Valero Energy Corp (VLO, Financial), one of the largest independent refiners in the United States, reported its second-quarter 2024 earnings, showcasing a mixed performance. The company operates 15 refineries with a total throughput capacity of 3.2 million barrels per day across the US, Canada, and the United Kingdom. Additionally, Valero owns 12 ethanol plants and holds a 50% stake in Diamond Green Diesel.
Performance Overview
Valero Energy Corp (VLO, Financial) reported net income attributable to its stockholders of $880 million, or $2.71 per share, for Q2 2024. This result surpassed the analyst estimate of $2.56 per share. However, the company's revenue for the quarter was $34,490 million, slightly above the estimated $33,672.15 million.
Comparatively, the net income for Q2 2023 was significantly higher at $1.9 billion, or $5.40 per share, indicating a notable year-over-year decline.
Segment Performance
The Refining segment reported an operating income of $1.2 billion for Q2 2024, down from $2.4 billion in Q2 2023. Refining throughput volumes averaged 3.0 million barrels per day.
The Renewable Diesel segment, which includes the Diamond Green Diesel joint venture, reported $112 million in operating income, a sharp decline from $440 million in Q2 2023. This decrease was attributed to lower sales volumes due to planned maintenance activities and reduced renewable diesel margins.
The Ethanol segment reported an operating income of $105 million, down from $127 million in Q2 2023. Ethanol production volumes averaged 4.5 million gallons per day, slightly higher than the previous year's 4.47 million gallons per day.
Financial Achievements
Valero returned $1.4 billion to stockholders through dividends and stock buybacks in Q2 2024. The company declared a regular quarterly cash dividend of $1.07 per share on July 18, 2024, payable on September 3, 2024.
Net cash provided by operating activities was $2.5 billion, including a $789 million favorable change in working capital. Capital investments totaled $420 million, with $329 million allocated for sustaining the business.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $34,490 million | $34,509 million |
| Net Income | $880 million | $1.9 billion |
| Earnings Per Share | $2.71 | $5.40 |
Balance Sheet and Cash Flow
Valero ended Q2 2024 with $8.4 billion in total debt, $2.4 billion in finance lease obligations, and $5.2 billion in cash and cash equivalents. The debt to capitalization ratio, net of cash and cash equivalents, stood at 16% as of June 30, 2024.
Strategic Update
The Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant is expected to be operational in Q4 2024, with a total cost of $315 million, half of which is attributable to Valero. This project aims to upgrade approximately 50% of the plant's current renewable diesel production capacity to SAF.
"Our team’s simple strategy of pursuing excellence in operations, return-driven discipline on growth projects, and a demonstrated commitment to shareholder returns has underpinned our success and positions us well for the future," said Lane Riggs, Valero’s Chief Executive Officer and President.
Analysis
Valero Energy Corp (VLO, Financial)'s Q2 2024 earnings report highlights a challenging quarter with significant year-over-year declines in net income and segment operating incomes. Despite these challenges, the company managed to exceed EPS estimates and maintain strong cash flow and shareholder returns. The ongoing strategic projects, such as the SAF initiative, indicate a forward-looking approach to maintaining and enhancing operational efficiency and market position.
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Explore the complete 8-K earnings release (here) from Valero Energy Corp for further details.
