VLO
$82.35
Valero Energy
($1.45)
(1.73%)
Earnings Details
3rd Quarter September 2017
Thursday, October 26, 2017 6:44:18 AM
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Summary

Valero Energy Misses

Valero Energy (VLO) reported 3rd Quarter September 2017 earnings of $1.91 per share on revenue of $23.6 billion. The consensus earnings estimate was $1.83 per share on revenue of $23.4 billion. The Earnings Whisper number was $1.92 per share. Revenue grew 19.9% on a year-over-year basis.

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
$1.91
Earnings Whisper
$1.92
Consensus Estimate
$1.83
Reported Revenue
$23.56 Bil
Revenue Estimate
$23.42 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Valero Energy Reports Third Quarter 2017 Results

Reported net income attributable to Valero stockholders of $841 million, or $1.91 per share.

-- Invested $565 million of growth and sustaining capital in the third quarter.

-- Returned $600 million in cash to stockholders through dividends and stock buybacks.

Previously announced expansion of Valero’s product supply chain into Mexico and in Texas.

-- Expect Diamond Pipeline and Wilmington cogeneration projects to start up in December.

Valero Energy Corporation (VLO) ("Valero") today reported net income attributable to Valero stockholders of $841 million, or $1.91 per share, for the third quarter of 2017 compared to $613 million, or $1.33 per share, for the third quarter of 2016. Third quarter 2016 adjusted net income attributable to Valero stockholders of $571 million, or $1.24 per share, excludes a $42 million income tax benefit from the disposition of Aruba assets.

"Hurricane Harvey disrupted operations at five of our refineries during the quarter," said Joe Gorder, Valero Chairman, President and Chief Executive Officer. "I’m proud of our team’s response and commitment to the safety of our workers, their families, and surrounding communities during the recovery efforts."

Valero worked closely with local, state, and federal government entities to address storm impacts. The company also provided millions of dollars of financial and other assistance to employees, affected communities, and charitable organizations.

"Despite the extent of the storm’s impact, we are pleased with our financial performance for the quarter and remain optimistic for the fourth quarter," continued Gorder. "We are encouraged by domestic and global economic growth, and we expect low oil prices and solid product demand to continue into 2018."

Refining

The refining segment reported $1.4 billion of operating income for the third quarter of 2017 compared to $934 million for the third quarter of 2016, which has been retrospectively revised to reflect the operating results of Valero Energy Partners LP (VLP) as a separate segment consistent with Valero’s current segment presentation. The increase in operating income was driven primarily by higher gasoline and distillate margins and wider discounts for domestic sweet crude oils relative to Brent crude oil, partly offset by higher premiums for residual feedstocks and narrower discounts for medium and heavy sour crude oils versus Brent.

Refinery throughput capacity utilization was 92 percent, and throughput volumes averaged 2.9 million barrels per day in the third quarter of 2017, which was 33,000 barrels per day higher than the third quarter of 2016.

The company exported a total of 339,000 barrels per day of gasoline and diesel during the third quarter of 2017.

Biofuel blending costs of $230 million for the third quarter of 2017 were $32 million higher than the third quarter of 2016, mainly due to higher Renewable Identification Number (RIN) expenses.

Ethanol

The ethanol segment reported $82 million of operating income for the third quarter of 2017 compared to $106 million for the third quarter of 2016. The decrease in operating income is attributed primarily to higher corn prices and lower distillers grain prices that pressured margins. Ethanol production volumes averaged 4.0 million gallons per day in the third quarter of 2017, which was 217,000 gallons per day higher than the third quarter of 2016.

VLP

The VLP segment reported $69 million of operating income for the third quarter of 2017 compared to $56 million for the third quarter of 2016. The increase in operating income was driven primarily by contributions from the Meraux and Three Rivers terminals, which were acquired in September of last year, and the Red River pipeline segment, which was acquired in January 2017.

