瓦萊羅能源 (VLO) 2009 Q4 法說會逐字稿

Good morning, my name is Janeka, and I will be your conference operator today.

At this time I would like to welcome everyone to the Valero Energy Corporation fourth quarter 2009 earnings results conference call.

(Operator instructions).

Thank you.

Mr.

Smith, you may begin your conference.

Thank you, Janeka.

Good morning, and welcome to Valero Energy Corporation's fourth quarter 2009 earnings conference call.

With me today are Bill Klesse, our Chairman and CEO, Mike Ciskowski, our CFO, Rich Marcogliese, our COO, Gene Edwards, our Executive Vice President of Corporate Development and Strategic Planning, and Joe Gorder, our Executive Vice President of Marketing and Supply, as well as Kim Bowers, our Executive Vice President and General Counsel.

If you have not received the earnings release, and would like a copy, you can find one on our website at Valero.com.

Also attached to the earnings releases are tables that provide additional financial information on our business segments.

If you have any questions after reviewing these tables, please feel free to contact me after the call.

Before we get started, I would like to direct your attention to the forward-looking statements 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 described in our filings with the SEC.

Now I'll turn the call over to Mike.

Thanks, Ashley, and thank you for joining us today.

As noted in the release, we reported a fourth quarter 2009 loss from continuing operations of $155 million, or $0.28 per share.

This number excludes a $7 million in after-tax costs for severance and early retirement at the Paulsboro refinery, and $20 million in after-tax asset impairment loss.Our GAAP results for the fourth quarter was a loss from continuing operations of $182 million or $0.32 per share.

I should note that the loss from discontinued operations shown in the financial tables relates to the Delaware City assets that were shut down in the fourth quarter.

In the fourth quarter, the $1.2 billion after-tax charge consists of $66 million operating loss after taxes, and an asset impairment and other shutdown charges of $1.1 billion after tax.

The fourth quarter 2009 operating loss was $179 million, excluding the special items already noted, versus $1.3 billion of operating income in the fourth quarter of 2008, which excludes the goodwill impairment taken last year.

The key drivers of the decline in operating income was smaller discounts on sour crude oil and other feed stock, combined with lower margins on diesel and jet fuel.

To put the smaller discounts in perspective, Maya discounts versus WTI decreased 50% year-over-year, comparing the same periods for benchmark Gulf Coast margins versus WTI, the ULSD margins decreased to 66% year-over-year.

Also contributing to the decrease in operating income was the unfavorable effect from a year-end LIFO decrement of $66 million before taxes in 2009 versus a favorable effect from a LIFO increment of $327 million before taxes in 2008.

The fourth quarter refinery through put volume averaged a 2.1 million barrels per day, which is line with our guidance as Delaware City's 113,000 barrels per day of throughput is excluded.

However, fourth quarter 2009 volumes from continuing operations were 371,000 barrels per day below the fourth quarter of 2008, namely due to lower utilization rates across our refinery system caused by lower demand, planned downtime for maintenance at our Wilmington and Paulsboro refineries and the continued idle status of our Aruba refinery Refinery cash operating expenses in the fourth quarter of 2009 were $4.03 per barrel, or $0.16 per barrel lower than the fourth quarter 2008 results, due mostly to lower energy costs.

But our focus on other cost reductions has also been successful.

Comparing the full-year 2008 versus 2009, our refinery operating expenses excluding depreciation and amortization were down $900 million.

Much of this was due to lower energy and natural gas prices, but we estimate more than $215 million was due to our aggressive cost reduction efforts.

Looking at our other business segments, retail has continued to produce strong results with operating income in the fourth quarter of 2009 at $61 million, which is less though, than the 160 -- $163 million in the fourth quarter of 2008, mainly due to lower fuel margins in the US, which were partially offset by lower selling expenses.

For the full year, 2009, retail earned at $293 million of operating income, making it the second-best year for retail.

