Visibility to Growth and Disciplined Capital Management
3
1
2
Disciplined Capital Management is a Constant in
Our Strategy
Non-Discretionary
Maintain Strong Balance Sheet
Maintain investment grade credit rating
Target 20% to 30% debt-to-cap ratio(1)
Sustaining Capex
Approximately $1.5 billion annually
Key to safe and reliable operations
Dividend
Commitment to stockholders
Targeting a sustainable and growing dividend,
with a payout that is at the high end of our
peer group(2)
Discretionary
Growth Capex
25% after-tax IRR
hurdle rate for projects
Focused on operating
cost control, market
expansion and margin
improvement
Acquisitions
Evaluate versus
alternative uses of
cash
(1) Targeted debt-to-cap ratio based on total debt reduced by $2 billion of cash.
(2) Peer group includes PSX, MPC, HFC, and PBF.
Cash Returns
Targeting a payout ratio (3) between 40%
and 50% of adjusted net cash provided by
operating activities for 2019
Stock buyback program consists of
ratable and opportunistic purchases
(3) Payout ratio is the sum of dividends and stock buybacks divided by adjusted net cash provided by operating activities. Adjusted net cash provided by operating activities is
calculated as net cash provided by operating activities excluding changes in working capital (i.e. current assets and current liabilities).
6
ValeroView entire presentation