Valero Energy Corporation VLO reported third-quarter 2024 adjusted earnings of $1.14 per share, which missed the Zacks Consensus Estimate of $1.29. The bottom line also declined from $7.49 reported in the year-ago quarter.
Total quarterly revenues decreased from $38,404 million in the prior-year quarter to $32,876 million. The top line also missed the Zacks Consensus Estimate of $33,041 million.
The weak quarterly results can be primarily attributed to a significant decline in refining throughput volumes. Further, a decrease in refining margin per barrel of throughput contributed to the same.
Valero Energy Corporation Price, Consensus and EPS Surprise
Valero Energy Corporation price-consensus-eps-surprise-chart | Valero Energy Corporation Quote
Segmental Performance
Adjusted operating income in the Refining segment totaled $565 million, down from $3,445 million in the year-ago quarter. The figure also missed our estimate of $1,846.3 million. The segment was affected due to lower refining throughput volumes and a lower refining margin per barrel of throughput in the third quarter.
In the Ethanol segment, Valero reported an adjusted operating profit of $153 million, which was lower than the prior-year figure of $197 million. The figure, however, surpassed our estimate of $123.9 million. The segment was affected due to a decline in ethanol margin per gallon of production.
Operating income in the Renewable Diesel segment declined to $35 million from $123 million in the year-ago quarter. Renewable diesel sales volume increased to 3,544 thousand gallons per day from 2,992 a year ago. The figure, however, missed our estimate of 5,766 thousand gallons per day. The segment was affected by lower renewable diesel margins compared to the year-ago period.
Throughput Volumes
In the third quarter, Valero’s refining throughput volumes totaled 2,884 thousand barrels per day (MBbls/d), down from 3,022 MBbls/d a year ago.
In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 58%, 8.8% and 21.4%, respectively, of the total volume. The remaining volume came from residuals, other feedstock, and blendstocks and others.
The Gulf Coast contributed 62.4% to the total throughput volume. Mid-Continent, North Atlantic and West Coast regions accounted for 14.5%, 14.6% and 8.5%, respectively, of the total throughput volume.
Throughput Margins
The refining margin per barrel of throughput declined to $9.09 from the year-ago level of $19.47.
Refining operating expenses per barrel of throughput was $4.73 compared with $4.91 in the year-ago quarter.
Depreciation and amortization expenses increased to $2.22 per barrel from $2.15 in the prior-year period.
Valero’s adjusted refining operating income was $2.14 per barrel of throughput compared with $12.41 a year ago.
Cost of Sales
Total cost of sales decreased to $32,122 million from the year-ago figure of $34,634 million. The figure was also below our estimate of $32,988.3 million, primarily due to a decrease in the cost of materials and a decline in operating expenses.
Capital Investment & Balance Sheet
The third-quarter capital investment totaled $429 million, of which $338 million was allotted for sustaining the business.
The company had cash and cash equivalents of $5.2 billion at the end of the third quarter. As of Sept. 30, 2024, it had total debt of $8.4 billion and finance lease obligations of $2.5 billion.
VLO’s Zacks Rank and Key Picks
Currently, VLO carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the energy sector are Archrock Inc. AROC, Sunoco LP SUN and FuelCell Energy FCEL. Archrock presently sports a Zacks Rank #1 (Strong Buy), while Sunoco and FuelCell Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
Sunoco LP is one of the largest distributors of motor fuel in the United States. The partnership distributes fuel to independent dealers, commercial customers, convenience stores as well as distributors. Its current distribution yield is greater than that of the composite stocks in the industry, providing unitholders with consistent returns.
FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.
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