July 25, 2019 - 6:32 AM EDT
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Valero Energy Reports Second Quarter 2019 Results
  • Reported net income attributable to Valero stockholders of $612 million, or $1.47 per share, and adjusted net income attributable to Valero stockholders of $629 million, or $1.51 per share.
  • Invested $740 million of capital and successfully completed the Houston alkylation project.
  • Returned $588 million in cash to stockholders through dividends and stock buybacks.

SAN ANTONIO, July 25, 2019 (GLOBE NEWSWIRE) -- Valero Energy Corporation (NYSE: VLO, “Valero”) today reported net income attributable to Valero stockholders of $612 million, or $1.47 per share, for the second quarter of 2019 compared to $845 million, or $1.96 per share, for the second quarter of 2018.  Excluding adjustments shown in the accompanying earnings release tables, second quarter 2019 adjusted net income attributable to Valero stockholders was $629 million, or $1.51 per share, compared to second quarter 2018 adjusted net income attributable to Valero stockholders of $928 million, or $2.15 per share.

“We had solid operating performance while also completing major turnarounds at our Memphis, Houston and Benicia refineries in the second quarter,” said Joe Gorder, Valero Chairman, President and Chief Executive Officer. “In addition, we successfully commissioned the new alkylation unit at the Houston refinery to improve our margin capture going forward.”

Refining
The refining segment reported $1.0 billion of operating income for the second quarter of 2019 compared to $1.4 billion for the second quarter of 2018.  The decrease was primarily driven by narrower discounts for medium and heavy sour crude oils relative to Brent crude oil.

“We saw a strong rebound in gasoline cracks in all regions in the second quarter,” Gorder said. “We continue to optimize our system with domestic, Canadian and Latin American crudes, and we set a new record of over 190,000 barrels per day of Canadian heavy crude oil processed during the quarter.”

Refinery throughput capacity utilization was 94 percent, with throughput volumes averaging 3.0 million barrels per day in the second quarter of 2019, which was 70,000 barrels per day higher than the second quarter of 2018.  The company exported a total of 344,000 barrels per day of gasoline and distillate during the second quarter of 2019. 

Ethanol
The ethanol segment reported $7 million of operating income for the second quarter of 2019 compared to $43 million for the second quarter of 2018.  The decrease in operating income was attributed primarily to higher corn prices.  Ethanol production volumes averaged 4.5 million gallons per day in the second quarter of 2019, an increase of 531,000 gallons per day versus the second quarter of 2018, which was largely due to added production from the three ethanol plants acquired in November 2018. 

Renewable Diesel
The renewable diesel segment reported $77 million of operating income for the second quarter of 2019 compared to $30 million for the second quarter of 2018.  Renewable diesel sales volumes averaged 769,000 gallons per day in the second quarter of 2019, an increase of 387,000 gallons per day versus the second quarter of 2018. The increases in operating income and sales volumes were attributed primarily to the expansion of the Diamond Green Diesel plant in the third quarter of 2018.

Corporate and Other
General and administrative expenses were $199 million in the second quarter of 2019 compared to $248 million in the second quarter of 2018.  The decrease was mainly due to environmental reserve adjustments recorded in the second quarter of 2018.  The effective tax rate for the second quarter of 2019 was 20 percent, compared to 22 percent for the second quarter of 2018. 

Investing and Financing Activities
Capital investments totaled $740 million in the second quarter of 2019, of which $514 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance.  

Valero returned $588 million to stockholders in the second quarter of 2019, of which $376 million was paid as dividends and $212 million was for the purchase of approximately 2.6 million shares of common stock, resulting in a year-to-date return of $1.0 billion to stockholders and a total payout ratio of 50 percent of adjusted net cash provided by operating activities. 

Net cash provided by operating activities was $1.5 billion in the second quarter of 2019.  Included in this amount is a $283 million favorable impact from working capital. Excluding the change in working capital, adjusted net cash provided by operating activities was $1.2 billion. 

Valero continues to target a total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities for 2019.  Valero defines total payout ratio as the sum of dividends and stock buybacks divided by net cash provided by operating activities adjusted for changes in working capital. 

Liquidity and Financial Position
Valero ended the second quarter of 2019 with $9.5 billion of total debt and $2.0 billion of cash and cash equivalents.  The debt to capital ratio, net of $2.0 billion in cash, was 26 percent. 

