VALERO ENERGY CORP/TX0001035002FALSE2025Q2--12-31http://fasb.org/us-gaap/2025#CostDirectMaterialhttp://fasb.org/us-gaap/2025#CostDirectMaterialhttp://fasb.org/us-gaap/2025#CostDirectMaterialhttp://fasb.org/us-gaap/2025#CostDirectMaterial

Includes excise taxes on sales by certain of our foreign operations of $1,662 million and $1,456 million for the three months ended June 30, 2025 and 2024, respectively, and $3,166 million and $2,843 million for the six months ended June 30, 2025 and 2024, respectively.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________

Commission File Number 001-13175

VALERO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			74-1828067
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)

One Valero Way

San Antonio, Texas

(Address of principal executive offices)

78249

(Zip Code)

(210) 345-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

VLO

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares of the registrant’s only class of common stock, $0.01 par value, outstanding as of July 18, 2025 was 310,651,744.

VALERO ENERGY CORPORATION

TABLE OF CONTENTS



			Page
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024			1
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2025 and 2024			2
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024			3
Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2025 and 2024			4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024			6
Condensed Notes to Consolidated Financial Statements			7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			35
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			65
ITEM 4. CONTROLS AND PROCEDURES			66
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			66
ITEM 1A. RISK FACTORS			67
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			67
ITEM 5. OTHER INFORMATION			67
ITEM 6. EXHIBITS			68
SIGNATURE			69

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(millions of dollars, except par value)


	June 30, 2025		December 31, 2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,537	$	4,657

Receivables, net	11,073		10,708
Inventories	7,538		7,761
Prepaid expenses and other	656		611
Total current assets	23,804		23,737
Property, plant, and equipment, at cost	49,701		52,368
Accumulated depreciation	(21,465)		(23,054)
Property, plant, and equipment, net	28,236		29,314
Deferred charges and other assets, net	7,393		7,092
Total assets	$	59,433	$	60,143
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	382	$	743
Accounts payable	11,499		12,092
Accrued expenses	1,288		1,130
Taxes other than income taxes payable	1,451		1,360
Income taxes payable	57		170
Total current liabilities	14,677		15,495
Debt and finance lease obligations, less current portion	10,265		9,720
Deferred income tax liabilities	5,048		5,267
Other long-term liabilities	2,496		2,140
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized; 673,501,593 and 673,501,593 shares issued	7		7
Additional paid-in capital	6,956		6,939
Treasury stock, at cost; 362,847,666 and 358,637,890 common shares	(28,757)		(28,178)
Retained earnings	46,425		47,016
Accumulated other comprehensive loss	(553)		(1,272)
Total Valero Energy Corporation stockholders’ equity	24,078		24,512
Noncontrolling interests	2,869		3,009
Total equity	26,947		27,521
Total liabilities and equity	$	59,433	$	60,143

See Condensed Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(millions of dollars, except per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenues (a)	$	29,889	$	34,490	$	60,147	$	66,249
Cost of sales:
Cost of materials and other	26,332		30,943		53,880		58,625

Operating expenses (excluding depreciation and amortization expense reflected below)	1,522		1,424		3,045		2,835
Depreciation and amortization expense	786		684		1,466		1,367
Total cost of sales	28,640		33,051		58,391		62,827
Asset impairment loss	—		—		1,131		—
Other operating expenses	4		3		8		37
General and administrative expenses (excluding depreciation and amortization expense reflected below)	220		203		481		461
Depreciation and amortization expense	28		12		39		24
Operating income	997		1,221		97		2,900
Other income, net	86		122		206		266
Interest and debt expense, net of capitalized interest	(141)		(140)		(278)		(280)
Income before income tax expense	942		1,203		25		2,886
Income tax expense	279		277		14		630


Net income	663		926		11		2,256
Less: Net income (loss) attributable to noncontrolling interests	(51)		46		(108)		131
Net income attributable to Valero Energy Corporation stockholders	$	714	$	880	$	119	$	2,125








Earnings per common share	$	2.28	$	2.71	$	0.37	$	6.47
Weighted-average common shares outstanding (in millions)	312		324		313		327





Earnings per common share – assuming dilution	$	2.28	$	2.71	$	0.37	$	6.47
Weighted-average common shares outstanding – assuming dilution (in millions)	312		324		313		327
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign operations	$	1,662	$	1,456	$	3,166	$	2,843

See Condensed Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions of dollars)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net income	$	663	$	926	$	11	$	2,256
Other comprehensive income (loss):
Foreign currency translation adjustment	564		(111)		726		(264)
Net gain (loss) on pension and other postretirement benefits	4		(5)		5		(11)
Net loss on cash flow hedges	(3)		(8)		—		(92)

Other comprehensive income (loss) before income tax expense (benefit)	565		(124)		731		(367)
Income tax expense (benefit) related to items of other comprehensive income (loss)	9		(3)		10		(18)
Other comprehensive income (loss)	556		(121)		721		(349)
Comprehensive income	1,219		805		732		1,907
Less: Comprehensive income (loss) attributable to noncontrolling interests	(51)		42		(106)		84
Comprehensive income attributable to Valero Energy Corporation stockholders	$	1,270	$	763	$	838	$	1,823

See Condensed Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(millions of dollars, except per share amounts)

(unaudited)


	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total		Non- controlling Interests		Total Equity
Balance as of March 31, 2025	$	7	$	6,944	$	(28,417)	$	46,065	$	(1,109)	$	23,490	$	2,825	$	26,315
Net income (loss)	—		—		—		714		—		714		(51)		663
Dividends on common stock ($1.13 per share)	—		—		—		(354)		—		(354)		—		(354)
Stock-based compensation expense	—		13		—		—		—		13		—		13
Transactions in connection with stock-based compensation plans	—		(1)		1		—		—		—		—		—
Purchases of common stock for treasury	—		—		(341)		—		—		(341)		—		(341)
Contributions from noncontrolling interests	—		—		—		—		—		—		97		97
Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)

Other comprehensive income	—		—		—		—		556		556		—		556
Balance as of June 30, 2025	$	7	$	6,956	$	(28,757)	$	46,425	$	(553)	$	24,078	$	2,869	$	26,947

Balance as of March 31, 2024	$	7	$	6,916	$	(26,330)	$	46,519	$	(1,055)	$	26,057	$	2,767	$	28,824
Net income	—		—		—		880		—		880		46		926
Dividends on common stock ($1.07 per share)	—		—		—		(347)		—		(347)		—		(347)
Stock-based compensation expense	—		13		—		—		—		13		—		13

Purchases of common stock for treasury	—		—		(1,043)		—		—		(1,043)		—		(1,043)

Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)

Other comprehensive loss	—		—		—		—		(117)		(117)		(4)		(121)
Balance as of June 30, 2024	$	7	$	6,929	$	(27,373)	$	47,052	$	(1,172)	$	25,443	$	2,807	$	28,250

See Condensed Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(millions of dollars, except per share amounts)

(unaudited)


	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total		Non- controlling Interests		Total Equity
Balance as of December 31, 2024	$	7	$	6,939	$	(28,178)	$	47,016	$	(1,272)	$	24,512	$	3,009	$	27,521
Net income (loss)	—		—		—		119		—		119		(108)		11
Dividends on common stock ($2.26 per share)	—		—		—		(710)		—		(710)		—		(710)
Stock-based compensation expense	—		50		—		—		—		50		—		50
Transactions in connection with stock-based compensation plans	—		(33)		34		—		—		1		—		1
Purchases of common stock for treasury	—		—		(613)		—		—		(613)		—		(613)
Contributions from noncontrolling interests	—		—		—		—		—		—		97		97
Distributions to noncontrolling interests	—		—		—		—		—		—		(131)		(131)


Other comprehensive income	—		—		—		—		719		719		2		721
Balance as of June 30, 2025	$	7	$	6,956	$	(28,757)	$	46,425	$	(553)	$	24,078	$	2,869	$	26,947

Balance as of December 31, 2023	$	7	$	6,901	$	(25,322)	$	45,630	$	(870)	$	26,346	$	2,178	$	28,524
Net income	—		—		—		2,125		—		2,125		131		2,256
Dividends on common stock ($2.14 per share)	—		—		—		(703)		—		(703)		—		(703)
Stock-based compensation expense	—		52		—		—		—		52		—		52
Transactions in connection with stock-based compensation plans	—		(24)		25		—		—		1		—		1
Purchases of common stock for treasury	—		—		(2,076)		—		—		(2,076)		—		(2,076)
Contributions from noncontrolling interests	—		—		—		—		—		—		90		90
Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)
Conversion of IEnova Revolver debt to equity (see Notes 4 and 6)	—		—		—		—		—		—		457		457

