Valero Energy Corporation (NYSE:VLO), (“Valero”) today reported
adjusted net income attributable to Valero stockholders of $283
million, or $0.60 per share, for the first quarter of 2016 compared
to $964 million, or $1.87 per share, for the first quarter of
2015. Adjusted first quarter 2016 net income excludes a net
after tax benefit of $212 million, or $0.45 per share, related
to the change in the company’s lower of cost or market inventory
valuation reserve resulting from an increase in hydrocarbon
inventory values during the quarter. Actual net income
attributable to Valero stockholders for the first quarter of 2016
was $495 million, or $1.05 per share. Reconciliations of
actual to adjusted amounts are shown in the accompanying financial
tables.
“Our team’s relentless pursuit of safe,
reliable, low-cost operations delivered solid operating performance
this quarter despite lower product margins,” said Joe Gorder,
Valero Chairman, President and Chief Executive Officer. “This
strategy, combined with our system’s flexibility and complex assets
concentrated in the advantaged U.S. Gulf Coast region, are factors
that allow us to succeed in this competitive global industry.”
“We’re on track and executing our capital investment plan for
2016 that we reviewed in close collaboration with our board of
directors. Taking a disciplined approach to capital
allocation is critical to our strategy for growing Valero’s
earnings per share while also returning excess cash to
stockholders.”
“As we look beyond the first quarter, we’re
optimistic about product demand. Here in the U.S., distillate
inventories have shown favorable reductions recently, and the
summer driving season is quickly approaching, which should support
gasoline margins. We also expect the strong export demand we
experienced in the first quarter to continue.”
Valero exported 249,000 barrels per day (“BPD”)
of diesel and 138,000 BPD of gasoline in the first quarter of
2016.
RefiningThe refining segment
reported $695 million of adjusted operating income for the first
quarter of 2016, compared to $1.6 billion for the first quarter of
2015. The decline was primarily attributable to weaker
distillate margins given high refining industry production levels
and a warm winter. Other factors included narrower crude oil
discounts relative to the Brent benchmark, reduced fuel oil and
petrochemical product margins, and higher costs for renewable
identification number credits. Lower energy costs resulting
from the continued growth in North American natural gas supply
partly offset these factors.
Valero’s refineries achieved 96 percent
throughput capacity utilization and averaged 2.9 million BPD
of throughput volume in the first quarter of 2016, an increase of
169,000 BPD from the first quarter of 2015 attributable primarily
to less maintenance activity in the first quarter of 2016.
EthanolThe ethanol segment
reported $9 million of adjusted operating income for the first
quarter of 2016 compared to $12 million for the first quarter of
2015. Ethanol production volumes averaged 3.7 million gallons
per day in the first quarter of 2016, which was essentially flat
versus the first quarter of 2015. Valero expects that recent
increases in crude oil and gasoline prices should improve ethanol
margins in the second quarter of 2016.
Corporate and OtherGeneral and
administrative expenses were $156 million in the first quarter of
2016 compared to $147 million in the first quarter of 2015.
The effective tax rate of 30 percent in the first quarter of 2016
was lower than the first quarter of 2015 due primarily to a
stronger relative earnings contribution in the first quarter of
2016 from international operations with lower statutory tax
rates.
Investing and Financing
ActivitiesCapital investments totaled $479 million in the
first quarter of 2016, of which $161 million was for turnarounds
and catalyst.
Valero paid $282 million in dividends and purchased 3.8 million
shares of its common stock for $265 million, resulting in total
cash returned to stockholders of $547 million in the first quarter
of 2016. In January, Valero increased the regular quarterly
cash dividend on common stock by 20 percent to $0.60 per
share. The company continues to target a payout ratio of
75 percent of net income in 2016. Valero defines payout
ratio as the sum of dividends plus stock buybacks divided by
adjusted net income from continuing operations attributable to
Valero stockholders.
