Market Overview

Valero Energy Reports Second Quarter 2019 Results

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  • Reported net income attributable to Valero stockholders of $612 million, or $1.47 per share, and adjusted net income attributable to Valero stockholders of $629 million, or $1.51 per share.
  • Invested $740 million of capital and successfully completed the Houston alkylation project.
  • Returned $588 million in cash to stockholders through dividends and stock buybacks.

SAN ANTONIO, July 25, 2019 (GLOBE NEWSWIRE) -- Valero Energy Corporation (NYSE:VLO, "Valero")) today reported net income attributable to Valero stockholders of $612 million, or $1.47 per share, for the second quarter of 2019 compared to $845 million, or $1.96 per share, for the second quarter of 2018.  Excluding adjustments shown in the accompanying earnings release tables, second quarter 2019 adjusted net income attributable to Valero stockholders was $629 million, or $1.51 per share, compared to second quarter 2018 adjusted net income attributable to Valero stockholders of $928 million, or $2.15 per share.

"We had solid operating performance while also completing major turnarounds at our Memphis, Houston and Benicia refineries in the second quarter," said Joe Gorder, Valero Chairman, President and Chief Executive Officer. "In addition, we successfully commissioned the new alkylation unit at the Houston refinery to improve our margin capture going forward."

Refining
The refining segment reported $1.0 billion of operating income for the second quarter of 2019 compared to $1.4 billion for the second quarter of 2018.  The decrease was primarily driven by narrower discounts for medium and heavy sour crude oils relative to Brent crude oil.

"We saw a strong rebound in gasoline cracks in all regions in the second quarter," Gorder said. "We continue to optimize our system with domestic, Canadian and Latin American crudes, and we set a new record of over 190,000 barrels per day of Canadian heavy crude oil processed during the quarter."

Refinery throughput capacity utilization was 94 percent, with throughput volumes averaging 3.0 million barrels per day in the second quarter of 2019, which was 70,000 barrels per day higher than the second quarter of 2018.  The company exported a total of 344,000 barrels per day of gasoline and distillate during the second quarter of 2019. 

Ethanol
The ethanol segment reported $7 million of operating income for the second quarter of 2019 compared to $43 million for the second quarter of 2018.  The decrease in operating income was attributed primarily to higher corn prices.  Ethanol production volumes averaged 4.5 million gallons per day in the second quarter of 2019, an increase of 531,000 gallons per day versus the second quarter of 2018, which was largely due to added production from the three ethanol plants acquired in November 2018. 

Renewable Diesel
The renewable diesel segment reported $77 million of operating income for the second quarter of 2019 compared to $30 million for the second quarter of 2018.  Renewable diesel sales volumes averaged 769,000 gallons per day in the second quarter of 2019, an increase of 387,000 gallons per day versus the second quarter of 2018. The increases in operating income and sales volumes were attributed primarily to the expansion of the Diamond Green Diesel plant in the third quarter of 2018.

Corporate and Other
General and administrative expenses were $199 million in the second quarter of 2019 compared to $248 million in the second quarter of 2018.  The decrease was mainly due to environmental reserve adjustments recorded in the second quarter of 2018.  The effective tax rate for the second quarter of 2019 was 20 percent, compared to 22 percent for the second quarter of 2018. 

Investing and Financing Activities
Capital investments totaled $740 million in the second quarter of 2019, of which $514 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance.  

Valero returned $588 million to stockholders in the second quarter of 2019, of which $376 million was paid as dividends and $212 million was for the purchase of approximately 2.6 million shares of common stock, resulting in a year-to-date return of $1.0 billion to stockholders and a total payout ratio of 50 percent of adjusted net cash provided by operating activities. 

Net cash provided by operating activities was $1.5 billion in the second quarter of 2019.  Included in this amount is a $283 million favorable impact from working capital. Excluding the change in working capital, adjusted net cash provided by operating activities was $1.2 billion. 

Valero continues to target a total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities for 2019.  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. 

Liquidity and Financial Position
Valero ended the second quarter of 2019 with $9.5 billion of total debt and $2.0 billion of cash and cash equivalents.  The debt to capital ratio, net of $2.0 billion in cash, was 26 percent. 

