Financial Data and Key Metrics - Net income attributable to Valero stockholders was 364millionor1 14 per share in Q3 2024 compared to 26billionor7 49 per share in Q3 2023 [6] - Refining segment operating income was 565millioninQ32024comparedto3 4 billion in Q3 2023 [6] - Refining throughput volumes averaged 2 9 million barrels per day with 90% capacity utilization in Q3 2024 [6] - Renewable Diesel segment operating income was 35millioninQ32024comparedto123 million in Q3 2023 [7] - Ethanol segment operating income was 153millioninQ32024comparedto197 million in Q3 2023 [7] - Net cash provided by operating activities was 13billioninQ32024[8]−Capitalinvestmentswere429 million in Q3 2024 with 338millionallocatedtosustainingthebusiness[9]−Thecompanyreturned907 million to stockholders in Q3 2024 with a payout ratio of 84% [10] Business Segment Performance - Refining cash operating expenses were 473perbarrelinQ32024[6]−Renewabledieselsalesvolumesaveraged35milliongallonsperdayinQ32024up552000gallonsperdayyear−over−year[7]−Ethanolproductionvolumesaveraged46milliongallonsperdayinQ32024up255000gallonsperdayyear−over−year[7]−TheDiamondGreenDieselSustainableAviationFuel(SAF)projectismechanicallycompleteandintheprocessofstartingup[4]MarketDataandKeyMetrics−USwholesalevolumesexceeded1millionbarrelsperdayforthesecondconsecutivequarter[4]−Gasolinesaleswereflatyear−over−yearwhiledieselsalesincreasedyear−over−year[16]−GasolineexportsinQ32024wereabout100000barrelsperdayprimarilytoLatinAmericaandCanada[17]−DieselexportsinQ32024were260000barrelsperdayprimarilytoSouthAmericaandEurope[17]CompanyStrategyandIndustryCompetition−Thecompanyremainscommittedtoenhancingearningscapabilityandexpandinglong−termcompetitiveadvantage[4]−Improvingdieseldemandandlowlightproductinventoriesareexpectedtosupportrefiningmargins[5]−OPECpluscrudesupplyincreasesareexpectedtowidensourcrudeoildifferentialsandincreasemargins[5]−Thecompanyexpectsproductdemandtoexceedsupplyduetoannouncedrefineryshutdownsandlimitedcapacityadditionsbeyond2025[5]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Thethirdquarterreflectedaperiodofheavymaintenanceintherefiningsegmentduringarelativelyweakmarginenvironment[4]−ThecompanyexpectsrefiningthroughputvolumestofallwithinspecificrangesacrossdifferentregionsinQ42024[12]−Renewabledieselsalesvolumesareexpectedtobeapproximately12billiongallonsin2024[13]−Ethanolproductionisexpectedtoaverage47milliongallonsperdayinQ42024[13]OtherImportantInformation−ThecompanyendedQ32024with8 4 billion of total debt 25billionoffinanceleaseobligationsand5 2 billion of cash and cash equivalents [11] - The debt-to-capitalization ratio net of cash and cash equivalents was 17% as of September 30 2024 [11] - The company expects capital investments attributable to Valero for 2024 to be approximately 2 billion [11] Q&A Session Summary Question: Demand for key products and trends [15] - Demand for gasoline is flat to slightly up while diesel demand has increased year-over-year [16] - Total light products in the U S are flat to slightly down year-over-year [17] - Export demand for gasoline and diesel remains strong particularly in Latin America and Europe [17] Question: Capital allocation and buyback program [23] - The company has a minimum commitment of 40% to 50% for shareholder returns and has consistently exceeded this despite margin pullbacks [24] - Excess free cash flow will continue to go towards buybacks [25] Question: California refinery operations and regulatory pressures [26] - California regulatory environment is increasing pressure on operators and all options are on the table for the company's West Coast operations [30] - The company has minimized strategic CapEx in California and maintains reliable operations as a core call option on West Coast cracks [30] Question: Global product supply and trade flows [32] - Net capacity additions of 300 000 barrels per day are expected in 2025 with tightening balances anticipated [33] - The company expects an extended period of tighter refining margins due to limited capacity additions and growing product demand [33] Question: Renewable diesel and SAF operations [34] - The SAF project startup is progressing well with strong commercial interest and contracting [35] - The company expects the SAF project to exceed its minimum return threshold of 25% after tax [36] Question: Refinery utilization and potential closures [38] - The company expects additional refinery closures globally particularly in Europe and the Far East [41] - Refinery utilization rates are expected to align with historic levels but some capacity may require significant capital investment [39] Question: California refinery cost competitiveness [42] - The West Coast operations are the company's highest cost structure due to regulatory environment and crude supply challenges [42] - The company positions its West Coast assets as a call option for when supply imbalances occur [42] Question: California regulatory impact and political interference [44] - California policies have historically increased costs for consumers and impaired supply [29] - The company is monitoring regulatory developments and will react accordingly [45] Question: Diesel demand trends [46] - Diesel demand has shown a 5% year-over-year increase in the last two weeks with tightening inventories heading into winter [46] Question: Ethanol production and export opportunities [70] - Ethanol production guidance for Q4 2024 is at an all-time record due to expanded export markets and increased global interest in ethanol [70] - The company has grown its ethanol capacity in anticipation of global demand increases [70] Question: Financial framework and balance sheet usage [73] - The company targets a cash balance of 4 billion to 5billioninanormalizedenvironmentandexpectstotrenddownfromcurrentlevels[73]−The4 billion cash balance provides flexibility to continue buybacks during downturns [74] Question: Product exports and market dynamics [75] - Gasoline inventories are low indicating a pull rather than a push for exports [75] - The company is able to sell to international markets at a higher price than the U S Gulf Coast [76]
Valero(VLO)2024-10-24 17:39