Liquidity and Financial
PositionValero ended the first quarter of 2016 with $7.3
billion of total debt and $3.8 billion of cash and temporary cash
investments, of which $102 million was held by Valero Energy
Partners LP (“VLP”). The company’s debt to capital ratio, net
of $2 billion in cash, was 20 percent.
Strategic UpdateThe $360 million, 70,000 BPD
crude unit at Corpus Christi that was completed in December ran
well and contributed as expected in the first quarter. Also
in the first quarter, Valero completed the $40 million,
15,000 BPD expansion of the gasoil hydrocracker at St.
Charles. Construction of the $400 million, 90,000 BPD crude
unit at Houston remains on track, with startup expected in the
second quarter of 2016.
The $300 million Houston alkylation project announced in January
entered the detailed engineering, procurement, and construction
phase of the development process during the quarter. This
13,000 BPD unit, which upgrades low-cost natural gas liquids into
premium-value alkylate, is expected to be completed in the first
half of 2019.
Valero continues to expect 2016 capital investments, including
turnarounds, catalyst, and joint venture investments, to be
approximately $2.6 billion. About $1.6 billion is for
turnarounds, catalyst, and asset replacements and improvements,
which are required to sustain the business. The balance is
allocated to investments to drive long-term earnings growth and is
split almost equally between refining asset optimization and
logistics projects. The company expects most of the logistics
growth capital to be eligible for future drop down to VLP.
On April 1, a subsidiary of Valero completed a
drop-down transaction to VLP consisting of the McKee Terminal
Services Business for total consideration of $240 million,
generating approximately $165 million in cash after taxes for
Valero.
“VLP continues to deliver a distribution growth
rate among the top of its peer group, which enhances its value to
Valero stockholders,” said Gorder. “With a strong balance
sheet and solid distribution coverage, VLP remains well positioned
to deliver 25 percent annual distribution growth through 2017.”
Conference CallValero’s senior management will
hold a conference call at 11 a.m. ET today to discuss this earnings
release and to provide an update on company operations and
strategy.
About ValeroValero Energy
Corporation, through its subsidiaries, is an international
manufacturer and marketer of transportation fuels, other
petrochemical products and power. Valero subsidiaries employ
approximately 10,000 people, and its assets include 15 petroleum
refineries with a combined throughput capacity of approximately 3.0
million barrels per day, 11 ethanol plants with a combined
production capacity of 1.4 billion gallons per year, a 50-megawatt
wind farm, and renewable diesel production from a joint venture.
Through subsidiaries, Valero owns the general partner of Valero
Energy Partners LP (NYSE:VLP), a midstream master limited
partnership. Approximately 7,500 outlets carry the Valero,
Diamond Shamrock, Shamrock, and Beacon brands in the United States
and the Caribbean; Ultramar in Canada; and Texaco in the United
Kingdom and Ireland. Valero is a Fortune 500 company based in
San Antonio. Please visit www.valero.com for more information.
Valero ContactsInvestors:John
Locke, Vice President – Investor Relations, 210-345-3077Karen Ngo,
Manager – Investor Relations, 210-345-4574
Media:Lillian Riojas, Director – Media Relations
and Communications, 210-345-5002
To download our investor relations mobile app,
which offers access to SEC filings, press releases, quotes, and
upcoming events, please visit Apple’s iTunes App Store for your
iPhone and iPad or Google’s Play Store for your Android mobile
device.
Safe-Harbor StatementStatements
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,” 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. 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 and quarterly
reports on Form 10-Q 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
InformationThis earnings release includes references to
financial measures that are not defined under U.S. generally
accepted accounting principles (“GAAP”). These non-GAAP measures
include adjusted net income, adjusted net income per share,
adjusted refining segment operating income, and adjusted ethanol
segment operating income. However, these non-GAAP financial
measures have been included in this earnings release to help
facilitate the comparison of operating results between periods.
