Valero energy reports 2022 fourth quarter and full year results
San antonio--(business wire)--valero energy corporation (nyse: vlo, “valero”) today reported net income attributable to valero stockholders of $3.1 billion, or $8.15 per share, for the fourth quarter of 2022, compared to $1.0 billion, or $2.46 per share, for the fourth quarter of 2021. excluding the adjustments shown in the accompanying earnings release tables, adjusted net income attributable to valero stockholders was $3.2 billion, or $8.45 per share, for the fourth quarter of 2022, compared to $988 million, or $2.41 per share, for the fourth quarter of 2021. for 2022, net income attributable to valero stockholders was $11.5 billion, or $29.04 per share, compared to $930 million, or $2.27 per share, in 2021. excluding the adjustments shown in the accompanying earnings release tables, adjusted net income attributable to valero stockholders was $11.6 billion, or $29.16 per share, in 2022, compared to $1.2 billion, or $2.81 per share, in 2021. refining the refining segment reported operating income of $4.3 billion for the fourth quarter of 2022, compared to $1.3 billion for the fourth quarter of 2021. adjusted operating income for the fourth quarter of 2022 was $4.4 billion, compared to $1.1 billion for the fourth quarter of 2021. refining throughput volumes averaged 3.0 million barrels per day in the fourth quarter of 2022. “our refineries operated at a 97 percent capacity utilization rate in the fourth quarter, which is the highest utilization rate for our system since 2018,” said joe gorder, valero’s chairman and chief executive officer, “i am also proud to report that 2022 was valero’s best year ever for combined employee and contractor safety, which is a testament to our long-standing commitment to safe, reliable and environmentally responsible operations.” renewable diesel the renewable diesel segment, which consists of the diamond green diesel (dgd) joint venture, reported $261 million of operating income for the fourth quarter of 2022, compared to $150 million for the fourth quarter of 2021. segment sales volumes averaged 2.4 million gallons per day in the fourth quarter of 2022, which was 851 thousand gallons per day higher than the fourth quarter of 2021. the higher sales volumes were due to the impact of additional volumes from the dgd st. charles plant expansion and the fourth quarter 2022 startup of the dgd port arthur plant. ethanol the ethanol segment reported $7 million of operating income for the fourth quarter of 2022, compared to $474 million for the fourth quarter of 2021. adjusted operating income for the fourth quarter of 2022 was $69 million, compared to $475 million for the fourth quarter of 2021. ethanol production volumes averaged 4.1 million gallons per day in the fourth quarter of 2022, which was 340 thousand gallons per day lower than the fourth quarter of 2021. the higher operating income in the fourth quarter of 2021 was primarily attributed to high ethanol prices due to strong demand and low inventories. corporate and other general and administrative expenses were $282 million in the fourth quarter of 2022, compared to $286 million in the fourth quarter of 2021. general and administrative expenses were $934 million for the year. the effective tax rate for 2022 was 22 percent. investing and financing activities net cash provided by operating activities was $4.1 billion in the fourth quarter of 2022. included in this amount was a $9 million unfavorable change in working capital and $142 million of net cash provided by operating activities associated with the other joint venture member’s share of dgd, excluding changes in dgd’s working capital. excluding these items, adjusted net cash provided by operating activities was $4.0 billion in the fourth quarter of 2022. net cash provided by operating activities in 2022 was $12.6 billion. included in this amount was a $1.6 billion unfavorable impact from working capital and $436 million of net cash provided by operating activities associated with the other joint venture member’s share of dgd, excluding changes in dgd’s working capital. excluding these items, adjusted net cash provided by operating activities in 2022 was $13.8 billion. capital investments totaled $640 million in the fourth quarter of 2022, of which $349 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance. excluding capital investments attributable to the other joint venture member’s share of dgd and those related to other variable interest entities, capital investments attributable to valero were $538 million in the fourth quarter of 2022 and $2.3 billion in 2022, which was higher than the annual guidance primarily due to spend timing on the port arthur coker project and the accelerated completion of the dgd port arthur plant. valero returned 45 percent of adjusted net cash provided by operating activities to stockholders in 2022. valero continues to target a long-term total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities. valero defines total payout ratio as the sum of dividends and stock buybacks divided by net cash provided by operating activities adjusted for changes in working capital and dgd’s net cash provided by operating activities, excluding changes in its working capital, attributable to the other joint venture member’s share of dgd. valero further reduced its debt by $442 million in the fourth quarter. this reduction, combined with a series of debt reduction and refinancing transactions completed since the second half of 2021, have collectively reduced valero’s debt by over $4.0 billion. liquidity and financial position valero ended 2022 with $9.2 billion of total debt, $2.4 billion of finance lease obligations and $4.9 billion of cash and cash equivalents, compared to $13.0 