Our ethanol segment had an excellent fourth quarter with $94 million of operating income, which is nearly double the $49 million reported in the third quarter of 2009.

The continued strong performance was due to higher margins and increased production volumes from the prior quarter.

Our timing with the initial acquisition could not have been better.

In less than three quarters of operation, the initial seven ethanol plants have earned $165 million in operating income, and had yielded impressive returns on the $477 million purchase price.

General and administrative expenses, excluding corporate depreciation were $137 million in the fourth quarter, which was $30 million lower than the third quarter, and in line with our guidance.

For the fourth quarter, total depreciation and amortization expense was $356 million, which was lower than our guidance of $390 million, mainly due to the reclassification of the Delaware City refinery into discontinued operations.

Net interest expense was $113 million, which was in line with our guidance, but down from the third quarter due to lower interest expense on several tax matters.

The effective tax rate benefit on continued operations in the fourth quarter was 39.5%, which was higher than our guidance.

In the fourth quarter, we had a loss, which means an increase in the tax rate is a benefit.

The increase in the tax rate benefit resulted from a gain on the liquidation of Aruba inventory, which is not taxed.

The gain lowered our consolidated loss, but because it is not taxed, it increased the tax rate benefit.

In addition, Congress passed law in November 2009, allowing companies to carry back 2009 losses five years instead of two years.

Carrying back five years to 2004, enabled us to reduce certain recaptured tax items, such as the section 199 manufacturing deduction, and this also resulted in additional favorable tax rate benefits.

Regarding cash flows for the fourth quarter, capital spending was $600 million, which includes $114 million of turnaround and catalyst expenditures.

For the year, capital spending was $2.7 billion, which is a sizable decrease of nearly $600 million, when compared to 2008.

With respect to our balance sheet at the end of December, total debt was $7.4 billion.

We ended the quarter with the cash balance of $825 million, and we had over $4 billion of additional liquidity available.

In addition to this existing liquidity, as previously mentioned, the 2009 net operating loss for taxes can be carried back up to five years to offset previously paid taxes.

This will allow Valero to claim a sizable tax refund that we expect to receive in the second quarter of 2010.

At the end of 2009, our debt to cap ratio net of cash was 31%, which is far below the credit facility covenant that requires a ratio below 60%.

In addition, we do not have any covenants with coverage-type ratios.

When you look back on 2009, it was a very challenge -- it was clearly a very challenging year for the refining industry and Valero.

Refined product demand shrank in the face of a deep recession, driving down margins and discounts in a very competitive environment.

Given these conditions, we took action and reduced costs.

We cut capital spending, and we shut down plants that were dragging down our profitability.

We also stepped up and made a significant investment to enter the ethanol industry by buying seven plants out of bankruptcy at 30% of replacement costs.

The returns have been outstanding so far, and we recently acquired two more plants, and expect to close on a third plant this quarter.

The consensus industry outlook shows that 2010 will be another difficult year for refining margins and discounts.

However, the strategic actions we have taken, should enable to be profitable in 2010, even if we have another year of low margins like 2009.

But due to the poor conditions and uncertainty of our industry, a high priority at Valero will be to maintain our financial strength in 2010.

As part of this effort, we reduced our capital spending budget to $2 billion, which is a $700 million reduction from 2009 spending, and we reduced our dividend rate.

Throughout our system, we will continue to reduce costs, optimize our operations, and upgrade our portfolio of assets to improve our competitiveness.

So far in 2010, we have had a couple of positive items to announce.

Last week we agreed with the government of Aruba on a framework for a stable tax structure.

The agreement will become effective upon approval by the Aruba Parliament and other Aruba authorities.

The framework once fully effective is expected to resolve all prior tax disputes with the payment of $111 million, which was previously reserved in the third quarter of 2009.

The $111 million payment is fully escrowed as restricted cash, separate from our year-end cash balance of $825 million.

