Tesoro Corporation (TSO) has reported a 27.54 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $50 million, or $0.42 a share in the quarter, compared with $69 million, or $0.57 a share for the same period last year. Revenue during the quarter surged 30.13 percent to $6,638 million from $5,101 million in the previous year period. Gross margin for the quarter contracted 307 basis points over the previous year period to 18.26 percent. Total expenses were 97.06 percent of quarterly revenues, up from 96.49 percent for the same period last year. That has resulted in a contraction of 57 basis points in operating margin to 2.94 percent.
Operating income for the quarter was $195 million, compared with $179 million in the previous year period.
"We are pleased with the overall results of our integrated business for the quarter, notwithstanding severe weather across our business and a crude oil pipeline outage in Salt Lake City, which combined had an impact of approximately $40 million pre-tax," said Greg Goff, chairman and chief executive officer. "We are excited about the transformation of Tesoro through our pending acquisition of Western Refining and the value creation as a result of synergies. We expect to close the transaction soon and look forward to sharing additional information regarding synergies and integration plans."
Operating cash flow drops significantly
Tesoro Corporation has generated cash of $100 million from operating activities during the quarter, down 45.65 percent or $ 84 million, when compared with the last year period. The company has spent $929 million cash to meet investing activities during the quarter as against cash outgo of $535 million in the last year period.
The company has spent $168 million cash to carry out financing activities during the quarter as against cash outgo of $152 million in the last year period.
Cash and cash equivalents stood at $2,298 million as on Mar. 31, 2017, up 423.46 percent or $1,859 million from $439 million on Mar. 31, 2016.
Working capital increases sharply
Tesoro Corporation has recorded an increase in the working capital over the last year. It stood at $3,208 million as at Mar. 31, 2017, up 159.76 percent or $1,973 million from $1,235 million on Mar. 31, 2016. Current ratio was at 2.05 as on Mar. 31, 2017, up from 1.54 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 7 days for the quarter from 28 days for the last year period. Days sales outstanding went down to 12 days for the quarter compared with 16 days for the same period last year.
Days inventory outstanding has decreased to 22 days for the quarter compared with 47 days for the previous year period. At the same time, days payable outstanding went down to 27 days for the quarter from 35 for the same period last year.
Debt increases substantially
Tesoro Corporation has witnessed an increase in total debt over the last one year. It stood at $6,643 million as on Mar. 31, 2017, up 64.19 percent or $2,597 million from $4,046 million on Mar. 31, 2016. Short-term debt stood at $465 million as on Mar. 31, 2017. Total debt was 33.10 percent of total assets as on Mar. 31, 2017, compared with 25.27 percent on Mar. 31, 2016. Debt to equity ratio was at 0.80 as on Mar. 31, 2017, up from 0.53 as on Mar. 31, 2016.
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