Company Overview - Valero Energy (VLO) closed at $128.97, reflecting a -0.15% change from the previous trading day, underperforming the S&P 500 which had a daily loss of 0.01% [1] - The stock has increased by 12.43% over the past month, outperforming the Oils-Energy sector's gain of 2.31% and the S&P 500's gain of 6.43% [1] Earnings Projections - The upcoming EPS for Valero Energy is projected at $2.54, indicating a 6.27% decline compared to the same quarter last year [2] - Quarterly revenue is estimated at $27.88 billion, down 19.16% from the previous year [2] - For the full year, earnings are projected at $6.08 per share and revenue at $115.97 billion, reflecting changes of -28.3% and -10.71% respectively from the prior year [3] Analyst Sentiment - Recent shifts in analyst projections for Valero Energy are important for investors, as positive revisions indicate optimism about the company's business and profitability [4] - The Zacks Consensus EPS estimate has decreased by 0.35% in the past month, and Valero Energy currently holds a Zacks Rank of 3 (Hold) [6] Valuation Metrics - Valero Energy has a Forward P/E ratio of 21.23, which is higher than the industry average Forward P/E of 16.76 [7] - The company has a PEG ratio of 2.29, compared to the industry average PEG ratio of 1.48 [8] Industry Context - The Oil and Gas - Refining and Marketing industry, which includes Valero Energy, has a Zacks Industry Rank of 139, placing it in the bottom 44% of over 250 industries [9] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [9]

Group 1 - Valero Energy's shares have underperformed over the past year, losing approximately 25% of their value due to a challenging refining macro environment [1] - The refining sector's conditions have been worse than anticipated, impacting Valero Energy's stock performance negatively [1] Group 2 - The article reflects a contrarian investment approach based on macro views and stock-specific turnaround stories to achieve significant returns with a favorable risk/reward profile [1]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss of $595 million or $1.90 per share, compared to a net income of $1.2 billion or $3.75 per share in Q1 2024 [12] - Adjusted net income for Q1 2025 was $282 million or $0.89 per share, down from $1.3 billion or $3.84 per share in Q1 2024 [12] - The refining segment reported an operating loss of $530 million in Q1 2025, compared to an operating income of $1.7 billion in Q1 2024 [12] - Refining throughput volumes averaged 2.8 million barrels per day with a capacity utilization of 89% in Q1 2025 [13] Business Line Data and Key Metrics Changes - The Renewable Diesel segment reported an operating loss of $141 million in Q1 2025, down from an operating income of $190 million in Q1 2024 [13] - Ethanol segment operating income was $20 million in Q1 2025, compared to $10 million in Q1 2024 [13] - Ethanol production volumes averaged 4.5 million gallons per day in Q1 2025 [14] Market Data and Key Metrics Changes - U.S. light product demand showed a slight increase compared to last year, with product inventories below the same period last year [8] - Diesel sales volumes increased by 6% year-over-year, supported by higher agricultural demand [26] - Total light product demand globally increased by approximately 1 million barrels per day year-over-year [29] Company Strategy and Development Direction - The company is focused on operational excellence, capital deployment with a focus on returns, and maintaining shareholder returns [10] - A $230 million SEC unit optimization project is underway to increase the yield of high-value products, expected to start in 2026 [9] - The company anticipates tight product supply and demand balances, with low product inventories supporting refining fundamentals ahead of the driving season [10] Management Comments on Operating Environment and Future Outlook - Management noted that refining margins improved through the quarter despite a tough margin environment in the renewable diesel segment [7] - The company expects refining throughput volumes to fall within specific ranges for Q2 2025, with cash operating expenses projected at $5.15 per barrel [18][19] - Management expressed confidence in the resilience of the portfolio despite macroeconomic uncertainties [98] Other Important Information - The company returned $633 million to shareholders in Q1 2025, with a payout ratio of 73% [16] - The company ended the quarter with $8.5 billion in total debt and $4.6 billion in cash and cash equivalents, indicating a strong balance sheet [17] Q&A Session Summary Question: Market dynamics and crude differentials - Management noted that sales through the wholesale system were down a few percent, but product exports were up year-over-year [25] - Diesel sales were supported by higher agricultural demand, with total light product inventory drawing down to below the five-year average [30][31] Question: Guidance for Q2 and maintenance impacts - Management confirmed that lower guidance for Q2 is primarily due to maintenance activities, particularly in the North Atlantic and Mid