Valero Energy Q3 2026 earnings climb to $6.83B
Operating cash generation funded shareholder returns, investment and debt repayment, while cash, cash equivalents and restricted cash totaled $10.021 billion.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
Valero Energy Corporation (VLO) reported third-quarter 2026 revenue of $46.098 billion versus $32.168 billion a year earlier, and net income attributable to Valero stockholders of $6.828 billion versus $1.095 billion. For the first nine months of 2026, net income attributable to Valero stockholders was $11.811 billion versus $1.214 billion. Valero said resilient demand and constrained supply supported refining margins, despite higher crude and other feedstock costs.
Operations generated $13.902 billion in cash during the first nine months. Valero returned $7.3 billion through treasury-stock purchases and dividends, invested $1.2 billion, and repaid $526 million of maturing public debt. As of September 30, 2026, cash, cash equivalents, and restricted cash were $10.021 billion, with liquidity of $14.7 billion.
Valero completed idling all Benicia refinery processing units in April 2026 and expects to serve Northern California customers through imports or other arrangements. On October 27, 2026, its board authorized up to $10.0 billion in additional share purchases and declared a $1.20-per-share dividend payable December 21, 2026, to holders of record November 24, 2026. Port Arthur refinery operations returned to normal throughput in the second quarter after a March 23, 2026 fire; repairs continue.
3 points · 0 major0 major · 0 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue: $46.098 billion, versus $32.168 billion in 2025.
- Moderate pointThird-quarter attributable net income: $6.828 billion, versus $1.095 billion in 2025.
- Moderate pointNine-month operating cash flow: $13.902 billion, versus $3.769 billion in 2025.
Negative
- None.
Filing Explained
The March 23, 2026 Port Arthur refinery fire has led to pending injury, property-damage and nuisance suits, including a proposed class action, and proposed regulatory citations and penalties, while Valero says outcomes and potential losses remain uncertain and cannot yet be reasonably estimated, and it intends to contest the allegations.
Key Figures
Revenue: $46.098 billion
Net income attributable to Valero stockholders: $6.828 billion
Net income attributable to Valero stockholders: $11.811 billion
+5 more
8 metrics
Revenue
$46.098 billion
Three months ended September 30, 2026; $32.168 billion in 2025
Net income attributable to Valero stockholders
$6.828 billion
Three months ended September 30, 2026; $1.095 billion in 2025
Net income attributable to Valero stockholders
$11.811 billion
Nine months ended September 30, 2026; $1.214 billion in 2025
Net cash provided by operating activities
$13.902 billion
Nine months ended September 30, 2026; $3.769 billion in 2025
Cash, cash equivalents, and restricted cash
$10.021 billion
As of September 30, 2026
Liquidity
$14.7 billion
As of September 30, 2026
Share-purchase authorization
Up to $10.0 billion
Authorized October 27, 2026; no expiration date
Quarterly cash dividend
$1.20 per common share
Declared October 27, 2026
Key Terms
last-in, first-out (LIFO) inventory layers, cash flow hedges, Variable Interest Entities, Renewable Identification Numbers (RINs), +1 more
5 terms
last-in, first-out (LIFO) inventory layers financial
"liquidation of last-in, first-out (LIFO) inventory layers"
cash flow hedges financial
"Cash flow hedges are derivative instruments that are formally designated"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
Variable Interest Entities financial
"VARIABLE INTEREST ENTITIES"
A variable interest entity (VIE) is a business that a company controls through contracts or special arrangements instead of owning a majority of its shares, like steering a puppet without holding its ticket. Investors care because these arrangements can hide who really bears the financial risks and rewards, affect how assets and liabilities appear on financial statements, and create extra legal or enforcement uncertainty that can change the value and risk of an investment.
