Valero Energy Corporation

And welcome to the Valero Energy Corp. Fourth Quarter 2023 Earnings Conference 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. You may begin.

Good morning, everyone, and welcome to Valero Energy Corporation's fourth 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. We're pleased to report strong financial results for the fourth quarter and the full year. With the exception of our 2022 results, we delivered the highest fourth quarter and full year adjusted earnings in company's history in 2023, demonstrating the earnings capability of our portfolio. Our refining system achieved 97.4% mechanical availability in 2023, which is our best ever. We also set a record for environmental performance, and matched our previous record for process safety, illustrating the benefits from our longstanding commitment to safe, reliable, and environmentally responsible operations. And through organic growth of our wholesale system, we set an annual record for sales volume in 2023 of approximately 1 million barrels per day, demonstrating the strength of our branded and wholesale marketing network. We continue to pursue strategic projects that enhance the earnings capability of our business and expand our long-term competitive advantage. The DGD Sustainable Aviation Fuel, or SAF, project at Port Arthur remains on schedule to completion, expected in the first quarter of 2025 for a total of $315 million. 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. In addition, we are pursuing shorter cash cycle projects that optimize and capitalize on opportunities to improve margins around our existing refining assets. On the financial side, we continue to honor our commitment to shareholders. We returned 73% of adjusted net cash provided by operating activities to shareholders for dividends and share repurchases in the fourth quarter, resulting in a 60% payout ratio for 2023. And last week, our board approved a 5% increase in the quarterly cash dividend. Looking ahead, we expect refining margins to remain supported by tight product supply and demand balances. In the near term, product inventories ahead of the summer driving season are expected to be constrained, with heavy industry-wide turnaround activity in the first quarter providing support to refining margins. Long term, we expect global demand growth to exceed product supply despite new refinery startups. In closing, our team's simple strategy of pursuing excellence in operations, return-driven discipline on growth projects, and a demonstrated commitment to shareholder returns has driven our success and positions us well for the future. So with that, Homer, I'll hand the call back to you.