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Valero Energy Reports First Quarter 2024 Results
Refining The Refining segment reported operating income of $1.7 billion for the first quarter of 2024, compared to $4.1 billion for the first quarter of 2023. Refining throughput volumes averaged 2.8 million barrels per day in the first quarter of 2024.
"We are pleased to report strong financial results for the first quarter despite heavy planned maintenance across our refining system," said Lane Riggs, Valero's Chief Executive Officer and President. "Our team's ability to optimize and maximize throughput while undertaking maintenance activities illustrates the benefits from our long-standing commitment to safe and reliable operations."
Renewable Diesel The Renewable Diesel segment, which consists of the Diamond Green Diesel joint venture (DGD), reported $190 million of operating income for the first quarter of 2024, compared to $205 million for the first quarter of 2023. Segment sales volumes averaged 3.7 million gallons per day in the first quarter of 2024, which was 741 thousand gallons per day higher than the first quarter of 2023. The higher sales volumes were due to the impact of additional volumes from the DGD Port Arthur plant, which started up in the fourth quarter of 2022 and was in the process of ramping up production rates in the first quarter of 2023. Operating income in the first quarter of 2024 was lower than the first quarter of 2023 due to lower renewable diesel margin.
Ethanol The Ethanol segment reported $10 million of operating income for the first quarter of 2024, compared to $39 million for the first quarter of 2023. Adjusted operating income was $39 million for the first quarter of 2024. Ethanol production volumes averaged 4.5 million gallons per day in the first quarter of 2024, which was 283 thousand gallons per day higher than the first quarter of 2023.
Corporate and Other General and administrative expenses were $258 million in the first quarter of 2024, compared to $244 million in the first quarter of 2023. The effective tax rate for the first quarter of 2024 was 21 percent.
Investing and Financing Activities Net cash provided by operating activities was $1.8 billion in the first quarter of 2024. Included in this amount was a $160 million unfavorable impact from working capital and $122 million of adjusted net cash provided by operating activities associated with the other joint venture member's share of DGD. Excluding these items, adjusted net cash provided by operating activities was $1.9 billion in the first quarter of 2024.
Capital investments totaled $661 million in the first quarter of 2024, of which $563 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance. Excluding capital investments attributable to the other joint venture member's share of DGD and other variable interest entities, capital investments attributable to Valero were $619 million.
Valero returned $1.4 billion to stockholders in the first quarter of 2024, of which $356 million was paid as dividends and $1.0 billion was for the purchase of approximately 6.6 million shares of common stock, resulting in a payout ratio of 74 percent of adjusted net cash provided by operating activities.
Valero defines payout ratio as the sum of dividends paid and the total cost of stock buybacks divided by net cash provided by operating activities adjusted for changes in working capital and DGD's net cash provided by operating activities, excluding changes in its working capital, attributable to the other joint venture member's share of DGD.
On January 18, Valero announced an increase of its quarterly cash dividend on common stock from $1.02 per share to $1.07 per share.
Liquidity and Financial Position Valero repaid the $167 million outstanding principal balance of its 1.200% Senior Notes that matured on March 15, ending the first quarter of 2024 with $8.5 billion of total debt, $2.4 billion of finance lease obligations and $4.9 billion of cash and cash equivalents. The debt to capitalization ratio, net of cash and cash equivalents, was 17 percent as of March 31, 2024.
Strategic Update The SAF project at the DGD Port Arthur plant is progressing ahead of schedule and is now expected to be operational in the fourth quarter of 2024, with a total cost of $315 million, half of which is attributable to Valero. The project is expected to give the plant the optionality to upgrade approximately 50 percent of its current 470 million gallon renewable diesel annual production capacity to SAF. With the completion of this project, DGD is expected to become one of the largest manufacturers of SAF in the world.
"We remain focused on the things that have been a hallmark of our strategy for over a decade - maintaining operating excellence, executing our projects well, discipline around capital investments, and our commitment to shareholder returns," said Riggs.