Renewable Identification Numbers (RINs) regulatory
"compliance credits (primarily Renewable Identification Numbers (RINs))"
Renewable Identification Numbers (RINs) are unique tracking credits used under U.S. renewable fuel rules to prove that a gallon of transportation fuel contains an approved amount of biofuel. Think of them as tradable coupons that biofuel producers and fuel blenders earn, buy, or sell to show regulatory compliance; their price and availability directly affect the cost and profit of companies involved in fuel production, refining, and distribution, creating financial exposure and potential revenue streams for investors.
renewable volume obligations (RVOs) regulatory
"increase in the renewable volume obligations (RVOs) imposed by the EPA"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were VLO's third-quarter 2026 revenue and earnings?
VLO reported third-quarter revenue of $46.098 billion and net income attributable to Valero stockholders of $6.828 billion. The comparable third-quarter 2025 figures were $32.168 billion in revenue and $1.095 billion in attributable net income.
How much cash did VLO generate from operations in the first nine months of 2026?
VLO generated $13.902 billion of cash from operations during the first nine months of 2026. Cash, cash equivalents, and restricted cash were $10.021 billion as of September 30, 2026.
What dividend did VLO declare and when is it payable?
On October 27, 2026, Valero's board declared a quarterly cash dividend of $1.20 per common share, payable December 21, 2026, to holders of record at the close of business on November 24, 2026.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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 September 30, 2026
OR
| 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)
| (State or other jurisdiction of | (I.R.S. Employer | ||||
| incorporation or organization) | Identification No.) | ||||
(Address of principal executive offices)
(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 | ||||||||||||
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.
| ☑ | 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 October 23, 2026 was 278,884,400 .
VALERO ENERGY CORPORATION
TABLE OF CONTENTS
| Page | |||||
PART I – FINANCIAL INFORMATION | |||||
ITEM 1. FINANCIAL STATEMENTS | |||||
Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 | 1 | ||||
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2026 and 2025 | 2 | ||||
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2026 and 2025 | 3 | ||||
Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2026 and 2025 | 4 | ||||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 | 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 | 66 | ||||
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 67 | ||||
ITEM 5. OTHER INFORMATION | 67 | ||||
ITEM 6. EXHIBITS | 68 | ||||
SIGNATURES | 69 | ||||
i
Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VALERO ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(millions of dollars, except par value)
| September 30, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Receivables, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other | |||||||||||
| Total current assets | |||||||||||
| Property, plant, and equipment, at cost | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property, plant, and equipment, net | |||||||||||
| Deferred charges and other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of debt and finance lease obligations | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Taxes other than income taxes payable | |||||||||||
| Income taxes payable | |||||||||||
| Total current liabilities | |||||||||||
| Debt and finance lease obligations, less current portion | |||||||||||
| Net deferred income tax liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Valero Energy Corporation stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Valero Energy Corporation stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See Condensed Notes to Consolidated Financial Statements.
1
Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(millions of dollars, except per share amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues (a) | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| Cost of materials and other | |||||||||||||||||||||||
| Taxes other than income taxes | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Asset impairment loss | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Interest and debt expense, net of capitalized interest | ( | ( | ( | ( | |||||||||||||||||||
| Income before income tax expense | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average common shares outstanding (in millions) | |||||||||||||||||||||||
| Earnings per common share – assuming dilution | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average common shares outstanding – assuming dilution (in millions) | |||||||||||||||||||||||
__________________________ | |||||||||||||||||||||||
| Supplemental information: | |||||||||||||||||||||||
(a) Includes excise taxes on sales by certain of our foreign operations | $ | $ | $ | $ | |||||||||||||||||||
See Condensed Notes to Consolidated Financial Statements.
2
Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions of dollars)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||||||||
Net gain (loss) on pension and other postretirement benefits | ( | ( | ( | ||||||||||||||||||||
Net gain (loss) on cash flow hedges | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss) before income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
Income tax expense (benefit) related to items of other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Comprehensive income attributable to Valero Energy Corporation stockholders | $ | $ | $ | $ | |||||||||||||||||||
See Condensed Notes to Consolidated Financial Statements.
