- Reported net loss attributable to Valero stockholders of $464
million, or $1.14 per share.
- Reported adjusted net loss attributable to Valero stockholders
of $472 million, or $1.16 per share.
- Issued $2.5 billion of Senior Notes for general corporate
purposes.
- 2020 and 2021 capital investments attributable to Valero
forecasted at $2.0 billion for each year.
- Returned $399 million in cash to stockholders through
dividends.
Valero Energy Corporation (NYSE: VLO, “Valero”) today reported a
net loss attributable to Valero stockholders of $464 million, or
$1.14 per share, for the third quarter of 2020 compared to net
income of $609 million, or $1.48 per share, for the third quarter
of 2019. Excluding the adjustments shown in the accompanying
earnings release tables, the adjusted net loss attributable to
Valero stockholders was $472 million, or $1.16 per share, for the
third quarter of 2020, compared to third quarter 2019 adjusted net
income attributable to Valero stockholders of $642 million, or
$1.55 per share. Third quarter 2020 adjusted results primarily
exclude the benefit from an after-tax lower of cost or market, or
LCM, inventory valuation adjustment of $250 million and an
after-tax loss of $218 million for an expected LIFO
liquidation.
Refining
The refining segment reported a $629 million operating loss for
the third quarter of 2020 compared to operating income of $1.1
billion for the third quarter of 2019. Excluding the LCM inventory
valuation adjustment, the expected LIFO liquidation adjustment, and
other operating expenses, the third quarter 2020 adjusted operating
loss was $575 million. Refinery throughput volumes averaged 2.5
million barrels per day in the third quarter of 2020, which was 428
thousand barrels per day lower than the third quarter of 2019.
“As the global economy recovers, we are pleased to see a demand
recovery for gasoline, diesel and jet fuel in the third quarter”
said Joe Gorder, Valero Chairman and Chief Executive Officer. “Our
unmatched execution, while being the lowest cost producer, and
ample liquidity continue to position us well to manage a low margin
environment.”
Renewable Diesel
The renewable diesel segment reported $184 million of operating
income for the third quarter of 2020 compared to $65 million for
the third quarter of 2019. After adjusting for the retroactive
blender’s tax credit, renewable diesel operating income was $123
million for the third quarter of 2019. Renewable diesel sales
volumes averaged 870 thousand gallons per day in the third quarter
of 2020, an increase of 232 thousand gallons per day versus the
third quarter of 2019. The third quarter of 2019 results and
volumes were impacted by the planned downtime of the Diamond Green
Diesel (DGD) plant for maintenance. DGD set a record for sales
volumes in the third quarter of 2020.
Ethanol
The ethanol segment reported $22 million of operating income for
the third quarter of 2020, compared to a $43 million operating loss
for the third quarter of 2019. Third quarter 2020 adjusted
operating income was $36 million. Ethanol production volumes
averaged 3.8 million gallons per day in the third quarter of 2020,
which was 206 thousand gallons per day lower than the third quarter
of 2019. The increase in operating income was attributed primarily
to higher margins resulting from lower corn prices.
Corporate and Other
General and administrative expenses were $186 million in the
third quarter of 2020 compared to $217 million in the third quarter
of 2019. The effective tax rate for the third quarter of 2020 was
47 percent, which was primarily impacted by an expected U.S.
federal tax net operating loss that will be carried back to 2015
when the U.S. federal statutory tax rate was 35 percent.
Investing and Financing Activities
Capital investments totaled $517 million in the third quarter of
2020, of which $205 million was for sustaining the business,
including costs for turnarounds, catalysts and regulatory
compliance. Excluding capital investments attributable to our
partner’s 50 percent share of DGD and those related to other
variable interest entities, capital investments attributable to
Valero were $393 million.
Net cash provided by operating activities was $165 million in
the third quarter of 2020. Included in this amount was a $246
million favorable impact from working capital, as well as our joint
venture partner’s share of DGD’s net cash provided by operating
activities, excluding changes in its working capital. Excluding
these items, adjusted net cash used by operating activities was
$177 million.
Valero returned $399 million to stockholders through dividends
in the third quarter of 2020, resulting in a year-to-date total
payout ratio of 165 percent of adjusted net cash provided by
operating activities. The year-to-date total payout ratio is higher
than our long-term target due to the adverse economic impact of
COVID-19.
Valero continues to target a long-term total payout ratio
between 40 and 50 percent of adjusted net cash provided by
operating activities. Valero defines total payout ratio as the sum
of dividends and stock buybacks divided by net cash provided by
operating activities adjusted for changes in working capital and
DGD’s net cash provided by operating activities, excluding changes
in its working capital, attributable to our joint venture partner’s
ownership interest in DGD.
“The guiding principles underpinning our capital allocation
strategy remain unchanged,” said Gorder. “There has been absolutely
no change in our strategy, which prioritizes our investment grade
ratings, sustaining investments and honoring our dividend.”
Liquidity and Financial Position
Valero ended the third quarter of 2020 with $15.2 billion of
total debt and finance lease obligations and $4.0 billion of cash
and cash equivalents. The debt to capitalization ratio, net of cash
and cash equivalents, was 36 percent as of September 30, 2020.
Strategic Update
Capital investments attributable to Valero are forecasted at
$2.0 billion per year in 2020 and 2021, of which approximately 60
percent is for sustaining the business and approximately 40 percent
is for growth projects. Approximately 40 percent of Valero’s 2020
and 2021 growth capital is allocated to expanding the renewable
diesel business.
The new St. Charles Alkylation Unit, which is designed to
convert low-value feedstocks into a premium alkylate product, is on
track to be completed in the fourth quarter of this year. The
Diamond Pipeline expansion and the Pembroke Cogen project are
expected to be completed in 2021 and the Port Arthur Coker project
is expected to be completed in 2023.
Valero and its joint venture partner in DGD continue to pursue
growth in the low-carbon renewable diesel business. The DGD plant
expansion is still expected to be completed in 2021, and as
previously announced, DGD continues to make progress on the
advanced engineering and development cost review for a potential
new 400 million gallons per year renewable diesel plant at Valero’s
Port Arthur, Texas facility. If the project is approved, operations
are expected to commence in 2024, increasing DGD’s production
capacity to over 1.1 billion gallons annually.
