Valero Energy Corp. (NYSE:VLO)

Inventory Turnover

The inventory turnover ratio exhibited fluctuations across the periods. It decreased from 14.76 in 2019 to 10.87 in 2020, indicating slower inventory movement during that year. Subsequently, it increased sharply to 17.69 in 2021 and peaked at 23.64 in 2022, reflecting improved efficiency in managing inventory. However, it declined to 17.39 in 2023, suggesting a slight reduction in inventory turnover efficiency compared to 2022.

Receivables Turnover

Receivables turnover remained relatively stable from 2019 (13.44) to 2020 (13.5), but experienced a decline to 11.43 in 2021, implying slower collection of receivables. It recovered significantly to 16.39 in 2022, indicating enhanced collection efficiency, before moderating to 13.12 in 2023.

Payables Turnover

The payables turnover ratio showed a downward trend from 10.15 in 2019 to 8.87 in 2021, suggesting a lengthening in the time taken to pay suppliers. This was followed by an increase to 12.54 in 2022, implying faster payments, and then a decrease to 10.49 in 2023.

Working Capital Turnover

Working capital turnover displayed significant variability. It declined sharply from 18.65 in 2019 to 9.89 in 2020, indicating a less effective use of working capital that year. This was followed by a substantial increase to 26.42 and 26.44 in 2021 and 2022 respectively, suggesting improved efficiency in using working capital. In 2023, it fell to 15.37, still above the level in 2020 but below the high in 2021-2022.

Average Inventory Processing Period

The average inventory processing period lengthened from 25 days in 2019 to 34 days in 2020, indicating slower inventory turnover. It then shortened significantly to 21 days in 2021 and further to 15 days in 2022, reflecting enhanced inventory management. In 2023, it increased to 21 days again.

Average Receivable Collection Period

The average receivable collection period remained steady at 27 days in 2019 and 2020, lengthened to 32 days in 2021, shortened sharply to 22 days in 2022, and then increased to 28 days in 2023. These fluctuations reflect varying efficiency in collecting receivables over the period.

Operating Cycle

The operating cycle extended from 52 days in 2019 to 61 days in 2020, shortened to 53 days in 2021, then dropped significantly to 37 days in 2022, indicating more efficient management of inventory and receivables. It expanded again to 49 days in 2023.

Average Payables Payment Period

The average payables payment period showed irregular movements, decreasing from 36 days in 2019 to 34 days in 2020, rising to 41 days in 2021, dropping considerably to 29 days in 2022, and increasing to 35 days in 2023. This indicates fluctuations in payment timing to suppliers.

Cash Conversion Cycle

The cash conversion cycle increased from 16 days in 2019 to 27 days in 2020, then declined markedly to 12 days in 2021 and further to 8 days in 2022, pointing to improved efficiency in converting investments in inventory and receivables into cash. The cycle lengthened again to 14 days in 2023, though it remained below the 2019-2020 levels.

Cost of Sales

The cost of sales exhibited significant fluctuations throughout the analyzed period. It decreased sharply from 103,546 million US dollars in 2019 to 65,652 million in 2020, likely reflecting impacts from external factors such as market conditions or operational adjustments. Subsequently, there was a considerable recovery and increase to 110,848 million in 2021, followed by a substantial rise to a peak of 159,587 million in 2022. However, in 2023, the cost of sales declined to 131,834 million, indicating some moderation.

Inventories

The value of inventories showed a relatively stable upward trend over the five-year period. Starting from 7,013 million US dollars in 2019, inventories decreased slightly in 2020 to 6,038 million but then experienced gradual increases each year, reaching 7,583 million in 2023. This trend suggests a modest buildup of inventory levels, which may relate to operational strategies or market demand expectations.

Inventory Turnover Ratio

The inventory turnover ratio displayed considerable variability. It declined from 14.76 in 2019 to 10.87 in 2020, coinciding with the drop in cost of sales, indicating slower inventory movement. The ratio then rose sharply to 17.69 in 2021 and continued to increase notably to 23.64 in 2022, signaling more efficient inventory utilization or increased sales activity. In 2023, the ratio decreased to 17.39, suggesting a slight reduction in inventory turnover efficiency compared to the previous year but still above the 2019-2020 levels.