3
Table of Contents
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 June 30, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Purchases of common stock for treasury | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Purchases of common stock for treasury | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
See Condensed Notes to Consolidated Financial Statements.
4
Table of Contents
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, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Purchases of common stock for treasury | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Transactions in connection with stock-based compensation plans | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Purchases of common stock for treasury | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
See Condensed Notes to Consolidated Financial Statements.
5
Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions of dollars)
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Asset impairment loss | |||||||||||
| Deferred income tax benefit | ( | ( | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
Current assets and current liabilities (see Note 11) | ( | ||||||||||
| Deferred charges and other assets | ( | ( | |||||||||
| Long-term liabilities | ( | ( | |||||||||
| Other operating activities, net | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures (excluding variable interest entities (VIEs)) | ( | ( | |||||||||
| Capital expenditures of VIEs: | |||||||||||
| Diamond Green Diesel Holdings LLC (DGD) | ( | ( | |||||||||
| Other VIEs | ( | ( | |||||||||
| Deferred turnaround and catalyst cost expenditures (excluding VIEs) | ( | ( | |||||||||
| Deferred turnaround and catalyst cost expenditures of DGD | ( | ( | |||||||||
| Investments in nonconsolidated joint ventures | ( | ||||||||||
| Other investing activities, net | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from debt issuances and borrowings (excluding VIEs) | |||||||||||
| Proceeds from debt borrowings of DGD | |||||||||||
| Repayments of debt and finance lease obligations (excluding VIEs) | ( | ( | |||||||||
| Repayments of debt and finance lease obligations of VIEs: | |||||||||||
| DGD | ( | ( | |||||||||
| Other VIEs | ( | ( | |||||||||
| Purchases of common stock for treasury | ( | ( | |||||||||
| Payment of excise tax on purchases of common stock for treasury | ( | ( | |||||||||
| Common stock dividend payments | ( | ( | |||||||||
| Contributions from noncontrolling interests | |||||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Other financing activities, net | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign exchange rate changes on cash | ( | ||||||||||
| Net increase in cash, cash equivalents, and restricted cash | |||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period (a) | |||||||||||
| Cash, cash equivalents, and restricted cash at end of period (a) | $ | $ | |||||||||
________________________
(a)Restricted cash is included in prepaid expenses and other in our consolidated balance sheets.
See Condensed Notes to Consolidated Financial Statements.
6
Table of Contents
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 were 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, 2026. 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, 2025.
The balance sheet as of December 31, 2025, 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, 2025.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 2026 presentation. The changes were due to the separate presentation of (i) taxes other than income taxes, which were previously included in cost of materials and other in our statements of income and (ii) changes in deferred charges and other assets and changes in long-term liabilities, which were previously included in “changes in deferred charges and credits and other operating activities, net” in our statements of cash flows. In addition, prior year amounts that were presented separately for activities related to investments in available-for-sale (AFS) debt securities have been reclassified to “other investing activities, net” in our statements of cash flows.
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.
7
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accounting Pronouncement Not Yet Adopted
ASU 2026-02
In May 2026, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which provides guidance on the accounting for environmental credit assets and related obligations. This ASU establishes recognition, measurement, presentation, and disclosure requirements for entities that generate, purchase, or receive environmental credits or have regulatory compliance obligations that may be settled with such credits. We expect to adopt this ASU effective January 1, 2028. We are currently evaluating the effect that adopting this ASU will have on our financial position, results of operations, and related disclosures.
2. IMPAIRMENT AND OTHER MATTERS
In March 2025, we approved a plan to idle the processing units and cease refining operations at our Benicia Refinery by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result of these actions, the following impacts were recorded in our Refining segment:
•During the first quarter of 2025, we evaluated the Benicia and Wilmington refineries for potential impairment and concluded that their carrying values were not recoverable as of March 31, 2025. Therefore, we recognized a combined asset impairment loss of $1.1 billion.