Strategic Update
The Houston alkylation unit was successfully commissioned in the second quarter of 2019.  This project upgrades isobutane and refinery olefins into high value alkylate product.  The Central Texas pipelines and terminals project is on target to be fully operational in the third quarter.  Other projects, including the Pasadena terminal, St. Charles alkylation unit, and Pembroke cogeneration unit, remain on track to be complete in 2020.  The Diamond Green Diesel expansion and Port Arthur Coker are expected to be complete in late 2021 and 2022, respectively.

Valero continues to expect to invest approximately $2.5 billion of capital in both 2019 and 2020, of which approximately 60 percent is for sustaining the business and approximately 40 percent is for growth projects.    

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 3.1 million barrels per day and 14 ethanol plants with a combined production capacity of 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 also is 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
Gautam Srivastava, Manager – Investor Relations, 210-345-3992
Tom Mahrer, Manager – Investor Relations, 210-345-1953

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.  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 on Valero's website at www.valero.com

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 attributable to Valero stockholders, adjusted earnings per common share – assuming dilution, refining margin, ethanol margin, renewable diesel margin, adjusted refining operating income, adjusted ethanol operating income, adjusted renewable diesel operating income, and adjusted net cash provided by operating activities.  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 (f) 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
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Statement of income data              
Revenues $ 28,933     $ 31,015     $ 53,196     $ 57,454  
Cost of sales:              
Cost of materials and other (a) 26,083     27,860     48,061     51,616  
Operating expenses (excluding depreciation and amortization expense reflected below) 1,175     1,110     2,390     2,246  
Depreciation and amortization expense 552     510     1,089     995  
Total cost of sales 27,810     29,480     51,540     54,857  
Other operating expenses (b) 2     21     4     31  
General and administrative expenses (excluding depreciation and amortization expense reflected below) (c) 199     248     408     486  
Depreciation and amortization expense 14     13     28     26  
Operating income 908     1,253     1,216     2,054  
Other income (expense), net (d) 12     (5 )   34     46  
Interest and debt expense, net of capitalized interest (112 )   (124 )   (224 )   (245 )
Income before income tax expense 808     1,124     1,026     1,855  
Income tax expense 160     249     211     398  
Net income 648     875     815     1,457  
Less: Net income attributable to noncontrolling interests (a) 36     30     62     143  
Net income attributable to Valero Energy Corporation stockholders $ 612     $ 845     $ 753     $ 1,314  
               
Earnings per common share $ 1.47     $ 1.96     $ 1.80     $ 3.05  
Weighted-average common shares outstanding (in millions) 415     429     416     430  
               
Earnings per common share – assuming dilution $ 1.47     $ 1.96     $ 1.80     $ 3.04  
Weighted-average common shares outstanding – assuming dilution (in millions) 417     431     417     432  

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT (e)
(millions of dollars)
(unaudited)
  Refining   Ethanol   Renewable
Diesel
  Corporate
and
Eliminations
  Total
Three months ended June 30, 2019                  
Revenues:                  
Revenues from external customers $ 27,746     $ 964     $ 222     $ 1     $ 28,933  
Intersegment revenues 8     53     73     (134 )    
Total revenues 27,754     1,017     295     (133 )   28,933  
Cost of sales:                  
Cost of materials and other 25,172     855     189     (133 )   26,083  
Operating expenses (excluding depreciation and amortization expense reflected below) 1,026     132     17         1,175  
Depreciation and amortization expense 518     22     12         552  
Total cost of sales 26,716     1,009     218     (133 )   27,810  
Other operating expenses 1     1             2  
General and administrative expenses (excluding depreciation and amortization expense reflected below)             199     199  
Depreciation and amortization expense             14     14  
Operating income by segment $ 1,037     $ 7     $ 77     $ (213 )   $ 908  
                   