Strategic Update
The Houston alkylation unit was successfully commissioned in the second quarter of 2019.  This project upgrades isobutane and refinery olefins into high value alkylate product.  The Central Texas pipelines and terminals project is on target to be fully operational in the third quarter.  Other projects, including the Pasadena terminal, St. Charles alkylation unit, and Pembroke cogeneration unit, remain on track to be complete in 2020.  The Diamond Green Diesel expansion and Port Arthur Coker are expected to be complete in late 2021 and 2022, respectively.

Valero continues to expect to invest approximately $2.5 billion of capital in both 2019 and 2020, of which approximately 60 percent is for sustaining the business and approximately 40 percent is for growth projects.    

Conference Call
Valero’s senior management will hold a conference call at 10 a.m. ET today 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 an international manufacturer and marketer of transportation fuels and petrochemical products. Valero is a Fortune 50 company based in San Antonio, Texas, and it operates 15 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day and 14 ethanol plants with a combined production capacity of 1.73 billion gallons per year. The petroleum refineries are located in the United States (U.S.), Canada and the United Kingdom (U.K.), and the ethanol plants are located in the Mid-Continent region of the U.S. Valero also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant. Valero sells its products in the wholesale rack or bulk markets in the U.S., Canada, the U.K., Ireland and Latin America. Approximately 7,000 outlets carry Valero’s brand names. Please visit www.valero.com for more information.

Valero Contacts
Investors:
Homer Bhullar, Vice President – Investor Relations, 210-345-1982
Gautam Srivastava, Manager – Investor Relations, 210-345-3992
Tom Mahrer, Manager – Investor Relations, 210-345-1953

Media:
Lillian Riojas, Executive Director – Media Relations and Communications, 210-345-5002

Safe-Harbor Statement
Statements contained in this release that state the company’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,” and other similar expressions identify forward-looking statements.  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 the company’s control, such as delays in construction timing and other factors.  For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see Valero’s annual reports on Form 10-K, quarterly reports on Form 10-Q, and other reports filed with the Securities and Exchange Commission and 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, ethanol margin, renewable diesel margin, adjusted refining operating income, adjusted ethanol operating income, adjusted renewable diesel operating income, and adjusted net cash provided by operating activities.  These non-GAAP 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 U.S. GAAP measures.  Note (f) to the earnings release tables provides reasons for the use of these non-GAAP financial measures.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS
(millions of dollars, except per share amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Statement of income data       
Revenues$28,933  $31,015  $53,196  $57,454 
Cost of sales:       
Cost of materials and other (a)26,083  27,860  48,061  51,616 
Operating expenses (excluding depreciation and amortization expense reflected below)1,175  1,110  2,390  2,246 
Depreciation and amortization expense552  510  1,089  995 
Total cost of sales27,810  29,480  51,540  54,857 
Other operating expenses (b)2  21  4  31 
General and administrative expenses (excluding depreciation and amortization expense reflected below) (c)199  248  408  486 
Depreciation and amortization expense14  13  28  26 
Operating income908  1,253  1,216  2,054 
Other income (expense), net (d)12  (5) 34  46 
Interest and debt expense, net of capitalized interest(112) (124) (224) (245)
Income before income tax expense808  1,124  1,026  1,855 
Income tax expense160  249  211  398 
Net income648  875  815  1,457 
Less: Net income attributable to noncontrolling interests (a)36  30  62  143 
Net income attributable to Valero Energy Corporation stockholders$612  $845  $753  $1,314 
        
Earnings per common share$1.47  $1.96  $1.80  $3.05 
Weighted-average common shares outstanding (in millions)415  429  416  430 
        
Earnings per common share – assuming dilution$1.47  $1.96  $1.80  $3.04 
Weighted-average common shares outstanding – assuming dilution (in millions)417  431  417  432 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT (e)
(millions of dollars)
(unaudited)
 Refining Ethanol Renewable
Diesel
 Corporate
and
Eliminations
 Total
Three months ended June 30, 2019         
Revenues:         
Revenues from external customers$27,746  $964  $222  $1  $28,933 
Intersegment revenues8  53  73  (134)  
Total revenues27,754  1,017  295  (133) 28,933 
Cost of sales:         
Cost of materials and other25,172  855  189  (133) 26,083 
Operating expenses (excluding depreciation and amortization expense reflected below)1,026  132  17    1,175 
Depreciation and amortization expense518  22  12    552 
Total cost of sales26,716  1,009  218  (133) 27,810 
Other operating expenses1  1      2 
General and administrative expenses (excluding depreciation and amortization expense reflected below)      199  199 
Depreciation and amortization expense      14  14 
Operating income by segment$1,037  $7  $77  $(213) $908 
          
