- Reported net income attributable to Valero stockholders of $463
million, or $1.13 per share.
- Reported adjusted net income attributable to Valero
stockholders of $500 million, or $1.22 per share.
- Returned $400 million in cash to stockholders through
dividends.
- Redeemed the total outstanding balance of $575 million Floating
Rate Senior Notes due in 2023.
- Completed the Diamond Green Diesel expansion project (DGD
2).
- Completed and started up the new Pembroke Cogeneration
Unit.
Valero Energy Corporation (NYSE: VLO, “Valero”) today reported
net income attributable to Valero stockholders of $463 million, or
$1.13 per share, for the third quarter of 2021, compared to a net
loss of $464 million, or $1.14 per share, for the third quarter of
2020. Excluding the adjustments shown in the accompanying earnings
release tables, third quarter 2021 adjusted net income attributable
to Valero stockholders was $500 million, or $1.22 per share,
compared to an adjusted net loss attributable to Valero
stockholders of $472 million, or $1.16 per share, for the third
quarter of 2020.
Refining
The refining segment reported $835 million of operating income
for the third quarter of 2021, compared to a $629 million operating
loss for the third quarter of 2020. Third quarter 2021 adjusted
operating income was $853 million, compared to an adjusted
operating loss of $575 million for the third quarter of 2020.
Refinery throughput volumes averaged 2.9 million barrels per day in
the third quarter of 2021, which was 338 thousand barrels per day
higher than the third quarter of 2020.
“We saw significant improvement in refining margins in the third
quarter as economic activity and mobility continued to recover in
key markets,” said Joe Gorder, Valero Chairman and Chief Executive
Officer. “The continued improvement in earnings of our refining
business, coupled with the ongoing expansion of our renewables
businesses, should strengthen our competitive advantage and drive
long-term shareholder returns.”
Renewable Diesel
The renewable diesel segment, which consists of the Diamond
Green Diesel (DGD) joint venture, reported $108 million of
operating income for the third quarter of 2021, compared to $184
million for the third quarter of 2020. Renewable diesel sales
volumes averaged 671 thousand gallons per day in the third quarter
of 2021, which was 199 thousand gallons per day lower than the
third quarter of 2020. The lower operating income and sales volumes
in the third quarter of 2021 are primarily attributed to plant
downtime due to Hurricane Ida.
Ethanol
The ethanol segment reported a $44 million operating loss for
the third quarter of 2021, compared to $22 million of operating
income for the third quarter of 2020. Excluding the adjustments
shown in the accompanying earnings release tables, third quarter
2021 adjusted operating income was $4 million, compared to $36
million for the third quarter of 2020. Ethanol production volumes
averaged 3.6 million gallons per day in the third quarter of 2021,
which was 175 thousand gallons per day lower than the third quarter
of 2020.
Corporate and Other
General and administrative expenses were $195 million in the
third quarter of 2021, compared to $186 million in the third
quarter of 2020. The effective tax rate for the third quarter of
2021 was 11 percent, which reflects the benefit from the portion of
DGD’s net income that is not taxable to Valero.
Investing and Financing Activities
Net cash provided by operating activities was $1.4 billion in
the third quarter of 2021. Included in this amount was a $379
million favorable impact from working capital and $59 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 $1.0 billion.
Capital investments totaled $585 million in the third quarter of
2021, of which $191 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 $392 million.
Valero returned $400 million to stockholders through dividends
for a payout ratio of 40 percent of adjusted net cash provided by
operating activities in the third quarter of 2021.
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.
Valero redeemed the entire outstanding principal amount of its
$575 million Floating Rate Senior Notes due in 2023 at par value,
plus accrued and unpaid interest on September 27, 2021.
Liquidity and Financial Position
Valero ended the third quarter of 2021 with $14.2 billion of
total debt and finance lease obligations and $3.5 billion of cash
and cash equivalents. The debt to capitalization ratio, net of cash
and cash equivalents, was 37 percent as of September 30, 2021.
Strategic Update
The Diamond Green Diesel expansion project at Valero’s St.
Charles refinery (DGD 2), which increases renewable diesel
production capacity by 400 million gallons per year, was completed
in the third quarter and is in the process of starting up.
“We are excited to report that the Diamond Green Diesel
expansion project at Valero’s St. Charles refinery was successfully
completed on-budget and ahead of schedule,” said Gorder. “This is a
testament to the strength of our engineering and operations teams,
who got this accomplished despite Hurricane Ida related
challenges.”
The new DGD plant at Valero’s Port Arthur refinery (DGD 3),
which is expected to have a renewable diesel production capacity of
470 million gallons per year, is progressing well and is still
expected to commence operations in the first 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.
The large-scale carbon sequestration project with BlackRock and
Navigator is also progressing on schedule. Navigator has received
the necessary board approvals to proceed with the carbon capture
pipeline system as a result of a successful binding open season.
Valero is expected to be the anchor shipper with eight of Valero’s
ethanol plants connected to this system, producing a lower carbon
intensity ethanol product to be marketed in low-carbon fuel markets
that is expected to result in a higher product margin.
