Valero Energy Corporation (NYSE: VLO)

Transcription

1 Valero Energy Corporation (NYSE: VLO) Company Description Valero Energy Corporation (Valero) is an independent petroleum refining and marketing company. Valero s refineries can produce conventional gasoline s, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products, as well as a slate of premium products, including conventional blendstock for oxygenate blending and reformulated gasoline blendstock for oxygenate blending, gasoline meeting the specifications of the California Air Resources Board, a diesel fuel, and low-sulfur and ultra-low-sulfur diesel fuel. Share Price As compared to S&P 500 Key Statistics Market Cap 17.99B Enterprise Value 23.17B Trailing P/E Price/Sales 0.13 Price/Book 1.08 EV/Revenue 0.17 EV/EBITDA 4.25 Source: Yahoo Finance Officers and Directors William Klesse Robert Profusek Deborah Majoras Philip Pfeiffer Ronald Calgaard Jerry Choate Ruben Escobedo Bob Marbut Donald Nickles Susan Purcell Stephen Waters Randall Weisenburger Chairman of the Board, President, Chief Executive Officer Lead Director Director

2 Valero Energy Corporation (NYSE: VLO) - DCF Valuation ($, except per share data) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Refining operations Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Capacity, bpd 1,913 2,126 2,458 3,260 3,260 3,105 2,990 2,780 2,640 3,045 Creep Throughput volume (th.bbls/day) 1,595 1,842 2,162 2,436 2,810 2,612 2,313 2,134 2,155 2,448 Utilization 83% 87% 88% 75% 86% 84% 77% 77% 82% 80% Growth 16% 17% 13% 15% -7% -11% -8% 1% 14% GC Crack $3.54 $5.18 $6.89 $10.81 $10.36 $13.21 $9.49 $6.87 $7.78 $23.34 VLO Refining margin per bbl $4.02 $5.13 $7.44 $11.10 $12.47 $12.44 $11.16 $6.00 $7.80 $9.30 VLO margin/gc margin 113% 99% 108% 103% 120% 94% 118% 87% 100% 40% Refining Operating Expense $2.29 $2.47 $2.70 $3.17 $3.53 $3.85 $4.41 $3.71 $3.79 $3.83 Depreciation & amortization $0.66 $0.63 $0.66 $0.81 $0.96 $1.17 $1.37 $1.55 $1.56 $1.51 Net operating margin per bbl $1.07 $2.03 $4.08 $7.12 $7.98 $7.42 $5.38 $0.74 $2.45 $3.96 Refining op. expense 1,333 1,661 2,131 2,819 3,621 3,671 3,723 2,890 2,981 3,422 D&A expense ,115 1,157 1,207 1,227 1,349 Refining Operating Income 623 1,365 3,220 5,710 8,185 7,074 4, ,927 3,538 Retail operations - 1. Company Operated Company-operated fuel sites 1,359 1,201 1,106 1, Fuel volume (gallons/day/site) 4,401 4,512 4,644 4,830 4,985 4,979 5,000 4,983 5,086 5,060 Fuel margin per gallon $0.111 $0.148 $0.142 $0.154 $0.162 $0.17 $0.19 $0.13 $0.14 $0.14 Fuel Revenues Franchise Fuel Volume (thous. gallons/day 3,235 3,328 3,250 3,204 3,176 3,234 3,193 3,159 3,168 3,195 Fuel Margin per Gallon $0.18 $0.21 $0.21 $0.21 $0.22 $0.25 $0.25 $0.25 $0.27 $0.30 Fuel Revenues Total Retail Fuel Revenues Merchandise and Other Revenues Retail selling expenses D&A expense Retail Operating Income

3 ($, except per share data) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Refining operations Estimated Estimated Estimated Estimated Estimated Estimated Capacity, bpd 3,075 3,106 3,137 3,169 3,200 3,232 Creep 1% 1% 1% 1% 1% 1% Throughput volume (th.bbls/day) 2,462 2,487 2,511 2,537 2,562 2,588 Utilization 80% 80% 80% 80% 80% 80% Growth 1% 1% 1% 1% 1% 1% GC Crack $12.14 $12.14 $10.00 $10.00 $10.00 $10.00 VLO Refining margin per bbl $10.66 $10.66 $8.78 $8.78 $8.78 $8.78 VLO margin/gc margin 88% 88% 88% 88% 88% 88% Refining Operating Expense $3.91 $4.00 $4.09 $4.18 $4.27 $4.36 Depreciation & amortization $1.66 $1.82 $2.00 $2.20 $2.42 $2.66 Net operating margin per bbl $5.09 $4.84 $2.69 $2.40 $2.09 $1.76 Refining op. expense 3,517 3,630 3,747 3,867 3,991 4,119 D&A expense 1,491 1,656 1,838 2,040 2,265 2,514 Refining Operating Income 4,572 4,391 2,467 2,224 1,957 1,662 Retail operations - 1. Company Operated Company-operated fuel sites Fuel volume (gallons/day/site) 5,034 5,008 4,983 4,957 4,932 4,907 Fuel margin per gallon $0.15 $0.15 $0.16 $0.16 $0.17 $0.17 Fuel Revenues Franchise Fuel Volume (thous. gallons/da 3,222 3,250 3,277 3,305 3,333 3,362 Fuel Margin per Gallon $0.33 $0.36 $0.40 $0.44 $0.49 $0.54 Fuel Revenues Total Retail Fuel Revenues Merchandise and Other Revenues Retail selling expenses D&A expense Retail Operating Income