See the accompanying financial tables in this earnings
release for a reconciliation of these non-GAAP measures to the most
directly comparable GAAP measures.
|
VALERO ENERGY CORPORATION AND
SUBSIDIARIES |
EARNINGS
RELEASE |
(Millions of
Dollars, Except per Share Amounts) |
(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
|
2016 |
|
|
|
2015 |
|
Statement of income data: |
|
|
|
|
|
|
|
Operating revenues (1) |
$ |
15,714 |
|
|
$ |
21,330 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of sales (excluding the lower
of cost or market inventory valuation adjustment) |
|
13,507 |
|
|
|
18,163 |
|
Lower of cost or market inventory
valuation adjustment (a) |
|
(293 |
) |
|
|
— |
|
Operating expenses |
|
1,030 |
|
|
|
1,084 |
|
General and administrative
expenses |
|
156 |
|
|
|
147 |
|
Depreciation and amortization
expense |
|
485 |
|
|
|
441 |
|
Total costs and expenses |
|
14,885 |
|
|
|
19,835 |
|
Operating income |
|
829 |
|
|
|
1,495 |
|
Other income, net |
|
9 |
|
|
|
24 |
|
Interest and debt expense, net of
capitalized interest |
|
(108 |
) |
|
|
(101 |
) |
Income before income tax
expense |
|
730 |
|
|
|
1,418 |
|
Income tax expense |
|
217 |
|
|
|
450 |
|
Net income |
|
513 |
|
|
|
968 |
|
Less: Net income attributable to
noncontrolling interests |
|
18 |
|
|
|
4 |
|
Net income attributable to Valero
Energy Corporation stockholders |
$ |
495 |
|
|
$ |
964 |
|
|
|
|
|
|
|
|
|
Earnings per common
share |
$ |
1.05 |
|
|
$ |
1.87 |
|
Weighted-average common shares
outstanding (in millions) |
|
469 |
|
|
|
513 |
|
|
|
|
|
|
|
|
|
Earnings per common share –
assuming dilution |
$ |
1.05 |
|
|
$ |
1.87 |
|
Weighted-average common shares
outstanding – assuming dilution (in millions) |
|
471 |
|
|
|
516 |
|
|
|
|
|
|
|
|
|
Dividends per common
share |
$ |
0.60 |
|
|
$ |
0.40 |
|
|
|
|
Supplemental
information: |
|
|
|
|
|
|
|
(1) Includes excise taxes on sales
by certain of our international operations |
$ |
1,395 |
|
|
$ |
1,426 |
|
|
|
|
|
|
|
|
|
See
Notes to Earnings Release. |
|
|
|
|
|
|
|
|
|
|
VALERO
ENERGY CORPORATION AND SUBSIDIARIES |
EARNINGS
RELEASE |
(Millions of
Dollars, Except per Barrel Amounts) |
(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
|
2016 |
|
|
|
2015 |
|
Operating income by business
segment: |
|
|
|
|
|
|
|
Refining |
$ |
958 |
|
|
$ |
1,641 |
|
Ethanol |
|
39 |
|
|
|
12 |
|
Corporate |
|
(168 |
) |
|
|
(158 |
) |
Total |
$ |
829 |
|
|
$ |
1,495 |
|
Operating expenses by business
segment: |
|
|
|
|
|
|
|
Refining |
|
931 |
|
|
|
964 |
|
Ethanol |
|
99 |
|
|
|
120 |
|
Total |
$ |
1,030 |
|
|
$ |
1,084 |
|
Depreciation and amortization expense by
business segment: |
|
|
|
|
|
|
|
Refining |
$ |
461 |
|
|
$ |
417 |
|
Ethanol |
|
12 |
|
|
|
13 |
|
Corporate |
|
12 |
|
|
|
11 |
|
Total |
$ |
485 |
|
|
$ |
441 |
|
Operating highlights: |
|
|
|
|
|
|
|
Refining: |
|
|
|
|
|
|
|
Throughput margin per barrel
(a) |
$ |
7.96 |
|
|
$ |
12.39 |
|
Operating costs per barrel: |
|
|
|
|
|
|
|
Operating expenses |
|
3.55 |
|
|
|
3.95 |
|
