Valero Energy Corporation (NYSE: VLO, “Valero”) today reported net income attributable to Valero stockholders of $1.3 billion, or $2.38 per share, for the fourth quarter of 2013 compared to net income attributable to Valero stockholders of $1.0 billion, or $1.82 per share, for the fourth quarter of 2012. The fourth quarter 2013 results include a nontaxable gain of $325 million, or $0.60 per share, related to the disposition of Valero’s retained interest in CST Brands, Inc. Excluding this item, fourth quarter 2013 net income attributable to Valero stockholders was $963 million, or $1.78 per share. The fourth quarter 2012 results include a noncash asset impairment loss of $37 million after taxes, or $0.06 per share. Excluding this item, fourth quarter 2012 net income attributable to Valero stockholders was $1.05 billion, or $1.88 per share.
For the year ended December 31, 2013, net income attributable to Valero stockholders was $2.7 billion, or $4.97 per share. The 2013 results include the previously noted nontaxable gain on the disposition of Valero’s retained interest in CST Brands, as well as after-tax charges to general and administrative expenses of $20 million and income tax expense of $9 million related to the May 1 spinoff of 80 percent of the outstanding equity in CST Brands to Valero’s stockholders. Excluding these items, net income attributable to Valero stockholders was $2.4 billion, or $4.42 per share.
“We had a great fourth quarter and ended the year on a strong note,” said Valero Chairman and CEO Bill Klesse. “Our refineries and ethanol plants ran well and at a high utilization rate in the fourth quarter. In refining, we took advantage of favorable crude oil discounts at most locations, while our ethanol business enjoyed high margins and set a record-high for quarterly and annual operating income.”
Commenting on strategic accomplishments in the fourth quarter, Klesse said, “In addition to liquidating our remaining interest in CST Brands, we successfully completed the initial public offering of common units in Valero Energy Partners LP. We plan to use this master limited partnership as the primary vehicle to grow our transportation and logistics assets.”
Fourth quarter 2013 operating income was $1.6 billion versus operating income of $1.6 billion in the fourth quarter of 2012. Year-over-year decreases in operating income in the refining segment and the spun-off retail segment were mostly offset by an increase in operating income in the ethanol segment.
The decrease in refining segment operating income from the fourth quarter of 2012 to the fourth quarter of 2013 was mainly due to an increase in depreciation and amortization expense, an increase in operating expenses due largely to higher energy costs, and a decrease in throughput margin. The decrease in throughput margin was primarily due to a decrease in gasoline and diesel margins, which was partially offset by an increase in sour crude oil discounts versus Brent crude oil and an increase in throughput volumes. Fourth quarter 2013 refining throughput volumes averaged 2.8 million barrels per day, an increase of 139,000 barrels per day from the fourth quarter of 2012.
Valero’s ethanol segment earned operating income of $269 million in the fourth quarter of 2013, versus $12 million in the fourth quarter of 2012. The increase in operating income was attributed to significantly higher gross margins per gallon caused by a decrease in corn prices and low industry ethanol inventories, combined with production volumes at a record high quarterly average of 3.6 million gallons per day. In 2013, the ethanol segment earned $491 million in operating income versus an operating loss of $47 million in 2012.
Regarding cash flows in the fourth quarter of 2013, capital expenditures were $538 million, of which $107 million was for turnarounds and catalyst. Valero paid $120 million in dividends on its common stock and $339 million to purchase approximately 8.3 million shares of its common stock, bringing the total 2013 stock purchases to 22.4 million shares at a cost of $928 million. Other sources of cash flow in the fourth quarter of 2013 were net proceeds of $369 million from the offering of common units in Valero Energy Partners LP as well as $448 million of net proceeds, including $19 million in associated fees, from the disposition of the remaining interest in CST Brands. Valero ended 2013 with $6.6 billion in total debt and $4.3 billion of cash and temporary cash investments, of which $375 million was held by Valero Energy Partners LP. Subsequent to year end, Valero continued to return cash to stockholders by purchasing four million shares of its common stock for $208 million.
Valero’s 2013 capital expenditures, including turnarounds and catalyst, were $2.76 billion, which was below previous guidance. Valero expects 2014 capital expenditures, including turnarounds and catalyst, to be approximately $3 billion, as previously announced.
“We continue to execute our overall strategy of creating long-term stockholder value,” Klesse said. “We are pursuing strategic investments that increase our capability to process light crude oil, increase our distillates yield, and convert more natural gas into liquids. While making these investments, we continue to return cash to stockholders by increasing our regular dividend and buying our stock. We believe that, as we continue to lower costs and improve reliability, our stockholder value will increase.”
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. Through subsidiaries, Valero owns the general partner of Valero Energy Partners LP (NYSE: VLP), a midstream master limited partnership. 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.
Investors: Ashley Smith, Vice President – Investor Relations, 210-345-2744
Media: Bill Day, Vice President – Media and Community Relations, 210-345-2928
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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