- Reported net income attributable to Valero stockholders of $2.8
billion, or $7.19 per share
- Reported adjusted net income attributable to Valero
stockholders of $2.8 billion, or $7.14 per share
- Reduced debt by $1.25 billion in September, bringing Valero’s
aggregate debt reduction since the second half of 2021 to
approximately $3.6 billion
Valero Energy Corporation (NYSE: VLO, “Valero”) today reported
net income attributable to Valero stockholders of $2.8 billion, or
$7.19 per share, for the third quarter of 2022, compared to $463
million, or $1.13 per share, for the third quarter of 2021.
Excluding the adjustments shown in the accompanying earnings
release tables, adjusted net income attributable to Valero
stockholders was $2.8 billion, or $7.14 per share, for the third
quarter of 2022, compared to $545 million, or $1.33 per share, for
the third quarter of 2021.
“Refining fundamentals remain strong as product demand through
our system has surpassed 2019 levels, while global product supply
remains constrained due to capacity reductions and high natural gas
prices in Europe are setting a higher floor on margins,” said Joe
Gorder, Valero’s Chairman and Chief Executive Officer. “We continue
to maximize refining utilization in a safe, reliable and
environmentally responsible manner to provide essential
products.”
Refining
The Refining segment reported operating income of $3.8 billion
for the third quarter of 2022, compared to $835 million for the
third quarter of 2021. Adjusted operating income for the third
quarter of 2021 was $911 million. Refining throughput volumes
averaged 3.0 million barrels per day in the third quarter of 2022,
which was 141 thousand barrels per day higher than the third
quarter of 2021. Refinery utilization rate was 95 percent in the
third quarter of 2022, compared to 91 percent in the third quarter
of 2021.
Renewable Diesel
The Renewable Diesel segment, which consists of the Diamond
Green Diesel (DGD) joint venture, reported $212 million of
operating income for the third quarter of 2022, compared to $108
million for the third quarter of 2021. Renewable diesel sales
volumes averaged 2.2 million gallons per day in the third quarter
of 2022, which was 1.6 million gallons per day higher than the
third quarter of 2021. The higher sales volumes in the third
quarter of 2022 were due to DGD 1 downtime in the third quarter of
2021 resulting from Hurricane Ida and the impact of additional
volumes from DGD 2, which started up in the fourth quarter of
2021.
Ethanol
The Ethanol segment reported $1 million of operating income for
the third quarter of 2022, compared to a $44 million operating loss
for the third quarter of 2021. Adjusted operating income for the
third quarter of 2021 was $4 million. Ethanol production volumes
averaged 3.5 million gallons per day in the third quarter of
2022.
Corporate and Other
General and administrative expenses were $214 million in the
third quarter of 2022, compared to $195 million in the third
quarter of 2021. The effective tax rate for the third quarter of
2022 was 22 percent.
Investing and Financing Activities
Net cash provided by operating activities was $2.0 billion in
the third quarter of 2022. Included in this amount was a $1.5
billion unfavorable change in working capital and $119 million of
net cash provided by operating activities associated with the other
joint venture member’s share of DGD, excluding changes in DGD’s
working capital. Excluding these items, adjusted net cash provided
by operating activities was $3.4 billion in the third quarter of
2022.
Capital investments totaled $602 million in the third quarter of
2022, of which $185 million was for sustaining the business,
including costs for turnarounds, catalysts and regulatory
compliance. Excluding capital investments attributable to the other
joint venture member’s share of DGD and those related to other
variable interest entities, capital investments attributable to
Valero were $479 million.
Valero further reduced its debt by $1.25 billion in September.
This transaction, combined with a series of debt reduction and
refinancing transactions completed since the second half of 2021,
have collectively reduced Valero’s debt by approximately $3.6
billion.
“Our strong balance sheet remains the cornerstone of our capital
allocation framework,” said Gorder. “We have significantly reduced
our debt since the second half of 2021 and will continue to
evaluate further reductions.”
Liquidity and Financial Position
Valero ended the third quarter of 2022 with $9.6 billion of
total debt, $1.9 billion of finance lease obligations and $4.0
billion of cash and cash equivalents, compared to $13.0 billion of
total debt, $1.6 billion of finance lease obligations and $2.3
billion of cash and cash equivalents at the end of the first
quarter of 2021. As a result, the debt to capitalization ratio, net
of cash and cash equivalents, was approximately 24 percent as of
September 30, 2022, down from the pandemic high of 40 percent as of
March 31, 2021.
Strategic Update
Refinery optimization projects that are expected to reduce costs
and improve margin capture are progressing on schedule. The Port
Arthur Coker project, which is expected to increase the refinery’s
throughput capacity, while also improving turnaround efficiency, is
expected to be completed in the first half of 2023.
