Valero Energy (VLO) Q4 2014 earnings summary

Executive summary

• Q4 adjusted earnings from continuing operations were $952M, or $1.83/share, versus $963M, or $1.78/share, in Q4 2013; FY adjusted earnings were $3.5B, or $6.68/share, versus $2.4B, or $4.41/share.

• Strategic priorities centered on operating reliability, stockholder returns, disciplined investment and unlocking asset value; the 2014 capital program was completed under budget.

Financial highlights

• Q4 reported continuing-operations earnings were $1.2B, or $2.22/share; FY reported earnings were $3.7B, or $6.97/share.

• Q4 refining operating income was $1.9B versus $1.5B YoY; nearly all of the $377M increase came from special items, and adjusted operating income was flat YoY.

• Q4 G&A excluding corporate depreciation was $214M, up $35M YoY, primarily due to legal reserve changes; net interest was $101M and D&A was $425M.

Outlook and guidance

• Q1 throughput guidance: Gulf Coast 1.45–1.50M b/d; Mid-Continent 430–450K; West Coast 240–260K; North Atlantic 450–470K.

• Q1 refining cash operating expense guidance was $4.20/bbl, reflecting exceptional late-quarter turnarounds and lower planned volumes; heavy-sour runs were not expected to raise costs.

• Q1 ethanol production guidance was 3.7M gal/day, with operating expense of $0.37/gal, including $0.04/gal of non-cash costs; G&A was ~$170M, net interest ~$100M, D&A ~$440M and tax rate ~33%.

• FY2015 capital spending guidance was ~$2.65B, including $1.5B stay-in-business and $1.15B growth; FY2016 was ~$2.4B, including $1.4B and $1.0B, respectively. St. Charles methanol spending was excluded.

• Ethanol margins were expected to remain low in a $50 crude environment, but the fleet was expected to remain profitable overall.