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Valero Energy Reports Second Quarter 2023 Results

  • Reported net income attributable to Valero stockholders of $1.9 billion, or $5.40 per share
  • Returned over $1.3 billion to stockholders through dividends and stock buybacks
  • Declared a regular quarterly cash dividend on common stock of $1.02 per share

Valero Energy Corporation (NYSE: VLO, “Valero”) today reported net income attributable to Valero stockholders of $1.9 billion, or $5.40 per share, for the second quarter of 2023, compared to $4.7 billion, or $11.57 per share, for the second quarter of 2022. Excluding the adjustments shown in the accompanying earnings release tables, adjusted net income attributable to Valero stockholders was $4.6 billion, or $11.36 per share, for the second quarter of 2022.

Refining

The Refining segment reported operating income of $2.4 billion for the second quarter of 2023, compared to $6.2 billion for the second quarter of 2022. Adjusted operating income was $6.1 billion for the second quarter of 2022. Refining throughput volumes averaged 3.0 million barrels per day in the second quarter of 2023.

“We are pleased to report solid financial results in the second quarter, underpinned by strong execution across all of our business segments,” said Lane Riggs, Valero’s Chief Executive Officer and President. “Our refineries ran well with throughput capacity utilization at 94 percent and our U.S. wholesale system set a sales record of over 1 million barrels per day in May and June.”

Renewable Diesel

The Renewable Diesel segment, which consists of the Diamond Green Diesel joint venture (DGD), reported $440 million of operating income for the second quarter of 2023, compared to $152 million for the second quarter of 2022. Segment sales volumes averaged 4.4 million gallons per day in the second quarter of 2023, which was 2.2 million gallons per day higher than the second quarter of 2022. The higher sales volumes were due to the impact of additional volumes from the startup of the DGD Port Arthur plant in the fourth quarter of 2022.

Ethanol

The Ethanol segment reported $127 million of operating income for the second quarter of 2023, compared to $101 million for the second quarter of 2022. Adjusted operating income for the second quarter of 2022 was $79 million. Ethanol production volumes averaged 4.4 million gallons per day in the second quarter of 2023, which was 582 thousand gallons per day higher than the second quarter of 2022.

Corporate and Other

General and administrative expenses were $209 million in the second quarter of 2023, compared to $233 million in the second quarter of 2022. The effective tax rate for the second quarter of 2023 was 22 percent.

Investing and Financing Activities

Net cash provided by operating activities was $1.5 billion in the second quarter of 2023. Included in this amount was a $1.2 billion unfavorable change in working capital and $242 million of adjusted net cash provided by operating activities associated with the other joint venture member’s share of DGD, excluding changes in DGD’s working capital. Excluding these items, adjusted net cash provided by operating activities was $2.5 billion in the second quarter of 2023.

Capital investments totaled $458 million in the second quarter of 2023, of which $382 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, capital investments attributable to Valero were $433 million.

Valero returned over $1.3 billion to stockholders in the second quarter of 2023, of which $367 million was paid as dividends and $951 million was for the purchase of approximately 8.4 million shares of common stock, resulting in a payout ratio of 53 percent of adjusted net cash provided by operating activities.

Valero continues to target an annual payout ratio between 40 and 50 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 July 20, Valero announced a quarterly cash dividend on common stock of $1.02 per share, payable on September 5, 2023 to holders of record at the close of business on August 3, 2023.

Liquidity and Financial Position

Valero ended the second quarter of 2023 with $9.0 billion of total debt, $2.3 billion of finance lease obligations and $5.1 billion of cash and cash equivalents. The debt to capitalization ratio, net of cash and cash equivalents, was 18 percent as of June 30, 2023.

Strategic Update

The Port Arthur Coker project, which successfully commenced operations in April, is operating well and at full capacity. The new coker has increased the refinery’s throughput capacity and enhanced its ability to process incremental volumes of heavy crudes and residual feedstocks, while also improving turnaround efficiency.

The Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant is expected to be completed in 2025 and is estimated to cost $315 million, with half of that attributable to Valero. The project is expected to give the plant the ability to upgrade approximately 50 percent of its current 470 million gallon annual renewable diesel production capacity to SAF, which is expected to make DGD one of the largest manufacturers of SAF in the world.

“We remain committed to the core strategy that has been in place for nearly a decade,” said Riggs. “Our focus on operational excellence, capital discipline and honoring our commitment to shareholder returns has served us well and will continue to anchor our strategy going forward.”

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.

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,” 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 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, the Russia-Ukraine conflict, 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 (e) to the earnings release tables provides reasons for the use of these non-GAAP financial measures.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

OTHER FINANCIAL DATA

(millions of dollars, except per share amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Statement of income data

 

 

 

 

 

 

 

Revenues

$

34,509

 

 

$

51,641

 

 

$

70,948

 

 

$

90,183

 

Cost of sales:

 

 

 

 

 

 

 

Cost of materials and other (a)

 

29,430

 

 

 

42,946

 

 

 

59,435

 

 

 

77,895

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

1,440

 

 

 

1,626

 

 

 

2,917

 

 

 

3,005

 

Depreciation and amortization expense (b)

 

658

 

 

 

590

 

 

 

1,308

 

 

 

1,185

 

Total cost of sales

 

31,528

 

 

 

45,162

 

 

 

63,660

 

 

 

82,085

 

Other operating expenses

 

2

 

 

 

15

 

 

 

12

 

 

 

34

 

General and administrative expenses (excluding

depreciation and amortization expense reflected below) (c)

 

209

 

 

 

233

 

 

 

453

 

 

 

438

 

Depreciation and amortization expense

 

11

 

 

 

12

 

 

 

21

 

 

 

23

 

Operating income

 

2,759

 

 

 

6,219

 

 

 

6,802

 

 

 

7,603

 

Other income, net (d)

 

106

 

 

 

33

 

 

 

235

 

 

 

13

 

Interest and debt expense, net of capitalized interest

 

(148

)

 

 

(142

)

 

 

(294

)

 

 

(287

)

Income before income tax expense

 

2,717

 