billion of total debt, $1.6 billion of finance lease obligations and $2.3 billion of cash and cash equivalents at the end of the first quarter of 2021. the debt to capitalization ratio, net of cash and cash equivalents, was approximately 21 percent as of december 31, 2022, down from the pandemic high of 40 percent as of march 31, 2021. strategic update the dgd project adjacent to the port arthur refinery (dgd port arthur plant), which has a production capacity of 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha, was commissioned and started up in the fourth quarter. the project was completed under budget and ahead of the original schedule. total annual dgd production capacity is now approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha. refinery optimization projects that are expected to reduce costs and improve margin capture are progressing on schedule. the port arthur coker project is expected to be completed in the second quarter of 2023 and to increase the refinery’s throughput capacity, while also improving turnaround efficiency. blackrock and navigator’s carbon sequestration project is still expected to begin startup activities in late 2024. valero expects to be the anchor shipper with eight of its ethanol plants connected to this system, which is expected to result in the production of a lower carbon intensity ethanol product that should significantly improve the margin profile and competitive positioning of the ethanol business. “we continue to advance other low-carbon opportunities, such as sustainable aviation fuel, renewable hydrogen, and additional renewable naphtha and carbon sequestration projects,” said gorder. “our gated process helps ensure these projects meet our minimum return threshold.” conference call valero’s senior management will hold a conference call at 10 a.m. et today to discuss this earnings release and to provide an update on operations and strategy. about valero valero energy corporation, through its subsidiaries (collectively, “valero”), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and it sells its products primarily in the united states (“u.s.”), canada, the united kingdom (“u.k.”), ireland and latin america. valero owns 15 petroleum refineries located in the u.s., canada and the u.k. with a combined throughput capacity of approximately 3.2 million barrels per day. valero is a joint venture member in diamond green diesel holdings llc, which owns two renewable diesel plants located in the u.s. gulf coast region with a production capacity of approximately 1.2 billion gallons per year, and valero owns 12 ethanol plants located in the u.s. mid-continent region with a combined production capacity of approximately 1.6 billion gallons per year. valero manages its operations through its refining, renewable diesel, and ethanol segments. please visit investorvalero.com for more information. valero contacts investors: homer bhullar, vice president – investor relations and finance, 210-345-1982 eric herbort, director – investor relations, 210-345-3331 gautam srivastava, senior manager – investor relations, 210-345-3992 media: lillian riojas, executive director – media relations and communications, 210-345-5002 safe-harbor statement statements contained in this release and the accompanying tables that state valero’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,” “target,” “will,” “plans,” “forecast,” and other similar expressions identify forward-looking statements. forward-looking statements in this release and the accompanying tables include those relating to valero’s greenhouse gas emissions targets, expected timing of completion and performance of projects, future market and industry conditions, future operating and financial performance, and management of future risks. it is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of valero’s control, such as legislative or political changes or developments, market dynamics, cyberattacks, weather events, and other matters affecting valero’s operations or the demand for valero’s products. these factors also include, but are not limited to, the uncertainties that remain with respect to the russia-ukraine conflict, the impact of inflation on margins and costs, economic activity levels, the covid-19 pandemic, variants of the covid-19 virus, governmental and societal responses thereto, and the adverse effects the foregoing may have on valero’s business or economic conditions generally. for more information concerning these and other factors that could cause actual results to differ from those expressed or forecasted, see valero’s annual report on form 10-k, quarterly reports on form 10‑q, and other reports filed with the securities and exchange commission and available on valero’s website at www.valero.com. use of non-gaap financial information this earnings release and the accompanying earnings release tables include references to financial measures that are not defined under u.s. generally accepted accounting principles (gaap). these non-gaap measures include adjusted net income attributable to valero stockholders, adjusted earnings per common share – assuming dilution, refining margin, renewable diesel margin, ethanol margin, adjusted refining operating income, adjusted renewable diesel operating income, adjusted ethanol operating income, adjusted net cash provided by operating activities, and capital investments attributable to valero. these non-gaap financial measures have been included to help facilitate the comparison of operating results between periods. see the accompanying earnings release tables for a reconciliation of non-gaap measures to their most directly comparable gaap measures. note (h) to the earnings release tables provides reasons for the use of these non-gaap financial measures. valero