- Reported a net loss attributable to Valero stockholders of $359
million, or $0.88 per share, for the fourth quarter and $1.4
billion, or $3.50 per share, for the year.
- Reported an adjusted net loss attributable to Valero
stockholders of $429 million, or $1.06 per share, for the fourth
quarter and $1.3 billion, or $3.12 per share, for the year.
- Returned $400 million in cash to stockholders through dividends
in the fourth quarter and $1.8 billion through dividends and stock
buybacks in the year.
- Declared a regular quarterly cash dividend of $0.98 per
share.
- Completed and started up the St. Charles Alkylation unit on
schedule and under budget.
- Approved a new 470 million gallons per year renewable diesel
plant at Valero’s Port Arthur refinery (DGD 3), which is expected
to commence operations in 2023.
Valero Energy Corporation (NYSE: VLO, “Valero”) today reported a
net loss attributable to Valero stockholders of $359 million, or
$0.88 per share, for the fourth quarter of 2020, compared to net
income of $1.1 billion, or $2.58 per share, for the fourth quarter
of 2019. Excluding the adjustments shown in the accompanying
earnings release tables, the adjusted net loss attributable to
Valero stockholders was $429 million, or $1.06 per share, for the
fourth quarter of 2020, compared to fourth quarter 2019 adjusted
net income attributable to Valero stockholders of $873 million, or
$2.13 per share. Fourth quarter 2020 adjusted results exclude the
after-tax benefit from a LIFO liquidation adjustment of $70
million.
For the year ended December 31, 2020, the net loss attributable
to Valero stockholders was $1.4 billion, or $3.50 per share,
compared to net income of $2.4 billion, or $5.84 per share, in
2019. Excluding the adjustments shown in the accompanying earnings
release tables, the adjusted net loss attributable to Valero
stockholders was $1.3 billion, or $3.12 per share, for 2020,
compared to adjusted net income attributable to Valero stockholders
of $2.4 billion, or $5.70 per share, in 2019.
“We expect to see continued improvement in product demand with
widespread vaccine distribution around the world,” said Joe Gorder,
Valero Chairman and Chief Executive Officer. “We also expect a
faster recovery in refining margins with the continued shutdowns
and conversions of uncompetitive refineries.”
Refining
The refining segment reported a $377 million operating loss for
the fourth quarter of 2020, compared to operating income of $1.4
billion for the fourth quarter of 2019. Excluding a LIFO
liquidation adjustment and other operating expenses, the fourth
quarter 2020 adjusted operating loss was $476 million. Refinery
throughput volumes averaged 2.6 million barrels per day in the
fourth quarter of 2020, which was 468 thousand barrels per day
lower than the fourth quarter of 2019.
Operationally, the refining segment achieved record employee
safety performance, process safety and environmental performance in
2020. “Despite the pandemic-induced financial challenges, our
commitment to safety and environmental stewardship never wavered,”
said Gorder.
Renewable Diesel
The renewable diesel segment, which consists of the Diamond
Green Diesel (DGD) joint venture, reported $127 million of
operating income for the fourth quarter of 2020, compared to $541
million for the fourth quarter of 2019. After adjusting for the
retroactive blender’s tax credit in 2019, adjusted renewable diesel
operating income was $187 million for the fourth quarter of 2019.
Renewable diesel sales volumes averaged 618 thousand gallons per
day in the fourth quarter of 2020, a decrease of 226 thousand
gallons per day versus the fourth quarter of 2019 due to the effect
of planned maintenance in the fourth quarter of 2020. The renewable
diesel segment set a record for annual sales volumes of 787
thousand gallons per day in 2020. As a result of continuous process
improvement and optimization, the capacity of the existing St.
Charles renewable diesel plant (DGD 1) has increased from 275
million gallons per year to 290 million gallons per year.
Ethanol
The ethanol segment reported $15 million of operating income for
the fourth quarter of 2020, compared to $36 million for the fourth
quarter of 2019. Fourth quarter 2020 adjusted operating income was
$17 million. Ethanol production volumes averaged 4.1 million
gallons per day in the fourth quarter of 2020, which was 197
thousand gallons per day lower than the fourth quarter of 2019. The
decrease in operating income was attributed primarily to lower
margins resulting from higher corn prices and lower ethanol
prices.
Corporate and Other
General and administrative expenses were $224 million in the
fourth quarter of 2020, compared to $243 million in the fourth
quarter of 2019. For 2020, general and administrative expenses of
$756 million were $112 million lower than 2019. The effective tax
rate for 2020 was 45 percent, which was primarily the result of the
carryback of our U.S. federal tax net operating loss to 2015 when
the U.S. federal statutory tax rate was 35 percent.