Depreciation and amortization
expense |
|
1.76 |
|
|
|
1.71 |
|
Total operating costs per
barrel |
|
5.31 |
|
|
|
5.66 |
|
Operating income per barrel |
$ |
2.65 |
|
|
$ |
6.73 |
|
Throughput volumes (thousand
barrels per day): |
|
|
|
|
|
|
|
Feedstocks: |
|
|
|
|
|
|
|
Heavy sour crude oil |
|
427 |
|
|
|
430 |
|
Medium/light sour crude oil |
|
533 |
|
|
|
377 |
|
Sweet crude oil |
|
1,172 |
|
|
|
1,145 |
|
Residuals |
|
289 |
|
|
|
257 |
|
Other feedstocks |
|
136 |
|
|
|
176 |
|
Total feedstocks |
|
2,557 |
|
|
|
2,385 |
|
Blendstocks and other |
|
322 |
|
|
|
325 |
|
Total throughput volumes |
|
2,879 |
|
|
|
2,710 |
|
Yields (thousand barrels per
day): |
|
|
|
|
|
|
|
Gasolines and blendstocks |
|
1,378 |
|
|
|
1,316 |
|
Distillates |
|
1,067 |
|
|
|
1,027 |
|
Other products (b) |
|
470 |
|
|
|
406 |
|
Total yields |
|
2,915 |
|
|
|
2,749 |
|
|
|
|
|
|
|
|
|
See Notes to
Earnings Release. |
|
|
|
|
|
|
|
|
|
|
VALERO
ENERGY CORPORATION AND SUBSIDIARIES |
EARNINGS
RELEASE |
(Millions of
Dollars, Except per Barrel Amounts) |
(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
|
2016 |
|
|
|
2015 |
|
Refining operating highlights by region
(a) (c): |
|
|
|
|
|
|
|
U.S. Gulf
Coast: |
|
|
|
|
|
|
|
Operating income |
$ |
437 |
|
|
$ |
872 |
|
Throughput volumes (thousand
barrels per day) |
|
1,693 |
|
|
|
1,527 |
|
Throughput margin per barrel |
$ |
8.03 |
|
|
$ |
11.98 |
|
Operating costs per barrel: |
|
|
|
|
|
|
|
Operating expenses |
|
3.48 |
|
|
|
3.83 |
|
Depreciation and amortization
expense |
|
1.71 |
|
|
|
1.81 |
|
Total operating costs per
barrel |
|
5.19 |
|
|
|
5.64 |
|
Operating income per barrel |
$ |
2.84 |
|
|
$ |
6.34 |
|
U.S.
Mid-Continent: |
|
|
|
|
|
|
|
Operating income |
$ |
73 |
|
|
$ |
317 |
|
Throughput volumes (thousand
barrels per day) |
|
455 |
|
|
|
432 |
|
Throughput margin per barrel |
$ |
6.95 |
|
|
$ |
13.82 |
|
Operating costs per barrel: |
|
|
|
|
|
|
|
Operating expenses |
|
3.43 |
|
|
|
3.96 |
|
Depreciation and amortization
expense |
|
1.76 |
|
|
|
1.70 |
|
Total operating costs per
barrel |
|
5.19 |
|
|
|
5.66 |
|
Operating income per barrel |
$ |
1.76 |
|
|
$ |
8.16 |
|
North
Atlantic: |
|
|
|
|
|
|
|
Operating income |
$ |
167 |
|
|
$ |
370 |
|
Throughput volumes (thousand
barrels per day) |
|
472 |
|
|
|
495 |
|
Throughput margin per barrel |
$ |
7.94 |
|
|
$ |
12.45 |
|
Operating costs per barrel: |
|
|
|
|
|
|
|
Operating expenses |
|
2.90 |
|
|
|
2.98 |
|
Depreciation and amortization
expense |
|
1.16 |
|
|
|
1.17 |
|
Total operating costs per
barrel |
|
4.06 |
|
|
|
4.15 |
|
Operating income per barrel |
$ |
3.88 |
|
|
$ |
8.30 |
|
U.S. West
Coast: |
|
|
|
|
|
|
|
Operating income |
$ |
18 |
|
|
$ |
82 |
|
Throughput volumes (thousand
barrels per day) |
|
259 |
|
|
|
256 |
|
Throughput margin per barrel |
$ |
9.34 |
|
|
$ |
12.33 |
|
Operating costs per barrel: |
|
|
|
|
|
|
|
Operating expenses |
|
5.43 |
|
|
|
6.57 |
|
Depreciation and amortization
expense |
|
3.16 |
|
|
|
2.18 |
|
Total operating costs per
barrel |
|
8.59 |
|
|
