News Release

Valero Energy Reports Third Quarter 2017 Results
  • Reported net income attributable to Valero stockholders of $841 million, or $1.91 per share.
  • Invested $565 million of growth and sustaining capital in the third quarter.
  • Returned $600 million in cash to stockholders through dividends and stock buybacks.
  • Previously announced expansion of Valero’s product supply chain into Mexico and in Texas.
  • Expect Diamond Pipeline and Wilmington cogeneration projects to start up in December.

SAN ANTONIO, Oct. 26, 2017 (GLOBE NEWSWIRE) -- Valero Energy Corporation (NYSE:VLO) (“Valero”) today reported net income attributable to Valero stockholders of $841 million, or $1.91 per share, for the third quarter of 2017 compared to $613 million, or $1.33 per share, for the third quarter of 2016.  Third quarter 2016 adjusted net income attributable to Valero stockholders of $571 million, or $1.24 per share, excludes a $42 million income tax benefit from the disposition of Aruba assets. 

“Hurricane Harvey disrupted operations at five of our refineries during the quarter,” said Joe Gorder, Valero Chairman, President and Chief Executive Officer.  “I’m proud of our team’s response and commitment to the safety of our workers, their families, and surrounding communities during the recovery efforts.”

Valero worked closely with local, state, and federal government entities to address storm impacts.  The company also provided millions of dollars of financial and other assistance to employees, affected communities, and charitable organizations.

“Despite the extent of the storm’s impact, we are pleased with our financial performance for the quarter and remain optimistic for the fourth quarter,” continued Gorder.  “We are encouraged by domestic and global economic growth, and we expect low oil prices and solid product demand to continue into 2018.”

Refining
The refining segment reported $1.4 billion of operating income for the third quarter of 2017 compared to $934 million for the third quarter of 2016, which has been retrospectively revised to reflect the operating results of Valero Energy Partners LP (NYSE:VLP) as a separate segment consistent with Valero’s current segment presentation.  The increase in operating income was driven primarily by higher gasoline and distillate margins and wider discounts for domestic sweet crude oils relative to Brent crude oil, partly offset by higher premiums for residual feedstocks and narrower discounts for medium and heavy sour crude oils versus Brent. 

Refinery throughput capacity utilization was 92 percent, and throughput volumes averaged 2.9 million barrels per day in the third quarter of 2017, which was 33,000 barrels per day higher than the third quarter of 2016.

The company exported a total of 339,000 barrels per day of gasoline and diesel during the third quarter of 2017. 

Biofuel blending costs of $230 million for the third quarter of 2017 were $32 million higher than the third quarter of 2016, mainly due to higher Renewable Identification Number (RIN) expenses.

Ethanol
The ethanol segment reported $82 million of operating income for the third quarter of 2017 compared to $106 million for the third quarter of 2016.  The decrease in operating income is attributed primarily to higher corn prices and lower distillers grain prices that pressured margins.  Ethanol production volumes averaged 4.0 million gallons per day in the third quarter of 2017, which was 217,000 gallons per day higher than the third quarter of 2016. 

VLP
The VLP segment reported $69 million of operating income for the third quarter of 2017 compared to $56 million for the third quarter of 2016.  The increase in operating income was driven primarily by contributions from the Meraux and Three Rivers terminals, which were acquired in September of last year, and the Red River pipeline segment, which was acquired in January 2017.

Earlier today, VLP announced the acquisition of the Port Arthur terminal assets and Parkway Pipeline LLC from Valero for $508 million.  The transaction is expected to close on November 1. 

Corporate and Other
General and administrative expenses were $229 million, and the effective tax rate was 30 percent for the third quarter of 2017. 

Investing and Financing Activities
Capital investments totaled $565 million for the third quarter of 2017, of which $73 million was for turnarounds and catalyst.  

Valero returned $600 million to stockholders in the third quarter, of which $309 million was paid as dividends and the balance was used to purchase 4.2 million shares of its common stock, resulting in a total payout ratio of 58 percent for the first nine months of 2017.  The company continues to target a total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities for 2017.  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. 

