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.
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.
Throughput Volumes
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.
Throughput Margins
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).
Other News
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.
Zacks Rank
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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