Other comprehensive loss	—		—		—		—		(302)		(302)		(47)		(349)
Balance as of June 30, 2024	$	7	$	6,929	$	(27,373)	$	47,052	$	(1,172)	$	25,443	$	2,807	$	28,250

See Condensed Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)

(unaudited)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities:
Net income	$	11	$	2,256
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	1,505		1,391


Asset impairment loss	1,131		—

Deferred income tax benefit	(259)		(100)
Changes in current assets and current liabilities	(168)		629
Changes in deferred charges and credits and other operating activities, net	(332)		142
Net cash provided by operating activities	1,888		4,318
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))	(333)		(247)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)	(63)		(142)
Other VIEs	(3)		(5)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)	(621)		(636)
Deferred turnaround and catalyst cost expenditures of DGD	(46)		(51)


Purchases of available-for-sale (AFS) debt securities	(12)		(14)
Proceeds from sales and maturities of AFS debt securities	16		68

Investments in nonconsolidated joint ventures	(1)		—
Other investing activities, net	16		(2)
Net cash used in investing activities	(1,047)		(1,029)
Cash flows from financing activities:
Proceeds from debt issuance and borrowings (excluding VIEs)	4,749		2,850
Proceeds from debt borrowings of VIEs:
DGD	300		250
Other VIEs	—		23
Repayments of debt and finance lease obligations (excluding VIEs)	(4,656)		(3,117)
Repayments of debt and finance lease obligations of VIEs:
DGD	(213)		(513)
Other VIEs	(21)		(13)

Purchases of common stock for treasury	(612)		(2,056)
Payment of excise tax on purchases of common stock for treasury	(28)		—
Common stock dividend payments	(710)		(703)
Contributions from noncontrolling interests	97		90
Distributions to noncontrolling interests	(131)		(2)
Other financing activities, net	(6)		—
Net cash used in financing activities	(1,231)		(3,191)
Effect of foreign exchange rate changes on cash	273		(108)
Net decrease in cash, cash equivalents, and restricted cash	(117)		(10)
Cash, cash equivalents, and restricted cash at beginning of period (a)	4,829		5,424
Cash, cash equivalents, and restricted cash at end of period (a)	$	4,712	$	5,414

________________________

(a)Restricted cash is included in prepaid expenses and other in our consolidated balance sheets.

See Condensed Notes to Consolidated Financial Statements.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

General

The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole. The term “DGD,” as used in this report, may refer to Diamond Green Diesel Holdings LLC, its wholly owned consolidated subsidiary, or both of them taken as a whole.

These interim unaudited financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these interim unaudited financial statements reflect all adjustments considered necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These interim unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024.

The balance sheet as of December 31, 2024 has been derived from our audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in these interim unaudited financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Accounting Pronouncements Recently Adopted

ASU 2023-07

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve interim and annual disclosures about a public entity’s reportable segments primarily through enhanced disclosures about significant segment expenses and other segment related items. We adopted this ASU effective January 1, 2024 and it did not affect our financial position or our results of operations, but did result in additional disclosures.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve annual income tax disclosures by requiring further disaggregation of information in the rate reconciliation and disaggregation of income taxes paid by jurisdiction. This ASU

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

also includes certain other amendments intended to improve the effectiveness of annual income tax disclosures. We adopted this ASU effective January 1, 2025 and it did not affect our financial position or our results of operations, but will result in additional annual disclosures.

Accounting Pronouncement Not Yet Adopted

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting—Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve interim and annual disclosures about a public business entity’s expenses by requiring more detailed information in the notes to the financial statements about certain expense categories, including purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. We expect to adopt this ASU effective January 1, 2027 and the adoption will not affect our financial position or our results of operations, but will result in additional disclosures.

2. IMPAIRMENT

In recent years, the State of California adopted legislation that has subjected our refining and marketing operations to potential increased operational restrictions and new reporting requirements. The considerable uncertainty and potential adverse effects on our operations and financial performance resulted in the evaluation of strategic alternatives for our operations in California.

In March 2025, we approved a plan with respect to the operations at our Benicia Refinery and currently intend to cease refining operations by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result, we updated our evaluation of potential impairment and concluded that the carrying values of our Benicia and Wilmington refineries were not recoverable as of March 31, 2025. Therefore, we reduced the carrying values of these assets to their estimated fair values of $722 million and $847 million, respectively, and recognized a combined asset impairment loss of $1.1 billion in our Refining segment in March 2025. See Note 12 for disclosure related to the method used to determine the fair values.

Included in the recoverability assessments discussed above was the recognition of expected asset retirement obligations of $337 million, which primarily reflects the fair value of estimated costs for certain legal obligations to decommission the assets based on a range of potential settlement dates as of March 31, 2025.

In connection with our plan to cease refining operations at our Benicia Refinery, we shortened the estimated useful life of the refinery assets, and as a result, will depreciate the revised carrying value of the net property, plant, and equipment and other noncurrent assets to the estimated salvage value of $107 million through April 2026. Accordingly, we recorded incremental depreciation of approximately $100 million in depreciation and amortization expense in the three and six months ended June 30, 2025.

We continue to evaluate strategic alternatives for our remaining operations in California.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVENTORIES

Inventories consisted of the following (in millions):


	June 30, 2025		December 31, 2024
Refinery feedstocks	$	1,875	$	2,167
Refined petroleum products and blendstocks	4,084		4,016
Renewable diesel feedstocks and products	874		872
Ethanol feedstocks and products	314		342
Materials and supplies	391		364


Inventories	$	7,538	$	7,761

As of June 30, 2025 and December 31, 2024, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded their LIFO carrying amounts by $3.7 billion and $4.0 billion, respectively. Our non-LIFO inventories accounted for $1.1 billion and $1.3 billion of our total inventories as of June 30, 2025 and December 31, 2024, respectively.

4. DEBT

Public Debt

On February 7, 2025, we issued $650 million of 5.150 percent Senior Notes due February 15, 2030. Proceeds from this debt issuance totaled $649 million before deducting the underwriting discount and other debt issuance costs. We used a portion of the net proceeds to repay the $189 million outstanding principal balance of our 3.65 percent Senior Notes that matured on March 15, 2025 and the $251 million outstanding principal balance of our 2.850 percent Senior Notes that matured on April 15, 2025.

In March 2024, we repaid the $167 million outstanding principal balance of our 1.200 percent Senior Notes that matured on March 15, 2024.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Facilities

We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (in millions):


				June 30, 2025
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued (a)		Availability
Committed facilities:
Valero Revolver	$	4,000	November 2027	$	—	$	2	$	3,998
Accounts receivable sales facility (b)	1,300		July 2025	—		n/a		1,300
Committed facilities of VIEs (c):
DGD Revolver (d)	400		June 2026	100		23		277
DGD Loan Agreement (e)	100		June 2026	—		n/a		100
IEnova Revolver (f)	830		February 2028	37		n/a		793
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		57		n/a
Uncommitted facility of VIE (c):
DGD letter of credit facility	n/a		n/a	n/a		47		n/a

________________________

(a)Letters of credit issued as of June 30, 2025 expire at various times in 2025 through 2026.

(b)In July 2025, we extended the maturity date of this facility to July 2026.

(c)Creditors of the VIEs do not have recourse against us.

(d)The variable interest rate on the unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) was 6.166 percent as of June 30, 2025.

(e)The amounts shown for DGD’s unsecured revolving loan agreement with its members (the DGD Loan Agreement) represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation.

(f)Central Mexico Terminals (defined in Note 6) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 6). The variable interest rate on the IEnova Revolver was 8.148 percent and 8.443 percent as of June 30, 2025 and December 31, 2024, respectively.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Borrowings and repayments under our credit facilities were as follows (in millions):


	Six Months Ended June 30,
	2025		2024
Borrowings:
Accounts receivable sales facility	$	4,100	$	2,850
DGD Revolver	300		150
DGD Loan Agreement	—		100
IEnova Revolver	—		23
Repayments:
Accounts receivable sales facility	(4,100)		(2,850)
DGD Revolver	(200)		(400)
DGD Loan Agreement	—		(100)
IEnova Revolver	(21)		—

Other Disclosures

“Interest and debt expense, net of capitalized interest” was comprised as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Interest and debt expense	$	146	$	146	$	288	$	293
Less: Capitalized interest	5		6		10		13
Interest and debt expense, net of capitalized interest	$	141	$	140	$	278	$	280

5. EQUITY

Treasury Stock

We purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described in the table below) and with respect to our employee stock-based compensation plans. During the three and six months ended June 30, 2025, we purchased for treasury 2,567,930 shares and 4,642,535 shares, respectively. During the three and six months ended June 30, 2024, we purchased for treasury 6,622,185 shares and 13,256,028 shares, respectively.