 

 

6,110

 

 

 

6,743

 

 

 

7,329

 

Income tax expense

 

595

 

 

 

1,342

 

 

 

1,475

 

 

 

1,594

 

Net income

 

2,122

 

 

 

4,768

 

 

 

5,268

 

 

 

5,735

 

Less: Net income attributable to noncontrolling interests

 

178

 

 

 

75

 

 

 

257

 

 

 

137

 

Net income attributable to Valero Energy Corporation

stockholders

$

1,944

 

 

$

4,693

 

 

$

5,011

 

 

$

5,598

 

 

 

 

 

 

 

 

 

Earnings per common share

$

5.41

 

 

$

11.58

 

 

$

13.75

 

 

$

13.75

 

Weighted-average common shares outstanding (in millions)

 

358

 

 

 

404

 

 

 

363

 

 

 

406

 

 

 

 

 

 

 

 

 

Earnings per common share – assuming dilution

$

5.40

 

 

$

11.57

 

 

$

13.74

 

 

$

13.74

 

Weighted-average common shares outstanding –

assuming dilution (in millions)

 

358

 

 

 

404

 

 

 

363

 

 

 

406

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

FINANCIAL HIGHLIGHTS BY SEGMENT

(millions of dollars)

(unaudited)

 

 

Refining

 

Renewable

Diesel

 

Ethanol

 

Corporate

and

Eliminations

 

Total

Three months ended June 30, 2023

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

31,996

 

 

$

1,296

 

$

1,217

 

 

$

 

 

$

34,509

Intersegment revenues

 

(3

)

 

 

950

 

 

257

 

 

 

(1,204

)

 

 

Total revenues

 

31,993

 

 

 

2,246

 

 

1,474

 

 

 

(1,204

)

 

 

34,509

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other

 

27,773

 

 

 

1,643

 

 

1,199

 

 

 

(1,185

)

 

 

29,430

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

1,205

 

 

 

104

 

 

128

 

 

 

3

 

 

 

1,440

Depreciation and amortization expense

 

582

 

 

 

59

 

 

19

 

 

 

(2

)

 

 

658

Total cost of sales

 

29,560

 

 

 

1,806

 

 

1,346

 

 

 

(1,184

)

 

 

31,528

Other operating expenses

 

1

 

 

 

 

 

1

 

 

 

 

 

 

2

General and administrative expenses (excluding

depreciation and amortization expense reflected

below)

 

 

 

 

 

 

 

 

 

209

 

 

 

209

Depreciation and amortization expense

 

 

 

 

 

 

 

 

 

11

 

 

 

11

Operating income by segment

$

2,432

 

 

$

440

 

$

127

 

 

$

(240

)

 

$

2,759

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2022

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

49,495

 

 

$

855

 

$

1,291

 

 

$

 

 

$

51,641

Intersegment revenues

 

11

 

 

 

596

 

 

201

 

 

 

(808

)

 

 

Total revenues

 

49,506

 

 

 

1,451

 

 

1,492

 

 

 

(808

)

 

 

51,641

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other (a)

 

41,313

 

 

 

1,213

 

 

1,226

 

 

 

(806

)

 

 

42,946

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

1,402

 

 

 

58

 

 

167

 

 

 

(1

)

 

 

1,626

Depreciation and amortization expense (b)

 

565

 

 

 

28

 

 

(3

)

 

 

 

 

 

590

Total cost of sales

 

43,280

 

 

 

1,299

 

 

1,390

 

 

 

(807

)

 

 

45,162

Other operating expenses

 

14

 

 

 

 

 

1

 

 

 

 

 

 

15

General and administrative expenses (excluding

depreciation and amortization expense reflected

below) (c)

 

 

 

 

 

 

 

 

 

233

 

 

 

233

Depreciation and amortization expense

 

 

 

 

 

 

 

 

 

12

 

 

 

12

Operating income by segment

$

6,212

 

 

$

152

 

$

101

 

 

$

(246

)

 

$

6,219

 

See Operating Highlights by Segment.

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS

REPORTED UNDER U.S. GAAP (e)

(millions of dollars)

(unaudited)

 

 

Refining

 

Renewable

Diesel

 

Ethanol

 

Corporate

and

Eliminations

 

Total

Six months ended June 30, 2023

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

66,403

 

$

2,231

 

$

2,314

 

$

 

 

$

70,948

Intersegment revenues

 

 

 

1,695

 

 

480

 

 

(2,175

)

 

 

Total revenues

 

66,403

 

 

3,926

 

 

2,794

 

 

(2,175

)

 

 

70,948

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other

 

56,283

 

 

2,974

 

 

2,330

 

 

(2,152

)

 

 

59,435

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

2,466

 

 

190

 

 

258

 

 

3

 

 

 

2,917

Depreciation and amortization expense

 

1,154

 

 

117

 

 

39

 

 

(2

)

 

 

1,308

Total cost of sales

 

59,903

 

 

3,281

 

 

2,627

 

 

(2,151

)

 

 

63,660

Other operating expenses

 

11

 

 

 

 

1

 

 

 

 

 

12

General and administrative expenses (excluding

depreciation and amortization expense reflected

below)

 

 

 

 

 

 

 

453

 

 

 

453

Depreciation and amortization expense

 

 

 

 

 

 

 

21

 

 

 

21

Operating income by segment

$

6,489

 

$

645

 

$

166

 

$

(498

)

 

$

6,802

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2022

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

86,308

 

$

1,450

 

$

2,425

 

$

 

 

$

90,183

Intersegment revenues

 

15

 

 

982

 

 

328

 

 

(1,325

)

 

 

Total revenues

 

86,323

 

 

2,432

 

 

2,753

 

 

(1,325

)

 

 

90,183

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other (a)

 

74,919

 

 

1,968

 

 

2,330

 

 

(1,322

)

 

 

77,895

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

2,595

 

 

109

 

 

302

 

 

(1

)

 

 

3,005

Depreciation and amortization expense (b)

 

1,114

 

 

54

 

 

17

 

 

 

 

 

1,185

Total cost of sales

 

78,628

 

 

2,131

 

 

2,649

 

 

(1,323

)

 

 

82,085

Other operating expenses

 

32

 

 

 

 

2

 

 

 

 

 

34

General and administrative expenses (excluding

depreciation and amortization expense reflected

below) (c)

 

 

 

 

 

 

 

438

 

 

 

438

Depreciation and amortization expense

 

 

 

 

 

 

 

23

 

 

 

23

Operating income by segment

$

7,663

 

$

301

 

$

102

 

$

(463

)

 

$

7,603

 

See Operating Highlights by Segment.