The framework will also effectively tax income at a rate of less than 10%, with an annual minimum tax payment of $10 million beginning mid-2012.

We believe this structure has the potential to enhance Valero's strategic alternatives for the refinery, and provide certainty as Valero's tax holiday was set to expire at the end of this year.

In addition, we announced last week that we are in advanced negotiations to sell the shutdown refinery and terminal operations in Delaware City.

Our discussions are ongoing, so I can not provide more details at that point.

But we will keep you informed when we finalize the terms.

Now I'll turn it over to Ashley to cover the earnings model assumption.

Thanks, Mike.

For modeling our first quarter operations, you should expect refinery through-put volumes to fall within the following ranges.

The Gulf Coast should be at 1.1 million to 1.15 million barrels per day.

Mid-continent should be at 360,000, to 370,000 barrels per day.

The Northeast should be at 340,000 to 350,000 barrels per day.

And the West Coast should be at 260,000 to 270,000 barrels per day.

Refinery cash operating expenses are expected to be around $4.45 per barrel, which is higher than last quarter due mainly to lower through-put volumes, combined with slightly higher expected energy catalyst and chemical costs.

Regarding our ethanol operations in the first quarter, we expect total through-put volumes of 2.4 million gallons per day.

And operating expenses should average approximately $0.37 per gallon, which includes $0.03 per gallon for non-cash costs such as depreciation and amortization.

With respect to some of the other items for the first quarter, we expect G&A expense excluding depreciation to be around $135 million.

Net interest expense should be around $115 million, and total depreciation and amortization expense should be around $355 million.

Regarding our tax rate, in this margin environment, small changes in assumptions are yielding a very wide range of results for the effective tax rate.

So at this point we would prefer not to provide guidance, which may not prove to be meaningful.

We will now open the call for questions.

(Operator Instructions).

Your first question comes from Paul Cheng.

Danica, we cannot hear Paul, if he is still on the line.

Okay.

Can you hear me?

Yes, we can.

Okay.

You must have been listening to another call too.

You indicated LIFO loss in the quarter.

Is there any trading profit after that loss or more than offset that loss in the quarter?

No, and in the fourth quarter, we had about a $40 million loss on our trading operations.

You actually have a loss in trading?

Small loss, yes.

Okay.

In the trading loss, I presume that in the LIFO loss, you are being spread according to all different region, based on the through-put level.

How about on the trading loss?

Where did he see it in the resell?

It's also spread the same way, Paul.

Okay.

So is it as a reduction to the margin?

That would be correct.

Okay.

On the special item, you have asset impairment charge of $32 million, what projects does that relate to?

$32 million.

Well, primarily it's related to the Port Arthur Coker project.

Okay.

And that's about $30 million of it.

Okay.

My -- just actually, out of curiosity, with your dividend, I understand why you cut it, but why only cut it to $0.05?

Why not all the way -- cut it down to zero?

I mean from the shareholder standpoint whether that have that $0.05 or not doesn't really matter.

Why don't we just do a more clean cut?

Is there any particular rational behind?

Well, obviously 2009 was a challenging year for us, and 2010 looks challenging also.

We felt like though, that we needed to maintain some level of dividend to attract all potential investors.

And then -- but we also wanted to cut it to a level that we felt was sustainable through the trough if you will, so we came out at this $0.05 per share.

Oh.

Okay.

Mike, can you tell us that -- what is the current carrying cost still on your book for Aruba?

If that's anything on the diversity and also in Paulsboro, including both the refinery and terminal -- and cap -- and the storage capacity?

Yes, the book value?

Yes.

Okay.

The $1 billion dollars on Aruba.

Aruba is $1 billion?

Yes, it is.

Okay.

And then on Paulsboro, it's $1.3 million, and then on Del City, about $150 million.

Okay.

I assume that Delaware City is all just related to the storage facility and all of that?