“We remain steadfast in the execution of our strategy, pursuing
excellence in operations, investing in earnings growth with lower
volatility and honoring our commitment to shareholder returns,”
said Gorder.
Conference Call
Valero’s senior management will hold a conference call at 10
a.m. ET today to discuss this earnings release and to provide an
update on operations and strategy.
About Valero
Valero Energy Corporation, through its subsidiaries
(collectively, “Valero”), is an international manufacturer and
marketer of transportation fuels and petrochemical products. Valero
is a Fortune 50 company based in San Antonio, Texas, and it
operates 15 petroleum refineries with a combined throughput
capacity of approximately 3.2 million barrels per day and 14
ethanol plants with a combined production capacity of approximately
1.73 billion gallons per year. The petroleum refineries are located
in the United States (U.S.), Canada and the United Kingdom (U.K.),
and the ethanol plants are located in the Mid-Continent region of
the U.S. Valero is also a joint venture partner in Diamond Green
Diesel, which operates a renewable diesel plant in Norco,
Louisiana. Diamond Green Diesel is North America’s largest
biomass-based diesel plant. Valero sells its products in the
wholesale rack or bulk markets in the U.S., Canada, the U.K.,
Ireland and Latin America. Approximately 7,000 outlets carry
Valero’s brand names. Please visit www.valero.com for more
information.
Valero Contacts
Investors:
Homer Bhullar, Vice President – Investor Relations,
210-345-1982
Eric Herbort, Senior Manager – Investor Relations,
210-345-3331
Gautam Srivastava, Manager – Investor Relations,
210-345-3992
Media:
Lillian Riojas, Executive Director – Media Relations and
Communications, 210-345-5002
Safe-Harbor Statement
Statements contained in this release that state the company’s or
management’s expectations or predictions of the future are
forward-looking statements intended to be covered by the safe
harbor provisions of the Securities Act of 1933 and the Securities
Exchange Act of 1934. The words “believe,” “expect,” “should,”
“estimates,” “intend,” “target,” “will,” “plans,” and other similar
expressions identify forward-looking statements. It is important to
note that actual results could differ materially from those
projected in such forward-looking statements based on numerous
factors, including those outside of the company’s control, such as
delays in construction timing and other factors, including but not
limited to the impacts of COVID-19. For more information concerning
factors that could cause actual results to differ from those
expressed or forecasted, see Valero’s annual reports on Form 10-K,
quarterly reports on Form 10-Q, and other reports filed with the
Securities and Exchange Commission and available on Valero’s
website at www.valero.com.
COVID-19 Disclosure
The global pandemic has significantly reduced global economic
activity and resulted in airlines dramatically cutting back on
flights and a decrease in motor vehicle use. As a result, there has
also been a decline in the demand for, and thus also the market
prices of, crude oil and certain of our products, particularly our
refined petroleum products. Many uncertainties remain with respect
to COVID-19, including its resulting economic effects and any
future recovery, and we are unable to predict the ultimate economic
impacts from COVID-19, how quickly national economies can recover
once the pandemic subsides, or whether any recovery will ultimately
experience a reversal or other setbacks. However, the adverse
impact of the economic effects on us has been and will likely
continue to be significant. We believe we have proactively
addressed many of the known impacts of COVID-19 to the extent
possible and will strive to continue to do so, but there can be no
guarantee that these measures will be fully effective. For more
information, see our quarterly reports on Form 10-Q and other
reports filed with the Securities and Exchange Commission.
Use of Non-GAAP Financial Information
This earnings release and the accompanying earnings release
tables include references to financial measures that are not
defined under U.S. generally accepted accounting principles (GAAP).
These non-GAAP measures include adjusted net income (loss)
attributable to Valero stockholders, adjusted earnings (loss) per
common share – assuming dilution, refining margin, renewable diesel
margin, ethanol margin, adjusted refining operating income (loss),
adjusted renewable diesel operating income, adjusted ethanol
operating income (loss), adjusted net cash provided by operating
activities, and capital investments attributable to Valero. These
non-GAAP financial measures have been included to help facilitate
the comparison of operating results between periods. See the
accompanying earnings release tables for a reconciliation of
non-GAAP measures to their most directly comparable U.S. GAAP
measures. Note (g) to the earnings release tables provides reasons
for the use of these non-GAAP financial measures.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
FINANCIAL HIGHLIGHTS
(millions of dollars, except
per share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Statement of income data
Revenues
$
15,809
$
27,249
$
48,308
$
80,445
Cost of sales:
Cost of materials and other (a) (b)
14,801
24,335
43,832
72,396
Lower of cost or market (LCM) inventory
valuation adjustment (c)
(313)
—
(19)
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,117
1,239
3,268
3,629
Depreciation and amortization expense
(d)
602
556
1,737
1,645
Total cost of sales
16,207
26,130
48,818
77,670
Other operating expenses
25
10
30
14
General and administrative expenses
(excluding
depreciation and amortization expense
reflected below)
186
217
532
625
Depreciation and amortization expense
12
11
37
39
Operating income (loss)
(621)
881
(1,109)
2,097
Other income, net (e)
48
34
107
68
Interest and debt expense, net of
capitalized interest
(143)
(111)
(410)
(335)
Income (loss) before income tax expense
(benefit)
(716)
804
(1,412)
1,830
Income tax expense (benefit)
(337)
165
(614)
376
Net income (loss)
(379)
639
(798)
1,454
Less: Net income attributable to
noncontrolling interests (b)
85
30
264
92
Net income (loss) attributable to Valero
Energy Corporation
stockholders
$
(464)
$
609
$
(1,062)
$
1,362
Earnings (loss) per common
share
$
(1.14)
$
1.48
$
(2.62)
$
3.28
Weighted-average common shares outstanding
(in millions)
407
412
407
415
Earnings (loss) per common share –
assuming dilution
$
(1.14)
$
1.48
$
(2.62)
$
3.28
Weighted-average common shares outstanding
–
assuming dilution (in millions) (f)
407
413
407
416
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
FINANCIAL HIGHLIGHTS BY
SEGMENT
(millions of dollars)
(unaudited)
Refining
Renewable
Diesel
Ethanol
Corporate and
Eliminations
Total
Three months ended September 30,
2020
Revenues:
Revenues from external customers
$
14,727
$
305
$
777
$
—
$
15,809
Intersegment revenues
2
40
58
(100)
—
Total revenues
14,729
345
835
(100)
15,809
Cost of sales:
Cost of materials and other (a) (b)
14,103
128
670
(100)
14,801
LCM inventory valuation adjustment (c)
(296)
—
(17)
—
(313)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
989
23
105
—
1,117
Depreciation and amortization expense
(d)
538
10
54
—
602
Total cost of sales
15,334
161
812
(100)
16,207
Other operating expenses
24
—
1
—
25
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
186
186
Depreciation and amortization expense
—
—
—
12
12
Operating income (loss) by segment
$
(629)
$
184
$
22
$
(198)
$
(621)
Three months ended September 30,
2019
Revenues:
Revenues from external customers
$
26,145
$
212
$
891
$
1
$
27,249
Intersegment revenues
2
50
57
(109)
—
Total revenues
26,147
262
948
(108)
27,249
Cost of sales:
Cost of materials and other
23,432
164
847
(108)
24,335
Operating expenses (excluding depreciation
and
amortization expense reflected below)
1,100
18
121
—
1,239
Depreciation and amortization expense
518
15
23
—
556
Total cost of sales
25,050
197
991
(108)
26,130
Other operating expenses
10
—
—
—
10
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
217
217
Depreciation and amortization expense
—
—
—
11
11
Operating income (loss) by segment
$
1,087
$
65
$
(43)
$
(228)
$
881
See Operating Highlights by
Segment.
