Valero Energy Corporation ( VLO ) reported stellar second-quarter 2014 results, which also marked the company's fourth consecutive earnings beat. The performance benefited from higher refining throughput volumes.
The company reported second-quarter 2014 earnings from continuing operations of $1.22 per share, beating the Zacks Consensus Estimate of $1.19. The bottom line also improved from the year-ago quarter level of 84 cents per share.
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Total revenue in the quarter increased 2.6% year over year to $34,914 million and also comfortably surpassed the Zacks Consensus Estimate of $31,761 million.
During the quarter, refining throughput volumes were approximately 2.7 million barrels per day, up from the year-earlier level of 2.6 million barrels a day. This was primarily backed by lower turnaround activity and higher utilization rates.
By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 39.8%, 17.3% and 15.7%, respectively. The remaining volumes came from residuals, other feedstock as well as blendstocks and others.
The Gulf Coast constituted 57.6% of the total volume. The Mid-Continent, North Atlantic and West Coast regions accounted for 15.7%, 17% and 9.8%, respectively.
Company-wide throughput margins increased to $9.84 per barrel from the year-ago level of $9.26 per barrel.
Average throughput margin realized was $10.03 per barrel in the U.S. Gulf Coast (up from $8.12 per barrel in the year-earlier period), $12.07 per barrel in the U.S. Mid-Continent (down from $14.20), $7.78 per barrel in the North Atlantic (up from $7.18) and $8.66 per barrel in the U.S. West Coast (down from $10.81).
Total operating cost per barrel was $5.48 during the quarter, up 1.7% from the year-earlier figure of $5.39. Refining operating expenses per barrel were $3.90 versus $3.83 in the year-ago quarter. Unit depreciation and amortization expenses increased 1.3% year over year to $1.58 per barrel.
Capital Expenditure & Balance Sheet
Second quarter capital expenditure totaled $806.0 million, including $240 million for turnarounds and catalyst expenditures. At the end of the quarter, the company had cash and temporary cash investments of $3.48 billion. Valero also rewarded shareholders $133 million through dividends.
Notably, Valero Energy maintained its total capital spending projection for 2014 at around $3 billion that includes about $870 million allocated to logistics investments. A major portion of these logistics assets are expected to be dropped down to Valero Energy Partners LP ( VLP ).
Valero announced that it has closed the sale of some logistics assets to Valero Energy Partners. The transaction was valued at $154 million and was completed on Jul 1.
Valero Energy currently carries a Zacks Rank #3 (Hold). Meanwhile, one can consider better-ranked players from the industry like Ferrellgas Partners LP ( FGP ) and Eagle Rock Energy Partners, L.P. ( EROC ), both of which sport a Zacks Rank #1 (Strong Buy).
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