Analysis of Debt
Total Debt (Carrying Amount)
Valero Energy Corp., balance sheet: debt
US$ in millions
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).
- Current Portion of Debt and Finance Lease Obligations
- The current portion of debt and finance lease obligations exhibited an overall increasing trend from 2019 through 2023. Starting at $494 million in 2019, it rose sharply to $723 million in 2020 and further surged to $1,264 million in 2021. A slight decrease was observed in 2022 when the value dropped to $1,109 million, but this was followed by another increase reaching $1,406 million in 2023. This pattern indicates growing short-term debt obligations over the period, with a minor temporary reduction in 2022.
- Debt and Finance Lease Obligations, Less Current Portion
- Long-term debt and finance lease obligations (excluding the current portion) displayed a peak in 2020 at $13,954 million, up from $9,178 million in 2019. Subsequently, these obligations decreased progressively each year, standing at $12,606 million in 2021, $10,526 million in 2022, and finally $10,118 million in 2023. This decline suggests a steady reduction in long-term debt over the last three years, potentially reflecting efforts to deleverage or restructure longer-term liabilities.
- Total Debt and Finance Lease Obligations, Including Current Portion
- The total debt and finance lease obligations, which combine both current and long-term liabilities, peaked at $14,677 million in 2020 from $9,672 million in 2019. Following this peak, total debt progressively declined each year, falling to $13,870 million in 2021, $11,635 million in 2022, and $11,524 million in 2023. This pattern indicates that the company’s overall debt burden increased significantly in 2020 but has since been decreasing steadily, indicating a reduction in overall indebtedness in more recent years despite fluctuations in the current portion of debt.
- Overall Analysis
- The data reveals a dynamic debt profile characterized by a sharp increase in total debt in 2020, driven primarily by a rise in both short-term and long-term obligations. Post-2020, there is a discernible deleveraging trend marked by reduced long-term debt and a moderate decline in total debt by 2023. Conversely, the current portion of debt has generally increased, except for a dip in 2022, which may suggest a shifting maturity structure with more debt moving closer to maturity or refinancing of short-term obligations. The combined trends may imply strategic debt management efforts, focusing on decreasing long-term liabilities while balancing short-term financing needs.
Total Debt (Fair Value)
| Dec 31, 2023 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Debt, excluding finance lease obligations | 9,109) |
| Finance lease obligations | 2,306) |
| Total debt and finance lease obligations, including current portion (fair value) | 11,415) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.99 |
Based on: 10-K (reporting date: 2023-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt and finance lease obligations: 4.80%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 1.20% | 167) | 2) | |
| 2.85% | 251) | 7) | |
| 3.65% | 189) | 7) | |
| 3.40% | 426) | 14) | |
| 2.15% | 564) | 12) | |
| 4.35% | 591) | 26) | |
| 4.00% | 439) | 18) | |
| 8.75% | 200) | 18) | |
| 2.80% | 462) | 13) | |
| 7.50% | 729) | 55) | |
| 6.63% | 1,380) | 91) | |
| 6.75% | 24) | 2) | |
| 10.50% | 113) | 12) | |
| 4.90% | 621) | 30) | |
| 3.65% | 829) | 30) | |
| 4.00% | 508) | 20) | |
| 7.45% | 70) | 5) | |
| 4.38% | 146) | 6) | |
| 4.50% | 456) | 21) | |
| 7.65% | 100) | 8) | |
| 4.80% | 2,306) | 111) | |
| Total | 10,571) | 507) | |
| 4.80% | |||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 507 ÷ 10,571 = 4.80%
Interest Costs Incurred
Valero Energy Corp., interest costs incurred
US$ in millions
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).
- Interest and debt expense, net of capitalized interest
- The data shows a generally upward trend from 2019 to 2023, starting at $454 million in 2019 and increasing to $592 million by 2023. There was a significant rise from 2019 to 2020, followed by a moderate continuous increase through 2023, despite a slight dip in 2022.
- Capitalized interest
- Capitalized interest values demonstrated a declining pattern over the five-year period. Starting at $90 million in 2019, it decreased to $19 million in 2023, with some fluctuations including a slight increase in 2022 from the prior year. The overall trend indicates a reduction in the amount of interest capitalized over time.
- Interest and debt expense
- The total interest and debt expense rose from $544 million in 2019 to a peak of $651 million in 2021, followed by a gradual decrease through 2023, ending at $611 million. This suggests some volatility in total interest expenses, with the highest burden experienced in 2021 before easing slightly in later years.
- Overall insights
- The net interest cost, excluding capitalized interest, steadily increased, indicating rising expense pressures. Meanwhile, the reduction in capitalized interest implies less interest is being added to assets, which could impact both expense recognition and capital expenditure treatment. The total interest and debt expense peaking in 2021 followed by a decline suggests potential management actions to control costs or changes in debt structure. The data collectively reflects increasing financial costs through the period, with some moderation in recent years.
Adjusted Interest Coverage Ratio
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).
2023 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and debt expense, net of capitalized interest
= 12,360 ÷ 592 = 20.88
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest and debt expense
= 12,360 ÷ 611 = 20.23
- Interest Coverage Ratio (without capitalized interest)
-
The interest coverage ratio experienced significant fluctuations over the five-year period. Beginning at a strong level of 8.68 in 2019, it sharply declined to a negative ratio of -2.57 in 2020, indicating potential financial distress or a substantial decrease in earnings relative to interest obligations during that year. Recovery was observed in 2021 with the ratio rising to 3.56, followed by a substantial improvement in 2022, reaching 28.24. In 2023, the ratio slightly decreased but remained strong at 20.88, suggesting a robust ability to meet interest expenses after the recovery phase.
- Adjusted Interest Coverage Ratio (with capitalized interest)
-
The adjusted interest coverage ratio, which includes capitalized interest, mirrored the overall trend of the non-adjusted ratio but at a slightly lower magnitude throughout the period. It started at 7.24 in 2019, fell to -2.27 in 2020, indicating similar challenges as the non-adjusted ratio, then increased steadily to 3.3 in 2021. The ratio improved markedly in 2022 to 25.64 and slightly decreased to 20.23 in 2023, maintaining a strong capacity to cover interest expenses considering capitalized interest.
- Overall Trend Analysis
-
The data reveals a period of significant financial strain in 2020, likely related to external or operational factors impacting earnings and interest obligations. The subsequent years show a resilient recovery, with coverage ratios reaching much higher levels than the initial 2019 figures in 2022 and 2023. The stability of the ratios in the last two years indicates improved profitability and financial health, allowing the company to comfortably cover interest charges both with and without capitalized interest considered.