VLO
$56.09
Valero Energy
$5.27
10.37%
Earnings Details
3rd Quarter September 2020
Thursday, October 22, 2020 6:30:00 AM
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Summary

Valero Energy Beats

Valero Energy (VLO) reported a 3rd Quarter September 2020 loss of $1.16 per share on revenue of $15.8 billion. The consensus estimate was a loss of $1.35 per share on revenue of $18.0 billion. The Earnings Whisper number was for a loss of $1.20 per share. Revenue fell 42.0% compared to the same quarter a year ago.

Valero Energy Corp is a refining and marketing company. The Company produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products as well as a slate of premium products.

Results
Reported Earnings
($1.16)
Earnings Whisper
($1.20)
Consensus Estimate
($1.35)
Reported Revenue
$15.81 Bil
Revenue Estimate
$18.01 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Valero Energy Reports Third Quarter 2020 Results

  • Reported net loss attributable to Valero stockholders of $464 million, or $1.14 per share.
  • Reported adjusted net loss attributable to Valero stockholders of $472 million, or $1.16 per share.
  • Issued $2.5 billion of Senior Notes for general corporate purposes.
  • 2020 and 2021 capital investments attributable to Valero forecasted at $2.0 billion for each year.
  • Returned $399 million in cash to stockholders through dividends.

SAN ANTONIO--(BUSINESS WIRE)--Valero Energy Corporation (NYSE: VLO, “Valero”) today reported a net loss attributable to Valero stockholders of $464 million, or $1.14 per share, for the third quarter of 2020 compared to net income of $609 million, or $1.48 per share, for the third quarter of 2019. Excluding the adjustments shown in the accompanying earnings release tables, the adjusted net loss attributable to Valero stockholders was $472 million, or $1.16 per share, for the third quarter of 2020, compared to third quarter 2019 adjusted net income attributable to Valero stockholders of $642 million, or $1.55 per share. Third quarter 2020 adjusted results primarily exclude the benefit from an after-tax lower of cost or market, or LCM, inventory valuation adjustment of $250 million and an after-tax loss of $218 million for an expected LIFO liquidation.

Refining

The refining segment reported a $629 million operating loss for the third quarter of 2020 compared to operating income of $1.1 billion for the third quarter of 2019. Excluding the LCM inventory valuation adjustment, the expected LIFO liquidation adjustment, and other operating expenses, the third quarter 2020 adjusted operating loss was $575 million. Refinery throughput volumes averaged 2.5 million barrels per day in the third quarter of 2020, which was 428 thousand barrels per day lower than the third quarter of 2019.

“As the global economy recovers, we are pleased to see a demand recovery for gasoline, diesel and jet fuel in the third quarter” said Joe Gorder, Valero Chairman and Chief Executive Officer. “Our unmatched execution, while being the lowest cost producer, and ample liquidity continue to position us well to manage a low margin environment.”

Renewable Diesel

The renewable diesel segment reported $184 million of operating income for the third quarter of 2020 compared to $65 million for the third quarter of 2019. After adjusting for the retroactive blender’s tax credit, renewable diesel operating income was $123 million for the third quarter of 2019. Renewable diesel sales volumes averaged 870 thousand gallons per day in the third quarter of 2020, an increase of 232 thousand gallons per day versus the third quarter of 2019. The third quarter of 2019 results and volumes were impacted by the planned downtime of the Diamond Green Diesel (DGD) plant for maintenance. DGD set a record for sales volumes in the third quarter of 2020.

Ethanol

The ethanol segment reported $22 million of operating income for the third quarter of 2020, compared to a $43 million operating loss for the third quarter of 2019. Third quarter 2020 adjusted operating income was $36 million. Ethanol production volumes averaged 3.8 million gallons per day in the third quarter of 2020, which was 206 thousand gallons per day lower than the third quarter of 2019. The increase in operating income was attributed primarily to higher margins resulting from lower corn prices.

Corporate and Other

General and administrative expenses were $186 million in the third quarter of 2020 compared to $217 million in the third quarter of 2019. The effective tax rate for the third quarter of 2020 was 47 percent, which was primarily impacted by an expected U.S. federal tax net operating loss that will be carried back to 2015 when the U.S. federal statutory tax rate was 35 percent.

Investing and Financing Activities

Capital investments totaled $517 million in the third quarter of 2020, of which $205 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance. Excluding capital investments attributable to our partner’s 50 percent share of DGD and those related to other variable interest entities, capital investments attributable to Valero were $393 million.

Net cash provided by operating activities was $165 million in the third quarter of 2020. Included in this amount was a $246 million favorable impact from working capital, as well as our joint venture partner’s share of DGD’s net cash provided by operating activities, excluding changes in its working capital. Excluding these items, adjusted net cash used by operating activities was $177 million.

Valero returned $399 million to stockholders through dividends in the third quarter of 2020, resulting in a year-to-date total payout ratio of 165 percent of adjusted net cash provided by operating activities. The year-to-date total payout ratio is higher than our long-term target due to the adverse economic impact of COVID-19.

Valero continues to target a long-term total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities. 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 and DGD’s net cash provided by operating activities, excluding changes in its working capital, attributable to our joint venture partner’s ownership interest in DGD.

“The guiding principles underpinning our capital allocation strategy remain unchanged,” said Gorder. “There has been absolutely no change in our strategy, which prioritizes our investment grade ratings, sustaining investments and honoring our dividend.”

Liquidity and Financial Position

Valero ended the third quarter of 2020 with $15.2 billion of total debt and finance lease obligations and $4.0 billion of cash and cash equivalents. The debt to capitalization ratio, net of cash and cash equivalents, was 36 percent as of September 30, 2020.

Strategic Update

Capital investments attributable to Valero are forecasted at $2.0 billion per year in 2020 and 2021, of which approximately 60 percent is for sustaining the business and approximately 40 percent is for growth projects. Approximately 40 percent of Valero’s 2020 and 2021 growth capital is allocated to expanding the renewable diesel business.

The new St. Charles Alkylation Unit, which is designed to convert low-value feedstocks into a premium alkylate product, is on track to be completed in the fourth quarter of this year. The Diamond Pipeline expansion and the Pembroke Cogen project are expected to be completed in 2021 and the Port Arthur Coker project is expected to be completed in 2023.

Valero and its joint venture partner in DGD continue to pursue growth in the low-carbon renewable diesel business. The DGD plant expansion is still expected to be completed in 2021, and as previously announced, DGD continues to make progress on the advanced engineering and development cost review for a potential new 400 million gallons per day renewable diesel plant at Valero’s Port Arthur, Texas facility. If the project is approved, operations are expected to commence in 2024, increasing DGD’s production capacity to over 1.1 billion gallons annually.