Refinery optimization projects that are expected to reduce cost
and improve margin capture are progressing on schedule. The
Pembroke Cogeneration Unit, which is expected to provide an
efficient and reliable source of electricity and steam, was
completed and commissioned in the third quarter of 2021. The Port
Arthur Coker project, which is expected to increase the refinery’s
utilization rate and improve turnaround efficiency, is still
expected to be completed in 2023.
Capital investments attributable to Valero are forecasted to be
$2.0 billion in 2021, of which approximately 60 percent is for
sustaining the business and approximately 40 percent is for growth
projects. Over 60 percent 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 500 company based in San Antonio, Texas, and owns 15
petroleum refineries with a combined throughput capacity of
approximately 3.2 million barrels per day and 12 ethanol plants
with a combined production capacity of approximately 1.6 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 owns 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 and Finance, 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 and the accompanying tables
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. Forward-looking statements in this
release and the accompanying tables include those relating to our
greenhouse gas emissions targets, expected timing of completion and
performance of projects, future market and industry conditions,
future operating and financial performance and management of future
risks. 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 legislative or political changes or developments,
market dynamics, cyberattacks, weather events, and other matters
affecting our operations or the demand for our products. These
factors also include, but are not limited to, the uncertainties
that remain with respect to the COVID-19 pandemic, variants of the
virus, governmental and societal responses thereto, including
requirements and mandates with respect to vaccines, vaccine
distribution and administration levels, and the adverse effects the
foregoing may have on our business or economic conditions
generally. For more information concerning these and other factors
that could cause actual results to differ from those expressed or
forecasted, see Valero’s annual report 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.
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 (used in)
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 (h) to the earnings release
tables provides reasons for the use of these non-GAAP financial
measures.
VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES FINANCIAL HIGHLIGHTS
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Statement of income data
Revenues
$
29,520
$
15,809
$
78,074
$
48,308
Cost of sales:
Cost of materials and other (a) (b)
26,624
14,801
70,865
43,832
Lower of cost or market (LCM) inventory
valuation adjustment (c)
—
(313
)
—
(19
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(a)
1,348
1,117
4,218
3,268
Depreciation and amortization expense
(d)
630
602
1,772
1,737
Total cost of sales
28,602
16,207
76,855
48,818
Other operating expenses
19
25
69
30
General and administrative expenses
(excluding
depreciation and amortization expense
reflected below)
195
186
579
532
Depreciation and amortization expense
11
12
35
37
Operating income (loss)
693
(621
)
536
(1,109
)
Other income, net (e)
32
48
179
107
Interest and debt expense, net of
capitalized interest
(152
)
(143
)
(451
)
(410
)
Income (loss) before income tax expense
(benefit)
573
(716
)
264
(1,412
)
Income tax expense (benefit) (f)
65
(337
)
86
(614
)
Net income (loss)
508
(379
)
178
(798
)
Less: Net income attributable to
noncontrolling interests
45
85
257
264
Net income (loss) attributable to Valero
Energy Corporation
stockholders
$
463
$
(464
)
$
(79
)
$
(1,062
)
Earnings (loss) per common
share
$
1.13
$
(1.14
)
$
(0.20
)
$
(2.62
)
Weighted-average common shares outstanding
(in millions)
407
407
407
407
Earnings (loss) per common share –
assuming dilution
$
1.13
$
(1.14
)
$
(0.20
)
$
(2.62
)
Weighted-average common shares outstanding
–
assuming dilution (in millions) (g)
408
407
407
407
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
FINANCIAL HIGHLIGHTS BY
SEGMENT
(millions of dollars)
(unaudited)
Refining
Renewable
Diesel
Ethanol
Corporate
and
Eliminations
Total
Three months ended September 30,
2021
Revenues:
Revenues from external customers
$
27,989
$
342
$
1,189
$
—
$
29,520
Intersegment revenues
3
60
115
(178
)
—
Total revenues
27,992
402
1,304
(178
)
29,520
Cost of sales:
Cost of materials and other
25,395
256
1,150
(177
)
26,624
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,195
26
128
(1
)
1,348
Depreciation and amortization expense
(d)
549
11
70
—
630
Total cost of sales
27,139
293
1,348
(178
)
28,602
Other operating expenses
18