Investing and Financing Activities
Capital investments totaled $622 million in the fourth quarter
of 2020, of which $214 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 $458 million in the fourth quarter of 2020 and $2.0
billion for the full year.
Net cash provided by operating activities in 2020 was $948
million. Included in this amount was a $345 million unfavorable
impact from working capital and $338 million associated with our
joint venture partner’s share of DGD’s net cash provided by
operating activities, excluding changes in DGD’s working capital.
Excluding these items, adjusted net cash provided by operating
activities was $955 million.
Valero returned $400 million to stockholders through dividends
in the fourth quarter of 2020. In 2020, Valero returned $1.8
billion to stockholders, or 184 percent of adjusted net cash
provided by operating activities, consisting of $156 million of
stock buybacks and $1.6 billion in dividends. The 2020 total payout
ratio was 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.
Declaration of Regular Cash Dividend
The Board of Directors has declared a regular quarterly common
stock dividend of $0.98 per share payable on March 4, 2021 to
holders of record at the close of business on February 11,
2021.
Liquidity and Financial Position
Valero ended 2020 with $14.7 billion of total debt and finance
lease obligations and $3.3 billion of cash and cash equivalents.
The debt to capitalization ratio, net of cash and cash equivalents,
was 37 percent as of December 31, 2020.
Strategic Update
In 2020, Valero completed several strategic projects on schedule
and under budget and continued to make progress on other projects
despite challenges related to the COVID-19 pandemic and several
hurricanes. The Pasadena terminal project, which was completed in
the first quarter, expands the company’s product logistics
portfolio, increases biofuel blending capacity and enhances export
flexibility. The St. Charles Alkylation unit, which started up in
the fourth quarter, is designed to convert low-value feedstocks
into a premium alkylate product. The Pembroke Cogen project and the
Diamond Pipeline expansion are on track to be completed in the
third quarter and fourth quarter of 2021, respectively, and the
Port Arthur Coker project is expected to be completed in 2023.
Valero continues to grow its position as the largest renewable
fuels producer in North America with plans to quadruple its
renewable diesel production by the end of 2023. The DGD plant
expansion at St. Charles (DGD 2), which is expected to increase
renewable diesel production by 400 million gallons per year, is
expected to be completed in the fourth quarter of 2021. Valero and
its joint venture partner have also approved a new 470 million
gallons per year renewable diesel plant (DGD 3) at Valero’s Port
Arthur, Texas refinery. The new plant is expected to commence
operations in the second half of 2023, increasing DGD’s total
annual production capacity to approximately 1.2 billion gallons of
renewable diesel and 50 million gallons of renewable naphtha.
“We expect low-carbon fuel policies to continue to expand
globally and drive demand for renewable fuels,” said Gorder, “and
to that end, we are applying our liquid fuels expertise to continue
to expand our long-term competitive advantage in low-carbon
transportation fuels with the expansion of DGD.”
Capital investments attributable to Valero are forecasted at
$2.0 billion in 2021, of which approximately 60 percent is for
sustaining the business and approximately 40 percent is for growth
projects. Almost half of Valero’s 2021 growth capital is allocated
to expanding the renewable diesel business.