“We remain steadfast in the execution of our strategy, pursuing excellence in operations, investing in earnings growth with lower volatility and honoring our commitment to shareholder returns,” said Gorder.

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 3.2 million barrels per day and 14 ethanol plants with a combined production capacity of approximately 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 is also 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
Eric Herbort, Senior Manager – Investor Relations, 210-345-3331
Gautam Srivastava, 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 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, including but not limited to the impacts of COVID-19. 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 available on Valero’s website at www.valero.com.

COVID-19 Disclosure

The global pandemic has significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use. As a result, there has also been a decline in the demand for, and thus also the market prices of, crude oil and certain of our products, particularly our refined petroleum products. Many uncertainties remain with respect to COVID-19, including its resulting economic effects and any future recovery, and we are unable to predict the ultimate economic impacts from COVID-19, how quickly national economies can recover once the pandemic subsides, or whether any recovery will ultimately experience a reversal or other setbacks. However, the adverse impact of the economic effects on us has been and will likely continue to be significant. We believe we have proactively addressed many of the known impacts of COVID-19 to the extent possible and will strive to continue to do so, but there can be no guarantee that these measures will be fully effective. For more information, see our quarterly reports on Form 10-Q and other reports filed with the Securities and Exchange Commission.

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 (loss) attributable to Valero stockholders, adjusted earnings (loss) per common share – assuming dilution, refining margin, renewable diesel margin, ethanol margin, adjusted refining operating income (loss), adjusted renewable diesel operating income, adjusted ethanol operating income (loss), adjusted net cash provided by operating activities, and capital investments attributable to Valero. 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 (g) 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
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Statement of income data

 

 

 

 

 

 

 

Revenues

$

15,809

 

 

$

27,249

 

 

$

48,308

 

 

$

80,445

 

Cost of sales:

 

 

 

 

 

 

 

Cost of materials and other (a) (b)

14,801

 

 

24,335

 

 

43,832

 

 

72,396

 

Lower of cost or market (LCM) inventory valuation adjustment (c)

(313)

 

 

 

 

(19)

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

1,117

 

 

1,239

 

 

3,268

 

 

3,629

 

Depreciation and amortization expense (d)

602

 

 

556

 

 

1,737

 

 

1,645

 

Total cost of sales

16,207

 

 

26,130

 

 

48,818

 

 

77,670

 

Other operating expenses

25

 

 

10

 

 

30

 

 

14

 

General and administrative expenses (excluding

depreciation and amortization expense reflected below)

186

 

 

217

 

 

532

 

 

625

 

Depreciation and amortization expense

12

 

 

11

 

 

37

 

 

39

 

Operating income (loss)

(621)

 

 

881

 

 

(1,109)

 

 

2,097

 

Other income, net (e)

48

 

 

34

 

 

107

 

 

68

 

Interest and debt expense, net of capitalized interest

(143)

 

 

(111)

 

 

(410)

 

 

(335)

 

Income (loss) before income tax expense (benefit)

(716)

 

 

804

 

 

(1,412)

 

 

1,830

 

Income tax expense (benefit)

(337)

 

 

165

 

 

(614)

 

 

376

 

Net income (loss)

(379)

 

 

639

 

 

(798)

 

 

1,454

 

Less: Net income attributable to noncontrolling interests (b)

85

 

 

30

 

 

264

 

 

92

 

Net income (loss) attributable to Valero Energy Corporation

stockholders

$

(464)

 

 

$

609

 

 

$

(1,062)

 

 

$

1,362

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share

$

(1.14)

 

 

$

1.48

 

 

$

(2.62)

 

 

$

3.28

 

Weighted-average common shares outstanding (in millions)

407

 

 

412

 

 

407

 

 

415

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share – assuming dilution

$

(1.14)

 

 

$

1.48

 

 

$

(2.62)

 

 

$

3.28

 

Weighted-average common shares outstanding –

assuming dilution (in millions) (f)

407

 

 

413

 

 

407

 

 

416

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

FINANCIAL HIGHLIGHTS BY SEGMENT

(millions of dollars)

(unaudited)

 

Refining

 

Renewable
Diesel

 

Ethanol

 

Corporate
and
Eliminations

 

Total

Three months ended September 30, 2020

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

14,727

 

 

$

305

 

 

$

777

 

 

$

 

 

$

15,809

 

Intersegment revenues

2

 

 

40

 

 

58

 

 

(100)

 

 

 

Total revenues

14,729

 

 

345

 

 

835

 

 

(100)

 

 

15,809

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other (a) (b)

14,103

 

 

128

 

 

670

 

 

(100)

 

 

14,801

 

LCM inventory valuation adjustment (c)

(296)

 

 

 

 

(17)

 

 

 

 

(313)

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

989

 

 

23

 

 

105

 

 

 

 

1,117

 

Depreciation and amortization expense (d)

538

 

 

10

 

 

54

 

 

 

 

602

 

Total cost of sales

15,334

 

 

161

 

 

812

 

 

(100)

 

 

16,207

 

Other operating expenses

24

 

 

 

 

1

 

 

 

 

25

 

General and administrative expenses (excluding

depreciation and amortization expense reflected

below)

 

 

 

 

 

 

186

 

 

186

 

Depreciation and amortization expense

 

 

 

 

 

 

12

 

 

12

 

Operating income (loss) by segment

$

(629)

 

 

$

184

 

 

$

22

 

 

$

(198)

 

 

$

(621)

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2019

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

26,145

 

 

$

212

 

 

$

891

 

 

$

1

 

 

$

27,249

 

Intersegment revenues

2

 

 

50

 

 

57

 

 

(109)

 

 

 

Total revenues

26,147

 

 

262

 

 

948

 

 

(108)

 

 

27,249

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other

23,432

 

 

164

 

 

847

 

 

(108)

 

 

24,335

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

1,100

 

 

18

 

 

121

 

 

 

 

1,239

 

Depreciation and amortization expense

518

 

 

15

 

 

23

 

 

 

 

556

 

Total cost of sales

25,050

 

 

197

 

 

991

 

 

(108)

 

 

26,130

 

Other operating expenses

10

 

 

 

 

 

 

 

 

10

 

General and administrative expenses (excluding

depreciation and amortization expense reflected

below)

 

 

 

 

 

 

217

 

 

217

 

Depreciation and amortization expense

 

 

 

 

 

 

11

 

 

11

 

Operating income (loss) by segment

$

1,087

 

 

$

65

 

 

$

(43)

 

 

$

(228)

 

 

$

881

 

 

See Operating Highlights by Segment.

See Notes to Earnings Release Tables.