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS

REPORTED UNDER U.S. GAAP (e)

(millions of dollars)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2023

 

 

2022

 

 

 

2023

 

 

 

2022

 

Reconciliation of net income attributable to Valero Energy

Corporation stockholders to adjusted net income

attributable to Valero Energy Corporation stockholders

 

 

 

 

 

 

 

Net income attributable to Valero Energy Corporation

stockholders

$

1,944

 

$

4,693

 

 

$

5,011

 

 

$

5,598

 

Adjustments:

 

 

 

 

 

 

 

Modification of renewable volume obligation (RVO) (a)

 

 

 

(104

)

 

 

 

 

 

(104

)

Income tax expense related to modification of RVO

 

 

 

23

 

 

 

 

 

 

23

 

Modification of RVO, net of taxes

 

 

 

(81

)

 

 

 

 

 

(81

)

Gain on sale of ethanol plant (b)

 

 

 

(23

)

 

 

 

 

 

(23

)

Income tax expense related to gain on sale of ethanol plant

 

 

 

5

 

 

 

 

 

 

5

 

Gain on sale of ethanol plant, net of taxes

 

 

 

(18

)

 

 

 

 

 

(18

)

Environmental reserve adjustment (c)

 

 

 

20

 

 

 

 

 

 

20

 

Income tax benefit related to environmental reserve adjustment

 

 

 

(5

)

 

 

 

 

 

(5

)

Environmental reserve adjustment, net of taxes

 

 

 

15

 

 

 

 

 

 

15

 

Loss (gain) on early retirement of debt (d)

 

 

 

 

 

 

(11

)

 

 

50

 

Income tax (benefit) expense related to loss (gain) on early

retirement of debt

 

 

 

 

 

 

2

 

 

 

(11

)

Loss (gain) on early retirement of debt, net of taxes

 

 

 

 

 

 

(9

)

 

 

39

 

Total adjustments

 

 

 

(84

)

 

 

(9

)

 

 

(45

)

Adjusted net income attributable to

Valero Energy Corporation stockholders

$

1,944

 

$

4,609

 

 

$

5,002

 

 

$

5,553

 

Reconciliation of earnings per common share –

assuming dilution to adjusted earnings per common

share – assuming dilution

 

 

 

 

 

 

 

Earnings per common share – assuming dilution

$

5.40

 

$

11.57

 

 

$

13.74

 

 

$

13.74

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(0.20

)

 

 

 

 

 

(0.20

)

Gain on sale of ethanol plant (b)

 

 

 

(0.05

)

 

 

 

 

 

(0.05

)

Environmental reserve adjustment (c)

 

 

 

0.04

 

 

 

 

 

 

0.04

 

Loss (gain) on early retirement of debt (d)

 

 

 

 

 

 

(0.02

)

 

 

0.10

 

Total adjustments

 

 

 

(0.21

)

 

 

(0.02

)

 

 

(0.11

)

Adjusted earnings per common share – assuming dilution

$

5.40

 

$

11.36

 

 

$

13.72

 

 

$

13.63

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS

REPORTED UNDER U.S. GAAP (e)

(millions of dollars)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reconciliation of operating income by segment to segment

margin, and reconciliation of operating income by segment

to adjusted operating income by segment

 

 

 

 

 

 

 

Refining segment

 

 

 

 

 

 

 

Refining operating income

$

2,432

 

$

6,212

 

 

$

6,489

 

$

7,663

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(104

)

 

 

 

 

(104

)

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

1,205

 

 

1,402

 

 

 

2,466

 

 

2,595

 

Depreciation and amortization expense

 

582

 

 

565

 

 

 

1,154

 

 

1,114

 

Other operating expenses

 

1

 

 

14

 

 

 

11

 

 

32

 

Refining margin

$

4,220

 

$

8,089

 

 

$

10,120

 

$

11,300

 

 

 

 

 

 

 

 

 

Refining operating income

$

2,432

 

$

6,212

 

 

$

6,489

 

$

7,663

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(104

)

 

 

 

 

(104

)

Other operating expenses

 

1

 

 

14

 

 

 

11

 

 

32

 

Adjusted Refining operating income

$

2,433

 

$

6,122

 

 

$

6,500

 

$

7,591

 

 

 

 

 

 

 

 

 

Renewable Diesel segment

 

 

 

 

 

 

 

Renewable Diesel operating income

$

440

 

$

152

 

 

$

645

 

$

301

 

Adjustments:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

104

 

 

58

 

 

 

190

 

 

109

 

Depreciation and amortization expense

 

59

 

 

28

 

 

 

117

 

 

54

 

Renewable Diesel margin

$

603

 

$

238

 

 

$

952

 

$

464

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS

REPORTED UNDER U.S. GAAP (e)

(millions of dollars)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

Reconciliation of operating income by segment to segment

margin, and reconciliation of operating income by segment

to adjusted operating income by segment (continued)

 

 

 

 

 

 

 

Ethanol segment

 

 

 

 

 

 

 

Ethanol operating income

$

127

 

$

101

 

 

$

166

 

$

102

 

Adjustments:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

128

 

 

167

 

 

 

258

 

 

302

 

Depreciation and amortization expense (b)

 

19

 

 

(3

)

 

 

39

 

 

17

 

Other operating expenses

 

1

 

 

1

 

 

 

1

 

 

2

 

Ethanol margin

$

275

 

$

266

 

 

$

464

 

$

423

 

 

 

 

 

 

 

 

 

Ethanol operating income

$

127

 

$

101

 