Three months ended June 30, 2018                  
Revenues:                  
Revenues from external customers $ 30,024     $ 884     $ 106     $ 1     $ 31,015  
Intersegment revenues 11     42     46     (99 )    
Total revenues 30,035     926     152     (98 )   31,015  
Cost of sales:                  
Cost of materials and other 27,103     754     102     (99 )   27,860  
Operating expenses (excluding depreciation and amortization expense reflected below) 988     109     13         1,110  
Depreciation and amortization expense 483     20     7         510  
Total cost of sales 28,574     883     122     (99 )   29,480  
Other operating expenses (b) 21                 21  
General and administrative expenses (excluding depreciation and amortization expense reflected below) (c)             248     248  
Depreciation and amortization expense             13     13  
Operating income by segment $ 1,440     $ 43     $ 30     $ (260 )   $ 1,253  

See Operating Highlights by Segment.
See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT (e)
(millions of dollars)
(unaudited)
  Refining   Ethanol   Renewable
Diesel
  Corporate
and
Eliminations
  Total
Six months ended June 30, 2019                  
Revenues:                  
Revenues from external customers $ 50,964     $ 1,757     $ 474     $ 1     $ 53,196  
Intersegment revenues 10     105     124     (239 )    
Total revenues 50,974     1,862     598     (238 )   53,196  
Cost of sales:                  
Cost of materials and other 46,337     1,549     413     (238 )   48,061  
Operating expenses (excluding depreciation and amortization expense reflected below) 2,097     257     36         2,390  
Depreciation and amortization expense 1,021     45     23         1,089  
Total cost of sales 49,455     1,851     472     (238 )   51,540  
Other operating expenses 3     1             4  
General and administrative expenses (excluding depreciation and amortization expense reflected below)             408     408  
Depreciation and amortization expense             28     28  
Operating income by segment $ 1,516     $ 10     $ 126     $ (436 )   $ 1,216  
                   
Six months ended June 30, 2018                  
Revenues:                  
Revenues from external customers $ 55,477     $ 1,761     $ 214     $ 2     $ 57,454  
Intersegment revenues 15     88     88     (191 )    
Total revenues 55,492     1,849     302     (189 )   57,454  
Cost of sales:                  
Cost of materials and other (a) 50,267     1,503     37     (191 )   51,616  
Operating expenses (excluding depreciation and amortization expense reflected below) 1,999     220     27         2,246  
Depreciation and amortization expense 944     38     13         995  
Total cost of sales 53,210     1,761     77     (191 )   54,857  
Other operating expenses (b) 31                 31  
General and administrative expenses (excluding depreciation and amortization expense reflected below) (c)             486     486  
Depreciation and amortization expense             26     26  
Operating income by segment $ 2,251     $ 88     $ 225     $ (510 )   $ 2,054  

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 (f)
(millions of dollars, except per share amounts)
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Reconciliation of net income attributable to Valero Energy Corporation stockholders to adjusted net income attributable to Valero Energy Corporation stockholders              
Net income attributable to Valero Energy Corporation stockholders $ 612     $ 845     $ 753     $ 1,314  
Exclude adjustments:              
2017 blender's tax credit attributable to Valero Energy Corporation stockholders (a)             90  
Income tax expense related to 2017 blender's tax credit             (11 )
2017 blender's tax credit attributable to Valero Energy Corporation stockholders, net of taxes             79  
Texas City Refinery fire expenses (b)     (14 )       (14 )
Income tax benefit related to Texas City Refinery fire expenses     3         3  
Texas City Refinery fire expenses, net of taxes     (11 )       (11 )
Environmental reserve adjustments (c)     (56 )       (108 )
Income tax benefit related to environmental reserve adjustments     13         24  
Environmental reserve adjustments, net of taxes     (43 )       (84 )
Loss on early redemption of debt (d) (22 )   (38 )   (22 )   (38 )
Income tax benefit related to loss on early redemption of debt 5     9     5     9  
Loss on early redemption of debt, net of taxes (17 )   (29 )   (17 )   (29 )
Total adjustments (17 )   (83 )   (17 )   (45 )
Adjusted net income attributable to Valero Energy Corporation stockholders $ 629     $ 928     $ 770     $ 1,359  
               