 

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

FINANCIAL HIGHLIGHTS BY SEGMENT

(millions of dollars)

(unaudited)

 

Refining

 

Renewable
Diesel

 

Ethanol

 

Corporate
and
Eliminations

 

Total

Nine months ended September 30, 2020

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

45,327

 

 

$

850

 

 

$

2,131

 

 

$

 

 

$

48,308

 

Intersegment revenues

6

 

 

150

 

 

160

 

 

(316)

 

 

 

Total revenues

45,333

 

 

1,000

 

 

2,291

 

 

(316)

 

 

48,308

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other (a) (b)

41,769

 

 

393

 

 

1,984

 

 

(314)

 

 

43,832

 

LCM inventory valuation adjustment (c)

(19)

 

 

 

 

 

 

 

 

(19)

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

2,912

 

 

63

 

 

293

 

 

 

 

3,268

 

Depreciation and amortization expense (d)

1,607

 

 

33

 

 

97

 

 

 

 

1,737

 

Total cost of sales

46,269

 

 

489

 

 

2,374

 

 

(314)

 

 

48,818

 

Other operating expenses

29

 

 

 

 

1

 

 

 

 

30

 

General and administrative expenses (excluding

depreciation and amortization expense reflected

below)

 

 

 

 

 

 

532

 

 

532

 

Depreciation and amortization expense

 

 

 

 

 

 

37

 

 

37

 

Operating income (loss) by segment

$

(965)

 

 

$

511

 

 

$

(84)

 

 

$

(571)

 

 

$

(1,109)

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2019

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

77,109

 

 

$

686

 

 

$

2,648

 

 

$

2

 

 

$

80,445

 

Intersegment revenues

12

 

 

174

 

 

162

 

 

(348)

 

 

 

Total revenues

77,121

 

 

860

 

 

2,810

 

 

(346)

 

 

80,445

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of materials and other

69,769

 

 

577

 

 

2,396

 

 

(346)

 

 

72,396

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

3,197

 

 

54

 

 

378

 

 

 

 

3,629

 

Depreciation and amortization expense

1,539

 

 

38

 

 

68

 

 

 

 

1,645

 

Total cost of sales

74,505

 

 

669

 

 

2,842

 

 

(346)

 

 

77,670

 

Other operating expenses

13

 

 

 

 

1

 

 

 

 

14

 

General and administrative expenses (excluding

depreciation and amortization expense reflected

below)

 

 

 

 

 

 

625

 

 

625

 

Depreciation and amortization expense

 

 

 

 

 

 

39

 

 

39

 

Operating income (loss) by segment

$

2,603

 

 

$

191

 

 

$

(33)

 

 

$

(664)

 

 

$

2,097

 

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 (g)

(millions of dollars, except per share amounts)

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

 

Reconciliation of net income (loss) attributable to Valero

Energy Corporation stockholders to adjusted net income

(loss) attributable to Valero Energy Corporation

stockholders

 

 

 

 

 

 

 

 

Net income (loss) attributable to Valero Energy Corporation

stockholders

$

(464)

 

 

$

609

 

 

$

(1,062)

 

 

$

1,362

 

 

Adjustments:

 

 

 

 

 

 

 

 

Last-in, first-out (LIFO) liquidation adjustment (a)

326

 

 

 

 

326

 

 

 

 

Income tax benefit related to the LIFO liquidation

adjustment

(108)

 

 

 

 

(108)

 

 

 

 

LIFO liquidation adjustment, net of taxes

218

 

 

 

 

218

 

 

 

 

Change in estimated useful life (d)

30

 

 

 

 

30

 

 

 

 

Income tax benefit related to the change in estimated

useful life

(6)

 

 

 

 

(6)

 

 

 

 

Change in estimated useful life, net of taxes

24

 

 

 

 

24

 

 

 

 

LCM inventory valuation adjustment (c)

(313)

 

 

 

 

(19)

 

 

 

 

Income tax expense related to the LCM inventory

valuation adjustment

63

 

 

 

 

3

 

 

 

 

LCM inventory valuation adjustment, net of taxes

(250)

 

 

 

 

(16)

 

 

 

 

2019 blender’s tax credit attributable to Valero Energy

Corporation stockholders (b)

 

 

33

 

 

 

 

112

 

 

Income tax expense related to 2019 blender’s tax credit

 

 

 

 

 

 

(3)

 

 

2019 blender’s tax credit attributable to Valero Energy

Corporation stockholders, net of taxes

 

 

33

 

 

 

 

109

 

 

Loss on early redemption of debt (e)

 

 

 

 

 

 

22

 

 

Income tax benefit related to loss on early

redemption of debt

 

 

 

 

 

 

(5)

 

 

Loss on early redemption of debt, net of taxes

 

 

 

 

 

 

17

 

 

Total adjustments

(8)

 

 

33

 

 

226

 

 

126

 

 

Adjusted net income (loss) attributable to

Valero Energy Corporation stockholders

$

(472)

 

 

$

642

 

 

$

(836)

 

 

$

1,488

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of earnings (loss) per common share –

assuming dilution to adjusted earnings (loss) per common

share – assuming dilution

 

 

 

 

 

 

 

 

Earnings (loss) per common share – assuming dilution (f)

$

(1.14)

 

 

$

1.48

 

 

$

(2.62)

 

 

$

3.28

 

 

Adjustments:

 

 

 

 

 

 

 

 

LIFO liquidation adjustment (a)

0.53

 

 

 

 

0.53

 

 

 

 

Change in estimated useful life (d)

0.06

 

 

 

 

0.06

 

 

 

 

LCM inventory valuation adjustment (c)

(0.61)

 

 

 

 

(0.04)

 

 

 

 

2019 blender’s tax credit attributable to Valero Energy

Corporation stockholders (b)

 

 

0.07

 

 

 

 

0.26

 

 

Loss on early redemption of debt (e)

 

 

 

 

 

 

0.04

 

 

Total adjustments

(0.02)

 

 

0.07

 

 

0.55

 

 

0.30

 

 

Adjusted earnings (loss) per common share –

assuming dilution (f)

$

(1.16)

 

 

$

1.55

 

 

$

(2.07)

 

 

$

3.58

 

 

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 (g)

(millions of dollars)

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of operating income (loss) by segment to

segment margin, and reconciliation of operating income

(loss) by segment to adjusted operating income (loss) by

segment

 

 

 

 

 

 

 

Refining segment

 

 

 

 

 

 

 

Refining operating income (loss)

$

(629)

 

 

$

1,087

 

 

$

(965)

 

 

$

2,603

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

4

 

 

 

 

13

 

LIFO liquidation adjustment (a)

326

 

 

 

 

326

 

 

 

LCM inventory valuation adjustment (c)

(296)

 

 

 

 

(19)

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

989

 

 

1,100

 

 

2,912

 

 