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
FINANCIAL HIGHLIGHTS BY
SEGMENT
(millions of dollars)
(unaudited)
Refining
Renewable
Diesel
Ethanol
Corporate and
Eliminations
Total
Nine months ended September 30,
2020
Revenues:
Revenues from external customers
$
45,327
$
850
$
2,131
$
—
$
48,308
Intersegment revenues
6
150
160
(316)
—
Total revenues
45,333
1,000
2,291
(316)
48,308
Cost of sales:
Cost of materials and other (a) (b)
41,769
393
1,984
(314)
43,832
LCM inventory valuation adjustment (c)
(19)
—
—
—
(19)
Operating expenses (excluding depreciation
and
amortization expense reflected below)
2,912
63
293
—
3,268
Depreciation and amortization expense
(d)
1,607
33
97
—
1,737
Total cost of sales
46,269
489
2,374
(314)
48,818
Other operating expenses
29
—
1
—
30
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
532
532
Depreciation and amortization expense
—
—
—
37
37
Operating income (loss) by segment
$
(965)
$
511
$
(84)
$
(571)
$
(1,109)
Nine months ended September 30,
2019
Revenues:
Revenues from external customers
$
77,109
$
686
$
2,648
$
2
$
80,445
Intersegment revenues
12
174
162
(348)
—
Total revenues
77,121
860
2,810
(346)
80,445
Cost of sales:
Cost of materials and other
69,769
577
2,396
(346)
72,396
Operating expenses (excluding depreciation
and
amortization expense reflected below)
3,197
54
378
—
3,629
Depreciation and amortization expense
1,539
38
68
—
1,645
Total cost of sales
74,505
669
2,842
(346)
77,670
Other operating expenses
13
—
1
—
14
General and administrative expenses
(excluding
depreciation and amortization expense
reflected
below)
—
—
—
625
625
Depreciation and amortization expense
—
—
—
39
39
Operating income (loss) by segment
$
2,603
$
191
$
(33)
$
(664)
$
2,097
See Operating Highlights by
Segment.
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars, except
per share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of net income (loss)
attributable to Valero
Energy Corporation stockholders to
adjusted net income
(loss) attributable to Valero Energy
Corporation
stockholders
Net income (loss) attributable to Valero
Energy Corporation
stockholders
$
(464)
$
609
$
(1,062)
$
1,362
Adjustments:
Last-in, first-out (LIFO) liquidation
adjustment (a)
326
—
326
—
Income tax benefit related to the LIFO
liquidation
adjustment
(108)
—
(108)
—
LIFO liquidation adjustment, net of
taxes
218
—
218
—
Change in estimated useful life (d)
30
—
30
—
Income tax benefit related to the change
in estimated
useful life
(6)
—
(6)
—
Change in estimated useful life, net of
taxes
24
—
24
—
LCM inventory valuation adjustment (c)
(313)
—
(19)
—
Income tax expense related to the LCM
inventory
valuation adjustment
63
—
3
—
LCM inventory valuation adjustment, net of
taxes
(250)
—
(16)
—
2019 blender’s tax credit attributable to
Valero Energy
Corporation stockholders (b)
—
33
—
112
Income tax expense related to 2019
blender’s tax credit
—
—
—
(3)
2019 blender’s tax credit attributable to
Valero Energy
Corporation stockholders, net of taxes
—
33
—
109
Loss on early redemption of debt (e)
—
—
—
22
Income tax benefit related to loss on
early
redemption of debt
—
—
—
(5)
Loss on early redemption of debt, net of
taxes
—
—
—
17
Total adjustments
(8)
33
226
126
Adjusted net income (loss) attributable
to
Valero Energy Corporation stockholders
$
(472)
$
642
$
(836)
$
1,488
Reconciliation of earnings (loss) per
common share –
assuming dilution to adjusted earnings
(loss) per common
share – assuming dilution
Earnings (loss) per common share –
assuming dilution (f)
$
(1.14)
$
1.48
$
(2.62)
$
3.28
Adjustments:
LIFO liquidation adjustment (a)
0.53
—
0.53
—
Change in estimated useful life (d)
0.06
—
0.06
—
LCM inventory valuation adjustment (c)
(0.61)
—
(0.04)
—
2019 blender’s tax credit attributable to
Valero Energy
Corporation stockholders (b)
—
0.07
—
0.26
Loss on early redemption of debt (e)
—
—
—
0.04
Total adjustments
(0.02)
0.07
0.55
0.30
Adjusted earnings (loss) per common share
–
assuming dilution (f)
$
(1.16)
$
1.55
$
(2.07)
$
3.58
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of operating income
(loss) by segment to
segment margin, and reconciliation of
operating income
(loss) by segment to adjusted operating
income (loss) by
segment
Refining segment
Refining operating income (loss)
$
(629)
$
1,087
$
(965)
$
2,603
Adjustments:
2019 blender’s tax credit (b)
—
4
—
13
LIFO liquidation adjustment (a)
326
—
326
—
LCM inventory valuation adjustment (c)
(296)
—
(19)
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
989
1,100
2,912
3,197
Depreciation and amortization expense
538
518
1,607
1,539
Other operating expenses
24
10
29
13
Refining margin
$
952
$
2,719
$
3,890
$
7,365
Refining operating income (loss)
$
(629)
$
1,087
$
(965)
$
2,603
Adjustments:
2019 blender’s tax credit (b)
—
4
—
13
LIFO liquidation adjustment (a)
326
—
326
—
LCM inventory valuation adjustment (c)
(296)
—
(19)
—
Other operating expenses
24
10
29
13
Adjusted refining operating income
(loss)
$
(575)
$
1,101
$
(629)
$
2,629
Renewable diesel segment
Renewable diesel operating income
$
184
$
65
$
511
$
191
Adjustments:
2019 blender’s tax credit (b)
—
58
—
198
Operating expenses (excluding depreciation
and
amortization expense reflected below)
23
18
63
54
Depreciation and amortization expense
10
