10-KPeriod: FY2014

VALERO ENERGY CORP/TX Annual Report, Year Ended Dec 31, 2014

Filed February 26, 2015For Securities:VLO

Summary

Valero Energy Corporation (VLO) demonstrated strong performance in 2014, with net income attributable to stockholders from continuing operations increasing to $3.7 billion ($6.97 per share) from $2.7 billion ($4.96 per share) in 2013. This significant improvement was primarily driven by a $1.9 billion increase in operating income, largely stemming from a substantial $1.7 billion rise in refining segment operating income. This boost in refining profitability was attributed to wider discounts on certain crude oil feedstocks relative to Brent crude, higher throughput volumes, and improved margins on other refined products, which more than offset weaker distillate margins and higher energy costs. The company's ethanol segment also showed considerable strength, with operating income increasing by $295 million, driven by lower corn feedstock costs and higher production volumes, despite facing lower co-product prices and ethanol prices. Valero also continued its capital allocation strategy, repurchasing $1.3 billion of its common stock and paying $554 million in dividends, reflecting a commitment to returning value to shareholders. The company ended the year with a strong financial position, indicated by its investment-grade credit ratings, and expressed confidence in its ability to fund ongoing operations and capital expenditures. Looking ahead, Valero anticipates continued market volatility but expects opportunities from widening crude oil discounts and potential strengthening of refined product margins. However, the company also faces risks related to environmental regulations, particularly those concerning greenhouse gas emissions, and potential disruptions in crude oil supply and transportation. The divestiture of its retail business in 2013 streamlined its operations, allowing for a clearer focus on its core refining and ethanol businesses.

Financial Highlights

49 data points
Beta

Net Income

$3.63B

EPS (Diluted)

$6.85

Total Assets

$45.55B

Cash & Equivalents

$3.69B

Free Cash Flow

$2.09B

Financial Statements
Beta
Operating Expenses$124.94B
Operating Income$5.90B
Interest Expense$397.00M
Net Income$3.63B
EPS (Basic)$6.88
EPS (Diluted)$6.85
Shares Outstanding (Basic)526.00M
Shares Outstanding (Diluted)530.00M

Key Highlights

  • 1Net income attributable to Valero stockholders from continuing operations increased by 37% to $3.7 billion in 2014, up from $2.7 billion in 2013.
  • 2Operating income grew by $1.9 billion to $5.9 billion in 2014, primarily due to a $1.7 billion increase in refining segment operating income.
  • 3Refining margin improved by $1.59 per barrel to $11.28, driven by wider discounts on sweet and sour crude oils and higher throughput volumes.
  • 4Ethanol segment operating income rose by $295 million to $786 million, benefiting from lower corn feedstock costs and increased production.
  • 5Valero returned significant capital to shareholders, repurchasing $1.3 billion in common stock and paying $554 million in dividends during 2014.
  • 6The company maintained investment-grade credit ratings (Baa2/BBB/BBB) with stable outlooks from Moody's, S&P, and Fitch.
  • 7The company operated 15 refineries with a combined throughput capacity of approximately 2.9 million barrels per day as of December 31, 2014.

Frequently Asked Questions

Valero experienced a significant improvement in financial performance in 2014 compared to 2013. Net income attributable to Valero stockholders from continuing operations increased by 37% to $3.7 billion, or $6.97 per share, from $2.7 billion, or $4.96 per share, in the prior year. This was primarily driven by a substantial increase in operating income, led by strong performance in the refining segment.

The refining segment's operating income increased by $1.7 billion, largely due to wider discounts for sweet and sour crude oils relative to Brent crude oil, which improved feedstock costs. Higher throughput volumes and increased margins on products like petroleum coke and sulfur also contributed positively, although weaker distillate margins and higher energy costs had a partially offsetting effect.

The ethanol segment demonstrated robust growth, with operating income increasing by $295 million to $786 million. This improvement was primarily a result of lower corn feedstock costs, due to a higher yielding harvest in 2013, and increased production volumes. These benefits were partially offset by lower co-product prices and lower ethanol prices.

Valero actively returns capital to shareholders through stock repurchases and dividend payments. In 2014, the company repurchased $1.3 billion of its common stock and paid $554 million in dividends, indicating a commitment to enhancing shareholder value.