Valero energy reports second quarter 2022 results
San antonio--(business wire)--valero energy corporation (nyse: vlo, “valero”) today reported net income attributable to valero stockholders of $4.7 billion, or $11.57 per share, for the second quarter of 2022, compared to $162 million, or $0.39 per share, for the second quarter of 2021. excluding the adjustments shown in the accompanying earnings release tables, adjusted net income attributable to valero stockholders was $4.6 billion, or $11.36 per share, for the second quarter of 2022, compared to $260 million, or $0.63 per share, for the second quarter of 2021. “we continue to maximize refinery run rates, while executing our long-standing commitment to safe, reliable and environmentally responsible operations,” said joe gorder, valero chairman and chief executive officer. “our refinery utilization rate increased from the pandemic low of 74 percent in the second quarter of 2020 to 94 percent in the second quarter of 2022.” refining the refining segment reported operating income of $6.2 billion for the second quarter of 2022, compared to $349 million for the second quarter of 2021. adjusted operating income was $6.1 billion for the second quarter of 2022, compared to $442 million for the second quarter of 2021. refining throughput volumes averaged 3.0 million barrels per day in the second quarter of 2022, which was 127 thousand barrels per day higher than the second quarter of 2021. renewable diesel the renewable diesel segment, which consists of the diamond green diesel (dgd) joint venture, reported $152 million of operating income for the second quarter of 2022, compared to $248 million for the second quarter of 2021. renewable diesel sales volumes averaged 2.2 million gallons per day in the second quarter of 2022, which was 1.3 million gallons per day higher than the second quarter of 2021. the higher sales volumes in the second quarter of 2022 were attributable to the fourth quarter 2021 startup of the dgd expansion project at st. charles (dgd 2). ethanol the ethanol segment reported $101 million of operating income for the second quarter of 2022, compared to $99 million for the second quarter of 2021. adjusted operating income, which primarily excludes the gain from the sale of our jefferson ethanol plant whose operations were idled in 2020, was $79 million for the second quarter of 2022. ethanol production volumes averaged 3.9 million gallons per day in the second quarter of 2022. corporate and other general and administrative expenses were $233 million in the second quarter of 2022, compared to $176 million in the second quarter of 2021. the effective tax rate for the second quarter of 2022 was 22 percent. investing and financing activities net cash provided by operating activities was $5.8 billion in the second quarter of 2022. included in this amount was a $594 million favorable impact from working capital and $90 million associated with the other joint venture member’s share of dgd’s net cash provided by operating activities, excluding changes in dgd’s working capital. excluding these items, adjusted net cash provided by operating activities was $5.2 billion in the second quarter of 2022. capital investments totaled $653 million in the second quarter of 2022, of which $298 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 50 percent share of dgd and those related to other variable interest entities, capital investments attributable to valero were $524 million. in the second quarter, valero further reduced its debt through the acquisition of the $300 million of 4.00 percent go zone bonds. this transaction, combined with debt reduction and refinancing transactions completed in the second half of 2021 and the first quarter of 2022, have collectively reduced valero’s debt by $2.3 billion. “we raised $4.0 billion of incremental debt in 2020 due to the negative impacts of the pandemic on our business,” said gorder. “since then, we have reduced our debt by $2.3 billion and will evaluate further deleveraging opportunities.” liquidity and financial position valero ended the second quarter of 2022 with $10.9 billion of total debt, $2.0 billion of finance lease obligations and $5.4 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. as a result, the debt to capitalization ratio, net of cash and cash equivalents, was 25 percent as of june 30, 2022, down from the pandemic high of 40 percent at the end of the first quarter of 2021. strategic update refinery optimization projects that are expected to reduce costs and improve margin capture are progressing on schedule. the port arthur coker project, which is expected to increase the refinery’s throughput capacity, while also improving turnaround efficiency, is expected to be completed in the first half of 2023. the dgd project located next to valero’s port arthur refinery (dgd 3), which is expected to have renewable diesel production capacity of 470 million gallons per year, should commence operations in the fourth quarter of 2022. the total annual dgd production capacity is expected to nearly double to approximately 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha upon commencement of dgd 3’s operations. blackrock and navigator’s carbon sequestration project is still expected to begin startup activities in late 2024. valero is expected to be the anchor shipper with eight of its ethanol plants connected to this system, producing a lower carbon intensity ethanol product expected to be marketed in low-carbon fuel markets that should result in a higher product margin. 