EX-99.01 2 d67431exv99w01.htm EX-99.01 exv99w01
Exhibit 99.01
Valero Energy Corporation Reports First Quarter Earnings
SAN ANTONIO, April 28, 2009 — Valero Energy Corporation (NYSE: VLO) today reported first quarter 2009 net income of $309 million, or $0.59 per share. This compares to first quarter 2008 net income of $261 million, or $0.48 per share, which included a pre-tax benefit of $101 million, or $0.12 per share, for an insurance recovery related to the first quarter 2007 fire at the McKee refinery.
First quarter 2009 operating income was $507 million versus $472 million in the first quarter of 2008, or $371 million without the previously mentioned insurance recovery. The increase in operating income was mainly due to higher refining margins on gasoline and secondary products, such as fuel oil, asphalt, and petroleum coke. Also contributing to the increase in operating income versus the first quarter of 2008 was a decline in refining operating expenses due primarily to lower energy costs. Partially offsetting the increase in first quarter 2009 operating income was the significant decline in sour crude oil discounts and lower diesel and jet fuel margins. Throughput volumes also declined due to downtime at certain refineries.
“We reported positive earnings despite weaker demand,” said Bill Klesse, Valero’s Chairman of the Board and Chief Executive Officer. “In fact, our first quarter 2009 earnings per share were 23% higher than the first quarter of 2008, and 64% higher if you exclude last year’s insurance recovery. In all our regions, gasoline margins were unseasonably strong and nearly double the level in the same quarter last year. Diesel and jet fuel margins were also good in the first quarter despite being down from last year’s high levels.
“Also in the first quarter, we entered the ethanol business by agreeing to buy seven ethanol plants from VeraSun. We closed on six of the plants in April, and we should close on the last plant soon. Acquiring these assets at a time of low ethanol margins enabled us to pay only 30% of replacement cost for some of the industry’s best ethanol plants. Since it is the government’s policy to include ethanol in motor fuel, this new business segment fits strategically with our business of producing clean, quality fuels for consumers. With this acquisition, we have established a sizable, strategic position within the ethanol business. Looking forward, we expect ethanol demand to grow under the federal mandate and catch up with production capacity by 2010.”
Regarding cash flows in the first quarter of 2009, the company’s capital spending was $902 million, of which $167 million was for turnaround and catalyst expenditures. The company paid $77 million in dividends on its common stock and issued $1 billion of

1

 

senior unsecured notes. The company ended the quarter with $1.7 billion in cash and temporary cash investments.
“Our successful bond offering allowed us in April to pay down $200 million of maturing debt, fund our acquisition of the ethanol plants, and maintain our capital investment program,” Klesse said. “To further conserve cash, we reviewed our capital budget again and identified $200 million in additional reductions. This reduces our estimated 2009 capital spending to $2.5 billion from the previously announced $2.7 billion estimate.
“Demand for refined products is clearly down from last year due to the decline in economic activity and rising unemployment. However, better-than-expected gasoline fundamentals have supported margins so far this year. With pump prices around 40% lower than this time last year, gasoline demand could improve with the summer driving season. Recovery in demand for diesel and jet fuel could take longer, since those products are tied more closely to economic activity. The poor economic environment that is hurting so many people continues to adversely affect demand for our products.
“Politically, there are many different ideas and proposals being offered. Some proposals in Congress unfairly raise taxes and costs on certain businesses, including the U.S. refining industry, which would make it less competitive in the global economy and lead to higher domestic fuel prices. It is true that our country imports some refined products and significant volumes of crude oil from all over the world, but the refining jobs and investments are here. Our country must not allow the rhetoric around our dependence on foreign oil to lead America to become more dependent on foreign refined products. Refiners pay taxes, provide good-paying jobs, and efficiently make products that improve lives. These jobs should stay in America.
“As we have seen in the past, the refining business continues to be volatile and cyclical. To make it through these difficult times, we will continue to manage our balance sheet and reduce costs while prudently investing for higher, long-term shareholder returns. As always, operating safely, reliably, and in environmental compliance remains our top priority,” Klesse said.
Valero’s senior management will hold a conference call at 11 a.m. ET (10 a.m. CT) today to discuss this earnings release and provide an update on company operations. A live broadcast of the conference call will be available on the company’s web site at www.valero.com.
Valero Energy Corporation is a Fortune 500 company based in San Antonio with approximately 22,000 employees and 2008 revenues of $119 billion. The company owns and operates 16 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately three million barrels per day, making it the largest refiner in North America. Valero is also a leading ethanol producer with six

2

 

ethanol plants in the Midwest at a combined capacity of 670 million gallons per year, and is one of the nation’s largest retail operators with approximately 5,800 retail and branded wholesale outlets in the United States, Canada and the Caribbean under the Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon brands. Please visit www.valero.com for more information.
Statements contained in this release that state the company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,” “expect,” “should,” “could,” “estimates,” and other similar expressions identify forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see Valero’s annual reports on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission and on Valero’s website at www.valero.com.
-30-

3

 

VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2009     2008 (1)  
STATEMENT OF INCOME DATA:
                
