01—Abstract
Summary
Summary of the 10-K filed February 26, 2020. Cited figures are marked; the original filing is the authoritative source.
Valero Energy Corporation (VLO) reported net income attributable to stockholders of $2.4 billiona for 2019, a decrease from $3.1 billion in 2018.
This decline was primarily driven by a $1.1 billionb decrease in the Refining segment's adjusted operating income, largely due to lower discounts on crude oil and feedstocks, and reduced throughput volumes, partially offset by improved distillate margins. The Ethanol segment also saw a decrease in adjusted operating income due to higher corn prices and operating expenses, despite higher ethanol prices. In contrast, the Renewable Diesel segment experienced a significant increase in adjusted operating income, driven by higher sales volumes and the benefit from the blender's tax credit.
For the full year 2019, Valero generated $5.5 billionc in cash from operations, which, along with other financing activities, funded significant capital investments, stock repurchases, and dividend payments. The company's liquidity remained strong, with $7.8 billion in total liquidity at year-end 2019.
Looking ahead to 2020, Valero anticipates improving distillate margins due to anticipated increases in global demand and compliance with new IMO sulfur specifications for bunker fuel. However, concerns remain regarding potential impacts from global economic conditions, including the coronavirus outbreak, and the ongoing developments related to Brexit.
02—Key points
Key Highlights
- Net income attributable to Valero stockholders decreased to $2.4 billion in 2019 from $3.1 billion in 2018, primarily due to weaker refining segment performance.
- The Refining segment's adjusted operating income declined by $1.1 billion, driven by lower feedstock discounts and throughput volumes, partially offset by better distillate margins.
- The Renewable Diesel segment saw a substantial increase in adjusted operating income, primarily due to higher sales volumes and increased blender's tax credits.
- Valero generated $5.5 billion in cash flow from operations in 2019, demonstrating strong operational cash generation.
- The company maintained robust liquidity, with $7.8 billion in total liquidity available at the end of 2019.
- Valero returned capital to shareholders through $1.5 billion in dividends and $777 million in stock repurchases during 2019.
- The company expects improved distillate margins in 2020 due to increased global demand and IMO 2020 regulations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Valero Energy kept $0.02.
- Revenue$108.32B100.0%
- Cost of revenue−$103.55B95.6%
- Gross profit$4.78B4.4%
- Operating costs−$942.0M0.9%
- Operating income$3.84B3.5%
- Interest, other & tax−$1.41B1.3%
- Net income$2.42B2.2%
Where FY2019 revenue went
$108.32B- Cost of revenue: $103.55B, 96% of revenue
- Net income: $2.42B, 2.2% of revenue
- Operating costs: $942.0M, 0.9% of revenue
- Interest, other & tax: $1.41B, 1.3% of revenue
Kept 2.2% as net incomeNet income $2.42B · 2.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 26, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $108.32B$117.03B | −7.4% |
| Cost of Revenue | $103.55B$111.44B | −7.1% |
| Gross Profit | $4.78B$5.59B | −14.6% |
| Operating Income | $3.84B$4.57B | −16.1% |
| Interest Expense | $454.00M$470.00M | −3.4% |
| Net Income | $2.42B$3.12B | −22.4% |
| EPS (Basic) | $5.84$7.30 | −20.0% |
| EPS (Diluted) | $5.84$7.29 | −19.9% |
| Shares Outstanding (Basic) | 413.00M426.00M | −3.1% |
| Shares Outstanding (Diluted) | 414.00M428.00M | −3.3% |
05—Questions
Frequently Asked Questions
What was Valero's financial performance in 2019 compared to 2018?
In 2019, Valero reported net income attributable to stockholders of $2.4 billion, a decrease from $3.1 billion in 2018. This was primarily driven by a decline in the Refining segment's profitability due to lower feedstock discounts and throughput volumes, although the Renewable Diesel segment showed significant growth.
How did Valero manage its capital and liquidity during 2019?
Valero generated $5.5 billion in cash flow from operations in 2019. The company utilized its strong liquidity, which stood at $7.8 billion at year-end, to fund capital investments of $2.7 billion, repurchase $777 million of its common stock, and pay $1.5 billion in dividends to shareholders.
What are Valero's expectations for 2020, particularly regarding refining margins?
Valero anticipates an improvement in distillate margins in 2020, driven by increased global demand and the implementation of the International Maritime Organization's (IMO) 2020 regulations for lower sulfur bunker fuel. However, the company also noted potential negative impacts from global economic concerns, such as the coronavirus outbreak.
What significant acquisitions or divestitures occurred in 2019?
In 2019, Valero completed its acquisition of all outstanding publicly held common units of Valero Energy Partners LP (VLP), which was accounted for as an equity transaction.
06—Continue