Valero energy corporation reports 2010 fourth quarter and annual
results
San antonio--(business wire)--valero energy corporation (nyse: vlo) today reported income from continuing operations of $180 million, or $0.32 per share, for the fourth quarter of 2010, compared to a loss from continuing operations of $131 million, or $0.23 per share, for the fourth quarter of 2009. the fourth-quarter 2010 results included an after-tax gain of $36 million, or $0.06 per share, on the sale of the company’s interest in the cameron highway oil pipeline company and an after-tax loss of $80 million, or $0.14 per share, from the mark-to-market impact of positions related to forward sales of refined products. for the year ended december 31, 2010, the company reported income from continuing operations of $923 million, or $1.62 per share, compared to a full-year 2009 loss from continuing operations of $273 million, or $0.50 per share. the full-year 2009 loss from continuing operations included an after-tax asset impairment loss of $151 million, or $0.28 per share, for project cancellations. for all periods shown in the accompanying tables, discontinued operations relate to the delaware city, delaware refinery that was sold in the second quarter of 2010 and the paulsboro, new jersey refinery that was sold in the fourth quarter of 2010. operating income in the fourth quarter of 2010 was $378 million versus an operating loss of $135 million in the fourth quarter of 2009. the improvement in operating income was mainly due to an increase in refining throughput margins to $7.30 per barrel, a 49 percent increase over the fourth quarter of 2009. the increase in throughput margins was primarily due to higher margins for diesel and gasoline combined with better discounts for heavy-sour feedstocks. the increase in operating income was also due to a 10 percent increase in throughput volumes versus the fourth quarter of 2009, which also improved refinery operating expenses from $3.90 per barrel in the fourth quarter of 2009 to $3.64 per barrel in the fourth quarter of 2010. “what a difference a year makes,” said valero chairman and ceo bill klesse. “the global economic recovery is underway with very strong growth in developing countries contributing to a surge in global demand for oil and refined products. refining margins and crude oil discounts have improved substantially over the past year, and this market momentum has carried into 2011. combined with additional capacity closures in europe and elsewhere, global demand growth should continue to support refining margins and encourage exports from competitive refiners like valero. we are seeing modest growth for fuels in the u.s., but unemployment rates will have to fall before demand really picks up. “while the market has changed for the better in 2010, so did valero,” continued klesse. “we have improved our portfolio through the sale of underperforming and non-core assets, advanced key economic growth projects, built our financial strength, and made significant progress on our cost savings. in fact, we achieved $225 million in pre-tax cost savings during 2010, which was more than double our initial goal of $100 million. these actions position valero with more earnings power for the future.” valero’s retail and ethanol segments reported another good quarter and an impressive year overall. the retail segment earned $61 million in operating income during the fourth quarter of 2010, and $346 million for the full-year 2010, nearly matching the record results in 2008. the ethanol segment also continued to perform well with $70 million in operating income generated during the fourth quarter of 2010, and set a record high with $209 million in operating income for the full-year 2010. regarding cash flows in the fourth quarter of 2010, capital spending was $629 million, of which $125 million was for turnaround and catalyst expenditures. also in the fourth quarter, the company paid $28 million in common stock dividends and received $877 million in proceeds from the sale of the paulsboro refinery and the company’s interest in the cameron highway oil pipeline company. in addition, the company issued $300 million in tax-exempt bonds and ended the fourth quarter with $3.3 billion in cash and temporary cash investments. for the full-year 2010, capital spending was $2.3 billion. earlier this month, the company announced a preliminary capital spending estimate of $2.9 billion for 2011, an increase from prior estimates due to the acceleration of economic growth projects to install new hydrocrackers at the port arthur and st. charles refineries. the 2011 capital spending estimate also incorporates several major turnarounds in the first quarter and the early part of the second quarter, including significant reliability investments for a revamp of the st. charles refinery cat cracker and replacement of the port arthur refinery coke drums. “in 2011, our focus continues on safety, improving reliability, achieving another $100 million in pre-tax cost savings, and executing on our growth projects,” said klesse. “we have advanced the timing on the hydrocracker projects to realize the economic benefits sooner, which capitalize on our outlook for high crude oil and low natural gas prices plus growing global demand for diesel. we will also continue to evaluate opportunities to improve the competitiveness of our portfolio.” valero’s senior management will hold a conference call at 11:00 a.m. et (10 a.m. ct) today to discuss this earnings release and provide an update on company operations. a live broadcast of the conference call will be available on the company’s web site at www.valero.com. valero energy corporation is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. its assets include 14 petroleum refineries with a combined throughput capacity of approximately 2.6 million barrels per day, 10 ethanol plants with a combined production capacity of 1.1 billion gallons per year, and a 50-megawatt wind farm. valero is also one of the largest retail operators with approximately 5,800 retail and branded wholesale outlets in the united states, canada and the caribbean under the valero, diamond shamrock, shamrock, ultramar and beacon brands. based in san antonio, valero is a fortune 500 company with approximately 20,000 employees. please visit www.valero.com for more information. statements contained in this release that state the company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the securities act of 1933 and the securities exchange act of 1934. the words “believe,” “expect,” “should,” “could,” “estimates,” and other similar expressions identify forward-looking statements. it is important to note that actual results could differ materially from those projected in such forward-looking statements. for more information concerning factors that could cause actual results to differ from those expressed or forecasted, see valero’s annual reports on form 10-k and quarterly reports on form 10-q, filed with the securities and exchange commission. u.s. u.s. on december 17, 2010, valero sold its refinery in paulsboro, new jersey, and associated inventory to pbf holding company llc for $707 million in proceeds, of which $160 million consisted of a short-term note, resulting in a loss on the sale of $980 million ($610 million after taxes). the results of operations of the refinery, including the loss on the sale, are reflected as discontinued operations for all periods presented. in addition, the refining segment and northeast region operating highlights presented herein exclude the paulsboro refinery for all periods presented. during the fourth quarter of 2009, valero permanently shut down its refinery in delaware city, delaware, and wrote down the book value of the refinery assets to net realizable value, resulting in a loss on the shutdown of $1.9 billion ($1.2 billion after taxes). on june 1, 2010, valero sold the shutdown refinery assets and associated terminal and pipeline assets to pbf energy partners lp (an entity related to the buyer of the paulsboro refinery) for $220 million in cash proceeds, resulting in a gain on the sale of the refinery assets of $92 million ($58 million after taxes) and an insignificant gain on the sale of the terminal and pipeline assets. the results of operations of the shutdown refinery, including the loss on the shutdown in 2009 and the gain on the sale in 2010, are reflected as discontinued operations for all periods presented. in addition, the refining segment and northeast region operating highlights presented herein exclude the delaware city refinery for all periods. the terminal and pipeline assets associated with the refinery were not shut down in 2009 and continued to be operated until the date of their sale, and the results of operations of those assets are reflected in continuing operations for all periods presented. the asset impairment loss for all periods presented relates primarily to the permanent cancellation of certain capital projects classified as "construction in progress" as a result of the unfavorable impact of the economic slowdown on refining industry fundamentals. the asset impairment loss applicable to the refining business segment has been excluded from refining operating expenses in determining operating costs per barrel. the after-tax amounts pertaining to the asset impairment loss reflected in the statement of income data are $0 million and $21 million for the three months ended december 31, 2010 and 2009, respectively, and $1 million and $151 million for the twelve months ended december 31, 2010 and 2009, respectively. on november 23, 2010, valero sold its investment in cameron highway pipeline company to genesis, inc. for $330 million in cash proceeds, resulting in a gain of $55 million ($36 million after taxes).
