- Reported net income attributable to Valero stockholders of $3.1 billion, or $8.29 per share
- Reported adjusted net income attributable to Valero stockholders of $3.1 billion, or $8.27 per share
- Reduced debt by $199 million
- Returned over $1.8 billion to stockholders through dividends and stock buybacks and declared a regular quarterly cash dividend on common stock of $1.02 per share
- Completed the Port Arthur Coker project in March and successfully commenced operations in April
- Valero’s Diamond Green Diesel (DGD) joint venture approved a Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant
According to the company’s website press release on April 27, 2023, Valero Energy Corporation (NYSE: VLO, “Valero”) reported net income attributable to Valero stockholders of $3.1 billion, or $8.29 per share, for the first quarter of 2023, compared to $905 million, or $2.21 per share, for the first quarter of 2022. Excluding the adjustments shown in the accompanying earnings release tables, adjusted net income attributable to Valero stockholders was $3.1 billion, or $8.27 per share, for the first quarter of 2023, compared to $944 million, or $2.31 per share, for the first quarter of 2022.
Refining
The Refining segment reported operating income of $4.1 billion for the first quarter of 2023, compared to $1.5 billion for the first quarter of 2022. Refining throughput volumes averaged 2.9 million barrels per day in the first quarter of 2023.
“Our refineries operated at a 93 percent capacity utilization rate in the first quarter, despite planned maintenance at several of our facilities, illustrating the benefits from our long-standing commitment to operational excellence,” said Joe Gorder, Valero’s Chairman and Chief Executive Officer.
Renewable Diesel
The Renewable Diesel segment, which consists of the DGD joint venture, reported $205 million of operating income for the first quarter of 2023, compared to $149 million for the first quarter of 2022. Segment sales volumes averaged 3.0 million gallons per day in the first quarter of 2023, which was 1.3 million gallons per day higher than the first quarter of 2022. The higher sales volumes were due to the impact of additional volumes from the startup of the DGD Port Arthur plant in the fourth quarter of 2022.
Ethanol
The Ethanol segment reported $39 million of operating income for the first quarter of 2023, compared to $1 million for the first quarter of 2022. Ethanol production volumes averaged 4.2 million gallons per day in the first quarter of 2023, which was 138 thousand gallons per day higher than the first quarter of 2022.
Corporate and Other
General and administrative expenses were $244 million in the first quarter of 2023, compared to $205 million in the first quarter of 2022. The effective tax rate for the first quarter of 2023 was 22 percent.
Investing and Financing Activities
Net cash provided by operating activities was $3.2 billion in the first quarter of 2023. Included in this amount was a $534 million unfavorable change in working capital and $123 million of net cash provided by operating activities associated with the other joint venture member’s share of DGD, excluding changes in DGD’s working capital. Excluding these items, adjusted net cash provided by operating activities was $3.6 billion in the first quarter of 2023.
Capital investments totaled $524 million in the first quarter of 2023, of which $341 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance. Excluding capital investments attributable to the other joint venture member’s share of DGD, capital investments attributable to Valero were $467 million.
Valero returned over $1.8 billion to stockholders in the first quarter of 2023, of which $379 million was paid as dividends and $1.5 billion was for the purchase of approximately 11.0 million shares of common stock, resulting in a payout ratio of 52 percent of adjusted net cash provided by operating activities.
Valero continues to target an annual payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities. Valero defines payout ratio as the sum of dividends and stock buybacks divided by net cash provided by operating activities adjusted for changes in working capital and DGD’s net cash provided by operating activities, excluding changes in its working capital, attributable to the other joint venture member’s share of DGD.
On January 31, Valero announced an increase of its quarterly cash dividend on common stock from $0.98 per share to $1.02 per share.
Liquidity and Financial Position
Valero further reduced its debt by $199 million, ending the first quarter of 2023 with $9.0 billion of total debt, $2.4 billion of finance lease obligations and $5.5 billion of cash and cash equivalents. The debt to capitalization ratio, net of cash and cash equivalents, was 18 percent as of March 31, 2023.
Strategic Update
The Port Arthur Coker project was completed in March and successfully commenced operations in April. The project is expected to increase Port Arthur refinery’s throughput capacity and enhance its ability to process incremental volumes of sour crude oils and residual feedstocks, while also improving turnaround efficiency.