Earlier today, VLP announced the acquisition of the Port Arthur terminal assets and Parkway Pipeline LLC from Valero for $508 million. The transaction is expected to close on November 1.

Corporate and Other

General and administrative expenses were $229 million, and the effective tax rate was 30 percent for the third quarter of 2017.

Investing and Financing Activities

Capital investments totaled $565 million for the third quarter of 2017, of which $73 million was for turnarounds and catalyst.

Valero returned $600 million to stockholders in the third quarter, of which $309 million was paid as dividends and the balance was used to purchase 4.2 million shares of its common stock, resulting in a total payout ratio of 58 percent for the first nine months of 2017. The company continues to target a total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities for 2017. 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.

The company generated approximately $1 billion of net cash from operating activities in the third quarter of 2017. Included in this amount is the negative impact from a $315 million increase in working capital. Excluding the change in working capital, net cash generated was approximately $1.4 billion.

Liquidity and Financial Position

Valero ended the third quarter of 2017 with $8.5 billion of total debt and $5.2 billion of cash and temporary cash investments. The debt to capital ratio, net of $2.0 billion in cash, was 24 percent.

Strategic Update

Valero continues to target $2.7 billion of total capital investments this year, consisting of $1.1 billion for growth projects and $1.6 billion for sustaining the business.

"We are making excellent progress on our growth investments, with the Wilmington cogeneration plant and Diamond Pipeline expected to be online in December," said Gorder. "We are also pleased with the progress of our investments in Texas and expansion into Mexico, which will extend our product supply chain, internalize secondary costs, and provide opportunities for third-party revenue growth."

During the quarter, the company announced the signing of long-term agreements with IEnova to use terminals to be constructed at the Port of Veracruz and near the cities of Puebla and Mexico City to import refined products into central Mexico beginning in late 2018. Additionally, Valero announced investments in pipelines and terminals in central Texas and a marine terminal in Pasadena, Texas, which are expected to be completed in 2019.

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, is an international manufacturer and marketer of transportation fuels and other petrochemical products. Valero, a Fortune 50 company based in San Antonio, Texas, with approximately 10,000 employees, is an independent petroleum refiner and ethanol producer, and its assets include 15 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day and 11 ethanol plants with a combined production capacity of 1.4 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. In addition, Valero owns the 2 percent general partner interest and a majority limited partner interest in Valero Energy Partners LP, a midstream master limited partnership. Valero sells its products in both the wholesale rack and bulk markets, and approximately 7,400 outlets carry Valero’s brand names in the U.S., Canada, the U.K. and Ireland. Please visit www.valero.com for more information.

Valero Contacts

Investors:

John Locke, Vice President - Investor Relations, 210-345-3077

Karen Ngo, Senior Manager - Investor Relations, 210-345-4574

Tom Mahrer, Manager - Investor Relations, 210-345-1953

Media:

Lillian Riojas, 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," "targeting," 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 our other reports filed with the SEC and on Valero’s website at www.valero.com, and VLP’s annual reports on Form 10-K and quarterly reports on Form 10-Q filed with the SEC and on VLP’s website at www.valeroenergypartners.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, adjusted operating income, refining margin, and ethanol margin. We have included these non-GAAP financial measures to help facilitate the comparison of operating results between periods. See the accompanying earnings release tables for a reconciliation of these non-GAAP measures to their most directly comparable U.S. GAAP measures. In note (e) to the earnings release tables, we disclose the reasons why we believe our use of these non-GAAP financial measures provides useful information.

VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Statement of income data
Operating revenues
$
23,562
$
19,649
$
67,588
$
54,947
Cost of sales:
Cost of materials and other
20,329
17,033
59,366
47,660
Operating expenses (excluding depreciation and
1,125
1,062
3,339
3,093
amortization expense reflected below)
Depreciation and amortization expense
484
458
1,457
1,391
Lower of cost or market inventory valuation adjustment (a) --
--
--
(747
)
Total cost of sales
21,938
18,553
64,162
51,397
Other operating expenses (b)
44
--
44
--
General and administrative expenses (excluding
229
192
597
507
depreciation and amortization expense reflected below)
Depreciation and amortization expense
13
12
39
35
Asset impairment loss (c)
--
--
--
56
Operating income
1,338
892
2,746
2,952
Other income, net
17
12
50
35
Interest and debt expense, net of capitalized interest
(114
)
(115
)
(354
)
(334
)
Income before income tax expense
1,241
789
2,442
2,653
Income tax expense (c)
378
144
686
652
Net income
863
645
1,756
2,001
Less: Net income attributable to noncontrolling interests
22
32
62
79
Net income attributable to
$
841
$
613
$
1,694
$
1,922
Valero Energy Corporation stockholders
Earnings per common share
$
1.91
$
1.33
$
3.80
$
4.12
Weighted-average common shares outstanding (in millions)
439
458
444
465
Earnings per common share - assuming dilution
$
1.91
$
1.33
$
3.80
$
4.12
Weighted-average common shares outstanding - assuming
441
460
446
467
dilution (in millions)
Dividends per common share
$
0.70
$
0.60
$
2.10
$
1.80
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT
(millions of dollars)
(unaudited)
Refining (d)
Ethanol
VLP (d) Corporate
Total
and
Eliminations
Three months ended September 30, 2017
Operating revenues:
Operating revenues from external customers
$
22,728
$
834
$
--
$
--
$
23,562
Intersegment revenues
1
48
110
(159
)
--
Total operating revenues
22,729
882
110
(159
)
23,562
Cost of sales:
Cost of materials and other
19,818
669
--
(158
)
20,329
Operating expenses (excluding depreciation and
986
114
26
(1
)
1,125
amortization expense reflected below)
Depreciation and amortization expense
455
17
12
--
484
Total cost of sales
21,259
800
38
(159
)
21,938
Other operating expenses (b)
41
--
3
--
44
General and administrative expenses (excluding
--
--
--
229
229
depreciation and amortization expense reflected
below)
Depreciation and amortization expense
--
--
--
13
13
Operating income by segment
$
1,429
$
82
$
69
$
(242 )
$
1,338
Three months ended September 30, 2016
Operating revenues:
Operating revenues from external customers
$
18,718
$
931
$
--
$
--
$
19,649
Intersegment revenues
--
56
92
(148
)
--
Total operating revenues
18,718
987
92
(148
)
19,649
Cost of sales:
Cost of materials and other
16,424
757
--
(148
)
17,033
Operating expenses (excluding depreciation and
931
107
24
--
1,062
amortization expense reflected below)
Depreciation and amortization expense
429
17
12
--
458
Total cost of sales
17,784
881
36
(148
)
18,553
General and administrative expenses (excluding
--
--
--
192
192
depreciation and amortization expense reflected
below)
Depreciation and amortization expense
--
--
--
12
12
Operating income by segment
$
934
$
106
$
56
$
(204 )
$
892
See Operating Highlights by Segment.
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT
(millions of dollars)
(unaudited)
Refining (d)
Ethanol
VLP (d)
Corporate
Total
and
Eliminations
Nine months ended September 30, 2017
Operating revenues:
Operating revenues from external customers
$
65,030
$
2,558
$
--
$
--
$
67,588
Intersegment revenues
1
136
326
(463
)
--
Total operating revenues
65,031
2,694
326
(463
)
67,588
Cost of sales:
