Valero Energy Corp. Reports Operating Results (10-Q)
Valero Energy Corp. has a market cap of $10.34 billion; its shares were traded at around $18.31 with a P/E ratio of 203.4 and P/S ratio of 0.1. The dividend yield of Valero Energy Corp. stocks is 1.2%. Valero Energy Corp. had an annual average earning growth of 11.9% over the past 10 years.VLO is in the portfolios of Charles Brandes of Brandes Investment, David Tepper of APPALOOSA MANAGEMENT LP, Richard Pzena of Pzena Investment Management LLC, Arnold Van Den Berg of Century Management, Jeff Auxier of Auxier Focus Fund, David Dreman of Dreman Value Management, Louis Moore Bacon of Moore Capital Management, LP, Louis Moore Bacon of Moore Capital Management, LP, Jeremy Grantham of GMO LLC, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors, Pioneer Investments, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations:For the second quarter of 2010, we reported income from continuing operations of $530 million, or $0.93 per share, compared to a loss from continuing operations of $191 million, or $0.36 per share, for the second quarter of 2009. For the first six months of 2010, we reported income from continuing operations of $429 million, or $0.76 per share, compared to $173 million, or $0.33 per share, for the first six months of 2009. These results were primarily due to our refining segment operations, which generated operating income of $921 million in the second quarter of 2010 and an operating loss of $143 million in the second quarter of 2009. Refining segment operating income was $870 million for the first six months of 2010 and $550 million for the first six months of 2009. The increase in refining operating income for both comparable periods (2010 vs. 2009) was primarily due to improved margins for the distillate products we produce and wider sour crude oil differentials. The sour crude oil differential is the difference between the price of sweet crude oil and the price of sour crude oil. We believe that the improved distillate margins are due to an increase in the demand for refined products resulting from the slowly improving U.S. and worldwide economies. This refined product demand, however, has not returned to levels experienced prior to the economic slowdown that began in 2008. In addition, we believe there is excess worldwide refinery capacity and refined product inventories remain high. These factors continue to constrain the margins for refined products.
In the second quarter of 2009, we entered the ethanol business through the acquisition of seven ethanol facilities, and we acquired three additional facilities in the first quarter of 2010. We believe that ethanol is a natural fit for us because we manufacture transportation fuels. During the second quarter and first half of 2010, our ethanol segment generated operating income of $35 million and $92 million, respectively, compared to $22 million for the second quarter and first half of 2009. The ethanol business is dependent on margins between ethanol and corn feedstocks and can be impacted by U.S. government subsidies and biofuels (including ethanol) mandates.
Our retail segment generated operating income of $109 million for the second quarter of 2010 compared to operating income of $65 million for the second quarter of 2009. Retail operating income was $180 million for the first six months of 2010, compared to $121 million for the comparable period in 2009. The 2010 results benefited from the blending of ethanol with the gasoline sold by our retail
To support our financial strength and liquidity, we issued $1.25 billion in debt during the first quarter of 2010 at interest rates favorable to those on our existing debt. We used a portion of the proceeds to redeem our 7.50% senior notes for $294 million in March 2010, and our 6.75% senior notes for $190 million in May 2010; the remainder was used for general corporate purposes.
Read the The complete Report