10-QPeriod: Q1 FY2021

VALERO ENERGY CORP/TX Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 30, 2021For Securities:VLO

Summary

Valero Energy Corp./TX (VLO) reported a net loss attributable to stockholders of $704 million for the first quarter of 2021, a significant improvement from the $1.9 billion net loss in the same period of 2020. This improvement was primarily driven by a lower operating loss, partly due to the absence of a large $2.5 billion LCM inventory valuation adjustment that impacted the prior year's first quarter. However, the company highlighted substantial excess energy costs of $579 million due to Winter Storm Uri, which significantly impacted its first-quarter results. Despite these challenges, the company observed signs of recovery in demand and market prices for gasoline and diesel, approaching pre-pandemic levels by March 2021. The company's liquidity remained robust, with $7.97 billion in total liquidity as of March 31, 2021, although cash and cash equivalents decreased by $1.0 billion during the quarter to $2.25 billion. This decrease was attributed to operational cash usage, capital investments, and dividend payments. Valero continues to navigate the uncertain economic environment shaped by the COVID-19 pandemic, with ongoing efforts to manage costs and align operations with market demand.

Financial Highlights

44 data points
Beta

Revenue

$20.81B

-2.0% Gross Margin

Net Income

-$704.00M

-3.4% Net Margin

EPS (Diluted)

$-1.73

Total Assets

$53.61B

Cash & Equivalents

$2.25B

Free Cash Flow

-$52.00M

Financial Statements
Beta
Revenue$20.81B
Cost of Revenue$21.21B
Gross Profit-$408.00M
Operating Income-$666.00M
Interest Expense$149.00M
Net Income-$704.00M
EPS (Basic)$-1.73
EPS (Diluted)$-1.73
Shares Outstanding (Basic)407.00M
Shares Outstanding (Diluted)407.00M

Key Highlights

  • 1Reported a net loss of $704 million for Q1 2021, an improvement from a $1.9 billion loss in Q1 2020.
  • 2Winter Storm Uri resulted in an estimated $579 million in excess energy costs during Q1 2021.
  • 3Revenue decreased by $1.3 billion to $20.8 billion in Q1 2021 compared to $22.1 billion in Q1 2020.
  • 4Operating loss improved significantly to $666 million in Q1 2021 from $2.3 billion in Q1 2020, aided by the absence of a large LCM inventory valuation adjustment from the prior year.
  • 5Total liquidity remained strong at $7.97 billion as of March 31, 2021.
  • 6Cash and cash equivalents decreased by $1.0 billion during the quarter to $2.25 billion, primarily due to operational cash usage and capital expenditures.
  • 7The company noted recovery in demand and market prices for gasoline and diesel, reaching near pre-pandemic levels by March 2021.

Frequently Asked Questions

The primary driver of Valero's net loss of $704 million in the first quarter of 2021 was the significant impact of Winter Storm Uri, which resulted in an estimated $579 million in excess energy costs. While the overall net loss improved compared to the prior year, these storm-related costs were a substantial factor.

Winter Storm Uri caused severe disruptions and significantly increased energy costs at several of Valero's refineries and ethanol plants. The company incurred an estimated $579 million in excess energy costs (pre-tax) during the first quarter of 2021, which negatively impacted its operating income and overall profitability for the period.

Valero anticipates continued improvement in gasoline, jet fuel, and diesel prices as industry-wide inventory levels normalize and demand recovers. They also expect renewable diesel margins to remain consistent with current levels and ethanol margins to improve with increasing domestic consumption. However, the company acknowledges ongoing uncertainties related to the COVID-19 pandemic and its potential economic impacts.

Valero's total liquidity remained strong at $7.97 billion as of March 31, 2021. However, its cash and cash equivalents decreased by $1.0 billion during the quarter to $2.25 billion. This reduction was primarily due to using cash to fund operations (negatively impacted by storm costs), capital investments, and dividend payments.