Cost of materials and other
57,662
2,166
--
(462
)
59,366
Operating expenses (excluding depreciation and
2,935
330
75
(1
)
3,339
amortization expense reflected below)
Depreciation and amortization expense
1,358
63
36
--
1,457
Total cost of sales
61,955
2,559
111
(463
)
64,162
Other operating expenses (b)
41
--
3
--
44
General and administrative expenses (excluding
--
--
--
597
597
depreciation and amortization expense reflected
below)
Depreciation and amortization expense
--
--
--
39
39
Operating income by segment
$
3,035
$
135
$
212
$
(636 )
$
2,746
Nine months ended September 30, 2016
Operating revenues:
Operating revenues from external customers
$
52,302
$
2,645
$
--
$
--
$
54,947
Intersegment revenues
--
135
258
(393
)
--
Total operating revenues
52,302
2,780
258
(393
)
54,947
Cost of sales:
Cost of materials and other
45,790
2,263
--
(393
)
47,660
Operating expenses (excluding depreciation and
2,716
305
72
--
3,093
amortization expense reflected below)
Depreciation and amortization expense
1,308
48
35
--
1,391
Lower of cost or market inventory valuation
(697
)
(50
)
--
--
(747
)
adjustment (a)
Total cost of sales
49,117
2,566
107
(393
)
51,397
General and administrative expenses (excluding
--
--
--
507
507
depreciation and amortization expense reflected
below)
Depreciation and amortization expense
--
--
--
35
35
Asset impairment loss (c)
56
--
--
--
56
Operating income by segment
$
3,129
$
214
$
151
$
(542 )
$
2,952
See Operating Highlights by Segment.
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
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 $
841
$
613
$
1,694
$
1,922
Exclude adjustments:
Lower of cost or market inventory valuation
--
--
--
747
adjustment (a)
Income tax expense related to the lower of cost or
--
--
--
(168
)
market inventory valuation adjustment
Lower of cost or market inventory valuation
--
--
--
579
adjustment, net of taxes
Asset impairment loss (c)
--
--
--
(56
)
Income tax benefit on Aruba Disposition (c)
--
42
--
42
Total adjustments
--
42
--
565
Adjusted net income attributable to
$
841
$
571
$
1,694
$
1,357
Valero Energy Corporation stockholders
Reconciliation of earnings per common share - assuming
dilution to adjusted earnings per common share -
assuming dilution
Earnings per common share - assuming dilution
$
1.91
$
1.33
$
3.80
$
4.12
Exclude adjustments:
Lower of cost or market inventory valuation
--
--
--
1.24
adjustment, net of taxes
Asset impairment loss (c)
--
--
--
(0.12
)
Income tax benefit on Aruba Disposition (c)
--
0.09
--
0.09
Total adjustments
--
0.09
--
1.21
Adjusted earnings per common share - assuming dilution
$
1.91
$
1.24
$
3.80
$
2.91
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Reconciliation of operating income by segment to segment
margin, and reconciliation of operating income by
segment to adjusted operating income by segment
Refining segment (d)
Refining segment operating income
$
1,429
$
934
$
3,035
$
3,129
Add back:
Operating expenses (excluding depreciation and
986
931
2,935
2,716
amortization expense reflected below)
Depreciation and amortization expense
455
429
1,358
1,308
Other operating expenses (b)
41
--
41
--
Lower of cost or market inventory valuation adjustment (a) --
--
--
(697
)
Asset impairment loss (c)
--
--
--
56
Refining margin
$
2,911
$
2,294
$
7,369
$
6,512
Refining segment operating income
$
1,429
$
934
$
3,035
$
3,129
Exclude:
Other operating expenses (b)
(41
)
--
(41
)
--
Lower of cost or market inventory valuation adjustment (a) --
--
--
697
Asset impairment loss (c)
--
--
--
(56
)
Adjusted refining segment operating income
$
1,470
$
934
$
3,076
$
2,488
Ethanol segment