energy corporation earnings release tables financial highlights (millions of dollars, except per share amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 statement of income data revenues $ 41,746 $ 35,903 $ 176,383 $ 113,977 cost of sales: cost of materials and other (a) (b) 34,811 31,849 150,770 102,714 operating expenses (excluding depreciation and amortization expense reflected below) (b) 1,638 1,558 6,389 5,776 depreciation and amortization expense (c) 622 586 2,428 2,358 total cost of sales 37,071 33,993 159,587 110,848 asset impairment loss (d) 61 — 61 — other operating expenses 26 18 66 87 general and administrative expenses (excluding depreciation and amortization expense reflected below) (e) 282 286 934 865 depreciation and amortization expense 11 12 45 47 operating income 4,295 1,594 15,690 2,130 other income (expense), net (f) 92 (163 ) 179 16 interest and debt expense, net of capitalized interest (137 ) (152 ) (562 ) (603 ) income before income tax expense 4,250 1,279 15,307 1,543 income tax expense (g) 1,018 169 3,428 255 net income 3,232 1,110 11,879 1,288 less: net income attributable to noncontrolling interests 119 101 351 358 net income attributable to valero energy corporation stockholders $ 3,113 $ 1,009 $ 11,528 $ 930 earnings per common share $ 8.15 $ 2.47 $ 29.05 $ 2.27 weighted-average common shares outstanding (in millions) 380 408 395 407 earnings per common share – assuming dilution $ 8.15 $ 2.46 $ 29.04 $ 2.27 weighted-average common shares outstanding – assuming dilution (in millions) 381 408 396 407 see notes to earnings release tables. valero energy corporation earnings release tables financial highlights by segment (millions of dollars) (unaudited) refining renewable diesel ethanol corporate and eliminations total three months ended december 31, 2022 revenues: revenues from external customers $ 39,566 $ 1,066 $ 1,114 $ — $ 41,746 intersegment revenues 32 528 233 (793 ) — total revenues 39,598 1,594 1,347 (793 ) 41,746 cost of sales: cost of materials and other 33,280 1,221 1,095 (785 ) 34,811 operating expenses (excluding depreciation and amortization expense reflected below) 1,398 77 161 2 1,638 depreciation and amortization expense 565 35 22 — 622 total cost of sales 35,243 1,333 1,278 (783 ) 37,071 asset impairment loss (d) — — 61 — 61 other operating expenses 25 — 1 — 26 general and administrative expenses (excluding depreciation and amortization expense reflected below) — — — 282 282 depreciation and amortization expense — — — 11 11 operating income by segment $ 4,330 $ 261 $ 7 $ (303 ) $ 4,295 three months ended december 31, 2021 revenues: revenues from external customers $ 33,521 $ 684 $ 1,698 $ — $ 35,903 intersegment revenues 7 253 174 (434 ) — total revenues 33,528 937 1,872 (434 ) 35,903 cost of sales: cost of materials and other (a) 30,342 714 1,224 (431 ) 31,849 operating expenses (excluding depreciation and amortization expense reflected below) 1,358 48 153 (1 ) 1,558 depreciation and amortization expense 543 23 20 — 586 total cost of sales 32,243 785 1,397 (432 ) 33,993 other operating expenses 15 2 1 — 18 general and administrative expenses (excluding depreciation and amortization expense reflected below) — — — 286 286 depreciation and amortization expense — — — 12 12 operating income by segment $ 1,270 $ 150 $ 474 $ (300 ) $ 1,594 see operating highlights by segment. see notes to earnings release tables. valero energy corporation earnings release tables financial highlights by segment (millions of dollars) (unaudited) refining renewable diesel ethanol corporate and eliminations total year ended december 31, 2022 revenues: revenues from external customers $ 168,154 $ 3,483 $ 4,746 $ — $ 176,383 intersegment revenues 56 2,018 740 (2,814 ) — total revenues 168,210 5,501 5,486 (2,814 ) 176,383 cost of sales: cost of materials and other (a) 144,588 4,350 4,628 (2,796 ) 150,770 operating expenses (excluding depreciation and amortization expense reflected below) 5,509 255 625 — 6,389 depreciation and amortization expense (c) 2,247 122 59 — 2,428 total cost of sales 152,344 4,727 5,312 (2,796 ) 159,587 asset impairment loss (d) — — 61 — 61 other operating expenses 63 — 3 — 66 general and administrative expenses (excluding depreciation and amortization expense reflected below) (e) — — — 934 934 depreciation and amortization expense — — — 45 45 operating income by segment $ 15,803 $ 774 $ 110 $ (997 ) $ 15,690 year ended december 31, 2021 revenues: revenues from external customers $ 106,947 $ 1,874 $ 5,156 $ — $ 113,977 intersegment revenues 14 468 433 (915 ) — total revenues 106,961 2,342 5,589 (915 ) 113,977 cost of sales: cost of materials and other (a) (b) 97,759 1,438 4,428 (911 ) 102,714 operating expenses (excluding depreciation and amortization expense reflected below) (b) 5,088 134 556 (2 ) 5,776 depreciation and amortization expense (c) 2,169 58 131 — 2,358 total cost of sales 105,016 1,630 5,115 (913 ) 110,848 other operating expenses 83 3 1 — 87 general and administrative expenses (excluding depreciation and amortization expense reflected below) — — — 865 865 depreciation and amortization expense — — — 47 47 operating income by segment $ 1,862 $ 709 $ 473 $ (914 ) $ 2,130 see operating highlights by segment. see notes to earnings release tables. valero energy corporation earnings release tables reconciliation of non-gaap measures to most comparable amounts reported under u.s. gaap (h) (millions of dollars) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of net income attributable to valero energy corporation stockholders to adjusted net income attributable to valero energy corporation stockholders net income attributable to valero energy corporation stockholders $ 3,113 $ 1,009 $ 11,528 $ 930 adjustments: modification of renewable volume obligation (rvo) (a) — (220 ) (104 ) (1 ) income tax expense related to modification of rvo — 49 23 — modification of rvo, net of taxes — (171 ) (81 ) (1 ) gain on sale of ethanol plant (c) — — (23 ) — income tax expense related to gain on sale of ethanol plant — — 5 — gain on sale of ethanol plant, net of taxes — — (18 ) — asset impairment loss (d) 61 — 61 — income tax benefit related to asset impairment loss (14 ) — (14 ) — asset impairment loss, net of taxes 47 — 47 — environmental reserve adjustment (e) — — 20 — income tax benefit related to environmental reserve adjustment — — (5 ) — environmental reserve adjustment, net of taxes — — 15 — pension settlement charge (f) 58 — 58 — income tax benefit related to pension settlement charge (13 ) — (13 ) — pension settlement charge, net of taxes 45 — 45 — loss (gain) on early redemption and retirement of debt (f) (38 ) 193 (14 ) 193 income tax (benefit) expense related to loss (gain) on early redemption and retirement of debt 9 (43 ) 3 (43 ) loss (gain) on early redemption and retirement of debt, net of taxes (29 ) 150 (11 ) 150 foreign withholding tax (g) 51 — 51 — change in estimated useful life of ethanol plant (c) — — — 48 income tax benefit related to the change in estimated useful life of ethanol plant — — — (11 ) change in estimated useful life of ethanol plant, net of taxes — — — 37 gain on sale of mvp interest (f) — — — (62 ) income tax expense related to gain on sale of mvp interest — — — 14 gain on sale of mvp interest, net of taxes — — — (48 ) diamond pipeline asset impairment loss (f) — — — 24 income tax benefit related to diamond pipeline asset impairment loss — — — (5 ) diamond pipeline asset impairment loss, net of taxes — — — 19 income tax expense related to changes in statutory tax rates (g) — — — 64 total adjustments 114 (21 ) 48 221 adjusted net income attributable to valero energy corporation stockholders $ 3,227 $ 988 $ 11,576 $ 1,151 see notes to earnings release tables. valero energy corporation earnings release tables reconciliation of non-gaap measures to most comparable amounts reported under u.s. gaap (h) (millions of dollars) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of earnings per common share – assuming dilution to adjusted earnings per common share – assuming dilution earnings per common share – assuming dilution $ 8.15 $ 2.46 $ 29.04 $ 2.27 adjustments: modification of rvo (a) — (0.42 ) (0.20 ) — gain on sale of ethanol plant (c) — — (0.05 ) — asset impairment loss (d) 0.13 — 0.12 — environmental reserve adjustment (e) — — 0.04 — pension settlement charge (f) 0.12 — 0.11 — loss (gain) on early redemption and retirement of debt (f) (0.08 ) 0.37 (0.03 ) 0.37 foreign withholding tax (g) 0.13 — 0.13 — change in estimated useful life of ethanol plant (c) — — — 0.09 gain on sale of mvp interest (f) — — — (0.12 ) diamond pipeline asset impairment loss (f) — — — 0.04 income tax expense related to changes in statutory tax rates (g) — — — 0.16 total adjustments 0.30 (0.05 ) 0.12 0.54 adjusted earnings per common share – assuming dilution $ 8.45 $ 2.41 $ 29.16 $ 2.81 see notes to earnings release tables. valero energy corporation earnings release tables reconciliation of non-gaap measures to most comparable amounts reported under u.s. gaap (h) (millions of dollars) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of operating income by segment to segment margin, and reconciliation of operating income by segment to adjusted operating income by segment refining segment refining operating income $ 4,330 $ 1,270 $ 15,803 $ 1,862 adjustments: modification of rvo (a) — (220 ) (104 ) (1 ) operating expenses (excluding depreciation and amortization expense reflected below) (b) 1,398 1,358 5,509 5,088 depreciation and amortization expense 565 543 2,247 2,169 other operating expenses 25 15 63 83 refining margin $ 6,318 $ 2,966 $ 23,518 $ 9,201 refining operating income $ 4,330 $ 1,270 $ 15,803 $ 1,862 adjustments: modification of rvo (a) — (220 ) (104 ) (1 ) other operating expenses 25 15 63 83 adjusted refining operating income $ 4,355 $ 1,065 $ 15,762 $ 1,944 renewable diesel segment renewable diesel operating income $ 261 $ 150 $ 774 $ 709 adjustments: operating expenses (excluding depreciation and amortization expense reflected below) 77 48 255 134 depreciation and amortization expense 35 23 122 58 other operating expenses — 2 — 3 renewable diesel margin $ 373 $ 223 $ 1,151 $ 904 renewable diesel operating income $ 261 $ 150 $ 774 $ 709 adjustment: other operating expenses — 2 — 3 adjusted renewable diesel operating income $ 261 $ 152 $ 774 $ 712 see notes to earnings release tables. valero energy corporation earnings release tables reconciliation of non-gaap measures to most comparable amounts reported under u.s. gaap (h) (millions of dollars) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of operating income by segment to segment margin, and reconciliation of operating income by segment to adjusted operating income by segment (continued) ethanol segment ethanol operating income $ 7 $ 474 $ 110 $ 473 adjustments: operating expenses (excluding depreciation and amortization expense reflected below) (b) 161 153 625 556 depreciation and amortization expense (c) 22 20 59 131 asset impairment loss (d) 61 — 61 — other operating expenses 1 1 3 1 ethanol margin $ 252 $ 648 $ 858 $ 1,161 ethanol operating income $ 7 $ 474 $ 110 $ 473 adjustments: gain on sale of ethanol plant (c) — — (23 ) — asset impairment loss (d) 61 — 61 — change in estimated useful life of ethanol plant (c) — — — 48 other operating expenses 1 1 3 1 adjusted ethanol operating income $ 69 $ 475 $ 151 $ 522 see notes to earnings release tables. valero energy corporation earnings release tables reconciliation of non-gaap measures to most comparable amounts reported under