Our Board authorized us to purchase shares of our outstanding common stock under various programs with no expiration dates as follows (in millions):


Program Name	Authorization Date	Total Cost Authorized		Remaining Available for Purchase as of June 30, 2025
February 2024 Program	February 22, 2024	$	2,500	$	1,241
September 2024 Program	September 19, 2024	2,500		2,500

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Common Stock Dividends

On July 17, 2025, our Board declared a quarterly cash dividend of $1.13 per common share payable on September 2, 2025 to holders of record at the close of business on July 31, 2025.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):


	Three Months Ended June 30,
	2025								2024
	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(1,102)	$	(2)	$	(5)	$	(1,109)	$	(883)	$	(167)	$	(5)	$	(1,055)
Other comprehensive income (loss) before reclassifications	554		—		1		555		(110)		—		8		(102)
Amounts reclassified from accumulated other comprehensive loss	—		(2)		(2)		(4)		—		(3)		(12)		(15)
Effect of exchange rates	—		5		—		5		—		—		—		—
Other comprehensive income (loss)	554		3		(1)		556		(110)		(3)		(4)		(117)
Balance as of end of period	$	(548)	$	1	$	(6)	$	(553)	$	(993)	$	(170)	$	(9)	$	(1,172)


	Six Months Ended June 30,
	2025								2024
	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Losses on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(1,264)	$	(2)	$	(6)	$	(1,272)	$	(735)	$	(162)	$	27	$	(870)
Other comprehensive income (loss) before reclassifications	716		—		—		716		(258)		—		(15)		(273)
Amounts reclassified from accumulated other comprehensive loss	—		(4)		—		(4)		—		(7)		(21)		(28)
Effect of exchange rates	—		7		—		7		—		(1)		—		(1)
Other comprehensive income (loss)	716		3		—		719		(258)		(8)		(36)		(302)
Balance as of end of period	$	(548)	$	1	$	(6)	$	(553)	$	(993)	$	(170)	$	(9)	$	(1,172)

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. VARIABLE INTEREST ENTITIES

Consolidated VIEs

We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of June 30, 2025, the significant consolidated VIEs included:

•DGD, a joint venture with a subsidiary of Darling Ingredients Inc. that owns and operates two plants that process waste and renewable feedstocks (predominantly animal fats, used cooking oils, vegetable oils, and inedible distillers corn oils (DCOs)) into renewable diesel, renewable naphtha, and neat sustainable aviation fuel (SAF)1; and

•Central Mexico Terminals, a collective group of three subsidiaries of Infraestructura Energetica Nova, S.A.P.I. de C.V. (IEnova), which is a Mexican company and indirect subsidiary of Sempra Energy, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals.

The assets of the consolidated VIEs can only be used to settle their own obligations and the creditors of the consolidated VIEs have no recourse to our other assets. We generally do not provide financial guarantees to the VIEs. Although we have provided credit facilities to some of the VIEs in support of their construction or acquisition activities and working capital requirements, these transactions are eliminated in consolidation. Our financial position, results of operations, and cash flows are impacted by the performance of the consolidated VIEs, net of intercompany eliminations, to the extent of our ownership interest in each VIE.

The following tables present summarized balance sheet information for the significant assets and liabilities of the consolidated VIEs, which are included in our balance sheets (in millions):


	DGD		Central Mexico Terminals		Other		Total
June 30, 2025
Assets
Cash and cash equivalents	$	164	$	—	$	24	$	188
Other current assets	987		18		43		1,048
Property, plant, and equipment, net	3,737		629		64		4,430
Deferred charges and other assets, net	301		69		10		380
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	354	$	55	$	3	$	412
Debt and finance lease obligations, less current portion	628		—		—		628

__________________________________________________________________

1 DGD produces synthetic paraffinic kerosene (SPK), a renewable blending component, using the Hydrotreated Esters and Fatty Acids (HEFA) process. SPK is also commonly referred to as “neat SAF.” Current aviation regulations allow SPK to be blended up to 50 percent with conventional jet fuel for use in an aircraft. This blend is commonly referred to as “blended SAF” or “SAF.”

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	DGD		Central Mexico Terminals		Other		Total
December 31, 2024
Assets
Cash and cash equivalents	$	353	$	—	$	21	$	374
Other current assets	976		9		42		1,027
Property, plant, and equipment, net	3,806		647		64		4,517
Deferred charges and other assets, net	86		69		11		166
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	304	$	75	$	4	$	383
Debt and finance lease obligations, less current portion	642		—		—		642

Nonconsolidated VIEs

We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These nonconsolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):


	Pension Plans				Other Postretirement Benefit Plans
	2025		2024		2025		2024
Three months ended June 30
Service cost	$	27	$	28	$	1	$	1
Interest cost	34		32		3		3
Expected return on plan assets	(56)		(54)		—		—
Amortization of:
Net actuarial gain	(2)		(2)		(2)		(1)
Prior service cost (credit)	1		(2)		—		—
Settlement loss	2		—		—		—
Net periodic benefit cost	$	6	$	2	$	2	$	3

Six months ended June 30
Service cost	$	54	$	56	$	2	$	2
Interest cost	68		63		6		6
Expected return on plan assets	(111)		(107)		—		—
Amortization of:
Net actuarial gain	(4)		(3)		(4)		(2)
Prior service cost (credit)	3		(5)		—		—
Settlement loss	3		—		—		—
Net periodic benefit cost	$	13	$	4	$	4	$	6

The components of net periodic benefit cost other than the service cost component (i.e., the non-service cost components) are included in “other income, net.”

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INCOME TAXES

Income Tax Expense

For the three and six months ended June 30, 2025, our effective tax rate was higher than the U.S. federal statutory rate due to lower U.S. income before income tax expense primarily resulting from the asset impairment loss associated with our operations in California, as described in Note 2.

There was no significant variation in the customary relationship between income tax expense and income before income tax expense for the three and six months ended June 30, 2024.

One Big Beautiful Bill Act

On July 4, 2025, legislation commonly known as the One Big Beautiful Bill Act (OBBB) was enacted, which resulted in a broad range of changes to the U.S. Internal Revenue Code of 1986, as amended (the Code). The most significant provisions affecting us include the following:

•extension of the clean fuel production credit through December 31, 2029;

•requirement that feedstocks for fuel produced after December 31, 2025 must be produced or grown exclusively in the U.S., Mexico, or Canada in order for such fuel to be eligible for the clean fuel production credit;

•elimination of the special clean fuel production credit rate for SAF produced after December 31, 2025;

•permanent reinstatement of the provision that allows companies to expense 100 percent of the cost of qualified property acquired and placed in service after January 19, 2025; and

•modification of several international tax provisions, including those relating to net controlled foreign corporation tested income (formerly global intangible low-taxed income) and foreign-derived deduction eligible income (formerly foreign-derived intangible income) beginning January 1, 2026.

We are currently evaluating the effects of these changes and other provisions of this legislation on our financial position, results of operations, and liquidity in the future; however, we do not expect that the OBBB will have a material effect on our financial position, results of operations, and liquidity in 2025.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. EARNINGS PER COMMON SHARE

Earnings per common share was computed as follows (dollars and shares in millions, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Earnings per common share:
Net income attributable to Valero stockholders	$	714	$	880	$	119	$	2,125
Less: Income allocated to participating securities	2		3		2		6
Net income available to common stockholders	$	712	$	877	$	117	$	2,119

Weighted-average common shares outstanding	312		324		313		327

Earnings per common share	$	2.28	$	2.71	$	0.37	$	6.47

Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders	$	714	$	880	$	119	$	2,125
Less: Income allocated to participating securities	2		3		2		6
Net income available to common stockholders	$	712	$	877	$	117	$	2,119

Weighted-average common shares outstanding	312		324		313		327
Effect of dilutive securities	—		—		—		—
Weighted-average common shares outstanding – assuming dilution	312		324		313		327

Earnings per common share – assuming dilution	$	2.28	$	2.71	$	0.37	$	6.47

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan. Dilutive securities include participating securities as well as outstanding stock options. For the three and six months ended June 30, 2025 and 2024, we computed earnings per common share – assuming dilution using the two-class method for all dilutive securities.

