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Valero Energy (VLO) Q4 Earnings & Revenues Beat Estimates

·4-min read

Valero Energy Corporation VLO reported fourth-quarter 2021 adjusted earnings of $2.47 per share, improving from a loss of $1.06 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $1.79 per share.

Total revenues increased from $16,604 million in the prior-year quarter to $35,903 million. The top line also surpassed the Zacks Consensus Estimate of $28,627 million.

The strong quarterly results of Valero Energy were supported by increased refinery throughput volumes and a higher refining margin.

Segmental Performance

Adjusted operating income in the Refining segment amounted to $1,095 million, turning around from a loss of $476 million in the year-ago quarter. Higher refinery throughput volumes aided the segment.

In the Ethanol segment, Valero Energy reported an adjusted operating profit of $475 million, up from $17 million in the year-ago quarter. Higher ethanol production volumes aided the segment. Production increased to 4,402 thousand gallons per day from 4,124 thousand gallons a year ago.

Operating income at the Renewable Diesel segment increased to $152 million from $127 million in the year-ago quarter owing to higher renewable diesel sales volumes, which increased to 1,592 thousand gallons per day from 618 thousand gallons a year ago.

Throughput Volumes

For the quarter, Valero Energy’s refining throughput volumes were 3,033 MBbls/d, up from 2,550 MBbls/d in fourth-quarter 2020.

In terms of feedstock composition, sweet crude, medium/light sour crude, and heavy sour crude accounted for 53.4%, 9.9%, and 11.2%, respectively, of its total volume. The remaining volumes came from residuals, other feedstock and blendstocks and others.

The Gulf Coast contributed approximately 59.2% to total throughput volume. Mid-Continent, North Atlantic, and West Coast regions accounted for 16%, 16.2%, and 8.5%, respectively, of the total throughput volume.

Throughput Margins

Refining margin per barrel of throughput increased to $10.73 from the year-ago level of $4.64. Refining operating expenses per barrel of throughput was $4.86 compared with $4.40 in the year-ago quarter. Depreciation and amortization expenses declined to $1.95 a barrel from $2.27 in the prior-year quarter. As such, Valero Energy’s adjusted refining operating income was recorded at $3.92 per barrel of throughput against the year-ago loss of $2.03.

Cost of Sales

Valero Energy’s total cost of sales surged to $33,993 million from the year-ago figure of $16,834 million, primarily due to the higher cost of materials and increased operating expenses.

Capital Investment & Balance Sheet

The fourth-quarter capital investment totaled $752 million. Of the total amount, $353 million was allotted for sustaining the business. Through the December quarter, the leading independent refiner and marketer of petroleum products returned $401 million to stockholders as dividend payments.

At the quarter-end, Valero Energy had cash and cash equivalents of $4,122 million. As of Dec 31, 2021, it had total debt and finance lease obligations of $13,870 million.

Zacks Rank & Stock to Consider

Valero Energy currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Murphy USA Inc. MUSA, Exxon Mobil Corporation XOM and Phillips 66 PSX. While Murphy USA and ExxonMobil sport a Zacks Rank #1 (Strong Buy), Phillips 66 carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is well-positioned to gain from improving gasoline demand in the coming months since it is a prominent retailer of gasoline and convenience merchandise. With a network of retail gasoline and convenience stores in 27 states, Murphy USA is able to serve an estimated two million customers every day.

In the past 30 days, Murphy USA has witnessed upward earnings estimate revisions for 2022.

A favorable oil pricing scenario is a boon for ExxonMobil’s upstream operations. ExxonMobil has a pipeline of key projects in the Permian — the most prolific basin in the United States — and offshore Guyana. In the Permian, ExxonMobil has an inventory of more than 8,000 well locations, with the integrated energy major estimating a net of 10 billion oil-equivalent barrels of recoverable resource.

In offshore Guyana, ExxonMobil made several discoveries which XOM estimated at more than 9 billion oil-equivalent barrels of recoverable resource.

Phillips 66 is a diversified energy player with operations spreading across refining, midstream, chemicals and marketing. In each of its business segments, Phillips 66 is a leading player, making its business model more stable compared with pure-play refining players.

In the past 60 days, Phillips 66 has witnessed upward earnings estimate revisions for 2021 and 2022, respectively.


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