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 we are a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and we sell our products primarily in the united states (u.s.), canada, the united kingdom (u.k.), ireland, and latin america. we own 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 (bpd). we are a joint venture member in diamond green diesel holdings llc (dgd), which owns a renewable diesel plant in norco, louisiana with a production capacity of 700 million gallons per year, and we own 12 ethanol plants located in the mid-continent region of the u.s. with a combined production capacity of approximately 1.6 billion gallons per year. we manage our operations through our refining, renewable diesel, and ethanol segments. please visit www.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 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,” “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 our 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 the company’s control, such as legislative or political changes or developments, market dynamics, cyberattacks, weather events, and other matters affecting our operations or the demand for our 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, the covid-19 pandemic, variants of the covid-19 virus, governmental and societal responses thereto, including requirements and mandates with respect to covid-19 vaccines, vaccine distribution and administration levels, and the adverse effects the foregoing may have on our 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 (loss) attributable to valero stockholders, adjusted earnings (loss) per common share – assuming dilution, refining margin, renewable diesel margin, ethanol margin, adjusted refining operating income (loss), 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 (g) 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 june 30, six months ended june 30, 2022 2021 2022 2021 statement of income data revenues $ 51,641 $ 27,748 $ 90,183 $ 48,554 cost of sales: cost of materials and other (a) (b) 42,946 25,249 77,895 44,241 operating expenses (excluding depreciation and amortization expense reflected below) (b) 1,626 1,214 3,005 2,870 depreciation and amortization expense (c) 590 576 1,185 1,142 total cost of sales 45,162 27,039 82,085 48,253 other operating expenses 15 12 34 50 general and administrative expenses (excluding depreciation and amortization expense reflected below) (d) 233 176 438 384 depreciation and amortization expense 12 12 23 24 operating income (loss) 6,219 509 7,603 (157 ) other income, net (e) 33 102 13 147 interest and debt expense, net of capitalized interest (142 ) (150 ) (287 ) (299 ) income (loss) before income tax expense 6,110 461 7,329 (309 ) income tax expense (f) 1,342 169 1,594 21 net income (loss) 4,768 292 5,735 (330 ) less: net income attributable to noncontrolling interests 75 130 137 212 net income (loss) attributable to valero energy corporation stockholders $ 4,693 $ 162 $ 5,598 $ (542 ) earnings (loss) per common share $ 11.58 $ 0.39 $ 13.75 $ (1.34 ) weighted-average common shares outstanding (in millions) 404 407 406 407 earnings (loss) per common share – assuming dilution $ 11.57 $ 0.39 $ 13.74 $ (1.34 ) weighted-average common shares outstanding – assuming dilution (in millions) 404 407 406 407 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 june 30, 2022 revenues: revenues from external customers $ 49,495 $ 855 $ 1,291 $ — $ 51,641 intersegment revenues 11 596 201 (808 ) — total revenues 49,506 1,451 1,492 (808 ) 51,641 cost of sales: cost of materials and other (a) 41,313 1,213 1,226 (806 ) 42,946 operating expenses (excluding depreciation and amortization expense reflected below) 1,402 58 167 (1 ) 1,626 depreciation and amortization expense (c) 565 28 (3 ) — 590 total cost of sales 43,280 1,299 1,390 (807 ) 45,162 other operating expenses 14 — 1 — 15 general and administrative expenses (excluding depreciation and amortization expense reflected below) (d) — — — 233 233 depreciation and amortization expense — — — 12 12 operating income by segment $ 6,212 $ 152 $ 101 $ (246 ) $ 6,219 three months ended june 30, 2021 revenues: revenues from external customers $ 25,968 $ 496 $ 1,284 $ — $ 27,748 intersegment revenues 1 76 84 (161 ) — total revenues 25,969 572 1,368 (161 ) 27,748 cost of sales: cost of materials and other 24,000 281 1,130 (162 ) 25,249 operating expenses (excluding depreciation and amortization expense reflected below) 1,064 31 119 — 1,214 depreciation and amortization expense 544 12 20 — 576 total cost of sales 25,608 324 1,269 (162 ) 27,039 other operating expenses 12 — — — 12 general and administrative expenses (excluding depreciation and amortization expense reflected below) — — — 176 176 depreciation and amortization expense — — — 12 12 operating income by segment $ 