Three months ended June 30, 2018         
Revenues:         
Revenues from external customers$30,024  $884  $106  $1  $31,015 
Intersegment revenues11  42  46  (99)  
Total revenues30,035  926  152  (98) 31,015 
Cost of sales:         
Cost of materials and other27,103  754  102  (99) 27,860 
Operating expenses (excluding depreciation and amortization expense reflected below)988  109  13    1,110 
Depreciation and amortization expense483  20  7    510 
Total cost of sales28,574  883  122  (99) 29,480 
Other operating expenses (b)21        21 
General and administrative expenses (excluding depreciation and amortization expense reflected below) (c)      248  248 
Depreciation and amortization expense      13  13 
Operating income by segment$1,440  $43  $30  $(260) $1,253 

See Operating Highlights by Segment.
See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT (e)
(millions of dollars)
(unaudited)
 Refining Ethanol Renewable
Diesel
 Corporate
and
Eliminations
 Total
Six months ended June 30, 2019         
Revenues:         
Revenues from external customers$50,964  $1,757  $474  $1  $53,196 
Intersegment revenues10  105  124  (239)  
Total revenues50,974  1,862  598  (238) 53,196 
Cost of sales:         
Cost of materials and other46,337  1,549  413  (238) 48,061 
Operating expenses (excluding depreciation and amortization expense reflected below)2,097  257  36    2,390 
Depreciation and amortization expense1,021  45  23    1,089 
Total cost of sales49,455  1,851  472  (238) 51,540 
Other operating expenses3  1      4 
General and administrative expenses (excluding depreciation and amortization expense reflected below)      408  408 
Depreciation and amortization expense      28  28 
Operating income by segment$1,516  $10  $126  $(436) $1,216 
          
Six months ended June 30, 2018         
Revenues:         
Revenues from external customers$55,477  $1,761  $214  $2  $57,454 
Intersegment revenues15  88  88  (191)  
Total revenues55,492  1,849  302  (189) 57,454 
Cost of sales:         
Cost of materials and other (a)50,267  1,503  37  (191) 51,616 
Operating expenses (excluding depreciation and amortization expense reflected below)1,999  220  27    2,246 
Depreciation and amortization expense944  38  13    995 
Total cost of sales53,210  1,761  77  (191) 54,857 
Other operating expenses (b)31        31 
General and administrative expenses (excluding depreciation and amortization expense reflected below) (c)      486  486 
Depreciation and amortization expense      26  26 
Operating income by segment$2,251  $88  $225  $(510) $2,054 

See Operating Highlights by Segment.
See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (f)
(millions of dollars, except per share amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Reconciliation of net income attributable to Valero Energy Corporation stockholders to adjusted net income attributable to Valero Energy Corporation stockholders       
Net income attributable to Valero Energy Corporation stockholders$612  $845  $753  $1,314 
Exclude adjustments:       
2017 blender’s tax credit attributable to Valero Energy Corporation stockholders (a)      90 
Income tax expense related to 2017 blender’s tax credit      (11)
2017 blender’s tax credit attributable to Valero Energy Corporation stockholders, net of taxes      79 
Texas City Refinery fire expenses (b)  (14)   (14)
Income tax benefit related to Texas City Refinery fire expenses  3    3 
Texas City Refinery fire expenses, net of taxes  (11)   (11)
Environmental reserve adjustments (c)  (56)   (108)
Income tax benefit related to environmental reserve adjustments  13    24 
Environmental reserve adjustments, net of taxes  (43)   (84)
Loss on early redemption of debt (d)(22) (38) (22) (38)
Income tax benefit related to loss on early redemption of debt5  9  5  9 
Loss on early redemption of debt, net of taxes(17) (29) (17) (29)
Total adjustments(17) (83) (17) (45)
Adjusted net income attributable to Valero Energy Corporation stockholders$629  $928  $770  $1,359 
        