Has nothing to do with the refining (multiple speakers )

Well, we have a little value, scrap value, if you will for the refinery, and we have a value for platinum too.

I see (multiple speakers) Sorry.

Is that the kind of information that you guys will share in terms of the storage capacity that -- in those three regions, those three facilities, Delaware City, Paulsboro and Aruba, what is on the site?

Paul, I tell you what, I guess to answer the question -- I won't do it directly, but when we look at this, we have got to look at it from a terminal perspective, rather than from an operating refinery perspective.

So I really can't tell you what the working capacity would be for both of those plants as terminals.

Okay.

I see.

That's fine.

Fair enough.

Thank you.

Okay.

Thank you, Paul.

Your next question comes from Jeff Dietert from Simmons.

Jeff Dietert with Simmons.

Hey, Jeff.

Can you hear me okay?

We can.

Okay.

Very good.

The way you have reported the full-year 2009 numbers in the back with Del City as discontinued operations, you have got $55 million of continuing operations excluding special items.

So that -- that adjusts for Del City.

I would assume that with your targeted operating cost, we could add some improvement from cost savings as well.

You've got a full year of ethanol, and I was curious what you expect full-year volumes to be in the ethanol segment?

It's up around 2.8 million gallons per day, if you kind of look at our existing 7, plus our time frame for getting these new plants on track, around 2.8 million gallons per day.

Okay.

So there's a -- positive influence from a full year of ethanol, cross savings.

Aruba, I assume was profitable in 1Q 2009, and probably not profitable thereafter.

Is Aruba profitability going to be meaningfully different in 2010 from 2009?

What would that adjustment look like?

Well, I tell you what -- what we know is that fit was running today, it would not be profitable.

Okay?

I mean, you have a combination of factors Jeff.

You have got the heavy sour discounts being where they are.

You have got the kind of weak distillate cracks where they are, BGO certainly comes into play in this, and BGO prices come off.

So, it wouldn't be profitable running today.

So, I would say our plan going forward for the rest of the year is, until it looked like it was profitable, we wouldn't have any plans to start it up.

I might point out, Jeff, though in 2010, we continue to depreciate Aruba.

And that's is non-cash obviously, but that is going to show up as a loss.

And then we have also agreed to pay the salaries, wages, and benefits until June of the employees.

And so obviously that's going to be -- show up as expense.

And so, here in the first part of the year, you will see some loss associated with Aruba.

Was Aruba a net positive or net negative contributor to net income in 2009?

For the full year?

For the full year, their operating income would have been about $130 million loss.

Okay.

All right.

That's what I was looking for.

Now as far as inventory at Aruba, Paulsboro and Del City, can you summarize what inventory you currently holding at those three plants?

I mean, we're liquidating the inventories at Aruba and Del City, okay?

And I'm not sure exactly what the numbers are there today.

I think we estimated by the end of the month, for example, at Del City would be down to 3 million barrels from a 6 million barrel, where we were at then of the year.

At Aruba are it is going to be almost zero, Jeff.

And at Paulsboro, we are still operative, as a going concern, so there shouldn't be any change in the inventories there.

And Jeff, I didn't mention that in my comments, but obviously that is going to add to our liquidity sources.

So we are going to get this cash from the inventory.

Yes, that's what I'm trying to make sure I capture in my expectations.

Very helpful on comments.

Thank you.

Thanks, Jeff.

Your next question comes from Evan Calio with Morgan Stanley.

Good morning, guys.

Thanks for taking my call.

Good morning, Evan.

A bit of a strategic question, on asset divestitures, and I understand your hesitancy to comment on Del City in negotiation.

But I mean is it -- it is -- would it be right to think there could be a potential linkage between a Delaware City as a terminal and a potential Paulsboro sale?

We are working the Del City process as we described earlier.

And we are also launching a separate process for Paulsboro going forward, which will probably start with initial bids in the February time frame.

Okay.