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10. REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers

Disaggregation of Revenue

Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements.

Contract Balances

Contract balances were as follows (in millions):


	June 30, 2025		December 31, 2024
Receivables from contracts with customers, included in receivables, net	$	6,366	$	5,812
Contract liabilities, included in accrued expenses	59		82

Remaining Performance Obligations

We have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of June 30, 2025, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.

Segment Information

We have three reportable segments—Refining, Renewable Diesel, and Ethanol. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.

•The Refining segment includes the operations of our petroleum refineries, the associated activities to market our refined petroleum products, and the logistics assets that support our refining operations. The principal products manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.

•The Renewable Diesel segment represents the operations of DGD, a consolidated joint venture as discussed in Note 6, and the associated activities to market low-carbon fuels. The principal products manufactured by DGD and sold by this segment are renewable diesel, renewable naphtha, and neat SAF. This segment sells some renewable diesel and neat SAF to the Refining

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

segment for blending into petroleum-based diesel and conventional jet fuel, respectively, which is then sold to that segment’s customers as finished product.

•The Ethanol segment includes the operations of our ethanol plants and the associated activities to market our ethanol and co-products. The principal products manufactured by our ethanol plants are ethanol and distillers grains. This segment sells some ethanol to the Refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.

Operations that are not included in any of the reportable segments are included in the corporate category.

Our chief operating decision maker (CODM) is our Chairman of the Board, Chief Executive Officer and President. Our CODM uses operating income by segment to allocate resources (including employees, property, and financial or capital resources) for each segment primarily during the annual budget process. On a monthly basis, our CODM considers budget-to-actual variances for operating income by segment when evaluating the operating performance of each segment.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables reflect information about our operating income (loss), including a reconciliation to our consolidated income before income tax expense and total expenditures for long-lived assets, by reportable segment (in millions):


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Three months ended June 30, 2025
Revenues:
Revenues from external customers	$	28,324	$	565	$	1,000	$	—	$	29,889
Intersegment revenues	2		533		205		(740)		—
Total revenues	28,326		1,098		1,205		(740)		29,889
Cost of sales:
Cost of materials and other (a)	25,042		1,044		988		(742)		26,332

Operating expenses (excluding depreciation and amortization expense reflected below)	1,307		72		144		(1)		1,522
Depreciation and amortization expense	707		61		19		(1)		786
Total cost of sales	27,056		1,177		1,151		(744)		28,640

Other operating expenses	4		—		—		—		4
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		220		220
Depreciation and amortization expense	—		—		—		28		28
Operating income (loss) by segment	$	1,266	$	(79)	$	54	$	(244)	997
Other income, net									86
Interest and debt expense, net of capitalized interest									(141)
Income before income tax expense									$	942

Total expenditures for long-lived assets (b)	$	374	$	14	$	10	$	9	$	407

________________________

See notes on page 23.

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	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Three months ended June 30, 2024
Revenues:
Revenues from external customers	$	33,044	$	554	$	892	$	—	$	34,490
Intersegment revenues	3		630		229		(862)		—
Total revenues	33,047		1,184		1,121		(862)		34,490
Cost of sales:
Cost of materials and other (a)	29,995		930		874		(856)		30,943

Operating expenses (excluding depreciation and amortization expense reflected below)	1,219		80		125		—		1,424
Depreciation and amortization expense	604		62		19		(1)		684
Total cost of sales	31,818		1,072		1,018		(857)		33,051

Other operating expenses	5		—		(2)		—		3
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		203		203
Depreciation and amortization expense	—		—		—		12		12
Operating income by segment	$	1,224	$	112	$	105	$	(220)	1,221
Other income, net									122
Interest and debt expense, net of capitalized interest									(140)
Income before income tax expense									$	1,203

Total expenditures for long-lived assets (b)	$	286	$	115	$	11	$	8	$	420

________________________

See notes on page 23.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Six months ended June 30, 2025
Revenues:
Revenues from external customers	$	57,081	$	1,058	$	2,008	$	—	$	60,147
Intersegment revenues	4		940		422		(1,366)		—
Total revenues	57,085		1,998		2,430		(1,366)		60,147
Cost of sales:
Cost of materials and other (a)	51,311		1,939		2,020		(1,390)		53,880

Operating expenses (excluding depreciation and amortization expense reflected below)	2,598		150		298		(1)		3,045
Depreciation and amortization expense	1,301		129		38		(2)		1,466
Total cost of sales	55,210		2,218		2,356		(1,393)		58,391
Asset impairment loss	1,131		—		—		—		1,131
Other operating expenses	8		—		—		—		8
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		481		481
Depreciation and amortization expense	—		—		—		39		39
Operating income (loss) by segment	$	736	$	(220)	$	74	$	(493)	97
Other income, net									206
Interest and debt expense, net of capitalized interest									(278)
Income before income tax expense									$	25

Total expenditures for long-lived assets (b)	$	907	$	109	$	18	$	32	$	1,066

________________________

See notes on page 23.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Six months ended June 30, 2024
Revenues:
Revenues from external customers	$	63,187	$	1,256	$	1,806	$	—	$	66,249
Intersegment revenues	5		1,339		419		(1,763)		—
Total revenues	63,192		2,595		2,225		(1,763)		66,249
Cost of sales:
Cost of materials and other (a)	56,606		1,996		1,783		(1,760)		58,625

Operating expenses (excluding depreciation and amortization expense reflected below)	2,403		170		262		—		2,835
Depreciation and amortization expense	1,204		127		38		(2)		1,367
Total cost of sales	60,213		2,293		2,083		(1,762)		62,827
Other operating expenses	10		—		27		—		37
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		461		461
Depreciation and amortization expense	—		—		—		24		24

Operating income by segment	$	2,969	$	302	$	115	$	(486)	2,900
Other income, net									266
Interest and debt expense, net of capitalized interest									(280)
Income before income tax expense									$	2,886

Total expenditures for long-lived assets (b)	$	847	$	193	$	17	$	24	$	1,081

________________________

(a)Cost of materials and other for our Renewable Diesel segment is net of the clean fuel production credit on qualifying sales of certain low-carbon transportation fuels of $140 million and $191 million for the three and six months ended June 30, 2025, respectively, and the blender’s tax credit on qualified fuel mixtures of $308 million and $639 million for the three and six months ended June 30, 2024, respectively.

(b)Total expenditures for long-lived assets includes amounts related to capital expenditures and deferred turnaround and catalyst costs.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Refining:
Gasolines and blendstocks	$	12,721	$	15,517	$	25,095	$	28,643
Distillates	12,778		14,303		26,154		28,431
Other product revenues	2,825		3,224		5,832		6,113
Total Refining revenues	28,324		33,044		57,081		63,187
Renewable Diesel:
Renewable diesel	470		540		861		1,219
Renewable naphtha	46		14		85		37
Neat SAF	49		—		112		—
Total Renewable Diesel revenues	565		554		1,058		1,256
Ethanol:
Ethanol	780		662		1,567		1,300
Distillers grains	220		230		441		506
Total Ethanol revenues	1,000		892		2,008		1,806

Revenues	$	29,889	$	34,490	$	60,147	$	66,249

Total assets by reportable segment were as follows (in millions):


	June 30, 2025		December 31, 2024
Refining	$	46,223	$	46,729
Renewable Diesel	5,402		5,680
Ethanol	1,496		1,545
Corporate and eliminations	6,312		6,189
Total assets	$	59,433	$	60,143

As of June 30, 2025 and December 31, 2024, our investments in nonconsolidated joint ventures accounted for under the equity method were $690 million and $695 million, respectively, all of which related to the Refining segment and are reflected in “deferred charges and other assets, net” in our balance sheets.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):


	Six Months Ended June 30,
	2025		2024
Decrease (increase) in current assets:
Receivables, net	$	(112)	$	(801)
Inventories	418		(503)
Prepaid expenses and other	98		218
Increase (decrease) in current liabilities:
Accounts payable	(613)		2,021
Accrued expenses	112		(215)
Taxes other than income taxes payable	45		17
Income taxes payable	(116)		(108)
Changes in current assets and current liabilities	$	(168)	$	629

Changes in current assets and current liabilities for the six months ended June 30, 2025 were primarily due to the following:

•The increase in receivables was primarily due to an increase in refined petroleum product sales volumes, partially offset by a decrease in related prices in June 2025 compared to December 2024 and the collection of $246 million for a blender’s tax credit receivable;

•The decrease in inventories was primarily due to lower inventory levels in June 2025 compared to December 2024; and

•The decrease in accounts payable was primarily due to a decrease in crude oil and other feedstock prices in June 2025 compared to December 2024.