Conference Call Valero's senior management will hold a conference call at 10 a.m. ET today to discuss this earnings release and to provide an update on operations and strategy.
About Valero Valero Energy Corporation, through its subsidiaries (collectively, Valero), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and it sells its products primarily in the United States (U.S.), Canada, the United Kingdom (U.K.), Ireland and Latin America. Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day. Valero is a joint venture member in Diamond Green Diesel Holdings LLC, which owns two renewable diesel plants located in the U.S. Gulf Coast region with a combined production capacity of approximately 1.2 billion gallons per year, and Valero owns 12 ethanol plants located in the U.S. Mid-Continent region with a combined production capacity of approximately 1.6 billion gallons per year. Valero manages its operations through its Refining, Renewable Diesel and Ethanol segments. Please visit investorvalero.com for more information.
Valero Contacts Investors: Homer Bhullar, Vice President - Investor Relations and Finance, 210-345-1982 Eric Herbort, Director - Investor Relations and Finance, 210-345-3331 Gautam Srivastava, Director - Investor Relations, 210-345-3992
Media: Lillian Riojas, Executive Director - Media Relations and Communications, 210-345-5002
Safe-Harbor Statement Statements contained in this release and the accompanying earnings release tables, or made during the conference call, that state Valero's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words "believe," "expect," "should," "estimates," "intend," "target," "will," "plans," "forecast, "guidance" and other similar expressions identify forward-looking statements. Forward-looking statements in this release and the accompanying earnings release tables include, and those made on the conference call may include, statements relating to Valero's low-carbon fuels strategy, expected timing, cost and performance of projects, future market and industry conditions, future operating and financial performance, future production and manufacturing ability and size, and management of future risks, among other matters. It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Valero's control, such as legislative or political changes or developments, market dynamics, cyberattacks, weather events, and other matters affecting Valero's operations and financial performance or the demand for Valero's products. These factors also include, but are not limited to, the uncertainties that remain with respect to current or contemplated legal, political or regulatory developments that are adverse to or restrict refining and marketing operations, or that impose profits, windfall or margin taxes or penalties, global geopolitical and other conflicts and tensions, the impact of inflation on margins and costs, economic activity levels, and the adverse effects the foregoing may have on Valero's business plan, strategy, operations and financial performance. For more information concerning these and other factors that could cause actual results to differ from those expressed or forecasted, see Valero's annual report on Form 10-K, quarterly reports on Form 10'Q, and other reports filed with the Securities and Exchange Commission and available on Valero's website at www.valero.com.
Use of Non-GAAP Financial Information This earnings release and the accompanying earnings release tables include references to financial measures that are not defined under U.S. generally accepted accounting principles (GAAP). These non-GAAP measures include adjusted net income attributable to Valero stockholders, adjusted earnings per common share - assuming dilution, Refining margin, Renewable Diesel margin, Ethanol margin, adjusted Refining operating income, adjusted Ethanol operating income, adjusted net cash provided by operating activities, and capital investments attributable to Valero. These non-GAAP financial measures have been included to help facilitate the comparison of operating results between periods. See the accompanying earnings release tables for a reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Note (c) to the earnings release tables provides reasons for the use of these non-GAAP financial measures.
VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Statement of income data
$ 31,759 $ 36,439
Revenues
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Cost of sales:
27,682 30,005
Cost of materials and other
1,411 1,477
Operating expenses (excluding depreciation and amortization expense reflected below)
683 650
Depreciation and amortization expense
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
29,776 32,132
Total cost of sales
34 10
Other operating expenses (a)
258 244
General and administrative expenses (excluding depreciation and amortization expense reflected below)
12 10
Depreciation and amortization expense
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
1,679 4,043
Operating income
144 129
Other income, net (b)
(140 ) (146 )
Interest and debt expense, net of capitalized interest
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
1,683 4,026
Income before income tax expense
353 880
Income tax expense
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
1,330 3,146
Net income
85 79
Less: Net income attributable to noncontrolling interests
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
$ 1,245 $ 3,067
Net income attributable to Valero Energy Corporation stockholders
==================== ==================== ==================== ==================== ==================== ====================
Earnings per common share $ 3.75 $ 8.30
331 369
Weighted-average common shares outstanding (in millions)
Earnings per common share - assuming dilution $ 3.75 $ 8.29
331 369
Weighted-average common shares outstanding - assuming dilution (in millions)
VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT
(millions of dollars)
(unaudited)
Refining Renewable Ethanol Corporate Total
Diesel and
Eliminations
---------------------------------- ---------------------------------- ---------------------------------- ------------------------------------------------------ ----------------------------------
Three months ended March 31, 2024
Revenues:
$ 30,143 $ 702 $ 914 $ -- $ 31,759
Revenues from external customers
2 709 190 (901 ) --
Intersegment revenues
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
30,145 1,411 1,104 (901 ) 31,759
Total revenues
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
Cost of sales:
26,611 1,066 909 (904 ) 27,682
Cost of materials and other
1,184 90 137 -- 1,411
Operating expenses (excluding depreciation and amortization expense reflected below)
600 65 19 (1 ) 683
Depreciation and amortization expense
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
28,395 1,221 1,065 (905 ) 29,776
Total cost of sales
5 -- 29 -- 34
Other operating expenses (a)
-- -- -- 258 258
General and administrative expenses (excluding depreciation and amortization expense reflected below)
-- -- -- 12 12
Depreciation and amortization expense
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
$ 1,745 $ 190 $ 10 $ (266 ) $ 1,679
Operating income by segment
==================== ============== ==================== ============== ==================== ============== ==================== ============== ==================== ==================== ==============
Three months ended March 31, 2023
Revenues:
$ 34,407 $ 935 $ 1,097 $ -- $ 36,439
Revenues from external customers
3 745 223 (971 ) --
Intersegment revenues
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
34,410 1,680 1,320 (971 ) 36,439
Total revenues
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
Cost of sales:
28,510 1,331 1,131 (967 ) 30,005
Cost of materials and other
1,261 86 130 -- 1,477
Operating expenses (excluding depreciation and amortization expense reflected below)
572 58 20 -- 650
Depreciation and amortization expense
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
30,343 1,475 1,281 (967 ) 32,132
Total cost of sales
10 -- -- -- 10
Other operating expenses
-- -- -- 244 244
General and administrative expenses (excluding depreciation and amortization expense reflected below)
-- -- -- 10 10
Depreciation and amortization expense
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- --------------
$ 4,057 $ 205 $ 39 $ (258 ) $ 4,043
Operating income by segment
==================== ============== ==================== ============== ==================== ============== ==================== ============== ==================== ==================== ==============
VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (c)
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Reconciliation of net income attributable to Valero Energy Corporation stockholders to adjusted net income attributable to Valero Energy Corporation stockholders
$ 1,245 $ 3,067
Net income attributable to Valero Energy Corporation stockholders
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjustments:
29 --
Project liability adjustment (a)
(7 ) --
Income tax benefit related to project liability adjustment
-------------------- -------------- -------------------- -------------------- -------------- --------------------
22 --
Project liability adjustment, net of taxes
-------------------- -------------- -------------------- -------------------- -------------- --------------------
-- (11 )
Gain on early retirement of debt (b)
-- 2
Income tax expense related to gain on early retirement of debt