Reconciliation of earnings per common share – assuming dilution to adjusted earnings per common share – assuming dilution              
Earnings per common share – assuming dilution $ 1.47     $ 1.96     $ 1.80     $ 3.04  
Exclude adjustments:              
2017 blender's tax credit attributable to Valero Energy Corporation stockholders (a)             0.18  
Texas City Refinery fire expenses (b)     (0.02 )       (0.03 )
Environmental reserve adjustments (c)     (0.10 )       (0.19 )
Loss on early redemption of debt (d) (0.04 )   (0.07 )   (0.04 )   (0.07 )
Total adjustments (0.04 )   (0.19 )   (0.04 )   (0.11 )
Adjusted earnings per common share – assuming dilution $ 1.51     $ 2.15     $ 1.84     $ 3.15  

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 (f)
(millions of dollars)
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Reconciliation of operating income by segment to segment margin, and reconciliation of operating income by segment to adjusted operating income by segment              
Refining segment (e)              
Refining operating income $ 1,037     $ 1,440     $ 1,516     $ 2,251  
Exclude:              
2017 blender's tax credit (a)             10  
Operating expenses (excluding depreciation and amortization expense reflected below) (1,026 )   (988 )   (2,097 )   (1,999 )
Depreciation and amortization expense (518 )   (483 )   (1,021 )   (944 )
Other operating expenses (b) (1 )   (21 )   (3 )   (31 )
Refining margin $ 2,582     $ 2,932     $ 4,637     $ 5,215  
               
Refining operating income $ 1,037     $ 1,440     $ 1,516     $ 2,251  
Exclude:              
2017 blender's tax credit (a)             10  
Other operating expenses (b) (1 )   (21 )   (3 )   (31 )
Adjusted refining operating income $ 1,038     $ 1,461     $ 1,519     $ 2,272  
               
Ethanol segment              
Ethanol operating income $ 7     $ 43     $ 10     $ 88  
Exclude:              
Operating expenses (excluding depreciation and amortization expense reflected below) (132 )   (109 )   (257 )   (220 )
Depreciation and amortization expense (22 )   (20 )   (45 )   (38 )
Other operating expenses (1 )       (1 )    
Ethanol margin $ 162     $ 172     $ 313     $ 346  
               
Ethanol operating income $ 7     $ 43     $ 10     $ 88  
Exclude: Other operating expenses (1 )       (1 )    
Adjusted ethanol operating income $ 8     $ 43     $ 11     $ 88  
               
Renewable diesel segment (e)              
Renewable diesel operating income $ 77     $ 30     $ 126     $ 225  
Exclude:              
2017 blender's tax credit (a)             160  
Operating expenses (excluding depreciation and amortization expense reflected below) (17 )   (13 )   (36 )   (27 )
Depreciation and amortization expense (12 )   (7 )   (23 )   (13 )
Renewable diesel margin $ 106     $ 50     $ 185     $ 105  
               
Renewable diesel operating income $ 77     $ 30     $ 126     $ 225  
Exclude: 2017 blender's tax credit (a)             160  
Adjusted renewable diesel operating income $ 77     $ 30     $ 126     $ 65  

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 (f)
(millions of dollars)
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Reconciliation of refining segment operating income to refining margin (by region), and reconciliation of refining segment operating income to adjusted refining segment operating income (by region) (g)              
U.S. Gulf Coast region (e)              
Refining operating income $ 273     $ 760     $ 391     $ 1,165  
Exclude:              
2017 blender's tax credit (a)             7  
Operating expenses (excluding depreciation and amortization expense reflected below) (586 )   (559 )   (1,185 )   (1,127 )
Depreciation and amortization expense (318 )   (292 )   (628 )   (569 )
Other operating expenses (b) (1 )   (20 )   (2 )   (30 )
Refining margin $ 1,178     $ 1,631     $ 2,206     $ 2,884  
               
Refining operating income $ 273     $ 760     $ 391     $ 1,165  
Exclude:              
2017 blender's tax credit (a)             7  
Other operating expenses (b) (1 )   (20 )   (2 )   (30 )
Adjusted refining operating income $ 274     $ 780     $ 393     $ 1,188  
               