Changes in current assets and current liabilities for the six months ended June 30, 2024 were primarily due to the following:

•The increase in receivables was primarily due to an increase in refined petroleum product sales volumes in June 2024 compared to December 2023;

•The increase in inventories was due to an increase in inventory volumes valued at higher unit prices in June 2024 compared to December 2023; and

•The increase in accounts payable was due to an increase in crude oil and other feedstock volumes purchased combined with an increase in related prices in June 2024 compared to December 2023.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash flows related to interest and income taxes were as follows (in millions):


	Six Months Ended June 30,
	2025		2024
Interest paid in excess of amount capitalized, including interest on finance leases	$	263	$	283
Income taxes paid, net	283		659

Supplemental cash flow information related to our operating and finance leases was as follows (in millions):


	Six Months Ended June 30,
	2025				2024
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	261	$	57	$	250	$	58

Financing cash flows	—		129		—		113
Changes in lease balances resulting from new and modified leases	266		18		276		194

Noncash investing activities for the six months ended June 30, 2025 included the recognition of expected asset retirement obligations of $337 million, as described in Note 2. There were no other significant noncash investing and financing activities during the six months ended June 30, 2025, except as noted in the table above.

Noncash financing activities for the six months ended June 30, 2024 included the conversion by IEnova of $457 million of outstanding borrowings under the IEnova Revolver to additional equity in Central Mexico Terminals. There were no other significant noncash investing and financing activities during the six months ended June 30, 2024, except as noted in the table above.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2025 and December 31, 2024.

We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross in our balance sheets.


	June 30, 2025
							Total Gross Fair Value		Effect of Counter- party Netting		Effect of Cash Collateral Netting		Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets
Commodity derivative contracts	$	867	$	—	$	—	$	867	$	(822)	$	(22)	$	23	$	—
Physical purchase contracts	—		1		—		1		n/a		n/a		1		n/a


Investments of certain benefit plans	84		—		4		88		n/a		n/a		88		n/a
Investments in AFS debt securities	4		23		—		27		n/a		n/a		27		n/a

Total	$	955	$	24	$	4	$	983	$	(822)	$	(22)	$	139

Liabilities
Commodity derivative contracts	$	881	$	—	$	—	$	881	$	(822)	$	(59)	$	—	$	(55)
Physical purchase contracts	—		8		—		8		n/a		n/a		8		n/a
Blending program obligations	—		140		—		140		n/a		n/a		140		n/a


Foreign currency contracts	4		—		—		4		n/a		n/a		4		n/a
Total	$	885	$	148	$	—	$	1,033	$	(822)	$	(59)	$	152

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	December 31, 2024
							Total Gross Fair Value		Effect of Counter- party Netting		Effect of Cash Collateral Netting		Net Carrying Value on Balance Sheet		Cash Collateral Paid or Received Not Offset
	Fair Value Hierarchy
	Level 1		Level 2		Level 3
Assets
Commodity derivative contracts	$	402	$	—	$	—	$	402	$	(402)	$	—	$	—	$	—
Physical purchase contracts	—		2		—		2		n/a		n/a		2		n/a
Investments of certain benefit plans	89		—		4		93		n/a		n/a		93		n/a
Investments in AFS debt securities	6		20		—		26		n/a		n/a		26		n/a
Foreign currency contracts	6		—		—		6		n/a		n/a		6		n/a
Total	$	503	$	22	$	4	$	529	$	(402)	$	—	$	127

Liabilities
Commodity derivative contracts	$	448	$	—	$	—	$	448	$	(402)	$	(46)	$	—	$	(71)
Blending program obligations	—		13		—		13		n/a		n/a		13		n/a
Physical purchase contracts	—		3		—		3		n/a		n/a		3		n/a

Total	$	448	$	16	$	—	$	464	$	(402)	$	(46)	$	16

A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows:

•Commodity derivative contracts consist primarily of exchange-traded futures, which are used to reduce the impact of price volatility on our results of operations and cash flows as discussed in Note 13. These contracts are measured at fair value using a market approach based on quoted prices from the commodity exchange and are categorized in Level 1 of the fair value hierarchy.

•Physical purchase contracts represent the fair value of fixed-price corn purchase contracts. The fair values of these purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy.

•Blending program obligations represent our liability for the purchase of compliance credits needed to satisfy our blending obligations under various government and regulatory blending programs, such as the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS), California Low Carbon Fuel Standard (LCFS), Canada Clean Fuel Regulations, U.K. Renewable Transport Fuel Obligation, and similar programs in other jurisdictions in which we operate (collectively, the Renewable and Low-Carbon Fuel Programs). The blending program

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.

•Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The plan assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer.

•Investments in AFS debt securities consist primarily of commercial paper and U.S. government treasury bills and have maturities within one year. The securities categorized in Level 1 are measured at fair value using a market approach based on quoted prices from national securities exchanges and the securities categorized in Level 2 are measured at fair value using a market approach based on quoted prices from independent pricing services. The amortized cost basis of the securities approximates fair value. Realized and unrealized gains and losses were de minimis for the three and six months ended June 30, 2025 and 2024.

•Foreign currency contracts consist of foreign currency exchange and purchase contracts related to our foreign operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of our operations. These contracts are valued based on quoted foreign currency exchange rates and are categorized in Level 1 of the fair value hierarchy.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of June 30, 2025 and December 31, 2024.

As discussed in Note 2, we concluded that the carrying values of the Benicia and Wilmington refineries were impaired as of March 31, 2025. The fair values of the refineries were determined using a market approach based on a comparison of recent property sales and other relevant real estate and market data, which we determined reflects the highest and best use of these assets. These fair values involved significant assumptions and actual results could differ from these estimates.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents information (in millions) about our nonfinancial assets measured at fair value on a nonrecurring basis during the six months ended June 30, 2025.


	March 31, 2025
	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Carrying Value as of June 30, 2025 (a)		Loss Recognized (b)
Assets
Long-lived assets of the Benicia Refinery	$	—	$	—	$	722	$	722	$	584	$	901
Long-lived assets of the Wilmington Refinery	—		—		847		847		824		230
Total	$	—	$	—	$	1,569	$	1,569	$	1,408	$	1,131

________________________

(a)The carrying values of the Benicia and Wilmington refineries as of June 30, 2025 are lower than the fair values as of March 31, 2025 primarily due to depreciation and amortization expense recognized in the three months ended June 30, 2025.

(b)The asset impairment loss was recognized in our Refining segment in March 2025.

Financial Instruments

Our financial instruments include cash and cash equivalents, restricted cash, investments in AFS debt securities, receivables, payables, debt obligations, operating and finance lease obligations, commodity derivative contracts, and foreign currency contracts. The estimated fair values of cash and cash equivalents, restricted cash, receivables, payables, and operating and finance lease obligations approximate their carrying amounts; the carrying value and fair value of debt is shown in the table below (in millions).


		June 30, 2025				December 31, 2024
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Debt (excluding finance lease obligations)	Level 2	$	8,370	$	8,191	$	8,085	$	7,776

Investments in AFS debt securities, commodity derivative contracts, and foreign currency contracts are recognized at their fair values as shown in “Recurring Fair Value Measurements” above.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. PRICE RISK MANAGEMENT ACTIVITIES

General

We are exposed to market risks primarily related to the volatility in the price of commodities, foreign currency exchange rates, and the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. We enter into derivative instruments to manage some of these risks, including derivative instruments related to the various commodities we purchase or produce, and foreign currency exchange and purchase contracts, as described below under “Risk Management Activities by Type of Risk.” These derivative instruments are recorded as either assets or liabilities measured at their fair values (see Note 12), as summarized below under “Fair Values of Derivative Instruments.” The effect of these derivative instruments on our income and other comprehensive income (loss) is summarized below under “Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss).”

Risk Management Activities by Type of Risk

Commodity Price Risk

We are exposed to market risks related to the volatility in the price of feedstocks (primarily crude oil, waste and renewable feedstocks, and corn); the products we produce; and natural gas and electricity used in our operations. To reduce the impact of price volatility on our results of operations and cash flows, we use commodity derivative instruments, such as futures and options. Our positions in commodity derivative instruments are monitored and managed on a daily basis by our risk control group to ensure compliance with our stated risk management policy that is periodically reviewed with our Board and/or relevant Board committee.

We primarily use commodity derivative instruments as cash flow hedges and economic hedges. Our objectives for entering into each type of hedge is described below.