u.s. gaap (h) (millions of dollars) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of refining segment operating income (loss) to refining margin (by region), and reconciliation of refining segment operating income (loss) to adjusted refining segment operating income (loss) (by region) (i) u.s. gulf coast region refining operating income $ 2,629 $ 843 $ 9,096 $ 831 adjustments: modification of rvo (a) — (158 ) (74 ) (1 ) operating expenses (excluding depreciation and amortization expense reflected below) (b) 774 748 3,113 3,027 depreciation and amortization expense 346 328 1,369 1,326 other operating expenses 19 12 48 70 refining margin $ 3,768 $ 1,773 $ 13,552 $ 5,253 refining operating income $ 2,629 $ 843 $ 9,096 $ 831 adjustments: modification of rvo (a) — (158 ) (74 ) (1 ) other operating expenses 19 12 48 70 adjusted refining operating income $ 2,648 $ 697 $ 9,070 $ 900 u.s. mid-continent region refining operating income $ 551 $ 204 $ 2,252 $ 528 adjustments: modification of rvo (a) — (39 ) (19 ) — operating expenses (excluding depreciation and amortization expense reflected below) (b) 191 190 772 713 depreciation and amortization expense 84 82 335 335 other operating expenses 1 1 1 11 refining margin $ 827 $ 438 $ 3,341 $ 1,587 refining operating income $ 551 $ 204 $ 2,252 $ 528 adjustments: modification of rvo (a) — (39 ) (19 ) — other operating expenses 1 1 1 11 adjusted refining operating income $ 552 $ 166 $ 2,234 $ 539 see notes to earnings release tables. valero energy corporation earnings release tables reconciliation of non-gaap measures to most comparable amounts reported under u.s. gaap (h) (millions of dollars) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of refining segment operating income (loss) to refining margin (by region), and reconciliation of refining segment operating income (loss) to adjusted refining segment operating income (loss) (by region) (i) (continued) north atlantic region refining operating income $ 1,091 $ 265 $ 3,384 $ 558 adjustments: operating expenses (excluding depreciation and amortization expense reflected below) 192 195 816 671 depreciation and amortization expense 62 68 259 247 other operating expenses 2 1 11 1 refining margin $ 1,347 $ 529 $ 4,470 $ 1,477 refining operating income $ 1,091 $ 265 $ 3,384 $ 558 adjustments: other operating expenses 2 1 11 1 adjusted refining operating income $ 1,093 $ 266 $ 3,395 $ 559 u.s. west coast region refining operating income (loss) $ 59 $ (42 ) $ 1,071 $ (55 ) adjustments: modification of rvo (a) — (23 ) (11 ) — operating expenses (excluding depreciation and amortization expense reflected below) 241 225 808 677 depreciation and amortization expense 73 65 284 261 other operating expenses 3 1 3 1 refining margin $ 376 $ 226 $ 2,155 $ 884 refining operating income (loss) $ 59 $ (42 ) $ 1,071 $ (55 ) adjustments: modification of rvo (a) — (23 ) (11 ) — other operating expenses 3 1 3 1 adjusted refining operating income (loss) $ 62 $ (64 ) $ 1,063 $ (54 ) see notes to earnings release tables. valero energy corporation earnings release tables refining segment operating highlights (millions of dollars, except per barrel amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 throughput volumes (thousand barrels per day) feedstocks: heavy sour crude oil 343 340 343 338 medium/light sour crude oil 338 300 413 296 sweet crude oil 1,578 1,621 1,474 1,448 residuals 218 241 222 240 other feedstocks 110 138 114 123 total feedstocks 2,587 2,640 2,566 2,445 blendstocks and other 455 393 387 342 total throughput volumes 3,042 3,033 2,953 2,787 yields (thousand barrels per day) gasolines and blendstocks 1,501 1,533 1,451 1,403 distillates 1,153 1,126 1,118 1,028 other products (j) 410 403 409 387 total yields 3,064 3,062 2,978 2,818 operating statistics (b) (h) (k) refining margin $ 6,318 $ 2,966 $ 23,518 $ 9,201 adjusted refining operating income $ 4,355 $ 1,065 $ 15,762 $ 1,944 throughput volumes (thousand barrels per day) 3,042 3,033 2,953 2,787 refining margin per barrel of throughput $ 22.58 $ 10.63 $ 21.82 $ 9.04 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 5.00 4.86 5.11 5.00 depreciation and amortization expense per barrel of throughput 2.02 1.95 2.09 2.13 adjusted refining operating income per barrel of throughput $ 15.56 $ 3.82 $ 14.62 $ 1.91 see notes to earnings release tables. valero energy corporation earnings release tables renewable diesel segment operating highlights (millions of dollars, except per gallon amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 operating statistics (h) (k) renewable diesel margin $ 373 $ 223 $ 1,151 $ 904 adjusted renewable diesel operating income $ 261 $ 152 $ 774 $ 712 sales volumes (thousand gallons per day) 2,443 1,592 2,175 1,014 renewable diesel margin per gallon of sales $ 1.66 $ 1.52 $ 1.45 $ 2.44 less: operating expenses (excluding depreciation and amortization expense reflected below) per gallon of sales 0.34 0.33 0.32 0.36 depreciation and amortization expense per gallon of sales 0.16 0.15 0.15 0.16 adjusted renewable diesel operating income per gallon of sales $ 1.16 $ 1.04 $ 0.98 $ 1.92 see notes to earnings release tables. valero energy corporation earnings release tables ethanol segment operating highlights (millions of dollars, except per gallon amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 operating statistics (b) (h) (k) ethanol margin $ 252 $ 648 $ 858 $ 1,161 adjusted ethanol operating income $ 69 $ 475 $ 151 $ 522 production volumes (thousand gallons per day) 4,062 4,402 3,866 3,949 ethanol margin per gallon of production $ 0.67 $ 1.60 $ 0.61 $ 0.81 less: operating expenses (excluding depreciation and amortization expense reflected below) per gallon of production 0.43 0.38 0.44 0.39 depreciation and amortization expense per gallon