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 13
ethanol plants with a combined production capacity of approximately
1.68 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 owns and 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.investorvalero.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, Senior 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,” “forecast,” 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, the timing or effectiveness of the
vaccine distribution, 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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Statement of income data
Revenues
$
16,604
$
27,879
$
64,912
$
108,324
Cost of sales:
Cost of materials and other (a) (b)
15,101
24,080
58,933
96,476
Lower of cost or market (LCM) inventory
valuation adjustment (c)
—
—
(19
)
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,167
1,239
4,435
4,868
Depreciation and amortization expense
(d)
566
557
2,303
2,202
Total cost of sales
16,834
25,876
65,652
103,546
Other operating expenses
5
7
35
21
General and administrative expenses
(excluding
depreciation and amortization expense
reflected below)
224
243
756
868
Depreciation and amortization expense
11
14
48
53
Operating income (loss)
(470
)
1,739
(1,579
)
3,836
Other income, net (e)
25
36
132
104
Interest and debt expense, net of
capitalized interest
(153
)
(119
)
(563
)
(454
)
Income (loss) before income tax expense
(benefit)
(598
)
1,656
(2,010
)
3,486
Income tax expense (benefit)
(289
)
326
(903
)
702
Net income (loss)
(309
)
1,330
(1,107
)
2,784
Less: Net income attributable to
noncontrolling interests (b)
50
270
314
362
Net income (loss) attributable to Valero
Energy Corporation
stockholders
$
(359
)
$
1,060
$
(1,421
)
$
2,422
Earnings (loss) per common
share
$
(0.88
)
$
2.58
$
(3.50
)
$
5.84
Weighted-average common shares outstanding
(in millions)
407
409
407
413
Earnings (loss) per common share –
assuming dilution
$
(0.88
)
$
2.58
$
(3.50
)
$
5.84
Weighted-average common shares outstanding
–
assuming dilution (in millions) (f)
407
410
407
414
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 December 31,
2020
Revenues:
Revenues from external customers
$
15,513
$
205
$
886
$
—
$
16,604
Intersegment revenues
2
62
66
(130
)
—
Total revenues
15,515
267
952
(130
)
16,604
Cost of sales:
Cost of materials and other (a) (b)
14,324
107
800
(130
)
15,101
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,032
22
113
—
1,167
Depreciation and amortization expense
531
11
24
—
566
Total cost of sales
15,887
140
937
(130
)
16,834
Other operating expenses
5
—
—
—
5
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
224
224
Depreciation and amortization expense
—
—
—
11
11
Operating income (loss) by segment
$
(377
)
$
127
$
15
$
(235
)
$
(470
)
Three months ended December 31,
2019
Revenues:
Revenues from external customers
$
26,637
$
284
$
958
$
—
$
27,879
Intersegment revenues
6
73
69
(148
)
—
Total revenues
26,643
357
1,027
(148
)
27,879
Cost of sales:
Cost of materials and other (b)
23,602
(217
)
843
(148
)
24,080
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,092
21
126
—
1,239
Depreciation and amortization expense
523
12
22
—
557
Total cost of sales
25,217
(184
)
991
(148
)
25,876
Other operating expenses
7
—
—
—
7
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
243
243
Depreciation and amortization expense
—
—
—
14
14
Operating income by segment
$
1,419
$
541
$
36
$
(257
)
$
1,739
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
Year ended December 31, 2020
Revenues:
Revenues from external customers
$
60,840
$
1,055
$
3,017
$
—
$
64,912
Intersegment revenues
8
212
226
(446
)
—
Total revenues
60,848
1,267
3,243
(446
)
64,912
Cost of sales:
Cost of materials and other (a) (b)
56,093
500
2,784
(444
)
58,933
LCM inventory valuation adjustment (c)
(19
)
—
—
—
(19
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
3,944
85
406
—
4,435
Depreciation and amortization expense
(d)
2,138
44
121
—
2,303
Total cost of sales
62,156
629
3,311
(444
)
65,652
Other operating expenses
34
—
1
—
35
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
756
756
Depreciation and amortization expense
—
—
—
48
48
Operating income (loss) by segment
$
(1,342
)
$
638
$
(69
)
$
(806
)
$
(1,579
)
Year ended December 31, 2019
Revenues:
Revenues from external customers
$
103,746
$
970
$
3,606
$
2
$
108,324
Intersegment revenues
18
247
231
(496