•Included in the recoverability assessments discussed above was the recognition of expected asset retirement obligations of $337 million. During the three and nine months ended September 30, 2026, we settled approximately $19 million and $189 million, respectively, of the asset retirement obligation related to our Benicia Refinery.
•We shortened the estimated useful life of the Benicia Refinery, and as a result, have depreciated the revised carrying value of the net property, plant, and equipment and other noncurrent assets since April 2025 to the estimated salvage value. Accordingly, we recorded incremental depreciation of approximately $133 million in the nine months ended September 30, 2026, and approximately $100 million and $200 million in the three and nine months ended September 30, 2025, respectively, in depreciation and amortization expense.
•We implemented a transition plan for the affected employees of the Benicia Refinery, which included retention incentive payments and separation benefits. During the third quarter of 2025, we recognized a liability of $50
•During the second quarter of 2026, we reduced certain inventory levels related to our California operations that resulted in the liquidation of last-in, first-out (LIFO) inventory layers with historical costs that were lower than current replacement costs. As a result, cost of materials and other includes a benefit of $44 million in the nine months ended September 30, 2026. Similar reductions in inventory levels occurred during the fourth quarter of 2025, which increased cost of materials and other by $37 million in the year ended December 31, 2025.
8
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During the first quarter of 2026, we began idling the processing units through a phased approach and ceased operation of the fuel production units at our Benicia Refinery. In accordance with our plan, full idling of all processing units was completed in April 2026. While we continue to evaluate potential redevelopment options for the future use of the refinery property, we plan to maintain all required operating permits and keep the facilities in a safe, clean, and idled condition. In addition, we expect to continue to fulfill our contractual obligations to customers in the Northern California market through imports or other alternative supply arrangements. Effective in the second quarter of 2026, activities associated with the decommissioning and redevelopment of our Benicia Refinery are reported within other corporate expenses in our segment information, as disclosed in Note 10.
3. INVENTORIES
Inventories consisted of the following (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Refinery feedstocks | $ | $ | |||||||||
Refined petroleum products and blendstocks | |||||||||||
Renewable diesel feedstocks and products | |||||||||||
| Ethanol feedstocks and products | |||||||||||
| Materials and supplies | |||||||||||
| Inventories | $ | $ | |||||||||
During the nine months ended September 30, 2026, we recognized a $44 million benefit in cost of materials and other resulting from the liquidation of LIFO inventory layers established in prior years at costs lower than current replacement costs. As discussed in Note 2, LIFO inventory levels related to our California operations declined during 2026 due to the phased idling of processing units and cessation of refining operations at the Benicia Refinery, which was completed by the end of April 2026. Consequently, inventory levels at December 31, 2026, are expected to remain below those at December 31, 2025.
As of September 30, 2026 and December 31, 2025, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by $11.9 billion and $2.6 billion, respectively. Our non-LIFO inventories accounted for $1.5 billion and $1.2 billion of our total inventories as of September 30, 2026 and December 31, 2025, respectively.
4. DEBT
Public Debt
In March 2026, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036. Proceeds from this debt issuance totaled $850 million before deducting the underwriting discount and other debt issuance costs. We used a portion of the net proceeds to repay the $100 million outstanding principal balance of our 7.65 percent Debentures that matured on July 1, 2026 and the $426 million outstanding principal balance of our 3.400 percent Senior Notes that matured on September 15, 2026.
9
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In February 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.
