VLO - Earnings call transcript Q2 2018 | Valero Energy Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Valero Energy Corporation's Second Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. And I would now like to introduce your host for today's conference Mr. John Locke. Sir, you may begin.

John Locke

morning. Good Energy XXXX Valero conference second Corporation's to earnings quarter call. Welcome CFO; our today our and and Executive Executive Vice are and Browning, me team. General other COO; Chairman, President Executive Riggs, and Vice Joe President President Titzman, With Management our Donna members Gorder, President of Jay Senior our Officer; Chief Vice Counsel and Lane several Executive Valero's

Valero.com. a Also received on the to additional our earnings copy, like you not would on provide can you've release If website our earnings and at attached the that are one find release business tables segments. information financial

If to after contact questions the reviewing free Relations Investor please team after feel you have our call. these any tables,

Safe contained that covered forward-looking are that actual Now in conference release future, the from or are I'd expectations results like our in many direct statements call those described filings to SEC. laws. attention company's management's our could to and predictions in disclaimer the the or summary, that statements under the with in factors which, your on says to cause we've differ press statement to be the of release press the this state federal securities forward-looking including There expectations by Harbor intended provisions the

the turn for opening remarks. to I'll call Now Joe over

Joseph W. Gorder

Thanks, John, and good morning everyone.

with to to Memphis Enbridge wide discounts investments processed discounts WTI as we having During XXXX. in we on the benefits. these We of Pipeline runs the Brent, additional margin WTI LLS. from second volumes sweet logistics seen versus for advantage in our to record running refinery provided discounts our turnarounds margin which solid And despite meaningful heavy commitment Coast were of quarter, including widened levels enabled and Gulf instead XB take more our North fully Line our relatively maximized results well crude crude we regions. We near since Diamond also operated of financial sour and to due our Atlantic refineries capture haven't positioned delivered and light

continues to Pasadena the ahead, terminal in pipelines and on Looking forward the expected with and XXXX and completion move XXXX. planned products as Texas work Central terminals

We expect expansion our access early Permian with crude. provide even Mid-Continent to region which in Sunrise XXXX will Pipeline cost greater start-up to advantage the

Turning the Construction completion Green to is the start-up our refining Diamond Charles capacity the Diesel St. Pembroke is investments, on plant. Houston progressing in cogeneration scheduled units expansion and and August. also alkylation nearing is and

XX% to completed these to projects paid we XXXX annual continue between and out year-to-date target activities an adjusted in XX%. net provided and cash stockholders, to XXXX. We of to to we payout XX% cash ratio expect be our operating returns With regard by

turnaround enters call crude expect industry an outlook is and remains despite industry And remains ahead, and you. recently, light domestically widen And internationally. and for demand optimistic I'll recent we rates. continue Gasoline market economic that, back of of narrowed Looking and products we refinery product to five-year of hand supply Global oil the with below healthy are John, the activity export to year. distillate averages as season. again volumes remain while discounts the have well to the Days balance differentials strong high have steady. utilization supplied the

John Locke

Joe. you, Thank

second or the in per share, For second income to the or $XXX compared quarter, share stockholders quarter $X.XX $X.XX net per XXXX. million, of to million, Valero attributable was $XXX

net $X.XX $XXX Valero adjusted income attributable share. or stockholders per XXXX quarter Second was to million,

to $X.X the that the to million second adjusted financial For release. reconciliations quarter $XXX income the of refer amounts, XXXX. quarter was billion of please tables for this Operating of the for to refining segment accompany second actual compared in XXXX

