Valero Energy Corporation (VLO – Analyst Report) reported adjusted third-quarter 2016 earnings of $1.24 per share that surpassed the Zacks Consensus Estimate of 91 cents, primarily owing to lower operating expenses. The upside, however, was partially limited by weak margins from gasoline and distillate. We note that the bottom line decreased substantially from the year-ago adjusted income of $2.79 per share.

Total quarterly revenue of $19,649 million handily beat the Zacks Consensus Estimate of $16,497 million but plunged 13% year over year.

Throughput Volumes         

During the quarter, refining throughput volumes were 2.9 million barrels per day (bbls/d), almost same as the prior-year quarter.

By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 43%, 18% and 14%, respectively. The remainder came from residuals, other feedstock as well as blendstocks and others.

The Gulf Coast accounted for about 58% of the total volume, while the Mid-Continent, North Atlantic and West Coast regions accounted for 16%, 17% and 9%, respectively.

Throughput Margins

Company-wide throughput margins decreased to $9.07 per barrel from the year-ago level of $14.38. The decline stemmed from weak margins from gasoline and distillate.

Average throughput margin realized was $9.02 per barrel in the U.S. Gulf Coast as against $12.93 in the year-earlier period, was $9.52 per barrel in the U.S. Mid-Continent compared with $16.74 last year, was $7.74 per barrel in the North Atlantic as against $12.78 in the prior-year period and was $11.02 per barrel in the U.S. West Coast compared with $ 21.61 in the previous year.

Total operating cost per barrel was $5.31 during the quarter, down 4.3% from the prior-year figure of $5.55. Refining operating expenses per barrel were $3.63 as against $3.80 in the year-ago quarter. Unit depreciation and amortization expenses decreased year over year to $1.68 per barrel from $1.75.