4 ($, except per share data) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Refining operations Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Total Operating Income 745 1,572 3,395 5,865 8,367 7,324 4, ,273 3,917 Corporate Overhead as% of op. income 35% 19% 13% 10% 7% 9% 11% 66% 23% 15% Operating Income post Overhead 487 1,273 2,979 5,307 7,769 6,686 4, ,742 3,346 Valero LP interest - net (14) Other Income 9 15 (48) Interest Expense Pref distributions to subsidiary tr (30) (17) 0 0 (7) Income before Tax 226 1,072 2,710 5,133 7,959 6,492 4,104 (101.9) 1,364 2,988 Tax Expense ,621 2,611 2,059 1,438 (43) 575 1,226 Tax rate 26% 34% 33% 32% 33% 32% 35% 42% 42% 41% Net Income ,803 3,512 5,348 4,433 2,666 (59) 789 1,762 EPS/share (2.2) (3.7) Diluted Shares Outstanding Consensus First Call Estimates Premium to Estimates PP&E 7,412 8,195 10,317 17,856 20,180 21,560 21,421 21,615 28,921 32,253 D&A as % of PP&E 7% 7% 8% 6% 7% 7% 7% 7% 5% EBIT 436 1,230 2,940 3,602 (1,343) 1, ,982 3,723 Depreciation & Amortization ,155 1,376 1,476 1,527 1,473 1,534 Net Change in Working capital ,082 (144) (469) (1,630) Capital Expenditure ,292 2,133 3,187 2,260 2,893 2,306 1,730 2,355 Free Cash Flow ,050 1,227 (3,231) 1, (904) 1,657 2,821 P/E 8.54 EV/EBITDA 2.47

5 ($, except per share data) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Refining operations Estimated Estimated Estimated Estimated Estimated Estimated Total Operating Income 4,974 4,817 2,920 2,708 2,473 2,213 Corporate Overhead as% of op. income 15% 15% 15% 15% 15% 15% Operating Income post Overhead 4,249 4,115 2,495 2,313 2,112 1,891 Valero LP interest - net Other Income Interest Expense Pref distributions to subsidiary Income before Tax 4,038 3,904 2,334 2,152 1,952 1,730 Tax Expense 1,552 1, Tax rate 38% 38% 38% 38% 38% 38% Net Income 2,486 2,404 1,437 1,325 1,202 1,065 EPS/share Diluted Shares Outstanding Consensus First Call Estimates Premium to Estimates PP&E 33,764 33,968 34,188 34,498 34,901 35,399 D&A as % of PP&E 5% 5% 5% 5% 5% 5% EBIT 4,338 4,204 2,584 2,402 2,202 1,980 Depreciation & Amortization 1,711 1,791 1,802 1,813 1,830 1,851 Net Change in Working capital Capital Expenditure 3,045 1,915 2,011 2,111 2,217 2,328 Free Cash Flow 2,923 3,999 2,294 2,024 1,734 1,422 P/E EV/EBITDA

6 VLO Discounted Cashflow Valuation WACC Terminal Growth Discounted Cashflow NPV Enterprise Debt - 2Q12 Cash Net Debt NPV Equity WACC Current Mcap (mm) # Shares out (mm) 8.0% 3.0% 8,550 19,940 7,042 1,295 5,747 22,743 17, Fair Value per Share, $/share Current Price per Share Upside to VLO stock % Sensitivity Analysis - Intrinsic Stock Value Terminal Growth Rate % 2% 3% 4% 5% 6% % WACC 8% % %

7 Valero Energy Corporation (NYSE: VLO) - GC Crack Spread Calculation USD ($) US GC Gasoline Heating Oil WTI Cushing Spot GC crack GC crack

8 Valero Energy Corporation (NYSE: VLO) - Comparable Valuation Company Ticker M.Cap. ($, mm) EV ($, mm) Revenue ($, mm) Net Debt ($, mm) P/E P/S P/B EV/Revenue EV/EBITDA Alon USA Energy, Inc. ALJ 784 1,610 7, CVR Energy, Inc. CVI 3,450 3,620 6, Hess Corporation HES 18,110 25,550 37,380 7, HollyFrontier Corporation HFC 8,270 7,930 19,880 (340) Marathon Petroleum Corporation MPC 18,740 20,180 75,140 1, Tesoro Corporation TSO 6,010 6,390 31, Western Refining, Inc. WNR 2,400 2,550 9, Chevron Corp CVX 231, , ,560 (11,230) Average 36,152 36,006 52,200 (148) Median 7,140 7,160 25, Valero Energy Corporation VLO 17,730 23, ,290 5, ) Source: Yahoo Finance 2) Comparable companies were selected based on the company's peer group list disclosed in their K.