Valero Energy Corporation VLO posted adjusted first-quarter 2015 earnings of $1.87 per share beating the Zacks Consensus Estimate of $1.74 by 7.5%.
The earnings also came in above the year-ago adjusted income of $1.54 per share. The bottom-line growth was bolstered by higher refining throughput margins in each of the company’s regions.
Total revenue in the quarter surpassed the Zacks Consensus Estimate of $15,799 million but decreased 36.6% year over year to $21,330 million from $33,663.0 million.
Throughput Volumes
During the quarter, refining throughput volumes were 2.71 million barrels per day, marginally higher than the year-earlier level of 2.7 million barrels per day. This was primarily backed by major turnaround, maintenance and repair activities at refineries in Valero’s U.S. Gulf Coast region.
By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 42%, 14% and 16%, respectively. The remaining volumes came from residuals, other feedstock as well as blendstocks and others.
The Gulf Coast accounted for about 56% of the total volume, while the Mid-Continent, North Atlantic and West Coast regions accounted for 16%, 18% and 10%, respectively.
Throughput Margins
Company-wide throughput margins increased to $12.39 per barrel from the year-ago level of $10.90 per barrel. The increase was backed by higher discounts for light sweet and sour crude oil.
Average throughput margin realized was $11.98 per barrel in the U.S. Gulf Coast (up from $11.47 per barrel in the year-earlier period), $13.82 per barrel in the U.S. Mid-Continent (up from $12.60), $12.45 per barrel in the North Atlantic (up from $9.47) and $12.33 per barrel in the U.S. West Coast (up from $7.24).
Total operating cost per barrel was $5.66 during the quarter, up 0.5% from the prior-year figure of $5.63. Refining operating expenses per barrel were $3.95 as against $3.99 in the year-ago quarter. However, unit depreciation and amortization expenses increased 4.3% year over year to $1.71 per barrel.
Capital Expenditure & Balance Sheet
First-quarter capital expenditure totaled $698.0 million, which included $240 million for turnarounds and catalyst expenditures. At the end of the quarter, the company had cash and temporary cash equivalents of $4.9 billion. Valero also rewarded shareholders $206 million through dividends and repurchased 5.4 million shares for $325 million.
Valero expects its total capital spending projection for 2015 at around $2.65 billion, which include spending for turnarounds, catalyst expenditures as well as expenses for the retail segment. About $1.5 billion of the above-mentioned capital spending is apportioned for stay-in-business capital and the other $1.15 billion is for growth investments. It, however, excludes $150 million for a St. Charles methanol project that remains under evaluation. A majority of the growth investments in 2015 is to be allocated for light crude oil processing and logistics.
Zacks Rank
The stock holds a Zacks Rank #2 (Buy). Other players from the same space that are worth considering are Valero Energy Partners L.P. VLP, CNOOC Ltd CEO and Hallador Energy Company HNRG. All these stocks sport a Zacks Rank #1 (Strong Buy).
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