Valero's Q3 Revenue Falls, But Strong EPS And Sustainable Aviation Fuel Progress Shines

Valero Energy Corp VLO reported a third-quarter FY23 revenue decline of 13.6% year-over-year to $38.404 billion, missing the consensus of $38.495 billion.

EPS was $7.49, up from $7.14 a year ago, beating the consensus of $7.47.

Operating income was $3.5 billion, down 7.6% Y/Y, and margin expanded 60 bps to 9.1%.

The Refining segment reported Q3 operating income of $3.45 billion, compared to $3.82 billion in 3Q22. Refining throughput volumes averaged 3 million barrels per day in the quarter.

The Renewable Diesel segment reported operating income of $123 million, compared to $212 million a year ago. Segment sales volumes averaged 3.0 million gallons daily, 761 thousand gallons higher than 3Q23. 

Renewable Diesel’s higher sales volumes were due to the impact of additional volumes from the DGD Port Arthur plant.

The ethanol segment reported operating income of $197 million compared to $1 million a year ago. Ethanol production volumes averaged 4.3 million gallons per day, 831 thousand gallons per day higher than 3Q22.

“Our refineries operated well and achieved 95 percent throughput capacity utilization, which is a testament to our team’s relentless focus on operational excellence,” commented Lane Riggs, Valero’s Chief Executive Officer and President.

“Product demand remained strong in our U.S. wholesale system, which matched the second quarter record of over 1 million barrels per day of sales volume,” Riggs added.

Adjusted net cash provided by operating activities was $3.19 billion for the quarter versus $4.42 billion in 3Q22.

During the quarter, Valero returned $2.2 billion to stockholders, $360 million was paid as dividends, and $1.8 billion was for the purchase of ~13 million shares of common stock.

Valero ended the quarter with $9.2 billion of total debt, $2.3 billion of finance lease obligations, and $5.8 billion of cash and cash equivalents. 

The company stated that The Sustainable Aviation Fuel (SAF) project at the DGD Port Arthur plant remains on schedule and is expected to be completed in 2025 and cost $315 million, with half of that attributable to Valero. 

Price Action: VLO shares are trading lower by 0.89% at $125.73 on the last check Thursday.