 

$

166

 

$

102

 

Adjustments:

 

 

 

 

 

 

 

Gain on sale of ethanol plant (b)

 

 

 

(23

)

 

 

 

 

(23

)

Other operating expenses

 

1

 

 

1

 

 

 

1

 

 

2

 

Adjusted Ethanol operating income

$

128

 

$

79

 

 

$

167

 

$

81

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS

REPORTED UNDER U.S. GAAP (e)

(millions of dollars)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

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) (f)

 

 

 

 

 

 

 

U.S. Gulf Coast region

 

 

 

 

 

 

 

Refining operating income

$

1,529

 

$

3,399

 

 

$

4,196

 

$

4,395

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(74

)

 

 

 

 

(74

)

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

674

 

 

814

 

 

 

1,360

 

 

1,469

 

Depreciation and amortization expense

 

358

 

 

341

 

 

 

707

 

 

673

 

Other operating expenses

 

1

 

 

5

 

 

 

11

 

 

23

 

Refining margin

$

2,562

 

$

4,485

 

 

$

6,274

 

$

6,486

 

 

 

 

 

 

 

 

 

Refining operating income

$

1,529

 

$

3,399

 

 

$

4,196

 

$

4,395

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(74

)

 

 

 

 

(74

)

Other operating expenses

 

1

 

 

5

 

 

 

11

 

 

23

 

Adjusted Refining operating income

$

1,530

 

$

3,330

 

 

$

4,207

 

$

4,344

 

 

 

 

 

 

 

 

 

U.S. Mid-Continent region

 

 

 

 

 

 

 

Refining operating income

$

323

 

$

959

 

 

$

925

 

$

1,101

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(19

)

 

 

 

 

(19

)

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

181

 

 

199

 

 

 

375

 

 

371

 

Depreciation and amortization expense

 

83

 

 

85

 

 

 

165

 

 

166

 

Refining margin

$

587

 

$

1,224

 

 

$

1,465

 

$

1,619

 

 

 

 

 

 

 

 

 

Refining operating income

$

323

 

$

959

 

 

$

925

 

$

1,101

 

Adjustment: Modification of RVO (a)

 

 

 

(19

)

 

 

 

 

(19

)

Adjusted Refining operating income

$

323

 

$

940

 

 

$

925

 

$

1,082

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS

REPORTED UNDER U.S. GAAP (e)

(millions of dollars)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

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) (f) (continued)

 

 

 

 

 

 

 

North Atlantic region

 

 

 

 

 

 

 

Refining operating income

$

311

 

$

1,222

 

 

$

940

 

$

1,508

 

Adjustments:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

178

 

 

192

 

 

 

358

 

 

398

 

Depreciation and amortization expense

 

66

 

 

66

 

 

 

129

 

 

135

 

Other operating expenses

 

 

 

9

 

 

 

 

 

9

 

Refining margin

$

555

 

$

1,489

 

 

$

1,427

 

$

2,050

 

 

 

 

 

 

 

 

 

Refining operating income

$

311

 

$

1,222

 

 

$

940

 

$

1,508

 

Adjustment: Other operating expenses

 

 

 

9

 

 

 

 

 

9

 

Adjusted Refining operating income

$

311

 

$

1,231

 

 

$

940

 

$

1,517

 

 

 

 

 

 

 

 

 

U.S. West Coast region

 

 

 

 

 

 

 

Refining operating income

$

269

 

$

632

 

 

$

428

 

$

659

 

Adjustments:

 

 

 

 

 

 

 

Modification of RVO (a)

 

 

 

(11

)

 

 

 

 

(11

)

Operating expenses (excluding depreciation and

amortization expense reflected below)

 

172

 

 

197

 

 

 

373

 

 

357

 

Depreciation and amortization expense

 

75

 

 

73

 

 

 

153

 

 

140

 

Refining margin

$

516

 

$

891

 

 

$

954

 

$

1,145

 

 

 

 

 

 

 

 

 

Refining operating income

$

269

 

$

632

 

 

$

428

 

$

659

 

Adjustment: Modification of RVO (a)

 

 

 

(11

)

 

 

 

 

(11

)

Adjusted Refining operating income

$

269

 

$

621

 

 

$

428

 

$

648

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

REFINING SEGMENT OPERATING HIGHLIGHTS

(millions of dollars, except per barrel amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Throughput volumes (thousand barrels per day)

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

Heavy sour crude oil

 

469

 

 

376

 

 

407

 

 

351

Medium/light sour crude oil

 

321

 

 

442

 

 

322

 

 

408

Sweet crude oil

 

1,462

 

 

1,413

 

 

1,475

 

 

1,418

Residuals

 

212

 

 

229

 

 

218

 

 

227

Other feedstocks

 

96

 

 

127

 

 

118

 

 

114

Total feedstocks

 

2,560

 

 

2,587

 

 

2,540

 

 

2,518

Blendstocks and other

 

409

 

 

375

 

 

410

 

 

363

Total throughput volumes

 

2,969

 

 

2,962

 

 

2,950

 

 

2,881

 

 

 

 

 

 

 

 

Yields (thousand barrels per day)

 

 

 

 

 

 

 

Gasolines and blendstocks

 

1,430

 

 

1,452

 

 

1,441

 

 

1,422

Distillates

 

1,119

 

 

1,135

 

 

1,109

 

 

1,081

Other products (g)

 

446

 

 

407

 

 

424

 

 

404

Total yields

 

2,995

 

 

2,994

 

 

2,974

 

 

2,907

 

 

 

 

 

 

 

 

Operating statistics (e) (h)

 

 

 

 

 

 

 

Refining margin

$

4,220

 

$

8,089

 

$

10,120

 

$

11,300

Adjusted Refining operating income

$

2,433

 

$

6,122

 

$

6,500

 

$

7,591

Throughput volumes (thousand barrels per day)

 

2,969

 

 

2,962

 

 

2,950

 

 

2,881

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

15.62

 

$

30.01

 

$

18.95

 

$

21.67

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

 

4.46

 

 

5.20

 

 

4.62

 