1
—
—
19
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
195
195
Depreciation and amortization expense
—
—
—
11
11
Operating income (loss) by segment
$
835
$
108
$
(44
)
$
(206
)
$
693
Three months ended September 30,
2020
Revenues:
Revenues from external customers
$
14,727
$
305
$
777
$
—
$
15,809
Intersegment revenues
2
40
58
(100
)
—
Total revenues
14,729
345
835
(100
)
15,809
Cost of sales:
Cost of materials and other (b)
14,103
128
670
(100
)
14,801
LCM inventory valuation adjustment (c)
(296
)
—
(17
)
—
(313
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
989
23
105
—
1,117
Depreciation and amortization expense
(d)
538
10
54
—
602
Total cost of sales
15,334
161
812
(100
)
16,207
Other operating expenses
24
—
1
—
25
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
186
186
Depreciation and amortization expense
—
—
—
12
12
Operating income (loss) by segment
$
(629
)
$
184
$
22
$
(198
)
$
(621
)
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
Eiminations
Total
Nine months ended September 30,
2021
Revenues:
Revenues from external customers
$
73,426
$
1,190
$
3,458
$
—
$
78,074
Intersegment revenues
7
215
259
(481
)
—
Total revenues
73,433
1,405
3,717
(481
)
78,074
Cost of sales:
Cost of materials and other (a)
67,417
724
3,204
(480
)
70,865
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(a)
3,730
86
403
(1
)
4,218
Depreciation and amortization expense
(d)
1,626
35
111
—
1,772
Total cost of sales
72,773
845
3,718
(481
)
76,855
Other operating expenses
68
1
—
—
69
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
579
579
Depreciation and amortization expense
—
—
—
35
35
Operating income (loss) by segment
$
592
$
559
$
(1
)
$
(614
)
$
536
Nine months ended September 30,
2020
Revenues:
Revenues from external customers
$
45,327
$
850
$
2,131
$
—
$
48,308
Intersegment revenues
6
150
160
(316
)
—
Total revenues
45,333
1,000
2,291
(316
)
48,308
Cost of sales:
Cost of materials and other (b)
41,769
393
1,984
(314
)
43,832
LCM inventory valuation adjustment (c)
(19
)
—
—
—
(19
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
2,912
63
293
—
3,268
Depreciation and amortization expense
(d)
1,607
33
97
—
1,737
Total cost of sales
46,269
489
2,374
(314
)
48,818
Other operating expenses
29
—
1
—
30
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
532
532
Depreciation and amortization expense
—
—
—
37
37
Operating income (loss) by segment
$
(965
)
$
511
$
(84
)
$
(571
)
$
(1,109
)
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
(h)
(millions of dollars, except
per share amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
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
$
463
$
(464
)
$
(79
)
$
(1,062
)
Adjustments:
Gain on sale of MVP interest (e)
—
—
(62
)
—
Income tax expense related to gain on sale
of MVP interest
—
—
14
—
Gain on sale of MVP interest, net of
taxes
—
—
(48
)
—
Diamond Pipeline asset impairment (e)
—
—
24
—
Income tax benefit related to Diamond
Pipeline asset
impairment
—
—
(5
)
—
Diamond Pipeline asset impairment, net of
taxes
—
—
19
—
Changes in estimated useful lives (d)
48
30
48
30
Income tax benefit related to the changes
in estimated
useful lives
(11
)
(6
)
(11
)
(6
)
Changes in estimated useful lives, net of
taxes
37
24
37
24
Income tax expense related to changes in
statutory tax rates (f)
—
—
64
—
Last-in, first-out (LIFO) liquidation
adjustment (b)
—
326
—
326
Income tax benefit related to the LIFO
liquidation adjustment
—
(108
)
—
(108
)
LIFO liquidation adjustment, net of
taxes
—
218
—
218
LCM inventory valuation adjustment (c)
—
(313
)
—
(19
)
Income tax expense related to the LCM
inventory
valuation adjustment
—
63
—
3
LCM inventory valuation adjustment, net of
taxes
—
(250
)
—
(16
)
Total adjustments
37
(8
)
72
226
Adjusted net income (loss) attributable
to
Valero Energy Corporation stockholders
$
500
$
(472
)
$
(7
)
$
(836
)
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 (g)
$
1.13
$
(1.14
)
$
(0.20
)
$
(2.62
)
Adjustments:
Gain on sale of MVP interest (e)
—
—
(0.12
)
—
Diamond Pipeline asset impairment (e)
—
—
0.04
—
Changes in estimated useful lives (d)
0.09
0.06
0.09
0.06
Income tax expense related to changes in
statutory tax rates (f)
—
—
0.16
—
LIFO liquidation adjustment (b)
—
0.53
—
0.53
LCM inventory valuation adjustment (c)
—
(0.61
)
—
(0.04
)
Total adjustments
0.09
(0.02
)
0.17
0.55
Adjusted earnings (loss) per common share
–
assuming dilution (g)
$
1.22
$
(1.16
)
$
(0.03
)
$
(2.07
)
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 (h) (millions of
dollars) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
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)
$
835
$
(629
)
$
592
$
(965
)
Adjustments:
LIFO liquidation adjustment (b)
—
326
—
326
LCM inventory valuation adjustment (c)
—
(296
)
—
(19
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(a)
1,195
989
3,730
2,912