•Cash flow hedges – The objective of our cash flow hedges is to lock in the price of forecasted purchases and/or product sales at existing market prices that we deem favorable.

•Economic hedges – Our objectives for holding economic hedges are to (i) manage price volatility in certain feedstock and product inventories and (ii) lock in the price of forecasted purchases and/or product sales at existing market prices that we deem favorable.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2025, we had the following outstanding commodity derivative instruments that were used as cash flow hedges and economic hedges, as well as commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except corn contracts that are presented in thousands of bushels).


	Notional Contract Volumes by Year of Maturity
	2025	2026
Derivatives designated as cash flow hedges:
Refined petroleum products:

Futures – short	3,432	—



Derivatives designated as economic hedges:
Crude oil and refined petroleum products:


Futures – long	119,584	7,081
Futures – short	117,712	7,066







Corn:
Futures – long	117,650	85
Futures – short	153,455	1,980
Physical contracts – long	33,976	1,939

Foreign Currency Risk

We are exposed to exchange rate fluctuations on transactions related to our foreign operations that are denominated in currencies other than the local (functional) currencies of our operations. To manage our exposure to these exchange rate fluctuations, we often use foreign currency contracts. These contracts are not designated as hedging instruments for accounting purposes and therefore are classified as economic hedges. As of June 30, 2025, we had foreign currency contracts to purchase $628 million of U.S. dollars. Of these commitments, $453 million matured on or before July 21, 2025 and the remaining $175 million will mature by July 30, 2025.

Renewable and Low-Carbon Fuel Programs Price Risk

We are exposed to market risk related to the volatility in the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. To manage this risk, we enter into contracts to purchase these credits. Some of these contracts are derivative instruments; however, we elect the normal purchase exception and do not record these contracts at their fair values. The Renewable and Low-Carbon Fuel Programs require us to blend a certain volume of renewable and low-carbon fuels into the petroleum-based transportation fuels we produce in, or import into, the respective jurisdiction to be consumed therein based on annual quotas. To the degree we are unable to blend at the required quotas, we must purchase compliance credits (primarily Renewable Identification Numbers (RINs)). The cost of meeting our credit obligations under the Renewable and Low-Carbon Fuel Programs was $408 million and $173 million for the three months ended June 30, 2025 and 2024, respectively, and $740 million and $377 million for the six months ended June 30, 2025 and 2024, respectively. These amounts are reflected in cost of materials and other.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Values of Derivative Instruments

The following table provides information about the fair values of our derivative instruments as of June 30, 2025 and December 31, 2024 (in millions) and the line items in our balance sheets in which the fair values are reflected. See Note 12 for additional information related to the fair values of our derivative instruments.

As indicated in Note 12, we net fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty under master netting arrangements, including cash collateral assets and obligations. The following table, however, is presented on a gross asset and gross liability basis, which results in the reflection of certain assets in liability accounts and certain liabilities in asset accounts:


	Balance Sheet Location	June 30, 2025				December 31, 2024
		Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Commodity contracts	Receivables, net	$	19	$	36	$	12	$	13

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables, net	$	848	$	845	$	390	$	435
Physical purchase contracts	Inventories	1		8		2		3
Foreign currency contracts	Receivables, net	—		—		6		—
Foreign currency contracts	Accrued expenses	—		4		—		—
Total		$	849	$	857	$	398	$	438

Market Risk

Our price risk management activities involve the receipt or payment of fixed price commitments into the future. These transactions give rise to market risk, which is the risk that future changes in market conditions may make an instrument less valuable. We closely monitor and manage our exposure to market risk on a daily basis in accordance with policies that are periodically reviewed with our Board and/or relevant Board committee. Market risks are monitored by our risk control group to ensure compliance with our stated risk management policy. We do not require any collateral or other security to support derivative instruments into which we enter. We also do not have any derivative instruments that require us to maintain a minimum investment-grade credit rating.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss)

The following table provides information about the gain (loss) recognized in income and other comprehensive income (loss) due to fair value adjustments of our cash flow hedges (in millions):


Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2025		2024		2025		2024
Commodity contracts:
Gain (loss) recognized in other comprehensive income (loss)	n/a	$	4	$	22	$	—	$	(38)
Gain reclassified from accumulated other comprehensive loss into income	Revenues	7		30		—		54

For cash flow hedges, no component of any derivative instrument’s gain or loss was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2025 and 2024. For the three and six months ended June 30, 2025 and 2024, cash flow hedges primarily related to forecasted sales of renewable diesel. As of June 30, 2025, the estimated deferred after-tax loss that is expected to be reclassified into revenues within the next 12 months was not material. The changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2025 and 2024 are described in Note 5.

The following table provides information about the gain (loss) recognized in income on our derivative instruments with respect to our economic hedges and our foreign currency hedges and the line items in our statements of income in which such gains (losses) are reflected (in millions):


Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2025		2024		2025		2024
Commodity contracts	Revenues	$	(4)	$	(3)	$	(4)	$	(7)
Commodity contracts	Cost of materials and other	(32)		(57)		(50)		(57)

Foreign currency contracts	Cost of materials and other	(16)		4		(20)		19

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report, including without limitation our disclosures below under “OVERVIEW AND OUTLOOK,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by the words “anticipate,” “believe,” “expect,” “plan,” “intend,” “scheduled,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “ambition,” “could,” “would,” “should,” “may,” “strive,” “seek,” “pursue,” “potential,” “opportunity,” “aimed,” “considering,” “continue,” “evaluate,” and similar expressions.

These forward-looking statements include, among other things, statements regarding:

•the effect, impact, potential duration or timing, or other implications of global geopolitical and other conflicts and tensions, and government and other responses thereto;

•future Refining segment margins, including gasoline and distillate margins, and differentials;

•future Renewable Diesel segment margins;

•future Ethanol segment margins;

•expectations regarding feedstock costs, including crude oil differentials, product prices for each of our segments, transportation costs, and operating expenses;

•anticipated levels of crude oil and liquid transportation fuel inventories, storage capacity, and production;

•expectations with respect to third-party refining, logistics, and low-carbon fuels projects and operations, and the effect and implications thereof on industry and market dynamics;

•expectations regarding the levels of, and costs and timing with respect to, the production and operations at our existing refineries and plants, projects under evaluation, construction, or development, and former projects;

•our plans, actions, assets, and operations in California and expected timing and cost of obligations and other financial statement impacts;

•our anticipated level of capital investments, including deferred turnaround and catalyst cost expenditures, our expected allocation between, and/or within, growth capital expenditures and sustaining capital expenditures, capital expenditures for environmental and other purposes, and joint venture investments, the expected costs and timing applicable to such capital investments and any related projects, and the effect of those capital investments on our business, financial condition, results of operations, and liquidity;

•our anticipated level of cash distributions or contributions, such as our dividend payment rate and contributions to our pension plans and other postretirement benefit plans;

•our ability to meet future cash and credit requirements, whether from funds generated from our operations or our ability to access financial markets effectively, and expectations regarding our liquidity;

•our evaluation of, and expectations regarding, any future activity under our share purchase program or transactions involving our debt securities;

•anticipated trends in the supply of, and demand for, crude oil and other feedstocks, refined petroleum products, renewable diesel, SAF, ethanol, and corn-related co-products in the regions where we operate, as well as globally;

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•expectations regarding environmental, tax, and other regulatory matters, including the matters discussed in Notes 2 and 8 of Condensed Notes to Consolidated Financial Statements and under “PART II, ITEM 1. LEGAL PROCEEDINGS,” the anticipated amounts and timing of payment with respect to our deferred tax liabilities, unrecognized tax benefits, matters impacting our ability to repatriate cash held by our foreign subsidiaries, and the anticipated or potential effects thereof on our business, financial condition, results of operations, and liquidity;

•the effect of general economic and other conditions, including inflation and economic activity levels, on refining, renewable diesel, SAF, and ethanol industry fundamentals;

•expectations regarding our risk management activities, including the anticipated effects of our hedge transactions;

•expectations regarding our counterparties and VIEs, including our ability to pass on increased compliance costs and timely collect receivables, and the credit risk within our accounts receivable or accounts payable;

•expectations regarding adoptions of new, or changes to existing, low-carbon fuel regulations, policies, and standards issued by governments across the world to address greenhouse gas (GHG) emissions and the percentage of low-carbon fuels in the transportation fuel mix, including, but not limited to, the Renewable and Low-Carbon Fuel Programs, blending and tax credits, efficiency standards, or other benefits or incentives that impact the demand for low-carbon fuels; and

•expectations regarding our low-carbon fuels strategy, publicly announced GHG emissions reduction/displacement targets and long-term ambition, and our current, former, and any future low-carbon projects.