of production (c) 0.05 0.05 0.04 0.09 gain on sale of ethanol plant per gallon of production (c) — — 0.02 — change in estimated useful life of ethanol plant per gallon of production (c) — — — (0.03 ) adjusted ethanol operating income per gallon of production $ 0.19 $ 1.17 $ 0.11 $ 0.36 see notes to earnings release tables. valero energy corporation earnings release tables refining segment operating highlights by region (millions of dollars, except per barrel amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 operating statistics by region (i) u.s. gulf coast region (b) (h) (k) refining margin $ 3,768 $ 1,773 $ 13,552 $ 5,253 adjusted refining operating income $ 2,648 $ 697 $ 9,070 $ 900 throughput volumes (thousand barrels per day) 1,806 1,796 1,766 1,673 refining margin per barrel of throughput $ 22.68 $ 10.73 $ 21.02 $ 8.60 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 4.66 4.53 4.83 4.96 depreciation and amortization expense per barrel of throughput 2.09 1.98 2.12 2.16 adjusted refining operating income per barrel of throughput $ 15.93 $ 4.22 $ 14.07 $ 1.48 u.s. mid-continent region (b) (h) (k) refining margin $ 827 $ 438 $ 3,341 $ 1,587 adjusted refining operating income $ 552 $ 166 $ 2,234 $ 539 throughput volumes (thousand barrels per day) 477 486 447 453 refining margin per barrel of throughput $ 18.84 $ 9.78 $ 20.49 $ 9.59 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 4.35 4.25 4.74 4.31 depreciation and amortization expense per barrel of throughput 1.92 1.84 2.06 2.03 adjusted refining operating income per barrel of throughput $ 12.57 $ 3.69 $ 13.69 $ 3.25 see notes to earnings release tables. valero energy corporation earnings release tables refining segment operating highlights by region (millions of dollars, except per barrel amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 operating statistics by region (i) (continued) north atlantic region (h) (k) refining margin $ 1,347 $ 529 $ 4,470 $ 1,477 adjusted refining operating income $ 1,093 $ 266 $ 3,395 $ 559 throughput volumes (thousand barrels per day) 494 492 485 413 refining margin per barrel of throughput $ 29.66 $ 11.69 $ 25.25 $ 9.81 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 4.23 4.29 4.61 4.46 depreciation and amortization expense per barrel of throughput 1.35 1.51 1.46 1.64 adjusted refining operating income per barrel of throughput $ 24.08 $ 5.89 $ 19.18 $ 3.71 u.s. west coast region (h) (k) refining margin $ 376 $ 226 $ 2,155 $ 884 adjusted refining operating income (loss) $ 62 $ (64 ) $ 1,063 $ (54 ) throughput volumes (thousand barrels per day) 265 259 255 248 refining margin per barrel of throughput $ 15.43 $ 9.52 $ 23.15 $ 9.75 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 9.87 9.45 8.68 7.46 depreciation and amortization expense per barrel of throughput 3.00 2.73 3.05 2.89 adjusted refining operating income (loss) per barrel of throughput $ 2.56 $ (2.66 ) $ 11.42 $ (0.60 ) see notes to earnings release tables. valero energy corporation earnings release tables average market reference prices and differentials (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 refining feedstocks (dollars per barrel) brent crude oil $ 88.81 $ 79.85 $ 98.86 $ 70.79 brent less west texas intermediate (wti) crude oil 5.96 2.49 4.43 2.83 brent less wti houston crude oil 4.45 1.55 2.82 1.91 brent less dated brent crude oil (0.11 ) (0.05 ) (2.22 ) 0.03 brent less alaska north slope (ans) crude oil 0.82 0.03 0.06 0.35 brent less argus sour crude index crude oil 9.91 4.83 7.42 3.92 brent less maya crude oil 17.21 8.07 11.68 6.48 brent less western canadian select houston crude oil 22.51 9.31 15.55 7.40 wti crude oil 82.85 77.36 94.43 67.97 natural gas (dollars per million british thermal units) 4.46 4.54 5.83 7.85 products (dollars per barrel) u.s. gulf coast: conventional blendstock of oxygenate blending (cbob) gasoline less brent 8.21 13.20 17.26 13.66 ultra-low-sulfur (uls) diesel less brent 52.78 17.68 46.45 13.75 propylene less brent (56.82 ) (18.59 ) (42.73 ) (6.43 ) u.s. mid-continent: cbob gasoline less wti 14.92 13.86 23.60 17.36 uls diesel less wti 59.53 19.79 51.83 18.70 north atlantic: cbob gasoline less brent 20.29 17.80 26.96 16.89 uls diesel less brent 73.03 20.36 57.01 15.91 u.s. west coast: california reformulated gasoline blendstock of oxygenate blending (carbob) 87 gasoline less ans 24.82 27.44 39.10 24.17 california air resources board (carb) diesel less ans 54.10 22.44 48.75 17.60 carbob 87 gasoline less wti 29.96 29.90 43.47 26.64 carb diesel less wti 59.24 24.90 53.12 20.08 see notes to earnings release tables. valero energy corporation earnings release tables average market reference prices and differentials (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 renewable diesel new york mercantile exchange uls diesel (dollars per gallon) $ 3.55 $ 2.39 $ 3.54 $ 2.07 biodiesel renewable identification number (rin) (dollars per rin) 1.82 1.49 1.67 1.49 california low-carbon fuel standard (dollars per metric ton) 65.78 155.24 98.73 177.78 chicago board of trade (cbot) soybean oil (dollars per pound) 0.70 0.58 0.71 0.58 ethanol cbot corn (dollars per bushel) 6.69 5.67 6.94 5.80 new york harbor ethanol (dollars per gallon) 2.48 3.43 2.57 2.49 see notes to earnings release tables. valero energy corporation earnings release tables other financial data (millions of dollars) (unaudited) december 31, 2022 2021 balance sheet data current assets $ 24,133 $ 21,165 cash and cash equivalents included in current assets 4,862 4,122 inventories included in current assets 6,752 6,265 current liabilities 17,461 16,851 valero energy corporation stockholders’ equity 23,561 18,430 total equity 25,468 19,817 debt and finance lease obligations: debt – current portion of debt (excluding variable interest