Summary

The analyzed data reveals a period of significant volatility in cost of sales, with a pronounced dip in 2020 followed by recovery and growth up to 2022, before a partial decline in 2023. Inventories remained relatively steady with a gradual increase across the period, reflecting cautious inventory management. The inventory turnover ratio trend mirrors these changes, indicating varying efficiency in inventory usage corresponding to sales and cost fluctuations. Overall, the patterns suggest adaptive operational responses to external conditions affecting sales and inventory dynamics.

Revenues including excise taxes

The revenue trend demonstrates significant fluctuations over the analyzed period. A steep decline is observed from 108,324 million USD in 2019 to 64,912 million USD in 2020, likely reflecting an external economic impact during that year. Following this drop, revenues sharply rebounded to 113,977 million USD in 2021 and reached a peak of 176,383 million USD in 2022. However, there was a decline to 144,766 million USD in 2023, indicating some volatility but overall a recovery surpassing the pre-2020 level.

Receivables after allowance for credit losses

Accounts receivable values generally show an increasing trend except for a notable dip in 2020, paralleling the revenue decline in the same year. Starting at 8,058 million USD in 2019, receivables dropped to 4,807 million USD in 2020, then increased substantially to 9,968 million USD in 2021 and continued to rise to 10,761 million USD in 2022 and 11,038 million USD in 2023. This trend suggests gradual growth in outstanding amounts owed to the company aligned with revenue recovery and expansion.

Receivables turnover

The receivables turnover ratio exhibits variability throughout the period, indicating changes in the efficiency of collecting receivables against credit sales. The ratio remained relatively stable at around 13.4-13.5 in 2019 and 2020, decreased to 11.43 in 2021 suggesting slower collections or increased receivables, then rose sharply to 16.39 in 2022, the highest in the period, implying faster collections or a reduction in receivables relative to sales. In 2023, the ratio decreased again to 13.12, indicating a moderate collection pace but still overall efficient management compared to earlier years.

Cost of sales

The cost of sales exhibited significant fluctuations over the five-year period. It decreased sharply from 103,546 million USD in 2019 to 65,652 million USD in 2020, likely reflecting a considerable reduction in expenses or sales volume during that year. This was followed by a strong rebound to 110,848 million USD in 2021. The cost of sales then reached its peak in 2022 at 159,587 million USD before declining again to 131,834 million USD in 2023. Overall, the data shows a pattern of volatility, with a notable recovery and subsequent correction in recent years.

Accounts payable

Accounts payable also showed variability during the observed period. Beginning at 10,205 million USD in 2019, it dropped to 6,082 million USD in 2020. After this decline, there was a recovery to 12,495 million USD in 2021, with relatively stable figures around 12,700 million USD in 2022 and a slight decrease to 12,567 million USD in 2023. This indicates an initial tightening of payables followed by a normalization and stabilization at a higher level compared to 2019.

Payables turnover ratio

The payables turnover ratio ranged from a low of 8.87 in 2021 to a high of 12.54 in 2022. The ratio increased from 10.15 in 2019 to 10.79 in 2020, suggesting a slightly faster settlement of payables in 2020 despite the lower accounts payable balance. However, in 2021 the turnover ratio decreased to 8.87, coinciding with an increase in accounts payable, indicating slower payments to suppliers. The subsequent increase to 12.54 in 2022 reflects a more rapid payment cycle, which then moderated to 10.49 in 2023. Overall, the payables turnover ratio reflects fluctuating payment behavior, with the company accelerating payments in 2022 before returning to a steadier pace in 2023.

The analysis of the financial data reveals several notable trends over the five-year period ending in 2023.

Working Capital

Working capital exhibited fluctuations during the period under review. It increased from 5,809 million USD in 2019 to 6,561 million USD in 2020, followed by a significant decline to 4,314 million USD in 2021. Thereafter, it recovered notably, reaching 6,672 million USD in 2022 and further increasing to 9,419 million USD in 2023. This suggests variability in short-term liquidity management, with a marked strengthening in the last two years.