And we'll just go from there as far as the actual closing date.

Okay.

Is there any political support or kind of open issues from the Delaware side that could facilitate a Delaware transaction in an effort to save jobs or of the like?

Yes, that's correct.

Okay.

If I follow up on -- on Jeff's line of question and in to your comments, this is more to your statement about assuming oil refining margins in 2009 that you would be profitable in 2010.

Is that correct?

That's primarily driven on ethanol year-on-year at the levels you talked about, you can assume a margin give you close to a $100 million.

And that also assumes cost control and tax, are those the three elements that support that assertion, same year-on-year margins?

Is that correct?

That's correct.

If you take 2009 -- in fact if you look at the reconciliation tables on page five of our earnings table.

Yes.

We have kind of a -- I would say a -- 2009 loss excluding special items of $55 million.

Right now, we don't expect a LIFO increment for 2010.

So add that back after tax, that's around $43 million.

We got a $100 million cash reduction target, mentioned in the press release.

After tax, that's around $60 million, $65 million.

And then, if you just built up for a full-year based on like a 2.8 million gallons per day of expected capacity.

And just go look at kind of what operating income margins we achieved for 2009, you're over, well over $100 million of profit, potential profit in 2010.

And that is just using 2009 price set.

Okay, thats helpful.

And I have one last question, to kind of circle back on the strategic side.

The stable tax structure when executed, the clarification on tax holiday and liability, I mean is that a gating item in kind of your opinion on any potential disposition of that asset.

Was that?

This is Klesse.

Having a stable tax arrangement with Aruba going forward, since the refinery has shut down here, what is happening in 2010 as far as tax structure is not that important.

But going forward, the agreement we have with Aruba is for 20 years.

Okay.

So it absolutely makes for both Aruba and for us -- gives us optionality here as we look for the proper transaction for that facility.

Okay.

Very helpful.

Thank you, guys.

(Operator Instructions).

Your next question comes from Mark Gilman from Benchmark Company.

Hey, guys.

What was the cost on 4Q and full-year purchasing rents?

And can we assume that terminal funding limitations required you to purchase versus buying ethanol and blending it?

And what do you expect the cost in volume to be in 2010 of purchased rents, assuming no change in government regulations.

$11 million.

Okay.

Fourth quarter was $11 million.

For the year it was just under $75 million.

And I would say our budget for 2010 is probably $140 million.

Okay.

Thank you very much.

Our next question comes from Alexander Inkster from Sanford and Bernstein.

Hi, guys.

A bit of a strategic question here, I was wondering, given the strong performance of the ethanol business so far, are you planning to continue expanding that business?

Or was it really opportunistic, and you'e happy with the size of the business as it is?

a -- a 2009 loss excluding number of months of being positive.

(multiple speakers) I can answer you -- we are very pleased -- this is Klesse -- we are very pleased with the ethanol business.

But to the specific, would we expand it?

It is exactly the same as we said before.

We get nice, bolt-on opportunities here, to buy quality assets at below, what we consider below replacement cost, that fit in with network we built, yes, we will look at acquiring and adding some more to this business.

I would like to add -- this is Klesse.

I'd like to change, I do not expect us to spend $140 million in 2010 on rents.

The issue we get into is, what is the price of a rent.

And it's not that high as the number that Joe gave you for the budget, as it is today.

So I would expect us to manage this, and we will not spend that much money.

It is very hard though for us, to give you a number that really has to do with what is the price of ren.

But the budget Joe gave you is $140 million, but I do not expect us to spend that much for rents.

Is there anything else, or we can't hear you.

Your next question comes from Doug Terreson Your next question comes from Doug Terreson with ISI.

Good morning, guys.

Good morning, Doug.

Most of the recent portfolio management activities and discussion for Valero have involved divestitures and closures, and I realize those were appropriate at this point of the cycle in a lot of cases.