The company generated approximately $1 billion of net cash from operating activities in the third quarter of 2017.  Included in this amount is the negative impact from a $315 million increase in working capital.  Excluding the change in working capital, net cash generated was approximately $1.4 billion

Liquidity and Financial Position
Valero ended the third quarter of 2017 with $8.5 billion of total debt and $5.2 billion of cash and temporary cash investments.  The debt to capital ratio, net of $2.0 billion in cash, was 24 percent. 

Strategic Update
Valero continues to target $2.7 billion of total capital investments this year, consisting of $1.1 billion for growth projects and $1.6 billion for sustaining the business. 

“We are making excellent progress on our growth investments, with the Wilmington cogeneration plant and Diamond Pipeline expected to be online in December,” said Gorder.  “We are also pleased with the progress of our investments in Texas and expansion into Mexico, which will extend our product supply chain, internalize secondary costs, and provide opportunities for third-party revenue growth.” 

During the quarter, the company announced the signing of long-term agreements with IEnova to use terminals to be constructed at the Port of Veracruz and near the cities of Puebla and Mexico City to import refined products into central Mexico beginning in late 2018.  Additionally, Valero announced investments in pipelines and terminals in central Texas and a marine terminal in Pasadena, Texas, which are expected to be completed in 2019. 

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, is an international manufacturer and marketer of transportation fuels and other petrochemical products.  Valero, a Fortune 50 company based in San Antonio, Texas, with approximately 10,000 employees, is an independent petroleum refiner and ethanol producer, and its assets include 15 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day and 11 ethanol plants with a combined production capacity of 1.4 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.  In addition, Valero owns the 2 percent general partner interest and a majority limited partner interest in Valero Energy Partners LP, a midstream master limited partnership.  Valero sells its products in both the wholesale rack and bulk markets, and approximately 7,400 outlets carry Valero’s brand names in the U.S., Canada, the U.K. and Ireland.  Please visit www.valero.com for more information.

Valero Contacts
Investors:
John Locke, Vice President – Investor Relations, 210-345-3077
Karen Ngo, Senior Manager – Investor Relations, 210-345-4574
Tom Mahrer, Manager – Investor Relations, 210-345-1953

Media:
Lillian Riojas, 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,” “targeting,” 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 our other reports filed with the SEC and on Valero’s website at www.valero.com, and VLP’s annual reports on Form 10-K and quarterly reports on Form 10-Q filed with the SEC and on VLP’s website at www.valeroenergypartners.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, adjusted operating income, refining margin, and ethanol margin.  We have included these non-GAAP financial measures to help facilitate the comparison of operating results between periods.  See the accompanying earnings release tables for a reconciliation of these non-GAAP measures to their most directly comparable U.S. GAAP measures. In note (e) to the earnings release tables, we disclose the reasons why we believe our use of these non-GAAP financial measures provides useful information.

 
VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS
(millions of dollars, except per share amounts)
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
Statement of income data              
Operating revenues $ 23,562     $ 19,649     $ 67,588     $ 54,947  
Cost of sales:              
Cost of materials and other 20,329     17,033     59,366     47,660  
Operating expenses (excluding depreciation and
amortization expense reflected below)
1,125     1,062     3,339     3,093  
Depreciation and amortization expense 484     458     1,457     1,391  
Lower of cost or market inventory valuation adjustment (a)             (747 )
Total cost of sales 21,938     18,553     64,162     51,397  
Other operating expenses (b) 44         44      
General and administrative expenses (excluding
depreciation and amortization expense reflected below)
229     192     597     507  
Depreciation and amortization expense 13     12     39     35  
Asset impairment loss (c)             56  
Operating income 1,338     892     2,746     2,952  
Other income, net 17     12     50     35  
Interest and debt expense, net of capitalized interest (114 )   (115 )   (354 )   (334 )
Income before income tax expense 1,241     789     2,442     2,653  
Income tax expense (c) 378     144     686     652  
Net income 863     645     1,756     2,001  
Less: Net income attributable to noncontrolling interests 22     32     62     79  
Net income attributable to
Valero Energy Corporation stockholders
$ 841     $ 613     $ 1,694     $ 1,922  
               