Continent regions [48][49] Question: Decision to close the Peninsula refinery - Management explained that the decision was influenced by California's stringent regulatory environment and the higher costs associated with maintaining the facility [58] Question: Renewable diesel market normalization - Management indicated that the market is still adjusting to the new PTC regime, with expectations for improvement in the back half of the year [75] Question: Update on import permit in Mexico - Management confirmed the reinstatement of the import permit after demonstrating compliance with Mexican authorities [89][90] Question: Cash balance and share buybacks - Management emphasized the strength of the balance sheet and the commitment to returning cash to shareholders through buybacks [97] Question: Diesel inventory outlook - Management acknowledged the tight diesel inventory situation in the U.S. and the potential for increased volatility in the market [148]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss of $595 million or $1.90 per share, compared to a net income of $1.2 billion or $3.75 per share in Q1 2024 [12] - Adjusted net income for Q1 2025 was $282 million or $0.89 per share, down from $1.3 billion or $3.84 per share in Q1 2024 [12] - The refining segment reported an operating loss of $530 million in Q1 2025, compared to an operating income of $1.7 billion in Q1 2024 [12] - Refining throughput averaged 2.8 million barrels per day with a capacity utilization of 89% [13] Business Line Data and Key Metrics Changes - The Renewable Diesel segment reported an operating loss of $141 million in Q1 2025, down from an operating income of $190 million in Q1 2024 [13] - Ethanol segment operating income was $20 million in Q1 2025, up from $10 million in Q1 2024 [13] - Renewable diesel sales volumes averaged 2.4 million gallons per day in Q1 2025 [13] Market Data and Key Metrics Changes - U.S. light product demand was slightly higher than last year, with product inventories below the same period last year [8] - Diesel sales showed a 6% year-over-year increase, supported by higher agricultural demand [26] - Total light product demand globally increased by approximately 1 million barrels per day year-over-year [29] Company Strategy and Development Direction - The company is focused on operational excellence, capital deployment with a focus on returns, and maintaining shareholder returns [10] - A $230 million SEC unit optimization project is underway to increase the yield of high-value products, expected to start in 2026 [9] - The company anticipates tight product supply and demand balances, with low product inventories supporting refining fundamentals ahead of the driving season [10] Management's Comments on Operating Environment and Future Outlook - Management noted a resilient economy despite macro uncertainties, with expectations of tight gasoline supply in California due to refinery closures [58][148] - The company expects refining cash operating expenses in Q2 2025 to be $5.15 per barrel [19] - Management expressed confidence in the ability to return cash to shareholders, with a commitment to share buybacks supported by a strong balance sheet [98] Other Important Information - The company returned $633 million to shareholders in Q1 2025, with a payout ratio of 73% [16] - The company ended Q1 2025 with $8.5 billion in total debt and $4.6 billion in cash and cash equivalents [17] - The company expects capital investments for 2025 to be approximately $2 billion, with $1.6 billion allocated to sustaining the business [18] Q&A Session Summary Question: Market dynamics and crude differentials - Management noted that sales through the wholesale system were down a few percent, but product exports were up year-over-year [25] - Diesel sales were supported by higher agricultural demand, with a year-over-year increase in gasoline sales of 1% [26] Question: Guidance for Q2 and maintenance impacts - Management confirmed that lower guidance for Q2 is primarily due to maintenance activities, particularly in the North Atlantic and Mid Continent regions [48][106] Question: Decision to close the Peninsula refinery - Management explained that stringent regulatory environments in California influenced the decision to close the refinery, with higher maintenance costs compared to Wilmington [58] Question: Renewable diesel market normalization - Management indicated that the market is adjusting to new PTC regulations, with expectations for improvement in the back half of the year [75] Question: Update on import permit in Mexico - Management confirmed the reinstatement of the import permit after demonstrating compliance with Mexican authorities [89] Question: Cash balance and share buybacks - Management emphasized the strength of the balance sheet and the commitment to returning cash to shareholders through buybacks [98] Question: Diesel inventory outlook - Management acknowledged that California may face gasoline shortages in the coming years, leading to potential volatility in margins [148]