The DGD project adjacent to the Port Arthur refinery (DGD 3),
which is expected to have renewable diesel production capacity of
470 million gallons per year, is currently in the start-up process
and is expected to be operational in November. The total annual DGD
production capacity is expected to increase to 1.2 billion gallons
of renewable diesel and 50 million gallons of renewable naphtha
upon commencement of DGD 3’s operations.
BlackRock and Navigator’s carbon sequestration project is still
expected to begin startup activities in late 2024. Valero is
expecting to be the anchor shipper with eight of its ethanol plants
connected to this system, producing a lower carbon intensity
ethanol product expected to be marketed in low-carbon fuel markets
that should result in a higher product margin.
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 a multinational manufacturer and
marketer of petroleum-based and low-carbon liquid transportation
fuels and petrochemical products, and sells its products primarily
in the United States (“U.S.”), Canada, the United Kingdom (“U.K.”),
Ireland and Latin America. Valero owns 15 petroleum refineries
located in the U.S., Canada and the U.K. with a combined throughput
capacity of approximately 3.2 million barrels per day. Valero is a
joint venture member in Diamond Green Diesel Holdings LLC, which
through its subsidiary owns a renewable diesel plant in Norco,
Louisiana with a production capacity of 700 million gallons per
year, and Valero owns 12 ethanol plants located in the
Mid-Continent region of the U.S. with a combined production
capacity of approximately 1.6 billion gallons per year. Valero
manages its operations through its Refining, Renewable Diesel, and
Ethanol segments. Please visit www.investorvalero.com for more
information.
Valero Contacts
Investors: Homer Bhullar, Vice President – Investor Relations
and Finance, 210-345-1982 Eric Herbort, Director – 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
Valero’s 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 Valero’s operations or
the demand for Valero’s products. These factors also include, but
are not limited to, the uncertainties that remain with respect to
the Russia-Ukraine conflict, the impact of inflation on margins and
costs, economic activity levels, the COVID-19 pandemic, variants of
the COVID-19 virus, governmental and societal responses thereto,
and the adverse effects the foregoing may have on Valero’s 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 attributable to
Valero stockholders, adjusted earnings per common share – assuming
dilution, Refining margin, Renewable Diesel margin, Ethanol margin,
adjusted Refining operating income, adjusted Renewable Diesel
operating income, adjusted Ethanol operating income, 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 GAAP measures. Note (g) to the earnings release tables
provides reasons for the use of these non-GAAP financial
measures.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
FINANCIAL HIGHLIGHTS
(millions of dollars, except
per share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Statement of income data
Revenues
$
44,454
$
29,520
$
134,637
$
78,074
Cost of sales:
Cost of materials and other (a) (b)
38,064
26,624
115,959
70,865
Operating expenses (excluding depreciation
and amortization expense reflected below) (b)
1,746
1,348
4,751
4,218
Depreciation and amortization expense
(c)
621
630
1,806
1,772
Total cost of sales
40,431
28,602
122,516
76,855
Other operating expenses
6
19
40
69
General and administrative expenses
(excluding depreciation and amortization expense reflected below)
(d)
214
195
652
579
Depreciation and amortization expense
11
11
34
35
Operating income
3,792
693
11,395
536
Other income, net (e)
74
32
87
179
Interest and debt expense, net of
capitalized interest
(138
)
(152
)
(425
)
(451
)
Income before income tax expense
3,728
573
11,057
264
Income tax expense (f)
816
65
2,410
86
Net income
2,912
508
8,647
178
Less: Net income attributable to
noncontrolling interests
95
45
232
257
Net income (loss) attributable to Valero
Energy Corporation stockholders
$
2,817
$
463
$
8,415
$
(79
)
Earnings (loss) per common
share
$
7.20
$
1.13
$
20.94
$
(0.20
)
Weighted-average common shares outstanding
(in millions)
390
407
400
407
Earnings (loss) per common share –
assuming dilution
$
7.19
$
1.13
$
20.93
$
(0.20
)
Weighted-average common shares outstanding
– assuming dilution (in millions)
390
408
401
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,
2022
Revenues:
Revenues from external customers
$
42,280
$
967
$
1,207
$
—
$
44,454
Intersegment revenues
9
508
179
(696
)
—
Total revenues
42,289
1,475
1,386
(696
)
44,454
Cost of sales:
Cost of materials and other
36,389
1,161
1,203
(689
)
38,064
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,516
69
162
(1
)
1,746
Depreciation and amortization expense
568
33
20
—
621
Total cost of sales
38,473
1,263
1,385
(690
)
40,431
Other operating expenses
6
—
—
—
6
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
214
214
Depreciation and amortization expense
—
—
—
11
11
Operating income by segment
$
3,810
$
212
$
1
$
(231
)
$
3,792
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
(c)
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
See Operating Highlights by
Segment.
