Oil refiner HollyFrontier Corp. (NYSE: HFC) reported fourth-quarter and full-year 2014 earnings before markets opened Wednesday. For the quarter, the company reported a diluted loss per share of $1.13 on a net loss of $222.2 million and revenues of $4.28 billion. In the same period a year ago, adjusted earnings per share (EPS) came in at $0.34 on net income of $62.9 million and revenues of $4.83 billion. The consensus estimates called for fourth-quarter EPS of $0.22 on revenues of $3.47 billion.

On an adjusted basis, HollyFrontier posted EPS of $0.12 in the fourth quarter. The company said in early January that it would take a pretax charge of $350 million to $450 million related to a “lower of cost or market” (LOCM) inventory adjustment. The after-tax adjustment cost HollyFrontier $244 million, or $1.25 a share. On a pretax basis the company took a charge of $397.48 million. We discussed the adjustment and a related turnaround issue at the time.

Excluding the LOCM adjustment, operating income in the fourth quarter totaled $43.1 million, down sharply from $87.12 million in the same period a year ago. HollyFrontier noted that operating expenses rose 9% in the quarter, which the company said included charges of $27 million for increased environmental accruals and $20 million in asset write-downs.

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For the full year, HollyFrontier posted EPS of $1.42 on revenues of $19.76 billion, compared with year-ago EPS of $3.64 and revenues of $20.16 billion. Analysts were looking for EPS of $2.93 on revenues of $18.92 billion. Even excluding the large inventory adjustment operating income for the year fell from $1.25 billion in 2013 to around $900 million this year.

According to the company’s CEO, the outlook for 2015 is improving:

For 2014, we reported full year refinery utilization of 91.7%, a 5% improvement versus 2013 as we began to see the benefits from our risk management, reliability and process safety efforts. Improved operational performance helped offset the impact of compressing Brent/WTI spreads, which averaged $6.70 in 2014 compared to $10.61 in 2013. … After reaching parity in early 2015, the Brent/WTI crude differential has recently widened to more than $9.00 per barrel. We believe we are well positioned to reap the benefits from widening crude spreads given our advantaged geographic location close to inland crude production, improving reliability and throughput, and limited amount of planned maintenance scheduled for 2015.

HollyFrontier was one of the refiners that profited nicely from the wide Brent-WTI differentials we saw a few years ago.

The company did not offer guidance but consensus estimates call for first quarter EPS of $0.43 on revenues of $2.48 billion, compared with EPS of $0.79 and revenues of $4.79 billion in the first quarter of 2014. For the full year, analysts are forecasting EPS of $2.81 on revenues of $14.01 billion.

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In the fourth quarter the company paid its regular quarterly dividend of $0.32 and a special dividend of $0.50 per share at a total cost of around $161 million.

Shares traded down about 2% in Wednesday’s premarket at $40.00, after closing at $40.82 on Tuesday, in a 52-week range of $30.15 to $53.42. The consensus price target from Thomson Reuters was around $44.00 before the announcement.

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