Depreciation and amortization expense
549
538
1,626
1,607
Other operating expenses
18
24
68
29
Refining margin
$
2,597
$
952
$
6,016
$
3,890
Refining operating income (loss)
$
835
$
(629
)
$
592
$
(965
)
Adjustments:
LIFO liquidation adjustment (b)
—
326
—
326
LCM inventory valuation adjustment (c)
—
(296
)
—
(19
)
Other operating expenses
18
24
68
29
Adjusted refining operating income
(loss)
$
853
$
(575
)
$
660
$
(629
)
Renewable diesel segment
Renewable diesel operating income
$
108
$
184
$
559
$
511
Adjustments:
Operating expenses (excluding depreciation
and
amortization expense reflected below)
26
23
86
63
Depreciation and amortization expense
11
10
35
33
Other operating expenses
1
—
1
—
Renewable diesel margin
$
146
$
217
$
681
$
607
Renewable diesel operating income
$
108
$
184
$
559
$
511
Adjustment: Other operating expenses
1
—
1
—
Adjusted renewable diesel operating
income
$
109
$
184
$
560
$
511
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 (h) (millions of
dollars) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
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)
$
(44
)
$
22
$
(1
)
$
(84
)
Adjustments:
LCM inventory valuation adjustment (c)
—
(17
)
—
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(a)
128
105
403
293
Depreciation and amortization expense
(d)
70
54
111
97
Other operating expenses
—
1
—
1
Ethanol margin
$
154
$
165
$
513
$
307
Ethanol operating income (loss)
$
(44
)
$
22
$
(1
)
$
(84
)
Adjustments:
Changes in estimated useful lives (d)
48
30
48
30
LCM inventory valuation adjustment (c)
—
(17
)
—
—
Other operating expenses
—
1
—
1
Adjusted ethanol operating income
(loss)
$
4
$
36
$
47
$
(53
)
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 (h) (millions of
dollars) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
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) (i)
U.S. Gulf Coast region
Refining operating income (loss)
$
341
$
(653
)
$
(8
)
$
(703
)
Adjustments:
LIFO liquidation adjustment (b)
—
200
—
200
LCM inventory valuation adjustment (c)
—
(4
)
—
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(a)
674
556
2,279
1,649
Depreciation and amortization expense
332
329
998
990
Other operating expenses
17
18
58
20
Refining margin
$
1,364
$
446
$
3,327
$
2,156
Refining operating income (loss)
$
341
$
(653
)
$
(8
)
$
(703
)
Adjustments:
LIFO liquidation adjustment (b)
—
200
—
200
LCM inventory valuation adjustment (c)
—
(4
)
—
—
Other operating expenses
17
18
58
20
Adjusted refining operating income
(loss)
$
358
$
(439
)
$
50
$
(483
)
U.S. Mid-Continent region
Refining operating income (loss)
$
209
$
(140
)
$
322
$
(67
)
Adjustments:
LIFO liquidation adjustment (b)
—
58
—
58
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(a)
174
153
523
465
Depreciation and amortization expense
84
84
253
250
Other operating expenses
1
—
10
—
Refining margin
$
468
$
155
$
1,108
$
706
Refining operating income (loss)
$
209
$
(140
)
$
322
$
(67
)
Adjustments:
LIFO liquidation adjustment (b)
—
58
—
58
Other operating expenses
1
—
10
—
Adjusted refining operating income
(loss)
$
210
$
(82
)
$
332
$
(9
)
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 (h) (millions of
dollars) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
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) (i) (continued)
North Atlantic region
Refining operating income
$
237
$
201
$
293
$
84
Adjustments:
LIFO liquidation adjustment (b)
—
33
—
33
LCM inventory valuation adjustment (c)
—
(236
)
—
(19
)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
186
130
476
383
Depreciation and amortization expense
67
53
179
158
Other operating expenses
—
5
—
8
Refining margin
$
490
$
186
$
948
$
647
Refining operating income
$
237
$
201
$
293
$
84
Adjustments:
LIFO liquidation adjustment (b)
—
33
—
33
LCM inventory valuation adjustment (c)
—
(236
)
—
(19
)
Other operating expenses
—
5
—
8
Adjusted refining operating income
$
237
$
3
$
293
$
106
U.S. West Coast region
Refining operating income (loss)
$
48
$
(37
)
$
(15
)
$
(279
)
Adjustments:
LIFO liquidation adjustment (b)
—
35
—
35
LCM inventory valuation adjustment (c)
—
(56
)
—
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
161
150
452
415
Depreciation and amortization expense
66
72
196
209
Other operating expenses
—
1
—
1
Refining margin
$
275
$
165
$
633
$
381
Refining operating income (loss)
$
48
$
(37
)
$
(15
)
$
(279
)
Adjustments:
LIFO liquidation adjustment (b)
—
35
—
35
LCM inventory valuation adjustment (c)
—
(56
)
—
—
Other operating expenses
—
1
—
1
Adjusted refining operating income
(loss)
$
48
$
(57
)
$
(15
)
$
(243
)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
REFINING SEGMENT OPERATING
HIGHLIGHTS
(millions of dollars, except
per barrel amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Throughput volumes (thousand barrels
per day)
Feedstocks:
Heavy sour crude oil
301
318
338
352
Medium/light sour crude oil