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
FINANCIAL HIGHLIGHTS BY
SEGMENT
(millions of dollars)
(unaudited)
Refining
Renewable
Diesel
Ethanol
Corporate
and
Eliminations
Total
Nine months ended September 30,
2022
Revenues:
Revenues from external customers
$
128,588
$
2,417
$
3,632
$
—
$
134,637
Intersegment revenues
24
1,490
507
(2,021
)
—
Total revenues
128,612
3,907
4,139
(2,021
)
134,637
Cost of sales:
Cost of materials and other (a)
111,308
3,129
3,533
(2,011
)
115,959
Operating expenses (excluding depreciation
and
amortization expense reflected below)
4,111
178
464
(2
)
4,751
Depreciation and amortization expense
(c)
1,682
87
37
—
1,806
Total cost of sales
117,101
3,394
4,034
(2,013
)
122,516
Other operating expenses
38
—
2
—
40
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below) (d)
—
—
—
652
652
Depreciation and amortization expense
—
—
—
34
34
Operating income by segment
$
11,473
$
513
$
103
$
(694
)
$
11,395
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 (b)
67,417
724
3,204
(480
)
70,865
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(b)
3,730
86
403
(1
)
4,218
Depreciation and amortization expense
(c)
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
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)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of net income (loss)
attributable to Valero
Energy Corporation stockholders to
adjusted net income
attributable to Valero Energy
Corporation stockholders
Net income (loss) attributable to Valero
Energy Corporation
stockholders
$
2,817
$
463
$
8,415
$
(79
)
Adjustments:
Modification of renewable volume
obligation (RVO) (a)
—
58
(104
)
219
Income tax expense related to modification
of RVO
—
(13
)
23
(49
)
Modification of RVO, net of taxes
—
45
(81
)
170
Gain on sale of ethanol plant (c)
—
—
(23
)
—
Income tax expense related to gain on sale
of ethanol plant
—
—
5
—
Gain on sale of ethanol plant, net of
taxes
—
—
(18
)
—
Environmental reserve adjustment (d)
—
—
20
—
Income tax benefit related to
environmental reserve adjustment
—
—
(5
)
—
Environmental reserve adjustment, net of
taxes
—
—
15
—
Loss (gain) on early retirement of debt
(e)
(26
)
—
24
—
Income tax (benefit) expense related to
loss (gain) on early
retirement of debt
5
—
(6
)
—
Loss (gain) on early retirement of debt,
net of taxes
(21
)
—
18
—
Change in estimated useful life of ethanol
plant (c)
—
48
—
48
Income tax benefit related to the change
in estimated useful
life of ethanol plant
—
(11
)
—
(11
)
Change in estimated useful life of ethanol
plant, net of taxes
—
37
—
37
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
Income tax expense related to changes in
statutory tax rates (f)
—
—
—
64
Total adjustments
(21
)
82
(66
)
242
Adjusted net income attributable to
Valero Energy Corporation stockholders
$
2,796
$
545
$
8,349
$
163
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of earnings (loss) per
common share –
assuming dilution to adjusted earnings
per common share – assuming dilution
Earnings (loss) per common share –
assuming dilution
$
7.19
$
1.13
$
20.93
$
(0.20
)
Adjustments:
Modification of RVO (a)
—
0.11
(0.20
)
0.42
Gain on sale of ethanol plant (c)
—
—
(0.05
)
—
Environmental reserve adjustment (d)
—
—
0.04
—
Loss (gain) on early retirement of debt
(e)
(0.05
)
—
0.05
—
Change in estimated useful life of ethanol
plant (c)
—
0.09
—
0.09
Gain on sale of MVP interest (e)
—
—
—
(0.12
)
Diamond Pipeline asset impairment (e)
—
—
—
0.04
Income tax expense related to changes in
statutory tax rates (f)
—
—
—
0.16
Total adjustments
(0.05
)
0.20
(0.16
)
0.59
Adjusted earnings per common share –
assuming dilution
$
7.14
$
1.33
$
20.77
$
0.39
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of operating income
(loss) by segment to segment
margin, and reconciliation of operating
income (loss) by
segment to adjusted operating income by
segment
Refining segment
Refining operating income
$
3,810
$
835
$
11,473
$
592
Adjustments:
Modification of RVO (a)
—
58
(104
)
219
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(b)
1,516
1,195
4,111
3,730
Depreciation and amortization expense
568
549
1,682
1,626
Other operating expenses
6
18
38
68
Refining margin
$
5,900
$
2,655
$
17,200
$
6,235
Refining operating income
$
3,810
$
835
$
11,473
$
592
Adjustments:
Modification of RVO (a)
—
58
(104
)
219