to offset million in XXXX income second cash volumes the sour XXXX were to $X.XX operating Texas per second for of and quarter XXXX. barrel quarter in the expenses of due the volumes of second capacity were the mostly to wider attributed contributions of U.S. operating and mostly grains XXXX. XXXX. day VLP lower acquired $XX of City Throughput Gulf to fire second generated associated primarily the to in Port domestic income higher the was second quarter quarter the second for million with from in mainly crudes utilization of million North XXXX, of at the XXXX the $XX stronger partly to quarter to to terminal XXXX in increase Excluding second attributed the costs increase and gasoline operating the segment quarter XXXX. than barrels XXXX million XXX,XXX was in and Pipeline, was operating April, margins. and in due XXXX, assets ethanol of quarter throughput versus X.X expenses of due compared prices $XX of production $XX second per Refining in The by XXXX. primarily was segment November of quarter Coast Atlantic Parkway averaged was distillate Operating quarter sweet $X.XX and from quarter related regions. of throughput quarter million distiller the the per discounts barrel were which margins second the from The XXXX than Refining to maintenance for Arthur other Refinery the XXXX is million Brent, from the The The income million higher volumes increase in compared lower throughput XXXX. of lower compared day second higher XX%. $XXX adjusted barrels $XX second of of in higher per

$X.X XX%. for rate only expenses to quarter-end, $X was VLP. working were of equivalents quarter billion we was from of cash million and of and from $X.X $XXX was billion, XXXX, interest For Depreciation $XXX tax end $XXX amortization XX%. net the effective liquidity, the million second million sheet was $X.X $X.X activities which expense June, With were held ratio million total available expense was excluding balance debt-to-capitalization debt cash and second $XXX of which At respect administrative our cash general million. in at in and capital. of this of and and cash was $XXX in billion We had billion operating generated cash, million $XXX billion amount is Included Valero's of benefit quarter. the available the VLP. by net was

$X.X working Excluding was operating cash billion. provided capital, net activities by approximately

capital regard growth which investments, turnaround million $XXX and and $XXX we purchase capital million to for our we million second returned investment of was to activities, stock. of growth. second Moving costs. common The was Included sustaining in $XXX million of quarter. million in acquisitions, catalyst the of in Valero quarter. the sustaining the dividends, expenditures was million $XXX quarter for as excludes to balance the With shares made to X.X paid the financing used with invested balance stockholders in $XXX

we had $X.X and June $XXX share repurchase XX, public notes authorization a of million offering completed we As of in approximately in of senior repaid May, remaining. We million June due billion XXXX. debt $XXX in

total joint sustaining the to billion to We and continue to total XXXX $X Included venture expect allocated $X.X with catalysts, are to about in billion, business and billion the turnarounds, growth. $X.X investments. capital investments

million fall U.S. the to throughput operations, XXX,XXX barrels at volumes day and Now XXX,XXX barrels ranges. XXX,XXX at day, barrels expect per to day, U.S. at West day. for following XXX,XXX North our to per Mid-Continent modeling we per Atlantic XXX,XXX per within barrels third to Coast X.XX Gulf Coast quarter U.S. X.XX XXX,XXX at million to

per in barrel. We quarter to be approximately expenses expect refining $X third the cash operating

produce should to in expected is a such X amortization. depreciation gallons Operating as segment gallon $X.XX which noncash ethanol $X.XX expenses per average gallon per million per includes and day for Our total quarter. third of costs the

about expect rate to to effective be continue we XX%. annual XXXX, For tax the

and quarter, approximately G&A approximately expenses, million. amortization estimated million Net to depreciation, and we $XXX interest third total the expense expect expense For be should corporate at excluding $XXX million. is $XXX be depreciation

to of continue would to call protocol we turn million expect we two the adhere callers Q&A expense the the remarks. each between And questions. $XXX for that Lastly, we and before That our questions, open the to our year limiting million. request to to respectfully opening again concludes $XXX in RINs

as questions, all time ensure please questions. If to their ask more rejoin permits, us help the time will than you have two this have callers queue as

Operator

our And line Roger with Fargo. of Wells Read the comes from question first

open. now is line Your

Roger D. Read

Thanks. all? How you are Good morning.

