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Valero Energy (VLO) Q3 Earnings Surpass Estimates, Sales Lag

Valero Energy CorporationVLO posted adjusted third-quarter 2018 profit of $2.01 per share, which surpassed the Zacks Consensus Estimate of $1.95 and the year-ago figure of $1.91. Higher throughput volumes along with impressive capacity utilization supported the better-than-expected results.

Total revenues grew 30.9% year over year to $30,849 million. The top line, however, missed the Zacks Consensus Estimate of $31,820 million.

Valero Energy Corporation Price, Consensus and EPS Surprise

Valero Energy Corporation Price, Consensus and EPS Surprise | Valero Energy Corporation Quote

Refining Segment

While the company benefited from higher throughput levels, lower margins from gasoline and secondary products reduced the total income from the refining segment to $1.3 billion vis a vis $1.4 billion recorded in the year-ago quarter.

During the quarter, refining throughput volumes were approximately 3.1 million barrels per day, up from 2.9 million in the year-ago quarter. Capacity utilization rate in the reported quarter was 99%, higher than 92% achieved in the corresponding quarter of 2017.

By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 54.4%, 15.1% and 16.6%, respectively. The remaining volumes came from blendstocks and others.

Notably, the Gulf Coast accounted for approximately 59.2% of the total throughput volumes. The Mid-Continent, North Atlantic and West Coast regions contributed 14.8%, 16.4% and 9.6%, respectively.

On a negative note, company-wide throughput margins decreased to $10.00 per barrel from the year-ago level of $10.94.

Refining operating expense per barrel was $3.67 compared with $3.75 in the year-ago quarter. Depreciation and amortization expenses per barrel of throughput also decreased 4% year over year to $1.64.

Ethanol Segment

Operating income from the segment came in at $21 million, reflecting a massive decline of 74.4% from the year-ago figure, amid lower ethanol prices . Notably, the figure also lagged the Zacks Consensus Estimate of $44.2 million.

VLP Segment

The midstream segment of the firm generated operating income of $90 million compared with $69 million recorded in the year-ago quarter. Higher contributions from Port Arthur terminal assets and Parkway Pipeline drove the results. The figure also topped the Zacks Consensus Estimate of $88 million.

Capital Expenditure

Third-quarter capital expenditure was $604 million, including $435 million for turnarounds and catalyst expenditures. For 2018, the company reiterated its capital expenditure of $2.7 billion, in line with the 2017 level. Of this, $1.0 billion will be allocated toward growth projects and $1.7 billion for sustaining the business.

Balance Sheet

At the end of the quarter, the company had cash and temporary cash investments of $3.6 billion, along with debt of $9.1 billion, representing a debt-to-capital ratio of 24%. Valero Energy rewarded its shareholders with dividends and share buybacks worth $775 million.

Zacks Rank & Stocks to Consider

Currently, Valero Energy carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Murphy Oil Corporation MUR , Eni SpA E and Range Resources Corporation RRC , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Murphy Oil pulled off an average positive earnings surprise of 96.50% in the last four quarters.

Eni delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Range Resources delivered an average positive earnings surprise of 47.48% in the last four quarters.

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Valero Energy Corporation (VLO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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