Other operating expenses
6
18
38
68
Adjusted Refining operating income
$
3,816
$
911
$
11,407
$
879
Renewable Diesel segment
Renewable Diesel operating income
$
212
$
108
$
513
$
559
Adjustments:
Operating expenses (excluding depreciation
and
amortization expense reflected below)
69
26
178
86
Depreciation and amortization expense
33
11
87
35
Other operating expenses
—
1
—
1
Renewable Diesel margin
$
314
$
146
$
778
$
681
Renewable Diesel operating income
$
212
$
108
$
513
$
559
Adjustment: Other operating expenses
—
1
—
1
Adjusted Renewable Diesel operating
income
$
212
$
109
$
513
$
560
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of operating income
(loss) by segment to segment
margin, and reconciliation of operating
income (loss) by
segment to adjusted operating income by
segment
Ethanol segment
Ethanol operating income (loss)
$
1
$
(44
)
$
103
$
(1
)
Adjustments:
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(b)
162
128
464
403
Depreciation and amortization expense
(c)
20
70
37
111
Other operating expenses
—
—
2
—
Ethanol margin
$
183
$
154
$
606
$
513
Ethanol operating income (loss)
$
1
$
(44
)
$
103
$
(1
)
Adjustments:
Gain on sale of ethanol plant (c)
—
—
(23
)
—
Change in estimated useful life of ethanol
plant (c)
—
48
—
48
Other operating expenses
—
—
2
—
Adjusted Ethanol operating income
$
1
$
4
$
82
$
47
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
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 (by region)
(h)
U.S. Gulf Coast region
Refining operating income (loss)
$
2,072
$
341
$
6,467
$
(8
)
Adjustments:
Modification of RVO (a)
—
41
(74
)
157
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(b)
870
674
2,339
2,279
Depreciation and amortization expense
350
332
1,023
998
Other operating expenses
6
17
29
58
Refining margin
$
3,298
$
1,405
$
9,784
$
3,484
Refining operating income (loss)
$
2,072
$
341
$
6,467
$
(8
)
Adjustments:
Modification of RVO (a)
—
41
(74
)
157
Other operating expenses
6
17
29
58
Adjusted Refining operating income
$
2,078
$
399
$
6,422
$
207
U.S. Mid-Continent region
Refining operating income
$
600
$
209
$
1,701
$
322
Adjustments:
Modification of RVO (a)
—
11
(19
)
39
Operating expenses (excluding depreciation
and
amortization expense reflected below)
(b)
210
174
581
523
Depreciation and amortization expense
85
84
251
253
Other operating expenses
—
1
—
10
Refining margin
$
895
$
479
$
2,514
$
1,147
Refining operating income
$
600
$
209
$
1,701
$
322
Adjustments:
Modification of RVO (a)
—
11
(19
)
39
Other operating expenses
—
1
—
10
Adjusted Refining operating income
$
600
$
221
$
1,682
$
371
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
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 (by region)
(h) (continued)
North Atlantic region
Refining operating income
$
785
$
237
$
2,293
$
293
Adjustments:
Operating expenses (excluding depreciation
and
amortization expense reflected below)
226
186
624
476
Depreciation and amortization expense
62
67
197
179
Other operating expenses
—
—
9
—
Refining margin
$
1,073
$
490
$
3,123
$
948
Refining operating income
$
785
$
237
$
2,293
$
293
Adjustment: Other operating expenses
—
—
9
—
Adjusted Refining operating income
$
785
$
237
$
2,302
$
293
U.S. West Coast region
Refining operating income (loss)
$
353
$
48
$
1,012
$
(15
)
Adjustments:
Modification of RVO (a)
—
6
(11
)
23
Operating expenses (excluding depreciation
and
amortization expense reflected below)
210
161
567
452
Depreciation and amortization expense
71
66
211
196
Refining margin
$
634
$
281
$
1,779
$
656
Refining operating income (loss)
$
353
$
48
$
1,012
$
(15
)
Adjustment: Modification of RVO (a)
—
6
(11
)
23
Adjusted Refining operating income
$
353
$
54
$
1,001
$
8
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,
2022
2021
2022
2021
Throughput volumes (thousand barrels
per day)
Feedstocks:
Heavy sour crude oil
325
301
342
338
Medium/light sour crude oil
497
249
438
295
Sweet crude oil
1,479
1,601
1,439
1,390
Residuals
214
275
223
239
Other feedstocks
123
125
117
118
Total feedstocks
2,638
2,551
2,559
2,380
Blendstocks and other
367
313
364
325
Total throughput volumes
3,005
2,864
2,923
2,705
Yields (thousand barrels per
day)
Gasolines and blendstocks
1,457
1,451
1,434
1,359
Distillates
1,158
1,055
1,107
995
Other products (i)
418
390
409
381
Total yields
3,033
2,896
2,950
2,735