249
346
295
357
Sweet crude oil
1,601
1,252
1,390
1,240
Residuals
275
219
239
208
Other feedstocks
125
108
118
92
Total feedstocks
2,551
2,243
2,380
2,249
Blendstocks and other
313
283
325
308
Total throughput volumes
2,864
2,526
2,705
2,557
Yields (thousand barrels per
day)
Gasolines and blendstocks
1,451
1,273
1,359
1,217
Distillates
1,055
914
995
931
Other products (j)
390
360
381
424
Total yields
2,896
2,547
2,735
2,572
Operating statistics (a) (h)
(k)
Refining margin
$
2,597
$
952
$
6,016
$
3,890
Adjusted refining operating income
(loss)
$
853
$
(575
)
$
660
$
(629
)
Throughput volumes (thousand barrels per
day)
2,864
2,526
2,705
2,557
Refining margin per barrel of
throughput
$
9.85
$
4.10
$
8.15
$
5.55
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.53
4.26
5.05
4.16
Depreciation and amortization expense per
barrel of
throughput
2.08
2.32
2.21
2.29
Adjusted refining operating income (loss)
per barrel of
throughput
$
3.24
$
(2.48
)
$
0.89
$
(0.90
)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RENEWABLE DIESEL SEGMENT
OPERATING HIGHLIGHTS
(millions of dollars, except
per gallon amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Operating statistics (h) (k)
Renewable diesel margin
$
146
$
217
$
681
$
607
Adjusted renewable diesel operating
income
$
109
$
184
$
560
$
511
Sales volumes (thousand gallons per
day)
671
870
819
844
Renewable diesel margin per gallon of
sales
$
2.37
$
2.72
$
3.05
$
2.63
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of sales
0.42
0.29
0.39
0.27
Depreciation and amortization expense per
gallon of sales
0.19
0.13
0.16
0.15
Adjusted renewable diesel operating income
per gallon of sales
$
1.76
$
2.30
$
2.50
$
2.21
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
ETHANOL SEGMENT OPERATING
HIGHLIGHTS
(millions of dollars, except
per gallon amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Operating statistics (a) (h)
(k)
Ethanol margin
$
154
$
165
$
513
$
307
Adjusted ethanol operating income
(loss)
$
4
$
36
$
47
$
(53
)
Production volumes (thousand gallons per
day)
3,625
3,800
3,797
3,408
Ethanol margin per gallon of
production
$
0.46
$
0.47
$
0.50
$
0.33
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of production
0.38
0.30
0.39
0.31
Depreciation and amortization expense per
gallon of production (d)
0.21
0.16
0.11
0.11
Changes in estimated useful lives per
gallon of production (d)
(0.14
)
(0.09
)
(0.05
)
(0.03
)
Adjusted ethanol operating income (loss)
per gallon of production
$
0.01
$
0.10
$
0.05
$
(0.06
)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
REFINING SEGMENT OPERATING
HIGHLIGHTS BY REGION
(millions of dollars, except
per barrel amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Operating statistics by region
(i)
U.S. Gulf Coast region (a) (h)
(k)
Refining margin
$
1,364
$
446
$
3,327
$
2,156
Adjusted refining operating income
(loss)
$
358
$
(439
)
$
50
$
(483
)
Throughput volumes (thousand barrels per
day)
1,649
1,448
1,632
1,500
Refining margin per barrel of
throughput
$
8.99
$
3.35
$
7.47
$
5.24
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.44
4.19
5.12
4.01
Depreciation and amortization expense per
barrel of
throughput
2.19
2.47
2.24
2.41
Adjusted refining operating income (loss)
per barrel of
throughput
$
2.36
$
(3.31
)
$
0.11
$
(1.18
)
U.S. Mid-Continent region (a) (h)
(k)
Refining margin
$
468
$
155
$
1,108
$
706
Adjusted refining operating income
(loss)
$
210
$
(82
)
$
332
$
(9
)
Throughput volumes (thousand barrels per
day)
465
417
442
404
Refining margin per barrel of
throughput
$
10.94
$
4.05
$
9.18
$
6.38
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.07
3.99
4.33
4.20
Depreciation and amortization expense per
barrel of
throughput
1.96
2.19
2.10
2.26
Adjusted refining operating income (loss)
per barrel of
throughput
$
4.91
$
(2.13
)
$
2.75
$
(0.08
)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
REFINING SEGMENT OPERATING
HIGHLIGHTS BY REGION
(millions of dollars, except
per barrel amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Operating statistics by region (i)
(continued)
North Atlantic region (h) (k)
Refining margin
$
490
$
186
$
948
$
647
Adjusted refining operating income
$
237
$
3
$
293
$
106
Throughput volumes (thousand barrels per
day)
480
408
386
412
Refining margin per barrel of
throughput
$
11.10
$
4.96
$
9.00
$
5.73
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.21
3.44
4.53
3.39
Depreciation and amortization expense per
barrel of
throughput
1.52
1.43
1.69
1.40
Adjusted refining operating income per
barrel of
throughput
$
5.37
$
0.09
$
2.78
$
0.94
U.S. West Coast region (h) (k)
Refining margin
$
275
$
165
$
633
$
381
Adjusted refining operating income
(loss)
$
48
$
(57
)
$
(15
)
$
(243
)
Throughput volumes (thousand barrels per
day)
270
253
245
241
Refining margin per barrel of
throughput
$
11.05
$
7.08
$
9.47
$
5.77
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