U.S. Mid-Continent region (e)              
Refining operating income $ 422     $ 406     $ 658     $ 632  
Exclude:              
2017 blender's tax credit (a)             2  
Operating expenses (excluding depreciation and amortization expense reflected below) (146 )   (156 )   (312 )   (312 )
Depreciation and amortization expense (74 )   (71 )   (149 )   (141 )
Refining margin $ 642     $ 633     $ 1,119     $ 1,083  
               
Refining operating income $ 422     $ 406     $ 658     $ 632  
Exclude: 2017 blender's tax credit (a)             2  
Adjusted refining operating income $ 422     $ 406     $ 658     $ 630  

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 (f)
(millions of dollars)
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Reconciliation of refining segment operating income to refining margin (by region), and reconciliation of refining segment operating income to adjusted refining segment operating income (by region) (g) (continued)              
North Atlantic region              
Refining operating income $ 278     $ 137     $ 454     $ 298  
Exclude:              
Operating expenses (excluding depreciation and amortization expense reflected below) (146 )   (138 )   (293 )   (283 )
Depreciation and amortization expense (55 )   (62 )   (108 )   (115 )
Refining margin $ 479     $ 337     $ 855     $ 696  
               
U.S. West Coast region              
Refining operating income $ 64     $ 137     $ 13     $ 156  
Exclude:              
2017 blender's tax credit (a)             1  
Operating expenses (excluding depreciation and amortization expense reflected below) (148 )   (135 )   (307 )   (277 )
Depreciation and amortization expense (71 )   (58 )   (136 )   (119 )
Other operating expenses     (1 )   (1 )   (1 )
Refining margin $ 283     $ 331     $ 457     $ 552  
               
Refining operating income $ 64     $ 137     $ 13     $ 156  
Exclude:              
2017 blender's tax credit (a)             1  
Other operating expenses     (1 )   (1 )   (1 )
Adjusted refining operating income $ 64     $ 138     $ 14     $ 156  

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
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Throughput volumes (thousand barrels per day)              
Feedstocks:              
Heavy sour crude oil 419     482     415     482  
Medium/light sour crude oil 257     434     297     421  
Sweet crude oil 1,550     1,303     1,513     1,323  
Residuals 241     231     193     226  
Other feedstocks 171     121     162     121  
Total feedstocks 2,638     2,571     2,580     2,573  
Blendstocks and other 330     327     337     342  
Total throughput volumes 2,968     2,898     2,917     2,915  
               
Yields (thousand barrels per day)              
Gasolines and blendstocks 1,378     1,407     1,387     1,404  
Distillates 1,141     1,096     1,115     1,102  
Other products (h) 483     434     445     446  
Total yields 3,002     2,937     2,947     2,952  
               
Operating statistics (e) (f) (i)              
Refining margin $ 2,582     $ 2,932     $ 4,637     $ 5,215  
Adjusted refining operating income $ 1,038     $ 1,461     $ 1,519     $ 2,272  
Throughput volumes (thousand barrels per day) 2,968     2,898     2,917     2,915  
               
Refining margin per barrel of throughput $ 9.56     $ 11.12     $ 8.78     $ 9.89  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 3.80     3.75     3.97     3.79  
Depreciation and amortization expense per barrel of throughput 1.92     1.83     1.93     1.79  
Adjusted refining operating income per barrel of throughput $ 3.84     $ 5.54     $ 2.88     $ 4.31  

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
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Operating statistics (f) (i)              
Ethanol margin $ 162     $ 172     $ 313     $ 346  
Adjusted ethanol operating income $ 8     $ 43     $ 11     $ 88  
Production volumes (thousand gallons per day) 4,533     4,002     4,376     4,057  
               
Ethanol margin per gallon of production $ 0.39     $ 0.47     $ 0.40     $ 0.47  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per gallon of production 0.32     0.30     0.32     0.30  
Depreciation and amortization expense per gallon of production 0.05     0.05     0.07     0.05  
Ethanol operating income per gallon of production $ 0.02     $ 0.12     $ 0.01     $ 0.12  

