Valero Energy Corporation VLO reported better-than-expected fourth-quarter 2024 results, with both the bottom line and top line beating the Zacks Consensus Estimate. However, the stock price has decreased 2.3% since its earnings release on Jan. 30.
Before delving into the recently reported quarterly results, let’s understand the premium refining company’s business.
Valero Energy’s refining operations, with 15 refineries, are spread across the United States, Canada and the United Kingdom. Considering all its refineries, the company’s combined throughput capacity is 3.2 million barrels per day. VLO’s adjusted refining operating income was $441 million for the quarter.
The refining player, carrying a Zacks Rank #3 (Hold), reported fourth-quarter adjusted earnings of 64 cents per share, surpassing the Zacks Consensus Estimate of 13 cents. The bottom line was, however, lower than the year-ago quarter’s figure of $3.57. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues decreased to $30.76 billion from $35.41 billion in the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $30.73 billion.
Adjusted operating income in the Refining segment totaled $441 million, down from $1.6 billion in the year-ago quarter. The segment was affected by a significantly lower refining margin per barrel of throughput in the fourth quarter.
Despite the lower margins, Valero demonstrated its refining system's flexibility by processing a record volume of heavy sour crude, optimizing operations based on economic crude availability.
Looking ahead, Valero expects refining margins to be supported by low light product inventories leading into the driving season. The company is also progressing with an FCC Unit Optimization project at St. Charles, aimed at increasing high-value product yields, including high-octane alkylate.
In the fourth quarter, Valero’s refining throughput volumes totaled 2,995 thousand barrels per day (MBbls/d), in line with the year-ago figure. Our estimate for the same was pegged at 2,688 MBbls/d.
In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 50.4%, 8% and 20.3%, respectively, of the total volume. The remaining volume came from residuals, other feedstock, blendstocks and others.
The refining margin per barrel of throughput declined to $8.44 from the year-ago level of $12.89. Our estimate for the same was $10.8.
Exxon Mobil Corporation XOM, Chevron Corporation CVX and SLB SLB are three energy giants that have also reported fourth-quarter earnings. While ExxonMobil & SLB beat the Zacks Consensus Estimate for earnings, Chevron missed the mark.
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