Tesoro Corp Earnings: Swinging to a Loss After Two Quarters of Profit

S&P 500 (NYSE:SPY) component Tesoro Corporation (NYSE:TSO) reported its results for the fourth quarter. Tesoro is an independent petroleum refiner and marketer in the United States that refines crude oil, sells refined products in bulk and wholesale markets and sells motor fuels in the retail market.

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Tesoro Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $124 million (89 cents per diluted share) in the quarter. Tesoro Corporation had a net income of $3 million or 2 cents per share in the year earlier quarter.

Revenue: Rose 39.9% to $7.71 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Tesoro Corporation fell short of the mean analyst estimate of a loss of 66 cents per share. It beat the average revenue estimate of $5.48 billion.

Quoting Management: “The fourth quarter was a challenging period as a result of the dramatic change in crude oil price differentials,” said Greg Goff, President and CEO of Tesoro. “Despite the loss in the fourth quarter, our full year results were better than any year since 2007 when we posted similar earnings on a Tesoro Index that was 40% higher. The Company`s strong performance for the year clearly demonstrates our ability to deliver fundamental improvements in the business.” With a strategic focus on operational efficiency and effectiveness, the Company increased refinery utilization rates, capturing additional gross margin while reducing manufacturing costs per barrel during 2011. The resulting strong free cash flow allowed the company to reduce debt by $328 million, further strengthening its balance sheet. The Company also increased the integration between refining and marketing and successfully launched Tesoro Logistics.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 41.3%, with the biggest boost coming in the second quarter when revenue rose 54.8% from the year earlier quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the third quarter, it topped the mark by 56 cents, and in the second quarter, it was ahead by 31 cents.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $345 million in the third quarter, a profit of $218 million in the second quarter and $107 million in the first.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 75 cents a share to 49 cents over the last sixty days. For the fiscal year, the average estimate has moved down from $5.73 a share to $4.13 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Damien Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com