349 $ 248 $ 99 $ (187 ) $ 509 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 six months ended june 30, 2022 revenues: revenues from external customers $ 86,308 $ 1,450 $ 2,425 $ — $ 90,183 intersegment revenues 15 982 328 (1,325 ) — total revenues 86,323 2,432 2,753 (1,325 ) 90,183 cost of sales: cost of materials and other (a) 74,919 1,968 2,330 (1,322 ) 77,895 operating expenses (excluding depreciation and amortization expense reflected below) 2,595 109 302 (1 ) 3,005 depreciation and amortization expense (c) 1,114 54 17 — 1,185 total cost of sales 78,628 2,131 2,649 (1,323 ) 82,085 other operating expenses 32 — 2 — 34 general and administrative expenses (excluding depreciation and amortization expense reflected below) (d) — — — 438 438 depreciation and amortization expense — — — 23 23 operating income by segment $ 7,663 $ 301 $ 102 $ (463 ) $ 7,603 six months ended june 30, 2021 revenues: revenues from external customers $ 45,437 $ 848 $ 2,269 $ — $ 48,554 intersegment revenues 4 155 144 (303 ) — total revenues 45,441 1,003 2,413 (303 ) 48,554 cost of sales: cost of materials and other (b) 42,022 468 2,054 (303 ) 44,241 operating expenses (excluding depreciation and amortization expense reflected below) (b) 2,535 60 275 — 2,870 depreciation and amortization expense 1,077 24 41 — 1,142 total cost of sales 45,634 552 2,370 (303 ) 48,253 other operating expenses 50 — — — 50 general and administrative expenses (excluding depreciation and amortization expense reflected below) — — — 384 384 depreciation and amortization expense — — — 24 24 operating income (loss) by segment $ (243 ) $ 451 $ 43 $ (408 ) $ (157 ) 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 (g) (millions of dollars, except per share amounts) (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 reconciliation of net income (loss) attributable to valero energy corporation stockholders to adjusted net income (loss) attributable to valero energy corporation stockholders net income (loss) attributable to valero energy corporation stockholders $ 4,693 $ 162 $ 5,598 $ (542 ) adjustments: modification of renewable volume obligation (rvo) (a) (104 ) 81 (104 ) 161 income tax expense related to modification of rvo 23 (18 ) 23 (36 ) modification of rvo, net of taxes (81 ) 63 (81 ) 125 gain on sale of ethanol plant (c) (23 ) — (23 ) — income tax expense related to gain on sale of ethanol plant 5 — 5 — gain on sale of ethanol plant, net of taxes (18 ) — (18 ) — environmental reserve adjustment (d) 20 — 20 — income tax benefit related to environmental reserve adjustment (5 ) — (5 ) — environmental reserve adjustment, net of taxes 15 — 15 — loss on early retirement of debt (e) — — 50 — income tax benefit related to loss on early retirement of debt — — (11 ) — loss on early retirement of debt, net of taxes — — 39 — gain on sale of mvp interest (e) — (62 ) — (62 ) income tax expense related to gain on sale of mvp interest — 14 — 14 gain on sale of mvp interest, net of taxes — (48 ) — (48 ) diamond pipeline asset impairment (e) — 24 — 24 income tax benefit related to diamond pipeline asset impairment — (5 ) — (5 ) diamond pipeline asset impairment, net of taxes — 19 — 19 income tax expense related to changes in statutory tax rates (f) — 64 — 64 total adjustments (84 ) 98 (45 ) 160 adjusted net income (loss) attributable to valero energy corporation stockholders $ 4,609 $ 260 $ 5,553 $ (382 ) 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 (g) (millions of dollars, except per share amounts) (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 reconciliation of earnings (loss) per common share – assuming dilution to adjusted earnings (loss) per common share – assuming dilution earnings (loss) per common share – assuming dilution $ 11.57 $ 0.39 $ 13.74 $ (1.34 ) adjustments: modification of rvo (a) (0.20 ) 0.15 (0.20 ) 0.30 gain on sale of ethanol plant (c) (0.05 ) — (0.05 ) — environmental reserve adjustment (d) 0.04 — 0.04 — loss on early retirement of debt (e) — — 0.10 — gain on sale of mvp interest (e) — (0.12 ) — (0.12 ) diamond pipeline asset impairment (e) — 0.05 — 0.05 income tax expense related to changes in statutory tax rates (f) — 0.16 — 0.16 total adjustments (0.21 ) 0.24 (0.11 ) 0.39 adjusted earnings (loss) per common share – assuming dilution $ 11.36 $ 0.63 $ 13.63 $ (0.95 ) 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 (g) (millions of dollars) (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 reconciliation of operating income (loss) by segment to segment margin, and reconciliation of operating income (loss) by segment to adjusted operating income (loss) by segment refining segment refining operating income (loss) $ 6,212 $ 349 $ 7,663 $ (243 ) adjustments: modification of rvo (a) (104 ) 81 (104 ) 161 operating expenses (excluding depreciation and amortization expense reflected below) (b) 1,402 1,064 2,595 2,535 depreciation and amortization expense 565 544 1,114 1,077 other operating expenses 14 12 32 50 refining margin $ 8,089 $ 2,050 $ 11,300 $ 3,580 refining operating income (loss) $ 6,212 $ 349 $ 7,663 $ (243 ) adjustments: modification of rvo (a) (104 ) 81 (104 ) 161 other operating expenses 14 12 32 50 adjusted