3,197

 

Depreciation and amortization expense

538

 

 

518

 

 

1,607

 

 

1,539

 

Other operating expenses

24

 

 

10

 

 

29

 

 

13

 

Refining margin

$

952

 

 

$

2,719

 

 

$

3,890

 

 

$

7,365

 

 

 

 

 

 

 

 

 

Refining operating income (loss)

$

(629)

 

 

$

1,087

 

 

$

(965)

 

 

$

2,603

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

4

 

 

 

 

 

13

 

LIFO liquidation adjustment (a)

326

 

 

 

 

326

 

 

 

LCM inventory valuation adjustment (c)

(296)

 

 

 

 

(19)

 

 

 

Other operating expenses

24

 

 

10

 

 

29

 

 

13

 

Adjusted refining operating income (loss)

$

(575)

 

 

$

1,101

 

 

$

(629)

 

 

$

2,629

 

 

 

 

 

 

 

 

 

Renewable diesel segment

 

 

 

 

 

 

 

Renewable diesel operating income

$

184

 

 

$

65

 

 

$

511

 

 

$

191

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

58

 

 

 

 

198

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

23

 

 

18

 

 

63

 

 

54

 

Depreciation and amortization expense

10

 

 

15

 

 

33

 

 

38

 

Renewable diesel margin

$

217

 

 

$

156

 

 

$

607

 

 

$

481

 

 

 

 

 

 

 

 

 

Renewable diesel operating income

$

184

 

 

$

65

 

 

$

511

 

 

$

191

 

Adjustment: 2019 blender’s tax credit (b)

 

 

58

 

 

 

 

198

 

Adjusted renewable diesel operating income

$

184

 

 

$

123

 

 

$

511

 

 

$

389

 

 

 

 

 

 

 

 

 

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 (g)

(millions of dollars)

(unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of operating income (loss) by segment to

segment margin, and reconciliation of operating income

(loss) by segment to adjusted operating income (loss) by

segment (continued)

 

 

 

 

 

 

 

Ethanol segment

 

 

 

 

 

 

 

Ethanol operating income (loss)

$

22

 

 

$

(43)

 

 

$

(84)

 

 

$

(33)

 

Adjustments:

 

 

 

 

 

 

 

LCM inventory valuation adjustment (c)

(17)

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

105

 

 

121

 

 

293

 

 

378

 

Depreciation and amortization expense (d)

54

 

 

23

 

 

97

 

 

68

 

Other operating expenses

1

 

 

 

 

1

 

 

1

 

Ethanol margin

$

165

 

 

$

101

 

 

$

307

 

 

$

414

 

 

 

 

 

 

 

 

 

Ethanol operating income (loss)

$

22

 

 

$

(43)

 

 

$

(84)

 

 

$

(33)

 

Adjustments:

 

 

 

 

 

 

 

LCM inventory valuation adjustment (c)

(17)

 

 

 

 

 

 

 

Change in estimated useful life (d)

30

 

 

 

 

30

 

 

 

Other operating expenses

1

 

 

 

 

1

 

 

1

 

Adjusted ethanol operating income (loss)

$

36

 

 

$

(43)

 

 

$

(53)

 

 

$

(32)

 

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 (g)

(millions of dollars)

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of refining segment operating income (loss) to refining margin (by region), and reconciliation of refining segment operating income (loss) to adjusted refining

segment operating income (loss) (by region) (h)

 

 

 

 

 

 

 

U.S. Gulf Coast region

 

 

 

 

 

 

 

Refining operating income (loss)

$

(653)

 

 

$

388

 

 

$

(703)

 

 

$

779

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

3

 

 

 

 

9

 

LIFO liquidation adjustment (a)

200

 

 

 

 

200

 

 

 

LCM inventory valuation adjustment (c)

(4)

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

556

 

 

641

 

 

1,649

 

 

1,826

 

Depreciation and amortization expense

329

 

 

326

 

 

990

 

 

954

 

Other operating expenses

18

 

 

6

 

 

20

 

 

8

 

Refining margin

$

446

 

 

$

1,364

 

 

$

2,156

 

 

$

3,576

 

 

 

 

 

 

 

 

 

Refining operating income (loss)

$

(653)

 

 

$

388

 

 

$

(703)

 

 

$

779

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

3

 

 

 

 

9

 

LIFO liquidation adjustment (a)

200

 

 

 

 

200

 

 

 

LCM inventory valuation adjustment (c)

(4)

 

 

 

 

 

 

 

Other operating expenses

18

 

 

6

 

 

20

 

 

8

 

Adjusted refining operating income (loss)

$

(439)

 

 

$

397

 

 

$

(483)

 

 

$

796

 

 

 

 

 

 

 

 

 

U.S. Mid-Continent region

 

 

 

 

 

 

 

Refining operating income (loss)

$

(140)

 

 

$

333

 

 

$

(67)

 

 

$

991

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

1

 

 

 

 

3

 

LIFO liquidation adjustment (a)

58

 

 

 

 

58

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

153

 

 

156

 

 

465

 

 

468

 

Depreciation and amortization expense

84

 

 

77

 

 

250

 

 

226

 

Other operating expenses

 

 

2

 

 

 

 

2

 

Refining margin

$

155

 

 

$

569

 

 

$

706

 

 

$

1,690

 

 

 

 

 

 

 

 

 

Refining operating income (loss)

$

(140)

 

 

$

333

 

 

$

(67)

 

 

$

991

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

1

 

 

 

 

3

 

LIFO liquidation adjustment (a)

58

 

 

 

 

58

 

 

 

Other operating expenses

 

 

2

 

 

 

 

2

 

Adjusted refining operating income (loss)

$

(82)

 

 

$

336

 

 

$

(9)

 

 

$

996

 

 

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 (g)

(millions of dollars)

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of refining segment operating income (loss)

to refining margin (by region), and reconciliation of

refining segment operating income (loss) to adjusted

refining segment operating income (loss) (by region) (h)

(continued)

 

 

 

 

 

 

 

North Atlantic region

 

 

 

 

 

 

 

Refining operating income

$

201

 

 

$

273

 

 

$

84

 

 

$

727

 

Adjustments:

 

 

 

 

 

 

 

LIFO liquidation adjustment (a)

33

 

 

 

 

33

 

 

 

LCM inventory valuation adjustment (c)

(236)

 

 

 

 

(19)

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

130

 

 

146

 

 

383

 

 

439

 

Depreciation and amortization expense

53

 

 

52

 

 

158

 

 

160

 

Other operating expenses

5

 

 

2

 

 

8

 

 

2

 

Refining margin

$

186

 

 

$

473

 

 

$

647

 

 

$

1,328

 

 

 

 

 

 

 

 

 