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
RENEWABLE DIESEL SEGMENT OPERATING HIGHLIGHTS (e)
(millions of dollars, except per gallon amounts)
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Operating statistics (f) (i)              
Renewable diesel margin $ 106     $ 50     $ 185     $ 105  
Adjusted renewable diesel operating income $ 77     $ 30     $ 126     $ 65  
Sales volumes (thousand gallons per day) 769     382     780     377  
               
Renewable diesel margin per gallon of sales $ 1.51     $ 1.43     $ 1.31     $ 1.53  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per gallon of sales 0.25     0.37     0.26     0.40  
Depreciation and amortization expense per gallon of sales 0.17     0.18     0.16     0.18  
Adjusted renewable diesel operating income per gallon of sales $ 1.09     $ 0.88     $ 0.89     $ 0.95  

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
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Operating statistics by region (g)              
U.S. Gulf Coast region (e) (f) (i)              
Refining margin $ 1,178     $ 1,631     $ 2,206     $ 2,884  
Adjusted refining operating income $ 274     $ 780     $ 393     $ 1,188  
Throughput volumes (thousand barrels per day) 1,779     1,729     1,725     1,728  
               
Refining margin per barrel of throughput $ 7.28     $ 10.37     $ 7.07     $ 9.23  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 3.63     3.56     3.80     3.61  
Depreciation and amortization expense per barrel of throughput 1.96     1.86     2.01     1.82  
Adjusted refining operating income per barrel of throughput $ 1.69     $ 4.95     $ 1.26     $ 3.80  
               
U.S. Mid-Continent region (e) (f) (i)              
Refining margin $ 642     $ 633     $ 1,119     $ 1,083  
Adjusted refining operating income $ 422     $ 406     $ 658     $ 630  
Throughput volumes (thousand barrels per day) 462     473     452     477  
               
Refining margin per barrel of throughput $ 15.24     $ 14.69     $ 13.68     $ 12.55  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 3.45     3.60     3.81     3.61  
Depreciation and amortization expense per barrel of throughput 1.76     1.64     1.82     1.63  
Adjusted refining operating income per barrel of throughput $ 10.03     $ 9.45     $ 8.05     $ 7.31  

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
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Operating statistics by region (g) (continued)              
North Atlantic region (f) (i)              
Refining margin $ 479     $ 337     $ 855     $ 696  
Refining operating income $ 278     $ 137     $ 454     $ 298  
Throughput volumes (thousand barrels per day) 493     398     491     428  
               
Refining margin per barrel of throughput $ 10.69     $ 9.33     $ 9.61     $ 8.99  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 3.26     3.81     3.30     3.66  
Depreciation and amortization expense per barrel of throughput 1.23     1.70     1.20     1.47  
Refining operating income per barrel of throughput $ 6.20     $ 3.82     $ 5.11     $ 3.86  
               
U.S. West Coast region (f) (i)              
Refining margin $ 283     $ 331     $ 457     $ 552  
Adjusted refining operating income $ 64     $ 138     $ 14     $ 156  
Throughput volumes (thousand barrels per day) 234     298     249     282  
               
Refining margin per barrel of throughput $ 13.30     $ 12.20     $ 10.15     $ 10.80  
Less:              
Operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 6.97     4.96     6.83     5.42  
Depreciation and amortization expense per barrel of throughput 3.32     2.17     3.02     2.33  
Adjusted refining operating income per barrel of throughput $ 3.01     $ 5.07     $ 0.30     $ 3.05  

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Refining              
Feedstocks (dollars per barrel)              
Brent crude oil $ 68.33     $ 74.93     $ 66.08     $ 71.05  
Brent less West Texas Intermediate (WTI) crude oil 8.53     6.93     8.73     5.61  
Brent less Alaska North Slope (ANS) crude oil 0.15     0.83     (0.27 )   0.52  
Brent less Louisiana Light Sweet (LLS) crude oil 1.30     1.93     1.38     1.66  
Brent less Argus Sour Crude Index (ASCI) crude oil 3.44     5.63     3.17     5.26  
Brent less Maya crude oil 6.23     12.90     5.64     11.18  
LLS crude oil 67.03     73.00     64.70     69.39  
LLS less ASCI crude oil 2.14     3.70     1.79     3.60  
LLS less Maya crude oil 4.93     10.97     4.26     9.52  
WTI crude oil 59.80     68.00     57.35     65.44  
               