In January, Valero’s DGD joint venture approved a SAF project at the DGD Port Arthur plant, which will give the plant the ability to upgrade approximately 50 percent of its current 470 million gallon annual renewable diesel production capacity to SAF. The project is expected to be completed in 2025 and is estimated to cost $315 million, with half of that attributable to Valero.
With the completion of this project, DGD is expected to be one of the largest manufacturers of SAF in the world.
BlackRock and Navigator’s carbon sequestration project is progressing and they are expecting to begin startup activities in late 2024. Valero expects to be the anchor shipper with eight of its ethanol plants connected to this system, which should allow it to produce a lower carbon intensity ethanol product and significantly improve the margin profile and competitive positioning of its ethanol business.
“Our team continues to successfully execute a strategy that enables us to meet the challenge of supplying the world’s need for reliable and affordable energy in an environmentally responsible manner,” said Gorder. “The tenets of our strategy – pursuing excellence in operations, deploying capital with an uncompromising focus on returns, and honoring our commitment to stockholders – have been in place for nearly a decade and continue to position us well for the future.”
Conference Call
Valero’s senior management will hold a conference call at 10 a.m. ET to discuss this earnings release and to provide an update on operations and strategy.
About Valero
Valero Energy Corporation, through its subsidiaries (collectively, “Valero”), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and it sells its products primarily in the United States (“U.S.”), Canada, the United Kingdom (“U.K.”), Ireland and Latin America. Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day. Valero is a joint venture member in Diamond Green Diesel Holdings LLC, which owns two renewable diesel plants located in the U.S. Gulf Coast region with a combined production capacity of approximately 1.2 billion gallons per year, and Valero owns 12 ethanol plants located in the U.S. Mid-Continent region with a combined production capacity of approximately 1.6 billion gallons per year. Valero manages its operations through its Refining, Renewable Diesel, and Ethanol segments. Please visit investorvalero.com for more information.
Valero Contacts Investors:
Homer Bhullar, Vice President – Investor Relations and Finance, 210-345-1982 Eric Herbort, Director – Investor Relations, 210-345-3331 Gautam Srivastava, Senior Manager – Investor Relations, 210-345-3992
Media: Lillian Riojas, Executive Director – Media Relations and Communications, 210-345-5002
Safe-Harbor
Statement Statements contained in this release and the accompanying earnings release tables, or made during the conference call, that state Valero’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,” “expect,” “should,” “estimates,” “intend,” “target,” “will,” “plans,” “forecast,” and other similar expressions identify forward-looking statements. Forward-looking statements in this release and the accompanying earnings release tables include, and those made on the conference call may include, statements relating to Valero’s low-carbon fuels strategy, expected timing of completion, cost and performance of projects, future market and industry conditions, future operating and financial performance, future production and manufacturing ability and size, and management of future risks, among other matters. It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Valero’s control, such as legislative or political changes or developments, market dynamics, cyberattacks, weather events, and other matters affecting Valero’s operations or the demand for Valero’s products. These factors also include, but are not limited to, the uncertainties that remain with respect to current or contemplated legal, political or regulatory developments that are adverse to or restrict refining and marketing operations, or that impose profits, windfall or margin taxes or penalties, the Russia-Ukraine conflict, the impact of inflation on margins and costs, economic activity levels, and the adverse effects the foregoing may have on Valero’s business plan, strategy, operations and financial performance. For more information concerning these and other factors that could cause actual results to differ from those expressed or forecasted, see Valero’s annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed with the Securities and Exchange Commission and available on Valero’s website at www.valero.com.
Use of Non-GAAP Financial Information
This earnings release and the accompanying earnings release tables include references to financial measures that are not defined under U.S. generally accepted accounting principles (GAAP). These non-GAAP measures include adjusted net income attributable to Valero stockholders, adjusted earnings per common share – assuming dilution, Refining margin, Renewable Diesel margin, Ethanol margin, adjusted Refining operating income, adjusted Ethanol operating income, adjusted net cash provided by operating activities, and capital investments attributable to Valero. These nonGAAP financial measures have been included to help facilitate the comparison of operating results between periods. See the accompanying earnings release tables for a reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Note (b) to the earnings release tables provides reasons for the use of these non-GAAP financial measures.
