Valero Q3 Refining Margin More Than Halved Year-on-Year

Valero Energy Corp. on Thursday reported $364 million in net income attributable to shareholders for the third quarter, 86.1 percent lower than the same three-month period last year as its average refining margin slumped 55.4 percent.

The net profit translates to $1.14 per share, missing the Zacks Consensus Estimate, which averages projections by brokerage analysts, of $1.29. Valero closed 1.2 percent lower at $131.36 on the New York Stock Exchange Thursday but opened at $133 Friday.

The San Antonio, Texas-based company logged $9.09 in refining margin per barrel of throughput for the July–September quarter. Adjusted operating income per barrel of throughput, which excludes expenses that Valero deems not indicative of the “core operating performance”, stood at $2.14.

“Refining throughput volumes averaged 2.9 million barrels per day during a period of heavy maintenance activities in the third quarter of 2024”, Valero said in a statement.

Throughput in the Gulf Coast dropped to 1.8 million barrels a day (MMbd). Throughput in Valero’s three other refining regions — the Mid-Continent, the North Atlantic and the West Coast — all declined year-on-year.

United States consumption of motor gasoline in the third quarter averaged 9.12 MMbd, up from the same period in 2023 and stable compared to the prior quarter in 2024, according to official data. Jet fuel demand grew both year-on-year and quarter-on-quarter to 1.77 MMbd. Distillate fuel oil demand dipped year-on-year but climbed quarter-on-quarter to 3.79 MMbd. Residual fuel oil demand inched up year-on-year but slipped quarter-on-quarter to 280,000 bd, the country’s Energy Information Administration said in its latest Short-Term Energy Outlook, published October 8.

Meanwhile Valero’s renewable diesel segment logged $35 million in operating income, down from $123 million for the third quarter of 2023. Sales volumes increased to 3.5 million gallons per day but the average margin decreased to $196 million from $262 million for the third quarter last year.

It announced Thursday that the sustainable aviation fuel (SAF) project at its joint venture renewable diesel plant in Port Arthur, Texas, had been completed. The project enables the plant to convert about half of its renewable diesel capacity into SAF production.

Valero’s ethanol segment contributed $153 million in operating income, down from $197 million for the comparable period last year. Sales volumes climbed to 4.6 million gallons per day but the average ethanol margin fell to $305 million from $342 million.

Valero’s operating activities in the third quarter of 2024 generated $1.3 billion in net cash — $1.1 billion adjusted.

It paid $907 million to stockholders during the period, with dividends totaling $342 million. The other portion consisted of $565 million in common stock redemptions. The total return to shareholders represents a payout ratio of 84 percent, it said. Valero defines payout ratio as dividends paid plus stock buybacks divided by adjusted net cash from operating activities.

“Valero remains committed to a through-cycle minimum annual payout ratio of 40 to 50 percent”, Valero added.

Valero ended the quarter with $5.2 billion in cash and cash equivalents, $8.4 billion in total debt and $2.5 billion in finance lease obligations.

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