Operating income in Valero’s refining segment doubled from $1.1 billion in the year-ago quarter to $2.2 billion primarily due to an increase to throughput margin of $3.87 per barrel from $9.84 to $13.71. Price differentials to Brent crude pushed gasoline and other refined product margins higher and Valero also benefited from lower natural gas costs.
Operating income in the company’s ethanol segment dropped year-over-year from $187 million to $108 million mainly due to lower gross margin per gallon which Valero attributed to a decline in ethanol and gasoline prices that more than offset cheaper corn prices. Average ethanol production totaled 3.8 million gallons per day, up by 517,000 gallons compared with the year-ago quarter.
Valero returned a total of $870 million in cash to stockholders in the second quarter of 2015, of which $203 million was paid in dividends and $667 million was used to purchase 11.3 million shares of Valero common stock. Year to date, the company has purchased 19.5 million shares of its common stock for $1.2 billion. Earlier this month Valero announced an incremental $2.5 billion share repurchase authorization. Combined with approximately $400 million of existing authorization, the company now has $2.9 billion available for stock repurchases.
The company did not offer earnings guidance in its press release, but did say that 2015 capex includes $1.5 billion for turnarounds and catalyst and $1.15 billion for growth investment. The company also expects to meet its goal of $1 billion in drop-down transactions with its logistics company, Valero Energy Partners LP (NYSE: VLP).
Consensus estimates call for third-quarter EPS of $2.08 on revenues of $20.56 billion. For the 2015 fiscal year EPS is forecast at $7.51 on revenues of $81.37 billion.
Shares of Valero traded up about 0.4% in Thursday’s pre-market at $66.30, in a 52-week range of $42.53 to $68.27. The consensus target price for the shares was $75.36 before today’s report.
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