refining operating income (loss) $ 6,122 $ 442 $ 7,591 $ (32 ) renewable diesel segment renewable diesel operating income $ 152 $ 248 $ 301 $ 451 adjustments: operating expenses (excluding depreciation and amortization expense reflected below) 58 31 109 60 depreciation and amortization expense 28 12 54 24 renewable diesel margin $ 238 $ 291 $ 464 $ 535 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 (g) (millions of dollars) (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 reconciliation of operating income (loss) by segment to segment margin, and reconciliation of operating income (loss) by segment to adjusted operating income (loss) by segment (continued) ethanol segment ethanol operating income $ 101 $ 99 $ 102 $ 43 adjustments: operating expenses (excluding depreciation and amortization expense reflected below) (b) 167 119 302 275 depreciation and amortization expense (c) (3 ) 20 17 41 other operating expenses 1 — 2 — ethanol margin $ 266 $ 238 $ 423 $ 359 ethanol operating income $ 101 $ 99 $ 102 $ 43 adjustments: gain on sale of ethanol plant (c) (23 ) — (23 ) — other operating expenses 1 — 2 — adjusted ethanol operating income $ 79 $ 99 $ 81 $ 43 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 (g) (millions of dollars) (unaudited) three months ended june 30, six months ended june 30, 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) (h) u.s. gulf coast region refining operating income (loss) $ 3,399 $ 159 $ 4,395 $ (349 ) adjustments: modification of rvo (a) (74 ) 58 (74 ) 116 operating expenses (excluding depreciation and amortization expense reflected below) (b) 814 611 1,469 1,605 depreciation and amortization expense 341 334 673 666 other operating expenses 5 10 23 41 refining margin $ 4,485 $ 1,172 $ 6,486 $ 2,079 refining operating income (loss) $ 3,399 $ 159 $ 4,395 $ (349 ) adjustments: modification of rvo (a) (74 ) 58 (74 ) 116 other operating expenses 5 10 23 41 adjusted refining operating income (loss) $ 3,330 $ 227 $ 4,344 $ (192 ) u.s. mid-continent region refining operating income $ 959 $ 123 $ 1,101 $ 113 adjustments: modification of rvo (a) (19 ) 14 (19 ) 28 operating expenses (excluding depreciation and amortization expense reflected below) (b) 199 159 371 349 depreciation and amortization expense 85 85 166 169 other operating expenses — 2 — 9 refining margin $ 1,224 $ 383 $ 1,619 $ 668 refining operating income $ 959 $ 123 $ 1,101 $ 113 adjustments: modification of rvo (a) (19 ) 14 (19 ) 28 other operating expenses — 2 — 9 adjusted refining operating income $ 940 $ 139 $ 1,082 $ 150 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 (g) (millions of dollars) (unaudited) three months ended june 30, six months ended june 30, 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) (h) (continued) north atlantic region refining operating income $ 1,222 $ 1 $ 1,508 $ 56 adjustments: operating expenses (excluding depreciation and amortization expense reflected below) 192 151 398 291 depreciation and amortization expense 66 59 135 111 other operating expenses 9 — 9 — refining margin $ 1,489 $ 211 $ 2,050 $ 458 refining operating income $ 1,222 $ 1 $ 1,508 $ 56 adjustment: other operating expenses 9 — 9 — adjusted refining operating income $ 1,231 $ 1 $ 1,517 $ 56 u.s. west coast region refining operating income (loss) $ 632 $ 66 $ 659 $ (63 ) adjustments: modification of rvo (a) (11 ) 9 (11 ) 17 operating expenses (excluding depreciation and amortization expense reflected below) 197 143 357 290 depreciation and amortization expense 73 66 140 131 refining margin $ 891 $ 284 $ 1,145 $ 375 refining operating income (loss) $ 632 $ 66 $ 659 $ (63 ) adjustment: modification of rvo (a) (11 ) 9 (11 ) 17 adjusted refining operating income (loss) $ 621 $ 75 $ 648 $ (46 ) 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 june 30, six months ended june 30, 2022 2021 2022 2021 throughput volumes (thousand barrels per day) feedstocks: heavy sour crude oil 376 389 351 372 medium/light sour crude oil 442 330 408 303 sweet crude oil 1,413 1,421 1,418 1,282 residuals 229 249 227 221 other feedstocks 127 126 114 114 total feedstocks 2,587 2,515 2,518 2,292 blendstocks and other 375 320 363 332 total throughput volumes 2,962 2,835 2,881 2,624 yields (thousand barrels per day) gasolines and blendstocks 1,452 1,432 1,422 1,312 distillates 1,135 1,035 1,081 965 other products (i) 407 401 404 377 total yields 2,994 2,868 2,907 2,654 operating statistics (b) (g) (j) refining margin $ 8,089 $ 2,050 $ 11,300 $ 3,580 adjusted refining operating income (loss) $ 6,122 $ 442 $ 7,591 $ (32 ) throughput volumes (thousand barrels per day) 2,962 2,835 2,881 2,624 refining margin per barrel of throughput $ 30.01 $ 7.95 $ 21.67 $ 7.54 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 5.20 4.13 4.98 5.34 depreciation and amortization expense per barrel of throughput 2.10 2.11 2.14 2.27 adjusted refining operating income (loss) per barrel of throughput $ 22.71 $ 1.71 $ 14.55 $ (0.07 ) 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 june 30, six months ended june 30, 2022 2021 2022 2021 operating statistics (g) (j) renewable diesel margin $ 238 $ 291 $ 464 $ 535 renewable diesel operating income $ 152 $ 248 $ 301 $ 451 sales volumes (thousand gallons per day) 2,182 923 1,961 895 renewable diesel margin per gallon of sales $ 1.20 $ 3.46 $ 1.31 $ 3.30 less: operating expenses (excluding depreciation and amortization expense reflected below) per gallon of sales 0.29 0.36 0.31 0.37 depreciation and amortization expense per gallon of sales 0.15 0.15 0.15 0.15 renewable diesel operating income per gallon of sales $ 0.76 $ 2.95 $ 0.85 $ 2.78 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 june 30, six months ended june 30, 2022 2021 2022 2021 operating statistics (b) (g) (j) ethanol margin $ 266 $ 238 $ 423 $ 359 adjusted ethanol operating income $ 79 $ 99 $ 81 $ 43 production volumes (thousand gallons per day) 3,861 4,203 3,953 3,884 ethanol margin per gallon of production $ 0.75 $ 0.62 $ 0.59 $ 0.51 less: operating expenses (excluding depreciation and amortization expense reflected below) per gallon of production 0.47 0.31 0.42 0.39 depreciation and amortization expense per gallon of production (c) (0.01 ) 0.05 0.03 0.06 gain on sale of ethanol plant per gallon of production (c) 0.07 — 0.03 — adjusted ethanol operating income per gallon of production $ 0.22 $ 0.26 $ 0.11 $ 0.06 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 june 30, six months ended june 30, 2022 2021 2022 2021 operating statistics by region (h) u.s. gulf coast region (b) (g) (j) refining margin $ 4,485 $ 1,172 $ 6,486 $ 2,079 adjusted refining operating income (loss) $ 3,330 $ 227 $ 4,344 $ (192 ) throughput volumes (thousand barrels per day) 1,750 1,731 1,722 1,623 refining margin per barrel of throughput $ 28.17 $ 7.44 $ 20.81 $ 7.08 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 5.11 3.88 4.71 5.46 depreciation and amortization expense per barrel of throughput 2.15 2.12 2.16 2.27 adjusted refining operating income (loss) per barrel of throughput $ 20.91 $ 1.44 $ 13.94 $ (0.65 ) u.s. mid-continent region (b) (g) (j) refining margin $ 1,224 $ 383 $ 1,619 $ 668 adjusted refining operating income $ 940 $ 139 $ 1,082 $ 150 throughput volumes (thousand barrels per day) 449 476 434 431 refining margin per barrel of throughput $ 29.99 $ 8.86 $ 20.59 $ 8.58 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 4.88 3.67 4.71 4.48 depreciation and amortization expense per barrel of throughput 2.09 1.98 2.12 2.17 adjusted refining operating income per barrel of throughput $ 23.02 $ 3.21 $ 13.76 $ 1.93 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 june 30, six months ended june 30, 2022 2021 2022 2021 operating statistics by region (h) (continued) north atlantic region (g) (j) refining margin $ 1,489 $ 211 $ 2,050 $ 458 adjusted refining operating income $ 1,231 $ 1 $ 1,517 $ 56 throughput volumes (thousand barrels per day) 483 356 484 338 refining margin per barrel of throughput $ 33.85 $ 6.52 $ 23.41 $ 7.48 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 4.37 4.66 4.55 4.76 depreciation and amortization expense per barrel of throughput 1.49 1.85 1.53 1.81 adjusted refining operating income per barrel of throughput $ 27.99 $ 0.01 $ 17.33 $ 0.91 u.s. west coast region (g) (j) refining margin $ 891 $ 284 $ 1,145 $ 375 adjusted refining operating income (loss) $ 621 $ 75 $ 648 $ (46 ) throughput volumes (thousand barrels per day) 280 272 241 232 refining margin per barrel of throughput $ 34.93 $ 11.45 $ 26.19 $ 8.93 less: operating expenses (excluding depreciation and amortization expense reflected below) per barrel of throughput 7.74 5.79 8.18 6.92 depreciation and amortization expense per barrel of throughput 2.83 2.63 3.20 3.11 adjusted refining operating income (loss) per barrel of throughput $ 24.36 $ 3.03 $ 14.81 $ (1.10 ) see notes to earnings release tables. valero energy corporation earnings release tables average market reference prices and differentials (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 refining feedstocks (dollars per barrel) brent crude oil $ 111.69 $ 69.00 $ 104.52 $ 65.05 brent less west texas intermediate (wti) crude oil 3.03 2.91 2.96 3.09 brent less alaska north slope (ans) crude oil (0.78 ) 0.56 0.48 0.45 brent less louisiana light sweet (lls) crude oil 1.54 1.05 1.06 1.08 brent less argus sour crude index (asci) crude oil 6.59 3.34 5.76 3.17 brent less maya crude oil 7.91 6.13 8.21 5.42 lls crude oil 110.15 67.95 103.46 63.97 lls less asci crude oil 5.05 2.29 4.70 2.09 lls less maya crude oil 6.37 5.08 7.15 4.34 wti crude oil 108.66 66.09 101.56 61.96 natural gas (dollars per million british thermal units) 7.23 2.93 5.78 11.30 products (dollars per barrel) u.s. gulf coast: conventional blendstock of oxygenate blending (cbob) gasoline less brent 31.33 14.43 23.50 12.28 ultra-low-sulfur (uls) diesel less brent 55.95 12.99 41.95 11.59 propylene less brent (38.56 ) (20.41 ) (33.69 ) (0.96 ) cbob gasoline less lls 32.87 15.48 24.56 13.36 uls diesel less lls 57.49 14.04 43.01 12.67 propylene less lls (37.02 ) (19.36 ) (32.63 ) 0.12 u.s. mid-continent: cbob gasoline less wti 36.08 19.93 26.05 17.38 uls diesel less wti 60.16 18.42 43.72 17.82 north atlantic: cbob gasoline less brent 41.58 17.37 29.63 14.47 uls diesel less brent 70.25 15.07 51.36 13.48 u.s. west coast: california reformulated