Reconciliation of earnings per common share – assuming dilution to adjusted earnings per common share – assuming dilution       
Earnings per common share – assuming dilution$1.47  $1.96  $1.80  $3.04 
Exclude adjustments:       
2017 blender’s tax credit attributable to Valero Energy Corporation stockholders (a)      0.18 
Texas City Refinery fire expenses (b)  (0.02)   (0.03)
Environmental reserve adjustments (c)  (0.10)   (0.19)
Loss on early redemption of debt (d)(0.04) (0.07) (0.04) (0.07)
Total adjustments(0.04) (0.19) (0.04) (0.11)
Adjusted earnings per common share – assuming dilution$1.51  $2.15  $1.84  $3.15 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (f)
(millions of dollars)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Reconciliation of operating income by segment to segment margin, and reconciliation of operating income by segment to adjusted operating income by segment       
Refining segment (e)       
Refining operating income$1,037  $1,440  $1,516  $2,251 
Exclude:       
2017 blender’s tax credit (a)      10 
Operating expenses (excluding depreciation and amortization expense reflected below)(1,026) (988) (2,097) (1,999)
Depreciation and amortization expense(518) (483) (1,021) (944)
Other operating expenses (b)(1) (21) (3) (31)
Refining margin$2,582  $2,932  $4,637  $5,215 
        
Refining operating income$1,037  $1,440  $1,516  $2,251 
Exclude:       
2017 blender’s tax credit (a)      10 
Other operating expenses (b)(1) (21) (3) (31)
Adjusted refining operating income$1,038  $1,461  $1,519  $2,272 
        
Ethanol segment       
Ethanol operating income$7  $43  $10  $88 
Exclude:       
Operating expenses (excluding depreciation and amortization expense reflected below)(132) (109) (257) (220)
Depreciation and amortization expense(22) (20) (45) (38)
Other operating expenses(1)   (1)  
Ethanol margin$162  $172  $313  $346 
        
Ethanol operating income$7  $43  $10  $88 
Exclude: Other operating expenses(1)   (1)  
Adjusted ethanol operating income$8  $43  $11  $88 
        
Renewable diesel segment (e)       
Renewable diesel operating income$77  $30  $126  $225 
Exclude:       
2017 blender’s tax credit (a)      160 
Operating expenses (excluding depreciation and amortization expense reflected below)(17) (13) (36) (27)
Depreciation and amortization expense(12) (7) (23) (13)
Renewable diesel margin$106  $50  $185  $105 
        
Renewable diesel operating income$77  $30  $126  $225 
Exclude: 2017 blender’s tax credit (a)      160 
Adjusted renewable diesel operating income$77  $30  $126  $65 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (f)
(millions of dollars)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Reconciliation of refining segment operating income to refining margin (by region), and reconciliation of refining segment operating income to adjusted refining segment operating income (by region) (g)       
U.S. Gulf Coast region (e)       
Refining operating income$273  $760  $391  $1,165 
Exclude:       
2017 blender’s tax credit (a)      7 
Operating expenses (excluding depreciation and amortization expense reflected below)(586) (559) (1,185) (1,127)
Depreciation and amortization expense(318) (292) (628) (569)
Other operating expenses (b)(1) (20) (2) (30)
Refining margin$1,178  $1,631  $2,206  $2,884 
        
Refining operating income$273  $760  $391  $1,165 
Exclude:       
2017 blender’s tax credit (a)      7 
Other operating expenses (b)(1) (20) (2) (30)
Adjusted refining operating income$274  $780  $393  $1,188 
        
U.S. Mid-Continent region (e)       
Refining operating income$422  $406  $658  $632 
Exclude:       
2017 blender’s tax credit (a)      2 
Operating expenses (excluding depreciation and amortization expense reflected below)(146) (156) (312) (312)
Depreciation and amortization expense(74) (71) (149) (141)
Refining margin$642  $633  $1,119  $1,083 
        
Refining operating income$422  $406  $658  $632 
Exclude: 2017 blender’s tax credit (a)      2 
Adjusted refining operating income$422  $406  $658  $630 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (f)
(millions of dollars)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Reconciliation of refining segment operating income to refining margin (by region), and reconciliation of refining segment operating income to adjusted refining segment operating income (by region) (g) (continued)       
North Atlantic region       
Refining operating income$278  $137  $454  $298 
Exclude:       
Operating expenses (excluding depreciation and amortization expense reflected below)(146) (138) (293) (283)
Depreciation and amortization expense(55) (62) (108) (115)
Refining margin$479  $337  $855  $696 
        