|
8.75 |
|
Operating income per barrel |
$ |
0.75 |
|
|
$ |
3.58 |
|
|
|
|
|
|
|
|
|
Operating income for regions
above |
$ |
695 |
|
|
$ |
1,641 |
|
Lower of cost or market inventory
valuation adjustment (a) |
|
263 |
|
|
|
— |
|
Total refining operating
income |
$ |
958 |
|
|
$ |
1,641 |
|
|
|
|
|
|
|
|
|
See Notes to
Earnings Release. |
|
|
|
VALERO
ENERGY CORPORATION AND SUBSIDIARIES |
EARNINGS
RELEASE |
(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
|
2016 |
|
|
|
2015 |
|
Average market reference prices and
differentials: |
|
|
|
|
|
|
|
Feedstocks (dollars per
barrel): |
|
|
|
|
|
|
|
Brent crude oil |
$ |
35.14 |
|
|
$ |
55.13 |
|
Brent less West Texas Intermediate
(WTI) crude oil |
|
1.90 |
|
|
|
6.57 |
|
Brent less Alaska North Slope (ANS)
crude oil |
|
0.69 |
|
|
|
1.44 |
|
Brent less Louisiana Light Sweet
(LLS) crude oil |
|
0.80 |
|
|
|
3.76 |
|
Brent less Mars crude oil |
|
6.00 |
|
|
|
7.43 |
|
Brent less Maya crude oil |
|
9.09 |
|
|
|
11.00 |
|
LLS crude oil |
|
34.34 |
|
|
|
51.37 |
|
LLS less Mars crude oil |
|
5.20 |
|
|
|
3.67 |
|
LLS less Maya crude oil |
|
8.29 |
|
|
|
7.24 |
|
WTI crude oil |
|
33.24 |
|
|
|
48.56 |
|
Natural gas (dollars
per million British Thermal Units) |
|
1.93 |
|
|
|
2.77 |
|
Products (dollars
per barrel, unless otherwise noted): |
|
|
U.S. Gulf Coast: |
|
|
|
|
|
|
|
CBOB gasoline less Brent |
|
7.81 |
|
|
|
7.69 |
|
Ultra-low-sulfur diesel less
Brent |
|
7.92 |
|
|
|
15.74 |
|
Propylene less Brent |
|
(2.39 |
) |
|
|
13.10 |
|
CBOB gasoline less LLS |
|
8.61 |
|
|
|
11.45 |
|
Ultra-low-sulfur diesel less
LLS |
|
8.72 |
|
|
|
19.50 |
|
Propylene less LLS |
|
(1.59 |
) |
|
|
16.86 |
|
U.S. Mid-Continent: |
|
|
|
|
|
|
|
CBOB gasoline less WTI |
|
10.00 |
|
|
|
14.70 |
|
Ultra-low-sulfur diesel less
WTI |
|
11.03 |
|
|
|
22.53 |
|
North Atlantic: |
|
|
|
|
|
|
|
CBOB gasoline less Brent |
|
10.30 |
|
|
|
8.05 |
|
Ultra-low-sulfur diesel less
Brent |
|
9.53 |
|
|
|
22.05 |
|
U.S. West Coast: |
|
|
|
|
|
|
|
CARBOB 87 gasoline less ANS |
|
17.34 |
|
|
|
19.40 |
|
CARB diesel less ANS |
|
11.19 |
|
|
|
19.16 |
|
CARBOB 87 gasoline less WTI |
|
18.55 |
|
|
|
24.53 |
|
CARB diesel less WTI |
|
12.40 |
|
|
|
24.29 |
|
New York Harbor corn crush (dollars
per gallon) |
|
0.13 |
|
|
|
0.13 |
|
|
|
|
|
|
|
|
|
See
Notes to Earnings Release. |
|
|
|
|
|
|
|
|
|
|
VALERO ENERGY CORPORATION AND
SUBSIDIARIES |
EARNINGS RELEASE |
(Millions of Dollars, Except per Gallon
Amounts) |
(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
|
2016 |
|
|
|
2015 |
|
Ethanol
(a): |
|
|
|
|
|
|
|
Operating income |
$ |
9 |
|
|
$ |
12 |
|
Production (thousand gallons per
day) |
|
3,740 |
|
|
|
3,776 |
|
Gross margin per gallon of
production |
$ |
0.35 |
|
|
$ |
0.43 |
|
Operating costs per gallon of
production: |
|
|
|
|
|
|
|
Operating expenses |
|
0.29 |
|
|
|
0.35 |
|
Depreciation and amortization
expense |
|
0.03 |
|
|
|
0.04 |
|
Total operating costs per gallon of
production |
|
0.32 |
|
|
|
0.39 |
|
Operating income per gallon of
production |