Ethanol segment operating income
$
82
$
106
$
135
$
214
Add back:
Operating expenses (excluding depreciation and
114
107
330
305
amortization expense reflected below)
Depreciation and amortization expense
17
17
63
48
Lower of cost or market inventory valuation adjustment (a) --
--
--
(50
)
Ethanol margin
$
213
$
230
$
528
$
517
Ethanol segment operating income
$
82
$
106
$
135
$
214
Exclude: Lower of cost or market inventory valuation
--
--
--
50
adjustment (a)
Adjusted ethanol segment operating income
$
82
$
106
$
135
$
164
VLP segment
VLP segment operating income
$
69
$
56
$
212
$
151
Exclude: Other operating expenses (b)
(3
)
--
(3
)
--
Adjusted VLP segment operating income
$
72
$
56
$
215
$
151
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
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) (f)
U.S. Gulf Coast region (d)
Operating income
$
608
$
536
$
1,464
$
1,404
Add back:
Operating expenses (excluding depreciation and
558
519
1,696
1,544
amortization expense reflected below)
Depreciation and amortization expense
281
261
839
774
Other operating expenses (b)
41
--
41
--
Lower of cost or market inventory valuation adjustment (a) --
--
--
(37
)
Asset impairment loss (c)
--
--
--
56
Refining margin
$
1,488
$
1,316
$
4,040
$
3,741
Operating income
$
608
$
536
$
1,464
$
1,404
Exclude:
Other operating expenses (b)
(41
)
--
(41
)
--
Lower of cost or market inventory valuation adjustment (a) --
--
--
37
Asset impairment loss (c)
--
--
--
(56
)
Adjusted operating income
$
649
$
536
$
1,505
$
1,423
U.S. Mid-Continent region (d)
Operating income
$
361
$
150
$
647
$
346
Add back:
Operating expenses (excluding depreciation and
144
151
436
422
amortization expense reflected below)
Depreciation and amortization expense
64
59
196
191
Lower of cost or market inventory valuation adjustment (a) --
--
--
(9
)
Refining margin
$
569
$
360
$
1,279
$
950
Operating income
$
361
$
150
$
647
$
346
Exclude: Lower of cost or market inventory valuation
--
--
--
9
adjustment (a)
Adjusted operating income
$
361
$
150
$
647
$
337
See Notes to Earnings Release Tables
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
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) (f) (continued)
North Atlantic region
Operating income
$
328
$
179
$
786
$
1,148
Add back:
Operating expenses (excluding depreciation and
137
119
378
363
amortization expense reflected below)
Depreciation and amortization expense
53
50
150
152
Lower of cost or market inventory valuation adjustment (a) --
--
--
(646
)
Refining margin
$
518
$
348
$
1,314
$
1,017
Operating income
$
328
$
179
$
786
$
1,148
Exclude: Lower of cost or market inventory valuation
--
--
--
646
adjustment (a)
Adjusted operating income
$
328
$
179
$
786
$
502
U.S. West Coast region
Operating income
$
132
$
69
$
138
$
231
Add back:
Operating expenses (excluding depreciation and
147
142
425
387
amortization expense reflected below)
Depreciation and amortization expense
57
59
173
191
Lower of cost or market inventory valuation adjustment (a) --
--
--
(5
)
Refining margin
$
336
$
270
$
736
$
804
Operating income
$
132
$
69
$
138
$
231
Exclude: Lower of cost or market inventory valuation
--
--
--
5
adjustment (a)
Adjusted operating income
$
132
$
69
$
138
$
226
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
REFINING SEGMENT OPERATING HIGHLIGHTS
(millions of dollars, except per barrel amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Throughput volumes (thousand barrels per day)
Feedstocks:
Heavy sour crude oil
446
394
470
401
Medium/light sour crude oil
420
520
461
519
Sweet crude oil
1,348
1,218
1,301
1,195
Residuals
215
282
226
281
Other feedstocks
147
166
146
157