Credit Facilities
We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (in millions):
| September 30, 2026 | |||||||||||||||||||||||||||||
| Facility Amount | Maturity Date | Outstanding Borrowings | Letters of Credit Issued (a) | Availability | |||||||||||||||||||||||||
| Committed facilities: | |||||||||||||||||||||||||||||
| Valero Revolver | $ | October 2030 | $ | $ | $ | ||||||||||||||||||||||||
Accounts receivable sales facility | June 2027 | n/a | |||||||||||||||||||||||||||
| Committed facilities of VIEs (b): | |||||||||||||||||||||||||||||
| DGD Revolver (c) | February 2029 | ||||||||||||||||||||||||||||
| DGD Loan Agreement (d) | June 2029 | n/a | |||||||||||||||||||||||||||
| IEnova Revolver (e) | February 2028 | n/a | |||||||||||||||||||||||||||
| Uncommitted facilities: | |||||||||||||||||||||||||||||
| Letter of credit facilities | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||
| Uncommitted facility of VIE (b): | |||||||||||||||||||||||||||||
| DGD letter of credit facility | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||
________________________
(a)Letters of credit issued as of September 30, 2026 expire at various times in 2026 through 2029.
(b)Creditors of the VIEs do not have recourse against us.
(c)In February 2026, DGD amended this unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) to (i) extend the maturity date to February 2029 and (ii) modify the reference interest rates from an adjusted term SOFR, a Secured Overnight Financing Rate (SOFR), to the term SOFR, and from an adjusted daily simple SOFR to the daily simple SOFR.
(d)In February 2026, DGD amended its unsecured revolving loan agreement with its members (the DGD Loan Agreement) to extend the maturity date to June 2029. The amounts shown for 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.
(e)Central Mexico Terminals (defined in Note 7) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 7). The variable interest rate on the IEnova Revolver was 7.575 percent and 7.835 percent as of September 30, 2026 and December 31, 2025, respectively.
10
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Activity under our credit facilities was as follows (in millions):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Borrowings: | |||||||||||
| Accounts receivable sales facility | $ | $ | |||||||||
| DGD Revolver | |||||||||||
| DGD Loan Agreement | |||||||||||
| Repayments: | |||||||||||
| Accounts receivable sales facility | ( | ( | |||||||||
| DGD Revolver | ( | ( | |||||||||
| DGD Loan Agreement | ( | ||||||||||
| IEnova Revolver | ( | ( | |||||||||
Other Disclosures
“Interest and debt expense, net of capitalized interest” was as follows (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Interest and debt expense | $ | $ | $ | $ | |||||||||||||||||||
| Less: Capitalized interest | |||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | $ | $ | $ | $ | |||||||||||||||||||
11
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. COMMITMENTS AND CONTINGENCIES
Port Arthur Refinery Fire
On March 23, 2026, our Port Arthur Refinery experienced a fire in one of the refinery’s distillate hydrotreater units that prompted a full shut-down of the refinery. The refinery resumed operations in April 2026 at reduced throughput rates and returned to normal throughput rates during the second quarter. We have completed our assessment of the damages and efforts to complete necessary repairs and replacements are in progress. We expect that a substantial portion of the cost of repairs and capital expenditures in 2026 resulting from the incident will be covered by insurance, subject to our self-insured retention. Insurance proceeds may be received in periods different from those in which the related repair costs or capital expenditures are incurred. Uncertainties remain with respect to the ultimate outcomes from this incident and the resulting impact on our financial position, results of operations, and cash flows.
During the three and nine months ended September 30, 2026, we recorded an insurance recovery receivable of $21 million and $99 million, respectively, to offset losses that we believe are probable of recovery. Any insurance recoveries attributable to property damage in excess of recognized losses represent a gain contingency and will be recognized when realized or realizable. No
In addition, during the three and nine months ended September 30, 2026, we incurred $4 million and $19 million, respectively, of repair costs directly attributable to the incident that may be recoverable through the insurance claims process. These costs are included in other operating expenses within our Refining segment.
