Capital improvements and higher margins driven by the company’s use of discounted crude oil led refiner Tesoro Corp. to a 66 percent increase in profit in the first quarter, the company said.
Tesoro’s net income climbed to $93 million, or 67 cents a share, compared with net income of $56 million, or 39 cents a share, for the same period a year ago.
“We are pleased with our first-quarter results, which reflect a solid operating performance and continued execution of our strategic plan,” CEO Greg Goff said in a statement.
The results included one-time after-tax expenses of 6 cents a share mostly related to its planned acquisition of BP’s refining and marketing business in Southern California. When those costs are excluded, Tesoro earned $102 million, or 73 cents a share.
That beat analysts’ estimates, as polled by Bloomberg News, that the company would earn 72 cents a share. Analysts typically exclude one-time items.
Revenue rose to $8.2 billion compared with $7.8 billion for the year-earlier period, beating analysts’ revenue estimate of $6.6 billion.
Locally based Tesoro said its gross margins were boosted in the quarter because it was able to buy crude oil priced at a discount compared tobenchmark grades of oil.
Cory Garcia, an analyst at Raymond James & Associates’ Houston office, said the period “wasn’t a home-run quarter.” But it was “solid,” he said, especially considering that the first quarter tends to be weak for refiners.
“Despite the fact that they had maintenance at some of their refineries, they were still able to run fairly efficiently,” Garcia said, noting that Tesoro’s refineries in California “are more competitive relative to their peers, even the majors operating there, because they can run more heavy crude,” which the company can acquire at a discount.
The company’s operating income rose to $300 million compared with