Operating statistics (b) (g)
(j)
Refining margin
$
5,900
$
2,655
$
17,200
$
6,235
Adjusted Refining operating income
$
3,816
$
911
$
11,407
$
879
Throughput volumes (thousand barrels per
day)
3,005
2,864
2,923
2,705
Refining margin per barrel of
throughput
$
21.34
$
10.07
$
21.55
$
8.45
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
5.48
4.53
5.15
5.05
Depreciation and amortization expense per
barrel of
throughput
2.06
2.08
2.11
2.21
Adjusted Refining operating income per
barrel of
throughput
$
13.80
$
3.46
$
14.29
$
1.19
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,
2022
2021
2022
2021
Operating statistics (g) (j)
Renewable Diesel margin
$
314
$
146
$
778
$
681
Adjusted Renewable Diesel operating
income
$
212
$
109
$
513
$
560
Sales volumes (thousand gallons per
day)
2,231
671
2,084
819
Renewable Diesel margin per gallon of
sales
$
1.53
$
2.37
$
1.37
$
3.05
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of sales
0.34
0.42
0.32
0.39
Depreciation and amortization expense per
gallon of sales
0.15
0.19
0.15
0.16
Adjusted Renewable Diesel operating income
per gallon of sales
$
1.04
$
1.76
$
0.90
$
2.50
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,
2022
2021
2022
2021
Operating statistics (b) (g)
(j)
Ethanol margin
$
183
$
154
$
606
$
513
Adjusted Ethanol operating income
$
1
$
4
$
82
$
47
Production volumes (thousand gallons per
day)
3,498
3,625
3,799
3,797
Ethanol margin per gallon of
production
$
0.57
$
0.46
$
0.59
$
0.50
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of production
0.50
0.38
0.45
0.39
Depreciation and amortization expense per
gallon of production (c)
0.07
0.21
0.04
0.11
Gain on sale of ethanol plant per gallon
of production (c)
—
—
0.02
—
Change in estimated useful life of ethanol
plant per gallon of
production (c)
—
(0.14
)
—
(0.05
)
Adjusted Ethanol operating income per
gallon of production
$
—
$
0.01
$
0.08
$
0.05
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,
2022
2021
2022
2021
Operating statistics by region
(h)
U.S. Gulf Coast region (b) (g)
(j)
Refining margin
$
3,298
$
1,405
$
9,784
$
3,484
Adjusted Refining operating income
$
2,078
$
399
$
6,422
$
207
Throughput volumes (thousand barrels per
day)
1,813
1,649
1,752
1,632
Refining margin per barrel of
throughput
$
19.76
$
9.27
$
20.45
$
7.83
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
5.21
4.44
4.89
5.12
Depreciation and amortization expense per
barrel of
throughput
2.09
2.19
2.14
2.24
Adjusted Refining operating income per
barrel of
throughput
$
12.46
$
2.64
$
13.42
$
0.47
U.S. Mid-Continent region (b) (g)
(j)
Refining margin
$
895
$
479
$
2,514
$
1,147
Adjusted Refining operating income
$
600
$
221
$
1,682
$
371
Throughput volumes (thousand barrels per
day)
441
465
437
442
Refining margin per barrel of
throughput
$
22.07
$
11.19
$
21.10
$
9.50
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
5.19
4.07
4.88
4.33
Depreciation and amortization expense per
barrel of
throughput
2.10
1.96
2.11
2.10
Adjusted Refining operating income per
barrel of
throughput
$
14.78
$
5.16
$
14.11
$
3.07
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,
2022
2021
2022
2021
Operating statistics by region (h)
(continued)
North Atlantic region (g) (j)
Refining margin
$
1,073
$
490
$
3,123
$
948
Adjusted Refining operating income
$
785
$
237
$
2,302
$
293
Throughput volumes (thousand barrels per
day)
479
480
482
386
Refining margin per barrel of
throughput
$
24.34
$
11.10
$
23.72
$
9.00
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
5.11
4.21
4.74
4.53
Depreciation and amortization expense per
barrel of
throughput
1.43
1.52
1.50
1.69
Adjusted Refining operating income per
barrel of
throughput
$
17.80
$
5.37
$
17.48
$
2.78
U.S. West Coast region (g) (j)
Refining margin
$
634
$
281
$
1,779
$
656
Adjusted Refining operating income
$
353
$
54
$
1,001
$
8
Throughput volumes (thousand barrels per
day)
272
270
252
245
Refining margin per barrel of
throughput
$
25.36
$
11.29
$
25.89
$
9.81
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
8.39
6.48
8.26
6.76
Depreciation and amortization expense per
barrel of
throughput
2.84
2.64
3.07
2.93
Adjusted Refining operating income per
barrel of
throughput
$
14.13
$
2.17
$
14.56
$
0.12
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,
2022
2021
2022
2021
Refining
Feedstocks (dollars per barrel)
Brent crude oil
