

Guidance

Tesoro Corporation expects throughput margin for the first quarter between 800 MBbl/d and 850 MBbl/d.

Zacks Rank

Tesoro Corporation currently carries a Zacks Rank #3 (Hold).

Some better-ranked players from the broader energy sector include Braskem S.A. BAK , McDermott International, Inc. MDR and Suncor Energy Inc. SU . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.

In the last quarter, McDermott posted a positive earnings surprise of 250.00%.

In the last quarter, Suncor posted a positive earnings surprise of 300.00%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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