We based our forward-looking statements on our current expectations, estimates, and projections about ourselves, current and potential counterparties, our industry, and the global economy and financial markets generally. We caution that these statements are not guarantees of future performance or results and involve known and unknown risks and uncertainties, the ultimate outcomes of which we cannot predict with certainty. In addition, we based many of these forward-looking statements on assumptions about future events, the ultimate outcomes of which we cannot predict with certainty and which may prove to be inaccurate. Accordingly, actual performance or results may differ materially from the future performance or results that we have expressed, suggested, or forecast in the forward-looking statements. Differences between actual performance or results and any future performance or results expressed, suggested, or forecast in these forward-looking statements could result from a variety of factors, including the following:

•the effects arising out of global geopolitical and other conflicts and tensions, including with respect to changes in trade flows and impacts to crude oil and other markets;

•demand for, and supplies of, refined petroleum products (such as gasoline, diesel, jet fuel, and petrochemicals), renewable diesel, SAF, ethanol, and corn-related co-products;

•demand for, and supplies of, crude oil and other feedstocks, as well as other critical materials and supplies;

•the effects of public health threats, pandemics, and epidemics, governmental and societal responses thereto, and the adverse impacts of the foregoing on our business, financial condition, results of operations, and liquidity, and the global economy and financial markets generally;

•acts of terrorism or other third-party actions affecting either our refineries and plants or third-party facilities that could impair our ability to produce or transport refined petroleum products, renewable diesel, SAF, ethanol, or corn-related co-products, to receive feedstocks, or otherwise operate efficiently;

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•the effects of war or hostilities, and political and economic conditions, in countries that produce crude oil or other feedstocks or consume refined petroleum products, renewable diesel, SAF, ethanol, or corn-related co-products;

•the ability of the members of the Organization of Petroleum Exporting Countries (OPEC), and other petroleum-producing nations that collectively make up OPEC+, to agree on and to maintain crude oil price and production controls;

•the level of consumer demand, consumption, and overall economic activity, including the effects from seasonal fluctuations and market prices;

•refinery, renewable diesel plant, or ethanol plant overcapacity or undercapacity;

•the risk that any transactions or capital decisions may not provide the anticipated benefits or may result in unforeseen detriments;

•the actions taken by competitors, including both pricing and adjustments to refining capacity or low-carbon fuels production, as well as changes in the geographic markets where they operate, in response to market conditions;

•the level of competitors’ imports into markets that we supply;

•accidents, unscheduled shutdowns, weather events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, societal, or political events or developments, terrorism, cyberattacks, or other catastrophes or disruptions affecting our operations, production facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of our suppliers, customers, or third-party service providers;

•changes in the cost or availability of transportation or storage capacity for feedstocks and our products;

•pressure and influence of environmental groups and other stakeholders upon policies and decisions related to the production, transportation, storage, refining, processing, marketing, and sales of crude oil or other feedstocks, refined petroleum products, renewable diesel, SAF, ethanol, or corn-related co-products;

•the price, availability, technology related to, and acceptance of alternative fuels and alternative-fuel vehicles, as well as sentiment and perceptions with respect to low-carbon projects and GHG emissions more generally;

•the levels of government subsidies for, and executive orders, mandates, or other policies with respect to, alternative fuels, alternative-fuel vehicles, and other low-carbon technologies or initiatives, including those related to carbon capture, carbon sequestration, and low-carbon fuels, or affecting the price of natural gas and/or electricity;

•the volatility in the market price of compliance credits (primarily RINs needed to comply with the RFS) under the Renewable and Low-Carbon Fuel Programs;

•delay of, cancellation of, or failure to implement planned capital or other strategic projects and realize the various assumptions and benefits projected for such projects or cost overruns in executing such planned projects;

•severe weather events, such as storms, hurricanes, droughts, floods, wildfires, and other weather events, which can unforeseeably affect the price or availability of electricity, natural gas, crude oil, waste and renewable feedstocks, corn, and other feedstocks, critical supplies, refined petroleum products, renewable diesel, SAF, ethanol, and corn-related co-products;

•rulings, judgments, or settlements in litigation or other legal or regulatory matters, such as unexpected environmental remediation or enforcement costs, including those in excess of any reserves or insurance coverage;

•legislative or regulatory action, including the introduction or enactment of legislation or rulemakings by government authorities, environmental regulations, changes to income tax rates, profits, windfall, margin, or other taxes or penalties, tax changes or restrictions impacting the foreign repatriation of cash, actions implemented under SBx 1-2 and related regulation, actions

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implemented under the Renewable and Low-Carbon Fuel Programs, including changes to volume requirements or other obligations or exemptions under the RFS, and actions arising from the EPA’s or other government agencies’ regulations, policies, or initiatives concerning GHGs, including mandates for or bans of specific technology, which may adversely affect our business, financial condition, results of operations, and liquidity;

•changing economic, regulatory, and political environments and related events in the various countries in which we operate or otherwise do business, including trade restrictions, expropriation or impoundment of assets, failure of foreign governments and state-owned entities to honor their contracts, property disputes, economic instability, restrictions on the transfer of funds, duties and tariffs and their effects on trading relationships, transportation delays, import and export controls, labor unrest, security issues involving key personnel, and decisions, investigations, regulations, issuances or revocations of permits and other authorizations, and other actions, policies, and initiatives by federal, state, local, and other jurisdictions applicable to us;

•changes in the credit ratings assigned to our debt securities and trade credit;

•the operating, financing, and distribution decisions of our joint ventures or other joint venture members, and other consolidated VIEs, that we do not control;

•changes in currency exchange rates, including the value of the Canadian dollar, the pound sterling, the euro, the Mexican peso, and the Peruvian sol relative to the U.S. dollar;

•the adequacy of capital resources and liquidity, including availability, timing, and amounts of cash flow or our ability to borrow or access financial markets;

•the costs, disruption, and diversion of resources associated with lawsuits, proceedings, demands, or investigations, or campaigns and negative publicity commenced by government authorities, investors, stakeholders, or other interested parties;

•overall economic conditions, including the stability and liquidity of financial markets, and the effect thereof on consumer demand; and

•other factors generally described in the “RISK FACTORS” section included in our annual report on Form 10-K for the year ended December 31, 2024.

Any one of these factors, or a combination of these factors, could materially affect our future business, financial condition, results of operations, and liquidity and whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those expressed, suggested, or forecast in any forward-looking statements. Such forward-looking statements speak only as of the date of this quarterly report on Form 10-Q and we do not intend to update these statements unless we are required by applicable securities laws to do so.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing, as it may be updated or modified by our future filings with the U.S. Securities and Exchange Commission (SEC). We undertake no obligation to publicly release any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events unless we are required by applicable securities laws to do so.

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NON-GAAP FINANCIAL MEASURES

The following discussions in “OVERVIEW AND OUTLOOK,” “RESULTS OF OPERATIONS,” and “LIQUIDITY AND CAPITAL RESOURCES” include references to financial measures that are not defined under GAAP. These non-GAAP financial measures include adjusted operating income (including adjusted operating income for each of our reportable segments, as applicable); Refining, Renewable Diesel, and Ethanol segment margin; and capital investments attributable to Valero. We have included these non-GAAP financial measures to help facilitate the comparison of operating results between periods, to help assess our cash flows, and because we believe they provide useful information as discussed further below. See the tables in note (b) beginning on page 57 for reconciliations of adjusted operating income (including adjusted operating income for each of our reportable segments, as applicable) and Refining, Renewable Diesel, and Ethanol segment margin to their most directly comparable GAAP financial measures. Also in note (b), we disclose the reasons why we believe our use of such non-GAAP financial measures provides useful information. See the table on page 63 for a reconciliation of capital investments attributable to Valero to its most directly comparable GAAP financial measure. Beginning on page 62, we disclose the reasons why we believe our use of this non-GAAP financial measure provides useful information.

OVERVIEW AND OUTLOOK

Overview

Business Operations Update

Our results for the second quarter and first six months of 2025 were supported by strong worldwide demand for petroleum-based transportation fuels, while worldwide supply of those products was constrained. However, our results were also impacted by the asset impairment loss of $1.1 billion ($877 million after taxes) associated with our operations in California, as described in Note 2 of Condensed Notes to Consolidated Financial Statements.