But at the same time, over the past couple of industry cycles in refining today and ethanol, you guys have made a variety of acquisitions during pretty challenging industry periods, many of which led to value creation for shareholders as we all know.

So my question is, how do you feel about acquisitions today, that is, are they even a consideration, and if so, are there geographical or functional emphases that make sense for the Company, and if so what are they?

And I am just talking in the refining space.

Yes, this is Klesse.

Your comment is exactly right.

The difference though in this environment, as we see it with alternate or renewable fuels taking gasoline market share, also with changes that are long term, we believe the industry has to rationalize and consolidate here.

This would be true, both in Europe, as well as North America.

And you are seeing examples happening right now in both places.

So, having said that, we think we are a million to two million barrels a day long in both places.

Now at the same times, we have a portfolio of refineries and we are always interested in improving that portfolio.

So we continue to look at refineries that come on the market, primarily we look in Europe and here in North America.

So you can see us continue to look, we are very careful.

We want to be sure we are improving our portfolio and shareholder value in the long run.

Sure.

Okay, Bill, thanks a lot.

You're welcome.

Your next question comes from Jeff Dieter from Simmons.

A question for Joe, the West Coast has been soft so far in January.

And we are continuing to see imports of gasoline into the West Coast.

Could you talk a little bit about the dynamics that are impacting the West Coast margins so far in this quarter.

Well, Jeff, I mean I think, if you look at the margins being weak right now, much of this is kind of the preparation for the transition from winter grade to summer grade.

You look at prompt margins, they might be $8 out there right now.

They're $12 in February.

So I think that is really what we are seeing.

The demand is not strong there, it's just as it's not strong anywhere else.

But I think what we are seeing in the marketplace is more that than anything.

And when do you shift from winter grade to summer grade, and when is the requirement?

And when do you actually start making that shift?

February -- go ahead.

February in the South, and March 1st, in the North.

So, LA in February, and San Francisco in March.

And, it looks as though distillates are between the Gulf Coast and Europe, has gone negative after a number of months of being positive.

Could you talk about your distillate exports out of the Gulf Coast, and both Europe and Latin America?

Sure, you're right.

The (inaudible) closed today, probably by about $0.02.

And we have seen a reduction in our exports from the Gulf Coast to Europe.

We have got some of that volume turned up, those barrels continue to move.

but a lot of the spot barrels aren't.

But we're seeing now, Jeff, a bit more demand out of South America, Peru and Chile are both taking barrels.

And so barrels that were previously moving to Europe, are now headed south.

So your total export --

So our export volumes will be down from where they were in December and last year.

Okay.

And how -- how significant a loss?

Oh, I would tell you, if we were doing15 to 20 a month last year, we're probably going to do 10 in January, cargoes.

Cargoes.

Yes, got you.

All right.

Thanks for your comments.

You bet.

Your next question comes from Paul Sankey with Deutsche Bank.

You've -- it seems to me that you are more or less calling the bottom on the US refining here, with your statements about the potential for profits in 2010, at least from your own point of view, a bottom.

Going back to a couple of the regional questions that we had.

You pretty much lost money in every region here.

How do you expect the regional dynamics of US refining to play out?

Are there any areas -- given that your profit view is based on a total corporate level.

I was just wondering if there were any regions where you expect things to be relatively better or worse over the course of 2010?

Thanks?

Paul, this is Gene Edwards.

I think what we look at -- it's our world economy and everything is tied together.

So I don't really see one area really doing much different than the other on a relative basis in 2009 sales.

The discounts are a little bit better than in the mid-continent.

And, you get a little bit better margin there but --

I guess what I was driving at, is the shutdowns on the East Coast.

Obviously there are different dynamics in that regionally, where you have seen more shutdowns on the East Coast.

I was wondering if you saw the potential for a bigger bounce on the East coast, on whether you were more focused on demand recovery on the West Coast?

Or as you just mentioned some subtleties on the mid continent , anything you could add about regional color would

Well, East Coast is influenced by imports.