Operating Revenues (2)
  $ 13,824     $ 27,945  
 
            
 
                
Costs and Expenses:
                
Cost of Sales
     11,628       25,669  
Refining Operating Expenses
    997       1,114  
Retail Selling Expenses
     169       188  
General and Administrative Expenses
     145       135  
Depreciation and Amortization Expense
     378       367  
 
            
Total Costs and Expenses
     13,317       27,473  
 
            
 
                
Operating Income
    507       472  
 
                
Other Income (Expense), Net
    (1 )     20  
 
                
Interest and Debt Expense:
                
Incurred
     (119 )     (116 )
Capitalized
    40       19  
 
            
 
                
Income Before Income Tax Expense
     427       395  
 
                
Income Tax Expense
     118       134  
 
            
 
                
Net Income
   $ 309     $ 261  
 
            
 
                
Earnings per Common Share (3)
   $ 0.60     $ 0.49  
 
                
Weighted Average Common Shares Outstanding (in millions)
    514       532  
 
                
Earnings per Common Share — Assuming Dilution
   $ 0.59     $ 0.48  
 
                
Weighted Average Common Shares Outstanding—Assuming Dilution (in millions)
    519       541  
                 
    March 31,     December 31,  
    2009     2008  
BALANCE SHEET DATA:
                
Cash and Temporary Cash Investments
   $ 1,715     $ 940  
 
                
Total Debt
  $ 7,576     $ 6,576  

 

 

VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2009     2008 (1)  
Operating Income (Loss) by Business Segment:
                
Refining
   $ 607     $ 568  
 
            
Retail:
                
U.S.
     25       14  
Canada
    31       36  
 
            
Total Retail
    56       50  
 
            
Total Before Corporate
    663       618  
Corporate
    (156 )     (146 )
 
            
Total
  $ 507     $ 472  
 
            
 
                
Depreciation and Amortization by Business Segment:
                
Refining
  $ 344     $ 331  
 
            
Retail:
                
U.S.
     17       17  
Canada
    6       8  
 
            
Total Retail
    23       25  
 
            
Total Before Corporate
    367       356  
Corporate
    11       11  
 
            
Total
  $ 378     $ 367  
 
            
 
                
Operating Highlights:
                
Refining:
                
Throughput Margin per Barrel
  $ 8.77     $ 8.48  
 
                
Operating Costs per Barrel:
                
Refining Operating Expenses
  $ 4.49     $ 4.69  
Depreciation and Amortization
     1.55       1.40  
 
            
Total Operating Costs per Barrel
  $ 6.04     $ 6.09  
 
            
 
                
Throughput Volumes (Mbbls per Day):
                
Feedstocks:
                
Heavy Sour Crude
    572       582  
Medium/Light Sour Crude
    625       656  
Acidic Sweet Crude
    112       73  
Sweet Crude
    562       629  
Residuals
    113       192  
Other Feedstocks
    171       159  
 
            
Total Feedstocks
    2,155       2,291  
Blendstocks and Other
    312       318  
 
            
Total Throughput Volumes
    2,467       2,609  
 
            
 
                
Yields (Mbbls per Day):
                
Gasolines and Blendstocks
    1,123       1,224  
Distillates
    832       872  
Petrochemicals
    61       77  
Other Products (4)
    441       438  
 
            
Total Yields
    2,457       2,611  
 
            

 

 

VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2009     2008  
Refining Operating Highlights by Region (5):
                
Gulf Coast (1):
                
Operating Income
   $ 169     $ 437  
 
                
Throughput Volumes (Mbbls per Day)
    1,315       1,380  
 
                
Throughput Margin per Barrel
  $ 7.13     $ 9.51  
 
                
Operating Costs per Barrel:
                
Refining Operating Expenses
  $ 4.19     $ 4.72  
Depreciation and Amortization
    1.51       1.31  
 
            
Total Operating Costs per Barrel
  $ 5.70     $ 6.03  
 
            
 
                
Mid-Continent:
                
Operating Income
  $ 172     $ 115  
 
                
Throughput Volumes (Mbbls per Day)
    400       412  
 
                
Throughput Margin per Barrel
  $ 9.98     $ 8.74  
 
                
Operating Costs per Barrel:
                
Refining Operating Expenses
  $ 3.74     $ 4.34  
Depreciation and Amortization
    1.47       1.33  
 
            
Total Operating Costs per Barrel
   $ 5.21     $ 5.67  
 
            
 
                
Northeast:
                
Operating Income
  $ 81     $ 5  
 
                
Throughput Volumes (Mbbls per Day)
    476       556  
 
                
Throughput Margin per Barrel
  $ 9.03     $ 6.00  
 
                
Operating Costs per Barrel:
                
Refining Operating Expenses
  $ 5.57     $ 4.50  
Depreciation and Amortization
    1.57       1.41  
 
            
Total Operating Costs per Barrel
  $ 7.14     $ 5.91  
 
            
 
                
West Coast:
                
Operating Income
  $ 185     $ 11  
 
                
Throughput Volumes (Mbbls per Day)
    276       261  
 
                
Throughput Margin per Barrel
  $ 14.40     $ 7.89  
 
                
Operating Costs per Barrel:
                