Earnings per common share $ 1.91     $ 1.33     $ 3.80     $ 4.12  
Weighted-average common shares outstanding (in millions) 439     458     444     465  
               
Earnings per common share – assuming dilution $ 1.91     $ 1.33     $ 3.80     $ 4.12  
Weighted-average common shares outstanding – assuming
dilution (in millions)
441     460     446     467  
               
Dividends per common share $ 0.70     $ 0.60     $ 2.10     $ 1.80  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT
(millions of dollars)
(unaudited)
                   
  Refining (d)   Ethanol   VLP (d)   Corporate
and
Eliminations
  Total
Three months ended September 30, 2017                  
Operating revenues:                  
Operating revenues from external customers $ 22,728     $ 834     $     $     $ 23,562  
Intersegment revenues 1     48     110     (159 )    
Total operating revenues 22,729     882     110     (159 )   23,562  
Cost of sales:                  
Cost of materials and other 19,818     669         (158 )   20,329  
Operating expenses (excluding depreciation and
amortization expense reflected below)
986     114     26     (1 )   1,125  
Depreciation and amortization expense 455     17     12         484  
Total cost of sales 21,259     800     38     (159 )   21,938  
Other operating expenses (b) 41         3         44  
General and administrative expenses (excluding
depreciation and amortization expense reflected
below)
            229     229  
Depreciation and amortization expense             13     13  
Operating income by segment $ 1,429     $ 82     $ 69     $ (242 )   $ 1,338  
                   
Three months ended September 30, 2016                  
Operating revenues:                  
Operating revenues from external customers $ 18,718     $ 931     $     $     $ 19,649  
Intersegment revenues     56     92     (148 )    
Total operating revenues 18,718     987     92     (148 )   19,649  
Cost of sales:                  
Cost of materials and other 16,424     757         (148 )   17,033  
Operating expenses (excluding depreciation and
amortization expense reflected below)
931     107     24         1,062  
Depreciation and amortization expense 429     17     12         458  
Total cost of sales 17,784     881     36     (148 )   18,553  
General and administrative expenses (excluding
depreciation and amortization expense reflected
below)
            192     192  
Depreciation and amortization expense             12     12  
Operating income by segment $ 934     $ 106     $ 56     $ (204 )   $ 892  
                                       
See Operating Highlights by Segment.
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
FINANCIAL HIGHLIGHTS BY SEGMENT
(millions of dollars)
(unaudited)
                   
  Refining (d)   Ethanol   VLP (d)   Corporate
and
Eliminations
  Total
Nine months ended September 30, 2017                  
Operating revenues:                  
Operating revenues from external customers $ 65,030     $ 2,558     $     $     $ 67,588  
Intersegment revenues 1     136     326     (463 )    
Total operating revenues 65,031     2,694     326     (463 )   67,588  
Cost of sales:                  
Cost of materials and other 57,662     2,166         (462 )   59,366  
Operating expenses (excluding depreciation and
amortization expense reflected below)
2,935     330     75     (1 )   3,339  
Depreciation and amortization expense 1,358     63     36         1,457  
Total cost of sales 61,955     2,559     111     (463 )   64,162  
Other operating expenses (b) 41         3         44  
General and administrative expenses (excluding
depreciation and amortization expense reflected
below)
            597     597  
Depreciation and amortization expense             39     39  
Operating income by segment $ 3,035     $ 135     $ 212     $ (636 )   $ 2,746  
                   
