SAN ANTONIO, Oct. 25, 2016 (GLOBE NEWSWIRE) -- Valero Energy Corporation (NYSE:VLO) today reported net income attributable to Valero stockholders of $613 million, or $1.33 per share, and adjusted net income attributable to Valero stockholders of $571 million, or $1.24 per share, for the third quarter of 2016 compared to net income attributable to Valero stockholders of $1.4 billion, or $2.79 per share, for the third quarter of 2015. Adjusted net income attributable to Valero stockholders for the third quarter of 2016 excludes an income tax benefit related to the disposition of the Aruba business of $42 million, or $0.09 per share. Reconciliations of actual to adjusted amounts are shown in the accompanying earnings release tables.

“Our operations ran well and generated $863 million of cash during the quarter despite a challenging earnings environment,” said Joe Gorder, Valero Chairman, President and Chief Executive Officer. “Our team’s focus on safe, reliable, low-cost operations allowed us to deliver solid performance while executing major turnarounds at our Port Arthur and Ardmore refineries.”

“We exported 329,000 barrels per day ('BPD') of diesel and gasoline combined during the third quarter,” said Gorder. “We were pleased to see strong refined product demand continue during the quarter and we expect consumer demand to remain healthy given low crude oil and refined product prices.”

Refining
The refining segment reported $990 million of operating income for the third quarter of 2016, compared to $2.3 billion of operating income for the third quarter of 2015. The decline was primarily attributable to weaker gasoline and distillate margins. Other factors included narrower discounts for most sweet and sour crude oils relative to the Brent benchmark and higher costs to meet our biofuel blending obligations (primarily from the purchase of RINs).

Biofuel blending costs were $198 million in the third quarter of 2016, which was $104 million higher than the third quarter of 2015. Valero continues to expect such costs to be between $750 million and $850 million for 2016.

Valero’s refineries achieved 95 percent throughput capacity utilization and averaged 2.9 million BPD of throughput volume in the third quarter of 2016, in line with the third quarter of 2015.

Ethanol
The ethanol segment reported $106 million of operating income for the third quarter of 2016, compared to $35 million of operating income for the third quarter of 2015. The increase was primarily due to lower corn prices. Ethanol production volumes averaged 3.8 million gallons per day in the third quarter of 2016, which was consistent with the third quarter of 2015. Valero expects ethanol demand to remain strong given high gasoline demand in the U.S. and significant ethanol exports. Record high corn production in the U.S. is also expected to keep corn prices low in the near term.

Corporate and Other
General and administrative expenses were $192 million in the third quarter of 2016 compared to $179 million in the third quarter of 2015. The effective tax rate of 18 percent in the third quarter of 2016 was lower than expected primarily due to the tax benefit on the disposition of the Aruba business noted earlier and the favorable settlement of an income tax audit.

Investing and Financing Activities
Capital investments totaled $453 million in the third quarter of 2016. Valero paid $276 million in dividends and purchased over 9.2 million shares of its common stock for $502 million, resulting in total cash returned to stockholders of $778 million in the third quarter of 2016. Valero also completed a $1.25 billion public offering of 3.4 percent senior notes in the third quarter of 2016. In early October, Valero repaid $950 million of senior notes due in 2017.

“In the third quarter, we continued to focus on improving capital efficiency, investing in our business, and growing Valero’s earnings power,” said Gorder. “Our team’s efforts in these areas allowed us to greatly exceed our total payout ratio target.”

Valero defines total payout ratio as the sum of dividends plus stock buybacks divided by adjusted net income from continuing operations attributable to Valero stockholders. For the first nine months of 2016, Valero delivered a total payout ratio of 148 percent.

Liquidity and Financial Position
Valero ended the third quarter of 2016 with $9.0 billion of total debt and $5.9 billion of cash and temporary cash investments, of which $35 million was held by Valero Energy Partners LP (NYSE:VLP) (“VLP”). The debt to capital ratio, net of $2.0 billion in cash, was 25 percent. On a pro forma basis giving effect to the October debt redemption noted earlier, the debt to capital ratio was 22 percent.

Strategic Update
Valero expects 2016 capital investments, including turnarounds, catalyst, and joint venture investments, to be about $2.4 billion, which is slightly lower than previous guidance.

In September, Valero achieved its stated drop down target for 2016 with the sale of the previously announced Meraux and Three Rivers Terminal Services Business to VLP.

“We were pleased to see continued growth in VLP through drop downs and incremental organic projects at VLP,” said Gorder. “Logistics investments are an important part of our strategy to grow and optimize Valero’s supply chain.”

Also in September, the Board of Directors approved an incremental $2.5 billion share repurchase authorization, resulting in about $2.7 billion of repurchase authority available.

About Valero
Valero Energy Corporation, through its subsidiaries, is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Valero subsidiaries employ approximately 10,000 people, and its assets include 15 petroleum refineries with a combined throughput capacity of approximately 3 million barrels per day, 11 ethanol plants with a combined production capacity of 1.4 billion gallons per year, a 50-megawatt wind farm, and renewable diesel production from a joint venture. Through subsidiaries, Valero owns the general partner of Valero Energy Partners LP (NYSE:VLP), a midstream master limited partnership. Approximately 7,500 outlets carry the Valero, Diamond Shamrock, Shamrock, and Beacon brands in the United States; Ultramar in Canada; and Texaco in the United Kingdom and Ireland. Valero is a Fortune 500 company based in San Antonio. Please visit www.valero.com for more information.