01—Abstract
Summary
Summary of the 10-K filed February 23, 2023. Cited figures are marked; the original filing is the authoritative source.
Valero Energy Corporation (VLO) reported a strong financial performance for the fiscal year ended December 31, 2022, driven by favorable market conditions including recovering demand and constrained supply in petroleum-based transportation fuels, leading to increased refining margins.
The company generated $11.5 billiona in net income attributable to stockholders, a significant increase from the prior year. Valero utilized its substantial operational cash flow to invest in its business, repay debt, and return capital to shareholders through share repurchases and dividends. The company's strategic focus on low-carbon fuels, including renewable diesel and ethanol, continues to be a growth area, supported by government regulations and incentives.
While facing ongoing market volatility and regulatory complexities, Valero's diversified operations and strategic investments position it to navigate the evolving energy landscape. The company highlighted robust performance across its segments, with the Refining segment being the primary driver of profitability due to improved gasoline and distillate margins and higher throughput volumes. The Renewable Diesel segment also showed increased profitability driven by higher sales volumes and prices, though partially offset by increased feedstock costs.
The Ethanol segment experienced a decrease in profitability due to higher corn prices and operating expenses. Valero also maintained a strong liquidity position and continued to manage its debt effectively.
02—Key points
Key Highlights
- Net income attributable to stockholders significantly increased to $11.5 billion for the fiscal year 2022, compared to $930 million in 2021, driven by strong refining margins.
- The company generated $12.6 billion in operating cash flow, which was used for $2.7 billion in capital investments, $6.1 billion in returns to stockholders (share repurchases and dividends), and $2.7 billion in debt reduction.
- Valero completed the expansion of its renewable diesel capacity to approximately 1.2 billion gallons per year with the commissioning of its second renewable diesel plant.
- The company's strategic focus on low-carbon fuels, including renewable diesel and ethanol, continues with significant investments and anticipation of future growth driven by regulatory tailwinds.
- Refining segment margins saw substantial improvement, with distillate margins increasing by approximately $11.8 billion and gasoline margins by $2.4 billion.
- The company continued its active share repurchase program, authorizing an additional $2.5 billion in share repurchases, reflecting confidence in its financial position and commitment to returning value to shareholders.
- Valero maintains a strong liquidity position with $10.1 billion in total liquidity as of December 31, 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Valero Energy kept $0.07.
- Revenue$176.38B100.0%
- Cost of revenue−$159.59B90.5%
- Gross profit$16.80B9.5%
- Operating costs−$1.11B0.6%
- Operating income$15.69B8.9%
- Interest, other & tax−$4.16B2.4%
- Net income$11.53B6.5%
Where FY2022 revenue went
$176.38B- Cost of revenue: $159.59B, 90% of revenue
- Net income: $11.53B, 6.5% of revenue
- Operating costs: $1.11B, 0.6% of revenue
- Interest, other & tax: $4.16B, 2.4% of revenue
Kept 6.5% as net incomeNet income $11.53B · 6.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 23, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $176.38B$113.98B | +54.8% |
| Cost of Revenue | $159.59B$110.85B | +44.0% |
| Gross Profit | $16.80B$3.13B | +436.8% |
| Operating Income | $15.69B$2.13B | +636.6% |
| Interest Expense | $562.00M$603.00M | −6.8% |
| Net Income | $11.53B$930.00M | +1139.6% |
| EPS (Basic) | $29.05$2.27 | +1179.7% |
| EPS (Diluted) | $29.04$2.27 | +1179.3% |
| Shares Outstanding (Basic) | 395.00M407.00M | −2.9% |
| Shares Outstanding (Diluted) | 396.00M407.00M | −2.7% |
05—Questions
Frequently Asked Questions
What was Valero's financial performance in 2022?
Valero Energy Corporation reported a significant increase in net income attributable to stockholders, reaching $11.5 billion for the year ended December 31, 2022, a substantial improvement from $930 million in 2021. This strong performance was primarily driven by higher refining margins, particularly for distillates and gasoline, and increased throughput volumes, benefiting from a recovery in demand and constrained supply in the petroleum-based transportation fuels market.
How is Valero investing in its future, particularly in low-carbon fuels?
Valero is strategically investing in its low-carbon fuels business. The company's renewable diesel segment, through its joint venture Diamond Green Diesel (DGD), has expanded its production capacity to approximately 1.2 billion gallons per year. Valero also owns 12 ethanol plants with a combined capacity of 1.6 billion gallons per year. The company has invested over $5 billion in its low-carbon fuels businesses to date and is evaluating further opportunities, including a new project to produce Sustainable Aviation Fuel (SAF).
How did regulatory changes impact Valero's business?
Government regulations, such as the Renewable Fuel Standard (RFS) and the California Low Carbon Fuel Standard (LCFS), have created opportunities for Valero's low-carbon fuels businesses by driving demand for renewable diesel and ethanol. While these regulations can add costs to the refining business, they also create value for Valero's renewable products. The company is actively managing compliance with these complex and evolving programs.
What is Valero's capital allocation strategy regarding shareholders?
Valero demonstrates a strong commitment to returning capital to shareholders. In 2022, the company returned $6.1 billion to stockholders through share repurchases and dividend payments. Furthermore, Valero's Board authorized additional share repurchases, indicating continued confidence in the company's financial strength and a strategy to enhance shareholder value.
06—Continue