Valero Energy Corporation

Greetings and welcome to the Valero Energy Corp second quarter 2023 earnings call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Homer Buller, Vice President, Investor Relations and Finance. Thank you. Please go ahead.

Good morning, everyone, and welcome to Valero Energy Corporation's second quarter 2023 earnings conference call. With me today are Lane Riggs, our CEO and president, Jason Frazier, our executive vice president and CFO, Gary Simmons, our executive vice president and COO, and several other members of Valero's senior management team. If you have not received the earnings release and would like a copy, you can find one on our website at InvestorValero.com. Also attached to the earnings release are tables that provide additional financial information on our business segments and reconciliations and disclosures for adjusted financial metrics mentioned on this call. If you have any questions after reviewing these tables, please feel free to contact our investor relations team after the call. I would now like to direct your attention to the forward-looking statement disclaimer contained in the press release. In summary, it says that statements in the press release and on this conference call that state the company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we've described in our earnings release and filings with the SEC. Now I'll turn the call over to Lane for opening remarks.

Thank you, Homer, and good morning, everyone. Before we discuss quarterly results, I want to thank Joe Gorder for everything he's done to build upon Bolero's 43-year history. Joe steered a repositioning of our strategy and the commitment to shareholder returns through capital discipline, innovation, and strong execution. I'm grateful for his leadership and proud of what Valero has accomplished, and I'm honored to build on that foundation as we continue to advance our position as a leading manufacturer of liquid transportation fuels. Moving on to quarterly results, we're pleased to report solid financial results in the second quarter underpinned by our strong execution across all of our business segments. Our refineries ran well with throughput capacity utilization of 94% as refinery margins were supported by continued tight product supply and demand balances. Product demand was strong, with our U.S. wholesale system setting a sales record of over 1 million barrels per day in May and June. We also had a positive contribution from the Port Arthur Coker project, which was started up in early April and is operating well and at full capacity. The new coker has increased the refinery's throughput capacity, and enhance its ability to process incremental volumes of heavy crude and residual feedstocks. Our renewable diesel segment set records for operating income and sales volumes in the second quarter, driven by incremental production volumes from Diamond Green Diesel Port Arthur. The Diamond Green Diesel Sustainable Aviation Fuel Project at Port Arthur is progressing on schedule. The plant is expected to have the ability to upgrade 50% of the current 470 million gallon annual renewable diesel production capacity to sustainable aviation fuel, or SAF. It's expected to be complete in 2025 and is estimated to cost $315 million, with half of that attributable to Valero. With the completion of this project, DGD is expected to become one of the largest manufacturers of SAF in the world. These projects expand our long-term competitive advantage, and I want to commend our projects and operations teams for their dedication and execution. We also continue to evaluate other opportunities while maintaining capital discipline and honoring our commitment that all projects meet a minimum return threshold. On the financial side, we returned 53% of the adjusted net cash provided by operating activities to shareholders through dividends and share repurchases in the second quarter. And we ended the second quarter with a net debt to capitalization ratio of 18%. Looking ahead, We expect low global light product inventories and tight product supply and demand balances to continue to support refining fundamentals. Global demand for transportation fuels has recovered substantially with gasoline and diesel demand now comparable to pre-pandemic levels, and jet fuel demand continues to increase steadily. In closing, we remain committed to the core strategy that has been in place under Joe's leadership for nearly a decade, our focus on operational excellence, capital discipline, and honoring our commitment to shareholder returns has served us well and will continue to anchor our strategy going forward. So, Homer, with that, I'll hand the call back to you.