Natural gas (dollars per million British Thermal Units) 2.46     2.89     2.66     3.04  
               
Products (dollars per barrel, unless otherwise noted)              
U.S. Gulf Coast:              
Conventional Blendstock of Oxygenate Blending (CBOB) gasoline less Brent 6.72     7.47     3.44     7.38  
Ultra-low-sulfur (ULS) diesel less Brent 12.88     13.46     13.94     13.62  
Propylene less Brent (24.70 )   (6.54 )   (22.67 )   (6.68 )
CBOB gasoline less LLS 8.02     9.40     4.82     9.04  
ULS diesel less LLS 14.18     15.39     15.32     15.28  
Propylene less LLS (23.40 )   (4.61 )   (21.29 )   (5.02 )
U.S. Mid-Continent:              
CBOB gasoline less WTI 18.76     16.05     14.23     14.76  
ULS diesel less WTI 22.51     22.02     23.70     20.93  
North Atlantic:              
CBOB gasoline less Brent 10.11     10.37     5.68     9.63  
ULS diesel less Brent 14.76     15.25     16.10     15.60  
U.S. West Coast:              
California Reformulated Gasoline Blendstock of Oxygenate Blending (CARBOB) 87 gasoline less ANS 23.24     18.36     15.49     15.82  
California Air Resources Board (CARB) diesel less ANS 21.10     18.70     18.65     17.99  
CARBOB 87 gasoline less WTI 31.62     24.46     24.49     20.91  
CARB diesel less WTI 29.48     24.80     27.65     23.08  

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Ethanol              
New York Harbor (NYH) corn crush (dollars per gallon) $ 0.12     $ 0.17     $ 0.11     $ 0.18  
Chicago Board of Trade (CBOT) corn (dollars per bushel) 3.91     3.83     3.82     3.75  
NYH ethanol (dollars per gallon) 1.54     1.56     1.49     1.54  
               
Renewable diesel              
New York Mercantile Exchange ULS diesel (dollars per gallon) 1.98     2.15     1.96     2.07  
Biodiesel Renewable Identification Number (RIN) (dollars per RIN) 0.38     0.53     0.44     0.66  
California Low-Carbon Fuel Standard (dollars per metric ton) 188.77     161.57     191.49     148.85  
CBOT soybean oil (dollars per pound) 0.28     0.31     0.29     0.32  

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
EARNINGS RELEASE TABLES
OTHER FINANCIAL DATA
(millions of dollars, except per share amounts)
(unaudited)
          June 30,   December 31,
          2019   2018
Balance sheet data              
Current assets         $ 17,811     $ 17,675  
Cash and cash equivalents included in current assets   2,033     2,982  
Inventories included in current assets         6,281     6,532  
Current liabilities         12,548     10,724  
Current portion of debt and finance lease obligations included in current liabilities   323     238  
Debt and finance lease obligations, less current portion       9,167     8,871  
Total debt and finance lease obligations         9,490     9,109  
Valero Energy Corporation stockholders' equity       21,345     21,667  
               
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Net cash provided by operating activities and adjusted net cash provided by operating activities (f)              
Net cash provided by operating activities $ 1,517     $ 2,059     $ 2,394     $ 2,197  
Exclude: changes in current assets and current liabilities 283     581     413     (445 )
Adjusted net cash provided by operating activities $ 1,234     $ 1,478     $ 1,981     $ 2,642  
               
Dividends per common share $ 0.90     $ 0.80     $ 1.80     $ 1.60  

See Notes to Earnings Release Tables.

VALERO ENERGY CORPORATION
NOTES TO EARNINGS RELEASE TABLES

(a) Cost of materials and other for the six months ended June 30, 2018 includes a benefit of $170 million for the biodiesel blender's tax credit attributable to volumes blended during 2017. The benefit was recognized in February 2018 because the United States (U.S.) legislation authorizing the credit was passed and signed into law in that month. Of the $170 million pre-tax benefit, $10 million and $160 million is included in our refining and renewable diesel segments, respectively, and consequently, $80 million is attributable to noncontrolling interest and $90 million is attributable to Valero Energy Corporation stockholders.