15
33
38
Renewable diesel margin
$
217
$
156
$
607
$
481
Renewable diesel operating income
$
184
$
65
$
511
$
191
Adjustment: 2019 blender’s tax credit
(b)
—
58
—
198
Adjusted renewable diesel operating
income
$
184
$
123
$
511
$
389
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of operating income
(loss) by segment to
segment margin, and reconciliation of
operating income
(loss) by segment to adjusted operating
income (loss) by
segment (continued)
Ethanol segment
Ethanol operating income (loss)
$
22
$
(43)
$
(84)
$
(33)
Adjustments:
LCM inventory valuation adjustment (c)
(17)
—
—
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
105
121
293
378
Depreciation and amortization expense
(d)
54
23
97
68
Other operating expenses
1
—
1
1
Ethanol margin
$
165
$
101
$
307
$
414
Ethanol operating income (loss)
$
22
$
(43)
$
(84)
$
(33)
Adjustments:
LCM inventory valuation adjustment (c)
(17)
—
—
—
Change in estimated useful life (d)
30
—
30
—
Other operating expenses
1
—
1
1
Adjusted ethanol operating income
(loss)
$
36
$
(43)
$
(53)
$
(32)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of refining segment
operating income (loss) to refining margin (by region), and
reconciliation of refining segment operating income (loss) to
adjusted refining
segment operating income (loss) (by
region) (h)
U.S. Gulf Coast region
Refining operating income (loss)
$
(653)
$
388
$
(703)
$
779
Adjustments:
2019 blender’s tax credit (b)
—
3
—
9
LIFO liquidation adjustment (a)
200
—
200
—
LCM inventory valuation adjustment (c)
(4)
—
—
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
556
641
1,649
1,826
Depreciation and amortization expense
329
326
990
954
Other operating expenses
18
6
20
8
Refining margin
$
446
$
1,364
$
2,156
$
3,576
Refining operating income (loss)
$
(653)
$
388
$
(703)
$
779
Adjustments:
2019 blender’s tax credit (b)
—
3
—
9
LIFO liquidation adjustment (a)
200
—
200
—
LCM inventory valuation adjustment (c)
(4)
—
—
—
Other operating expenses
18
6
20
8
Adjusted refining operating income
(loss)
$
(439)
$
397
$
(483)
$
796
U.S. Mid-Continent region
Refining operating income (loss)
$
(140)
$
333
$
(67)
$
991
Adjustments:
2019 blender’s tax credit (b)
—
1
—
3
LIFO liquidation adjustment (a)
58
—
58
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
153
156
465
468
Depreciation and amortization expense
84
77
250
226
Other operating expenses
—
2
—
2
Refining margin
$
155
$
569
$
706
$
1,690
Refining operating income (loss)
$
(140)
$
333
$
(67)
$
991
Adjustments:
2019 blender’s tax credit (b)
—
1
—
3
LIFO liquidation adjustment (a)
58
—
58
—
Other operating expenses
—
2
—
2
Adjusted refining operating income
(loss)
$
(82)
$
336
$
(9)
$
996
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RECONCILIATION OF NON-GAAP
MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP
(g)
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of refining segment
operating income (loss)
to refining margin (by region), and
reconciliation of
refining segment operating income
(loss) to adjusted
refining segment operating income
(loss) (by region) (h)
(continued)
North Atlantic region
Refining operating income
$
201
$
273
$
84
$
727
Adjustments:
LIFO liquidation adjustment (a)
33
—
33
—
LCM inventory valuation adjustment (c)
(236)
—
(19)
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
130
146
383
439
Depreciation and amortization expense
53
52
158
160
Other operating expenses
5
2
8
2
Refining margin
$
186
$
473
$
647
$
1,328
Refining operating income
$
201
$
273
$
84
$
727
Adjustments:
LIFO liquidation adjustment (a)
33
—
33
—
LCM inventory valuation adjustment (c)
(236)
—
(19)
—
Other operating expenses
5
2
8
2
Adjusted refining operating income
$
3
$
275
$
106
$
729
U.S. West Coast region
Refining operating income (loss)
$
(37)
$
93
$
(279)
$
106
Adjustments:
2019 blender’s tax credit (b)
—
—
—
1
LIFO liquidation adjustment (a)
35
—
35
—
LCM inventory valuation adjustment (c)
(56)
—
—
—
Operating expenses (excluding depreciation
and
amortization expense reflected below)
150
157
415
464
Depreciation and amortization expense
72
63
209
199
Other operating expenses
1
—
1
1
Refining margin
$
165
$
313
$
381
$
771
Refining operating income (loss)
$
(37)
$
93
$
(279)
$
106
Adjustments:
2019 blender’s tax credit (b)
—
—
—
1
LIFO liquidation adjustment (a)
35
—
35
—
LCM inventory valuation adjustment (c)
(56)
—
—
—
Other operating expenses
1
—
1
1
Adjusted refining operating income
(loss)
$
(57)
$
93
$
(243)
$
108
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
REFINING SEGMENT OPERATING
HIGHLIGHTS
(millions of dollars, except
per barrel amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Throughput volumes (thousand barrels
per day)
Feedstocks:
Heavy sour crude oil
318
418
352
416
Medium/light sour crude oil
346
253
357
282
Sweet crude oil
1,252
1,615
1,240
1,548
Residuals
219
238
208
208
Other feedstocks
108
132
92
152
Total feedstocks
2,243
2,656
2,249
2,606
Blendstocks and other
283
298
308
323
Total throughput volumes
2,526
2,954
2,557
2,929
Yields (thousand barrels per
day)
Gasolines and blendstocks
1,273
1,406
1,217
1,393
Distillates
914
1,137
931
1,123
Other products (i)
360
438
424
442
Total yields
2,547
2,981
2,572
2,958
Operating statistics (g) (j)
Refining margin
$
952