Nine months ended September 30, 2016                  
Operating revenues:                  
Operating revenues from external customers $ 52,302     $ 2,645     $     $     $ 54,947  
Intersegment revenues     135     258     (393 )    
Total operating revenues 52,302     2,780     258     (393 )   54,947  
Cost of sales:                  
Cost of materials and other 45,790     2,263         (393 )   47,660  
Operating expenses (excluding depreciation and
amortization expense reflected below)
2,716     305     72         3,093  
Depreciation and amortization expense 1,308     48     35         1,391  
Lower of cost or market inventory valuation
adjustment (a)
(697 )   (50 )           (747 )
Total cost of sales 49,117     2,566     107     (393 )   51,397  
General and administrative expenses (excluding
depreciation and amortization expense reflected
below)
            507     507  
Depreciation and amortization expense             35     35  
Asset impairment loss (c) 56                 56  
Operating income by segment $ 3,129     $ 214     $ 151     $ (542 )   $ 2,952  
                                       
See Operating Highlights by Segment.
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars, except per share amounts)
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
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 $ 841     $ 613     $ 1,694     $ 1,922  
Exclude adjustments:              
Lower of cost or market inventory valuation
adjustment (a)
            747  
Income tax expense related to the lower of cost or
market inventory valuation adjustment
            (168 )
Lower of cost or market inventory valuation
adjustment, net of taxes
            579  
Asset impairment loss (c)             (56 )
Income tax benefit on Aruba Disposition (c)     42         42  
Total adjustments     42         565  
Adjusted net income attributable to
Valero Energy Corporation stockholders
$ 841     $ 571     $ 1,694     $ 1,357  
               
Reconciliation of earnings per common share – assuming
dilution to adjusted earnings per common share –
assuming dilution
             
Earnings per common share – assuming dilution $ 1.91     $ 1.33     $ 3.80     $ 4.12  
Exclude adjustments:              
Lower of cost or market inventory valuation
adjustment, net of taxes
            1.24  
Asset impairment loss (c)             (0.12 )
Income tax benefit on Aruba Disposition (c)     0.09         0.09  
Total adjustments     0.09         1.21  
Adjusted earnings per common share – assuming dilution $ 1.91     $ 1.24     $ 3.80     $ 2.91  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars)
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
Reconciliation of operating income by segment to segment
margin, and reconciliation of operating income by
segment to adjusted operating income by segment
             
Refining segment (d)              
Refining segment operating income $ 1,429     $ 934     $ 3,035     $ 3,129  
Add back:              
Operating expenses (excluding depreciation and
amortization expense reflected below)
986     931     2,935     2,716  
Depreciation and amortization expense 455     429     1,358     1,308  
Other operating expenses (b) 41         41      
Lower of cost or market inventory valuation adjustment (a)             (697 )
Asset impairment loss (c)             56  
Refining margin $ 2,911     $ 2,294     $ 7,369     $ 6,512  
               
Refining segment operating income $ 1,429     $ 934     $ 3,035     $ 3,129  
Exclude:              
Other operating expenses (b) (41 )       (41 )    
Lower of cost or market inventory valuation adjustment (a)             697  
Asset impairment loss (c)             (56 )
Adjusted refining segment operating income $ 1,470     $ 934     $ 3,076     $ 2,488  
               
Ethanol segment              
Ethanol segment operating income $ 82     $ 106     $ 135     $ 214  
Add back:              
Operating expenses (excluding depreciation and
amortization expense reflected below)
114     107     330     305  
Depreciation and amortization expense 17     17     63     48  
Lower of cost or market inventory valuation adjustment (a)             (50 )
Ethanol margin $ 213     $ 230     $ 528     $ 517  
               
Ethanol segment operating income $ 82     $ 106     $ 135     $ 214  
Exclude: Lower of cost or market inventory valuation
adjustment (a)
            50  
Adjusted ethanol segment operating income $ 82     $ 106     $ 135     $ 164  
               
VLP segment              
VLP segment operating income $ 69     $ 56     $ 212     $ 151  
Exclude: Other operating expenses (b) (3 )       (3 )    
Adjusted VLP segment operating income $ 72     $ 56     $ 215     $ 151  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars)
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
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) (f)
             
