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Valero Energy (VLO) Q2 Earnings Beat Estimates, Revenues Miss

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Valero Energy Corporation (VLO - Free Report) reported second-quarter 2020 loss of $1.25 per share, narrower than the Zacks Consensus Estimate of a loss of $1.42. In the year-ago quarter, the company reported earnings of $1.51 per share.

Total revenues fell from $28,933 million in the prior-year period to $10,397 million. Moreover, the top line missed the Zacks Consensus Estimate of $15,806 million.

The narrower-than-expected loss can be attributed to a rise in renewable diesel sales volumes and speedy recovery in refined product demand. This was partially offset by lower ethanol prices.

Valero Energy Corporation Price, Consensus and EPS Surprise

 

Valero Energy Corporation Price, Consensus and EPS Surprise

Valero Energy Corporation price-consensus-eps-surprise-chart | Valero Energy Corporation Quote

Segmental Performance

Operating income at the Refining segment was reported at $1,751 million, suggesting an increase from $1,037 million in the year-ago quarter. Speedy recovery in refined product demand despite the coronavirus pandemic aided the segment.

In the Ethanol segment, the company reported operating profit of $91 million, reflecting a jump from $7 million in the second quarter of 2019. The upside was led by a significant decline in total cost of sales, offset partially by lower ethanol prices and throughput.

Operating income at the Renewable Diesel segment increased to $129 million from $77 million in the year-ago period on a rise in renewable diesel sales volumes.

Throughput Volumes

During the quarter, refining throughput volumes were 2,321 thousand barrels per day (Mbpd), down from the prior-year quarter’s 2,968 Mbpd.

In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 43.9%, 16.6% and 16.3%, respectively, of its total volume. The remaining volumes came from residuals, other feedstock and; blendstocks and others.

The Gulf Coast contributed approximately 59.7% to total throughput volume. Mid-Continent, North Atlantic and West Coast regions accounted for 15.7%, 14.6% and 10%, respectively, of the total throughput volume.

Throughput Margins

Refining margin per barrel of throughput decreased to $5.10 from the year-ago level of $9.58. Refining operating expense per barrel was $4.39 compared with $3.8 in the year-ago quarter. Depreciation and amortization expenses increased to $2.53 a barrel from $1.92 in the prior-year quarter. As such, adjusted refining operating loss was recorded at $1.82 per barrel of throughput against the year-ago profit of $3.86.

Capital Investment & Balance Sheet

Second-quarter capital investment totaled $503 million. Of the total amount, $240 million was allotted for sustaining the business. Notably, through the June quarter, the leading independent refiner and marketer of petroleum products has returned $400 million to stockholders as dividend payments.

At the end of the quarter, the company had cash and cash equivalents of $2,319 million. As of Jun 30, 2020, it had a total debt of $12,677 million. Its debt-to-capitalization was 39%.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include NGL Energy Partners LP (NGL - Free Report) , Cimarex Energy Co (XEC - Free Report) and EOG Resources, Inc. (EOG - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NGL Energy Partners’ bottom line for second-quarter 2020 is expected to rise 92.7% year over year.

Cimarex Energy’ 2020 bottom-line estimates have moved up over the past 30 days.

EOG Resources’ 2020 bottom-line estimates have risen over the past 30 days.

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