Refining operating income

$

201

 

 

$

273

 

 

$

84

 

 

$

727

 

Adjustments:

 

 

 

 

 

 

 

LIFO liquidation adjustment (a)

33

 

 

 

 

33

 

 

 

LCM inventory valuation adjustment (c)

(236)

 

 

 

 

(19)

 

 

 

Other operating expenses

5

 

 

2

 

 

8

 

 

2

 

Adjusted refining operating income

$

3

 

 

$

275

 

 

$

106

 

 

$

729

 

 

 

 

 

 

 

 

 

U.S. West Coast region

 

 

 

 

 

 

 

Refining operating income (loss)

$

(37)

 

 

$

93

 

 

$

(279)

 

 

$

106

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

 

 

 

 

1

 

LIFO liquidation adjustment (a)

35

 

 

 

 

35

 

 

 

LCM inventory valuation adjustment (c)

(56)

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below)

150

 

 

157

 

 

415

 

 

464

 

Depreciation and amortization expense

72

 

 

63

 

 

209

 

 

199

 

Other operating expenses

1

 

 

 

 

1

 

 

1

 

Refining margin

$

165

 

 

$

313

 

 

$

381

 

 

$

771

 

 

 

 

 

 

 

 

 

Refining operating income (loss)

$

(37)

 

 

$

93

 

 

$

(279)

 

 

$

106

 

Adjustments:

 

 

 

 

 

 

 

2019 blender’s tax credit (b)

 

 

 

 

 

 

1

 

LIFO liquidation adjustment (a)

35

 

 

 

 

35

 

 

 

LCM inventory valuation adjustment (c)

(56)

 

 

 

 

 

 

 

Other operating expenses

1

 

 

 

 

1

 

 

1

 

Adjusted refining operating income (loss)

$

(57)

 

 

$

93

 

 

$

(243)

 

 

$

108

 

 

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
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Throughput volumes (thousand barrels per day)

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

Heavy sour crude oil

318

 

 

418

 

 

352

 

 

416

 

Medium/light sour crude oil

346

 

 

253

 

 

357

 

 

282

 

Sweet crude oil

1,252

 

 

1,615

 

 

1,240

 

 

1,548

 

Residuals

219

 

 

238

 

 

208

 

 

208

 

Other feedstocks

108

 

 

132

 

 

92

 

 

152

 

Total feedstocks

2,243

 

 

2,656

 

 

2,249

 

 

2,606

 

Blendstocks and other

283

 

 

298

 

 

308

 

 

323

 

Total throughput volumes

2,526

 

 

2,954

 

 

2,557

 

 

2,929

 

 

 

 

 

 

 

 

 

Yields (thousand barrels per day)

 

 

 

 

 

 

 

Gasolines and blendstocks

1,273

 

 

1,406

 

 

1,217

 

 

1,393

 

Distillates

914

 

 

1,137

 

 

931

 

 

1,123

 

Other products (i)

360

 

 

438

 

 

424

 

 

442

 

Total yields

2,547

 

 

2,981

 

 

2,572

 

 

2,958

 

 

 

 

 

 

 

 

 

Operating statistics (g) (j)

 

 

 

 

 

 

 

Refining margin

$

952

 

 

$

2,719

 

 

$

3,890

 

 

$

7,365

 

Adjusted refining operating income (loss)

$

(575)

 

 

$

1,101

 

 

$

(629)

 

 

$

2,629

 

Throughput volumes (thousand barrels per day)

2,526

 

 

2,954

 

 

2,557

 

 

2,929

 

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

4.10

 

 

$

10.00

 

 

$

5.55

 

 

$

9.21

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

4.26

 

 

4.05

 

 

4.16

 

 

4.00

 

Depreciation and amortization expense per barrel of

throughput

2.32

 

 

1.90

 

 

2.29

 

 

1.92

 

Adjusted refining operating income (loss) per barrel of

throughput

$

(2.48)

 

 

$

4.05

 

 

$

(0.90)

 

 

$

3.29

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

RENEWABLE DIESEL SEGMENT OPERATING HIGHLIGHTS

(millions of dollars, except per gallon amounts)

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Operating statistics (g) (j)

 

 

 

 

 

 

 

Renewable diesel margin

$

217

 

 

$

156

 

 

$

607

 

 

$

481

 

Adjusted renewable diesel operating income

$

184

 

 

$

123

 

 

$

511

 

 

$

389

 

Sales volumes (thousand gallons per day)

870

 

 

638

 

 

844

 

 

732

 

 

 

 

 

 

 

 

 

Renewable diesel margin per gallon of sales

$

2.72

 

 

$

2.64

 

 

$

2.63

 

 

$

2.40

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per gallon of sales

0.29

 

 

0.30

 

 

0.27

 

 

0.27

 

Depreciation and amortization expense per gallon of sales

0.13

 

 

0.25

 

 

0.15

 

 

0.19

 

Adjusted renewable diesel operating income per gallon

of sales

$

2.30

 

 

$

2.09

 

 

$

2.21

 

 

$

1.94

 

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
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Operating statistics (g) (j)

 

 

 

 

 

 

 

Ethanol margin

$

165

 

 

$

101

 

 

$

307

 

 

$

414

 

Adjusted ethanol operating income (loss)

$

36

 

 

$

(43)

 

 

$

(53)

 

 

$

(32)

 

Production volumes (thousand gallons per day)

3,800

 

 

4,006

 

 

3,408

 

 

4,251

 

 

 

 

 

 

 

 

 

Ethanol margin per gallon of production

$

0.47

 

 

$

0.27

 

 

$

0.33

 

 

$

0.36

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per gallon of production

0.30

 

 

0.33

 

 

0.31

 

 

0.33

 

Depreciation and amortization expense per gallon of production

0.07

 

 

0.06

 

 

0.08

 

 

0.06

 

Adjusted ethanol operating income (loss) per gallon of production

$

0.10

 

 

$

(0.12)

 

 

$

(0.06)

 

 

$

(0.03)

 

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
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Operating statistics by region (h)

 

 

 

 

 

 

 

U.S. Gulf Coast region (g) (j)

 

 

 

 

 

 

 

Refining margin

$

446

 

 

$

1,364

 

 

$

2,156

 

 

$

3,576

 

Adjusted refining operating income (loss)

$

(439)

 

 

$

397

 

 

$

(483)

 

 

$

796

 

Throughput volumes (thousand barrels per day)

1,448

 

 

1,747

 

 

1,500

 

 

1,732

 

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

3.35

 

 

$

8.48

 

 

$

5.24

 

 

$

7.56

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

4.19

 

 

3.99

 

 

4.01

 

 

3.86

 

Depreciation and amortization expense per barrel of

throughput

2.47

 

 

2.02

 