U.S. Gulf Coast region (d)              
Operating income $ 608     $ 536     $ 1,464     $ 1,404  
Add back:              
Operating expenses (excluding depreciation and
amortization expense reflected below)
558     519     1,696     1,544  
Depreciation and amortization expense 281     261     839     774  
Other operating expenses (b) 41         41      
Lower of cost or market inventory valuation adjustment (a)             (37 )
Asset impairment loss (c)             56  
Refining margin $ 1,488     $ 1,316     $ 4,040     $ 3,741  
               
Operating income $ 608     $ 536     $ 1,464     $ 1,404  
Exclude:              
Other operating expenses (b) (41 )       (41 )    
Lower of cost or market inventory valuation adjustment (a)             37  
Asset impairment loss (c)             (56 )
Adjusted operating income $ 649     $ 536     $ 1,505     $ 1,423  
               
U.S. Mid-Continent region (d)              
Operating income $ 361     $ 150     $ 647     $ 346  
Add back:              
Operating expenses (excluding depreciation and
amortization expense reflected below)
144     151     436     422  
Depreciation and amortization expense 64     59     196     191  
Lower of cost or market inventory valuation adjustment (a)             (9 )
Refining margin $ 569     $ 360     $ 1,279     $ 950  
               
Operating income $ 361     $ 150     $ 647     $ 346  
Exclude: Lower of cost or market inventory valuation
adjustment (a)
            9  
Adjusted operating income $ 361     $ 150     $ 647     $ 337  
                               
See Notes to Earnings Release Tables
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS
REPORTED UNDER U.S. GAAP (e)
(millions of dollars)
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
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) (f) (continued)
             
North Atlantic region              
Operating income $ 328     $ 179     $ 786     $ 1,148  
Add back:              
Operating expenses (excluding depreciation and
amortization expense reflected below)
137     119     378     363  
Depreciation and amortization expense 53     50     150     152  
Lower of cost or market inventory valuation adjustment (a)             (646 )
Refining margin $ 518     $ 348     $ 1,314     $ 1,017  
               
Operating income $ 328     $ 179     $ 786     $ 1,148  
Exclude: Lower of cost or market inventory valuation
adjustment (a)
            646  
Adjusted operating income $ 328     $ 179     $ 786     $ 502  
               
U.S. West Coast region              
Operating income $ 132     $ 69     $ 138     $ 231  
Add back:              
Operating expenses (excluding depreciation and
amortization expense reflected below)
147     142     425     387  
Depreciation and amortization expense 57     59     173     191  
Lower of cost or market inventory valuation adjustment (a)             (5 )
Refining margin $ 336     $ 270     $ 736     $ 804  
               
Operating income $ 132     $ 69     $ 138     $ 231  
Exclude: Lower of cost or market inventory valuation
adjustment (a)
            5  
Adjusted operating income $ 132     $ 69     $ 138     $ 226  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
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,
  2017   2016   2017   2016
Throughput volumes (thousand barrels per day)              
Feedstocks:              
Heavy sour crude oil 446     394     470     401  
Medium/light sour crude oil 420     520     461     519  
Sweet crude oil 1,348     1,218     1,301     1,195  
Residuals 215     282     226     281  
Other feedstocks 147     166     146     157  
Total feedstocks 2,576     2,580     2,604     2,553  
Blendstocks and other 317     280     313     302  
Total throughput volumes 2,893     2,860     2,917     2,855  
               
Yields (thousand barrels per day)              
Gasolines and blendstocks 1,401     1,401     1,406     1,396  
Distillates 1,108     1,078     1,122     1,072  
Other products (g) 420     426     426     425  
Total yields 2,929     2,905     2,954     2,893  
               
Operating statistics (d) (e) (h)              
Refining margin $ 2,911     $ 2,294     $ 7,369     $ 6,512  
Adjusted refining segment operating income
$ 1,470     $ 934     $ 3,076     $ 2,488  
Throughput volumes (thousand barrels per day) 2,893     2,860     2,917     2,855  
               
