Northern Tier Energy's Net Income Plummets 55%

Northern Tier Energy (NYSE: NTI  ) reported earnings after the market closed today, and the results were dismal. Revenue came in at $1.44 billion, outpacing last year's mark of $1.26 billion, but declining crack spreads wreaked havoc on the partnership's net income, which fell more than 55% to $27.2 million.

Management attributed the losses to market fundamentals that affect the 6:3:2:1 crack spread (the price difference in petroleum products and the crude oil they originate from), and benchmark crude oil price differentials. Gross margin per barrel fell from $36.69 in 2012 to $11.84 this quarter.

Northern Tier's earnings were also affected by unplanned maintenance at its Saint Paul Park refinery, resulting in total throughput of 81,168 barrels per day, compared with 87,476 last year. Operating income for the refining segment was $27.8 million.

On a positive note, the partnership's retail segment appears to be in good shape, as Northern Tier is selling more fuel and booking greater fuel margin per gallon compared with last year. Operating income for the segment more than tripled to $4.4 million.

The partnership booked $28.3 million in cash available for distribution and issued a $0.31 payout per unit for the third quarter. It is less than half of the partnership's second-quarter distribution, but as a variable-rate MLP, this is more or less expected after a rough quarter.

Management reiterated that maintenance is now complete at the St. Paul facility, and investors can expect total throughput between 80,000 and 85,000 barrels per day in the fourth quarter.


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