Valero Energy Corporation

Greetings and welcome to Valero Energy Corp. 4th Quarter 2024 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires 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 Bullard, Vice President of Investor Relations and Finance. Thank you. You may begin.

Good morning, everyone, and welcome to Valero Energy Corporation's fourth quarter 2024 earnings conference call. With me today are Lane Riggs, our chairman, 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. I would like to start by highlighting some of our team's accomplishments last year. 2024 was our best year for personnel and process safety and one of our best years for environmental performance. Safe and reliable operations drive overall performance and disciplined operations. In refining, we processed a record volume of heavy sour crude in the fourth quarter. This demonstrates our refining system's flexibility and highlights the capability of our commercial and operations teams be able to secure and process the most economic crude oils. Finally, we set a record for ethanol production with the expansion of the Charles City Plant and process optimization at other sites. Our team's relentless focus on operational excellence and low-cost operations enabled us to deliver positive results in the fourth quarter in an otherwise weak margin environment. On the strategic front, we continue to deliver on our commitment to grow Valero's earnings capacity through organic investments. The DGD sustainable aviation fuel project was successfully started up in the fourth quarter and is now fully operational. Looking ahead, we are progressing with an SEC unit optimization project at St. Charles that will enable the refinery to increase the yield of high-value products, including high-octane alkylate. The project is estimated to cost $230 million and is expected to start up in 2026. And we continue to pursue other short-cycle, high-return optimization projects around our existing refining assets. On the financial side, we continue to honor our commitment to shareholder returns with a strong payout ratio of 78% for the year. And earlier this month, our board approved a 6% increase in the quarterly cash dividend, further demonstrating our strong financial position. Looking ahead, refining margins should be supported by low-light product inventories ahead of the driving season. In longer term, we still expect product demand to exceed supply with the announced refinery shutdowns this year and the limited capacity additions beyond 2025. supporting long-term refining fundamentals. So with that, Homer, I'll hand it back to you.