Valero Energy Corp 10-Q for FY2021 Q1

Valero Energy Corp (VLO)

10-Q 2021-04-30 For: 2021-03-31

Added on April 12, 2026

About this 10-Q

Valero Energy Corp filed this 10-Q on April 30, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $20.81B; down 5.9% from $22.1B a year earlier
Net loss: $704M; compared with a net loss of $1.85B a year earlier
Diluted EPS: -$1.73; compared with -$4.54 a year earlier

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Delaware			74-1828067
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)



			Page
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020			1
Consolidated Statements of Income for the Three Months Ended March 31, 2021 and 2020			2
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020			3
Consolidated Statements of Equity for the Three Months Ended March 31, 2021 and 2020			4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020			5
Condensed Notes to Consolidated Financial Statements			6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			27
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			49
ITEM 4. CONTROLS AND PROCEDURES			51
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			52
ITEM 1A. RISK FACTORS			52
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			53
ITEM 6. EXHIBITS			54
SIGNATURE			55


	March 31, 2021		December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,254	$	3,313
Receivables, net	9,014		6,109
Inventories	5,881		6,038
Prepaid expenses and other	442		384
Total current assets	17,591		15,844
Property, plant, and equipment, at cost	47,370		46,967
Accumulated depreciation	(16,991)		(16,578)
Property, plant, and equipment, net	30,379		30,389
Deferred charges and other assets, net	5,644		5,541
Total assets	$	53,614	$	51,774
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	734	$	723
Accounts payable	9,113		6,082
Accrued expenses	1,087		994
Taxes other than income taxes payable	1,233		1,372
Income taxes payable	140		112
Total current liabilities	12,307		9,283
Debt and finance lease obligations, less current portion	13,930		13,954
Deferred income tax liabilities	5,034		5,275
Other long-term liabilities	3,616		3,620
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued	7		7
Additional paid-in capital	6,810		6,814
Treasury stock, at cost; 264,741,072 and 265,096,171 common shares	(15,700)		(15,719)
Retained earnings	27,849		28,953
Accumulated other comprehensive loss	(1,165)		(1,254)
Total Valero Energy Corporation stockholders’ equity	17,801		18,801
Noncontrolling interests	926		841
Total equity	18,727		19,642
Total liabilities and equity	$	53,614	$	51,774


	Three Months Ended March 31,
	2021		2020
Revenues (a)	$	20,806	$	22,102
Cost of sales:
Cost of materials and other	18,992		19,952
Lower of cost or market (LCM) inventory valuation adjustment	—		2,542
Operating expenses (excluding depreciation and amortization expense reflected below)	1,656		1,124
Depreciation and amortization expense	566		569
Total cost of sales	21,214		24,187
Other operating expenses	38		2
General and administrative expenses (excluding depreciation and amortization expense reflected below)	208		177
Depreciation and amortization expense	12		13

Operating loss	(666)		(2,277)
Other income, net	45		32
Interest and debt expense, net of capitalized interest	(149)		(125)
Loss before income tax benefit	(770)		(2,370)
Income tax benefit	(148)		(616)


Net loss	(622)		(1,754)
Less: Net income attributable to noncontrolling interests	82		97
Net loss attributable to Valero Energy Corporation stockholders	$	(704)	$	(1,851)








Loss per common share	$	(1.73)	$	(4.54)
Weighted-average common shares outstanding (in millions)	407		408





Loss per common share – assuming dilution	$	(1.73)	$	(4.54)
Weighted-average common shares outstanding – assuming dilution (in millions)	407		408

__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our international operations	$	1,120	$	1,368


	Three Months Ended March 31,
		2021		2020
Net loss		$	(622)	$	(1,754)
Other comprehensive income (loss):
Foreign currency translation adjustment		76		(607)
Net gain on pension and other postretirement benefits		15		12
Net gain on cash flow hedges		10		29
Other comprehensive income (loss) before income tax expense		101		(566)
Income tax expense related to items of other comprehensive income (loss)		7		6
Other comprehensive income (loss)		94		(572)
Comprehensive loss		(528)		(2,326)
Less: Comprehensive income attributable to noncontrolling interests		87		111
Comprehensive loss attributable to Valero Energy Corporation stockholders		$	(615)	$	(2,437)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________


	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total		Non- controlling Interests		Total Equity
Balance as of December 31, 2020	$	7	$	6,814	$	(15,719)	$	28,953	$	(1,254)	$	18,801	$	841	$	19,642
Net income (loss)	—		—		—		(704)		—		(704)		82		(622)
Dividends on common stock ($0.98 per share)	—		—		—		(400)		—		(400)		—		(400)
Stock-based compensation expense	—		28		—		—		—		28		—		28
Transactions in connection with stock-based compensation plans	—		(32)		19		—		—		(13)		—		(13)


Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)