)
—
Total revenues
103,764
1,217
3,837
(494
)
108,324
Cost of sales:
Cost of materials and other (b)
93,371
360
3,239
(494
)
96,476
Operating expenses (excluding depreciation
and
amortization expense reflected below)
4,289
75
504
—
4,868
Depreciation and amortization expense
2,062
50
90
—
2,202
Total cost of sales
99,722
485
3,833
(494
)
103,546
Other operating expenses
20
—
1
—
21
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
868
868
Depreciation and amortization expense
—
—
—
53
53
Operating income by segment
$
4,022
$
732
$
3
$
(921
)
$
3,836
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
December 31,
Year Ended December
31,
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
$
(359
)
$
1,060
$
(1,421
)
$
2,422
Adjustments:
Last-in, first-out (LIFO) liquidation
adjustment (a)
(102
)
—
224
—
Income tax expense (benefit) related to
the LIFO liquidation
adjustment
32
—
(76
)
—
LIFO liquidation adjustment, net of
taxes
(70
)
—
148
—
Change in estimated useful life (d)
—
—
30
—
Income tax benefit related to the change
in estimated
useful life
—
—
(6
)
—
Change in estimated useful life, net of
taxes
—
—
24
—
LCM inventory valuation adjustment (c)
—
—
(19
)
—
Income tax expense related to the LCM
inventory
valuation adjustment
—
—
3
—
LCM inventory valuation adjustment, net of
taxes
—
—
(16
)
—
Blender’s tax credit attributable to
Valero Energy
Corporation stockholders (b)
—
(192
)
—
(80
)
Income tax expense related to blender’s
tax credit
—
5
—
2
Blender’s tax credit attributable to
Valero Energy
Corporation stockholders, net of taxes
—
(187
)
—
(78
)
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
(70
)
(187
)
156
(61
)
Adjusted net income (loss) attributable
to
Valero Energy Corporation stockholders
$
(429
)
$
873
$
(1,265
)
$
2,361
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)
$
(0.88
)
$
2.58
$
(3.50
)
$
5.84
Adjustments:
LIFO liquidation adjustment (a)
(0.18
)
—
0.36
—
Change in estimated useful life (d)
—
—
0.06
—
LCM inventory valuation adjustment (c)
—
—
(0.04
)
—
Blender’s tax credit attributable to
Valero Energy
Corporation stockholders (b)
—
(0.45
)
—
(0.18
)
Loss on early redemption of debt (e)
—
—
—
0.04
Total adjustments
(0.18
)
(0.45
)
0.38
(0.14
)
Adjusted earnings (loss) per common share
–
assuming dilution (f)
$
(1.06
)
$
2.13
$
(3.12
)
$
5.70
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
December 31,
Year Ended December
31,
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)
$
(377
)
$
1,419
$
(1,342
)
$
4,022
Adjustments:
Blender’s tax credit (b)
—
(15
)
—
(2
)
LIFO liquidation adjustment (a)
(104
)
—
222
—
LCM inventory valuation adjustment (c)
—
—
(19
)
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,032
1,092
3,944
4,289
Depreciation and amortization expense
531
523
2,138
2,062
Other operating expenses
5
7
34
20
Refining margin
$
1,087
$
3,026
$
4,977
$
10,391
Refining operating income (loss)
$
(377
)
$
1,419
$
(1,342
)
$
4,022
Adjustments:
Blender’s tax credit (b)
—
(15
)
—
(2
)
LIFO liquidation adjustment (a)
(104
)
—
222
—
LCM inventory valuation adjustment (c)
—
—
(19
)
—
Other operating expenses
5
7
34
20
Adjusted refining operating income
(loss)
$
(476
)
$
1,411
$
(1,105
)
$
4,040
Renewable diesel segment
Renewable diesel operating income
$
127
$
541
$
638
$
732
Adjustments:
Blender’s tax credit (b)
—
(354
)
—
(156
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
22
21
85
75
Depreciation and amortization expense
11
12
44
50
Renewable diesel margin
$
160
$
220
$
767
$
701
Renewable diesel operating income
$
127
$
541
$
638
$
732
Adjustment: Blender’s tax credit (b)
—
(354
)
—
(156
)
Adjusted renewable diesel operating
income
$
127
$
187
$
638
$
576
See Notes to Earnings
Release.
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
December 31,
Year Ended December
31,
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)
$
15
$
36
$
(69
)
$
3
Adjustments:
LIFO liquidation adjustment (a)
2
—
2
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
113
126
406
504
Depreciation and amortization expense
(d)
24
22
121
90
Other operating expenses
—
—
1
1
Ethanol margin
$
154
$
184
$
461
$
598
Ethanol operating income (loss)
$
15
$
36
$
(69
)
$
3
Adjustments:
LIFO liquidation adjustment (a)
2
—
2
—
Change in estimated useful life (d)
—
—
30
—
Other operating expenses
—
—
1
1
Adjusted ethanol operating income
(loss)
$
17
$
36
$
(36
)
$
4
