01—Abstract
Summary
Summary of the 10-K filed February 27, 2014. Cited figures are marked; the original filing is the authoritative source.
Valero Energy Corporation (VLO) reported net income attributable to stockholders of $2.7 billiona ($4.97 per diluted share) for the year ended December 31, 2013.
This represents a significant increase compared to the previous year, primarily driven by the absence of substantial asset impairment losses recorded in 2012, as well as a non-taxable gain from the disposition of its retained interest in CST Brands, Inc. However, excluding these one-time items, the company experienced a decline in operating income, largely due to lower refining segment operating income, which was impacted by compressed refining margins across its various regions. The company also completed the separation of its retail business through a spin-off of CST Brands, Inc. in May 2013, thereby exiting the retail segment. The ethanol segment showed a strong performance, with operating income increasing significantly due to higher gross margins and production volumes, driven by lower corn prices and higher ethanol prices.
Valero also announced the initial public offering of Valero Energy Partners LP (VLP) in December 2013, creating a midstream master limited partnership to support its refining operations. The company ended the year with a robust cash position, enabling significant capital expenditures, debt repayments, and shareholder returns through dividends and share repurchases.
02—Key points
Key Highlights
- Net income attributable to stockholders of $2.7 billion ($4.97 per diluted share) for the year ended December 31, 2013, an increase from $2.1 billion ($3.75 per diluted share) in 2012, primarily due to the absence of asset impairment losses and a gain on disposition of retained interest in CST Brands.
- Refining segment operating income decreased by $233 million to $4.2 billion in 2013, primarily due to lower refining margins and higher biofuel credit costs, partially offset by increased distillate margins from new hydrocracker units.
- Ethanol segment operating income saw a substantial increase of $538 million to $491 million in 2013, driven by lower corn prices, higher ethanol prices, and increased production volumes.
- Completed the separation of its retail business by spinning off 80% of CST Brands, Inc. on May 1, 2013, exiting the retail segment.
- Valero Energy Partners LP (VLP) completed its initial public offering in December 2013, raising $369 million in net proceeds.
- The company repurchased approximately $8.28 million of its common stock during the fourth quarter of 2013, with $2.6 billion remaining under an ongoing share repurchase program.
- Dividends per common share increased from $0.65 in 2012 to $0.85 in 2013, reflecting the company's commitment to returning capital to shareholders.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 27, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Operating Expenses | $134.12B$133.35B | +0.6% |
| Operating Income | $3.96B$5.04B | −21.6% |
| Interest Expense | $365.00M$314.00M | +16.2% |
| Net Income | $2.72B$2.08B | +30.6% |
| EPS (Basic) | $4.99$3.77 | +32.4% |
| EPS (Diluted) | $4.97$3.75 | +32.5% |
| Shares Outstanding (Basic) | 542.00M550.00M | −1.5% |
| Shares Outstanding (Diluted) | 548.00M556.00M | −1.4% |
05—Questions
Frequently Asked Questions
What was Valero's financial performance in 2013 compared to 2012?
In 2013, Valero reported net income attributable to stockholders of $2.7 billion, or $4.97 per diluted share, an increase from $2.1 billion, or $3.75 per diluted share, in 2012. This improvement was largely due to the absence of $1.0 billion in asset impairment losses recorded in 2012 and a $325 million non-taxable gain from the disposition of its retained interest in CST Brands. However, excluding these items, the company's operating income decreased due to lower refining margins.
How did the separation of the retail business impact Valero?
Valero completed the separation of its retail business by spinning off 80% of CST Brands, Inc. on May 1, 2013. This transaction resulted in Valero exiting the retail segment. The financial results for 2013 reflect the retail business operations only for the first four months of the year, leading to a significant decrease in retail segment operating income compared to 2012.
What drove the performance of Valero's ethanol segment?
Valero's ethanol segment experienced a substantial increase in operating income, rising by $538 million to $491 million in 2013. This growth was attributed to higher gross margins per gallon, driven by lower corn prices and higher ethanol prices, as well as an increase in production volumes.
What is the company's outlook regarding crude oil and product margins?
Valero benefits from processing discounted crude oils like Maya and WTI relative to Brent crude. The company noted that discounts for these crude oils widened in Q4 2013. However, gasoline margins were seasonally weak in Q4 2013 and early 2014, while distillate margins remained consistent. Valero expects price volatility in crude oil and refined products to continue in the near to mid-term.
06—Continue