entities (vies)) $ — $ 300 debt, less current portion of debt (excluding vies) 8,380 10,820 total debt (excluding vies) 8,380 11,120 current portion of debt attributable to vies 861 810 debt, less current portion of debt attributable to vies — 20 total debt attributable to vies 861 830 total debt 9,241 11,950 finance lease obligations – current portion of finance lease obligations (excluding vies) 184 141 finance lease obligations, less current portion (excluding vies) 1,453 1,502 total finance lease obligations (excluding vies) 1,637 1,643 current portion of finance lease obligations attributable to vies 64 13 finance lease obligations, less current portion attributable to vies 693 264 total finance lease obligations attributable to vies 757 277 total finance lease obligations 2,394 1,920 total debt and finance lease obligations $ 11,635 $ 13,870 three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of net cash provided by operating activities to adjusted net cash provided by operating activities (h) net cash provided by operating activities $ 4,096 $ 2,454 $ 12,574 $ 5,859 exclude: changes in current assets and current liabilities (9 ) 595 (1,626 ) 2,225 diamond green diesel llc’s (dgd) adjusted net cash provided by operating activities attributable to the other joint venture member’s ownership interest in dgd 142 82 436 381 adjusted net cash provided by operating activities $ 3,963 $ 1,777 $ 13,764 $ 3,253 see notes to earnings release tables. valero energy corporation earnings release tables other financial data (millions of dollars, except per share amounts) (unaudited) three months ended december 31, year ended december 31, 2022 2021 2022 2021 reconciliation of capital investments to capital investments attributable to valero (h) capital expenditures (excluding vies) $ 236 $ 145 $ 788 $ 513 capital expenditures of vies: dgd 171 312 853 1,042 other vies 10 51 40 110 deferred turnaround and catalyst cost expenditures (excluding vies) 210 243 1,030 787 deferred turnaround and catalyst cost expenditures of dgd 13 — 26 6 investments in nonconsolidated joint ventures — 1 1 9 capital investments 640 752 2,738 2,467 adjustments: dgd’s capital investments attributable to the other joint venture member (92 ) (156 ) (439 ) (524 ) capital expenditures of other vies (10 ) (51 ) (40 ) (110 ) capital investments attributable to valero $ 538 $ 545 $ 2,259 $ 1,833 dividends per common share $ 0.98 $ 0.98 $ 3.92 $ 3.92 year ending december 31, 2023 reconciliation of expected total capital investments to expected capital investments attributable to valero (h) expected total capital investments $ 2,055 adjustment: dgd’s capital investments attributable to the other joint venture member (55 ) expected capital investments attributable to valero $ 2,000 see notes to earnings release tables. valero energy corporation notes to earnings release tables (a) under the renewable fuel standard program, the u.s. environmental protection agency (epa) is required to set annual quotas for the volume of renewable fuels that obligated parties, such as us, must blend into petroleum-based transportation fuels consumed in the u.s. the quotas are used to determine an obligated party’s renewable volume obligation (rvo). the epa released a final rule on june 3, 2022 that, among other things, modified the volume standards for 2020 and, for the first time, established volume standards for 2021 and 2022. in 2020, we recognized the cost of the rvo using the 2020 quotas set by the epa at that time, and in 2021 and the three months ended march 31, 2022, we recognized the cost of the rvo using our estimates of the quotas. as a result of the final rule released by the epa as noted above, we recognized a benefit of $104 million in june 2022 primarily related to the modification of the 2020 quotas. the impacts to the estimated cost of the rvo recognized by us in 2021 and the three months ended march 31, 2022 were not significant; however, there were impacts in the 2021 quarterly periods as follows: (i) benefit of $80 million for the three months ended march 31, 2021; (ii) benefit of $81 million for the three months ended june 30, 2021; (iii) benefit of $58 million for the three months ended september 30, 2021; and (iv) charge of $220 million related to the three months ended december 31, 2021, resulting in a charge of $1 million for the year ended december 31, 2021. (b) in mid-february 2021, many of our refineries and plants were impacted to varying extents by the severe cold, utility disruptions, and higher energy costs arising out of winter storm uri. the higher energy costs resulted from an increase in the prices of natural gas and electricity that significantly exceeded rates that we consider normal, such as the average rates we incurred the month preceding the storm. as a result, our operating income for the year ended december 31, 2021 includes estimated excess energy costs of $579 million ($1.15 per share). the above-mentioned pre-tax estimated excess energy charge is reflected in our statement of income line items and attributable to our reportable segments for the year ended december 31, 2021 as follows (in millions): refining renewable diesel ethanol total cost of materials and other $ 47 $ — $ — $ 47 operating expenses (excluding depreciation and amortization expense) 478 — 54 532 total estimated excess energy costs $ 525 $ — $ 54 $ 579 the estimated excess energy costs attributable to our refining segment for the year ended december 31, 2021 are associated with the refining segment regions as follows (in millions, except per barrel amounts): u.s. gulf coast u.s. mid- continent other regions combined refining segment cost of materials and other $ 45 $ 2 $ — $ 47 operating expenses (excluding depreciation and amortization expense) 437 38 