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
December 31,
Year Ended December
31,
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)
$
(276
)
$
706
$
(979
)
$
1,485
Adjustments:
Blender’s tax credit (b)
—
(11
)
—
(2
)
LIFO liquidation adjustment (a)
(68
)
—
132
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
571
610
2,220
2,436
Depreciation and amortization expense
327
325
1,317
1,279
Other operating expenses
—
5
20
13
Refining margin
$
554
$
1,635
$
2,710
$
5,211
Refining operating income (loss)
$
(276
)
$
706
$
(979
)
$
1,485
Adjustments:
Blender’s tax credit (b)
—
(11
)
—
(2
)
LIFO liquidation adjustment (a)
(68
)
—
132
—
Other operating expenses
—
5
20
13
Adjusted refining operating income
(loss)
$
(344
)
$
700
$
(827
)
$
1,496
U.S. Mid-Continent region
Refining operating income (loss)
$
(61
)
$
251
$
(128
)
$
1,242
Adjustments:
Blender’s tax credit (b)
—
(3
)
—
—
LIFO liquidation adjustment (a)
(18
)
—
40
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
163
164
628
632
Depreciation and amortization expense
83
82
333
308
Other operating expenses
1
—
1
2
Refining margin
$
168
$
494
$
874
$
2,184
Refining operating income (loss)
$
(61
)
$
251
$
(128
)
$
1,242
Adjustments:
Blender’s tax credit (b)
—
(3
)
—
—
LIFO liquidation adjustment (a)
(18
)
—
40
—
Other operating expenses
1
—
1
2
Adjusted refining operating income
(loss)
$
(78
)
$
248
$
(87
)
$
1,244
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
December 31,
Year Ended December
31,
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
$
31
$
314
$
115
$
1,041
Adjustments:
LIFO liquidation adjustment (a)
(8
)
—
25
—
LCM inventory valuation adjustment (c)
—
—
(19
)
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
153
154
536
593
Depreciation and amortization expense
53
53
211
213
Other operating expenses
—
2
8
4
Refining margin
$
229
$
523
$
876
$
1,851
Refining operating income
$
31
$
314
$
115
$
1,041
Adjustments:
LIFO liquidation adjustment (a)
(8
)
—
25
—
LCM inventory valuation adjustment (c)
—
—
(19
)
—
Other operating expenses
—
2
8
4
Adjusted refining operating income
$
23
$
316
$
129
$
1,045
U.S. West Coast region
Refining operating income (loss)
$
(71
)
$
148
$
(350
)
$
254
Adjustments:
Blender’s tax credit (b)
—
(1
)
—
—
LIFO liquidation adjustment (a)
(10
)
—
25
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
145
164
560
628
Depreciation and amortization expense
68
63
277
262
Other operating expenses
4
—
5
1
Refining margin
$
136
$
374
$
517
$
1,145
Refining operating income (loss)
$
(71
)
$
148
$
(350
)
$
254
Adjustments:
Blender’s tax credit (b)
—
(1
)
—
—
LIFO liquidation adjustment (a)
(10
)
—
25
—
Other operating expenses
4
—
5
1
Adjusted refining operating income
(loss)
$
(77
)
$
147
$
(320
)
$
255
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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Throughput volumes (thousand barrels
per day)
Feedstocks:
Heavy sour crude oil
368
329
356
394
Medium/light sour crude oil
317
242
347
272
Sweet crude oil
1,258
1,676
1,245
1,581
Residuals
184
236
202
215
Other feedstocks
82
157
81
153
Total feedstocks
2,209
2,640
2,231
2,615
Blendstocks and other
341
378
324
337
Total throughput volumes
2,550
3,018
2,555
2,952
Yields (thousand barrels per
day)
Gasolines and blendstocks
1,338
1,511
1,248
1,423
Distillates
886
1,136
928
1,126
Other products (i)
351
405
397
433
Total yields
2,575
3,052
2,573
2,982
Operating statistics (g) (j)
Refining margin
$
1,087
$
3,026
$
4,977
$
10,391
Adjusted refining operating income
(loss)
$
(476)
$
1,411
$
(1,105)
$
4,040
Throughput volumes (thousand barrels per
day)
2,550
3,018
2,555
2,952
Refining margin per barrel of
throughput
$
4.64
$
10.90
$
5.32
$
9.65
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.40
3.93
4.22
3.98
Depreciation and amortization expense per
barrel of
throughput
2.27
1.89
2.28
1.92
Adjusted refining operating income (loss)
per barrel of
throughput
$
(2.03)
$
5.08
$
(1.18)
$
3.75
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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Operating statistics (g) (j)
Renewable diesel margin
$
160
$
220
$
767
$
701
Adjusted renewable diesel operating
income
$
127
$
187
$
638
$
576
Sales volumes (thousand gallons per
day)
618
844
787
760
Renewable diesel margin per gallon of
sales
$
2.82
$
2.84
$
2.66
$
2.53
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of sales
0.38
0.27
0.29
0.27