Joseph W. Gorder

Roger. Hi,

Roger D. Read

a point I given back you of trends it, QX Maybe through the was as guess of year maybe was of starting industry, turnarounds let's nearby dive how off issues and are good. call but into Joe, the maybe, the market this QX walk in QX year here on half countries. look the us where we we at big within to thoughts great. access ago that's quite strong, crude out this structure OPEC kind you if see, question like of look the terms there. it's of demand you can the see as where really then out some year. doesn't

Joseph W. Gorder

Yeah. great. ahead take Gary at let Roger, that's these. and We'll whack a go

Gary Simmons

think remarks, the seeing a very to opening we're Joe domestically export demand barrels demand I of remains both day Roger, the his Domestically, on you side, Okay. in diesel growth. much commented know about and like strong markets. XXX,XXX

utilization able fact diesel the that the really to and pre-hurricane that's type five-year we we've inventories distillate average range, levels. been record high had despite replenish refinery production So to haven't above

very demand. very strong continue to and diesel we So domestic low inventories, see very export strong demand

some the production turnaround forward you And oil off moving of third year, with So season I as fall course, refineries as colder season improvement later some see as see then, we down expect in think the and you'd heating kicks into you some in to weather. come demand in into for turnarounds. get quarter, get

the in to very at I the a be look year. me, I in when diesel fundamentals, even diesel think should market, prompt we're you think but strong So, for stronger

gasoline export and On looks demand into again, side, gasoline the good markets. domestically the

to gasoline Here been utilization demand little outpacing increases to replenish inventories type production, are with bit, pre-hurricane we've a production so in in gasoline a level. the increases and kind record-high able of gasoline refinery the increase

diesel, gasoline As supply your expect in interruption fall crude Labor off little to a year fourth cracks quarter. I declining despite have bit, we we some and gasoline driving demand like would question, Venezuela. crudes more to we you'll with production through I saw the the hurricanes, through in production falls see into On and like with last get assuming the off in in think turnaround see you'll you But good season don't we weaken continue trends, see move forward some markets, seasonal as once season. availability Day you gasoline get follow

continue levels Canada. United the to supply more States get North to expectations above American from OPEC to to and its well. starting there. as then good growth way exceed Seeing see we're continues our make We contract volume

Roger D. Read

Okay.

So then? no problem on the crude side

Gary Simmons

No.

Roger D. Read

barrel. a $X a Guidance I follow-up. cash Then Okay. quick was just OpEx on if understood

You've better much consistently a barrel. than done $X

my So on basis? something question to better perform simply, in per-barrel is you is if you wise? on just going Or expense and there this lower closer is budget come a

John Locke

this Roger, time. as We a sometimes view, a right, of John. point is over in changes take time that Yeah. and

there's little bit think a is probably time I look it's from that the the is there, as number off the what at today, – number you forecast. we at that come take maybe but

Roger D. Read

Okay.

the changes So or anything sequentially, of budgetary approach? no changing major that's just part

John Locke

Right.

Roger D. Read

Thank Okay. you.

Operator

comes Thank And question next with Manav from the Gupta you. line Credit of Suisse. our

on you Your or if earnings side. Suisse or some in of business? trying color acquisition? Securities would open. question understand just I'm go Hi, is; the Peru acquisitions the acquisition could biodiesel you Manav Credit the ethanol made Gupta whatever give us now some recently have guys. refining in you (USA) segment segment on - more that made new line that is to through My LLC the And

Joseph W. Gorder

question. Good you Rich, Okay. to? do want

Richard F. Lashway

this. answer Yeah, I'll you bet.

here mooring wholesale terminal it's and years. barrels X.X be renewable terminals not diesel acquisition facilities really So acquisition. acquired clear, million a there was two storage, offshore was been a acquisition. product. out service an plant This for two in We just two to to but of that There's have of offload racks, the of idol renewable diesel excess several marketing truck

play. is not to bring this up and into So country a renewable set product diesel really the

