Valero Misses EPS, Tops on Rev - Analyst Blog
July 26 2011 - 8:37AM
Zacks
Valero Energy Corporation (VLO) has posted
second quarter 2011 earnings from continuing operations of $1.30
per share. The quarter’s results missed the Zacks Consensus
Estimate of $1.47 but climbed more than 39% from last year's
earnings from continuing operations of 93 cents.
The year-over-year improvement can be traced back to a better
refining margins environment and higher feedstock discounts.
Total revenue in the quarter increased more than 52% year over
year to $31,293 million, beating the Zacks Consensus Estimate
of $29,306 million.
Throughput Volumes
During the quarter, throughput volumes were 2.32 million barrels
per day, up approximately 6.2% year over year. By feedstock
composition, sweet crude, medium/light sour crude and heavy sour
crude accounted for 33%, 20% and 22%, respectively, of the total.
The remaining volumes came from residuals, blend-stocks and other
feedstock.
The Gulf Coast accounted for approximately 62% of the total
volume. The Mid-Continent, Northeast and West Coast regions
accounted for 17%, 9% and 12%, respectively.
Throughput Margins
Company-wide throughput margins jumped $1.84 per barrel year
over year in the reported quarter, owing to higher margins for
gasoline, diesel and jet fuel, associated with better discounts for
heavy-sour feedstocks on the Gulf Coast and light-sweet crude oils
in the Mid-Continent. Margins increased significantly across all
regions except in the Northeast.
Average throughput margin realized was $11.30 per barrel in the
Gulf Coast (up from $10.28 per barrel in the year-earlier period),
$16.50 per barrel in the Mid-Continent (up from $9.13), $3.36 per
barrel in the Northeast (down from $4.40) and $10.65 per barrel in
the West Coast (up from $10.55).
Total operating cost per barrel was $5.47 during the quarter, up
more than 9% from the year-earlier quarter. Refining operating
expenses per barrel increased more than 10% year over year to
$3.86. Unit depreciation and amortization expenses upped nearly 6%
to $1.61 per barrel from the year-ago quarter.
Capital Expenditure & Balance Sheet
Second quarter capital spending totaled $664 million, of which
$133 million was for turnarounds and catalyst expenditures. At the
end of the quarter, the company had cash and temporary cash
investments of approximately $4.1 billion. Valero also rewarded
shareholders $29 million in dividends and paid back $208 million in
debt.
Our Take
Valero remains upbeat on 2011 and 2012, and expects wider
discounts in the medium term. It also foresees attractive
opportunities to export products from the Gulf Coast refineries. We
also appreciate Valero’s endeavor of consistently review its
refining portfolio, and upgrade its asset base by selling refinery
properties that do not fit the business mix.
However, being the largest independent refiner, Valero remains
particularly exposed to the unfavorable macro backdrop, along with
other refiners like NGL Energy Partners LP (NGL)
and Able Energy Inc. (ABLE).
The company holds a Zacks #2 Rank, which translates to a
short-term Buy rating. We maintain our long-term Neutral
recommendation on Valero.
VALERO ENERGY (VLO): Free Stock Analysis Report
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