 

4.98

Depreciation and amortization expense per barrel of

throughput

 

2.16

 

 

2.10

 

 

2.16

 

 

2.14

Adjusted Refining operating income per barrel of

throughput

$

9.00

 

$

22.71

 

$

12.17

 

$

14.55

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RENEWABLE DIESEL SEGMENT OPERATING HIGHLIGHTS

(millions of dollars, except per gallon amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Operating statistics (e) (h)

 

 

 

 

 

 

 

Renewable Diesel margin

$

603

 

$

238

 

$

952

 

$

464

Renewable Diesel operating income

$

440

 

$

152

 

$

645

 

$

301

Sales volumes (thousand gallons per day)

 

4,400

 

 

2,182

 

 

3,698

 

 

1,961

 

 

 

 

 

 

 

 

Renewable Diesel margin per gallon of sales

$

1.51

 

$

1.20

 

$

1.42

 

$

1.31

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per gallon of sales

 

0.26

 

 

0.29

 

 

0.28

 

 

0.31

Depreciation and amortization expense per gallon of sales

 

0.15

 

 

0.15

 

 

0.18

 

 

0.15

Renewable Diesel operating income per gallon of sales

$

1.10

 

$

0.76

 

$

0.96

 

$

0.85

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

ETHANOL SEGMENT OPERATING HIGHLIGHTS

(millions of dollars, except per gallon amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

Operating statistics (e) (h)

 

 

 

 

 

 

 

Ethanol margin

$

275

 

$

266

 

 

$

464

 

$

423

Adjusted Ethanol operating income

$

128

 

$

79

 

 

$

167

 

$

81

Production volumes (thousand gallons per day)

 

4,443

 

 

3,861

 

 

 

4,314

 

 

3,953

 

 

 

 

 

 

 

 

Ethanol margin per gallon of production

$

0.68

 

$

0.75

 

 

$

0.59

 

$

0.59

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per gallon of production

 

0.32

 

 

0.47

 

 

 

0.33

 

 

0.42

Depreciation and amortization expense per gallon of production (b)

 

0.05

 

 

(0.01

)

 

 

0.05

 

 

0.03

Gain on sale of ethanol plant per gallon of production (b)

 

 

 

0.07

 

 

 

 

 

0.03

Adjusted Ethanol operating income per gallon of production

$

0.31

 

$

0.22

 

 

$

0.21

 

$

0.11

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

REFINING SEGMENT OPERATING HIGHLIGHTS BY REGION

(millions of dollars, except per barrel amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Operating statistics by region (f)

 

 

 

 

 

 

 

U.S. Gulf Coast region (e) (h)

 

 

 

 

 

 

 

Refining margin

$

2,562

 

$

4,485

 

$

6,274

 

$

6,486

Adjusted Refining operating income

$

1,530

 

$

3,330

 

$

4,207

 

$

4,344

Throughput volumes (thousand barrels per day)

 

1,800

 

 

1,750

 

 

1,757

 

 

1,722

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

15.64

 

$

28.17

 

$

19.73

 

$

20.81

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

 

4.11

 

 

5.11

 

 

4.28

 

 

4.71

Depreciation and amortization expense per barrel of

throughput

 

2.19

 

 

2.15

 

 

2.22

 

 

2.16

Adjusted Refining operating income per barrel of

throughput

$

9.34

 

$

20.91

 

$

13.23

 

$

13.94

 

 

 

 

 

 

 

 

U.S. Mid-Continent region (e) (h)

 

 

 

 

 

 

 

Refining margin

$

587

 

$

1,224

 

$

1,465

 

$

1,619

Adjusted Refining operating income

$

323

 

$

940

 

$

925

 

$

1,082

Throughput volumes (thousand barrels per day)

 

434

 

 

449

 

 

463

 

 

434

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

14.89

 

$

29.99

 

$

17.48

 

$

20.59

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

 

4.60

 

 

4.88

 

 

4.48

 

 

4.71

Depreciation and amortization expense per barrel of

throughput

 

2.10

 

 

2.09

 

 

1.97

 

 

2.12

Adjusted Refining operating income per barrel of

throughput

$

8.19

 

$

23.02

 

$

11.03

 

$

13.76

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

REFINING SEGMENT OPERATING HIGHLIGHTS BY REGION

(millions of dollars, except per barrel amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Operating statistics by region (f) (continued)

 

 

 

 

 

 

 

North Atlantic region (e) (h)

 

 

 

 

 

 

 

Refining margin

$

555

 

$

1,489

 

$

1,427

 

$

2,050

Adjusted Refining operating income

$

311

 

$

1,231

 

$

940

 

$

1,517

Throughput volumes (thousand barrels per day)

 

463

 

 

483

 

 

464

 

 

484

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

13.15

 

$

33.85

 

$

17.00

 

$

23.41

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

 

4.20

 

 

4.37

 

 

4.26

 

 

4.55

Depreciation and amortization expense per barrel of

throughput

 

1.56

 

 

1.49

 

 

1.54

 

 

1.53

Adjusted Refining operating income per barrel of

throughput

$

7.39

 

$

27.99

 

$

11.20

 

$

17.33

 

 

 

 

 

 

 

 

U.S. West Coast region (e) (h)

 

 

 

 

 

 

 

Refining margin

$

516

 

$

891

 

$

954

 

$

1,145

Adjusted Refining operating income

$

269

 

$

621

 

$

428

 

$

648

Throughput volumes (thousand barrels per day)

 

272

 

 

280

 

 

266

 

 

241

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

20.81

 

$

34.93

 

$

19.84

 

$

26.19

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

 

6.97

 

 

7.74

 

 

7.77

 

 

8.18

Depreciation and amortization expense per barrel of

throughput

 

3.03

 

 

2.83

 

 

3.18

 

 

3.20

Adjusted Refining operating income per barrel of

throughput

$

10.81

 

$

24.36

 

$

8.89

 

$

14.81

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Refining

 

 

 

 

 

 

 

Feedstocks (dollars per barrel)

 

 

 

 

 

 

 