Other comprehensive income	—		—		—		—		89		89		5		94
Balance as of March 31, 2021	$	7	$	6,810	$	(15,700)	$	27,849	$	(1,165)	$	17,801	$	926	$	18,727

Balance as of December 31, 2019	$	7	$	6,821	$	(15,648)	$	31,974	$	(1,351)	$	21,803	$	733	$	22,536
Net income (loss)	—		—		—		(1,851)		—		(1,851)		97		(1,754)
Dividends on common stock ($0.98 per share)	—		—		—		(401)		—		(401)		—		(401)
Stock-based compensation expense	—		24		—		—		—		24		—		24
Transactions in connection with stock-based compensation plans	—		(31)		14		—		—		(17)		—		(17)
Open market stock purchases	—		—		(130)		—		—		(130)		—		(130)

Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)

Other comprehensive income (loss)	—		—		—		—		(586)		(586)		14		(572)
Balance as of March 31, 2020	$	7	$	6,814	$	(15,764)	$	29,722	$	(1,937)	$	18,842	$	843	$	19,685


ASU		Basis of Adoption
2021-01	Reference Rate Reform (Topic 848): Scope	Prospectively


	March 31, 2021		December 31, 2020
Refinery feedstocks	$	1,947	$	1,979
Refined petroleum products and blendstocks	3,284		3,425
Renewable diesel feedstocks and products	64		50
Ethanol feedstocks and products	297		297
Materials and supplies	289		287


Inventories	$	5,881	$	6,038


				March 31, 2021
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued (a)		Availability
Committed facilities:
Valero Revolver	$	4,000	March 2024	$	—	$	118	$	3,882
364-day Revolving Credit Facility (b)	$	875	April 2021	$	—	n/a		$	875
Canadian Revolver	C$	150	November 2021	C$	—	C$	5	C$	145
Accounts receivable sales facility	$	1,000	July 2021	$	—	n/a		$	1,000
Letter of credit facility	$	50	November 2021	n/a		$	—	$	50
Committed facilities of VIEs (c):
DGD Revolver	$	400	March 2024	$	—	$	—	$	400
IEnova Revolver (d)	$	660	February 2028	$	606	n/a		$	54
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		$	330	n/a


	Three Months Ended March 31,
	2021								2020
	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(515)	$	(737)	$	(2)	$	(1,254)	$	(676)	$	(672)	$	(3)	$	(1,351)
Other comprehensive income (loss) before reclassifications	76		1		(5)		72		(606)		—		21		(585)
Amounts reclassified from accumulated other comprehensive loss	—		8		9		17		—		9		(10)		(1)
Other comprehensive income (loss)	76		9		4		89		(606)		9		11		(586)
Balance as of end of period	$	(439)	$	(728)	$	2	$	(1,165)	$	(1,282)	$	(663)	$	8	$	(1,937)


	March 31, 2021
	DGD		Central Mexico Terminals		Other		Total
Assets
Cash and cash equivalents	$	191	$	—	$	19	$	210
Other current assets	272		10		10		292
Property, plant, and equipment, net	1,431		614		94		2,139
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	166	$	632	$	8	$	806
Debt and finance lease obligations, less current portion	1		—		24		25


	December 31, 2020
	DGD		Central Mexico Terminals		Other		Total
Assets
Cash and cash equivalents	$	144	$	1	$	16	$	161
Other current assets	219		24		8		251
Property, plant, and equipment, net	1,232		590		96		1,918
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	90	$	620	$	8	$	718
Debt and finance lease obligations, less current portion	1		—		25		26


	Pension Plans				Other Postretirement Benefit Plans
	2021		2020		2021		2020










Three months ended March 31
Service cost	$	40	$	35	$	2	$	1
Interest cost	18		21		2		2
Expected return on plan assets	(48)		(44)		—		—
Amortization of:
Net actuarial loss	20		18		—		—
Prior service credit	(4)		(5)		(2)		(1)

Net periodic benefit cost	$	26	$	25	$	2	$	2


	March 31, 2021		December 31, 2020		Increase
Receivables from contracts with customers, included in receivables, net	$	4,701	$	3,642	$	1,059
Contract liabilities, included in accrued expenses	104		55		49


	Three Months Ended March 31,
		2021		2020
Refining:
Gasolines and blendstocks		$	8,729	$	8,244
Distillates		8,581		10,663
Other product revenues		2,159		2,078
Total refining revenues		19,469		20,985
Renewable diesel:
Renewable diesel		352		306
Ethanol:
Ethanol		752		629
Distillers grains		233		182
Total ethanol revenues		985		811

Revenues		$	20,806	$	22,102


	March 31, 2021
							Total Gross Fair Value		Effect of Counter- party Netting		Effect of Cash Collateral Netting		Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets
Commodity derivative contracts	$	386	$	—	$	—	$	386	$	(386)	$	—	$	—	$	—
Physical purchase contracts	—		10		—		10		n/a		n/a		10		n/a