Depreciation and amortization expense per
gallon of sales
0.20
0.15
0.15
0.18
Adjusted renewable diesel operating income
per gallon
of sales
$
2.24
$
2.42
$
2.22
$
2.08
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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Operating statistics (g) (j)
Ethanol margin
$
154
$
184
$
461
$
598
Adjusted ethanol operating income
(loss)
$
17
$
36
$
(36
)
$
4
Production volumes (thousand gallons per
day)
4,124
4,321
3,588
4,269
Ethanol margin per gallon of
production
$
0.41
$
0.46
$
0.35
$
0.38
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of production
0.30
0.32
0.31
0.32
Depreciation and amortization expense per
gallon of production
0.06
0.06
0.07
0.06
Adjusted ethanol operating income (loss)
per gallon of production
$
0.05
$
0.08
$
(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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Operating statistics by region
(h)
U.S. Gulf Coast region (g) (j)
Refining margin
$
554
$
1,635
$
2,710
$
5,211
Adjusted refining operating income
(loss)
$
(344
)
$
700
$
(827
)
$
1,496
Throughput volumes (thousand barrels per
day)
1,471
1,762
1,493
1,740
Refining margin per barrel of
throughput
$
4.09
$
10.08
$
4.96
$
8.21
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.22
3.76
4.06
3.84
Depreciation and amortization expense per
barrel of
throughput
2.40
2.01
2.41
2.01
Adjusted refining operating income (loss)
per barrel of
throughput
$
(2.53
)
$
4.31
$
(1.51
)
$
2.36
U.S. Mid-Continent region (g)
(j)
Refining margin
$
168
$
494
$
874
$
2,184
Adjusted refining operating income
(loss)
$
(78
)
$
248
$
(87
)
$
1,244
Throughput volumes (thousand barrels per
day)
404
463
404
454
Refining margin per barrel of
throughput
$
4.52
$
11.60
$
5.91
$
13.17
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.38
3.84
4.25
3.81
Depreciation and amortization expense per
barrel of
throughput
2.23
1.90
2.25
1.85
Adjusted refining operating income (loss)
per barrel of
throughput
$
(2.09
)
$
5.86
$
(0.59
)
$
7.51
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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Operating statistics by region (h)
(continued)
North Atlantic region (g) (j)
Refining margin
$
229
$
523
$
876
$
1,851
Adjusted refining operating income
$
23
$
316
$
129
$
1,045
Throughput volumes (thousand barrels per
day)
418
510
413
492
Refining margin per barrel of
throughput
$
5.94
$
11.14
$
5.79
$
10.31
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
3.99
3.29
3.54
3.30
Depreciation and amortization expense per
barrel of
throughput
1.37
1.12
1.40
1.19
Adjusted refining operating income per
barrel of
throughput
$
0.58
$
6.73
$
0.85
$
5.82
U.S. West Coast region (g) (j)
Refining margin
$
136
$
374
$
517
$
1,145
Adjusted refining operating income
(loss)
$
(77
)
$
147
$
(320
)
$
255
Throughput volumes (thousand barrels per
day)
257
283
245
266
Refining margin per barrel of
throughput
$
5.78
$
14.37
$
5.77
$
11.80
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
6.15
6.30
6.25
6.47
Depreciation and amortization expense per
barrel of
throughput
2.90
2.45
3.10
2.71
Adjusted refining operating income (loss)
per barrel of
throughput
$
(3.27
)
$
5.62
$
(3.58
)
$
2.62
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
AVERAGE MARKET REFERENCE
PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Refining
Feedstocks (dollars per barrel)
Brent crude oil
$
45.10
$
62.49
$
43.15
$
64.18
Brent less West Texas Intermediate (WTI)
crude oil
2.54
5.51
3.84
7.15
Brent less Alaska North Slope (ANS) crude
oil
0.27
(1.92
)
0.82
(0.86
)
Brent less Louisiana Light Sweet (LLS)
crude oil
1.04
1.67
1.91
1.47
Brent less Argus Sour Crude Index (ASCI)
crude oil
2.18
4.72
3.26
3.56
Brent less Maya crude oil
4.56
9.56
6.89
6.57
LLS crude oil
44.06
60.82
41.24
62.71
LLS less ASCI crude oil
1.14
3.05
1.35
2.09
LLS less Maya crude oil
3.52
7.89
4.98
5.10
WTI crude oil
42.56
56.98
39.31
57.03
Natural gas (dollars per million
British Thermal Units)
2.55
2.26
2.00
2.47
Products (dollars per barrel)
U.S. Gulf Coast:
Conventional Blendstock of Oxygenate
Blending (CBOB)
gasoline less Brent
4.05
3.79
2.97
4.37
Ultra-low-sulfur (ULS) diesel less
Brent
7.09
15.92
7.11
14.90
Propylene less Brent
(2.05
)
(24.54
)
(12.12
)
(22.31
)
CBOB gasoline less LLS
5.09
5.46
4.88
5.84
ULS diesel less LLS
8.13
17.59
9.02
16.37
Propylene less LLS
(1.01
)
(22.87
)
(10.22
)
(20.84
)
U.S. Mid-Continent:
CBOB gasoline less WTI
5.77
10.73
6.96
13.62
ULS diesel less WTI
11.20
22.31
12.11
22.77
North Atlantic:
CBOB gasoline less Brent
6.61
7.33
5.50
7.20
ULS diesel less Brent
8.64
19.42
9.17
17.22
U.S. West Coast:
California Reformulated Gasoline
Blendstock of
Oxygenate Blending (CARBOB) 87 gasoline
less ANS
10.89
14.84
10.33
16.28
California Air Resources Board (CARB)
diesel less ANS
12.76
21.50
12.42
19.30
CARBOB 87 gasoline less WTI
13.16
22.27
13.36
24.29
CARB diesel less WTI
15.03
28.93
15.44
27.31
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
AVERAGE MARKET REFERENCE
PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Renewable diesel
New York Mercantile Exchange ULS
diesel
(dollars per gallon)
$
1.28
$
1.95
$
1.25
$
1.94
Biodiesel Renewable Identification Number
(RIN)
(dollars per RIN)
0.88
0.56
0.64
0.48
California Low-Carbon Fuel Standard
(dollars per metric ton)
197.83
206.04
200.12
196.82
Chicago Board of Trade (CBOT) soybean oil
(dollars per
pound)
0.37
0.31
0.32
0.29
Ethanol
CBOT corn (dollars per bushel)
4.17
3.81
3.64
3.84
New York Harbor ethanol (dollars per
gallon)
1.49
1.62
1.36
1.53
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars, except
per share amounts)
(unaudited)
December 31,
2020
2019
Balance sheet data
Current assets
$
15,844
$
18,969
Cash and cash equivalents included in
current assets
3,313
2,583
Inventories included in current assets
6,038
7,013
Current liabilities
9,283
13,160
Current portion of debt and finance lease
obligations
included in current liabilities
723
494
Debt and finance lease obligations, less
current portion
13,954
9,178
Total debt and finance lease
obligations
14,677
9,672
Valero Energy Corporation stockholders’
equity
18,801
21,803
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Reconciliation of net cash provided by
operating
activities to adjusted net cash
provided by operating
activities (g)
Net cash provided by operating
activities
$
96
$
1,708
$
948
$
5,531
Exclude:
Changes in current assets and current
liabilities
(113
)
(434
)
(345
)
294
Diamond Green Diesel LLC’s (DGD) adjusted
net cash
provided by operating activities
attributable to our joint
venture partner’s ownership interest in
DGD
69
277
338
390
Adjusted net cash provided by operating
activities
$
140
$
1,865
$
955
$
4,847
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Dividends per common share
$
0.98
$
0.90
$
3.92
$
3.60
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars)
(unaudited)
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Reconciliation of total capital
investments to capital
investments attributable to Valero
(g)
Capital expenditures (excluding variable
interest entities
(VIEs))
$
239
$
448
$
1,014
$
1,627
Capital expenditures of VIEs:
DGD
212
51
523
142
Other VIEs
55
86
251
225
Deferred turnaround and catalyst cost
expenditures
(excluding VIEs)
94
179
623
762
Deferred turnaround and catalyst cost
expenditures
of DGD
7
2
25
18
Investments in unconsolidated joint
ventures
15
42
54
164
Total capital investments
622
808
2,490
2,938
Adjustments:
DGD’s capital investments attributable to
our joint
venture partner
(109
)
(26
)
(274
)
(80
)
Capital expenditures of other VIEs
(55
)
(86
)
(251
)
(225
)
Capital investments attributable to
Valero
$
458
$
696
$
1,965
$
2,633
See Notes to Earnings Release
Tables.
VALERO ENERGY CORPORATION NOTES TO EARNINGS
RELEASE TABLES
(a)
Cost of materials and other for the year
ended December 31, 2020 includes a charge of $224 million related
to the liquidation of LIFO inventory layers attributable to our
refining and ethanol segments. We recorded a charge of $326 million
in September 2020 due to the expected liquidation of LIFO inventory
layers because our LIFO inventory levels had decreased throughout
the first nine months of 2020 due to lower production resulting
from lower demand for our products caused by the negative economic
impacts of COVID-19 on our business, and we expected that our
inventory levels at December 31, 2020 would remain below their
December 31, 2019 levels. While our actual inventory levels at
December 31, 2020 were below their December 31, 2019 levels, they
did not decrease as much as expected. Therefore, cost of materials
and other for the three months ended December 31, 2020 includes a
benefit of $102 million to adjust the $326 million estimate to the
$224 million actual charge for the year ended December 31,
2020.