Revenues

Revenues showed considerable volatility. After a decrease from 108,324 million USD in 2019 to 64,912 million USD in 2020, revenues rebounded to 113,977 million USD in 2021. This positive momentum accelerated sharply to 176,383 million USD in 2022, representing the peak in the period analyzed. However, there was a decline in 2023, with revenues dropping to 144,766 million USD. The changes likely reflect factors affecting sales volume and pricing, possibly including market demand and external economic conditions.

Working Capital Turnover

The working capital turnover ratio experienced dramatic changes over the years. It decreased from 18.65 in 2019 to 9.89 in 2020, indicating reduced efficiency in generating revenues relative to working capital. This was followed by a sharp increase to 26.42 in 2021 and a nearly steady figure of 26.44 in 2022, suggesting improved operational efficiency and better utilization of working capital during these years. However, the ratio declined again to 15.37 in 2023, pointing to a reduction in turnover efficiency relative to 2021 and 2022.

Overall, the data show a period of considerable fluctuation in both liquidity and operational efficiency measures, alongside volatile revenue trends. The years 2021 and 2022 stand out as periods of improved efficiency and strong revenue growth, while 2020 and 2023 reflect slower performance and weakened turnover metrics. The increase in working capital in the most recent year indicates a focus on strengthening liquidity, though with somewhat less efficient turnover compared to the preceding two years.

Inventory Turnover

The inventory turnover ratio exhibited noticeable fluctuations over the five-year period. It declined from 14.76 in 2019 to 10.87 in 2020, indicating a slower rate of inventory being sold or replaced during that year. Subsequently, the ratio increased sharply to 17.69 in 2021 and peaked at 23.64 in 2022, suggesting a significant acceleration in inventory turnover and enhanced operational efficiency. However, in 2023, the turnover ratio decreased to 17.39, indicating a slight slowdown compared to the previous year but still remaining higher than the initial values seen in 2019 and 2020.

Average Inventory Processing Period

The average inventory processing period mirrored the inverse trend of the inventory turnover ratio, as expected given their relationship. It rose from 25 days in 2019 to 34 days in 2020, marking an increased duration for inventory to be processed, which corresponds with the decline in turnover that same year. Then, the processing period dramatically shortened to 21 days in 2021 and further to 15 days in 2022, signaling improvements in inventory management and faster inventory cycles. In 2023, this period increased somewhat to 21 days, aligning with the decline in inventory turnover ratio but still representing better efficiency than the initial years.

Overall Observations

The data reveals a general pattern of initial decline in inventory efficiency during 2020, followed by marked improvements in 2021 and 2022. The year 2023 shows a slight regression from the peak efficiency observed in 2022 but remains stronger compared to 2019 and 2020 levels. These trends suggest that operational adjustments after 2020 positively impacted inventory management, though the recent slight decline may indicate external factors or strategic changes affecting turnover and processing speed.

Receivables Turnover

The receivables turnover ratio showed fluctuations over the five-year period. It remained relatively stable from 2019 to 2020, increasing marginally from 13.44 to 13.5. However, there was a noticeable decline in 2021 to 11.43, indicating slower collection of receivables during that year. In 2022, the ratio improved significantly to 16.39, suggesting a much faster collection process. This upward trend reversed slightly in 2023, with the turnover ratio decreasing to 13.12, still higher than the 2019 and 2020 levels but substantially lower than the peak in 2022.

Average Receivable Collection Period

The average collection period generally exhibited an inverse relationship with the receivables turnover, as expected. It remained stable at 27 days in both 2019 and 2020. In 2021, the collection period extended notably to 32 days, consistent with the decline in receivables turnover that year. A significant improvement occurred in 2022, with the period decreasing sharply to 22 days, corresponding to the highest receivables turnover ratio observed. In 2023, the collection period increased again to 28 days, indicating a moderate slowdown in collections relative to the previous year but still better than 2021.

Summary of Trends

Overall, the data reveal variability in the efficiency of receivables management, with a dip in performance in 2021 followed by a strong recovery in 2022. The subsequent partial reversal in 2023 suggests some challenges in maintaining the improved collection efficiency. Monitoring these metrics moving forward will be important to assess whether the 2022 improvements can be sustained over time.

