10-QPeriod: Q1 FY2023

VALERO ENERGY CORP/TX Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 27, 2023For Securities:VLO

Summary

Valero Energy Corporation (VLO) reported a strong first quarter of 2023, with net income attributable to stockholders soaring to $3.1 billion, a significant increase from $905 million in the same period last year. This performance was driven by robust demand for petroleum-based transportation fuels and a favorable supply-demand imbalance, which supported strong refining margins. The company generated $3.2 billion in operating cash flow and increased its cash and cash equivalents to $5.5 billion, while maintaining $10.8 billion in total liquidity. Strategic investments were made in the business, with $524 million allocated to capital expenditures, including significant contributions to its low-carbon initiatives. Valero also returned substantial value to shareholders, with $1.8 billion deployed towards stock repurchases and dividend payments. The company's diversified operations, including its Refining, Renewable Diesel, and Ethanol segments, all contributed positively to the strong financial results, with the Refining segment showing a particularly substantial improvement in operating income.

Financial Highlights

44 data points
Beta

Revenue

$36.44B

11.8% Gross Margin

Net Income

$3.07B

8.4% Net Margin

EPS (Diluted)

$8.29

Total Assets

$60.18B

Cash & Equivalents

$5.52B

Free Cash Flow

$3.17B

Financial Statements
Beta
Revenue$36.44B
Cost of Revenue$32.13B
Gross Profit$4.31B
Operating Income$4.04B
Interest Expense$146.00M
Net Income$3.07B
EPS (Basic)$8.30
EPS (Diluted)$8.29
Shares Outstanding (Basic)369.00M
Shares Outstanding (Diluted)369.00M

Key Highlights

  • 1Net income attributable to Valero stockholders surged to $3.1 billion for Q1 2023, up from $905 million in Q1 2022.
  • 2Operating income increased significantly to $4.04 billion from $1.38 billion year-over-year, driven by strong refining margins.
  • 3The company generated $3.17 billion in cash from operating activities, a substantial increase from $588 million in the prior year period.
  • 4Valero returned $1.8 billion to stockholders through share repurchases ($1.45 billion) and dividend payments ($379 million) in Q1 2023.
  • 5Capital investments totaled $549 million, with a significant portion allocated to growth and low-carbon projects.
  • 6Total assets remained robust at $60.2 billion, with total equity increasing to $27.1 billion.
  • 7The Renewable Diesel segment saw operating income rise to $205 million, supported by increased sales volumes from new capacity.

Frequently Asked Questions

The substantial increase in net income to $3.1 billion was primarily driven by a significant rise in operating income to $4.04 billion, fueled by strong refining margins resulting from continued high worldwide demand for petroleum-based transportation fuels and constrained supply. This strong performance across segments, particularly in Refining, more than offset increased income tax expense.

Valero generated $3.17 billion in cash from operating activities and $914 million from debt borrowings. This cash was used for $549 million in capital investments, $1.2 billion in debt repayments, and $1.8 billion returned to stockholders via share repurchases and dividends. Consequently, the company's cash and cash equivalents increased by $659 million to $5.5 billion, with total liquidity reaching $10.8 billion.

Valero reports on three segments: Refining, Renewable Diesel, and Ethanol. The Refining segment's performance is largely influenced by refining margins (e.g., U.S. Gulf Coast gasoline less Brent crude). The Renewable Diesel segment's profitability is tied to renewable diesel margins, influenced by factors like Renewable Volume Obligations (RVOs) and feedstock costs. The Ethanol segment's results are impacted by ethanol margins, driven by corn prices and ethanol/co-product prices.

The filing mentions potential impacts from California Senate Bill 2 (SBx 1-2), which could introduce a maximum gross gasoline refining margin, financial penalties for excess profits, and expanded reporting obligations, creating uncertainty for operations in California. While the full impact is still being determined, the company is reviewing its provisions and potential adverse effects, including potential asset impairment.