gasoline blendstock of oxygenate blending (carbob) 87 gasoline less ans 55.06 27.18 41.76 20.87 california air resources board (carb) diesel less ans 58.37 15.28 45.32 14.71 carbob 87 gasoline less wti 58.87 29.53 44.24 23.51 carb diesel less wti 62.18 17.63 47.80 17.35 see notes to earnings release tables. valero energy corporation earnings release tables average market reference prices and differentials (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 renewable diesel new york mercantile exchange uls diesel (dollars per gallon) $ 4.03 $ 2.00 $ 3.54 $ 1.87 biodiesel renewable identification number (rin) (dollars per rin) 1.70 1.71 1.57 1.44 california low-carbon fuel standard (dollars per metric ton) 104.30 184.82 121.47 190.06 chicago board of trade (cbot) soybean oil (dollars per pound) 0.80 0.63 0.74 0.56 ethanol cbot corn (dollars per bushel) 7.77 6.58 7.24 5.98 new york harbor ethanol (dollars per gallon) 2.84 2.38 2.61 2.08 see notes to earnings release tables. valero energy corporation earnings release tables other financial data (millions of dollars, except per share amounts) (unaudited) june 30, december 31, 2022 2021 balance sheet data current assets $ 27,409 $ 21,165 cash and cash equivalents included in current assets 5,392 4,122 inventories included in current assets 7,147 6,265 current liabilities 21,969 16,851 valero energy corporation stockholders’ equity 20,969 18,430 total equity 22,733 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) 10,055 10,820 total debt (excluding vies) 10,055 11,120 current portion of debt attributable to vies 843 810 debt, less current portion of debt attributable to vies — 20 total debt attributable to vies 843 830 total debt 10,898 11,950 finance lease obligations – current portion of finance lease obligations (excluding vies) 166 141 finance lease obligations, less current portion (excluding vies) 1,545 1,502 total finance lease obligations (excluding vies) 1,711 1,643 current portion of finance lease obligations attributable to vies 13 13 finance lease obligations, less current portion attributable to vies 258 264 total finance lease obligations attributable to vies 271 277 total finance lease obligations 1,982 1,920 total debt and finance lease obligations $ 12,880 $ 13,870 three months ended june 30, six months ended june 30, 2022 2021 2022 2021 reconciliation of net cash provided by operating activities to adjusted net cash provided by operating activities (g) net cash provided by operating activities $ 5,845 $ 2,008 $ 6,433 $ 1,956 exclude: changes in current assets and current liabilities 594 1,067 (128 ) 1,251 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 90 132 175 240 adjusted net cash provided by operating activities $ 5,161 $ 809 $ 6,386 $ 465 see notes to earnings release tables. valero energy corporation earnings release tables other financial data (millions of dollars) (unaudited) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 reconciliation of capital investments to capital investments attributable to valero (g) capital expenditures (excluding vies) $ 172 $ 101 $ 324 $ 261 capital expenditures of vies: dgd 239 245 458 398 other vies 6 9 19 35 deferred turnaround and catalyst cost expenditures (excluding vies) 228 196 681 426 deferred turnaround and catalyst cost expenditures of dgd 7 — 13 1 investments in nonconsolidated joint ventures 1 (3 ) 1 9 capital investments 653 548 1,496 1,130 adjustments: dgd’s capital investments attributable to the other joint venture member (123 ) (122 ) (235 ) (199 ) capital expenditures of other vies (6 ) (9 ) (19 ) (35 ) capital investments attributable to valero $ 524 $ 417 $ 1,242 $ 896 dividends per common share $ 0.98 $ 0.98 $ 1.96 $ 1.96 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 rvo. the epa released a final rule on june 3, 2022 that, among other things, reduced the quotas for 2020 and, for the first time, established quotas 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 on june 3, 2022 as noted above, we recognized a benefit of $104 million in the three and six months ended june 30, 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. (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 loss for the six months ended june 30, 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 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 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 (j) refining margin per barrel of throughput (g) $ 0.15 $ 0.03 n/a $ 0.10 operating expenses (excluding depreciation and amortization expense) per barrel of throughput 1.49 0.49 n/a 1.01 adjusted refining operating income (loss) per barrel of throughput (g) $ 1.64 $ 0.52 n/a $ 1.11 the estimated excess energy costs attributable to our ethanol segment affected that segment’s operating statistics of (i) operating expenses (excluding depreciation and amortization expenses) per gallon of production and (ii) adjusted operating income per gallon of production by $0.08 (see note (g) below). (c) in june 2022, we sold our ethanol plant located in jefferson, wisconsin, which ceased operations and was written down to estimated salvage value in 2021, for $32 million. depreciation and amortization expense