$
97.59
$
73.22
$
102.21
$
67.77
Brent less West Texas Intermediate (WTI)
crude oil
5.83
2.64
3.91
2.94
Brent less WTI Houston crude oil
3.69
2.01
2.28
2.03
Brent less Dated Brent crude oil
(2.97
)
(0.25
)
(2.92
)
0.06
Brent less Alaska North Slope (ANS) crude
oil
(1.53
)
0.49
(0.19
)
0.46
Brent less Argus Sour Crude Index (ASCI)
crude oil
8.23
4.52
6.58
3.62
Brent less Maya crude oil
13.11
7.01
9.84
5.95
Brent less Western Canadian Select (WCS)
Houston crude oil
17.68
7.74
13.22
6.77
WTI crude oil
91.76
70.58
98.29
64.84
Natural gas (dollars per million
British Thermal Units)
7.31
4.25
6.29
8.95
Products (dollars per barrel)
U.S. Gulf Coast:
Conventional Blendstock of Oxygenate
Blending (CBOB)
gasoline less Brent
13.81
16.90
20.27
13.82
Ultra-low-sulfur (ULS) diesel less
Brent
49.12
14.15
44.34
12.44
Propylene less Brent
(46.73
)
(5.21
)
(38.04
)
(2.37
)
U.S. Mid-Continent:
CBOB gasoline less WTI
27.38
20.84
26.49
18.53
ULS diesel less WTI
60.36
19.37
49.26
18.33
North Atlantic:
CBOB gasoline less Brent
28.28
20.82
29.18
16.58
ULS diesel less Brent
52.30
16.32
51.67
14.43
U.S. West Coast:
California Reformulated Gasoline
Blendstock of
Oxygenate Blending (CARBOB) 87 gasoline
less ANS
48.06
27.49
43.86
23.08
California Air Resources Board (CARB)
diesel less ANS
50.26
18.55
46.97
15.99
CARBOB 87 gasoline less WTI
55.42
29.64
47.96
25.55
CARB diesel less WTI
57.62
20.70
51.07
18.47
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,
2022
2021
2022
2021
Renewable Diesel
New York Mercantile Exchange ULS
diesel
(dollars per gallon)
$
3.55
$
2.13
$
3.54
$
1.96
Biodiesel Renewable Identification Number
(RIN)
(dollars per RIN)
1.71
1.60
1.61
1.49
California Low-Carbon Fuel Standard
(dollars per metric ton)
86.21
175.75
109.71
185.29
Chicago Board of Trade (CBOT) soybean oil
(dollars per
pound)
0.66
0.62
0.71
0.58
Ethanol
CBOT corn (dollars per bushel)
6.60
5.58
7.02
5.85
New York Harbor ethanol (dollars per
gallon)
2.58
2.37
2.60
2.18
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars)
(unaudited)
September 30,
December 31,
2022
2021
Balance sheet data
Current assets
$
22,696
$
21,165
Cash and cash equivalents included in
current assets
3,969
4,122
Inventories included in current assets
6,628
6,265
Current liabilities
17,237
16,851
Valero Energy Corporation stockholders’
equity
21,912
18,430
Total equity
23,715
19,817
Debt and finance lease obligations:
Debt –
Current portion of debt (excluding
variable interest entities (VIEs))
$
—
$
300
Debt, less current portion of debt
(excluding VIEs)
8,813
10,820
Total debt (excluding VIEs)
8,813
11,120
Current portion of debt attributable to
VIEs
825
810
Debt, less current portion of debt
attributable to VIEs
—
20
Total debt attributable to VIEs
825
830
Total debt
9,638
11,950
Finance lease obligations –
Current portion of finance lease
obligations (excluding VIEs)
168
141
Finance lease obligations, less current
portion (excluding VIEs)
1,502
1,502
Total finance lease obligations (excluding
VIEs)
1,670
1,643
Current portion of finance lease
obligations attributable to VIEs
13
13
Finance lease obligations, less current
portion attributable to VIEs
255
264
Total finance lease obligations
attributable to VIEs
268
277
Total finance lease obligations
1,938
1,920
Total debt and finance lease
obligations
$
11,576
$
13,870
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of net cash provided by
operating activities to
adjusted net cash provided by operating
activities (g)
Net cash provided by operating
activities
$
2,045
$
1,449
$
8,478
$
3,405
Exclude:
Changes in current assets and current
liabilities
(1,489
)
379
(1,617
)
1,630
Diamond Green Diesel LLC’s (DGD) adjusted
net cash
provided by operating activities
attributable to the other joint
venture member’s ownership interest in
DGD
119
59
294
299
Adjusted net cash provided by operating
activities
$
3,415
$
1,011
$
9,801
$
1,476
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars, except
per share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Reconciliation of capital investments
to capital
investments attributable to Valero
(g)
Capital expenditures (excluding VIEs)
$
228
$
107
$
552
$
368
Capital expenditures of VIEs:
DGD
224
332
682
730
Other VIEs
11
24
30
59
Deferred turnaround and catalyst cost
expenditures
(excluding VIEs)
139
118
820
544
Deferred turnaround and catalyst cost
