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Valero (VLO) Q2 Earnings & Revenues Beat on Refinery Throughput

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Valero Energy Corporation (VLO - Free Report) reported second-quarter 2021 adjusted earnings of 48 cents per share, turning around from a loss of $1.25 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 15 cents.

Total revenues jumped from $10,397 million in the prior-year period to $27,748 million. The top line surpassed the Zacks Consensus Estimate of $22,657 million.

The strong quarterly results were supported by increased refinery throughput and higher renewable diesel sales volumes.

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

Adjusted operating income at the Refining segment was reported at $361 million, turning around from a loss of $383 million in the year-ago quarter. Higher refinery throughput volumes aided the segment.

In the Ethanol segment, it reported adjusted operating profit of $99 million, turning around from a loss of $20 million in the year-ago quarter. Higher ethanol production volumes favored the segment.

Operating income at the Renewable Diesel segment increased to $248 million from $129 million in the year-ago period owing to higher renewable diesel sales volumes.

Cost of Sales

Total cost of sales surged to $27,039 million from the year-ago figure of $8,424 million.

Throughput Volumes

For the quarter, refining throughput volumes were 2,835 thousand barrels per day (Mbpd), up from the prior-year quarter’s 2,321 Mbpd.

In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 50.1%, 11.6% and 13.7%, respectively, of its total volume. The remaining volumes came from residuals, other feedstock, and blendstocks and others.

The Gulf Coast contributed approximately 61.1% to total throughput volume. Mid-Continent, North Atlantic and West Coast regions accounted for 16.7%, 12.6% and 9.6%, respectively, of the total throughput volume.

Throughput Margins

Refining margin per barrel of throughput increased to $7.64 from the year-ago level of $5.10. Refining operating expense per barrel of throughput was $4.13 compared with $4.39 in the year-ago quarter. Depreciation and amortization expenses decreased to $2.11 a barrel from $2.53 in the prior-year quarter. As such, adjusted refining operating income was recorded at $1.40 per barrel of throughput against the year-ago loss of $1.82.

Capital Investment & Balance Sheet

Second-quarter capital investment totaled $548 million. Of the total amount, $252 million was allotted for sustaining the business. Through the June quarter, the leading independent refiner and marketer of petroleum products returned $401 million to stockholders as dividend payments.

At quarter-end, Valero had cash and cash equivalents of $3,572 million. As of Jun 30, 2021, it had a total debt and finance lease obligations of $14,680 million, signifying a debt to capitalization of 45.4%.

Guidance

The company is planning to invest capital of $2 billion in this year. Of the total amount, the company is likely to allocate 60% toward sustaining the business. The remaining proportion is expected to get allocated for growth projects.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #4 (Sell). Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation , Continental Resources, Inc. and PDC Energy, Inc. . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.


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