Joseph W. Gorder

a today essentially overall taking with are looking our activities markets. and in Peru, the and more we've refineries business, got that. access we're into securing fits what from Essentially about approach that chain fits out, talked facilities that not business, into We've particular just having got other But was we've a acquisition to an bought at. being it we've got Yeah, the we different into shorts in supply the right asset. to international we're operating and now this Mexico, place involved

team so the feel pretty also this, we got focus to about So terminal. on are a now pass where - we've through Peru, to that Securities in that. guys, working and Credit you going take a to okay, expand We've (USA) for Gupta barrels else us market Suisse good is, this we ground, their strong question. my the allow LLC business right much, believe we it, going got Manav around it's Thank obviously, taking

Operator

question Barclays. with from And comes line Paul the our next you. Thank Cheng of

line Your now is open.

Paul Cheng

Hey, morning. guys. Good

Joseph W. Gorder

Paul. Morning,

Paul Cheng

I to, better maybe Lane. better for think operations. Valero and this continued is refining seems your performing like has in

would leader is that at have throughput some even we're consistently outperform good fundamentally, guys that, also your that like one also trying we've you other think the but Lane, it a I rate. more think industry been Is so more and is anything and run despite industry better. fundamental there here pricing good Is clearly You've difficult stringent high make reason environmental unplanned would to guidance outages for while that maintain the standards than, when everyone looking are that more any the reason to all there seems shift? standard, doing you it hot. been has why when run say, the other

R. Lane Riggs

is please. repeat Lane. couple Could this that Paul, of sentences, last you

Paul Cheng

But that, in everyone be that is system to make attractive fundamentally the pricing understandable. is to trying to run there because other is anything trying past? just I'm which the understand just commodity Well, able their hotter, than that, industry the so than run much better it is is

R. Lane Riggs

their Solomon, do it's journeys I and industry own we've to through, of our things through whether on on get has looks via what individual been understanding some focus in And and good how like our clearly think, spaces. generally, experienced think to those environmentally being everybody's and all improve. better There's obviously, to to continue the and like it's themselves these shared a room improved reliable deal things we operation. our and the more safe we'll operation over focus a be XX a and great always to improvement. But past for years, much compliant reliable, lend it's that

Paul Cheng

it much have to push we a have on mean, what that think been remarkable than sustainable quite the has be has we you Do to basis more well industry I room better how done. seen?

R. Lane Riggs

Valero. going industry. speak Yeah. to I'll the for speak not I'm for

particular opportunity. Our And in is in minimize is our to continue we to downtime, the during minimize outages, amount to to going to right over and real unplanned our focus turnaround achieve most that's and entire try we, our forward, cycle, make an ways downtime that find really of the rates spend where time to where that. see our that terms that's of sure

Paul Cheng

out So you don't yet? think that you max

R. Lane Riggs

No.

Paul Cheng

an for talking Final us that one me, when update, normal fire, is you color Okay. be you coker Texas about, do to investment? think And about any also the give can going I previously operation? to City, give back the

R. Lane Riggs

working full resume we'll just the so the still with sort outlook, stakeholders. in question, the the normal at SCC to we came through August, early the on respect restored back of The alkylation we're to end operation. from Texas the With current coker, believe City, unit, currently operation process will So, SCCs be September. all back alky mechanically the the of in permitting

We permit, position so we in operating forward, permit have operating to a and just I to works, FID decision. way to the to and go gating final have really an construction and mean, get make even are. that's where that's the the our process ultimately

Paul Cheng

you. Thank Pleasure.

Operator

America. with line our And the you. comes next of Doug from Leggate of Bank Thank question

now is line Your open.

Doug Leggate

Thanks. questions. taking Good my morning, everybody. Morning, Thanks Joe. for

Joseph W. Gorder

Morning, Doug.