expenditures
of DGD
—
5
13
6
Investments in nonconsolidated joint
ventures
—
(1
)
1
8
Capital investments
602
585
2,098
1,715
Adjustments:
DGD’s capital investments attributable to
the other joint
venture member
(112
)
(169
)
(347
)
(368
)
Capital expenditures of other VIEs
(11
)
(24
)
(30
)
(59
)
Capital investments attributable to
Valero
$
479
$
392
$
1,721
$
1,288
Dividends per common share
$
0.98
$
0.98
$
2.94
$
2.94
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
NOTES TO EARNINGS RELEASE
TABLES
(a)
Under the Renewable Fuel Standard program,
the U.S. Environmental Protection Agency (EPA) is required to set
annual quotas for the volume of renewable fuels that obligated
parties, such as us, must blend into petroleum-based transportation
fuels consumed in the U.S. The quotas are used to determine an
obligated party’s renewable volume obligation (RVO). The EPA
released a final rule on June 3, 2022 that, among other things,
reduced the quotas for 2020 and, for the first time, established
quotas for 2021 and 2022.
In 2020, we recognized the cost of the RVO
using the 2020 quotas set by the EPA at that time, and in 2021 and
the three months ended March 31, 2022, we recognized the cost of
the RVO using our estimates of the quotas. As a result of the final
rule released by the EPA as noted above, we recognized a benefit of
$104 million in June 2022 primarily related to the modification of
the 2020 quotas. The impacts to the estimated cost of the RVO
recognized by us in 2021 and the three months ended March 31, 2022
were not significant; however, there were impacts in the 2021
quarterly periods as follows: (i) benefit of $80 million for the
three months ended March 31, 2021; (ii) benefit of $81 million for
the three months ended June 30, 2021; (iii) benefit of $58 million
for the three months ended September 30, 2021, resulting in a
benefit of $219 million for the nine months ended September 30,
2021; and (iv) charge of $220 million related to the three months
ended December 31, 2021.
(b)
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 (j)
Refining margin per barrel of throughput
(g)
$
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 per
barrel
of throughput (g)
$
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 (g) below).
(c)
Depreciation and amortization expense
includes the following:
◦
a gain of $23 million in the nine months
ended September 30, 2022 on the sale of our ethanol plant located
in Jefferson, Wisconsin (Jefferson ethanol plant); and
◦
accelerated depreciation of $48 million in
the three and nine months ended September 30, 2021 related to a
change in the estimated useful life of our Jefferson ethanol
plant.
(d)
General and administrative expenses
(excluding depreciation and amortization expense) for the nine
months ended September 30, 2022 includes a charge of $20 million
for an environmental reserve adjustment associated with a
non-operating site.
(e)
“Other income, net” includes the
following:
◦
a gain of $26 million in the three months
ended September 30, 2022 and a net charge of $24 million in the
nine months ended September 30, 2022 related to the early
retirement of approximately $1.25 billion and $2.65 billion
aggregate principal amount, respectively, of various series of our
senior notes;
◦
a gain of $62 million in the nine months
ended September 30, 2021 on the sale of a 24.99 percent membership
interest in MVP Terminalling, LLC (MVP), a nonconsolidated joint
venture with a subsidiary of Magellan Midstream Partners, L.P.;
and
◦
a charge of $24 million in the nine months
ended September 30, 2021 representing our portion of the asset
impairment loss recognized by Diamond Pipeline LLC, a
nonconsolidated 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 income tax rate changes
(primarily an increase in the U.K. rate from 19 percent to 25
percent effective in 2023) were enacted during the second quarter
of 2021 that resulted in the remeasurement of our deferred tax
liabilities. Under GAAP, we are required to recognize the effect of
a change in tax law in the period of enactment. As a result, we
recognized deferred income tax expense of $64 million in the nine
months ended September 30, 2021, which represented the net increase
in our deferred tax liabilities resulting from the changes in the
income tax rates.