6.48
6.44
6.76
6.29
Depreciation and amortization expense per
barrel of
throughput
2.64
3.08
2.93
3.17
Adjusted refining operating income (loss)
per barrel of
throughput
$
1.93
$
(2.44
)
$
(0.22
)
$
(3.69
)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
AVERAGE MARKET REFERENCE
PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended
September 30,
Nine Months Ended September
30,
2021
2020
2021
2020
Refining
Feedstocks (dollars per barrel)
Brent crude oil
$
73.22
$
43.38
$
67.77
$
42.50
Brent less West Texas Intermediate (WTI)
crude oil
2.64
2.47
2.94
4.27
Brent less Alaska North Slope (ANS) crude
oil
0.49
0.64
0.46
1.00
Brent less Louisiana Light Sweet (LLS)
crude oil
1.72
0.88
1.29
2.20
Brent less Argus Sour Crude Index (ASCI)
crude oil
4.52
1.71
3.62
3.62
Brent less Maya crude oil
7.01
4.19
5.95
7.66
LLS crude oil
71.51
42.50
66.48
40.30
LLS less ASCI crude oil
2.81
0.83
2.33
1.42
LLS less Maya crude oil
5.30
3.31
4.66
5.46
WTI crude oil
70.58
40.91
64.84
38.23
Natural gas (dollars per million
British Thermal Units)
4.25
1.99
8.95
1.82
Products (dollars per barrel)
U.S. Gulf Coast:
Conventional Blendstock of Oxygenate
Blending (CBOB)
gasoline less Brent
16.90
4.96
13.82
2.61
Ultra-low-sulfur (ULS) diesel less
Brent
14.15
5.19
12.44
7.11
Propylene less Brent
(5.21
)
(12.69
)
(2.37
)
(15.48
)
CBOB gasoline less LLS
18.61
5.84
15.11
4.81
ULS diesel less LLS
15.86
6.07
13.73
9.31
Propylene less LLS
(3.50
)
(11.81
)
(1.08
)
(13.28
)
U.S. Mid-Continent:
CBOB gasoline less WTI
20.84
8.17
18.53
7.35
ULS diesel less WTI
19.37
8.54
18.33
12.41
North Atlantic:
CBOB gasoline less Brent
20.82
8.08
16.58
5.13
ULS diesel less Brent
16.32
6.79
14.43
9.34
U.S. West Coast:
California Reformulated Gasoline
Blendstock of
Oxygenate Blending (CARBOB) 87 gasoline
less ANS
27.49
13.19
23.08
10.15
California Air Resources Board (CARB)
diesel less ANS
18.55
9.34
15.99
12.31
CARBOB 87 gasoline less WTI
29.64
15.02
25.55
13.42
CARB diesel less WTI
20.70
11.17
18.47
15.58
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
AVERAGE MARKET REFERENCE
PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Renewable diesel
New York Mercantile Exchange ULS
diesel
(dollars per gallon)
$
2.13
$
1.20
$
1.96
$
1.24
Biodiesel Renewable Identification Number
(RIN)
(dollars per RIN)
1.60
0.67
1.49
0.56
California Low-Carbon Fuel Standard
(dollars per metric ton)
175.75
195.60
185.29
200.88
Chicago Board of Trade (CBOT) soybean oil
(dollars per
pound)
0.62
0.32
0.58
0.30
Ethanol
CBOT corn (dollars per bushel)
5.58
3.40
5.85
3.46
New York Harbor ethanol (dollars per
gallon)
2.37
1.46
2.18
1.32
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars, except
per share amounts)
(unaudited)
September 30, 2021
December 31, 2020
Balance sheet data
Current assets
$
18,790
$
15,844
Cash and cash equivalents included in
current assets
3,498
3,313
Inventories included in current assets
6,227
6,038
Current liabilities
14,313
9,283
Current portion of debt and finance lease
obligations
included in current liabilities
1,162
723
Debt and finance lease obligations, less
current portion
13,071
13,954
Total debt and finance lease
obligations
14,233
14,677
Valero Energy Corporation stockholders’
equity
17,476
18,801
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Reconciliation of net cash provided by
operating activities to
adjusted net cash provided by operating
activities (h)
Net cash provided by operating
activities
$
1,449
$
165
$
3,405
$
852
Exclude:
Changes in current assets and current
liabilities
379
246
1,630
(232
)
Diamond Green Diesel LLC’s (DGD) adjusted
net cash
provided by operating activities
attributable to our joint
venture partner’s ownership interest in
DGD
59
96
299
269
Adjusted net cash provided by (used in)
operating activities
$
1,011
$
(177
)
$
1,476
$
815
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Dividends per common share
$
0.98
$
0.98
$
2.94
$
2.94
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars)
(unaudited)
Three Months Ended September
30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Reconciliation of total capital
investments to capital
investments attributable to Valero
(h)
Capital expenditures (excluding variable
interest entities
(VIEs))
$
107
$
220
$
368
$
775
Capital expenditures of VIEs:
DGD
332
134
730
311
Other VIEs
24
53
59
196
Deferred turnaround and catalyst cost
expenditures
(excluding VIEs)
118
92
544
529
Deferred turnaround and catalyst cost
expenditures
of DGD
5
8
6
18
Investments in unconsolidated joint
ventures
(1
)
10
8
39
Total capital investments
585
517
1,715
1,868
Adjustments:
DGD’s capital investments attributable to
our joint
venture partner
(169
)
(71
)
(368
)
(165
)
Capital expenditures of other VIEs
(24
)
(53
)
(59
)
(196
)
Capital investments attributable to
Valero
$
392
$
393
$
1,288
$
1,507
See Notes to Earnings Release
Tables.