Doug Leggate

off at a deal admire you're great continue to cash obviously, you to clearly Joe, returning throwing are shareholders. and the cash, which of we discipline

number? your I've follow-up, you at substantial latest parent XX% MLP thoughts an And it hold still company from on two-edged kind level, given my macro EBITDA why So drop-down the question a is to XX% that is, what's standpoint? timing got right on of And the the And please. is topic.

Joseph W. Gorder

Okay. about Doug, payout good questions. the talk Donna, ratio. you want to

Donna M. Titzman

Sure.

cash acquisition also XX% the allocation the preserving On parent the but right that to to opportunities company, is buybacks, the that capital reinvest at growth some back capital, perspective, sustaining opportunities. the the but shareholder believe of being in cash and the we form returning also dividend share balance XX% between and to via in just in

Doug Leggate

if the cash? clear, see guess, be that do and be a dividend And, still rerating the within changing balance dividend back micro really can stock I'm of has what I a buyback. S&P. is you move your do pivot to have drop-downs, I guess, lot please. use did of wondering a priority the more follow-up, for would between additional the the at I'm towards And the driven a of I just just think getting being question, if what towards away that I do some bit little yield been you by, anyway, point? see So from on MLP the at some you the obviously, a buyback, of the Because, the more

Joseph W. Gorder

good Doug. mean, question. I No, Yeah.

reality cash just the On way aren't the that's and is drop-downs, drop-downs, I capital MLP the today. because that we mean, for there it equities receiving Valero markets just the back via all hasn't to, expected materialize

Doug Leggate

Right.

Joseph W. Gorder

is Valero okay. But, VLP. think debt is the I way working essentially, for the out MLP it's financier is

so it And know, today. assets months? far the for I perspective the windfall cash market down the to is cash is that's be to It's of Valero Will in market okay, goes, today. way no don't as by the way but six dropping this be there is VLP. as way the achieved

say, So a there's a of of cash, had because to big not be drop-down opportunity. windfall I would

expectations, repurchases XX% up paying the look the the dividend. And to we that we've probably something a XX% as free our let's so additional very continue forward. between our range going our we're is essentially extent cash rest what there. the assured The than and flows shares. of continue the ahead we dividend that's and to the And towards go at and is get But share we that competitive high-end We view that we're And target. to with flywheel the repurchases regularly. used to I group, to we're use think is dividend out repurchase peer exceed balance And give talk comfortable to basic share that about the flywheel. that then, you where do we'll the

it. it to bad XXX% want to make be whenever it, in and with that able we we're absolutely deal times we are sure changes committed We in times. good to to And

Doug Leggate

some. I extended arbitrage the has answer appreciate the obviously, and, closed

you've cited just up, And I in perspectives follow just some date world great afraid, let's a water is close and IMO So things. that's as going to example back it bunker leave Joe. meeting to out. the got delay deal It's about say, towards hopefully be perspective ballast is that are are because a particularly there's fuel obviously but the confident are what question, market as things going was wanted how ready. others not to comments. options optimistically, if to around the that wanted other as I'm been was about. to Thanks rules scrubber play uncertainty I pushed it because I'll just that updated you there. out are two talk of your industry amongst that transpire to the currently pivot starting get an The how curious years talking are quick And the the the to of a challenges micro I'm associations out on X/X/XX the real seems of going and this

Joseph W. Gorder

that's and a little let about Jason IMO. Doug, we'll bit good, talk

Jason Fraser

higher The with in potentially enforcement you don't, view internationally you is you is there's vessels implemented you be it to lot thing of time also implemented, out expect about how a enforced our if without without this it and hadn't like any to and whether now same they're But violate have to big effective at or insurance looking right. discussion working timeline a according made at off indications any backing the the we sulfur seen your material. lose anything, definitely change. timeline's big to from whether least the put scrubbers practical at we've (XX:XX) But they mechanisms, disruptions. Yeah, place more put transporting if it the provisions prohibiting

Doug Leggate

might it Do high Exxon Mobil, that? fuel the be not Jason, man that you a idea a bad last standing to from oil standpoint. concur be sulfur suggests with

Joseph W. Gorder

like Gary, mention that one? you would to

Gary Simmons

way. a We know. high don't sulfur make really don't that it I oil don't lot of I Yeah, see and fuel

to I see going to liquidate have. get oil inventory sulfur fuel think that you're high they people, as lot of of to a what you closer XXXX,

Operator

our line Phil And you. the of next question from JPMorgan. Thank Gresh comes with

Your line now is open.

