10-KPeriod: FY2015

VALERO ENERGY CORP/TX Annual Report, Year Ended Dec 31, 2015

Filed February 25, 2016For Securities:VLO

Summary

Valero Energy Corporation's 2015 10-K filing reveals a strong year for its refining segment, which saw a significant increase in operating income driven by higher gasoline margins and improved performance from other refined products. This was partially offset by lower distillate margins and reduced benefits from processing certain crude oil feedstocks. The company's ethanol segment experienced a considerable decline in operating income due to lower ethanol and co-product prices, despite lower corn feedstock costs. Despite the challenging ethanol market, Valero demonstrated solid overall financial performance, with net income attributable to stockholders from continuing operations reaching $4.0 billion. The company actively managed its capital through debt issuances and significant share repurchases, demonstrating a commitment to returning value to shareholders. Valero's substantial refining capacity across the U.S., Canada, and the UK positions it as a key player in the energy market, though the company remains exposed to the inherent volatility of refining margins and fluctuating feedstock costs.

Financial Highlights

49 data points
Beta

Net Income

$3.99B

EPS (Diluted)

$7.99

Total Assets

$44.23B

Cash & Equivalents

$4.11B

Free Cash Flow

$3.99B

Financial Statements
Beta
Cost of Revenue$80.69B
Operating Expenses$81.45B
Operating Income$6.36B
Interest Expense$433.00M
Net Income$3.99B
EPS (Basic)$8.00
EPS (Diluted)$7.99
Shares Outstanding (Basic)497.00M
Shares Outstanding (Diluted)500.00M

Key Highlights

  • 1Valero reported a net income of $4.0 billion attributable to stockholders from continuing operations for the year ended December 31, 2015.
  • 2The refining segment's operating income increased by $1.1 billion to $7.0 billion, primarily driven by higher gasoline margins and other refined product margins.
  • 3Ethanol segment operating income decreased significantly by $644 million to $142 million due to lower ethanol and co-product prices.
  • 4The company's total operating revenues decreased by 33% to $87.8 billion, largely due to lower commodity prices.
  • 5Valero repurchased $2.7 billion of its common stock and paid $848 million in dividends during 2015.
  • 6The company ended 2015 with $4.1 billion in cash and temporary cash investments.
  • 7Valero plans to invest approximately $2.6 billion in capital investments for 2016, including both maintenance and growth projects.

Frequently Asked Questions

The significant increase in Valero's refining segment operating income was primarily driven by a $2.1 billion improvement in refining margins, particularly for gasoline. Higher margins on other refined products like petroleum coke, propane, and sulfur also contributed positively. These gains were partly offset by lower distillate margins and a narrowing of discounts for certain crude oil feedstocks compared to Brent crude oil.

The ethanol segment experienced a substantial decrease in operating income primarily due to lower ethanol and co-product prices. Although corn feedstock costs also decreased, the decline in product prices had a more significant negative impact on margins. Increased production volumes favorably impacted the margin but could not offset the overall decline.

Valero actively managed its capital by issuing $1.25 billion in senior notes and raising $189 million through Valero Energy Partners LP's public offering. Crucially, the company returned significant value to shareholders by repurchasing approximately $2.7 billion of its common stock under its authorized programs and paying $848 million in common stock dividends.

Valero faces significant risks related to the volatility of refining margins, which are influenced by crude oil prices, refined product prices, and refinery capacity. Environmental regulations, including those related to greenhouse gas emissions, could increase compliance costs. Additionally, disruptions in crude oil supply or transportation, as well as competition, pose ongoing risks to the company's operations and financial performance.