U.S. West Coast region       
Refining operating income$64  $137  $13  $156 
Exclude:       
2017 blender’s tax credit (a)      1 
Operating expenses (excluding depreciation and amortization expense reflected below)(148) (135) (307) (277)
Depreciation and amortization expense(71) (58) (136) (119)
Other operating expenses  (1) (1) (1)
Refining margin$283  $331  $457  $552 
        
Refining operating income$64  $137  $13  $156 
Exclude:       
2017 blender’s tax credit (a)      1 
Other operating expenses  (1) (1) (1)
Adjusted refining operating income$64  $138  $14  $156 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
REFINING SEGMENT OPERATING HIGHLIGHTS
(millions of dollars, except per barrel amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Throughput volumes (thousand barrels per day)       
Feedstocks:       
Heavy sour crude oil419  482  415  482 
Medium/light sour crude oil257  434  297  421 
Sweet crude oil1,550  1,303  1,513  1,323 
Residuals241  231  193  226 
Other feedstocks171  121  162  121 
Total feedstocks2,638  2,571  2,580  2,573 
Blendstocks and other330  327  337  342 
Total throughput volumes2,968  2,898  2,917  2,915 
        
Yields (thousand barrels per day)       
Gasolines and blendstocks1,378  1,407  1,387  1,404 
Distillates1,141  1,096  1,115  1,102 
Other products (h)483  434  445  446 
Total yields3,002  2,937  2,947  2,952 
        
Operating statistics (e) (f) (i)       
Refining margin$2,582  $2,932  $4,637  $5,215 
Adjusted refining operating income$1,038  $1,461  $1,519  $2,272 
Throughput volumes (thousand barrels per day)2,968  2,898  2,917  2,915 
        
Refining margin per barrel of throughput$9.56  $11.12  $8.78  $9.89 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput3.80  3.75  3.97  3.79 
Depreciation and amortization expense per barrel of throughput1.92  1.83  1.93  1.79 
Adjusted refining operating income per barrel of throughput$3.84  $5.54  $2.88  $4.31 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
ETHANOL SEGMENT OPERATING HIGHLIGHTS
(millions of dollars, except per gallon amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Operating statistics (f) (i)       
Ethanol margin$162  $172  $313  $346 
Adjusted ethanol operating income$8  $43  $11  $88 
Production volumes (thousand gallons per day)4,533  4,002  4,376  4,057 
        
Ethanol margin per gallon of production$0.39  $0.47  $0.40  $0.47 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per gallon of production0.32  0.30  0.32  0.30 
Depreciation and amortization expense per gallon of production0.05  0.05  0.07  0.05 
Ethanol operating income per gallon of production$0.02  $0.12  $0.01  $0.12 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RENEWABLE DIESEL SEGMENT OPERATING HIGHLIGHTS (e)
(millions of dollars, except per gallon amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Operating statistics (f) (i)       
Renewable diesel margin$106  $50  $185  $105 
Adjusted renewable diesel operating income$77  $30  $126  $65 
Sales volumes (thousand gallons per day)769  382  780  377 
        
Renewable diesel margin per gallon of sales$1.51  $1.43  $1.31  $1.53 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per gallon of sales0.25  0.37  0.26  0.40 
Depreciation and amortization expense per gallon of sales0.17  0.18  0.16  0.18 
Adjusted renewable diesel operating income per gallon of sales$1.09  $0.88  $0.89  $0.95 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
REFINING SEGMENT OPERATING HIGHLIGHTS BY REGION
(millions of dollars, except per barrel amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Operating statistics by region (g)       
U.S. Gulf Coast region (e) (f) (i)       
Refining margin$1,178  $1,631  $2,206  $2,884 
Adjusted refining operating income$274  $780  $393  $1,188 
Throughput volumes (thousand barrels per day)1,779  1,729  1,725  1,728 
        
Refining margin per barrel of throughput$7.28  $10.37  $7.07  $9.23 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput3.63  3.56  3.80  3.61 
Depreciation and amortization expense per barrel of throughput1.96  1.86  2.01  1.82 
Adjusted refining operating income per barrel of throughput$1.69  $4.95  $1.26  $3.80 
        