Philip M. Gresh

Hi, morning. Yes. good

Joseph W. Gorder

Morning, Phil.

John Locke

Morning.

Philip M. Gresh

Yeah.

all question light the on coming to position. those those The resolved, so but is U.S. obviously, all Houston side have Gulf are bottlenecks and pointing the where sweet growth Coast crude the will first just barrels be thinking a towards the and, here have production we probably with be in prime Permian going ahead U.S. you

in and out? that might how So today you of export Coast happen where Gulf how do plays the to going? capabilities think about the the and What discounts system they're

Gary Simmons

is this Phil, Gary. Yeah,

it like barrels think, which pipeline to a dock looks project the most to the I water. with allows tie overall, project to the people are focused get

to I not in buy by the being on they able Gulf. are before an think to advantage water. But logistics and buy inland the the to their Gulf barrels looks just make you'll all to people Coast like way the investing water, it way barrels the have the the still

Philip M. Gresh

specific view Houston and a what's spread Brent, long-term you have transport? on like a based do So on reasonable

Gary Simmons

Yeah.

from we to then $X a think cost water at to market. actually to get on get look $X.XX anywhere cost and have it, it the you barrel I to the barrel the So did transit some

And MEH so in somewhere spread $X.XX Brent type that range. puts to $X to the

Philip M. Gresh

it. Got

bit heavy And of question to little side. Okay. the then follow-up a on just a just prior a

tightening of, seen the have We LLS spread. like, Maya, LLS, – some Mars

of the rest you I'm for playing So year. curious just that out how see the

the the coming East barrels comments made back. You Middle about

of quarter? see fourth spread it, move as you re-widening do we call a into, that So the

Gary Simmons

the sour. with I'll think I heavy So start

volatility the far, really Brent/TI and been So Maya Brent/TI that has by the in formula impacted the widespread in spread.

to Maya and as the Mid-Continent, relief you turnaround in third again some some sour you quarter some you'll out. activity spread the on formula is our move to the would Cushing inventory widen that think could the impacted. And see fourth view be will where we begin is get heavy build does, and I the which allow Brent/TI into discounts as

so could significant production heavy certainly need do widen discounts medium the and the some. Overall, big ramps a OPEC quality in on see get to will think to on you relief or OPEC back and out big so you have the And how up get I discounts see sour heavy, discounts. fast impact those production

Philip M. Gresh

specifically mediums? Anything the on

Gary Simmons

No, in breakeven I pretty all much the today, values. look grades crude don't, you are trading quality-adjusted at their

to those the as way reintroduce the West the so that widen Gulf. out. that so you OPEC, to medium I discounts back I see come Saudi into And see the Coast see to Today, barrels taking haven't make their Gulf, we the the going an barrels then sours think seen you But from to holds barrels Gulf then we're until the back back widen start OPEC are barrels and and incentive at they to those out. the we're could you taking back think least

Philip M. Gresh

Thank you. Okay.

Operator

you. And line the Thank Blair with from comes our Tudor, Holt. Matthew of Pickering, next question

Your now line open. is

Matthew Blair

everyone. morning, Good Hey.

Joseph W. Gorder

Matt. Morning,

John Locke

Morning.