We reported $714 million and $119 million of net income attributable to Valero stockholders for the second quarter of 2025 and the first six months of 2025, respectively. Our operating results, including operating results by segment, are described in the following summary under “Second Quarter Results” and “First Six Months Results,” and detailed descriptions can be found under “RESULTS OF OPERATIONS” beginning on page 43.

Our operations generated $1.9 billion of cash during the first six months of 2025. In addition, we issued $650 million of 5.150 percent Senior Notes due February 15, 2030 during the first six months of 2025, as described in Note 4 of Condensed Notes to Consolidated Financial Statements. The cash generated by our operations, along with the net proceeds from our debt issuance and cash on hand, was used to make $1.1 billion of capital investments in our business, return $1.3 billion to our stockholders through purchases of common stock for treasury and dividend payments, and repay $440 million of our public debt that matured in the first six months of 2025. As a result of this and other activity, our cash, cash equivalents, and restricted cash decreased by $117 million during the first six months of 2025 to $4.7 billion as of June 30, 2025. We had $9.6 billion in liquidity as of June 30, 2025. The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found under “LIQUIDITY AND CAPITAL RESOURCES” beginning on page 60.

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Second Quarter Results

For the second quarter of 2025, we reported net income attributable to Valero stockholders of $714 million compared to $880 million for the second quarter of 2024. The decrease of $166 million was primarily due to a decrease in operating income of $224 million, partially offset by a decrease in net income (loss) attributable to noncontrolling interest of $97 million. The details of our operating income (loss) and adjusted operating income, where applicable, by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustments reflected in the tables in note (b) beginning on page 57.


	Three Months Ended June 30,
	2025		2024		Change
Refining segment:
Operating income	$	1,266	$	1,224	$	42
Adjusted operating income	1,270		1,229		41
Renewable Diesel segment:
Operating income (loss)	(79)		112		(191)

Ethanol segment:
Operating income	54		105		(51)
Adjusted operating income	54		103		(49)
Total company:
Operating income	997		1,221		(224)
Adjusted operating income	1,001		1,224		(223)

While our operating income decreased by $224 million in the second quarter of 2025 compared to the second quarter of 2024, adjusted operating income decreased by $223 million primarily due to the following:

•Refining segment. Refining segment adjusted operating income increased by $41 million primarily due to higher gasoline and distillate (primarily diesel) margins, partially offset by a decline in crude oil differentials, a decrease in throughput volumes, and increases in operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense.

•Renewable Diesel segment. Renewable Diesel segment operating income decreased by $191 million primarily due to higher feedstock costs and a decrease in sales volumes, partially offset by higher product prices (primarily renewable diesel).

•Ethanol segment. Ethanol segment adjusted operating income decreased by $49 million primarily due to lower ethanol prices, higher corn prices, and higher operating expenses (excluding depreciation and amortization expense); partially offset by an increase in production volumes.

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First Six Months Results

For the first six months of 2025, we reported net income attributable to Valero stockholders of $119 million compared to $2.1 billion for the first six months of 2024. The decrease of $2.0 billion was primarily due to a decrease in operating income of $2.8 billion, partially offset by a decrease in income tax expense of $616 million and a decrease in net income (loss) attributable to noncontrolling interest of $239 million. The details of our operating income and adjusted operating income, where applicable, by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustments reflected in the tables in note (b) beginning on page 57.


	Six Months Ended June 30,
	2025		2024		Change
Refining segment:
Operating income	$	736	$	2,969	$	(2,233)
Adjusted operating income	1,875		2,979		(1,104)
Renewable Diesel segment:
Operating income (loss)	(220)		302		(522)

Ethanol segment:
Operating income	74		115		(41)
Adjusted operating income	74		142		(68)
Total company:
Operating income	97		2,900		(2,803)
Adjusted operating income	1,236		2,937		(1,701)

While our operating income decreased by $2.8 billion in the first six months of 2025 compared to the first six months of 2024, adjusted operating income decreased by $1.7 billion primarily due to the following:

•Refining segment. Refining segment adjusted operating income decreased by $1.1 billion primarily due to a decline in crude oil and other feedstock differentials, lower distillate (primarily diesel) margins, and increases in operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense; partially offset by higher margins on other products.

•Renewable Diesel segment. Renewable Diesel segment operating income decreased by $522 million primarily due to higher feedstock costs and a decrease in sales volumes, partially offset by higher product prices (primarily renewable diesel).

•Ethanol segment. Ethanol segment adjusted operating income decreased by $68 million primarily due to higher corn prices, lower corn related co-product prices, and higher operating expenses (excluding depreciation and amortization expense); partially offset by higher ethanol prices and an increase in production volumes.

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Outlook

Many uncertainties remain with respect to the supply and demand balances in petroleum-based product markets worldwide. While it is difficult to predict future worldwide economic activity and its resulting impact on product supply and demand, including the effects of tariffs thereon, we have noted several factors below that have impacted or may impact our results of operations during the third quarter of 2025.

•Gasoline and diesel demand have exceeded pre-pandemic levels and are expected to follow typical seasonal patterns. Jet fuel demand continues to improve, outpacing gasoline and diesel demand growth, and is approaching pre-pandemic levels in the U.S.

•Combined light product (gasoline, diesel, and jet fuel) inventories across the U.S. and Europe are low. Expected reductions in refining capacity in 2025 should continue to support utilization of refining capacity.

•Crude oil differentials are expected to remain relatively stable. However, potential sanction adjustments related to Iran, Russia, and Venezuela, the Russia-Ukraine conflict, and an increase in sour crude production from OPEC+ suppliers could result in increased volatility in the crude oil market and potentially impact crude oil differentials.

•Renewable diesel demand is expected to remain consistent with current levels.

•Ethanol demand is expected to follow typical seasonal patterns.

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RESULTS OF OPERATIONS

The following tables, including the reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures in note (b) beginning on page 57, highlight our results of operations, our operating performance, and market reference prices that directly impact our operations. Note references in this section can be found on pages 57 through 59.

Second Quarter Results -

Financial Highlights by Segment and Total Company

(millions of dollars)


	Three Months Ended June 30, 2025
	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Revenues:
Revenues from external customers	$	28,324	$	565	$	1,000	$	—	$	29,889
Intersegment revenues	2		533		205		(740)		—
Total revenues	28,326		1,098		1,205		(740)		29,889
Cost of sales:
Cost of materials and other	25,042		1,044		988		(742)		26,332

Operating expenses (excluding depreciation and amortization expense reflected below)	1,307		72		144		(1)		1,522
Depreciation and amortization expense	707		61		19		(1)		786
Total cost of sales	27,056		1,177		1,151		(744)		28,640

Other operating expenses	4		—		—		—		4
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		220		220
Depreciation and amortization expense	—		—		—		28		28
Operating income (loss) by segment	$	1,266	$	(79)	$	54	$	(244)	997
Other income, net									86
Interest and debt expense, net of capitalized interest									(141)
Income before income tax expense									942
Income tax expense									279
Net income									663
Less: Net loss attributable to noncontrolling interests									(51)
Net income attributable to Valero Energy Corporation stockholders									$	714

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Second Quarter Results -

Financial Highlights by Segment and Total Company (continued)

(millions of dollars)


	Three Months Ended June 30, 2024
	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Revenues:
Revenues from external customers	$	33,044	$	554	$	892	$	—	$	34,490
Intersegment revenues	3		630		229		(862)		—
Total revenues	33,047		1,184		1,121		(862)		34,490
Cost of sales:
Cost of materials and other	29,995		930		874		(856)		30,943

Operating expenses (excluding depreciation and amortization expense reflected below)	1,219		80		125		—		1,424
Depreciation and amortization expense	604		62		19		(1)		684
Total cost of sales	31,818		1,072		1,018		(857)		33,051
Other operating expenses	5		—		(2)		—		3
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		203		203
Depreciation and amortization expense	—		—		—		12		12
Operating income by segment	$	1,224	$	112	$	105	$	(220)	1,221
Other income, net									122
Interest and debt expense, net of capitalized interest									(140)
Income before income tax expense									1,203
Income tax expense									277
Net income									926
Less: Net income attributable to noncontrolling interests									46
Net income attributable to Valero Energy Corporation stockholders									$	880

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Second Quarter Results -

Average Market Reference Prices and Differentials


	Three Months Ended June 30,
	2025		2024
Refining
Feedstocks (dollars per barrel)
Brent crude oil	$	66.59	$	84.96
Brent less West Texas Intermediate (WTI) crude oil	2.72		4.22

VALERO ENERGY CORP/TX 10-Q