 

2.41

 

 

2.02

 

Adjusted refining operating income (loss) per barrel of

throughput

$

(3.31)

 

 

$

2.47

 

 

$

(1.18)

 

 

$

1.68

 

 

 

 

 

 

 

 

 

U.S. Mid-Continent region (g) (j)

 

 

 

 

 

 

 

Refining margin

$

155

 

 

$

569

 

 

$

706

 

 

$

1,690

 

Adjusted refining operating income (loss)

$

(82)

 

 

$

336

 

 

$

(9)

 

 

$

996

 

Throughput volumes (thousand barrels per day)

417

 

 

450

 

 

404

 

 

451

 

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

4.05

 

 

$

13.75

 

 

$

6.38

 

 

$

13.72

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

3.99

 

 

3.79

 

 

4.20

 

 

3.80

 

Depreciation and amortization expense per barrel of

throughput

2.19

 

 

1.86

 

 

2.26

 

 

1.84

 

Adjusted refining operating income (loss) per barrel of

throughput

$

(2.13)

 

 

$

8.10

 

 

$

(0.08)

 

 

$

8.08

 

 

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
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Operating statistics by region (h) (continued)

 

 

 

 

 

 

 

North Atlantic region (g) (j)

 

 

 

 

 

 

 

Refining margin

$

186

 

 

$

473

 

 

$

647

 

 

$

1,328

 

Adjusted refining operating income

$

3

 

 

$

275

 

 

$

106

 

 

$

729

 

Throughput volumes (thousand barrels per day)

408

 

 

474

 

 

412

 

 

486

 

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

4.96

 

 

$

10.84

 

 

$

5.73

 

 

$

10.01

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

3.44

 

 

3.33

 

 

3.39

 

 

3.31

 

Depreciation and amortization expense per barrel of

throughput

1.43

 

 

1.21

 

 

1.40

 

 

1.20

 

Adjusted refining operating income per barrel of

throughput

$

0.09

 

 

$

6.30

 

 

$

0.94

 

 

$

5.50

 

 

 

 

 

 

 

 

 

U.S. West Coast region (g) (j)

 

 

 

 

 

 

 

Refining margin

$

165

 

 

$

313

 

 

$

381

 

 

$

771

 

Adjusted refining operating income (loss)

$

(57)

 

 

$

93

 

 

$

(243)

 

 

$

108

 

Throughput volumes (thousand barrels per day)

253

 

 

283

 

 

241

 

 

260

 

 

 

 

 

 

 

 

 

Refining margin per barrel of throughput

$

7.08

 

 

$

12.06

 

 

$

5.77

 

 

$

10.87

 

Less:

 

 

 

 

 

 

 

Operating expenses (excluding depreciation and

amortization expense reflected below) per barrel of

throughput

6.44

 

 

6.03

 

 

6.29

 

 

6.54

 

Depreciation and amortization expense per barrel of

throughput

3.08

 

 

2.43

 

 

3.17

 

 

2.80

 

Adjusted refining operating income (loss) per barrel of

throughput

$

(2.44)

 

 

$

3.60

 

 

$

(3.69)

 

 

$

1.53

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Refining

 

 

 

 

 

 

 

Feedstocks (dollars per barrel)

 

 

 

 

 

 

 

Brent crude oil

$

43.38

 

 

$

62.08

 

 

$

42.50

 

 

$

64.74

 

Brent less West Texas Intermediate (WTI) crude oil

2.47

 

 

5.64

 

 

4.27

 

 

7.70

 

Brent less Alaska North Slope (ANS) crude oil

0.64

 

 

(0.99)

 

 

1.00

 

 

(0.51)

 

Brent less Louisiana Light Sweet (LLS) crude oil

0.88

 

 

1.46

 

 

2.20

 

 

1.40

 

Brent less Argus Sour Crude Index (ASCI) crude oil

1.71

 

 

3.18

 

 

3.62

 

 

3.17

 

Brent less Maya crude oil

4.19

 

 

5.45

 

 

7.66

 

 

5.57

 

LLS crude oil

42.50

 

 

60.62

 

 

40.30

 

 

63.34

 

LLS less ASCI crude oil

0.83

 

 

1.72

 

 

1.42

 

 

1.77

 

LLS less Maya crude oil

3.31

 

 

3.99

 

 

5.46

 

 

4.17

 

WTI crude oil

40.91

 

 

56.44

 

 

38.23

 

 

57.04

 

 

 

 

 

 

 

 

 

Natural gas (dollars per million British Thermal Units)

1.99

 

 

2.28

 

 

1.82

 

 

2.53

 

 

 

 

 

 

 

 

 

Products (dollars per barrel)

 

 

 

 

 

 

 

U.S. Gulf Coast:

 

 

 

 

 

 

 

Conventional Blendstock of Oxygenate Blending (CBOB)

gasoline less Brent

4.96

 

 

6.82

 

 

2.61

 

 

4.57

 

Ultra-low-sulfur (ULS) diesel less Brent

5.19

 

 

15.79

 

 

7.11

 

 

14.55

 

Propylene less Brent

(12.69)

 

 

(19.36)

 

 

(15.48)

 

 

(21.57)

 

CBOB gasoline less LLS

5.84

 

 

8.28

 

 

4.81

 

 

5.97

 

ULS diesel less LLS

6.07

 

 

17.25

 

 

9.31

 

 

15.95

 

Propylene less LLS

(11.81)

 

 

(17.90)

 

 

(13.28)

 

 

(20.17)

 

U.S. Mid-Continent:

 

 

 

 

 

 

 

CBOB gasoline less WTI

8.17

 

 

15.28

 

 

7.35

 

 

14.58

 

ULS diesel less WTI

8.54

 

 

21.38

 

 

12.41

 

 

22.93

 

North Atlantic:

 

 

 

 

 

 

 

CBOB gasoline less Brent

8.08

 

 

10.11

 

 

5.13

 

 

7.16

 

ULS diesel less Brent

6.79

 

 

17.28

 

 

9.34

 

 

16.49

 

U.S. West Coast:

 

 

 

 

 

 

 

California Reformulated Gasoline Blendstock of

Oxygenate Blending (CARBOB) 87 gasoline less ANS

13.19

 

 

19.31

 

 

10.15

 

 

16.76

 

California Air Resources Board (CARB) diesel less ANS

9.34

 

 

18.38

 

 

12.31

 

 

18.56

 

CARBOB 87 gasoline less WTI

15.02

 

 

25.94

 

 

13.42

 

 

24.97

 

CARB diesel less WTI

11.17

 

 

25.01

 

 

15.58

 

 

26.77

 

See Notes to Earnings Release Tables.

