Valero Energy Corp. (VLO) posted a first quarter loss from continuing operations of 18 cents per share, better than the Zacks Consensus Estimate of a loss of 27 cents. This is the fourth consecutive quarterly loss due to the continuous struggling margin for refined products and heavy maintenance at key facilities.
In the year-ago period, the Texas-based marketer of petroleum products earned 70 cents per share. Revenues rose 47% to $19.6 billion in the reported quarter.
Throughput Volumes
Throughput volumes during the quarter were 2.1 million barrels per day, down nearly 11% year over year, primarily reflecting a reduction in sour crude volumes.
By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 31%, 22% and 21% of the total, respectively. The remaining volumes came from residuals, blend-stocks and other feedstocks.
The Gulf Coast accounted for approximately 54% of total volumes. The Mid-continent, Northeast and West Coast regions accounted for 17%, 16% and 13% of the total, respectively.
Throughput Margins
Company-wide throughput margins decreased over 35% year over year to $5.79 per barrel, as all regions witnessed substantially reduced margins. Average throughput margin realized in the Gulf Coast was $6.08 per barrel (down almost 15% year over year), the Mid-Continent was $5.34 per barrel (down more than 46%), the Northeast was $5.80 per barrel (down more than 40%) and the West Coast reached $5.20 per barrel (down approximately 64%).
Costs
Cash operating cost per barrel was $6.06 during the quarter, up more than 10% from the year-earlier quarter. The unit depreciation and amortization expenses increased nearly 11% to $1.65 per barrel.
Capital Expenditure & Balance Sheet
First-quarter capital spending totaled $611 million, of which $229 million was for turnarounds. At the end of the quarter, the company had cash and cash equivalents of approximately $1.89 billion and total debt of approximately $8.4 billion.
Outlook
Given the weak refining margin environment, Valero has taken certain strategic measures to improve its performance and competitiveness in a cost-effective manner. As part of this effort, Valero has recently sold its Delaware City refinery for $220 million.
While margins for gasoline, diesel and other products in some markets are showing improvement amid rising demand, we appreciate the company’s tangible initiatives towards developing earnings and returns via idling/selling loss-making refineries and cost-saving initiatives.
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