Total feedstocks
2,576
2,580
2,604
2,553
Blendstocks and other
317
280
313
302
Total throughput volumes
2,893
2,860
2,917
2,855
Yields (thousand barrels per day)
Gasolines and blendstocks
1,401
1,401
1,406
1,396
Distillates
1,108
1,078
1,122
1,072
Other products (g)
420
426
426
425
Total yields
2,929
2,905
2,954
2,893
Operating statistics (d) (e) (h)
Refining margin
$
2,911
$
2,294
$
7,369
$
6,512
Adjusted refining segment operating income
$
1,470
$
934
$
3,076
$
2,488
Throughput volumes (thousand barrels per day)
2,893
2,860
2,917
2,855
Throughput margin per barrel
$
10.94
$
8.72
$
9.26
$
8.32
Less:
Operating expenses (excluding depreciation and
3.71
3.54
3.69
3.47
amortization expense reflected below) per barrel
Depreciation and amortization expense per barrel
1.71
1.63
1.71
1.67
Adjusted refining segment operating income per barrel $
5.52
$
3.55
$
3.86
$
3.18
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
ETHANOL SEGMENT OPERATING HIGHLIGHTS
(millions of dollars, except per gallon amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Operating statistics (e) (h)
Ethanol margin
$
213
$
230
$
528
$
517
Adjusted ethanol segment operating income
$
82
$
106
$
135
$
164
Production volumes (thousand gallons per day)
4,032
3,815
3,949
3,794
Ethanol margin per gallon of production
$
0.57
$
0.66
$
0.49
$
0.50
Less:
Operating expenses (excluding depreciation and
0.30
0.31
0.31
0.29
amortization expense reflected below) per gallon
of production
Depreciation and amortization expense per gallon of
0.05
0.05
0.05
0.05
production
Adjusted ethanol segment operating income per gallon $
0.22
$
0.30
$
0.13
$
0.16
of production
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
VLP SEGMENT OPERATING HIGHLIGHTS (d)
(millions of dollars, except per barrel amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Volumes (thousand barrels per day) (h)
Pipeline transportation throughput
859
778
941
849
Terminaling throughput
2,694
2,394
2,760
2,131
Operating statistics (h)
Pipeline transportation revenue
$
23
$
19
$
71
$
58
Pipeline transportation revenue per barrel $
0.29
$
0.26
$
0.28
$
0.25
Terminaling revenue
$
86
$
73
$
253
$
200
Terminaling revenue per barrel
$
0.34
$
0.33
$
0.34
$
0.34
Storage and other revenue
$
1
$
--
$
2
$
--
Total operating revenues
$
110
$
92
$
326
$
258
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
REFINING SEGMENT OPERATING HIGHLIGHTS BY REGION
(millions of dollars, except per barrel amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Operating statistics by region (f)
U.S. Gulf Coast region (d) (e) (h)
Refining margin
$
1,488
$
1,316
$
4,040
$
3,741
Adjusted operating income
$
649
$
536
$
1,505
$
1,423
Throughput volumes (thousand barrels per day)
1,657
1,663
1,713
1,654
Throughput margin per barrel
$
9.76
$
8.60
$
8.64
$
8.26
Less:
Operating expenses (excluding depreciation and
3.66
3.39
3.62
3.41
amortization expense reflected below) per barrel
Depreciation and amortization expense per barrel 1.84
1.71
1.80
1.71
Adjusted operating income per barrel
$
4.26
$
3.50
$
3.22
$
3.14
U.S. Mid-Continent region (d) (e) (h)
Refining margin
$
569
$
360
$
1,279
$
950
Adjusted operating income
$
361
$
150
$
647
$
337
Throughput volumes (thousand barrels per day)
465
443
464
453
Throughput margin per barrel
$
13.31
$
8.85
$
10.10
$
7.65
Less:
Operating expenses (excluding depreciation and
3.38
3.71
3.45
3.40
amortization expense reflected below) per barrel
Depreciation and amortization expense per barrel 1.48
1.45
1.54
1.53
Adjusted operating income per barrel
$
8.45
$
3.69
$
5.11
$
2.72
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
REFINING SEGMENT OPERATING HIGHLIGHTS BY REGION