$
2,719
$
3,890
$
7,365
Adjusted refining operating income
(loss)
$
(575)
$
1,101
$
(629)
$
2,629
Throughput volumes (thousand barrels per
day)
2,526
2,954
2,557
2,929
Refining margin per barrel of
throughput
$
4.10
$
10.00
$
5.55
$
9.21
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.26
4.05
4.16
4.00
Depreciation and amortization expense per
barrel of
throughput
2.32
1.90
2.29
1.92
Adjusted refining operating income (loss)
per barrel of
throughput
$
(2.48)
$
4.05
$
(0.90)
$
3.29
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
RENEWABLE DIESEL SEGMENT
OPERATING HIGHLIGHTS
(millions of dollars, except
per gallon amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Operating statistics (g) (j)
Renewable diesel margin
$
217
$
156
$
607
$
481
Adjusted renewable diesel operating
income
$
184
$
123
$
511
$
389
Sales volumes (thousand gallons per
day)
870
638
844
732
Renewable diesel margin per gallon of
sales
$
2.72
$
2.64
$
2.63
$
2.40
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of sales
0.29
0.30
0.27
0.27
Depreciation and amortization expense per
gallon of sales
0.13
0.25
0.15
0.19
Adjusted renewable diesel operating income
per gallon
of sales
$
2.30
$
2.09
$
2.21
$
1.94
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
ETHANOL SEGMENT OPERATING
HIGHLIGHTS
(millions of dollars, except
per gallon amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Operating statistics (g) (j)
Ethanol margin
$
165
$
101
$
307
$
414
Adjusted ethanol operating income
(loss)
$
36
$
(43)
$
(53)
$
(32)
Production volumes (thousand gallons per
day)
3,800
4,006
3,408
4,251
Ethanol margin per gallon of
production
$
0.47
$
0.27
$
0.33
$
0.36
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
gallon of production
0.30
0.33
0.31
0.33
Depreciation and amortization expense per
gallon of production
0.07
0.06
0.08
0.06
Adjusted ethanol operating income (loss)
per gallon of production
$
0.10
$
(0.12)
$
(0.06)
$
(0.03)
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
REFINING SEGMENT OPERATING
HIGHLIGHTS BY REGION
(millions of dollars, except
per barrel amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Operating statistics by region
(h)
U.S. Gulf Coast region (g) (j)
Refining margin
$
446
$
1,364
$
2,156
$
3,576
Adjusted refining operating income
(loss)
$
(439)
$
397
$
(483)
$
796
Throughput volumes (thousand barrels per
day)
1,448
1,747
1,500
1,732
Refining margin per barrel of
throughput
$
3.35
$
8.48
$
5.24
$
7.56
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
4.19
3.99
4.01
3.86
Depreciation and amortization expense per
barrel of
throughput
2.47
2.02
2.41
2.02
Adjusted refining operating income (loss)
per barrel of
throughput
$
(3.31)
$
2.47
$
(1.18)
$
1.68
U.S. Mid-Continent region (g)
(j)
Refining margin
$
155
$
569
$
706
$
1,690
Adjusted refining operating income
(loss)
$
(82)
$
336
$
(9)
$
996
Throughput volumes (thousand barrels per
day)
417
450
404
451
Refining margin per barrel of
throughput
$
4.05
$
13.75
$
6.38
$
13.72
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
3.99
3.79
4.20
3.80
Depreciation and amortization expense per
barrel of
throughput
2.19
1.86
2.26
1.84
Adjusted refining operating income (loss)
per barrel of
throughput
$
(2.13)
$
8.10
$
(0.08)
$
8.08
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
REFINING SEGMENT OPERATING
HIGHLIGHTS BY REGION
(millions of dollars, except
per barrel amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Operating statistics by region (h)
(continued)
North Atlantic region (g) (j)
Refining margin
$
186
$
473
$
647
$
1,328
Adjusted refining operating income
$
3
$
275
$
106
$
729
Throughput volumes (thousand barrels per
day)
408
474
412
486
Refining margin per barrel of
throughput
$
4.96
$
10.84
$
5.73
$
10.01
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
3.44
3.33
3.39
3.31
Depreciation and amortization expense per
barrel of
throughput
1.43
1.21
1.40
1.20
Adjusted refining operating income per
barrel of
throughput
$
0.09
$
6.30
$
0.94
$
5.50
U.S. West Coast region (g) (j)
Refining margin
$
165
$
313
$
381
$
771
Adjusted refining operating income
(loss)
$
(57)
$
93
$
(243)
$
108
Throughput volumes (thousand barrels per
day)
253
283
241
260
Refining margin per barrel of
throughput
$
7.08
$
12.06
$
5.77
$
10.87
Less:
Operating expenses (excluding depreciation
and
amortization expense reflected below) per
barrel of
throughput
6.44
6.03
6.29
6.54
Depreciation and amortization expense per
barrel of
throughput
3.08
2.43
3.17
2.80
Adjusted refining operating income (loss)
per barrel of
throughput
$
(2.44)
$
3.60
$
(3.69)
$
1.53
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
AVERAGE MARKET REFERENCE
PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Refining
Feedstocks (dollars per barrel)
Brent crude oil
$
43.38
$
62.08
$
42.50
$
64.74
Brent less West Texas Intermediate (WTI)
crude oil
2.47
5.64
4.27
7.70
Brent less Alaska North Slope (ANS) crude
oil
0.64
(0.99)
1.00
(0.51)
Brent less Louisiana Light Sweet (LLS)
crude oil
0.88
1.46
2.20
1.40
Brent less Argus Sour Crude Index (ASCI)
crude oil
1.71
3.18
3.62
3.17
Brent less Maya crude oil
4.19
5.45
7.66
5.57
LLS crude oil
42.50
60.62
40.30
63.34
LLS less ASCI crude oil
0.83
1.72
1.42
1.77
LLS less Maya crude oil
3.31
3.99
5.46
4.17