 

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Renewable diesel

 

 

 

 

 

 

 

New York Mercantile Exchange ULS diesel

(dollars per gallon)

$

1.20

 

 

$

1.90

 

 

$

1.24

 

 

$

1.94

 

Biodiesel Renewable Identification Number (RIN)

(dollars per RIN)

0.67

 

 

0.46

 

 

0.56

 

 

0.45

 

California Low-Carbon Fuel Standard (dollars per metric ton)

195.60

 

 

198.24

 

 

200.88

 

 

193.74

 

Chicago Board of Trade (CBOT) soybean oil (dollars per

pound)

0.32

 

 

0.29

 

 

0.30

 

 

0.29

 

 

 

 

 

 

 

 

 

Ethanol

 

 

 

 

 

 

 

CBOT corn (dollars per bushel)

3.40

 

 

3.90

 

 

3.46

 

 

3.85

 

New York Harbor ethanol (dollars per gallon)

1.46

 

 

1.53

 

 

1.32

 

 

1.50

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

OTHER FINANCIAL DATA

(millions of dollars, except per share amounts)

(unaudited)

 

September 30,

 

December 31,

 

2020

 

2019

Balance sheet data

 

 

 

Current assets

$

15,422

 

 

$

18,969

 

Cash and cash equivalents included in current assets

4,047

 

 

2,583

 

Inventories included in current assets

5,357

 

 

7,013

 

Current liabilities

8,122

 

 

13,160

 

Current portion of debt and finance lease obligations

included in current liabilities

636

 

 

494

 

Debt and finance lease obligations, less current portion

14,577

 

 

9,178

 

Total debt and finance lease obligations

15,213

 

 

9,672

 

Valero Energy Corporation stockholders’ equity

19,223

 

 

21,803

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of net cash provided by operating

activities to adjusted net cash provided by (used in)

operating activities (g)

 

 

 

 

 

 

 

Net cash provided by operating activities

$

165

 

 

$

1,429

 

 

$

852

 

 

$

3,823

 

Exclude:

 

 

 

 

 

 

 

Changes in current assets and current liabilities

246

 

 

315

 

 

(232)

 

 

728

 

Diamond Green Diesel LLC’s (DGD) adjusted net cash

provided by operating activities attributable to our joint venture partner’s ownership interest in DGD

96

 

 

40

 

 

269

 

 

114

 

Adjusted net cash provided by (used in) operating

activities

$

(177)

 

 

$

1,074

 

 

$

815

 

 

$

2,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Dividends per common share

$

0.98

 

 

$

0.90

 

 

$

2.94

 

 

$

2.70

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

EARNINGS RELEASE TABLES

OTHER FINANCIAL DATA

(millions of dollars)

(unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of total capital investments to capital

investments attributable to Valero (g)

 

 

 

 

 

 

 

Capital expenditures (excluding variable interest entities

(VIEs))

$

220

 

 

$

325

 

 

$

775

 

 

$

1,179

 

Capital expenditures of VIEs:

 

 

 

 

 

 

 

DGD

134

 

 

40

 

 

311

 

 

91

 

Other VIEs

53

 

 

70

 

 

196

 

 

139

 

Deferred turnaround and catalyst cost expenditures

(excluding VIEs)

92

 

 

113

 

 

529

 

 

583

 

Deferred turnaround and catalyst cost expenditures

of DGD

8

 

 

15

 

 

18

 

 

16

 

Investments in unconsolidated joint ventures

10

 

 

32

 

 

39

 

 

122

 

Total capital investments

517

 

 

595

 

 

1,868

 

 

2,130

 

Adjustments:

 

 

 

 

 

 

 

DGD’s capital investments attributable to our joint

venture partner

(71)

 

 

(28)

 

 

(165)

 

 

(54)

 

Capital expenditures of other VIEs

(53)

 

 

(70)

 

 

(196)

 

 

(139)

 

Capital investments attributable to Valero

$

393

 

 

$

497

 

 

$

1,507

 

 

$

1,937

 

 

 

 

 

 

 

 

 

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION

NOTES TO EARNINGS RELEASE TABLES

(a)

Cost of materials and other for the three and nine months ended September 30, 2020 includes a charge of $326 million for the impact of an expected liquidation of LIFO inventory layers attributable to our refining segment. Our inventory levels have decreased throughout the first nine months of 2020 due to lower demand for our products resulting from the negative economic impacts of COVID-19 on our business. Because these impacts are ongoing, we expect that our inventory levels at December 31, 2020 will remain below their December 31, 2019 levels.

 

(b)

Cost of materials and other for the three and nine months ended September 30, 2020 includes a benefit of $82 million and $237 million, respectively, related to the blender’s tax credit attributable to renewable diesel volumes blended during those periods. The legislation authorizing the credit through December 31, 2022 was passed and signed into law in December 2019, and that legislation also applied retroactively to volumes blended during 2019 (2019 blender’s tax credit). The entire 2019 blender’s tax credit was recognized by us in December 2019 because the law was enacted in that month, but the benefit attributable to volumes blended during the three and nine months ended September 30, 2019 was $62 million and $211 million, respectively.

 
The above-mentioned pre-tax benefits are attributable to our reportable segments and stockholders as follows:

 

 

Periods to which Blenders Tax Credit is Attributable

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Reportable segments to which blenders

tax credit is attributable

 

 

 

 

 

 

 

Refining

$

2

 

 

$

4

 

 

$

6

 

 

$

13

 

Renewable diesel

80

 

 

58

 

 

231

 

 

198

 

Total

$

82

 

 

$

62

 

 

$

237

 

 

$

211

 

 

 

 

 

 

 

 

 

Interests to which blenders tax credit is

attributable

 

 

 

 

 

 

 

Valero Energy Corporation stockholders

$

42

 

 

$

33

 

 

$

121

 

 

$

112

 

Noncontrolling interest

40

 

 

29

 

 

116

 

 

99

 

Total

$

82

 

 

$

62

 

 

$

237

 

 

$

211

 

(c)

The market value of our inventories accounted for under the LIFO method fell below their historical cost on an aggregate basis as of March 31, 2020. As a result, we recorded an LCM inventory valuation adjustment of $2.5 billion in March 2020. The market value of our LIFO inventories improved due to the subsequent recovery in market prices, which resulted in a reversal of $2.2 billion in the three months ended June 30, 2020 and the remaining amount in the three months ended September 30, 2020. Of the $313 million benefit recognized in the three months ended September 30, 2020, $296 million and $17 million is attributable to our refining and ethanol segments, respectively. The LCM inventory valuation adjustment for the nine months ended September 30, 2020 reflects a net benefit of $19 million due to the foreign currency translation effect of the portion of the LCM inventory valuation adjustment attributable to our international operations.