U.S. Mid-Continent region (e) (f) (i)       
Refining margin$642  $633  $1,119  $1,083 
Adjusted refining operating income$422  $406  $658  $630 
Throughput volumes (thousand barrels per day)462  473  452  477 
        
Refining margin per barrel of throughput$15.24  $14.69  $13.68  $12.55 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput3.45  3.60  3.81  3.61 
Depreciation and amortization expense per barrel of throughput1.76  1.64  1.82  1.63 
Adjusted refining operating income per barrel of throughput$10.03  $9.45  $8.05  $7.31 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
REFINING SEGMENT OPERATING HIGHLIGHTS BY REGION
(millions of dollars, except per barrel amounts)
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Operating statistics by region (g) (continued)       
North Atlantic region (f) (i)       
Refining margin$479  $337  $855  $696 
Refining operating income$278  $137  $454  $298 
Throughput volumes (thousand barrels per day)493  398  491  428 
        
Refining margin per barrel of throughput$10.69  $9.33  $9.61  $8.99 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput3.26  3.81  3.30  3.66 
Depreciation and amortization expense per barrel of throughput1.23  1.70  1.20  1.47 
Refining operating income per barrel of throughput$6.20  $3.82  $5.11  $3.86 
        
U.S. West Coast region (f) (i)       
Refining margin$283  $331  $457  $552 
Adjusted refining operating income$64  $138  $14  $156 
Throughput volumes (thousand barrels per day)234  298  249  282 
        
Refining margin per barrel of throughput$13.30  $12.20  $10.15  $10.80 
Less:       
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput6.97  4.96  6.83  5.42 
Depreciation and amortization expense per barrel of throughput3.32  2.17  3.02  2.33 
Adjusted refining operating income per barrel of throughput$3.01  $5.07  $0.30  $3.05 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Refining       
Feedstocks (dollars per barrel)       
Brent crude oil$68.33  $74.93  $66.08  $71.05 
Brent less West Texas Intermediate (WTI) crude oil8.53  6.93  8.73  5.61 
Brent less Alaska North Slope (ANS) crude oil0.15  0.83  (0.27) 0.52 
Brent less Louisiana Light Sweet (LLS) crude oil1.30  1.93  1.38  1.66 
Brent less Argus Sour Crude Index (ASCI) crude oil3.44  5.63  3.17  5.26 
Brent less Maya crude oil6.23  12.90  5.64  11.18 
LLS crude oil67.03  73.00  64.70  69.39 
LLS less ASCI crude oil2.14  3.70  1.79  3.60 
LLS less Maya crude oil4.93  10.97  4.26  9.52 
WTI crude oil59.80  68.00  57.35  65.44 
        
Natural gas (dollars per million British Thermal Units)2.46  2.89  2.66  3.04 
        
Products (dollars per barrel, unless otherwise noted)       
U.S. Gulf Coast:       
Conventional Blendstock of Oxygenate Blending (CBOB) gasoline less Brent6.72  7.47  3.44  7.38 
Ultra-low-sulfur (ULS) diesel less Brent12.88  13.46  13.94  13.62 
Propylene less Brent(24.70) (6.54) (22.67) (6.68)
CBOB gasoline less LLS8.02  9.40  4.82  9.04 
ULS diesel less LLS14.18  15.39  15.32  15.28 
Propylene less LLS(23.40) (4.61) (21.29) (5.02)
U.S. Mid-Continent:       
CBOB gasoline less WTI18.76  16.05  14.23  14.76 
ULS diesel less WTI22.51  22.02  23.70  20.93 
North Atlantic:       
CBOB gasoline less Brent10.11  10.37  5.68  9.63 
ULS diesel less Brent14.76  15.25  16.10  15.60 
U.S. West Coast:       
California Reformulated Gasoline Blendstock of Oxygenate Blending (CARBOB) 87 gasoline less ANS23.24  18.36  15.49  15.82 
California Air Resources Board (CARB) diesel less ANS21.10  18.70  18.65  17.99 
CARBOB 87 gasoline less WTI31.62  24.46  24.49  20.91 
CARB diesel less WTI29.48  24.80  27.65  23.08 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS
(unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Ethanol       
New York Harbor (NYH) corn crush (dollars per gallon)$0.12  $0.17  $0.11  $0.18 
Chicago Board of Trade (CBOT) corn (dollars per bushel)3.91  3.83  3.82  3.75 
NYH ethanol (dollars per gallon)1.54  1.56  1.49  1.54 
        