for the three and six months ended june 30, 2022 includes a gain on the sale of $23 million. (d) general and administrative expenses (excluding depreciation and amortization expense) for the three and six months ended june 30, 2022 includes a charge of $20 million for an environmental reserve adjustment associated with a non-operating site. (e) “other income, net” includes the following: a charge of $50 million in the six months ended june 30, 2022 from the early retirement of approximately $1.4 billion aggregate principal amount of various series of our senior notes; a gain of $62 million in the three and six months ended june 30, 2021 on the sale of a 24.99 percent membership interest in mvp terminalling, llc (mvp), a nonconsolidated joint venture with a subsidiary of magellan midstream partners, l.p., for $270 million; and a charge of $24 million in the three and six months ended june 30, 2021 representing our portion of the asset impairment loss recognized by diamond pipeline llc, a nonconsolidated joint venture with a subsidiary of plains all american pipeline, l.p., resulting from the joint venture’s cancellation of its pipeline extension project. (f) certain statutory income tax rate changes (primarily an increase in the u.k. rate from 19 percent to 25 percent effective in 2023) were enacted during the second quarter of 2021 that resulted in the remeasurement of our deferred tax liabilities. under gaap, we are required to recognize the effect of a change in tax law in the period of enactment. as a result, we recognized deferred income tax expense of $64 million in the three and six months ended june 30, 2021, which represented the net increase in our deferred tax liabilities resulting from the changes in the income tax rates. (g) we use certain financial measures (as noted below) in the earnings release tables and accompanying earnings release that are not defined under gaap and are considered to be non-gaap measures. we have defined these non-gaap measures and believe they are useful to the external users of our financial statements, including industry analysts, investors, lenders, and rating agencies. we believe these measures are useful to assess our ongoing financial performance because, when reconciled to their most comparable gaap measures, they provide improved comparability between periods after adjusting for certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. these non-gaap measures should not be considered as alternatives to their most comparable gaap measures nor should they be considered in isolation or as a substitute for an analysis of our results of operations as reported under gaap. in addition, these non-gaap measures may not be comparable to similarly titled measures used by other companies because we may define them differently, which diminishes their utility. non-gaap measures are as follows: adjusted net income (loss) attributable to valero energy corporation stockholders is defined as net income (loss) attributable to valero energy corporation stockholders adjusted to reflect the items noted below, along with their related income tax effect. the income tax effect for the adjustments was calculated using a combined federal and state statutory rate for the u.s-based adjustments of 22.5 percent and a local statutory income tax rate for foreign-based adjustments. we have adjusted for these items because we believe that they are not indicative of our core operating performance and that their adjustment results in an important measure of our ongoing financial performance to better assess our underlying business results and trends. the basis for our belief with respect to each adjustment is provided below. – 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 three and six months ended june 30, 2022. see note (a) for additional details. on the other hand, the net benefit 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 benefit that is associated with the cost of the rvo generated by our operations during the three and six months ended june 30, 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. – 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 (d)). – loss on early retirement of debt – premiums and other expenses incurred in connection with the early retirement of approximately $1.4 billion aggregate principal amount of various series of our senior notes (see note (e)) are not associated with the ongoing costs of our borrowing and financing activities. – gain on sale of mvp interest – the gain on the sale of a 24.99 percent membership interest in mvp (see note (e)) is not indicative of our ongoing operations. – diamond pipeline asset impairment – the asset impairment loss related to the cancellation of a capital project associated with diamond pipeline llc (see note (e)) 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 (f)) is not indicative of income tax expense associated with the pre-tax results for the three and six months ended june 30, 2021. adjusted earnings (loss) per common share – assuming dilution is defined as adjusted net income (loss) attributable to valero energy corporation stockholders divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution. refining