(millions of dollars, except per barrel amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Operating statistics by region (f) (continued)
North Atlantic region (e) (h)
Refining margin
$
518
$
348
$
1,314
$
1,017
Adjusted operating income
$
328
$
179
$
786
$
502
Throughput volumes (thousand barrels per day)
489
489
490
482
Throughput margin per barrel
$
11.51
$
7.74
$
9.83
$
7.69
Less:
Operating expenses (excluding depreciation and
3.06
2.65
2.83
2.75
amortization expense reflected below) per barrel
Depreciation and amortization expense per barrel 1.17
1.12
1.12
1.15
Adjusted operating income per barrel
$
7.28
$
3.97
$
5.88
$
3.79
U.S. West Coast region (e) (h)
Refining margin
$
336
$
270
$
736
$
804
Adjusted operating income
$
132
$
69
$
138
$
226
Throughput volumes (thousand barrels per day)
282
265
250
266
Throughput margin per barrel
$
12.97
$
11.02
$
10.80
$
11.04
Less:
Operating expenses (excluding depreciation and
5.65
5.78
6.24
5.31
amortization expense reflected below) per barrel
Depreciation and amortization expense per barrel 2.22
2.43
2.53
2.63
Adjusted operating income per barrel
$
5.10
$
2.81
$
2.03
$
3.10
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Feedstocks (dollars per barrel)
Brent crude oil
$
52.21
$
46.91
$
52.59
$
43.00
Brent less West Texas Intermediate (WTI) crude oil
4.05
2.03
3.18
1.80
Brent less Alaska North Slope (ANS) crude oil
0.02
2.13
0.35
1.35
Brent less Louisiana Light Sweet (LLS) crude oil
0.57
0.38
0.77
0.02
Brent less Argus Sour Crude Index (ASCI) crude oil
3.85
5.16
4.28
5.18
Brent less Maya crude oil
5.66
7.88
7.54
8.73
LLS crude oil
51.64
46.53
51.82
42.98
LLS less ASCI crude oil
3.28
4.78
3.51
5.16
LLS less Maya crude oil
5.09
7.50
6.77
8.71
WTI crude oil
48.16
44.88
49.41
41.20
Natural gas (dollars per million British Thermal Units) 2.91
2.80
3.00
2.27
Products (dollars per barrel, unless otherwise noted)
U.S. Gulf Coast:
CBOB gasoline less Brent
14.36
9.69
11.17
9.54
Ultra-low-sulfur diesel less Brent
15.89
10.63
12.67
9.34
Propylene less Brent
(1.74
)
(2.76
)
(0.16
)
(5.65
)
CBOB gasoline less LLS
14.93
10.07
11.94
9.56
Ultra-low-sulfur diesel less LLS
16.46
11.01
13.44
9.36
Propylene less LLS
(1.17
)
(2.38
)
0.61
(5.63
)
U.S. Mid-Continent:
CBOB gasoline less WTI
19.28
14.15
15.38
12.64
Ultra-low-sulfur diesel less WTI
21.99
15.36
16.86
12.70
North Atlantic:
CBOB gasoline less Brent
17.72
11.12
12.99
12.02
Ultra-low-sulfur diesel less Brent
17.06
11.52
13.78
10.74
U.S. West Coast:
CARBOB 87 gasoline less ANS
22.11
17.68
20.63
18.86
CARB diesel less ANS
20.46
14.83
16.54
13.58
CARBOB 87 gasoline less WTI
26.14
17.58
23.46
19.31
CARB diesel less WTI
24.49
14.73
19.37
14.03
New York Harbor corn crush (dollars per gallon)
0.31
0.35
0.28
0.24
See Notes to Earnings Release Tables.
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
OTHER FINANCIAL DATA
(millions of dollars)
(unaudited)
September 30, December 31,
2017
2016
Balance sheet data
Current assets
$
17,442
$
16,800
Cash and temporary cash investments included in current assets
5,176
4,816
Inventories included in current assets
6,137
5,709
Current liabilities
9,130
8,328
Current portion of debt and capital lease obligations included
121
115
in current liabilities
Debt and capital lease obligations, less current portion
8,364
7,886
Total debt and capital lease obligations
8,485
8,001
Valero Energy Corporation stockholders’ equity
20,370
20,024
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Cash flow data
Net cash provided by operating activities $
1,037
$
863
$
3,822
$
3,822
See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO EARNINGS RELEASE TABLES