-------------------- -------------- -------------------- -------------------- -------------- --------------------
-- (9 )
Gain on early retirement of debt, net of taxes
-------------------- -------------- -------------------- -------------------- -------------- --------------------
22 (9 )
Total adjustments
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Reconciliation of earnings per common share - assuming dilution to adjusted earnings per common share - assuming dilution
Earnings per common share - assuming dilution $ 3.75 $ 8.29
-------------------- -------------------- -------------------- -------------------- --------------------
Adjustments:
Project liability adjustment (a) 0.07 --
Gain on early retirement of debt (b) -- (0.02 )
-------------------- -------------------- -------------------- -------------------- --------------------
Total adjustments 0.07 (0.02 )
-------------------- -------------------- -------------------- -------------------- --------------------
Adjusted earnings per common share - assuming dilution $ 3.82 $ 8.27
==================== ==================== ==================== ==================== ====================
VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (c)
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
----------------------------------------------------------------------------------------------------
2024 2023
---------------------------------------- ----------------------------------------
Reconciliation of operating income by segment to segment margin, and reconciliation of operating income by segment to adjusted operating income by segment
Refining segment
$ 1,745 $ 4,057
Refining operating income
Adjustments:
1,184 1,261
Operating expenses (excluding depreciation and amortization expense reflected below)
600 572
Depreciation and amortization expense
5 10
Other operating expenses
-------------------- -------------------- -------------------- --------------------
$ 3,534 $ 5,900
Refining margin
==================== ==================== ==================== ====================
$ 1,745 $ 4,057
Refining operating income
5 10
Adjustment: Other operating expenses
-------------------- -------------------- -------------------- --------------------
$ 1,750 $ 4,067
Adjusted Refining operating income
==================== ==================== ==================== ====================
Renewable Diesel segment
$ 190 $ 205
Renewable Diesel operating income
Adjustments:
90 86
Operating expenses (excluding depreciation and amortization expense reflected below)
65 58
Depreciation and amortization expense
-------------------- -------------------- -------------------- --------------------
$ 345 $ 349
Renewable Diesel margin
==================== ==================== ==================== ====================
Ethanol segment
$ 10 $ 39
Ethanol operating income
Adjustments:
137 130
Operating expenses (excluding depreciation and amortization expense reflected below)
19 20
Depreciation and amortization expense
29 --
Other operating expenses (a)
-------------------- -------------------- -------------------- --------------------
$ 195 $ 189
Ethanol margin
==================== ==================== ==================== ====================
$ 10 $ 39
Ethanol operating income
29 --
Adjustment: Other operating expenses (a)
-------------------- -------------------- -------------------- --------------------
$ 39 $ 39
Adjusted Ethanol operating income
==================== ==================== ==================== ====================
VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (c)
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
------------------------------------------------------------------------------------
2024 2023
------------------------------ ----------------------------------
Reconciliation of Refining segment operating income to Refining margin (by region), and reconciliation of Refining segment operating income to adjusted Refining segment operating income (by region) (d)
U.S. Gulf Coast region
$ 1,007 $ 2,667
Refining operating income
Adjustments:
664 686
Operating expenses (excluding depreciation and amortization expense reflected below)
373 349
Depreciation and amortization expense
3 10
Other operating expenses
-------------------- ---------- -------------------- --------------
$ 2,047 $ 3,712
Refining margin
==================== ========== ==================== ==============
$ 1,007 $ 2,667
Refining operating income
3 10
Adjustment: Other operating expenses
-------------------- ---------- -------------------- --------------
$ 1,010 $ 2,677
Adjusted Refining operating income
==================== ========== ==================== ==============
U.S. Mid-Continent region
$ 269 $ 602
Refining operating income
Adjustments:
185 194
Operating expenses (excluding depreciation and amortization expense reflected below)
87 82
Depreciation and amortization expense
2 --
Other operating expenses
-------------------- ---------- -------------------- --------------
$ 543 $ 878
Refining margin
==================== ========== ==================== ==============
$ 269 $ 602
Refining operating income
2 --
Adjustment: Other operating expenses
-------------------- ---------- -------------------- --------------
$ 271 $ 602
Adjusted Refining operating income