Brent crude oil

$

77.98

 

 

$

111.69

 

 

$

80.09

 

 

$

104.52

 

Brent less West Texas Intermediate (WTI) crude oil

 

4.22

 

 

 

3.03

 

 

 

5.16

 

 

 

2.96

 

Brent less WTI Houston crude oil

 

3.07

 

 

 

1.84

 

 

 

3.68

 

 

 

1.58

 

Brent less Dated Brent crude oil

 

(0.45

)

 

 

(1.89

)

 

 

0.24

 

 

 

(2.90

)

Brent less Argus Sour Crude Index crude oil

 

4.74

 

 

 

6.59

 

 

 

6.58

 

 

 

5.76

 

Brent less Maya crude oil

 

14.31

 

 

 

7.91

 

 

 

16.85

 

 

 

8.21

 

Brent less Western Canadian Select Houston crude oil

 

9.23

 

 

 

12.34

 

 

 

13.30

 

 

 

11.00

 

WTI crude oil

 

73.76

 

 

 

108.66

 

 

 

74.94

 

 

 

101.56

 

 

 

 

 

 

 

 

 

Natural gas (dollars per million British Thermal Units)

 

2.00

 

 

 

7.23

 

 

 

2.13

 

 

 

5.78

 

 

 

 

 

 

 

 

 

RVO (dollars per barrel) (i)

 

7.69

 

 

 

7.80

 

 

 

7.95

 

 

 

7.12

 

 

 

 

 

 

 

 

 

Product margins (RVO adjusted unless otherwise noted)

(dollars per barrel)

 

 

 

 

 

 

 

U.S. Gulf Coast:

 

 

 

 

 

 

 

Conventional Blendstock of Oxygenate Blending (CBOB)

gasoline less Brent

 

12.98

 

 

 

23.53

 

 

 

11.51

 

 

 

16.38

 

Ultra-low-sulfur (ULS) diesel less Brent

 

14.64

 

 

 

48.15

 

 

 

22.46

 

 

 

34.83

 

Propylene less Brent (not RVO adjusted)

 

(38.78

)

 

 

(38.56

)

 

 

(40.50

)

 

 

(33.69

)

U.S. Mid-Continent:

 

 

 

 

 

 

 

CBOB gasoline less WTI

 

23.60

 

 

 

28.28

 

 

 

20.65

 

 

 

18.93

 

ULS diesel less WTI

 

25.16

 

 

 

52.36

 

 

 

29.63

 

 

 

36.60

 

North Atlantic:

 

 

 

 

 

 

 

CBOB gasoline less Brent

 

22.63

 

 

 

33.78

 

 

 

16.98

 

 

 

22.51

 

ULS diesel less Brent

 

17.36

 

 

 

62.45

 

 

 

25.33

 

 

 

44.24

 

U.S. West Coast:

 

 

 

 

 

 

 

California Reformulated Gasoline Blendstock of

Oxygenate Blending 87 gasoline less Brent

 

30.63

 

 

 

48.04

 

 

 

27.67

 

 

 

34.16

 

California Air Resources Board diesel less Brent

 

14.80

 

 

 

51.35

 

 

 

23.32

 

 

 

37.72

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Renewable Diesel

 

 

 

 

 

 

 

New York Mercantile Exchange ULS diesel

(dollars per gallon)

$

2.44

 

$

4.03

 

$

2.69

 

$

3.54

Biodiesel Renewable Identification Number (RIN)

(dollars per RIN)

 

1.51

 

 

1.70

 

 

1.57

 

 

1.57

California Low-Carbon Fuel Standard carbon credit

(dollars per metric ton)

 

80.81

 

 

104.30

 

 

73.25

 

 

121.47

U.S. Gulf Coast (USGC) used cooking oil (dollars per pound)

 

0.57

 

 

0.80

 

 

0.60

 

 

0.79

USGC distillers corn oil (dollars per pound)

 

0.60

 

 

0.81

 

 

0.62

 

 

0.79

USGC fancy bleachable tallow (dollars per pound)

 

0.57

 

 

0.78

 

 

0.59

 

 

0.75

 

 

 

 

 

 

 

 

Ethanol

 

 

 

 

 

 

 

Chicago Board of Trade corn (dollars per bushel)

 

6.27

 

 

7.77

 

 

6.44

 

 

7.24

New York Harbor ethanol (dollars per gallon)

 

2.56

 

 

2.84

 

 

2.43

 

 

2.61

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

OTHER FINANCIAL DATA

(millions of dollars)

(unaudited)

 

 

June 30,

 

December 31,

 

2023

 

2022

Balance sheet data

 

 

 

Current assets

$

23,695

 

$

24,133

Cash and cash equivalents included in current assets

 

5,075

 

 

4,862

Inventories included in current assets

 

6,961

 

 

6,752

Current liabilities

 

14,948

 

 

17,461

Valero Energy Corporation stockholders’ equity

 

25,851

 

 

23,561

Total equity

 

27,994

 

 

25,468

Debt and finance lease obligations:

 

 

 

Debt –

 

 

 

Current portion of debt (excluding variable interest entities (VIEs))

$

167

 

$

Debt, less current portion of debt (excluding VIEs)

 

8,019

 

 

8,380

Total debt (excluding VIEs)

 

8,186

 

 

8,380

Current portion of debt attributable to VIEs

 

800

 

 

861

Debt, less current portion of debt attributable to VIEs

 

 

 

Total debt attributable to VIEs

 

800

 

 

861

Total debt

 

8,986

 

 

9,241

Finance lease obligations –

 

 

 

Current portion of finance lease obligations (excluding VIEs)

 

176

 

 

184

Finance lease obligations, less current portion (excluding VIEs)

 

1,431

 

 

1,453

Total finance lease obligations (excluding VIEs)

 

1,607

 

 

1,637

Current portion of finance lease obligations attributable to VIEs

 

50

 

 

64

Finance lease obligations, less current portion attributable to VIEs

 

680

 

 

693

Total finance lease obligations attributable to VIEs

 

730

 

 

757

Total finance lease obligations

 

2,337

 