Of the $102 million benefit recognized in
the three months ended December 31, 2020, a benefit of $104 million
is attributable to our refining segment and a charge of $2 million
is attributable to our ethanol segment. Of the $224 million charge
recognized for the year ended December 31, 2020, $222 million and
$2 million is attributable to our refining and ethanol segments,
respectively.
(b)
Cost of materials and other includes a
benefit related to the blender’s tax credit in each reporting
period. The legislation authorizing the credit through December 31,
2022 was passed and signed into law in December 2019. As a result,
for the three months and year ended December 31, 2020, we
recognized a benefit of $60 million and $297 million, respectively,
related to the blender’s tax credit attributable to renewable
diesel volumes blended during those periods. The legislation also
reinstated the credit retroactively to volumes blended during 2019
and 2018, and consequently, we recognized a benefit of $449 million
in December 2019 for the blender’s tax credit attributable to
volumes blended during those two years. The entire amount was
recognized by us in December 2019 because the law was enacted in
that month.
The above-mentioned pre-tax benefits are
attributable to our reportable segments and stockholders as
follows:
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Blender’s tax credit by reportable
segment
Refining:
Amount related to reporting period
$
3
$
3
$
9
$
16
Amount related to prior periods but
recognized in reporting period
—
15
—
2
Total
3
18
9
18
Renewable diesel:
Amount related to reporting period
57
77
288
275
Amount related to prior periods but
recognized in reporting period
—
354
—
156
Total
57
431
288
431
Total recognized in reporting period
$
60
$
449
$
297
$
449
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Interests to which blender’s tax credit
is
attributable
Valero Energy Corporation
stockholders:
Amount related to reporting period
$
32
$
42
$
153
$
154
Amount related to prior periods but
recognized in reporting period
—
192
—
80
Total
32
234
153
234
Noncontrolling interest:
Amount related to reporting period
28
38
144
137
Amount related to prior periods but
recognized in reporting period
—
177
—
78
Total
28
215
144
215
Total recognized in reporting period
$
60
$
449
$
297
$
449
(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
full reversal of the reserve by September 30, 2020. The LCM
inventory valuation adjustment for the year ended December 31, 2020
reflects a net benefit of $19 million due solely to the foreign
currency translation effect of the portion of the LCM inventory
valuation adjustments attributable to our international
operations.
(d)
Depreciation and amortization expense for
the year ended December 31, 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 year ended
December 31, 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 months and year ended December 31, 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, the writedown was fully reversed by September
30, 2020. The net benefit of $19 million associated with the LCM
inventory valuation adjustments recorded during 2020 is due solely
to the effects of foreign currency translation explained in note
(c).
– Blender’s tax credit
attributable to Valero Energy Corporation stockholders – The
blender’s tax credit attributable to volumes blended during 2019
and 2018 was recognized by us in December 2019. The adjustment,
therefore, reflects the portion of the blender’s tax credit that
was recorded in December 2019 but is associated with volumes
blended during the nine months ended September 30, 2019 and the
year ended December 31, 2018. 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) excluding the blender’s tax credit not attributable to
volumes blended during the applicable period (see note (b)), 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 excluding the blender’s tax credit not
attributable to volumes blended during the applicable period (see
note (b)), 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 LIFO liquidation adjustment (see note (a)),
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) excluding the blender’s
tax credit not attributable to volumes blended during the
applicable period (see note (b)), 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 excluding the blender’s
tax credit not attributable to volumes blended during the
applicable period (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 LIFO
liquidation adjustment (see note (a)), 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 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
December 31,
Year Ended December
31,
2020
2019
2020
2019
DGD operating cash flow data
Net cash provided by operating
activities
$
141
$
88
$
1,018
$
315
Exclude: changes in current assets and
current liabilities
4
(465
)
343
(465
)
Adjusted net cash provided by
operating activities
137
553
675
780
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
$
69
$
277
$
338
$
390
- Capital investments attributable to Valero is defined as
all capital expenditures, deferred turnaround and catalyst cost
expenditures, and investments in unconsolidated joint ventures
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210128005556/en/
Valero Contacts Investors: Homer Bhullar, Vice President
– Investor Relations, 210-345-1982 Eric Herbort, Senior Manager –
Investor Relations, 210-345-3331 Gautam Srivastava, Senior Manager
– Investor Relations, 210-345-3992
Media: Lillian Riojas, Executive Director – Media Relations and
Communications, 210-345-5002
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