WTI crude oil
40.91
56.44
38.23
57.04
Natural gas (dollars per million
British Thermal Units)
1.99
2.28
1.82
2.53
Products (dollars per barrel)
U.S. Gulf Coast:
Conventional Blendstock of Oxygenate
Blending (CBOB)
gasoline less Brent
4.96
6.82
2.61
4.57
Ultra-low-sulfur (ULS) diesel less
Brent
5.19
15.79
7.11
14.55
Propylene less Brent
(12.69)
(19.36)
(15.48)
(21.57)
CBOB gasoline less LLS
5.84
8.28
4.81
5.97
ULS diesel less LLS
6.07
17.25
9.31
15.95
Propylene less LLS
(11.81)
(17.90)
(13.28)
(20.17)
U.S. Mid-Continent:
CBOB gasoline less WTI
8.17
15.28
7.35
14.58
ULS diesel less WTI
8.54
21.38
12.41
22.93
North Atlantic:
CBOB gasoline less Brent
8.08
10.11
5.13
7.16
ULS diesel less Brent
6.79
17.28
9.34
16.49
U.S. West Coast:
California Reformulated Gasoline
Blendstock of
Oxygenate Blending (CARBOB) 87 gasoline
less ANS
13.19
19.31
10.15
16.76
California Air Resources Board (CARB)
diesel less ANS
9.34
18.38
12.31
18.56
CARBOB 87 gasoline less WTI
15.02
25.94
13.42
24.97
CARB diesel less WTI
11.17
25.01
15.58
26.77
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
AVERAGE MARKET REFERENCE
PRICES AND DIFFERENTIALS
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Renewable diesel
New York Mercantile Exchange ULS
diesel
(dollars per gallon)
$
1.20
$
1.90
$
1.24
$
1.94
Biodiesel Renewable Identification Number
(RIN)
(dollars per RIN)
0.67
0.46
0.56
0.45
California Low-Carbon Fuel Standard
(dollars per metric ton)
195.60
198.24
200.88
193.74
Chicago Board of Trade (CBOT) soybean oil
(dollars per
pound)
0.32
0.29
0.30
0.29
Ethanol
CBOT corn (dollars per bushel)
3.40
3.90
3.46
3.85
New York Harbor ethanol (dollars per
gallon)
1.46
1.53
1.32
1.50
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars, except
per share amounts)
(unaudited)
September 30,
December 31,
2020
2019
Balance sheet data
Current assets
$
15,422
$
18,969
Cash and cash equivalents included in
current assets
4,047
2,583
Inventories included in current assets
5,357
7,013
Current liabilities
8,122
13,160
Current portion of debt and finance lease
obligations
included in current liabilities
636
494
Debt and finance lease obligations, less
current portion
14,577
9,178
Total debt and finance lease
obligations
15,213
9,672
Valero Energy Corporation stockholders’
equity
19,223
21,803
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of net cash provided by
operating
activities to adjusted net cash
provided by (used in)
operating activities (g)
Net cash provided by operating
activities
$
165
$
1,429
$
852
$
3,823
Exclude:
Changes in current assets and current
liabilities
246
315
(232)
728
Diamond Green Diesel LLC’s (DGD) adjusted
net cash
provided by operating activities
attributable to our joint venture partner’s ownership interest in
DGD
96
40
269
114
Adjusted net cash provided by (used in)
operating
activities
$
(177)
$
1,074
$
815
$
2,981
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Dividends per common share
$
0.98
$
0.90
$
2.94
$
2.70
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
EARNINGS RELEASE
TABLES
OTHER FINANCIAL DATA
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reconciliation of total capital
investments to capital
investments attributable to Valero
(g)
Capital expenditures (excluding variable
interest entities
(VIEs))
$
220
$
325
$
775
$
1,179
Capital expenditures of VIEs:
DGD
134
40
311
91
Other VIEs
53
70
196
139
Deferred turnaround and catalyst cost
expenditures
(excluding VIEs)
92
113
529
583
Deferred turnaround and catalyst cost
expenditures
of DGD
8
15
18
16
Investments in unconsolidated joint
ventures
10
32
39
122
Total capital investments
517
595
1,868
2,130
Adjustments:
DGD’s capital investments attributable to
our joint
venture partner
(71)
(28)
(165)
(54)
Capital expenditures of other VIEs
(53)
(70)
(196)
(139)
Capital investments attributable to
Valero
$
393
$
497
$
1,507
$
1,937
See Notes to Earnings Release
Tables.
VALERO ENERGY
CORPORATION
NOTES TO EARNINGS RELEASE
TABLES
(a)
Cost of materials and other for the three
and nine months ended September 30, 2020 includes a charge of $326
million for the impact of an expected liquidation of LIFO inventory
layers attributable to our refining segment. Our inventory levels
have decreased throughout the first nine months of 2020 due to
lower demand for our products resulting from the negative economic
impacts of COVID-19 on our business. Because these impacts are
ongoing, we expect that our inventory levels at December 31, 2020
will remain below their December 31, 2019 levels.
(b)
Cost of materials and other for the three and nine months ended
September 30, 2020 includes a benefit of $82 million and $237
million, respectively, related to the blender’s tax credit
attributable to renewable diesel volumes blended during those
periods. The legislation authorizing the credit through December
31, 2022 was passed and signed into law in December 2019, and that
legislation also applied retroactively to volumes blended during
2019 (2019 blender’s tax credit). The entire 2019 blender’s tax
credit was recognized by us in December 2019 because the law was
enacted in that month, but the benefit attributable to volumes
blended during the three and nine months ended September 30, 2019
was $62 million and $211 million, respectively.