Matthew Blair

and if over resid opening could crude environment think, Maybe system appreciate approximately an little crude but years, couple the this talked to I quarter. back XX% plus in heavies with to heavy through crude Gulf you you look look next ran the you saw Aruba heavy your bit toppers, QX. wider how ran And sour has resid. we theme, make-up in more with a incremental XXXX, heavy I Gulf then system plus way, the the changed you dips you your if If run system? approximately Coast Coast heavy at sour runs in maximized about XX% the data, stick way on Joe, heavy your I comments,

R. Lane Riggs

is This Matt. Lane. Hey,

So is I the units have our be. the sweet two topping one clear to because was accurately In you like bit mentioned of had sort that all and used also of then basis portfolio quality question alluded that answer it last you have particular, that is margin different grades we on Gary think the in run things are little a the on of to equivalent. the the crude, what we've a than

been So just really it's crude rate. max

it the maximize leveraged refinery diet, to it. that gets extent so will particular crude And that from

had clearly heavy, over If then very was and as you us may way the would winner other very, we sour not two, the just much – work that we run crude. was disconnected heavy run more

Matthew Blair

Okay.

to Enbridge mind circle Sounds Line just in from the some quarter. in XB margin provided also the on good. that And then comment had how keeping Québec the want back upside, turnaround to big

If at to Coast EIA down data, it it the on then WCS seems shipping the Is a it to somebody selling and you and is refineries. look Valero XB that Line tankering source for Gulf upside here? that indicate of

Gary Simmons

nominate XB but shipping be because difficult ship didn't very it us any issue would be, ship for for able would do. heavy through It Enbridge would we to an us and actually mainline mainline, to be and the Line and heavy, heavy is prorated so actually being

Matthew Blair

you. Thank good. Sounds

Operator

comes Tuohy you. the Thank Brothers. question Craig line our next from with of And Shere

now line open. Your is

Craig K. Shere

Good morning.

Joseph W. Gorder

Craig. Morning,

Craig K. Shere

the cracks to Just cheap. the dry growth the second pretty past on in Donna's that course, maybe commented first billion increasing wanted question have for projects looked not comment improving the market M&A But all and over for prospects IMO maintenance annually, $X retain think flow want And is about of and sequentially XXXX lower half for and especially you up. then, outlook to CapEx, cash growth I potential certainly coming be acquisitions that cash think to been expand on Doug's stable, you have projects. some appropriately obviously powder and there's

this logical of to sticking time? of question is, to think XX% XX% there limit, size a limit kind my payout of you an is the to absolute So the ratio over as cash build

Joseph W. Gorder

tail like have we said framework, we've really quarters tell Donna and onto it and that years you were to look has to But wrong, at – a now a and, continue build number significant stick going for been tell let to between which do four our $X it, And historically been the I'll commitment that row. – but you So but of we cash component would a if billion however of would capital allocation also billion historically to me we for forward. going this have of we'll now can – I in John, cash and $X positions. not you she I'm

John Locke

Yes.

Joseph W. Gorder

We XX% consistently payout set XX% the raised the target of dividend. We've ratio. the on to

think we'll shareholders commitment forward. up, look going building to when gone an going We our run we're up. – in way to going absolute it it to investing on do to sense the are to to we're at stick going them cash, the allow continue we're business, it's going continue to to basis balances We're within makes we the and deploy But has we're to deploy that fair going that versus that. So it not cash if not it. this. our projects to ourselves investors to to And

and Lane chewed projects. team on We executed continue some which quarter, some Now, acquisitions develop this to the up cash.

share all to not it's committed repurchases. So,

I using are far. the it the grow we're generally to But the thus to continue we've it of allocating business. think earnings with We been capability comfortable way

Craig K. Shere

the been question how years, as quarters next understand might balance guess, many a in the has control relatively kind if there's respond in recent couple cash coming people of is the that? of guess envisioned to I quarters. under and in for I industry you my I But, out – break