VALERO ENERGY CORPORATION
NOTES TO EARNINGS RELEASE TABLES
(a)
In mid-February 2021, many of our
refineries and plants were impacted to varying extents by the
severe cold, utility disruptions, and higher energy costs arising
out of Winter Storm Uri. The higher energy costs resulted from an
increase in the prices of natural gas and electricity that
significantly exceeded rates that we consider normal, such as the
average rates we incurred the month preceding the storm. As a
result, our operating income for the nine months ended September
30, 2021 includes estimated excess energy costs of $579 million
($1.15 per share).
The above-mentioned pre-tax estimated
excess energy charge is reflected in our statement of income line
items and attributable to our reportable segments for the nine
months ended September 30, 2021 as follows (in millions):
Refining
Renewable
Diesel
Ethanol
Total
Cost of materials and other
$
47
$
—
$
—
$
47
Operating expenses (excluding
depreciation
and amortization expense)
478
—
54
532
Total estimated excess energy costs
$
525
$
—
$
54
$
579
The estimated excess energy costs
attributable to our refining segment for the nine months ended
September 30, 2021 are associated with the refining segment regions
as follows (in millions, except per barrel amounts):
U.S. Gulf Coast
U.S. Mid-
Continent
Other Regions
Combined
Refining
Segment
Cost of materials and other
$
45
$
2
$
—
$
47
Operating expenses (excluding
depreciation
and amortization expense)
437
38
3
478
Total estimated excess energy costs
$
482
$
40
$
3
$
525
Effect of estimated excess energy
costs
on operating statistics (k)
Refining margin per barrel of throughput
(h)
$
0.10
$
0.02
n/a
$
0.06
Operating expenses (excluding
depreciation
and amortization expense) per barrel
of
throughput
0.98
0.31
n/a
0.65
Adjusted refining operating income
(loss)
per barrel of throughput (h)
$
1.08
$
0.33
n/a
$
0.71
The estimated excess energy costs
attributable to our ethanol segment for the nine months ended
September 30, 2021 affected that segment’s operating statistics of
(i) operating expenses (excluding depreciation and amortization
expenses) per gallon of production and (ii) adjusted operating
income per gallon of production by $0.05 (see note (h) below).
(b)
Cost of materials and other for the three
and nine months ended September 30, 2020 includes a charge of $326
million for the impact of an expected liquidation of LIFO inventory
layers attributable to our refining segment. Our inventory levels
decreased throughout the first nine months of 2020 due to lower
demand for our products resulting from the negative economic
impacts of the COVID-19 pandemic on our business. Consequently, we
expected our inventory levels at December 31, 2020 would remain
below their December 31, 2019 levels.
(c)
The market value of our inventories
accounted for under the LIFO method fell below their historical
cost on an aggregate basis as of March 31, 2020. As a result, we
recorded an LCM inventory valuation adjustment of $2.5 billion in
March 2020. The market value of our LIFO inventories improved due
to the subsequent recovery in market prices, which resulted in a
reversal of $2.2 billion in the three months ended June 30, 2020
and the remaining amount in the three months ended September 30,
2020. Of the $313 million benefit recognized in the three months
ended September 30, 2020, $296 million and $17 million is
attributable to our refining and ethanol segments, respectively.
The LCM inventory valuation adjustment for the nine months ended
September 30, 2020 reflects a net benefit of $19 million due 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 three and nine months ended September 30, 2021 and 2020
includes accelerated depreciation of $48 million and $30 million,
respectively, related to changes in the estimated useful lives of
two of our ethanol plants.
(e)
On April 19, 2021, we sold a 24.99 percent
membership interest in MVP Terminalling, LLC (MVP), an
unconsolidated joint venture with a subsidiary of Magellan
Midstream Partners, L.P., for $270 million. “Other income, net” for
the nine months ended September 30, 2021 includes a gain on the
sale of $62 million.
“Other income, net” for the nine months
ended September 30, 2021 also includes a $24 million charge
representing our portion of the asset impairment loss recognized by
Diamond Pipeline LLC, an unconsolidated joint venture with a
subsidiary of Plains All American Pipeline, L.P., resulting from
the joint venture’s cancellation of its pipeline extension
project.