Throughput margin per barrel $ 10.94     $ 8.72     $ 9.26     $ 8.32  
Less:              
Operating expenses (excluding depreciation and
amortization expense reflected below) per barrel
3.71     3.54     3.69     3.47  
Depreciation and amortization expense per barrel 1.71     1.63     1.71     1.67  
Adjusted refining segment operating income per barrel $ 5.52     $ 3.55     $ 3.86     $ 3.18  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
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,
  2017   2016   2017   2016
Operating statistics (e) (h)              
Ethanol margin $ 213     $ 230     $ 528     $ 517  
Adjusted ethanol segment operating income
$ 82     $ 106     $ 135     $ 164  
Production volumes (thousand gallons per day) 4,032     3,815     3,949     3,794  
               
Ethanol margin per gallon of production $ 0.57     $ 0.66     $ 0.49     $ 0.50  
Less:              
Operating expenses (excluding depreciation and
amortization expense reflected below) per gallon
of production
0.30     0.31     0.31     0.29  
Depreciation and amortization expense per gallon of
production
0.05     0.05     0.05     0.05  
Adjusted ethanol segment operating income per gallon
of production
$ 0.22     $ 0.30     $ 0.13     $ 0.16  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
VLP SEGMENT OPERATING HIGHLIGHTS (d)
(millions of dollars, except per barrel amounts)
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
Volumes (thousand barrels per day) (h)              
Pipeline transportation throughput 859     778     941     849  
Terminaling throughput 2,694     2,394     2,760     2,131  
               
Operating statistics (h)              
Pipeline transportation revenue $ 23     $ 19     $ 71     $ 58  
Pipeline transportation revenue per barrel $ 0.29     $ 0.26     $ 0.28     $ 0.25  
               
Terminaling revenue $ 86     $ 73     $ 253     $ 200  
Terminaling revenue per barrel $ 0.34     $ 0.33     $ 0.34     $ 0.34  
               
Storage and other revenue $ 1     $     $ 2     $  
               
Total operating revenues $ 110     $ 92     $ 326     $ 258  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
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,
  2017   2016   2017   2016
Operating statistics by region (f)              
U.S. Gulf Coast region (d) (e) (h)              
Refining margin $ 1,488     $ 1,316     $ 4,040     $ 3,741  
Adjusted operating income $ 649     $ 536     $ 1,505     $ 1,423  
Throughput volumes (thousand barrels per day) 1,657     1,663     1,713     1,654  
               
Throughput margin per barrel $ 9.76     $ 8.60     $ 8.64     $ 8.26  
Less:              
Operating expenses (excluding depreciation and
amortization expense reflected below) per barrel
3.66     3.39     3.62     3.41  
Depreciation and amortization expense per barrel 1.84     1.71     1.80     1.71  
Adjusted operating income per barrel $ 4.26     $ 3.50     $ 3.22     $ 3.14  
               
U.S. Mid-Continent region (d) (e) (h)              
Refining margin $ 569     $ 360     $ 1,279     $ 950  
Adjusted operating income $ 361     $ 150     $ 647     $ 337  
Throughput volumes (thousand barrels per day) 465     443     464     453  
               
Throughput margin per barrel $ 13.31     $ 8.85     $ 10.10     $ 7.65  
Less:              
Operating expenses (excluding depreciation and
amortization expense reflected below) per barrel
3.38     3.71     3.45     3.40  
Depreciation and amortization expense per barrel 1.48     1.45     1.54     1.53  
Adjusted operating income per barrel $ 8.45     $ 3.69     $ 5.11     $ 2.72  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
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,
  2017   2016   2017   2016
Operating statistics by region (f) (continued)              
North Atlantic region (e) (h)              
Refining margin $ 518     $ 348     $ 1,314     $ 1,017  
Adjusted operating income $ 328     $ 179     $ 786     $ 502  
Throughput volumes (thousand barrels per day) 489     489     490     482  
               