Joseph W. Gorder

expectation our our free get increases to to XXXX, significant IMO quarters, of allocation – – we that the our to and maintain certainly a that to over XXXX, bunch we're are to through that and should the would capital flow see I framework cash process. closer think as in commitment as going Well we and be see result our going next we

disciplined abort dividends? mean well We executing want Could process share Now, projects. don't our to Does Could well to does capital it that additional repurchases? higher mean be. be.

really we Okay? returns that extent really getting outstanding over being last the several made prefer degrade not have we Lane accelerate you project the arms be to it. job of this would that, to sure team commitments expected do you was the before done and and try to what years we and an cost we that their what the to around that. process knew to going potentially To the the and

look may our dividend be will of part probably potential acquisitions cash an increases. have we still repurchases better. cash, if use certainly Share So, a of abundance big and of

Craig K. Shere

appreciate I Great. color. the

Joseph W. Gorder

bet. You

Operator

our And question of you. from Peter Thank comes Redburn. line the with next Low

now open. is line Your

Peter Low

taking Hi. Thanks my for question.

Joseph W. Gorder

Good morning, Peter.

Peter Low

the outage. on have one I City Texas

the what I opportunity But exceptional in terms break the of the kind release, actually think the of kind in that on of outage the lost out impact expense. you of earnings was kind from quarter? during

R. Lane Riggs

Hi. This Lane. is

outage So, the million. second the during $XXX our lost quarter due opportunity to was

Peter Low

Okay. great. Thank much. you That's very

Operator

with our question line from Pickering, And you. Tudor, of Matthew Thank the next Blair Holt. comes

open. is line Your now

Matthew Blair

Hey.

Just follow-up one here. quick

back was I bit EBITDA a those say, were, expanding alkylation could have little potential projects a we hoping just you have although capacity, year-over-year, and widened we're regarding provide you update So, the where projects. like where stand couple you XXXX. spreads around nowhere an in contribution looks of octane on your It near from

general, do you and octane X would Just would reduce standards rising any on increase be So, in octane economy demand? supply would expect that that great. comments Tier fuel maybe

R. Lane Riggs

Hi.

Lane. So, Matt, this is

we're alky, first I half question, believe. next the the going of year. start-up still answered in Houston of to The sort You

Our transportation destroying that strategic really, wide will and or forward then, then, octane valuable is octane that fuel And this we obviously, Tier via NGL view gasoline, X on arbitrage go increasing get the fuel. between is economy and as standards. more

So we about good still those. feel

any the on $XXX sort to a – provide EBITDA respect at million. forward the FID time not prompt that. not of to with color going We're market other Our even a We're was to number. or market going view that's

Matthew Blair

Thank you. Okay.

R. Lane Riggs

You bet.

Operator

the John to to return Q&A like Locke conclude any And Thank does you. closing remarks. Mr. that today's and I'd call session for

John Locke

Okay. please questions. if you Thank we Look, you. team, have and us me, Thanks, joining additional IR the Sandra. contact everybody today appreciate

Operator

conclude disconnect. have Ladies in does and may Everyone, This a program great you thank for all day. the participating and you conference. today's gentlemen,

John Locke	Valero Energy Corp.
Joseph W. Gorder	Valero Energy Corp.
Gary Simmons	Valero Energy Corp.
Richard F. Lashway	Valero Energy Corp.
R. Lane Riggs	Valero Energy Corp.
Donna M. Titzman	Valero Energy Corp.
Jason Fraser	Valero Energy Corp.
Roger D. Read	Wells Fargo Securities LLC
Manav Gupta	Credit Suisse Securities (NYSE:USA) LLC
Paul Cheng	Barclays Capital, Inc.
Doug Leggate	Bank of America Merrill Lynch
Philip M. Gresh	JPMorgan Securities LLC
Matthew Blair	Tudor, Pickering, Holt & Co. Securities, Inc.
Craig K. Shere	Tuohy Brothers Investment Research, Inc.
Peter Low	Redburn (Europe) Ltd.

Valero Energy (VLO) 26 Jul 182018 Q2 Earnings call transcript