 

2,394

Total debt and finance lease obligations

$

11,323

 

$

11,635

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

2023

 

 

 

2022

 

Reconciliation of net cash provided by operating activities to

adjusted net cash provided by operating activities (e)

 

 

 

 

 

 

 

Net cash provided by operating activities

$

1,512

 

 

$

5,845

 

$

4,682

 

 

$

6,433

 

Exclude:

 

 

 

 

 

 

 

Changes in current assets and current liabilities

 

(1,194

)

 

 

594

 

 

(1,728

)

 

 

(128

)

Diamond Green Diesel LLC’s (DGD) adjusted net cash

provided by operating activities attributable to the other joint

venture member’s ownership interest in DGD

 

242

 

 

 

90

 

 

365

 

 

 

175

 

Adjusted net cash provided by operating activities

$

2,464

 

 

$

5,161

 

$

6,045

 

 

$

6,386

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

OTHER FINANCIAL DATA

(millions of dollars, except per share amounts)

(unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Reconciliation of capital investments to capital

investments attributable to Valero (e)

 

 

 

 

 

 

 

Capital expenditures (excluding VIEs)

$

136

 

 

$

172

 

 

$

311

 

 

$

324

 

Capital expenditures of VIEs:

 

 

 

 

 

 

 

DGD

 

32

 

 

 

239

 

 

 

122

 

 

 

458

 

Other VIEs

 

2

 

 

 

6

 

 

 

2

 

 

 

19

 

Deferred turnaround and catalyst cost expenditures

(excluding VIEs)

 

273

 

 

 

228

 

 

 

508

 

 

 

681

 

Deferred turnaround and catalyst cost expenditures

of DGD

 

15

 

 

 

7

 

 

 

39

 

 

 

13

 

Investments in nonconsolidated joint ventures

 

 

 

 

1

 

 

 

 

 

 

1

 

Capital investments

 

458

 

 

 

653

 

 

 

982

 

 

 

1,496

 

Adjustments:

 

 

 

 

 

 

 

DGD’s capital investments attributable to the other joint

venture member

 

(23

)

 

 

(123

)

 

 

(80

)

 

 

(235

)

Capital expenditures of other VIEs

 

(2

)

 

 

(6

)

 

 

(2

)

 

 

(19

)

Capital investments attributable to Valero

$

433

 

 

$

524

 

 

$

900

 

 

$

1,242

 

 

 

 

 

 

 

 

 

Dividends per common share

$

1.02

 

 

$

0.98

 

 

$

2.04

 

 

$

1.96

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

NOTES TO EARNINGS RELEASE TABLES

 
(a) Under the Renewable Fuel Standard (RFS) program, the U.S. Environmental Protection Agency (EPA) is required to set annual quotas for the volume of renewable fuels that obligated parties, such as us, must blend into petroleum-based transportation fuels consumed in the U.S. The quotas are used to determine an obligated party’s RVO. The EPA released a final rule on June 3, 2022 that, among other things, modified the volume standards for 2020 and, for the first time, established volume standards for 2021 and 2022.

 

In 2020, we recognized the cost of the RVO using the 2020 quotas set by the EPA at that time, and in 2021 and the three months ended March 31, 2022, we recognized the cost of the RVO using our estimates of the quotas. As a result of the final rule released by the EPA as noted above, we recognized a benefit of $104 million in the three and six months ended June 30, 2022 primarily related to the modification of the 2020 quotas.

 

(b) Depreciation and amortization expense for the three and six months ended June 30, 2022 includes a gain of $23 million on the sale of our ethanol plant located in Jefferson, Wisconsin (Jefferson ethanol plant).

 

(c) General and administrative expenses (excluding depreciation and amortization expense) for the three and six months ended June 30, 2022 includes a charge of $20 million for an environmental reserve adjustment associated with a non-operating site.

 

(d) “Other income, net” includes the following:

 

  • a net gain of $11 million in the six months ended June 30, 2023 related to the early retirement of $199 million aggregate principal amount of various series of our senior notes; and

 

  • a charge of $50 million in the six months ended June 30, 2022 related to the early retirement of $1.4 billion aggregate principal amount of various series of our senior notes.

 

(e) We use certain financial measures (as noted below) in the earnings release tables and accompanying earnings release that are not defined under GAAP and are considered to be non-GAAP measures.

 

We have defined these non-GAAP measures and believe they are useful to the external users of our financial statements, including industry analysts, investors, lenders, and rating agencies. We believe these measures are useful to assess our ongoing financial performance because, when reconciled to their most comparable GAAP measures, they provide improved comparability between periods after adjusting for certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These non-GAAP measures should not be considered as alternatives to their most comparable GAAP measures nor should they be considered in isolation or as a substitute for an analysis of our results of operations as reported under GAAP. In addition, these non-GAAP measures may not be comparable to similarly titled measures used by other companies because we may define them differently, which diminishes their utility.

 

Non-GAAP measures are as follows:

 

  • Adjusted net income attributable to Valero Energy Corporation stockholders is defined as net income attributable to Valero Energy Corporation stockholders adjusted to reflect the items noted below, along with their related income tax effect. The income tax effect for the adjustments was calculated using a combined federal and state statutory rate for the U.S.-based adjustments of 22.5 percent and a local statutory income tax rate for foreign-based adjustments. We have adjusted for these items because we believe that they are not indicative of our core operating performance and that their adjustment results in an important measure of our ongoing financial performance to better assess our underlying business results and trends. The basis for our belief with respect to each adjustment is provided below.

 

Modification of RVO – The net benefit resulting from the modification of our RVO for 2020 and 2021 that was recognized by us in June 2022 is not associated with the cost of the RVO generated by our operations during the three and six months ended June 30, 2022. See note (a) for additional details.

 

Gain on sale of ethanol plant – The gain on the sale of our Jefferson ethanol plant (see note (b)) is not indicative of our ongoing operations.

 

Environmental reserve adjustment – The environmental reserve adjustment (see note (c)) is attributable to a site that was shut down by prior owners and subsequently acquired by us (referred to by us as a non-operating site).

