SAN ANTONIO — Tesoro Corp. swung to a loss and widely missed analysts’ estimates in the fourth quarter of 2013 as a result of lower refining margins, higher stock-based pay and a loss related to the sale of a refinery
The San Antonio-based independent refiner posted a loss in the period ended Dec. 31 of $7 million, or 5 cents a share, compared to net income of $27 million, or 19 cents a share, for the same period one year ago.
The company said its quarterly results included $40 million in stock-based compensation expenses and a net loss of $3 million, or 2 cents a share, related to the sale of its refinery in Hawaii. Tesoro said its compensation expenses more than tripled, mostly as a result of a change in its stock price.
Also, the company said its quarterly results included an after-tax expense of 7 cents a share related to integrating acquisitions made in 2013.
Excluding the latter expense, Tesoro earned $5 million, or 4 cents a share.
Analysts as polled by Bloomberg News had expected the company to earn 31 cents a share.
Tesoro’s stock closed at $49.95 a share, off 50 cents, in New York Stock Exchange trading. The company’s results were released after the close of the market on Wednesday. In after-hours trading, it fell nearly $2.
“Despite a lower margin and crude oil differential environment, and weaker earnings relative to 2012, 2013 was a year of important strategic accomplishments for Tesoro,” CEO Greg Goff said.
“The acquisition of the Los Angeles refining, marketing and logistics assets, the acquisition of the Northwest Products System and the sale of our business in Hawaii collectively represent significant achievements in the continuing transformation of Tesoro.”
In a note to clients, Wells Fargo Securities’ senior analyst Roger Read noted that Tesoro suffered lower refining margins, “especially in the core California region.”
But it’s a positive, he said, that the company’s balance sheet remains strong, with $1.2 billion in cash.
The company noted that operating income in its refining and retail segment fell in the quarter to $152 million compared with $406 million for the year-earlier period.
The decline in operating income “was driven primarily by a weaker margin environment across all operating regions,” the company said.
Although Tesoro processed more crude oil and other feedstocks in the quarter, its gross refining margin fell to $9.45 a barrel compared with $15.11 for the final quarter of 2012.
Quarterly manufacturing costs rose to $392 million compared with $239 million for the final period of 2012.
For the full year, Tesoro logged net income of $412 million, or $3 a share, a decline of 44 percent compared with net income of $743 million, or $5.25 a share, for 2012.
Excluding special items, 2013’s net income from continuing operations fell to $386 million, or $2.81 a share. That compares to adjusted net income from continuing operations of $922 million, or $6.52 a share, for 2012.