Valero(US:VLO)2024-07-25 17:14Financial Data and Key Metrics Changes - For Q2 2024, net income attributable to Valero stockholders was $880 million or $2.71 per share, down from $1.9 billion or $5.40 per share in Q2 2023 [9] - The Refining segment reported operating income of $1.2 billion for Q2 2024, compared to $2.4 billion in Q2 2023 [9] - Refining throughput volumes averaged 3 million barrels per day in Q2 2024, with a throughput capacity utilization of 94% [9] - Refining cash operating expenses were $4.45 per barrel in Q2 2024 [11] Business Line Data and Key Metrics Changes - Renewable Diesel segment operating income was $112 million in Q2 2024, down from $440 million in Q2 2023, with sales volumes averaging 3.5 million gallons per day, a decrease of 908,000 gallons per day year-over-year [10] - The Ethanol segment reported operating income of $105 million for Q2 2024, compared to $127 million in Q2 2023, with production volumes averaging 4.5 million gallons per day, an increase of 31,000 gallons per day year-over-year [10] Market Data and Key Metrics Changes - Gasoline sales in the U.S. were flat year-over-year, while diesel sales showed a 10% increase in Valero's system, although overall diesel demand in the U.S. declined by about 100,000 barrels per day [19][20] - The North Atlantic Basin experienced slowing economic activity, negatively impacting diesel demand, while increased refinery runs in the Middle East contributed to inventory restocking in Europe [22][23] Company Strategy and Development Direction - Valero's growth projects are on schedule, with the Diamond Green Diesel sustainable aviation fuel project expected to be operational in Q4 2024 [7] - The company is focused on short-cycle, high-return optimization projects around existing refining assets and maintaining a commitment to shareholder returns, with a year-to-date payout of 80% [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the U.S. economy remains resilient, with gasoline demand flat year-over-year and a slight decline in diesel demand [19] - The company expects refining throughput volumes to decrease in Q3 due to planned maintenance activities, but anticipates a tightening of supply-demand balances in the near term [15][25] Other Important Information - Valero returned $1.4 billion to stockholders in Q2 2024, with a payout ratio of 87% for the quarter and 80% year-to-date [12] - The company ended the quarter with $8.4 billion in total debt and $5.2 billion in cash and cash equivalents, maintaining a debt-to-capitalization ratio of 16% [13][14] Q&A Session Summary Question: What are your views on supply and demand in the refining market? - Management indicated that the U.S. economy is resilient, with gasoline demand flat year-over-year and a slight decline in diesel demand, while diesel sales in Valero's system increased by 10% [19][20] Question: How do you view capital returns and buyback cadence going forward? - Management stated that they have not needed to lean into the balance sheet for shareholder returns, maintaining a strong cash flow position to support buybacks and dividends [28] Question: What is the impact of TMX on the West Coast market? - Management noted that the West Coast market took time to respond to TMX, with crude costs adjusting but the full impact expected to be seen in Q3 [62] Question: Can you provide an update on Mexico volumes and terminal openings? - Management reported a slight decrease in volumes to Mexico but anticipates growth with the opening of a new terminal in Altamira before the end of the year [65] Question: What is the outlook for ethanol margins and the Summit carbon capture project? - Management expressed optimism about ethanol margins due to low corn prices and indicated that the Summit project is not directly managed by them, but they support carbon sequestration strategies [83][84]