The refinery shutdown there -- I mean it's really just a small percentage of overall demand there, so usually the imports just kind of rebalance the equation.

And we have seen East coast trading above the Gulf at least, which is -- I remember years which the East coast is actually negative to the Gulf, so maybe there is a little improvement.

But I think we actually saw that all of last year, the East coast was a little bit over the Gulf too.

Imports are down, European economics are bad over there, with poor distillate cracks over there.

So we are seeing less imports than we saw last year.

And last year, imports were down for the prior year, so that has all helped to rebalance the equation as well.

But all in all, I think -- the world dynamics are what determined the cracks in each region, and unless you are in a real true niche area, it just kind of just rebalances it.

We see monthly fluctuations, but overall we don't see a big change.

Hi, Gene.

This is Mike Willoughby with a follow-up question for you.

Given again, you are effectively saying we have seen the bottom, assuming 2009 margins are about as bad as things can get.

Would the portfolio rationalization program be limited now, just to the ones that we know about in terms of -- some sort of action on Aruba, Paulsboro, Del, you obviously handled.

Do you think beyond that now, the portfolio is as the portfolio will be for Valero on the (inaudible) rationalization front?

Thanks.

Yes, I think that is all we see doing right now.

I think after we have these -- the rest of our portfolio looks pretty good, as it did last year.

And we -- even with low margins we think we have got refineries we can beat.

We still have got a couple of other refineries that didn't do as well last year, but we have plans to improve those operations, through minor things we're doing like fixing cat crackers like in Memphis and St.

Charles, we're going to put those refineries back on the block as well.

When do you think you'll get a resolution on Paulsboro?

Would you expect the Delaware City outcome as the ultimate way of handling that?

We think it is a viable refinery that can be sold as is.

And we have some interested parties, so we'll will just have to see how it plays out.

Okay, guys.

Thanks a lot.

(Operator Instructions).

Your next question comes from Ann Kohler with Caris.

Good morning, gentleman.

Could you just give a little bit of color on what you saw in terms of same-store sales in terms of volumes as well as merchandise, in your retail operations here in the US?

In you retail operations here in the US, as well as in Canada?

Okay.

In the US in the fourth quarter 2008 versus 2009, and this is on a same-store basis.

Our gas was down about 4.7%.

Diesel was up about 5.4%, and in total it was like down, total fuel was 3.7%.

On inside sales, we were up quarter-over-quarter 1.7%, and that's in the US.

Okay.

In Canada -- and I don't have those volumes here with me.

We'll have to get those to you.

Okay.

Great.

And do you have any color regarding turnarounds for either the quarter or for the year?

Sure.

This is Rich Marcogliese.

We have a pretty significant turnover activity here in the first quarter.

The Port Arthur cat cracker and (inaudible) are down currently.

That's going to be about a 37-day outage.

In February, we have a planned turnaround at the St.

Charles crude and coker.

Based upon the overall economics of running the plant, it is going to be a plant-wide shutdown.

We're going to take the opportunity to make some cat cracker repairs at the same time.

Following that will we will take the Memphis cat cracker down in March for a 45-day turnaround time.

This will provide an opportunity to do a large revamp project, over $200 million on this cat cracker, which actually which is one of our strategic projects should increase operating income in Memphis over $100 million a year.

And then finally in the first quarter, we have a hydrocracker outage in Corpus Christi in March for 14 days.

Beyond first quarter, then turnaround activity will subside, but then it ramps up again in the fourth quarter, and the main activity there will be the Benicia plant-wide turnaround which is scheduled for November.

Great.

Thank you.

At this time there are no further questions.

Thank you, Danica.

Just want to thank our shareholders for calling in and listening to the call, if you have any questions feel free to call our investor relations department here at Valero.

Thanks a lot.

Thank you for participating in today's conference call.

You may now disconnect.