Valero Energy Reports First Quarter 2024 Results
Source: Business Wire
Reported net income attributable to Valero stockholders of $1.2 billion, or $3.75 per share
Reported adjusted net income attributable to Valero stockholders of $1.3 billion, or $3.82 per share
Repaid the $167 million outstanding principal balance of its 1.200% Senior Notes that matured on March 15
Declared a regular quarterly cash dividend of $1.07 per share on January 18
Returned $1.4 billion to stockholders through dividends and stock buybacks
Startup of the Diamond Green Diesel Sustainable Aviation Fuel (SAF) project is now expected in the fourth quarter of 2024
Valero Energy Corporation (NYSE: VLO, “Valero”) today reported net income attributable to Valero stockholders of $1.2 billion, or $3.75 per share, for the first quarter of 2024, compared to $3.1 billion, or $8.29 per share, for the first quarter of 2023. Excluding the adjustments shown in the accompanying earnings release tables, adjusted net income attributable to Valero stockholders was $1.3 billion, or $3.82 per share, compared to $3.1 billion, or $8.27 per share, for the first quarter of 2023.
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
