Name: Valero Energy Corp. (NYSE:VLO) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Valero Energy Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss)	9,149)	11,879)	1,288)	(1,107)	2,784)
Depreciation and amortization expense	2,701)	2,473)	2,405)	2,351)	2,255)
(Gain) loss on early redemption and retirement of debt, net	(11)	(14)	193)	—)	—)
LCM inventory valuation adjustment	—)	—)	—)	(19)	—)
Asset impairment loss	—)	61)	—)	—)	—)
Gain on sale of assets	—)	—)	(62)	—)	—)
Deferred income tax expense (benefit)	103)	50)	(126)	158)	234)
Receivables, net	(387)	(1,619)	(4,382)	2,773)	(1,468)
Inventories	(684)	(672)	(253)	1,007)	(385)
Prepaid expenses and other	(34)	(180)	(22)	101)	427)
(Increase) decrease in current assets	(1,105)	(2,471)	(4,657)	3,881)	(1,426)
Accounts payable	(169)	521)	6,301)	(4,068)	1,534)
Accrued expenses	(50)	(5)	253)	48)	(27)
Taxes other than income taxes payable	(226)	98)	104)	37)	60)
Income taxes payable	(776)	231)	224)	(243)	153)
Increase (decrease) in current liabilities	(1,221)	845)	6,882)	(4,226)	1,720)
Changes in current assets and current liabilities	(2,326)	(1,626)	2,225)	(345)	294)
Changes in deferred charges and credits and other operating activities, net	(387)	(249)	(64)	(90)	(36)
Adjustments to reconcile net income (loss) to net cash provided by operating activities	80)	695)	4,571)	2,055)	2,747)
Net cash provided by operating activities	9,229)	12,574)	5,859)	948)	5,531)
Capital expenditures, excluding variable interest entities (VIEs)	(665)	(788)	(513)	(1,014)	(1,627)
Diamond Green Diesel Holdings LLC (DGD)	(235)	(853)	(1,042)	(523)	(142)
Other VIEs	(11)	(40)	(110)	(251)	(225)
Capital expenditures of VIEs	(246)	(893)	(1,152)	(774)	(367)
Deferred turnaround and catalyst cost expenditures, excluding VIEs	(946)	(1,030)	(787)	(623)	(762)
Deferred turnaround and catalyst cost expenditures of DGD	(59)	(26)	(6)	(25)	(18)
Purchases of available-for-sale (AFS) debt securities	(276)	(100)	—)	—)	—)
Proceeds from sales and maturities of AFS debt securities	314)	5)	—)	—)	—)
Proceeds from sale of assets	—)	32)	270)	—)	—)
Investments in nonconsolidated joint ventures	—)	(1)	(9)	(54)	(164)
Other investing activities, net	13)	(4)	38)	65)	(63)
Net cash used in investing activities	(1,865)	(2,805)	(2,159)	(2,425)	(3,001)
Proceeds from debt issuances and borrowings, excluding VIEs	1,750)	2,239)	1,446)	4,320)	1,892)
DGD	550)	809)	301)	—)	—)
Other VIEs	120)	105)	81)	250)	239)
Proceeds from borrowings of VIEs	670)	914)	382)	250)	239)
Repayments of debt and finance lease obligations, excluding VIEs	(2,125)	(5,067)	(2,849)	(490)	(1,805)
DGD	(480)	(823)	(180)	—)	—)
Other VIEs	(77)	(73)	(6)	(5)	(6)
Repayments of debt and finance lease obligations of VIEs	(557)	(896)	(186)	(5)	(6)
Premiums on early redemption and retirement of debt	(5)	(56)	(179)	—)	—)
Purchases of common stock for treasury	(5,136)	(4,577)	(27)	(156)	(777)
Common stock dividend payments	(1,452)	(1,562)	(1,602)	(1,600)	(1,492)
Acquisition of VLP publicly held common units	—)	—)	—)	—)	(950)
Contributions from noncontrolling interests	75)	265)	189)	—)	—)
Distributions to noncontrolling interests	(164)	(93)	(2)	(208)	(70)
Other financing activities, net	3)	(16)	(18)	(34)	(28)
Net cash provided by (used in) financing activities	(6,941)	(8,849)	(2,846)	2,077)	(2,997)
Effect of foreign exchange rate changes on cash	139)	(180)	(45)	130)	68)
Net increase (decrease) in cash and cash equivalents	562)	740)	809)	730)	(399)
Cash and cash equivalents at beginning of year	4,862)	4,122)	3,313)	2,583)	2,982)
Cash and cash equivalents at end of year	5,424)	4,862)	4,122)	3,313)	2,583)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Operating cash flows exhibit significant volatility over the five-year period, mirroring fluctuations in net income. A substantial contraction occurred in 2020, where net income fell to a loss of 1,107 million US dollars, yet net cash provided by operating activities remained positive at 948 million US dollars. This resilience was primarily driven by non-cash adjustments and working capital movements. A period of exceptional growth followed, peaking in 2022 with net cash from operations reaching 12,574 million US dollars, supported by a record net income of 11,879 million US dollars. While 2023 saw a slight moderation in both net income and operating cash flow, the levels remained significantly elevated compared to pre-2022 benchmarks.