Average Inventory Processing Period

The average inventory processing period showed variability over the five-year span. It increased from 25 days in 2019 to 34 days in 2020, indicating a slower inventory turnover during that year. Subsequently, there was a notable improvement as the period decreased to 21 days in 2021 and reached a low of 15 days in 2022, suggesting enhanced inventory management and faster processing. However, in 2023, the period increased again to 21 days, indicating a slight reversal but still below the initial 2019 level.

Average Receivable Collection Period

The receivable collection period remained fairly stable at 27 days in both 2019 and 2020. In 2021, it rose to 32 days, implying a longer time to collect receivables. The period improved significantly in 2022, dropping to 22 days, but then increased again to 28 days in 2023, reflecting some fluctuations in the efficiency of receivables collection across the years.

Operating Cycle

The operating cycle lengthened from 52 days in 2019 to 61 days in 2020, reflecting combined impacts of slower inventory processing and receivable collection. Improvements were observed in 2021 and 2022, with the cycle shortening to 53 and then 37 days, respectively. This suggests enhanced operational efficiency primarily driven by faster inventory turnover and receivables collection in 2022. Nonetheless, the operating cycle increased to 49 days in 2023, indicating a moderate decline in operational efficiency compared to the previous year, but still an improvement relative to 2019 and 2020.

Payables turnover

The payables turnover ratio displayed fluctuations over the observed period. It initially increased from 10.15 in 2019 to 10.79 in 2020, indicating an improvement in the rate at which the company paid its suppliers. However, this ratio then declined to 8.87 in 2021, suggesting a slower payment process. The ratio rebounded significantly in 2022 to 12.54, representing the highest turnover in the period, before decreasing again to 10.49 in 2023.

Average payables payment period

The average payables payment period, expressed in days, moved inversely to the payables turnover, as expected. It decreased from 36 days in 2019 to 34 days in 2020, then increased notably to 41 days in 2021, indicating slower payments to suppliers. Subsequently, this period shortened to 29 days in 2022, the lowest in the timeline, before rising again to 35 days in 2023. This pattern mirrors the turnover ratio's fluctuations, reflecting varying payment strategies or cash flow management.

Summary of trends

Overall, the data suggests that the company experienced periods of changing payment practices. The year 2021 stands out with slower payment speeds, as seen in both a lower payables turnover and longer payment period. Conversely, 2022 reflects a tighter payment cycle with higher turnover and a shorter average payment period. The data for 2023 indicate a moderate shift back towards longer payment periods and lower turnover relative to 2022 but still within a range similar to earlier years. These variations could be indicative of management's response to market conditions, liquidity requirements, or supplier negotiations.

Average Inventory Processing Period

The average inventory processing period experienced fluctuations over the five-year span. It increased from 25 days in 2019 to a peak of 34 days in 2020, indicating slower inventory turnover that year. Subsequently, it decreased sharply to 21 days in 2021 and reached its lowest point of 15 days in 2022, suggesting improved inventory efficiency. However, in 2023, it rose again to 21 days, reflecting a partial reversal of the previous year's gains.

Average Receivable Collection Period

This metric remained stable at 27 days initially in 2019 and 2020, indicating consistent credit collection practices. It then increased to 32 days in 2021, pointing to a slowdown in cash inflows from receivables. Improvements were noted in 2022, where the period shortened significantly to 22 days, followed by a slight increase to 28 days in 2023, which may suggest some challenges in maintaining collection efficiency.

Average Payables Payment Period

The payables payment period showed variability within the timeframe. It started at 36 days in 2019 and slightly decreased to 34 days in 2020. In 2021, there was a notable increase to 41 days, indicating more extended payment terms or slower payments. The period then dropped to 29 days in 2022, reflecting faster payments to suppliers, before rising again to 35 days in 2023, signaling a partial return to more extended payable cycles.

Cash Conversion Cycle

The cash conversion cycle (CCC) demonstrated an overall improvement with some fluctuations. It increased from 16 days in 2019 to 27 days in 2020, which implies reduced operational liquidity efficiency. From 2020 onward, the CCC decreased steadily, reaching a low of 8 days in 2022, suggesting improved management of working capital components. In 2023, the CCC increased modestly to 14 days but remained below earlier years' levels, indicating an ongoing strong position in cash flow conversion relative to earlier periods.