Renewable diesel       
New York Mercantile Exchange ULS diesel (dollars per gallon)1.98  2.15  1.96  2.07 
Biodiesel Renewable Identification Number (RIN) (dollars per RIN)0.38  0.53  0.44  0.66 
California Low-Carbon Fuel Standard (dollars per metric ton)188.77  161.57  191.49  148.85 
CBOT soybean oil (dollars per pound)0.28  0.31  0.29  0.32 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
OTHER FINANCIAL DATA
(millions of dollars, except per share amounts)
(unaudited)
     June 30, December 31,
     2019 2018
Balance sheet data       
Current assets    $17,811  $17,675 
Cash and cash equivalents included in current assets 2,033  2,982 
Inventories included in current assets    6,281  6,532 
Current liabilities    12,548  10,724 
Current portion of debt and finance lease obligations included in current liabilities 323  238 
Debt and finance lease obligations, less current portion   9,167  8,871 
Total debt and finance lease obligations    9,490  9,109 
Valero Energy Corporation stockholders’ equity   21,345  21,667 
        
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Net cash provided by operating activities and adjusted net cash provided by operating activities (f)       
Net cash provided by operating activities$1,517  $2,059  $2,394  $2,197 
Exclude: changes in current assets and current liabilities283  581  413  (445)
Adjusted net cash provided by operating activities$1,234  $1,478  $1,981  $2,642 
        
Dividends per common share$0.90  $0.80  $1.80  $1.60 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
NOTES TO EARNINGS RELEASE TABLES

(a) Cost of materials and other for the six months ended June 30, 2018 includes a benefit of $170 million for the biodiesel blender’s tax credit attributable to volumes blended during 2017. The benefit was recognized in February 2018 because the United States (U.S.) legislation authorizing the credit was passed and signed into law in that month. Of the $170 million pre-tax benefit, $10 million and $160 million is included in our refining and renewable diesel segments, respectively, and consequently, $80 million is attributable to noncontrolling interest and $90 million is attributable to Valero Energy Corporation stockholders.

(b) Other operating expenses for the three and six months ended June 30, 2018 includes $14 million of costs to respond to and assess the damage caused by a fire in the alkylation unit at our Texas City Refinery on April 19, 2018. In addition, other operating expenses for the three and six months ended June 30, 2018 includes repair costs incurred at certain of our refineries due to damage associated with inclement weather events in 2018 and Hurricane Harvey in 2017.

(c) General and administrative expenses (excluding depreciation and amortization expense) for the three and six months ended June 30, 2018 includes a charge of $56 million and $108 million, respectively, for environmental reserve adjustments associated with certain non-operating sites.

(d) “Other income (expense), net” for the three and six months ended June 30, 2019 and 2018 includes a $22 million charge from the early redemption of $850 million of our 6.125 percent senior notes due February 1, 2020 and a $38 million charge from the early redemption of $750 million of our 9.375 percent senior notes due March 15, 2019, respectively.

(e) Effective January 1, 2019, we revised our reportable segments to align with certain changes in how our chief operating decision maker manages and allocates resources to our business. Accordingly, we created a new reportable segment — renewable diesel. The results of the renewable diesel segment, which includes the operations of our consolidated joint venture, Diamond Green Diesel Holdings LLC, were transferred from the refining segment. Also effective January 1, 2019, we no longer have a VLP segment, and as a result, the operations previously included in the VLP segment are included in our refining segment. Our prior period segment information has been retrospectively adjusted to reflect our current segment presentation.

(f) We use certain financial measures (as noted below) in the earnings release tables and accompanying earnings release that are not defined under U.S. GAAP and are considered to be non-GAAP measures.

We have defined these non-GAAP measures and believe they are useful to the external users of our financial statements, including industry analysts, investors, lenders, and rating agencies. We believe these measures are useful to assess our ongoing financial performance because, when reconciled to their most comparable U.S. GAAP measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These non-GAAP measures should not be considered as alternatives to their most comparable U.S. GAAP measures nor should they be considered in isolation or as a substitute for an analysis of our results of operations as reported under U.S. GAAP. In addition, these non-GAAP measures may not be comparable to similarly titled measures used by other companies because we may define them differently, which diminishes their utility.

