10-QPeriod: Q1 FY2013

VALERO ENERGY CORP/TX Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 8, 2013For Securities:VLO

Summary

Valero Energy Corporation (VLO) reported a significant turnaround in its financial performance for the first quarter of 2013 compared to the same period in 2012. The company posted a net income attributable to stockholders of $654 million, or $1.18 per share, a substantial improvement from a net loss of $432 million, or $0.78 per share, in Q1 2012. This recovery was primarily driven by a strong rebound in the Refining segment, which saw its operating income surge by $1.3 billion year-over-year, largely due to improved refining throughput margins and wider crude oil discounts. A key strategic development during this period was the upcoming separation of Valero's retail business into a new independent company, CST Brands, Inc., which was completed shortly after the quarter's end. This move is expected to allow Valero to focus more intently on its core refining and logistics operations. The company also highlighted its ongoing investment in logistics and capabilities to process cost-advantaged domestic crude oils, positioning itself to benefit from the evolving energy landscape.

Financial Highlights

48 data points
Beta

Net Income

$654.00M

EPS (Diluted)

$1.18

Total Assets

$45.50B

Cash & Equivalents

$1.86B

Free Cash Flow

$972.00M

Financial Statements
Beta
Operating Expenses$32.41B
Operating Income$1.06B
Interest Expense$83.00M
Net Income$654.00M
EPS (Basic)$1.18
EPS (Diluted)$1.18
Shares Outstanding (Basic)550.00M
Shares Outstanding (Diluted)556.00M

Key Highlights

  • 1Valero achieved a net income of $654 million in Q1 2013, a dramatic improvement from a net loss of $432 million in Q1 2012.
  • 2Refining segment operating income saw a substantial increase of $1.3 billion year-over-year, driven by higher throughput margins and favorable crude oil differentials.
  • 3The company is actively investing in logistics infrastructure, including ordering 2,500 new rail cars, to capitalize on the availability of cost-advantaged domestic crude oils.
  • 4Valero completed the separation of its retail business (CST Brands, Inc.) effective May 1, 2013, aiming to sharpen its strategic focus.
  • 5The company's outlook anticipates continued benefits from processing domestic light crude oils, though it notes potential narrowing of price differentials.
  • 6Significant capital expenditures of $577 million were made in Q1 2013 for capital projects and $287 million for deferred turnaround and catalyst costs, indicating ongoing investment in its facilities.

Frequently Asked Questions

The primary driver was the significant recovery and improvement in the Refining segment's operating income, which increased by $1.3 billion year-over-year. This was mainly due to higher refining throughput margins, especially for diesel and jet fuel, and wider discounts on certain crude oils, such as heavy sour crude versus Brent crude.

The separation of the retail business into CST Brands, Inc. allows Valero to streamline its operations and focus more intensely on its core refining and logistics businesses. This strategic shift aims to enhance operational efficiency and capital allocation towards its growth areas.

Valero is investing in its logistics capabilities, such as acquiring additional rail cars, and enhancing refinery flexibility to process cost-advantaged domestic light crude oils. This strategy aims to capitalize on the increased production of these crudes in the U.S. and Canada and the associated price discounts relative to global benchmarks like Brent.

Yes, the company highlights risks related to commodity price volatility, geopolitical factors affecting crude oil supply, refinery operational risks (accidents, shutdowns), environmental regulations, and the potential impact of government policies on alternative fuels. There's also a noted potential for a loss in the range of $0 to $250 million related to an environmental cleanup in Hartford, Illinois, exceeding current accruals.