Throughput margin per barrel $ 11.51     $ 7.74     $ 9.83     $ 7.69  
Less:              
Operating expenses (excluding depreciation and
amortization expense reflected below) per barrel
3.06     2.65     2.83     2.75  
Depreciation and amortization expense per barrel 1.17     1.12     1.12     1.15  
Adjusted operating income per barrel $ 7.28     $ 3.97     $ 5.88     $ 3.79  
               
U.S. West Coast region (e) (h)              
Refining margin $ 336     $ 270     $ 736     $ 804  
Adjusted operating income $ 132     $ 69     $ 138     $ 226  
Throughput volumes (thousand barrels per day) 282     265     250     266  
               
Throughput margin per barrel $ 12.97     $ 11.02     $ 10.80     $ 11.04  
Less:              
Operating expenses (excluding depreciation and
amortization expense reflected below) per barrel
5.65     5.78     6.24     5.31  
Depreciation and amortization expense per barrel 2.22     2.43     2.53     2.63  
Adjusted operating income per barrel $ 5.10     $ 2.81     $ 2.03     $ 3.10  
                               
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
AVERAGE MARKET REFERENCE PRICES AND DIFFERENTIALS
(unaudited)
       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
Feedstocks (dollars per barrel)              
Brent crude oil $ 52.21     $ 46.91     $ 52.59     $ 43.00  
Brent less West Texas Intermediate (WTI) crude oil 4.05     2.03     3.18     1.80  
Brent less Alaska North Slope (ANS) crude oil 0.02     2.13     0.35     1.35  
Brent less Louisiana Light Sweet (LLS) crude oil 0.57     0.38     0.77     0.02  
Brent less Argus Sour Crude Index (ASCI) crude oil 3.85     5.16     4.28     5.18  
Brent less Maya crude oil 5.66     7.88     7.54     8.73  
LLS crude oil 51.64     46.53     51.82     42.98  
LLS less ASCI crude oil 3.28     4.78     3.51     5.16  
LLS less Maya crude oil 5.09     7.50     6.77     8.71  
WTI crude oil 48.16     44.88     49.41     41.20  
               
Natural gas (dollars per million British Thermal Units) 2.91     2.80     3.00     2.27  
               
Products (dollars per barrel, unless otherwise noted)              
U.S. Gulf Coast:              
CBOB gasoline less Brent 14.36     9.69     11.17     9.54  
Ultra-low-sulfur diesel less Brent 15.89     10.63     12.67     9.34  
Propylene less Brent (1.74 )   (2.76 )   (0.16 )   (5.65 )
CBOB gasoline less LLS 14.93     10.07     11.94     9.56  
Ultra-low-sulfur diesel less LLS 16.46     11.01     13.44     9.36  
Propylene less LLS (1.17 )   (2.38 )   0.61     (5.63 )
U.S. Mid-Continent:              
CBOB gasoline less WTI 19.28     14.15     15.38     12.64  
Ultra-low-sulfur diesel less WTI 21.99     15.36     16.86     12.70  
North Atlantic:              
CBOB gasoline less Brent 17.72     11.12     12.99     12.02  
Ultra-low-sulfur diesel less Brent 17.06     11.52     13.78     10.74  
U.S. West Coast:              
CARBOB 87 gasoline less ANS 22.11     17.68     20.63     18.86  
CARB diesel less ANS 20.46     14.83     16.54     13.58  
CARBOB 87 gasoline less WTI 26.14     17.58     23.46     19.31  
CARB diesel less WTI 24.49     14.73     19.37     14.03  
New York Harbor corn crush (dollars per gallon) 0.31     0.35     0.28     0.24  
                       
See Notes to Earnings Release Tables.
 


VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE TABLES
OTHER FINANCIAL DATA
(millions of dollars)
(unaudited)
               
          September 30,   December 31,
          2017   2016
Balance sheet data              
Current assets         $ 17,442     $ 16,800  
Cash and temporary cash investments included in current assets   5,176     4,816  
Inventories included in current assets         6,137     5,709  
Current liabilities         9,130     8,328  
Current portion of debt and capital lease obligations included
in current liabilities
  121     115  
Debt and capital lease obligations, less current portion       8,364     7,886  
Total debt and capital lease obligations         8,485     8,001  
Valero Energy Corporation stockholders’ equity       20,370     20,024  
               
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2017   2016   2017   2016
Cash flow data              
Net cash provided by operating activities $ 1,037     $ 863     $ 3,822     $ 3,822  
                               
See Notes to Earnings Release Tables.
 