Foreign currency contracts	10		—		—		10		n/a		n/a		10		n/a
Investments of certain benefit plans	75		—		8		83		n/a		n/a		83		n/a

Total	$	471	$	10	$	8	$	489	$	(386)	$	—	$	103

Liabilities
Commodity derivative contracts	$	444	$	—	$	—	$	444	$	(386)	$	(58)	$	—	$	(120)
Environmental credit obligations	—		62		—		62		n/a		n/a		62		n/a




Total	$	444	$	62	$	—	$	506	$	(386)	$	(58)	$	62


	December 31, 2020
							Total Gross Fair Value		Effect of Counter- party Netting		Effect of Cash Collateral Netting		Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets
Commodity derivative contracts	$	403	$	—	$	—	$	403	$	(373)	$	(18)	$	12	$	—
Physical purchase contracts	—		13		—		13		n/a		n/a		13		n/a

Investments of certain benefit plans	74		—		8		82		n/a		n/a		82		n/a

Total	$	477	$	13	$	8	$	498	$	(373)	$	(18)	$	107

Liabilities
Commodity derivative contracts	$	405	$	—	$	—	$	405	$	(373)	$	(32)	$	—	$	(44)
Environmental credit obligations	—		96		—		96		n/a		n/a		96		n/a

Foreign currency contracts	4		—		—		4		n/a		n/a		4		n/a
Total	$	409	$	96	$	—	$	505	$	(373)	$	(32)	$	100


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Three months ended March 31, 2021
Revenues:
Revenues from external customers	$	19,469	$	352	$	985	$	—	$	20,806
Intersegment revenues	3		79		60		(142)		—
Total revenues	19,472		431		1,045		(142)		20,806
Cost of sales:
Cost of materials and other	18,022		187		924		(141)		18,992

Operating expenses (excluding depreciation and amortization expense reflected below)	1,471		29		156		—		1,656
Depreciation and amortization expense	533		12		21		—		566
Total cost of sales	20,026		228		1,101		(141)		21,214
Other operating expenses	38		—		—		—		38
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		208		208
Depreciation and amortization expense	—		—		—		12		12


Operating income (loss) by segment	$	(592)	$	203	$	(56)	$	(221)	$	(666)


		March 31, 2021				December 31, 2020
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents	Level 1	$	2,254	$	2,254	$	3,313	$	3,313
Financial liabilities
Debt (excluding finance leases)	Level 2	13,024		14,776		13,013		15,103


	Notional Contract Volumes by Year of Maturity
	2021	2022
Derivatives designated as cash flow hedges
Refined petroleum products:
Futures – long	427	—
Futures – short	1,605	—



Derivatives designated as economic hedges
Crude oil and refined petroleum products:


Futures – long	66,513	64
Futures – short	56,880	22







Corn:
Futures – long	63,630	10
Futures – short	90,395	365
Physical contracts – long	26,563	351


	Balance Sheet Location	March 31, 2021				December 31, 2020
		Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments
Commodity contracts	Receivables, net	$	5	$	10	$	4	$	17



Derivatives not designated as hedging instruments
Commodity contracts	Receivables, net	$	381	$	434	$	399	$	388
Physical purchase contracts	Inventories	10		—		13		—
Foreign currency contracts	Receivables, net	10		—		—		—
Foreign currency contracts	Accrued expenses	—		—		—		4
Total		$	401	$	434	$	412	$	392


Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended March 31,
		2021		2020
Commodity contracts
Gain (loss) recognized in other comprehensive income (loss) on derivatives	N/A	$	(13)	$	55
Gain (loss) reclassified from accumulated other comprehensive loss into income	Revenues	(23)		26


Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended March 31,
		2021		2020
Commodity contracts	Revenues	$	7	$	(8)
Commodity contracts	Cost of materials and other	(78)		(152)
Commodity contracts	Operating expenses (excluding depreciation and amortization expense)	1		(2)
Foreign currency contracts	Cost of materials and other	(8)		49
Foreign currency contracts	Other income, net	30		(165)


	Three Months Ended March 31, 2020
	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Revenues:
Revenues from external customers	$	20,985	$	306	$	811	$	—	$	22,102
Intersegment revenues	2		53		64		(119)		—
Total revenues	20,987		359		875		(119)		22,102
Cost of sales:
Cost of materials and other	19,127		130		813		(118)		19,952
LCM inventory valuation adjustment (b)	2,414		—		128		—		2,542
Operating expenses (excluding depreciation and amortization expense reflected below)	995		20		109		—		1,124
Depreciation and amortization expense	536		11		22		—		569
Total cost of sales	23,072		161		1,072		(118)		24,187
Other operating expenses	2		—		—		—		2
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		177		177
Depreciation and amortization expense	—		—		—		13		13
Operating income (loss) by segment	$	(2,087)	$	198	$	(197)	$	(191)	(2,277)
Other income, net									32
Interest and debt expense, net of capitalized interest									(125)
Loss before income tax benefit									(2,370)
Income tax benefit									(616)
Net loss									(1,754)
Less: Net income attributable to noncontrolling interests									97
Net loss attributable to Valero Energy Corporation stockholders									$	(1,851)