Non-GAAP measures are as follows:

  • Adjusted net income attributable to Valero Energy Corporation stockholders is defined as net income attributable to Valero Energy Corporation stockholders excluding the items noted below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends. The basis for our belief with respect to each excluded item is provided below.
    • 2017 blender’s tax credit attributable to Valero Energy Corporation stockholders - The blender’s tax credit is attributable to volumes blended during 2017 and is not related to 2018 activities, as described in note (a).
    • Texas City Refinery fire expenses - The costs incurred to respond to and assess the damage caused by the fire that occurred at the Texas City Refinery (see note (b)) are specific to that event and are not ongoing costs incurred in our operations.
    • Environmental reserve adjustments - The environmental reserve adjustments are attributable to sites that were shut down by prior owners and subsequently acquired by us (referred to by us as non-operating sites) (see note (c)).
    • Loss on early redemption of debt - The penalty and other expenses incurred in connection with the early redemption of our 6.125 percent senior notes due February 1, 2020 and 9.375 percent senior notes due March 15, 2019 (see note (d)) are not associated with the ongoing costs of our borrowing and financing activities.

  • Adjusted earnings per common share – assuming dilution is defined as adjusted net income attributable to Valero Energy Corporation stockholders divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.
  • Refining margin is defined as refining operating income excluding the 2017 blender’s tax credit (see note (a)), operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses. We believe refining margin is an important measure of our refining segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance.
  • Ethanol margin is defined as ethanol operating income excluding operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses. We believe ethanol margin is an important measure of our ethanol segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance.
  • Renewable diesel margin is defined as renewable diesel operating income excluding the 2017 blender’s tax credit (see note (a)), operating expenses (excluding depreciation and amortization expense), and depreciation and amortization expense. We believe renewable diesel margin is an important measure of our renewable diesel segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance.
  • Adjusted refining operating income is defined as refining segment operating income excluding the 2017 blender’s tax credit (see note (a)) and other operating expenses. We believe adjusted refining operating income is an important measure of our refining segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.
  • Adjusted ethanol operating income is defined as ethanol segment operating income excluding other operating expenses. We believe this is an important measure of our ethanol segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.
  • Adjusted renewable diesel operating income is defined as renewable diesel segment operating income excluding the 2017 blender’s tax credit (see note (a)). We believe this is an important measure of our renewable diesel segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.
  • Adjusted net cash provided by operating activities is defined as net cash provided by operating activities excluding changes in current assets and current liabilities. We believe adjusted net cash provided by operating activities is an important measure of our ongoing financial performance to better assess our ability to generate cash to fund our investing and financing activities.

(g) The refining segment regions reflected herein contain the following refineries: U.S. Gulf Coast- Corpus Christi East, Corpus Christi West, Houston, Meraux, Port Arthur, St. Charles, Texas City, and Three Rivers Refineries; U.S. Mid-Continent- Ardmore, McKee, and Memphis Refineries; North Atlantic- Pembroke and Quebec City Refineries; and U.S. West Coast- Benicia and Wilmington Refineries.

(h) Primarily includes petrochemicals, gas oils, No. 6 fuel oil, petroleum coke, sulfur, and asphalt.

(i) Valero uses certain operating statistics (as noted below) in the earnings release tables and the accompanying earnings release to evaluate performance between comparable periods. Different companies may calculate them in different ways.

All per barrel of throughput, per gallon of production, and per gallon of sales amounts are calculated by dividing the associated dollar amount by the throughput volumes, production volumes, and sales volumes for the period, as applicable.

Throughput volumes, production volumes, and sales volumes are calculated by multiplying throughput volumes per day, production volumes per day, and sales volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period. We use throughput volumes, production volumes, and sales volumes for the refining segment, ethanol segment, and renewable diesel segment, respectively, due to their general use by others who operate facilities similar to those included in our segments. We believe the use of such volumes results in per unit amounts that are most representative of the product margins generated and the operating costs incurred as a result of our operation of those facilities.

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Source: GlobeNewswire (July 25, 2019 - 6:32 AM EDT)

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