margin is defined as refining segment operating income (loss) excluding the modification of rvo adjustment (see note (a)), operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses. we believe refining margin is an important measure of our refining segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance. renewable diesel margin is defined as renewable diesel segment operating income excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense. we believe renewable diesel margin is an important measure of our renewable diesel segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance. ethanol margin is defined as ethanol segment operating income excluding operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses. we believe ethanol margin is an important measure of our ethanol segment’s operating and financial performance as it is the most comparable measure to the industry’s market reference product margins, which are used by industry analysts, investors, and others to evaluate our performance. adjusted refining operating income (loss) is defined as refining segment operating income (loss) excluding the modification of rvo adjustment (see note (a)) and other operating expenses. we believe adjusted refining operating income (loss) is an important measure of our refining segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance. adjusted ethanol operating income is defined as ethanol segment operating income excluding the gain on sale of ethanol plant (see note (c)) and other operating expenses. we believe adjusted ethanol operating income is an important measure of our ethanol segment’s operating and financial performance because it excludes items that are not indicative of that segment’s core operating performance. adjusted net cash provided by operating activities is defined as net cash provided by operating activities excluding the items noted below. we believe adjusted net cash provided by operating activities is an important measure of our ongoing financial performance to better assess our ability to generate cash to fund our investing and financing activities. the basis for our belief with respect to each excluded item is provided below. – 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 june 30, six months ended june 30, 2022 2021 2022 2021 dgd operating cash flow data net cash provided by operating activities $ 128 $ 256 $ 149 $ 463 exclude: changes in current assets and current liabilities (51 ) (8 ) (200 ) (17 ) adjusted net cash provided by operating activities 179 264 349 480 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 $ 90 $ 132 $ 175 $ 240 capital investments attributable to valero is defined as all capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in nonconsolidated joint ventures presented in our consolidated statements of cash flows, excluding the portion of dgd’s capital investments attributable to the other joint venture member and all of the capital expenditures of vies other than dgd. 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. because dgd’s operating cash flow is effectively attributable to each member, only 50 percent of dgd’s capital investments should be attributed to our net share of total capital investments. we also exclude the capital expenditures of other vies that we consolidate because we do not operate those vies. we believe capital investments attributable to valero is an important measure because it more accurately reflects our capital investments. (h) the refining segment regions reflected herein contain the following refineries: u.s. gulf coast- corpus christi east, corpus christi west, houston, meraux, port arthur, st. charles, texas city, and three rivers refineries; u.s. mid continent- ardmore, mckee, and memphis refineries; north atlantic- pembroke and quebec city refineries; and u.s. west coast- benicia and wilmington refineries. (i) primarily includes petrochemicals, gas oils, no. 6 fuel oil, petroleum coke, sulfur, and asphalt (j) valero uses certain operating statistics (as noted below) in the earnings release tables and the accompanying earnings release to evaluate performance between comparable periods. different companies may calculate them in different ways. all per barrel of throughput, per gallon of sales, and per gallon of production amounts are calculated by dividing the associated dollar amount by the throughput volumes, sales volumes, and production volumes for the period, as applicable. throughput volumes, sales volumes, and production volumes are calculated by multiplying throughput volumes per day, sales volumes per day, and production volumes per day (as provided in the accompanying tables), respectively, by the number of days in the applicable period. we use throughput volumes, sales volumes, and production volumes for the refining segment, renewable diesel segment, and ethanol segment, respectively, due to their general use by others who operate facilities similar to those included in our segments. we believe the use of such volumes results in per unit amounts that are most representative of the product margins generated and the operating costs incurred as a result of our operation of those facilities.
