Valero Energy Corporation (VLO) has delivered positive news to investors, surpassing revenue expectations in the third quarter of Fiscal Year 2024. The company reported total revenues of $32.876 billion, exceeding the consensus estimate of $31.131 billion. This strong performance comes despite a decline in the refining segment’s operating income, which dropped to $565 million from $3.4 billion in the same quarter last year. During the quarter, refining throughput averaged 2.9 million barrels per day, impacted by significant maintenance activities.
Despite the challenges in the refining sector, Valero saw strong performance in its other segments. The Ethanol segment generated an operating income of $153 million, a slight decrease from $197 million in the third quarter of 2023. However, production volumes increased, averaging 4.6 million gallons per day, a 255,000 gallon per day increase compared to the previous year. The Renewable Diesel segment also contributed positively, recording an operating income of $35 million, although down from $123 million in the year-ago quarter. Sales volumes for this segment averaged 3.5 million gallons per day, a year-over-year increase of 552,000 gallons per day.
Beyond its financial performance, Valero continues to demonstrate its commitment to sustainable fuel initiatives. The completion of the DGD SAF project, a significant milestone for the company, was completed on schedule and under budget. This project exemplifies Valero’s dedication to cleaner energy solutions and showcases the company’s operational strength.
Valero’s strong earnings performance is reflected in its share price, which is trading higher despite the decline in the refining segment’s income. The company’s adjusted earnings per share (EPS) reached $1.14, exceeding the consensus estimate of $0.98. Valero generated strong cash flow, with operating cash flow reaching $1.3 billion during the quarter. The company also returned $907 million to stockholders, comprising $342 million in dividends and $565 million in share repurchases. Valero ended the quarter with a strong financial position, holding $5.2 billion in cash and cash equivalents and $8.4 billion in total debt.
Investors looking to gain exposure to Valero’s stock can explore ETFs such as the VanEck Oil Refiners ETF (CRAK) and the Invesco Energy Exploration & Production ETF (PXE).
While Valero faces challenges in the refining sector, its overall strong performance, commitment to sustainable fuels, and positive financial outlook are driving investor confidence. The company’s continued focus on innovation and its commitment to a cleaner energy future are key factors in its success, making Valero a company worth watching in the energy sector.
