Valero Energy (VLO) Q1 Earnings Beat Estimates, Increase Y/Y

Oil refining and marketing player Valero Energy Corporation (NYSE:VLO) posted adjusted first-quarter 2017 income of 68 cents per share that surpassed the Zacks Consensus Estimate as well as the year-ago adjusted profit of 60 cents.

Total revenue for the quarter grew 39% year over year to $21,772 million from $15,714 million. The top line was also above the Zacks Consensus Estimate of $20,100 million.

Higher throughput margin due to 91% throughput capacity utilization supported Valero Energy’s strong first-quarter results.

Throughput Volumes

During the quarter, refining throughput volumes were approximately 2.84 million barrels per day, almost in line with the year-earlier level.

By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 49.2%, 17.9% and 17.7%, respectively. The remaining volumes came from residuals, other feedstock as well as blendstocks and others.

The Gulf Coast accounted for approximately 60% of the total throughput volume. The Mid-Continent, North Atlantic and West Coast regions contributed 16%, 17% and 7%, respectively.

Throughput Margins

Company-wide throughput margins increased to $8.14 per barrel from the year-ago level of $7.66 per barrel. Throughput capacity utilization of 91% during the first quarter of this year supported the outperformance.

Average throughput margin realized was $7.98 per barrel in the U.S. Gulf Coast as against $7.63 per barrel in the year-earlier period. The metric was $7.98 per barrel in the U.S. Mid-Continent as against $6.53 a year ago. Throughput margin realized was $8.55 per barrel in the North Atlantic compared with $7.94 last year and $8.86 per barrel in the U.S. West Coast compared with $9.34 in the prior-year quarter.

Total operating cost per barrel was $5.61 during the quarter, up 8.5% from the year-earlier figure of $5.17. Refining operating expense per barrel was $3.85 compared with $3.46 in the year-ago quarter. Depreciation and amortization expenses increased 3% year over year to $1.76 per barrel.

Capital Expenditure & Balance Sheet

First-quarter capital expenditure was $641 million, including $245 million for turnarounds and catalyst expenditures. At the end of the quarter, the company had cash and temporary cash investments of $4.5 billion and debt of $8.5 billion. Valero also rewarded shareholders with dividends and share buybacks worth $629 million.

Q1 Price Performance

During the first three months of 2017, Valero Energy’s shares underperformed the Zacks categorized Oil Refining & Marketing industry. During the aforesaid period, the stock lost almost 3% compared with 10.8% decrease for the broader industry.

Guidance

For 2017, Valero reaffirmed its capital expenditure at $2.7 billion.

Zacks Rank

Valero Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked players from the energy sector include Antero Resources Corp. (NYSE:AR) , W&T Offshore Inc. (NYSE:WTI) and Diamond Offshore Drilling Inc. (NYSE:DO) . Antero Resources and W&T Offshore sport a Zacks Rank #1 (Strong Buy), while Concho carries a Zacks Rank #2 (Buy).

Antero Resources beat the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 239.10%.

W&T Offshore had an average positive earnings surprise of 50.53% for the last four quarters.

Diamond Offshore surpassed the Zacks Consensus Estimate in all the prior four quarters with an average positive earnings surprise of 353.3%.

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