Financial Performance - Valero reported a net loss attributable to stockholders of $595 million for Q1 2025, a decrease of $1.8 billion compared to a net income of $1.2 billion in Q1 2024[107]. - The operating income decreased by $2.6 billion, partially offset by a decrease in income tax expense of $618 million[109]. - Total revenues for Q1 2025 were $30.258 billion, down from $31.759 billion in Q1 2024, representing a decrease of approximately 4.7%[115][116]. - Revenues decreased by $1.5 billion in Q1 2025 to $30.258 billion from $31.759 billion in Q1 2024, primarily due to lower product prices in the Refining segment[121]. - Operating income fell by $2.579 billion, resulting in an operating loss of $900 million in Q1 2025 compared to an operating income of $1.679 billion in Q1 2024[121]. - Adjusted operating income decreased by $1.478 billion, from $1.713 billion in Q1 2024 to $235 million in Q1 2025[122]. - The effective tax rate increased to 29% in Q1 2025 from 21% in Q1 2024, primarily due to lower income before tax[123]. Segment Performance - The company's total operating income decreased by $2.6 billion in Q1 2025 compared to Q1 2024, with adjusted operating income down by $1.5 billion[110]. - The refining segment's adjusted operating income fell by $1.1 billion due to lower gasoline and distillate margins, a decline in crude oil differentials, and higher operating expenses[111]. - Renewable Diesel segment's operating income decreased by $331 million primarily due to reduced sales volumes and increased feedstock costs[111]. - Ethanol segment's adjusted operating income decreased by $19 million, impacted by higher corn prices and increased operating expenses, despite higher ethanol prices[111]. - Refining segment operating income decreased by $2.275 billion, resulting in an operating loss of $530 million in Q1 2025 compared to an operating income of $1.745 billion in Q1 2024[127]. - Renewable Diesel segment operating income decreased by $331 million, resulting in an operating loss of $141 million in Q1 2025 compared to an operating income of $190 million in Q1 2024[130]. - Ethanol operating income increased to $20 million in Q1 2025 from $10 million in Q1 2024, but adjusted operating income decreased by $19 million[135]. Cash Flow and Liquidity - Cash generated from operations during Q1 2025 was $952 million, with $660 million allocated to capital investments[108]. - As of March 31, 2025, Valero had $4.8 billion in cash, cash equivalents, and restricted cash, with total liquidity of $9.7 billion[108]. - Total liquidity as of March 31, 2025, was $9,747 million, consisting of $4,449 million in cash and cash equivalents and $5,298 million in available capacity from committed facilities[148]. - Cash flows from operating activities in Q1 2025 were $952 million, down from $1,846 million in Q1 2024, while cash used in investing activities was $(635) million[153]. - Capital investments for Q1 2025 totaled $660 million, slightly down from $661 million in Q1 2024, with capital investments attributable to Valero at $611 million compared to $619 million[167]. Debt and Financing - Valero issued $650 million of 5.150% Senior Notes due February 15, 2030 during Q1 2025[108]. - The company issued $650 million of 5.150% Senior Notes due February 15, 2030, with proceeds used for debt repayment and general corporate purposes[150]. - The company has a total fixed-rate debt of $8,558 million with an average interest rate of 4.9% as of March 31, 2025[178]. - The floating-rate debt amounts to $46 million with an average interest rate of 8.2%[178]. - A 10% increase or decrease in floating interest rates would not have a material effect on the company's results of operations[177]. Market and Operational Risks - The company is focused on managing risks associated with geopolitical tensions and regulatory changes affecting the industry[98]. - The company is exposed to market risks related to commodity price volatility and foreign currency exchange rates, with no material changes reported since the last annual report[180]. - Environmental regulations are becoming more complex and stringent, potentially increasing future costs and expenditures for the company[173]. - The company’s operations are subject to extensive environmental regulations, which may impact operational costs[173]. Future Outlook - Valero's future outlook includes expectations regarding refining segment margins and feedstock costs[96]. - Gasoline and diesel demand have exceeded pre-pandemic levels and are expected to follow typical seasonal patterns[113]. - The company anticipates that crude oil differentials will remain stable, but geopolitical factors may introduce volatility[113]. - Renewable diesel demand is expected to remain consistent with current levels, while ethanol demand is projected to follow typical seasonal patterns[113]. Asset Impairment - The company recognized an asset impairment loss of $1.1 billion ($877 million after taxes) related to operations in California[106]. - The company recognized a combined asset impairment loss of $1.1 billion in Q1 2025 due to the evaluation of assets at the Benicia and Wilmington refineries[138].

