Valero Energy's Q1 Earnings Miss on Lower Refining Margins

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].