(f)
Certain statutory tax rate changes were
enacted during the second quarter of 2021 (primarily an increase in
the U.K. rate from 19 percent to 25 percent effective in 2023),
which resulted in the remeasurement of our deferred tax
liabilities. Under U.S. generally accepted accounting principles
(GAAP), we are required to recognize the effect of a change in tax
law in the period of enactment. As a result, we recognized income
tax expense of $64 million during the nine months ended September
30, 2021, which represents the net increase in our deferred tax
liabilities resulting from the changes in the tax rates.
(g)
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 nine months ended September 30, 2021 and for the three and nine
months ended September 30, 2020, as the effect of including such
shares is antidilutive.
(h)
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. The income tax effect for the adjustments was calculated
using a combined federal and state statutory rate for the
U.S.-based adjustments of 22 percent and a local statutory income
tax rate for foreign-based adjustments. 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.
– Gain on sale of MVP interest – The gain
on the sale of a 24.99 percent membership interest in MVP (see note
(e)) is not indicative of our ongoing operations.
– Diamond Pipeline asset impairment – The
asset impairment loss related to the cancellation of a capital
project associated with Diamond Pipeline LLC (see note (e)) is not
indicative of our ongoing operations.
– Changes in estimated useful lives – The
accelerated depreciation recognized as a result of changes in the
estimated useful lives of two of our ethanol plants (see note (d))
is not indicative of our ongoing operations.
– Income tax expense related to changes in
statutory tax rates – The income tax expense related to changes in
certain statutory tax rates (see note (f)) is not indicative of
income tax expense associated with the pre-tax results for the nine
months ended September 30, 2021.
– 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 (b) for additional
details.
– 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 crude oil and product
market prices associated with the negative economic impacts from
the COVID-19 pandemic. As market prices improved over the
subsequent months, we reversed the writedown. The adjustment
obscures our financial performance because it does not result from
decisions made by us; therefore, we have excluded the adjustment
from adjusted net income (loss) attributable to Valero Energy
Corporation stockholders.
- 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 (g)).
- Refining margin is defined as refining segment operating
income (loss) excluding the LIFO liquidation adjustment (see note
(b)), 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
segment operating income excluding operating expenses (excluding
depreciation and amortization expense), depreciation and
amortization expense, and other operating expenses. 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 segment operating
income (loss) excluding the LCM inventory valuation adjustment (see
note (c)), operating expenses (excluding depreciation and
amortization expense), depreciation and amortization expense, and
other operating expenses. We believe ethanol margin is an important
measure of our ethanol segment’s operating and financial
performance as it is the most comparable measure to the industry’s
market reference product margins, which are used by industry
analysts, investors, and others to evaluate our performance.
- Adjusted refining operating income (loss) is defined as
refining segment operating income (loss) excluding the LIFO
liquidation adjustment (see note (b)), 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 other operating
expenses. We believe adjusted renewable diesel operating income is
an important measure of our renewable diesel segment’s operating
and financial performance because it excludes an item that is not
indicative of that segment’s core operating performance.
- Adjusted ethanol operating income (loss) is defined as
ethanol segment operating income (loss) excluding the changes in
estimated useful lives (see note (d)), the LCM inventory
valuation adjustment (see note (c)), and other operating
expenses. We believe adjusted ethanol operating income (loss) 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 we consolidate DGD’s financial statements. Our renewable
diesel segment includes the operations of DGD and the associated
activities to market renewable diesel. Because we consolidate DGD’s
financial statements, all of DGD’s net cash provided by operating
activities (or operating cash flow) is included in our consolidated
net cash provided by operating activities.
DGD’s partners use DGD’s operating cash
flow (excluding changes in its current assets and current
liabilities) to fund its capital investments rather than distribute
all of that cash to themselves. Nevertheless, DGD’s operating cash
flow is effectively attributable to each partner and only 50
percent of DGD’s operating cash flow should be attributed to our
net cash provided by operating activities. Therefore, we have
adjusted our net cash provided by operating activities for the
portion of DGD’s operating cash flow attributable to our joint
venture partner’s ownership interest because we believe that it
more accurately reflects the operating cash flow available to us to
fund our investing and financing activities. The adjustment is
calculated as follows (in millions):
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
DGD operating cash flow data
Net cash provided by operating
activities
$
175
$
194
$
638
$
877
Exclude: changes in current assets and
current liabilities
56
1
39
339
Adjusted net cash provided by
operating activities
119
193
599
538
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
$
59
$
96
$
299
$
269
- 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 VIEs other
than DGD. 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
consolidated VIEs other than DGD 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.
(i)
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.
(j)
Primarily includes petrochemicals, gas
oils, No. 6 fuel oil, petroleum coke, sulfur, and asphalt.
(k)
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/20211021005514/en/
Valero Contacts Investors: Homer Bhullar, Vice President
– Investor Relations and Finance, 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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