(a) During the nine months ended September 30, 2016, we recorded a change in our lower of cost or market inventory valuation reserve that was established on December 31, 2015, resulting in a noncash benefit of $747 million ($697 million and $50 million attributable to our refining and ethanol segments, respectively).

(b) Other operating expenses reflect expenses that are not associated with our cost of sales, which for the third quarter of 2017, includes costs incurred at certain of our United States (U.S.) Gulf Coast refineries and certain VLP assets due to damage associated with Hurricane Harvey.

(c) Effective October 1, 2016, we (i) transferred ownership of all of our assets in Aruba, other than certain hydrocarbon inventories and working capital, to Refineria di Aruba N.V., an entity wholly-owned by the Government of Aruba (GOA), (ii) settled our obligations under various agreements with the GOA, including agreements that required us to dismantle our leasehold improvements under certain conditions, and (iii) sold the working capital of our Aruba operations, including hydrocarbon inventories, to the GOA, CITGO Aruba Refining N.V., and CITGO Petroleum Corporation. We refer to this transaction as the "Aruba Disposition."

In June 2016, we recognized an asset impairment loss of $56 million representing all of the remaining carrying value of the long-lived assets of our crude oil and refined product terminal and transshipment facility in Aruba.

In September 2016 and in connection with the Aruba Disposition, our U.S. subsidiaries cancelled all outstanding debt obligations owed to them by our Aruba subsidiaries, which resulted in the recognition by us of an income tax benefit in the U.S. of $42 million during the three and nine months ended September 30, 2016.

(d) Effective January 1, 2017, 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 -- VLP. The results of the VLP segment, which include the results of our majority-owned master limited partnership referred to by the same name, were transferred from the refining segment. Comparable prior period information for our refining segment (as well as that segment’s U.S. Gulf Coast and U.S. Mid-Continent regions) and VLP segment has been retrospectively adjusted to reflect our current segment presentation.

(e) We use certain financial measures (as noted below) in the earnings release tables and accompanying earnings release that are not defined under U.S. generally accepted accounting principles (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 lower of cost or market inventory valuation adjustment, its related income tax effect, the asset impairment loss, and the income tax benefit on the Aruba Disposition. We believe that these items are not indicative of our core operating performance and that their exclusion results in an important measure for our ongoing financial performance to better assess our underlying business results and trends.

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 segment operating income excluding the lower of cost or market inventory valuation adjustment, operating expenses (excluding depreciation and amortization expense), other operating expenses, depreciation and amortization expense, and the asset impairment loss. 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 segment operating income excluding the lower of cost or market inventory valuation adjustment, operating expenses (excluding depreciation and amortization expense), and depreciation and amortization expense. 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 segment operating income is defined as refining segment operating income excluding other operating expenses, the lower of cost or market inventory valuation adjustment, and the asset impairment loss. We believe adjusted refining segment 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 segment operating income is defined as ethanol segment operating income excluding the lower of cost or market inventory valuation adjustment. 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 VLP segment operating income is defined as VLP segment operating income excluding other operating expenses. We believe this is an important measure of our VLP segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.

(f) 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.

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

(h) 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 and per gallon of production amounts are calculated by dividing the associated dollar amount by the throughout volumes, production volumes, pipeline transportation throughput volumes, or terminaling throughput volumes for the period, as applicable.

Throughput volumes, production volumes, pipeline transportation throughput volumes, and terminaling throughput volumes are calculated by multiplying throughput volumes per day, production volumes per day, pipeline transportation throughput volumes per day, and terminaling throughput volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period.

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