The above-mentioned pre-tax benefits are attributable to our
reportable segments and stockholders as follows:
Periods to which
Blender’s Tax Credit is Attributable
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Reportable segments to which
blender’s
tax credit is attributable
Refining
$
2
$
4
$
6
$
13
Renewable diesel
80
58
231
198
Total
$
82
$
62
$
237
$
211
Interests to which blender’s tax
credit is
attributable
Valero Energy Corporation stockholders
$
42
$
33
$
121
$
112
Noncontrolling interest
40
29
116
99
Total
$
82
$
62
$
237
$
211
(c)
The market value of our inventories
accounted for under the LIFO method fell below their historical
cost on an aggregate basis as of March 31, 2020. As a result, we
recorded an LCM inventory valuation adjustment of $2.5 billion in
March 2020. The market value of our LIFO inventories improved due
to the subsequent recovery in market prices, which resulted in a
reversal of $2.2 billion in the three months ended June 30, 2020
and the remaining amount in the three months ended September 30,
2020. Of the $313 million benefit recognized in the three months
ended September 30, 2020, $296 million and $17 million is
attributable to our refining and ethanol segments, respectively.
The LCM inventory valuation adjustment for the nine months ended
September 30, 2020 reflects a net benefit of $19 million due to the
foreign currency translation effect of the portion of the LCM
inventory valuation adjustment attributable to our international
operations.
(d)
Depreciation and amortization expense for
the three and nine months ended September 30, 2020 includes $30
million in accelerated depreciation related to a change in the
estimated useful life of one of our ethanol plants.
(e)
“Other income, net” for the nine months
ended September 30, 2019 includes a $22 million charge from the
early redemption of $850 million of our 6.125 percent senior notes
due February 1, 2020.
(f)
Common equivalent shares have been
excluded from the computation of loss per common share — assuming
dilution and adjusted loss per common share — assuming dilution for
the three and nine months ended September 30, 2020, as the effect
of including such shares would be antidilutive.
(g)
We use certain financial measures (as
noted below) in the earnings release tables and accompanying
earnings release that are not defined under U.S. GAAP and are
considered to be non-GAAP measures.
We have defined these non-GAAP measures
and believe they are useful to the external users of our financial
statements, including industry analysts, investors, lenders, and
rating agencies. We believe these measures are useful to assess our
ongoing financial performance because, when reconciled to their
most comparable U.S. GAAP measures, they provide improved
comparability between periods after adjusting for certain items
that we believe are not indicative of our core operating
performance and that may obscure our underlying business results
and trends. These non-GAAP measures should not be considered as
alternatives to their most comparable U.S. GAAP measures nor should
they be considered in isolation or as a substitute for an analysis
of our results of operations as reported under U.S. GAAP. In
addition, these non-GAAP measures may not be comparable to
similarly titled measures used by other companies because we may
define them differently, which diminishes their utility.
Non-GAAP measures are as follows:
- Adjusted net income (loss) attributable to Valero Energy
Corporation stockholders is defined as net income (loss)
attributable to Valero Energy Corporation stockholders adjusted to
reflect the items noted below, along with their related income tax
effect. We have adjusted for these items because we believe that
they are not indicative of our core operating performance and that
their adjustment results in an important measure of our ongoing
financial performance to better assess our underlying business
results and trends. The basis for our belief with respect to each
adjustment is provided below.
– LIFO liquidation adjustment – Generally, the LIFO inventory
valuation method provides for the matching of current costs with
current revenues. However, a LIFO liquidation results in a portion
of our current-year cost of sales being impacted by historical
costs, which obscures our current-year financial performance.
Therefore, we have excluded the historical cost impact from
adjusted net income (loss) attributable to Valero Energy
Corporation stockholders. See note (a) for additional details.
– Change in estimated useful life – The
accelerated depreciation recognized as a result of a change in the
estimated useful life of one of our ethanol plants (see note (d))
is not indicative of our ongoing operations.
– LCM inventory valuation adjustment – The
LCM inventory valuation adjustment, which is described in note (c),
is the result of the market value of our inventories as of March
31, 2020 falling below their historical cost, with the decline in
market value resulting from the decline in product market prices
associated with the negative economic impacts from COVID-19. As
market prices improved over the subsequent months, we reversed the
writedown. The adjustment obscures our financial performance
because it results in cost of sales reflecting something other than
current costs; therefore, we have excluded the adjustment from
adjusted net income (loss) attributable to Valero Energy
Corporation stockholders.
– 2019 blender’s tax credit attributable
to Valero Energy Corporation stockholders – The 2019 blender’s tax
credit was recognized by us in December 2019, but it is
attributable to volumes blended throughout 2019. Therefore, the
adjustment reflects the portion of the 2019 blender’s tax credit
that is associated with volumes blended during the three and nine
months ended September 30, 2019. See note (b) for additional
details.
– Loss on early redemption of debt – The
penalty and other expenses incurred in connection with the early
redemption of our 6.125 percent senior notes due February 1, 2020
(see note (e)) are not associated with the ongoing costs of our
borrowing and financing activities.
- Adjusted earnings (loss) per common share – assuming
dilution is defined as adjusted net income (loss) attributable
to Valero Energy Corporation stockholders divided by the number of
weighted-average shares outstanding in the applicable period,
assuming dilution (see note (f)).
- Refining margin is defined as refining operating income
(loss) adjusted to reflect the 2019 blender’s tax credit (see note
(b)), and excluding the LIFO liquidation adjustment (see note (a)),
the LCM inventory valuation adjustment (see note (c)), operating
expenses (excluding depreciation and amortization expense),
depreciation and amortization expense, and other operating
expenses. We believe refining margin is an important measure of our
refining segment’s operating and financial performance as it is the
most comparable measure to the industry’s market reference product
margins, which are used by industry analysts, investors, and others
to evaluate our performance.
- Renewable diesel margin is defined as renewable diesel
operating income adjusted to reflect the 2019 blender’s tax credit
(see note (b)), and excluding operating expenses (excluding
depreciation and amortization expense) and depreciation and
amortization expense. We believe renewable diesel margin is an
important measure of our renewable diesel segment’s operating and
financial performance as it is the most comparable measure to the
industry’s market reference product margins, which are used by
industry analysts, investors, and others to evaluate our
performance.