(g)
We use certain financial measures (as
noted below) in the earnings release tables and accompanying
earnings release that are not defined under 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 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 GAAP measures nor should they be considered in isolation
or as a substitute for an analysis of our results of operations as
reported under GAAP. In addition, these non-GAAP measures may not
be comparable to similarly titled measures used by other companies
because we may define them differently, which diminishes their
utility.
Non-GAAP measures are as follows:
◦
Adjusted net income attributable to
Valero Energy Corporation stockholders is defined as net income
(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 22.5 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.
–
Modification of RVO – The net benefit
resulting from the modification of our RVO for 2020 and 2021 that
was recognized by us in June 2022 is not associated with the cost
of the RVO generated by our operations during the nine months ended
September 30, 2022. See note (a) for additional details.
On the other hand, the net charge
resulting from the modification of our RVO for 2021 that was
recognized by us in June 2022 is associated with the cost of the
RVO generated by our operations throughout 2021. Therefore, the
adjustment reflects the portion of the net charge that is
associated with the cost of the RVO generated by our operations
during the three and nine months ended September 30, 2021.
–
Gain on sale of ethanol plant – The gain
on the sale of our Jefferson ethanol plant (see note (c)) is not
indicative of our ongoing operations.
–
Environmental reserve adjustment – The
environmental reserve adjustment is attributable to a site that was
shut down by prior owners and subsequently acquired by us (referred
to by us as a non-operating site (see note (d)).
–
Loss (gain) on early retirement of debt –
Discounts, premiums, and other expenses recognized in connection
with the early retirement of various series of our senior notes
(see note (e)) are not associated with the ongoing costs of our
borrowing and financing activities.
–
Change in estimated useful life of ethanol
plant – The accelerated depreciation recognized as a result of a
change in the estimated useful life of our Jefferson ethanol plant
(see note (c)) is not indicative of our ongoing operations.
–
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.
–
Income tax expense related to changes in
statutory tax rates – The income tax expense related to changes in
certain statutory income 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.
◦
Adjusted earnings per common share
– assuming dilution is defined as adjusted net income attributable
to Valero Energy Corporation stockholders divided by the number of
weighted-average shares outstanding in the applicable period,
assuming dilution.
◦
Refining margin is defined as
Refining segment operating income (loss) excluding the modification
of RVO adjustment (see note (a)), operating expenses (excluding
depreciation and amortization expense), depreciation and
amortization expense, and other operating expenses. We believe
Refining margin is an important measure of our Refining segment’s
operating and financial performance as it is the most comparable
measure to the industry’s market reference product margins, which
are used by industry analysts, investors, and others to evaluate
our performance.
◦
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 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
is defined as Refining segment operating income (loss) excluding
the modification of RVO adjustment (see note (a)) and other
operating expenses. We believe adjusted Refining operating income
is an important measure of our Refining segment’s operating and
financial performance because it excludes items that are not
indicative of that segment’s core operating performance.
◦
Adjusted 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
is defined as Ethanol segment operating income (loss) excluding the
gain on sale of ethanol plant (see note (c)), the change in
estimated useful life of ethanol plant (see note (c)), and other
operating expenses. We believe adjusted Ethanol operating income 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 the other joint venture
member’s ownership interest in DGD – We are a 50 percent joint
venture member 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 members 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 member 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 the other joint venture
member’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,
2022
2021
2022
2021
DGD operating cash flow data
Net cash provided by operating
activities
$
512
$
175
$
661
$
638
Exclude: Changes in current assets and
current
liabilities
273
56
73
39
Adjusted net cash provided by
operating
activities
239
119
588
599
Other joint venture member’s ownership
interest
50
%
50
%
50
%
50
%
DGD’s adjusted net cash provided by
operating
activities attributable to the other joint
venture
member’s ownership interest in DGD
$
119
$
59
$
294
$
299
◦
Capital investments attributable to
Valero is defined as all capital expenditures, deferred
turnaround and catalyst cost expenditures, and investments in
nonconsolidated joint ventures presented in our consolidated
statements of cash flows, excluding the portion of DGD’s capital
investments attributable to the other joint venture member and all
of the capital expenditures of VIEs other than DGD.
DGD’s members 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 member, 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 other VIEs that we consolidate 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/20221024006010/en/
Investors: Homer Bhullar, Vice President – Investor Relations
and Finance, 210-345-1982 Eric Herbort, Director – 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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