Core Viewpoint - Valero Energy Corporation (VLO) reported a significant adjusted loss in Q1 2025, contrasting sharply with prior earnings and consensus estimates, primarily due to asset impairments and declining refining margins [1][2]. Financial Performance - The adjusted loss for Q1 2025 was $1.90 per share, compared to earnings of $3.82 in the same quarter last year [1]. - Total revenues decreased from $31,759 million in the prior-year quarter to $30,258 million, although this figure exceeded the Zacks Consensus Estimate of $28,450 million [1]. - Adjusted operating income in the Refining segment fell to $605 million from $1.8 billion year-over-year, missing the estimate of $1,022 million [3]. - The Ethanol segment reported an adjusted operating profit of $20 million, down from $39 million in the prior-year quarter, also missing the estimate of $55.1 million [4]. - The Renewable Diesel segment experienced an operating loss of $141 million, a decline from an operating income of $190 million in the previous year [5]. Operational Metrics - Refining throughput volumes increased to 2,828 thousand barrels per day (MBbls/d) from 2,760 MBbls/d year-over-year, surpassing the estimate of 2,786 MBbls/d [6]. - The Gulf Coast region contributed 59.1% to total throughput volume, with Mid-Continent, North Atlantic, and West Coast regions accounting for 16%, 17.4%, and 7.5%, respectively [7]. Margins and Costs - The refining margin per barrel of throughput decreased to $9.78 from $14.07 in the prior year, while operating expenses per barrel rose to $5.07 from $4.71 [8]. - Total cost of sales slightly decreased to $29,751 million from $29,776 million year-over-year, attributed to lower material costs [9]. Capital Investment and Balance Sheet - Capital investment for Q1 totaled $660 million, with $582 million allocated for sustaining the business [10]. - As of March 31, 2025, the company had cash and cash equivalents of $4.6 billion, total debt of $8.5 billion, and finance lease obligations of $2.3 billion [11].