3 478 total estimated excess energy costs $ 482 $ 40 $ 3 $ 525 effect of estimated excess energy costs on operating statistics (k) refining margin per barrel of throughput (h) $ 0.07 $ 0.01 n/a $ 0.05 operating expenses (excluding depreciation and amortization expense) per barrel of throughput 0.72 0.23 n/a 0.47 adjusted refining operating income per barrel of throughput (h) $ 0.79 $ 0.24 n/a $ 0.52 (c) ◦ ◦ (d) (e) (f) ◦ ◦ ◦ ◦ ◦ (g) ◦ ◦ (h) ◦ – modification of rvo – the net benefit resulting from the modification of our rvo for 2020 and 2021 that was recognized by us in june 2022 is not associated with the cost of the rvo generated by our operations during the year ended december 31, 2022. see note (a) for additional details. on the other hand, the net charge resulting from the modification of our rvo for 2021 that was recognized by us in june 2022 is associated with the cost of the rvo generated by our operations throughout 2021. therefore, the adjustment reflects the portion of the net charge that is associated with the cost of the rvo generated by our operations during the three months and year ended december 31, 2021. – gain on sale of ethanol plant – the gain on the sale of our jefferson ethanol plant (see note (c)) is not indicative of our ongoing operations. – asset impairment loss – the asset impairment loss attributable to our lakota ethanol plant (see note (d)) is not indicative of our ongoing operations or our expectations about the profitability of our ethanol business. – environmental reserve adjustment – the environmental reserve adjustment is attributable to a site that was shut down by prior owners and subsequently acquired by us (referred to by us as a non-operating site (see note (e)). – pension settlement charge – the settlement charge is largely the result of the rising interest rate environment in 2022 and the impact of higher interest rates on lump sum pension benefits that affected employee retirement decisions (see note (f)). therefore, the settlement charge is not indicative of the ongoing costs associated with our pension plans. – loss (gain) on early redemption and retirement of debt – discounts, premiums, and other expenses recognized in connection with the early redemption and retirement of various series of our senior notes (see note (f)) are not associated with the ongoing costs of our borrowing and financing activities. – foreign withholding tax – the deferred income tax expense associated with the recognition of a deferred tax liability for foreign withholding tax (see note (g)) is the result of a change in the three months and year ended december 31, 2022 in the manner in which cash generated by the company’s business in international jurisdictions is deployed in the u.s. – change in estimated useful life of ethanol plant – the accelerated depreciation recognized as a result of a change in the estimated useful life of our jefferson ethanol plant (see note (c)) is not indicative of our ongoing operations. – gain on sale of mvp interest – the gain on the sale of a 24.99 percent membership interest in mvp (see note (f)) is not indicative of our ongoing operations. – diamond pipeline asset impairment loss – the asset impairment loss related to the cancellation of a capital project associated with diamond pipeline llc (see note (f)) is not indicative of our ongoing operations. – income tax expense related to changes in statutory tax rates – the income tax expense related to changes in certain statutory income tax rates (see note (g)) is not indicative of income tax expense associated with the pre-tax results for the year ended december 31, 2021. ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ – changes in current assets and current liabilities – current assets net of current liabilities represents our operating liquidity. we believe that the change in our operating liquidity from period to period does not represent cash generated by our operations that is available to fund our investing and financing activities. – dgd’s adjusted net cash provided by operating activities attributable to the other joint venture member’s ownership interest in dgd – we are a 50 percent joint venture member in dgd and we consolidate dgd’s financial statements. our renewable diesel segment includes the operations of dgd and the associated activities to market renewable diesel. because we consolidate dgd’s financial statements, all of dgd’s net cash provided by operating activities (or operating cash flow) is included in our consolidated net cash provided by operating activities. dgd’s members use dgd’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. nevertheless, dgd’s operating cash flow is effectively attributable to each member and only 50 percent of dgd’s operating cash flow should be attributed to our net cash provided by operating activities. therefore, we have adjusted our net cash provided by operating activities for the portion of dgd’s operating cash flow attributable to the other joint venture member’s ownership interest because we believe that it more accurately reflects the operating cash flow available to us to fund our investing and financing activities. the adjustment is calculated as follows (in millions): three months ended december 31, year ended december 31, 2022 2021 2022 2021 dgd operating cash flow data net cash provided by (used in) operating activities $ — $ (199 ) $ 661 $ 439 exclude: changes in current assets and current liabilities (283 ) (362 ) (210 ) (323 ) adjusted net cash provided by operating activities 283 163 871 762 other joint venture member’s ownership interest 50 % 50 % 50 % 50 % dgd’s adjusted net cash provided by operating activities attributable to the other joint venture member’s ownership interest in dgd $ 142 $ 82 $ 436 $ 381 ◦ (i) (j) (k)
