10-KPeriod: FY2020

VALERO ENERGY CORP/TX Annual Report, Year Ended Dec 31, 2020

Filed February 23, 2021For Securities:VLO

Summary

Valero Energy Corporation (VLO) reported a net loss of $1.4 billion for the fiscal year ended December 31, 2020, a significant downturn from the $2.4 billion net income reported in 2019. This loss was primarily driven by a $5.4 billion decrease in operating income, heavily impacted by the COVID-19 pandemic's severe reduction in transportation fuel demand and associated market prices. Refining segment adjusted operating income saw a substantial decrease of $5.1 billion due to lower gasoline and distillate margins, reduced throughput volumes, and higher biofuel credit costs. Despite the challenging year for the refining segment, Valero's renewable diesel segment demonstrated resilience, with adjusted operating income increasing by $62 million, largely due to favorable commodity derivative impacts. The company took measures to manage liquidity, including deferring capital investments and managing working capital. Valero ended the year with $9.0 billion in liquidity, aiming to navigate the ongoing uncertainties of the pandemic while strategically investing in its renewable diesel business for future growth.

Financial Statements
Beta
Revenue$64.91B
Cost of Revenue$65.65B
Gross Profit-$740.00M
Operating Income-$1.58B
Interest Expense$563.00M
Net Income-$1.42B
EPS (Basic)$-3.50
EPS (Diluted)$-3.50
Shares Outstanding (Basic)407.00M
Shares Outstanding (Diluted)407.00M

Key Highlights

  • 1Valero reported a net loss of $1.4 billion for the year ended December 31, 2020, a significant decrease from a net income of $2.4 billion in 2019, primarily due to the impact of COVID-19 on demand and prices.
  • 2The refining segment experienced a substantial decline, with adjusted operating income falling by $5.1 billion, attributed to lower margins, reduced throughput, and increased biofuel credit costs.
  • 3The renewable diesel segment remained a bright spot, with adjusted operating income increasing by $62 million, driven by favorable commodity derivative instruments.
  • 4The company ended 2020 with strong liquidity, totaling $9.0 billion, demonstrating effective management of cash resources amidst the pandemic.
  • 5Valero has made substantial investments in its renewable fuels business, with plans to invest nearly $2 billion over the next three years to expand its renewable diesel production capacity.
  • 6Capital investments for 2021 are projected at $2.4 billion, with approximately 40% allocated to growth strategies, particularly in the renewable diesel expansion.

Frequently Asked Questions

Valero reported a net loss of $1.4 billion for the year ended December 31, 2020, a significant decrease from the $2.4 billion net income in 2019. This was primarily due to the severe impact of the COVID-19 pandemic on transportation fuel demand and market prices, which led to a $5.4 billion decrease in operating income.

The pandemic significantly impacted Valero's refining segment, causing reduced demand, lower prices, and decreased margins. However, the renewable diesel segment was more resilient and saw an increase in adjusted operating income, benefiting from continued demand for low-carbon fuels. The ethanol segment also experienced lower prices and volumes, similar to the refining segment.

Valero is heavily investing in its renewable fuels business, particularly renewable diesel through its joint venture, Diamond Green Diesel (DGD). The company has invested over $3 billion to date and plans to invest an additional $2 billion over the next three years to expand DGD's production capacity, aiming to capitalize on the growing demand for low-carbon transportation fuels.

Valero ended 2020 with $9.0 billion in liquidity. The company took several actions to manage its financial position during the pandemic, including deferring capital investments, managing working capital, issuing $4.0 billion in debt, and drawing on its credit facilities. The company believes its liquidity is sufficient to fund ongoing operations and commitments.