$ |
0.03 |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
Operating income from above |
$ |
9 |
|
|
$ |
12 |
|
Lower of cost or market inventory
valuation adjustment (a) |
|
30 |
|
|
|
— |
|
Total ethanol operating income |
$ |
39 |
|
|
$ |
12 |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
Balance sheet data
(d): |
|
Current assets |
$ |
14,861 |
|
$ |
14,898 |
|
Cash and temporary cash
investments ($102 and $81, respectively, held by Valero Energy
Partners LP) included in current assets |
|
3,778 |
|
|
4,114 |
|
Inventories included in
current assets |
|
6,056 |
|
|
5,898 |
|
Current liabilities |
|
6,775 |
|
|
6,994 |
|
Current portion of debt
and capital lease obligations included in current liabilities |
|
128 |
|
|
127 |
|
Debt and capital lease
obligations, less current portion |
|
7,207 |
|
|
7,208 |
|
Total debt and capital
lease obligations |
|
7,335 |
|
|
7,335 |
|
Valero Energy Corporation
stockholders’ equity |
|
20,656 |
|
|
20,527 |
|
|
Three Months EndedMarch
31, |
|
|
2016 |
|
|
|
2015 |
|
Valero Energy
Partners LP: |
|
|
|
|
|
|
|
Weighted-average limited
partner units outstanding (in millions): |
|
|
|
|
|
|
|
Common units - public (basic and
diluted) |
|
22 |
|
|
|
17 |
|
Common units - Valero (basic and
diluted) |
|
15 |
|
|
|
12 |
|
Subordinated units - Valero (basic
and diluted) |
|
29 |
|
|
|
29 |
|
Distributions
declared: |
|
|
|
Limited partner units - public |
$ |
8 |
|
|
$ |
5 |
|
Limited partner units - Valero |
|
15 |
|
|
|
11 |
|
General partner units - Valero |
|
3 |
|
|
|
1 |
|
Total distribution declared |
$ |
26 |
|
|
$ |
17 |
|
|
See
Notes to Earnings Release. |
|
|
|
VALERO
ENERGY CORPORATION AND SUBSIDIARIES |
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(a) |
(Millions of
Dollars, Except per Share Amounts) |
(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
|
2016 |
|
|
|
2015 |
|
Reconciliation of operating income by
business segment to adjusted operating income by business
segment: |
|
|
|
|
|
|
|
Refining: |
|
|
|
|
|
|
|
Actual operating income |
$ |
958 |
|
|
$ |
1,641 |
|
Lower of cost or market inventory
valuation adjustment (a) |
|
(263 |
) |
|
|
— |
|
Adjusted refining operating
income |
|
695 |
|
|
|
1,641 |
|
Ethanol: |
|
|
|
|
|
|
|
Actual operating income |
|
39 |
|
|
|
12 |
|
Lower of cost or market inventory
valuation adjustment (a) |
|
(30 |
) |
|
|
— |
|
Adjusted ethanol operating
income |
|
9 |
|
|
|
12 |
|
Corporate |
|
(168 |
) |
|
|
(158 |
) |
Total adjusted operating
income |
$ |
536 |
|
|
$ |
1,495 |
|
|
Three Months EndedMarch
31, |
|
|
2016 |
|
|
|
2015 |
|
Reconciliation of net income to adjusted
net income: |
|
|
|
|
|
|
|
Actual net income attributable to
Valero Energy Corporation stockholders |
$ |
495 |
|
|
$ |
964 |
|
Lower of cost or market inventory
valuation adjustment, after taxes (a) |
|
(212 |
) |
|
|
|
|
— |
|
Adjusted net income attributable to
Valero Energy Corporation stockholders |
$ |
283 |
|
|
$ |
|
|
964 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share –
