Valero(VLO) - 2024 Q3 - Quarterly Results

Valero Energy Q3 2024 Earnings Release Financial & Operational Highlights Valero reported a significant decrease in Q3 2024 net income to $364 million, while returning $907 million to stockholders and completing its DGD Port Arthur SAF project Q3 2024 Key Financial Results | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income Attributable to Valero Stockholders | $364 million | $2.6 billion | | Earnings Per Share | $1.14 | $7.49 | - Returned $907 million to stockholders, comprising $342 million in dividends and $565 million in stock buybacks[1][6] - Successfully completed the Diamond Green Diesel (DGD) Port Arthur Sustainable Aviation Fuel (SAF) project in October[1][9] Segment Performance All primary business segments experienced a year-over-year decline in Q3 2024 operating income, with Refining, Renewable Diesel, and Ethanol segments reporting significant decreases Operating Income by Segment (Q3 2024 vs. Q3 2023) | Segment | Q3 2024 Operating Income | Q3 2023 Operating Income | | :--- | :--- | :--- | | Refining | $565 million | $3.4 billion | | Renewable Diesel | $35 million | $123 million | | Ethanol | $153 million | $197 million | Refining The Refining segment's Q3 2024 operating income sharply declined to $565 million, alongside decreased throughput volumes due to maintenance activities Refining Segment Performance | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Operating Income | $565 million | $3.4 billion | | Throughput Volumes (barrels/day) | 2.9 million | 3.022 million | Refining Margin per Barrel of Throughput | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Refining Margin per Barrel | $9.09 | $19.47 | | Adjusted Operating Income per Barrel | $2.14 | $12.41 | Renewable Diesel Renewable Diesel operating income decreased to $35 million in Q3 2024 despite increased sales volumes, indicating significant margin compression Renewable Diesel Segment Performance | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Operating Income | $35 million | $123 million | | Sales Volumes (gallons/day) | 3.5 million | 2.992 million | Renewable Diesel Margin per Gallon of Sales | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Renewable Diesel Margin per Gallon | $0.60 | $0.95 | | Operating Income per Gallon | $0.11 | $0.45 | Ethanol The Ethanol segment's Q3 2024 operating income declined to $153 million despite an increase in production volumes Ethanol Segment Performance | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Operating Income | $153 million | $197 million | | Production Volumes (gallons/day) | 4.6 million | 4.329 million | Adjusted Ethanol Operating Income per Gallon of Production | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Adjusted Operating Income per Gallon | $0.36 | $0.49 | Corporate and Other General and administrative expenses decreased in Q3 2024, with an effective tax rate of 20 percent for the quarter - General and administrative expenses decreased to $234 million in Q3 2024 from $250 million in Q3 2023[5] - The effective tax rate for Q3 2024 was 20 percent[5] Financial Position and Shareholder Returns Valero maintained a strong financial position with $5.2 billion in cash and a 17% net debt-to-capitalization ratio, returning $907 million to stockholders in Q3 2024 - Remains committed to a through-cycle minimum annual payout ratio of 40 to 50 percent of adjusted net cash provided by operating activities[6] - The CEO emphasized a continued focus on operational excellence, capital discipline, and honoring the commitment to shareholder returns[7] Investing and Financing Activities Q3 2024 net cash from operating activities was $1.3 billion, with $429 million in capital investments and $907 million returned to stockholders through dividends and buybacks Q3 2024 Cash Flow and Investments | Metric | Amount | | :--- | :--- | | Net Cash Provided by Operating Activities | $1.3 billion | | Adjusted Net Cash Provided by Operating Activities | $1.1 billion | | Capital Investments | $429 million | | Sustaining Capital Investments | $338 million | Q3 2024 Shareholder Returns | Type | Amount | | :--- | :--- | | Dividends Paid | $342 million | | Stock Buybacks | $565 million | | Total Returns | $907 million | Liquidity and Financial Position As of September 30, 2024, Valero maintained a strong financial position with $5.2 billion in cash and a 17% net debt-to-capitalization ratio Financial Position as of September 30, 2024 | Metric | Amount | | :--- | :--- | | Total Debt | $8.4 billion | | Finance Lease Obligations | $2.5 billion | | Cash and Cash Equivalents | $5.2 billion | | Debt to Capitalization Ratio (net of cash) | 17% | Strategic Update Valero successfully completed its DGD Port Arthur Sustainable Aviation Fuel (SAF) project, enabling conversion of half its renewable diesel capacity to SAF and capitalizing on low-carbon fuel demand - The SAF project at the DGD Port Arthur plant was completed in October, on schedule and under budget[9][11] - The project provides the plant the optionality to upgrade approximately 50% of its current 470 million gallon annual renewable diesel production capacity to SAF[9] Detailed Financial Tables This section provides unaudited financial tables for Q3 and nine months ended September 30, 2024, including consolidated, segment, and other key financial data with GAAP to non-GAAP reconciliations Consolidated Financial Highlights Q3 2024 consolidated revenues decreased to $32.9 billion, with net income attributable to Valero stockholders sharply declining to $364 million Consolidated Statement of Income Data (Three Months Ended Sep 30) | Metric (in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $32,876 | $38,404 | | Operating Income | $507 | $3,503 | | Net Income Attributable to Valero | $364 | $2,622 | | Earnings per Share - Diluted | $1.14 | $7.49 | Segment Financial Highlights Q3 2024 operating income for Refining, Renewable Diesel, and Ethanol segments were $565 million, $35 million, and $153 million respectively, all lower than prior year Operating Income by Segment (Three Months Ended Sep 30, in millions) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | Refining | $565 | $3,445 | | Renewable Diesel | $35 | $123 | | Ethanol | $153 | $197 | | Corporate and Eliminations | $(246) | $(262) | | Total Operating Income | $507 | $3,503 | Segment Operating Highlights Q3 2024 operating statistics show Refining throughput at 2,884 thousand barrels per day, Renewable Diesel sales at 3,544 thousand gallons per day, and Ethanol production at 4,584 thousand gallons per day, with declining per-unit margins Key Operating Volumes (per day, Q3 2024 vs Q3 2023) | Segment | Unit | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Refining | Thousand Barrels | 2,884 | 3,022 | | Renewable Diesel | Thousand Gallons | 3,544 | 2,992 | | Ethanol | Thousand Gallons | 4,584 | 4,329 | Other Financial Data As of September 30, 2024, the balance sheet shows total equity of $28.0 billion and total debt of $10.8 billion, with adjusted net cash from operations at $4.6 billion for the first nine months Balance Sheet Data (in millions) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,184 | $5,424 | | Total debt and finance lease obligations | $10,806 | $11,524 | | Total equity | $28,000 | $28,524 | Appendix This section provides corporate information, legal disclaimers, and detailed explanations of non-GAAP financial measures, including definitions and reconciliations to GAAP equivalents About Valero Valero Energy Corporation is a multinational manufacturer and marketer of petroleum-based and low-carbon transportation fuels, operating through Refining, Renewable Diesel, and Ethanol segments - Valero owns 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day[13] - Valero is a joint venture partner in Diamond Green Diesel, which has a combined renewable diesel production capacity of 1.2 billion gallons per year[13] - The company owns 12 ethanol plants with a combined production capacity of approximately 1.6 billion gallons per year[13] Safe-Harbor Statement This standard safe-harbor statement warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially due to various external factors - Forward-looking statements cover expectations for low-carbon fuels strategy, project performance, market conditions, and future financial performance[14][16] - Actual results may differ due to factors including legislative changes, market dynamics, inflation, geopolitical conflicts, and other risks detailed in SEC filings[16] Use of Non-GAAP Financial Information Valero explains its use of non-GAAP financial measures, such as adjusted net income and segment margins, to facilitate period-over-period comparison by excluding non-core items, with reconciliations provided - The report uses non-GAAP measures including adjusted net income, adjusted EPS, segment margins (Refining, Renewable Diesel, Ethanol), and adjusted net cash provided by operating activities[17][47] - Valero believes these non-GAAP measures provide improved comparability by adjusting for items not indicative of core operating performance[48]