 

Loss (gain) on early retirement of debt – Discounts, premiums, and other expenses recognized in connection with the early retirement of various series of our senior notes (see note (d)) are not associated with the ongoing costs of our borrowing and financing activities.

 

  • Adjusted earnings per common share – assuming dilution is defined as adjusted net income attributable to Valero Energy Corporation stockholders divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.

 

  • Refining margin is defined as Refining segment operating income excluding the modification of RVO adjustment (see note (a)), operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses. We believe Refining margin is an important measure of our Refining segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance.

 

  • Renewable Diesel margin is defined as Renewable Diesel segment operating income excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense. We believe Renewable Diesel margin is an important measure of our Renewable Diesel segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance.

 

  • Ethanol margin is defined as Ethanol segment operating income excluding operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses. We believe Ethanol margin is an important measure of our Ethanol segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance.

 

  • Adjusted Refining operating income is defined as Refining segment operating income excluding the modification of RVO adjustment (see note (a)) and other operating expenses. We believe adjusted Refining operating income is an important measure of our Refining segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.

 

  • Adjusted Ethanol operating income is defined as Ethanol segment operating income excluding the gain on sale of ethanol plant (see note (b)) and other operating expenses. We believe adjusted Ethanol operating income is an important measure of our Ethanol segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.

 

  • Adjusted net cash provided by operating activities is defined as net cash provided by operating activities excluding the items noted below. We believe adjusted net cash provided by operating activities is an important measure of our ongoing financial performance to better assess our ability to generate cash to fund our investing and financing activities. The basis for our belief with respect to each excluded item is provided below.

 

Changes in current assets and current liabilities – Current assets net of current liabilities represents our operating liquidity. We believe that the change in our operating liquidity from period to period does not represent cash generated by our operations that is available to fund our investing and financing activities.

 

DGD’s adjusted net cash provided by operating activities attributable to the other joint venture member’s ownership interest in DGD – We are a 50 percent joint venture member in DGD and we consolidate DGD’s financial statements. Our Renewable Diesel segment includes the operations of DGD and the associated activities to market its products. Because we consolidate DGD’s financial statements, all of DGD’s net cash provided by operating activities (or operating cash flow) is included in our consolidated net cash provided by operating activities.

 

DGD’s members use DGD’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. Nevertheless, DGD’s operating cash flow is effectively attributable to each member and only 50 percent of DGD’s operating cash flow should be attributed to our net cash provided by operating activities. Therefore, we have adjusted our net cash provided by operating activities for the portion of DGD’s operating cash flow attributable to the other joint venture member’s ownership interest because we believe that it more accurately reflects the operating cash flow available to us to fund our investing and financing activities. The adjustment is calculated as follows (in millions):

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

DGD operating cash flow data

 

 

 

 

 

 

 

Net cash provided by operating activities

$

586

 

 

$

128

 

 

$

515

 

 

$

149

 

Exclude: Changes in current assets and

current liabilities

 

102

 

 

 

(51

)

 

 

(216

)

 

 

(200

)

Adjusted net cash provided by operating

activities

 

484

 

 

 

179

 

 

 

731

 

 

 

349

 

Other joint venture member’s ownership interest

 

50

%

 

 

50

%

 

 

50

%

 

 

50

%

DGD’s adjusted net cash provided by

operating activities attributable to the other

joint venture member’s ownership interest in

DGD

$

242

 

 

$

90

 

 

$

365

 

 

$

175

 

     
  • Capital investments attributable to Valero is defined as all capital expenditures and deferred turnaround and catalyst cost expenditures presented in our consolidated statements of cash flows, excluding the portion of DGD’s capital investments attributable to the other joint venture member and all of the capital expenditures of VIEs other than DGD.
     
     

DGD’s members use DGD’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. Because DGD’s operating cash flow is effectively attributable to each member, only 50 percent of DGD’s capital investments should be attributed to our net share of total capital investments. We also exclude the capital expenditures of other VIEs that we consolidate because we do not operate those VIEs. We believe capital investments attributable to Valero is an important measure because it more accurately reflects our capital investments. 

     
(f)    The Refining segment regions reflected herein contain the following refineries: U.S. Gulf Coast- Corpus Christi East, Corpus Christi West, Houston, Meraux, Port Arthur, St. Charles, Texas City, and Three Rivers Refineries; U.S. Mid Continent- Ardmore, McKee, and Memphis Refineries; North Atlantic- Pembroke and Quebec City Refineries; and U.S. West Coast- Benicia and Wilmington Refineries.
     
(g)   Primarily includes petrochemicals, gas oils, No. 6 fuel oil, petroleum coke, sulfur, and asphalt.
     
(h)    Valero uses certain operating statistics (as noted below) in the earnings release tables and the accompanying earnings release to evaluate performance between comparable periods. Different companies may calculate them in different ways.
     
    All per barrel of throughput, per gallon of sales, and per gallon of production amounts are calculated by dividing the associated dollar amount by the throughput volumes, sales volumes, and production volumes for the period, as applicable.
     
    Throughput volumes, sales volumes, and production volumes are calculated by multiplying throughput volumes per day, sales volumes per day, and production volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period. We use throughput volumes, sales volumes, and production volumes for the Refining segment, Renewable Diesel segment, and Ethanol segment, respectively, due to their general use by others who operate facilities similar to those included in our segments. We believe the use of such volumes results in per unit amounts that are most representative of the product margins generated and the operating costs incurred as a result of our operation of those facilities.
     
(i)   The RVO cost represents the average market cost on a per barrel basis to comply with the RFS program. The RVO cost is calculated by multiplying (i) the average market price during the applicable period for the RINs associated with each class of renewable fuel (i.e., biomass-based diesel, cellulosic biofuel, advanced biofuel, and total renewable fuel) by (ii) the quotas for the volume of each class of renewable fuel that must be blended into petroleum-based transportation fuels consumed in the U.S., as set or proposed by the EPA, on a percentage basis for each class of renewable fuel and adding together the results of each calculation.

 

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

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