assuming dilution: |
|
|
|
|
|
|
|
|
|
Actual |
$ |
1.05 |
|
|
|
|
$ |
1.87 |
|
Adjusted |
|
0.60 |
|
|
|
|
|
1.87 |
|
|
|
|
|
|
|
|
|
|
|
See Notes to
Earnings Release. |
|
|
|
|
|
|
|
|
|
|
|
|
VALERO
ENERGY CORPORATION AND SUBSIDIARIES |
NOTES TO
EARNINGS RELEASE |
|
|
(a) |
During the three months ended March 31, 2016, we
recorded a change in our lower of cost or market (LCM) inventory
valuation reserve that resulted in a net benefit of $293 million
($212 million after taxes), of which $263 million and $30 million
is attributable to our refining segment and ethanol segment,
respectively. In accordance with U.S. GAAP, we are required to
state our inventories at the lower of cost or market. When the
market price of our inventory falls below cost, we record an LCM
inventory valuation adjustment to write down the value to market.
In subsequent periods, the value of our inventory is reassessed and
an LCM inventory valuation adjustment is recorded to reflect the
net change in the LCM inventory valuation reserve between
periods. |
|
|
|
The LCM inventory valuation adjustment for the
three months ended March 31, 2016 has been excluded from (1) the
segment and regional throughput margins per barrel and the regional
operating income amounts for the refining segment, and (2) the
gross operating income and the gross margin per gallon of
production amounts for the ethanol segment, respectively. We have
also excluded the segment and total amounts for purposes of
computing refining segment and ethanol segment adjusted operating
income, adjusted net income attributable to Valero stockholders,
and adjusted earnings per common share - assuming dilution for the
three months ended March 31, 2016, as reflected in the
reconciliation of amounts reported under U.S. GAAP. |
|
|
(b) |
Primarily includes petrochemicals, gas oils, No.
6 fuel oil, petroleum coke, sulfur, and asphalt. |
|
|
(c) |
The 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. |
|
|
(d) |
Current assets and current liabilities as of
December 31, 2015 have been retrospectively adjusted to reflect the
adoption of amendments to Accounting Standard Codification (ASC)
Topic 740, “Income Taxes”. The amendments require that deferred
income tax liabilities and assets be classified as noncurrent in
the balance sheet. As of December 31, 2015, current deferred income
tax assets and current income tax liabilities totaled $74 million
and $366 million, respectively. |
|
|
|
Debt and capital lease obligations, less current
portion, and total debt and capital lease obligations as of
December 31, 2015 have been retrospectively adjusted to reflect the
adoption of amendments to ASC Subtopic 835-30, “Interest-Imputation
of Interest”. The amendments require that debt issuance costs
related to a note be reported in the balance sheet as a direct
deduction from the face amount of that note. As of December 31,
2015, debt issuance costs associated with issued debt totaled $42
million. |
|
|
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