(b) Other operating expenses for the three and six months ended June 30, 2018 includes $14 million of costs to respond to and assess the damage caused by a fire in the alkylation unit at our Texas City Refinery on April 19, 2018. In addition, other operating expenses for the three and six months ended June 30, 2018 includes repair costs incurred at certain of our refineries due to damage associated with inclement weather events in 2018 and Hurricane Harvey in 2017.

(c) General and administrative expenses (excluding depreciation and amortization expense) for the three and six months ended June 30, 2018 includes a charge of $56 million and $108 million, respectively, for environmental reserve adjustments associated with certain non-operating sites.

(d) "Other income (expense), net" for the three and six months ended June 30, 2019 and 2018 includes a $22 million charge from the early redemption of $850 million of our 6.125 percent senior notes due February 1, 2020 and a $38 million charge from the early redemption of $750 million of our 9.375 percent senior notes due March 15, 2019, respectively.

(e) Effective January 1, 2019, we revised our reportable segments to align with certain changes in how our chief operating decision maker manages and allocates resources to our business. Accordingly, we created a new reportable segment — renewable diesel. The results of the renewable diesel segment, which includes the operations of our consolidated joint venture, Diamond Green Diesel Holdings LLC, were transferred from the refining segment. Also effective January 1, 2019, we no longer have a VLP segment, and as a result, the operations previously included in the VLP segment are included in our refining segment. Our prior period segment information has been retrospectively adjusted to reflect our current segment presentation.

(f) 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 through the exclusion of 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 attributable to Valero Energy Corporation stockholders is defined as net income attributable to Valero Energy Corporation stockholders excluding the items noted below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion 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 excluded item is provided below.

    • 2017 blender's tax credit attributable to Valero Energy Corporation stockholders - The blender's tax credit is attributable to volumes blended during 2017 and is not related to 2018 activities, as described in note (a).
    • Texas City Refinery fire expenses - The costs incurred to respond to and assess the damage caused by the fire that occurred at the Texas City Refinery (see note (b)) are specific to that event and are not ongoing costs incurred in our operations.
    • Environmental reserve adjustments - The environmental reserve adjustments are attributable to sites that were shut down by prior owners and subsequently acquired by us (referred to by us as non-operating sites) (see note (c)).
    • 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 and 9.375 percent senior notes due March 15, 2019 (see note (d)) are not associated with the ongoing costs of our borrowing and financing activities.

  • Adjusted earnings per common share – assuming dilution is defined as adjusted net income attributable to Valero Energy Corporation stockholders divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.
  • Refining margin is defined as refining operating income excluding the 2017 blender's tax credit (see note (a)), 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.
  • Ethanol margin is defined as ethanol operating income excluding 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.
  • Renewable diesel margin is defined as renewable diesel operating income excluding the 2017 blender's tax credit (see note (a)), 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.
  • Adjusted refining operating income is defined as refining segment operating income excluding the 2017 blender's tax credit (see note (a)) and other operating expenses. We believe adjusted refining operating income 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 ethanol operating income is defined as ethanol segment operating income excluding 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 renewable diesel operating income is defined as renewable diesel segment operating income excluding the 2017 blender's tax credit (see note (a)). 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 net cash provided by operating activities is defined as net cash provided by operating activities excluding changes in current assets and current liabilities. 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.

(g) 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.

(h) Primarily includes petrochemicals, gas oils, No. 6 fuel oil, petroleum coke, sulfur, and asphalt.

(i) 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 production, and per gallon of sales amounts are calculated by dividing the associated dollar amount by the throughput volumes, production volumes, and sales volumes for the period, as applicable.

Throughput volumes, production volumes, and sales volumes are calculated by multiplying throughput volumes per day, production volumes per day, and sales volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period. We use throughput volumes, production volumes, and sales volumes for the refining segment, ethanol segment, and renewable diesel 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.

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