VALERO ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO EARNINGS RELEASE TABLES

(a) During the nine months ended September 30, 2016, we recorded a change in our lower of cost or market inventory valuation reserve that was established on December 31, 2015, resulting in a noncash benefit of $747 million ($697 million and $50 million attributable to our refining and ethanol segments, respectively).

(b) Other operating expenses reflect expenses that are not associated with our cost of sales, which for the third quarter of 2017, includes costs incurred at certain of our United States (U.S.) Gulf Coast refineries and certain VLP assets due to damage associated with Hurricane Harvey.

(c) Effective October 1, 2016, we (i) transferred ownership of all of our assets in Aruba, other than certain hydrocarbon inventories and working capital, to Refineria di Aruba N.V., an entity wholly-owned by the Government of Aruba (GOA), (ii) settled our obligations under various agreements with the GOA, including agreements that required us to dismantle our leasehold improvements under certain conditions, and (iii) sold the working capital of our Aruba operations, including hydrocarbon inventories, to the GOA, CITGO Aruba Refining N.V., and CITGO Petroleum Corporation. We refer to this transaction as the “Aruba Disposition.”

In June 2016, we recognized an asset impairment loss of $56 million representing all of the remaining carrying value of the long-lived assets of our crude oil and refined product terminal and transshipment facility in Aruba.

In September 2016 and in connection with the Aruba Disposition, our U.S. subsidiaries cancelled all outstanding debt obligations owed to them by our Aruba subsidiaries, which resulted in the recognition by us of an income tax benefit in the U.S. of $42 million during the three and nine months ended September 30, 2016.

(d) Effective January 1, 2017, 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 — VLP. The results of the VLP segment, which include the results of our majority-owned master limited partnership referred to by the same name, were transferred from the refining segment. Comparable prior period information for our refining segment (as well as that segment’s U.S. Gulf Coast and U.S. Mid-Continent regions) and VLP segment has been retrospectively adjusted to reflect our current segment presentation.

(e) We use certain financial measures (as noted below) in the earnings release tables and accompanying earnings release that are not defined under U.S. generally accepted accounting principles (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 lower of cost or market inventory valuation adjustment, its related income tax effect, the asset impairment loss, and the income tax benefit on the Aruba Disposition. We believe that these items are not indicative of our core operating performance and that their exclusion results in an important measure for our ongoing financial performance to better assess our underlying business results and trends.
  • 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 segment operating income excluding the lower of cost or market inventory valuation adjustment, operating expenses (excluding depreciation and amortization expense), other operating expenses, depreciation and amortization expense, and the asset impairment loss. 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 segment operating income excluding the lower of cost or market inventory valuation adjustment, operating expenses (excluding depreciation and amortization expense), and depreciation and amortization expense. 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 segment operating income is defined as refining segment operating income excluding other operating expenses, the lower of cost or market inventory valuation adjustment, and the asset impairment loss. We believe adjusted refining segment 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 segment operating income is defined as ethanol segment operating income excluding the lower of cost or market inventory valuation adjustment. 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 VLP segment operating income is defined as VLP segment operating income excluding other operating expenses. We believe this is an important measure of our VLP segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance.

(f) 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.

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

(h) 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 and per gallon of production amounts are calculated by dividing the associated dollar amount by the throughout volumes, production volumes, pipeline transportation throughput volumes, or terminaling throughput volumes for the period, as applicable.

Throughput volumes, production volumes, pipeline transportation throughput volumes, and terminaling throughput volumes are calculated by multiplying throughput volumes per day, production volumes per day, pipeline transportation throughput volumes per day, and terminaling throughput volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period.

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