Refining Operating Expenses
  $ 5.10     $ 5.56  
Depreciation and Amortization
    1.83       1.87  
 
            
Total Operating Costs per Barrel
  $ 6.93     $ 7.43  
 
            

 

 

VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
                 
    Three Months Ended
    March 31,
    2009   2008
Retail — U.S.:
                
Company-Operated Fuel Sites (Average)
     1,004       950  
Fuel Volumes (Gallons per Day per Site)
    4,984       4,942  
Fuel Margin per Gallon
  $ 0.117     $ 0.112  
Merchandise Sales
   $ 266     $ 245  
Merchandise Margin (Percentage of Sales)
    30.4 %     30.5 %
Margin on Miscellaneous Sales
  $ 23     $ 28  
Selling Expenses
  $ 114     $ 120  
 
                
Retail — Canada:
                
Fuel Volumes (Thousand Gallons per Day)
    3,260       3,278  
Fuel Margin per Gallon
  $ 0.250     $ 0.301  
Merchandise Sales
   $ 39     $ 46  
Merchandise Margin (Percentage of Sales)
    29.9 %     28.3 %
Margin on Miscellaneous Sales
  $ 8     $ 9  
Selling Expenses
  $ 55     $ 68  
 
                
Average Market Reference Prices and Differentials
               
(Dollars per Barrel):
                
Feedstocks (at U.S. Gulf Coast):
                
West Texas Intermediate (WTI) Crude Oil
  $ 42.97     $ 97.94  
WTI Less Sour Crude Oil (6)
  $ 1.71     $ 5.84  
WTI Less Mars Crude Oil
  $ (0.78 )   $ 6.97  
WTI Less Maya Crude Oil
  $ 4.46     $ 16.81  
 
                
Products:
                
U.S. Gulf Coast:
                
Conventional 87 Gasoline Less WTI
  $ 8.14     $ 4.23  
No. 2 Fuel Oil Less WTI
  $ 10.85     $ 15.20  
Ultra-Low-Sulfur Diesel Less WTI
  $ 15.04     $ 20.37  
Propylene Less WTI
  $ (6.49 )   $ (0.77 )
U.S. Mid-Continent:
                
Conventional 87 Gasoline Less WTI
  $ 8.58     $ 4.97  
Low-Sulfur Diesel Less WTI
  $ 11.64     $ 20.92  
U.S. Northeast:
                
Conventional 87 Gasoline Less WTI
  $ 8.14     $ 3.07  
No. 2 Fuel Oil Less WTI
  $ 13.43     $ 17.76  
Lube Oils Less WTI
  $ 67.10     $ 32.29  
U.S. West Coast:
                
CARBOB 87 Gasoline Less WTI
  $ 19.13     $ 9.04  
CARB Diesel Less WTI
  $ 13.70     $ 19.95  

 

 

VALERO ENERGY CORPORATION AND SUBSIDIARIES
EARNINGS RELEASE
(Millions of Dollars, Except per Share, per Barrel, and per Gallon Amounts)
(Unaudited)
 
(1)   Effective July 1, 2008, Valero sold its Krotz Springs Refinery to Alon Refining Krotz Springs, Inc. (Alon), a subsidiary of Alon USA Energy, Inc. The nature and significance of Valero’s post-closing participation in an offtake agreement with Alon represents a continuation of activities with the Krotz Springs Refinery for accounting purposes, and as such the results of operations related to the Krotz Springs Refinery have not been presented as discontinued operations in the Statement of Income Data for the three months ended March 31, 2008. The refining operating highlights, both consolidated and for the Gulf Coast region, presented in this earnings release include the Krotz Springs Refinery for the three months ended March 31, 2008.
 
(2)   Includes excise taxes on sales by Valero’s U.S. retail system of $204 million and $194 million for the three months ended March 31, 2009 and 2008, respectively.
 
(3)   Effective January 1, 2009, Valero adopted FASB Staff Position No. EITF 03-6-1 (FSP No. EITF 03-6-1), “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” which requires restricted stock granted under Valero’s stock-based compensation plans to be treated as participating securities under the two-class method of determining basic earnings per common share. Basic earnings per common share for prior periods are to be adjusted to conform to this FSP. The adoption of FSP No. EITF 03-6-1 did not have any effect on the calculation of basic earnings per common share for the three months ended March 31, 2009 and 2008.
 
(4)   Primarily includes gas oils, No. 6 fuel oil, petroleum coke, and asphalt.
 
(5)   The regions reflected herein contain the following refineries: Gulf Coast- Corpus Christi East, Corpus Christi West, Texas City, Houston, Three Rivers, Krotz Springs (prior to its sale effective July 1, 2008), St. Charles, Aruba, and Port Arthur Refineries; Mid-Continent- McKee, Ardmore, and Memphis Refineries; Northeast- Quebec City, Paulsboro, and Delaware City Refineries; and West Coast- Benicia and Wilmington Refineries.
 
(6)   The market reference differential for sour crude oil is based on 50% Arab Medium and 50% Arab Light posted prices.