 

(d)

Depreciation and amortization expense for the three and nine months ended September 30, 2020 includes $30 million in accelerated depreciation related to a change in the estimated useful life of one of our ethanol plants.

 

(e)

“Other income, net” for the nine months ended September 30, 2019 includes a $22 million charge from the early redemption of $850 million of our 6.125 percent senior notes due February 1, 2020.

 

(f)

Common equivalent shares have been excluded from the computation of loss per common share — assuming dilution and adjusted loss per common share — assuming dilution for the three and nine months ended September 30, 2020, as the effect of including such shares would be antidilutive.

 

(g)

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 after adjusting for 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 (loss) attributable to Valero Energy Corporation stockholders is defined as net income (loss) attributable to Valero Energy Corporation stockholders adjusted to reflect the items noted below, along with their related income tax effect. We have adjusted for these items because we believe that they are not indicative of our core operating performance and that their adjustment 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 adjustment is provided below.

 

LIFO liquidation adjustment – Generally, the LIFO inventory valuation method provides for the matching of current costs with current revenues. However, a LIFO liquidation results in a portion of our current-year cost of sales being impacted by historical costs, which obscures our current-year financial performance. Therefore, we have excluded the historical cost impact from adjusted net income (loss) attributable to Valero Energy Corporation stockholders. See note (a) for additional details.

 

Change in estimated useful life – The accelerated depreciation recognized as a result of a change in the estimated useful life of one of our ethanol plants (see note (d)) is not indicative of our ongoing operations.

 

– LCM inventory valuation adjustment – The LCM inventory valuation adjustment, which is described in note (c), is the result of the market value of our inventories as of March 31, 2020 falling below their historical cost, with the decline in market value resulting from the decline in product market prices associated with the negative economic impacts from COVID-19. As market prices improved over the subsequent months, we reversed the writedown. The adjustment obscures our financial performance because it results in cost of sales reflecting something other than current costs; therefore, we have excluded the adjustment from adjusted net income (loss) attributable to Valero Energy Corporation stockholders.

 

2019 blender’s tax credit attributable to Valero Energy Corporation stockholders – The 2019 blender’s tax credit was recognized by us in December 2019, but it is attributable to volumes blended throughout 2019. Therefore, the adjustment reflects the portion of the 2019 blender’s tax credit that is associated with volumes blended during the three and nine months ended September 30, 2019. See note (b) for additional details.

 

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 (see note (e)) are not associated with the ongoing costs of our borrowing and financing activities.

 

  • Adjusted earnings (loss) per common share – assuming dilution is defined as adjusted net income (loss) attributable to Valero Energy Corporation stockholders divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution (see note (f)).

 

  • Refining margin is defined as refining operating income (loss) adjusted to reflect the 2019 blender’s tax credit (see note (b)), and excluding the LIFO liquidation adjustment (see note (a)), the LCM inventory valuation adjustment (see note (c)), 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.

 

  • Renewable diesel margin is defined as renewable diesel operating income adjusted to reflect the 2019 blender’s tax credit (see note (b)), and excluding 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.

 

  • Ethanol margin is defined as ethanol operating income (loss) excluding the LCM inventory valuation adjustment (see note (c)), 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.

 

  • Adjusted refining operating income (loss) is defined as refining segment operating income (loss) adjusted to reflect the 2019 blender’s tax credit (see note (b)), and excluding the LIFO liquidation adjustment (see note (a)), the LCM inventory valuation adjustment (see note (c)), and other operating expenses. We believe adjusted refining operating income (loss) 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 renewable diesel operating income is defined as renewable diesel segment operating income adjusted to reflect the 2019 blender’s tax credit (see note (b)). 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 ethanol operating income (loss) is defined as ethanol segment operating income (loss) excluding the LCM inventory valuation adjustment (see note (c)), the change in estimated useful life (see note (d)), and 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 net cash provided by operating activities is defined as net cash provided by (used in) operating activities excluding the items noted below. 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. The basis for our belief with respect to each excluded item is provided below.

 

Changes in current assets and current liabilities – Current assets net of current liabilities represents our operating liquidity. We believe that the change in our operating liquidity from period to period does not represent cash generated by our operations that is available to fund our investing and financing activities.

 

DGD’s adjusted net cash provided by operating activities attributable to our joint venture partner’s ownership interest in DGD – We are a 50/50 joint venture partner in DGD and consolidate DGD’s financial statements; as a result, all of DGD’s net cash provided by operating activities (or operating cash flow) is included in our consolidated net cash provided by operating activities.

 

DGD’s partners use DGD’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. Nevertheless, DGD’s operating cash flow is effectively attributable to each partner and only 50 percent of DGD’s operating cash flow should be attributed to our net cash provided by operating activities. Therefore, we have adjusted our net cash provided by operating activities for the portion of DGD’s operating cash flow attributable to our joint venture partner’s ownership interest because we believe that it more accurately reflects the operating cash flow available to us to fund our investing and financing activities. The adjustment is calculated as follows (in millions):

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

 

DGD operating cash flow data

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

194

 

 

$

68

 

 

$

877

 

 

$

228

 

 

Exclude: changes in current assets and

current liabilities

1

 

 

(12)

 

 

339

 

 

 

 

Adjusted net cash provided by

operating activities

193

 

 

80

 

 

538

 

 

228

 

 

Our partner’s ownership interest

50%

 

50%

 

50%

 

50%

 

DGD’s adjusted net cash provided by

operating activities attributable to our joint

venture partner’s ownership interest in

DGD

$

96

 

 

$

40

 

 

$

269

 

 

$

114

 

  • Capital investments attributable to Valero is defined as all capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in unconsolidated joint venture presented in our consolidated statements of cash flows, excluding the portion of DGD’s capital investments attributable to our joint venture partner and all of the capital expenditures of other VIEs.

 

DGD’s partners use DGD’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. Because DGD’s operating cash flow is effectively attributable to each partner, only 50 percent of DGD’s capital investments should be attributed to our net share of total capital investments. We also exclude the capital expenditures of our other consolidated VIEs because we do not operate those VIEs. We believe capital investments attributable to Valero is an important measure because it more accurately reflects our capital investments.

 

(h)

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.

 

(i)

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

 

(j)

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

 

Throughput volumes, sales volumes, and production volumes are calculated by multiplying throughput volumes per day, sales volumes per day, and production volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period. We use throughput volumes, sales volumes, and production volumes for the refining segment, renewable diesel segment, and ethanol 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.

 

Investors:
Homer Bhullar, Vice President – Investor Relations, 210-345-1982
Eric Herbort, Senior Manager – Investor Relations, 210-345-3331
Gautam Srivastava, Manager – Investor Relations, 210-345-3992

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

Source: Valero Energy Corporation