With roughly 10,000 employees, Valero is an independent petroleum refiner and ethanol producer, with petroleum refineries in the U.S., Canada and the U.K., and ethanol plants in the Mid-Continent region of the U.S.

In addition, Valero owns the 2 percent general partner interest and a majority limited partner interest in Valero Energy Partners LP, a midstream master limited partnership. Valero sells its products in both the wholesale rack and bulk markets, and roughly 7,400 outlets carry Valero’s brand names in the U.S., Canada, the U.K. and Ireland.

Valero’s first-quarter income rose 47% from a year ago, to $1 per share, beating the Zacks consensus estimate by 8 cents. Total revenues grew 21.4% to $26.4 million, surpassing analysts’ $23.53 million consensus estimate.

Despite some margin headwinds, Valero “performed well and delivered solid financial results,” Gorder said in the company’s earnings call with analysts.

“We’ve been investing growth capital in logistics projects — an excellent example of this is the Diamond Pipeline, which is running well and enabling us to capture additional margin into our refining system,” he said.

“We increased pipeline throughput during the quarter, which provided our Memphis refinery with greater access to Cushing and Midland crudes that are cost advantage versus LLS. We made additional investments in logistics to further reduce secondary costs and increase margin capture.”

During the quarter, Valero acquired the SemLogistics Milford Haven fuel storage facility in Wales, and also entered into a joint ownership agreement with Sunrise Pipeline LLC, a new pipeline connecting Midland and Wichita Falls, Texas.

Construction also continues on the Central Texas pipelines and terminals and the Pasadena products terminal. The company expects these investments to improve flexibility in product and feedstock supply in Valero’s refineries when completed in 2019 and 2020, Gorder told analysts.

Within the company’s refining investments, work remains on track for the Diamond Green Diesel capacity expansion and the Houston and St. Charles alkylation units, and the projects should begin between the third quarter and 2020.

In addition, Valero’s board of directors approved the construction of a 45-megawatt cogeneration plant at the Pembroke refinery, and the company expects to post lower operating costs and improved electricity and steam supply reliability when the project is completed in 2020.

Gorder also outlined Valero’s ongoing cash returns to stockholders, paying out 57% of the company’s first quarter adjusted net cash provided by operating activities, with a target annual payout ratio of between 40% to 50%.

“We remain optimistic about the margin environment for the year,” he told analysts. “Global economies are growing. Product demand is strong, particularly in Latin America. And days of supply refine light product inventories are below five-year averages. With our highly reliable and flexible refining system, we are well positioned to capture margin tailwinds arising from these positive trends.”

In May, company subsidiary Valero Marketing and Supply de Mexico, S.A. de C.V., signed long-term agreements to directly supply refined products into northern Mexico from two Texas refineries, via a pipeline and terminal expansion in Nuevo Laredo, Mexico, recently announced by NuStar Energy.

—————————-

TankTerminals.com – Research, Market and Expand Your Presence within the Tank Storage Industry Learn more.