Available borrowing capacity from committed facilities(a):
Valero Revolver	$	3,882
364-day Revolving Credit Facility(b)	875
Canadian Revolver(c)	116
Accounts receivable sales facility	1,000
Letter of credit facility	50
Total available borrowing capacity	5,923
Cash and cash equivalents(d)	2,044
Total liquidity	$	7,967


	March 31, 2021 (a)
	Expected Maturity Dates
	Remainder of 2021 (b)			2022			2023			2024			2025			There- after			Total			Fair Value
Fixed rate	$	—		$	—		$	850		$	925		$	1,650		$	8,474		$	11,899		$	13,565
Average interest rate	—		%	—		%	2.7		%	1.2		%	3.1		%	5.1		%	4.4		%
Floating rate (c)	$	610		$	6		$	595		$	—		$	—		$	—		$	1,211		$	1,211
Average interest rate	3.9		%	3.9		%	1.4		%	—		%	—		%	—		%	2.7		%









	December 31, 2020 (a)
	Expected Maturity Dates
	2021 (b)			2022			2023			2024			2025			There- after			Total			Fair Value
Fixed rate	$	—		$	—		$	850		$	925		$	1,650		$	8,474		$	11,899		$	13,899
Average interest rate	—		%	—		%	2.7		%	1.2		%	3.1		%	5.1		%	4.4		%
Floating rate (c)	$	603		$	6		$	595		$	—		$	—		$	—		$	1,204		$	1,204
Average interest rate	3.9		%	3.0		%	1.4		%	—		%	—		%	—		%	2.7		%


	Receive USD/ Pay CAD		Receive USD/ Pay GBP		Receive CAD/ Pay USD
March 31, 2021
Contract amount	$	160	$	85	$	2,800
Weighted-average contractual exchange rate	0.79625		1.37805		0.79271
Fair value asset	$	—	$	—	$	10

December 31, 2020
Contract amount	$	228	$	97	$	1,600
Weighted-average contractual exchange rate	0.78205		1.34454		0.78492
Fair value liability	$	(1)	$	(1)	$	(2)


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Not Purchased as Part of Publicly Announced Plans or Programs (a)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b)
January 2021	129,304	$	59.36	129,304	—	$1.4 billion
February 2021	82,040	$	74.06	82,040	—	$1.4 billion
March 2021	9,644	$	75.21	9,644	—	$1.4 billion
Total	220,988	$	65.51	220,988	—	$1.4 billion


Exhibit No.						Description

*+10.01						Form of Amended and Restated Performance Share Agreement (2020 grant–second and third tranches).

*+10.02						Form of Performance Share Agreement (2021 grant).

*31.01						Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.

*31.02						Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.

**32.01						Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002).

***101.INS						Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

***101.SCH						Inline XBRL Taxonomy Extension Schema Document.

***101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

***101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

***101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

***101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

***104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


*			Filed herewith.
**			Furnished herewith.
***			Submitted electronically herewith.
+			Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto.



						VALERO ENERGY CORPORATION (Registrant)
			By:			/s/ Jason W. Fraser
						Jason W. Fraser
						Executive Vice President and
						Chief Financial Officer
						(Duly Authorized Officer and Principal
						Financial and Accounting Officer)



Ranking	Percentile	Payout
1	100.0%	200.0%
2	90.0%	200.0%
3	80.0%	175.0%
4	70.0%	150.0%
5	60.0%	125.0%
6	50.0%	100.0%
7	40.0%	75.0%
8	30.0%	50.0%
9	20.0%	25.0%
10	10.0%	0.0%
11	0.0%	0.0%


	perf sh				common sh
Maximum	12,000			200%	24,000

TSR	12,000	75%	9,000	175%	15,750
ROIC	12,000	25%	3,000	100%	3,000
Energy Transition	12,000			25%	3,000
Total shares of Common Stock					21,750


by:			/s/ Julia R. Reinhart
			Julia Rendon Reinhart
			Senior Vice President & Chief Human
			Resources Officer

Participant


18,000 common shares x 18/36 =	9,000	common shares

Add DEA shares	2,823	common shares

Total	25,323	common shares


21,000 common shares x 6/36 =	3,500	common shares

Add DEA shares	1,647	common shares

Total	20,897	common shares


/s/ Joseph W. Gorder
Joseph W. Gorder Chief Executive Officer