- Ethanol margin is defined as ethanol operating income
(loss) excluding the LCM inventory valuation adjustment (see note
(c)), operating expenses (excluding depreciation and amortization
expense), depreciation and amortization expense, and other
operating expenses. We believe ethanol margin is an important
measure of our ethanol segment’s operating and financial
performance as it is the most comparable measure to the industry’s
market reference product margins, which are used by industry
analysts, investors, and others to evaluate our performance.
- Adjusted refining operating income (loss) is defined as
refining segment operating income (loss) adjusted to reflect the
2019 blender’s tax credit (see note (b)), and excluding the LIFO
liquidation adjustment (see note (a)), the LCM inventory valuation
adjustment (see note (c)), and other operating expenses. We believe
adjusted refining operating income (loss) is an important measure
of our refining segment’s operating and financial performance
because it excludes items that are not indicative of that segment’s
core operating performance.
- Adjusted renewable diesel operating income is defined as
renewable diesel segment operating income adjusted to reflect the
2019 blender’s tax credit (see note (b)). We believe this is an
important measure of our renewable diesel segment’s operating and
financial performance because it excludes items that are not
indicative of that segment’s core operating performance.
- Adjusted ethanol operating income (loss) is defined as
ethanol segment operating income (loss) excluding the LCM inventory
valuation adjustment (see note (c)), the change in estimated useful
life (see note (d)), and other operating expenses. We believe this
is an important measure of our ethanol segment’s operating and
financial performance because it excludes items that are not
indicative of that segment’s core operating performance.
- Adjusted net cash provided by operating activities is
defined as net cash provided by (used in) operating activities
excluding the items noted below. We believe adjusted net cash
provided by operating activities is an important measure of our
ongoing financial performance to better assess our ability to
generate cash to fund our investing and financing activities. The
basis for our belief with respect to each excluded item is provided
below.
–Changes in current assets and current
liabilities – Current assets net of current liabilities represents
our operating liquidity. We believe that the change in our
operating liquidity from period to period does not represent cash
generated by our operations that is available to fund our investing
and financing activities.
–DGD’s adjusted net cash provided by
operating activities attributable to our joint venture partner’s
ownership interest in DGD – We are a 50/50 joint venture partner in
DGD and consolidate DGD’s financial statements; as a result, all of
DGD’s net cash provided by operating activities (or operating cash
flow) is included in our consolidated net cash provided by
operating activities.
DGD’s partners use DGD’s operating cash
flow (excluding changes in its current assets and current
liabilities) to fund its capital investments rather than distribute
all of that cash to themselves. Nevertheless, DGD’s operating cash
flow is effectively attributable to each partner and only 50
percent of DGD’s operating cash flow should be attributed to our
net cash provided by operating activities. Therefore, we have
adjusted our net cash provided by operating activities for the
portion of DGD’s operating cash flow attributable to our joint
venture partner’s ownership interest because we believe that it
more accurately reflects the operating cash flow available to us to
fund our investing and financing activities. The adjustment is
calculated as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
DGD operating cash flow data
Net cash provided by operating
activities
$
194
$
68
$
877
$
228
Exclude: changes in current assets and
current liabilities
1
(12)
339
—
Adjusted net cash provided by
operating activities
193
80
538
228
Our partner’s ownership interest
50%
50%
50%
50%
DGD’s adjusted net cash provided by
operating activities attributable to our
joint
venture partner’s ownership interest
in
DGD
$
96
$
40
$
269
$
114
- Capital investments attributable to Valero is defined as
all capital expenditures, deferred turnaround and catalyst cost
expenditures, and investments in unconsolidated joint venture
presented in our consolidated statements of cash flows, excluding
the portion of DGD’s capital investments attributable to our joint
venture partner and all of the capital expenditures of other
VIEs.
DGD’s partners use DGD’s operating cash
flow (excluding changes in its current assets and current
liabilities) to fund its capital investments rather than distribute
all of that cash to themselves. Because DGD’s operating cash flow
is effectively attributable to each partner, only 50 percent of
DGD’s capital investments should be attributed to our net share of
total capital investments. We also exclude the capital expenditures
of our other consolidated VIEs because we do not operate those
VIEs. We believe capital investments attributable to Valero is an
important measure because it more accurately reflects our capital
investments.
(h)
The refining segment regions reflected herein contain the
following refineries: U.S. Gulf Coast- Corpus Christi East,
Corpus Christi West, Houston, Meraux, Port Arthur, St. Charles,
Texas City, and Three Rivers Refineries; U.S. Mid-Continent-
Ardmore, McKee, and Memphis Refineries; North Atlantic-
Pembroke and Quebec City Refineries; and U.S. West
Coast- Benicia and Wilmington Refineries.
(i)
Primarily includes petrochemicals, gas oils, No. 6 fuel oil,
petroleum coke, sulfur, and asphalt.
(j)
Valero uses certain operating statistics (as noted below) in the
earnings release tables and the accompanying earnings release to
evaluate performance between comparable periods. Different
companies may calculate them in different ways.
All per barrel of throughput, per gallon
of sales, and per gallon of production amounts are calculated by
dividing the associated dollar amount by the throughput volumes,
sales volumes, and production volumes for the period, as
applicable.
Throughput volumes, sales volumes, and
production volumes are calculated by multiplying throughput volumes
per day, sales volumes per day, and production volumes per day (as
provided in the accompanying tables), respectively, by the number
of days in the applicable period. We use throughput volumes, sales
volumes, and production volumes for the refining segment, renewable
diesel segment, and ethanol segment, respectively, due to their
general use by others who operate facilities similar to those
included in our segments. We believe the use of such volumes
results in per unit amounts that are most representative of the
product margins generated and the operating costs incurred as a
result of our operation of those facilities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201022005582/en/
Investors: Homer Bhullar, Vice President – Investor Relations,
210-345-1982 Eric Herbort, Senior Manager – Investor Relations,
210-345-3331 Gautam Srivastava, Manager – Investor Relations,
210-345-3992 Media: Lillian Riojas, Executive Director – Media
Relations and Communications, 210-345-5002
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