Valero Energy Corporation ("Valero," NYSE: VLO) today reported net income attributable to Valero stockholders of $466 million, or $0.85 per share, for the second quarter of 2013 compared to net income attributable to Valero stockholders of $831 million, or $1.50 per share, for the second quarter of 2012. Included in the second quarter 2013 results were after-tax charges to general and administrative expenses of $20 million, or $0.04 per share, and income tax expense of $9 million, or $0.01 per share, related to the May 1 spinoff of CST Brands to Valero's stockholders. Also included in general and administrative expenses in the second quarter of 2013 were after-tax charges of $34 million related to various environmental and legal matters.
Second quarter 2013 operating income was $808 million versus operating income of $1.4 billion in the second quarter of 2012. The decrease in operating income was primarily due to lower refining throughput margins caused by significantly lower discounts for heavy sour and light crude oil, higher natural gas costs, and higher costs of Renewable Identification Numbers to comply with the U.S. federal Renewable Fuel Standard.
Second quarter 2013 refining throughput volumes averaged 2.6 million barrels per day, a decrease of 52,000 barrels per day from the second quarter of 2012. Significant turnaround and planned maintenance activity occurred at Valero's Quebec City, McKee, Meraux, and Port Arthur refineries in the second quarter of 2013.
"Valero performed well financially given the margin environment and maintenance activities," said Valero Chairman and CEO Bill Klesse. "We also returned $364 million in cash to our stockholders through dividends and stock buybacks in the second quarter. On May 1, we spun off 80 percent of the outstanding equity in CST Brands to our stockholders. We also entered into long-term supply agreements with CST Brands, and they became Valero's largest wholesale marketing customer.
"We recently completed two significant projects at our St. Charles refinery in connection with our strategy to increase production of high-quality diesel. At the end of June, we started up the Diamond Green Diesel joint venture biofuels plant, and in July, we started our new hydrocracker."
Valero's retail segment reported $39 million of operating income in the second quarter of 2013 prior to the May 1 spinoff of CST Brands. Subsequent to May 1, Valero reported its equity interest in the earnings of CST Brands as part of other income.
Valero's ethanol segment reported operating income of $95 million in the second quarter of 2013 versus $5 million in the second quarter of 2012. The increase in operating income was due to a higher gross margin per gallon and higher production volumes.
Regarding cash flows in the second quarter of 2013, capital expenditures were $796 million, of which $162 million was for turnarounds and catalyst. Valero paid $109 million in dividends on its common stock and $255 million to purchase 6.5 million shares of its common stock. Also, Valero received approximately $550 million of net cash from the CST Brands transaction and retired $300 million of 4.75% notes that matured in June. Valero ended the second quarter of 2013 with $2.4 billion of cash and temporary cash investments, $6.6 billion in total debt, and approximately $3 billion available under its stock purchase authorizations.
Valero expects full-year 2013 capital expenditures, including turnarounds and catalyst, to be approximately $2.85 billion, of which $1.34 billion is for growth investments. For 2014, Valero expects capital expenditures, including turnarounds and catalyst, to be in the range of $2.5 billion to $3.0 billion.
"We continue to focus on our strategy to create long-term shareholder value," Klesse said. "We plan to continue returning cash to stockholders via stock buybacks and dividends, and we also plan to strategically invest in logistics assets, hydrocracking, petrochemicals, and the processing of cost-advantaged lighter crude oil. We are evaluating the formation of a master limited partnership for our logistics assets, and we are also evaluating potential investments that leverage Valero's existing assets to upgrade cost-advantaged natural gas and natural gas liquids into higher value products."
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, through its subsidiaries, is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Valero subsidiaries employ approximately 10,500 people, and assets include 16 petroleum refineries with a combined throughput capacity of approximately 3 million barrels per day, 10 ethanol plants with a combined production capacity of 1.2 billion gallons per year, a 50-megawatt wind farm, and renewable diesel production from a joint venture. More than 7,300 outlets carry the Valero, Diamond Shamrock, Shamrock and Beacon brands in the United States and the Caribbean; Ultramar in Canada; and Texaco in the United Kingdom and Ireland. Valero is a Fortune 500 company based in San Antonio. 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," "estimates," "intend," 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.
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