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Valero (VLO) Q3 Earnings, Revenues Beat on Refinery Throughput
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Valero Energy Corporation (VLO - Free Report) reported third-quarter 2021 adjusted earnings of $1.22 per share, turning around from a loss of $1.16 in the year-ago period. The bottom line also beat the Zacks Consensus Estimate of 94 cents per share.
Total revenues jumped from $15,809 million in the prior-year period to $29,520 million. The top line also surpassed the Zacks Consensus Estimate of $26,036 million.
The strong quarterly results were supported by increased refinery throughput volumes and higher refining margin. A massive recovery in gasoline demand helped the company.
Valero Energy Corporation Price, Consensus and EPS Surprise
Adjusted operating income at the Refining segment was reported at $853 million, turning around from a loss of $575 million in the year-ago quarter. Higher refinery throughput volumes aided the segment.
In the Ethanol segment, it reported an adjusted operating profit of $4 million, declining from $36 million in the year-ago quarter. Lower ethanol production volumes affected the segment. Production decreased to 3,625 thousand gallons per day from 3,800 thousand gallons a year ago.
Operating income at the Renewable Diesel segment decreased to $109 million from $184 million in the year-ago period owing to lower renewable diesel sales volumes, which declined to 671 thousand gallons per day from 870 thousand gallons a year ago. Hurricane Ida-related plant downtime affected the segment.
Throughput Volumes
For the quarter, refining throughput volumes were 2,864 MBbls/d, up from 2,526 MBbls/d in third-quarter 2020.
In terms of feedstock composition, sweet crude, medium/light sour crude, and heavy sour crude accounted for 55.9%, 8.7%, 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 57.6% to total throughput volume. Mid-Continent, North Atlantic, and West Coast regions accounted for 16.2%, 16.8%, and 9.4%, respectively, of the total throughput volume.
Throughput Margins
Refining margin per barrel of throughput increased to $9.85 from the year-ago level of $4.10. Refining operating expense per barrel of throughput was $4.53 compared with $4.26 in the year-ago quarter. Depreciation and amortization expenses decreased to $2.08 a barrel from $2.32 in the prior-year quarter. As such, adjusted refining operating income was recorded at $3.24 per barrel of throughput against the year-ago loss of $2.48.
Cost of Sales
Total cost of sales surged to $28,602 million from the year-ago figure of $16,207 million, primarily due to higher cost of materials and increased operating expenses.
Capital Investment & Balance Sheet
Third-quarter capital investment totaled $585 million. Of the total amount, $191 million was allotted for sustaining the business. Through the September quarter, the leading independent refiner and marketer of petroleum products returned $400 million to stockholders as dividend payments.
At quarter-end, Valero had cash and cash equivalents of $3,498 million, down from the second-quarter level of $3,572 million. As of Sep 30, 2021, it had total debt and finance lease obligations of $14,233 million, down from $14,680 million at June-quarter end. Valero has a debt to capitalization of 44.9%.
Guidance
The company reiterated its capital investment guidance of $2 billion for this year. Of the total amount, Valero is likely to allocate 60% toward sustaining the business. The remaining proportion is expected to get allocated for growth projects.
In the third quarter, it completed the Diamond Green Diesel expansion project at St. Charles refinery (DGD 2), boosting output capacity by 400 million gallons per annum. The DGD 3 project at Port Arthur refinery is on track and expected to come online in first-half 2023.
Image: Shutterstock
Valero (VLO) Q3 Earnings, Revenues Beat on Refinery Throughput
Valero Energy Corporation (VLO - Free Report) reported third-quarter 2021 adjusted earnings of $1.22 per share, turning around from a loss of $1.16 in the year-ago period. The bottom line also beat the Zacks Consensus Estimate of 94 cents per share.
Total revenues jumped from $15,809 million in the prior-year period to $29,520 million. The top line also surpassed the Zacks Consensus Estimate of $26,036 million.
The strong quarterly results were supported by increased refinery throughput volumes and higher refining margin. A massive recovery in gasoline demand helped the company.
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 $853 million, turning around from a loss of $575 million in the year-ago quarter. Higher refinery throughput volumes aided the segment.
In the Ethanol segment, it reported an adjusted operating profit of $4 million, declining from $36 million in the year-ago quarter. Lower ethanol production volumes affected the segment. Production decreased to 3,625 thousand gallons per day from 3,800 thousand gallons a year ago.
Operating income at the Renewable Diesel segment decreased to $109 million from $184 million in the year-ago period owing to lower renewable diesel sales volumes, which declined to 671 thousand gallons per day from 870 thousand gallons a year ago. Hurricane Ida-related plant downtime affected the segment.
Throughput Volumes
For the quarter, refining throughput volumes were 2,864 MBbls/d, up from 2,526 MBbls/d in third-quarter 2020.
In terms of feedstock composition, sweet crude, medium/light sour crude, and heavy sour crude accounted for 55.9%, 8.7%, 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 57.6% to total throughput volume. Mid-Continent, North Atlantic, and West Coast regions accounted for 16.2%, 16.8%, and 9.4%, respectively, of the total throughput volume.
Throughput Margins
Refining margin per barrel of throughput increased to $9.85 from the year-ago level of $4.10. Refining operating expense per barrel of throughput was $4.53 compared with $4.26 in the year-ago quarter. Depreciation and amortization expenses decreased to $2.08 a barrel from $2.32 in the prior-year quarter. As such, adjusted refining operating income was recorded at $3.24 per barrel of throughput against the year-ago loss of $2.48.
Cost of Sales
Total cost of sales surged to $28,602 million from the year-ago figure of $16,207 million, primarily due to higher cost of materials and increased operating expenses.
Capital Investment & Balance Sheet
Third-quarter capital investment totaled $585 million. Of the total amount, $191 million was allotted for sustaining the business. Through the September quarter, the leading independent refiner and marketer of petroleum products returned $400 million to stockholders as dividend payments.
At quarter-end, Valero had cash and cash equivalents of $3,498 million, down from the second-quarter level of $3,572 million. As of Sep 30, 2021, it had total debt and finance lease obligations of $14,233 million, down from $14,680 million at June-quarter end. Valero has a debt to capitalization of 44.9%.
Guidance
The company reiterated its capital investment guidance of $2 billion for this year. Of the total amount, Valero is likely to allocate 60% toward sustaining the business. The remaining proportion is expected to get allocated for growth projects.
In the third quarter, it completed the Diamond Green Diesel expansion project at St. Charles refinery (DGD 2), boosting output capacity by 400 million gallons per annum. The DGD 3 project at Port Arthur refinery is on track and expected to come online in first-half 2023.
Zacks Rank & Other Stocks to Consider
The company currently has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include HollyFrontier Corporation , Cheniere Energy, Inc. (LNG - Free Report) and Schlumberger Limited (SLB - Free Report) , each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HollyFrontier’s bottom line for 2021 is expected to rise 260.9% year over year.
Cheniere Energy’s bottom line for third-quarter 2021 is expected to surge 244.8% year over year.
Schlumberger’s bottom line for 2021 is expected to rise 86.8% year over year.