Operating Cash Flow Drivers: Depreciation and amortization expenses remained relatively stable, trending slightly upward from 2,255 million US dollars in 2019 to 2,701 million US dollars in 2023, providing a consistent non-cash add-back. Working capital exhibited high variance, particularly in receivables and accounts payable, which created significant short-term swings in cash availability between 2020 and 2022.
Profitability Transition: The transition from a net loss in 2020 to high profitability in 2022 and 2023 indicates a rapid recovery and subsequent expansion of cash-generating capacity, allowing the organization to pivot from liquidity preservation to aggressive capital distribution.

Investing activities consistently resulted in net cash outflows, though the intensity of these expenditures varied. Capital expenditures for non-VIE entities showed a general downward trend, decreasing from 1,627 million US dollars in 2019 to 665 million US dollars in 2023. Investments in Variable Interest Entities (VIEs), specifically Diamond Green Diesel Holdings LLC, peaked in 2021 at 1,042 million US dollars before declining sharply to 235 million US dollars by 2023. This suggests a shift from a heavy investment phase in renewable diesel capacity toward a maintenance or optimization phase.

Capital Expenditure Patterns: Deferred turnaround and catalyst cost expenditures remained a significant and recurring cash outflow, averaging approximately 800 to 1,000 million US dollars annually from 2021 to 2023, highlighting the ongoing operational costs associated with refinery maintenance.
Asset Liquidity: Investing activities were occasionally offset by the sale of assets and maturities of debt securities, though these were insufficient to flip the net investing cash flow to a positive value in any observed year.

Financing activities reflect a strategic shift in capital allocation. In the early part of the period, financing focused on debt issuance and borrowing to maintain liquidity. However, coinciding with the surge in operating cash flows in 2022 and 2023, there was a marked increase in shareholder returns. Common stock dividend payments remained remarkably stable, ranging between 1,452 million US dollars and 1,602 million US dollars annually. The most prominent change is observed in the purchase of common stock for treasury, which surged from a negligible 27 million US dollars in 2021 to 4,577 million US dollars in 2022 and 5,136 million US dollars in 2023.

Debt Management: A significant deleveraging event occurred in 2022, characterized by 5,067 million US dollars in repayments of debt and finance lease obligations for non-VIEs, suggesting a utilization of excess cash to reduce liabilities.
Shareholder Yield: The combination of steady dividends and escalating share buybacks indicates a transition toward a highly aggressive capital return strategy during years of peak profitability.

The overall liquidity position strengthened over the period. Cash and cash equivalents grew from 2,583 million US dollars at the end of 2019 to 5,424 million US dollars by the end of 2023. This growth occurred despite massive outflows for debt repayment and share repurchases, underscoring the strength of the operating cash generation during the 2022-2023 window.

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