Core Insights - Valero Energy reported $30.26 billion in revenue for Q1 2025, a year-over-year decline of 4.7%, with an EPS of $0.89 compared to $3.82 a year ago, indicating a significant drop in profitability [1] - The revenue exceeded the Zacks Consensus Estimate by 6.36%, while the EPS surprised positively by 106.98% compared to the consensus estimate of $0.43 [1] Financial Performance - The refining margin per barrel in the U.S. Mid-Continent region was $7.87, below the average estimate of $8.98 [4] - In the U.S. West Coast region, the refining margin per barrel was $14.43, exceeding the average estimate of $11.51 [4] - The U.S. Gulf Coast region reported a refining margin of $9.56, above the average estimate of $8.87 [4] - Total throughput volumes per day were 2,828 thousand barrels, slightly above the estimated 2,824.11 thousand barrels [4] - Renewable diesel revenues were $900 million, significantly higher than the estimated $635.55 million, but down 36.2% year-over-year [4] - Ethanol revenues reached $1.23 billion, surpassing the estimated $997.56 million, reflecting an 11% year-over-year increase [4] - Refining revenues totaled $28.76 billion, compared to the estimated $27.22 billion, marking a 4.6% decline year-over-year [4] - Corporate and Eliminations reported -$626 million, better than the estimated -$840.47 million, with a year-over-year change of -30.5% [4] Stock Performance - Valero Energy's shares have returned -14.9% over the past month, compared to the Zacks S&P 500 composite's -5.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

分组1 - Valero Energy reported quarterly earnings of $0.89 per share, exceeding the Zacks Consensus Estimate of $0.43 per share, but down from $3.82 per share a year ago, representing an earnings surprise of 106.98% [1] - The company posted revenues of $30.26 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.36%, although this is a decrease from year-ago revenues of $31.76 billion [2] - Over the last four quarters, Valero Energy has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] 分组2 - The stock has lost about 6.6% since the beginning of the year, compared to the S&P 500's decline of 8.6% [3] - The current consensus EPS estimate for the coming quarter is $3.03 on revenues of $30.17 billion, and for the current fiscal year, it is $6.76 on revenues of $117.95 billion [7] - The Oil and Gas - Refining and Marketing industry is currently in the top 38% of Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Core Viewpoint - Valero Energy (VLO) is expected to report a significant decline in quarterly earnings and revenues, with analysts predicting earnings of $0.43 per share, an 88.7% decrease year-over-year, and revenues of $28.45 billion, a 10.4% decrease from the previous year [1]. Earnings Estimates - Over the last 30 days, the consensus EPS estimate for the quarter has been revised upward by 8.3%, indicating a collective reassessment by analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and are strongly correlated with short-term stock price performance [3]. Revenue Projections - Analysts estimate 'Total operating revenues - Renewable diesel' at $635.55 million, reflecting a 55% decrease from the prior-year quarter [5]. - The 'Total operating revenues - Ethanol' is projected to be $997.56 million, indicating a 9.6% decline from the year-ago quarter [5]. - 'Total operating revenues - Refining' is expected to be $27.22 billion, showing a year-over-year change of -9.7% [6]. Refining Margins - The consensus for 'U.S. Mid-Continent region - Refining margin per barrel of throughput' is $8.98, down from $13.20 in the same quarter last year [6]. - For the 'U.S. West Coast region - Refining margin per barrel of throughput', the estimate is $11.51, compared to $12.62 a year ago [7]. - The 'U.S. Gulf Coast region - Refining margin per barrel of throughput' is projected at $8.87, down from $14.11 in the same quarter last year [7]. Throughput Volumes - Analysts predict 'Refining - Total Throughput volumes per day' to be 2,824.11 thousand barrels of oil, an increase from 2,760 thousand barrels of oil year-over-year [8]. - 'U.S. Gulf Coast region - Throughput volumes per day' is expected to reach 1,732.09 thousand barrels of oil, up from 1,594 thousand barrels of oil in the same quarter last year [8]. - 'U.S. Mid-Continent region - Throughput volumes per day' is forecasted at 426.77 thousand barrels of oil, down from 452 thousand barrels of oil a year ago [9]. Regional Insights - 'North Atlantic region - Throughput volumes per day' is estimated at 465.99 thousand barrels of oil, slightly up from 449 thousand barrels of oil in the previous year [10]. - The estimated 'North Atlantic region - Refining margin per barrel of throughput' is $11.82, down from $15.67 in the same quarter last year [10]. Stock Performance - Valero Energy shares have returned -17.5% over the past month, underperforming the Zacks S&P 500 composite, which saw a -8.9% change [11].

Refinery Operations - Valero Energy Corporation's subsidiary plans to idle or cease operations at the Benicia Refinery by the end of April 2026[6] Impairment Charges - A combined pre-tax impairment charge of $1.1 billion was recorded for the Benicia and Wilmington refineries, expected to be treated as a special item[7] - The impairment charge includes $337 million for expected asset retirement obligations as of March 31, 2025[7]