As a result of this incident, we have received a number of lawsuits, including a proposed class action lawsuit, alleging personal injury, property damage, and nuisance in the adjacent community. Several of these actions seek unspecified damages in excess of $1 million. While we intend to vigorously defend against such pending actions, the ultimate outcomes and impacts thereof are currently uncertain and the full extent of any potential losses or damages cannot be reasonably estimated at this time. In addition, we continue to work cooperatively with various regulatory authorities reviewing the incident and discussions are ongoing. During the third quarter of 2026, we received proposed citations and penalties from certain regulatory enforcement agencies associated with this incident. We intend to contest the alleged violations and proposed penalties. Current regulatory enforcement actions or proceedings, and those that may arise in the future, if any, are currently uncertain and we are unable to make any reasonable estimates with respect thereto at this time.
Trade and Other Policy Matters
The U.S. federal government under the current administration implemented new or revised tariffs that negatively impacted our business, particularly our Renewable Diesel segment, during 2025 and 2026, including those implemented pursuant to the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were invalid. On April 20, 2026, U.S. Customs and Border Protection (CBP) launched a system that was developed to process IEEPA tariff refund claims. Based on the eligibility parameters established by CBP for Phase 1 of the refund process, DGD prepared and filed a refund claim of $51
12
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
April 2026, which resulted in a decrease in cost of materials and other for our Renewable Diesel segment. As of September 30, 2026, substantially all of the Phase 1 refund claim has been received. DGD may be eligible to participate in future phases of the refund process; however, the timing, amount, and ultimate recoverability of any additional refunds remain uncertain. Accordingly, no amounts have been recognized with respect to such potential future claims. We continue to monitor developments related to trade and tariff-related matters and evaluate their potential effects on our business, financial position, results of operations, and cash flows.
6. 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. We purchased for treasury 9,056,938 shares and 5,667,134 shares for the three months ended September 30, 2026 and 2025, respectively, and 20,395,132 shares and 10,309,669 shares for the nine months ended September 30, 2026 and 2025, 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 | Completion of Authorized Share Purchases | Remaining Available for Purchase as of September 30, 2026 | ||||||||||||||||||||||
| September 2024 Program | September 19, 2024 | $ | Second quarter of 2026 | $ | ||||||||||||||||||||||
| February 2026 Program | February 25, 2026 | Third quarter of 2026 | ||||||||||||||||||||||||
| July 2026 Program | July 16, 2026 | n/a | ||||||||||||||||||||||||
On October 27, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $10.0 billion with no expiration date, which is in addition to the amount remaining under the July 2026 Program.
Common Stock Dividends
On October 27, 2026, our Board declared a quarterly cash dividend of $1.20 per common share payable on December 21, 2026 to holders of record at the close of business on November 24, 2026.
13
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | ( | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
Other comprehensive loss before reclassifications | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Effect of exchange rates | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Balance as of end of period | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Effect of exchange rates | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance as of end of period | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
14
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. VARIABLE INTEREST ENTITIES
Consolidated VIEs
•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 Energética Nova, S.A.P.I. de C.V. (IEnova), which is a Mexican company and indirect subsidiary of Sempra, 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 | ||||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
| Other current assets | |||||||||||||||||||||||
| Property, plant, and equipment, net | |||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
Current liabilities, including current portion of debt and finance lease obligations | $ | $ | $ | $ | |||||||||||||||||||
Debt and finance lease obligations, less current portion | |||||||||||||||||||||||
___________________________________________________________________
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.”
15
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| DGD | Central Mexico Terminals | Other | Total | ||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
| Other current assets | |||||||||||||||||||||||
| Property, plant, and equipment, net | |||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
Current liabilities, including current portion of debt and finance lease obligations | $ | $ | $ | $ | |||||||||||||||||||
Debt and finance lease obligations, less current portion | |||||||||||||||||||||||
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.
16
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. 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 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Three months ended September 30 | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||
| Net actuarial gain | ( | ( | ( | ( | |||||||||||||||||||
| Prior service cost | |||||||||||||||||||||||
| Settlement loss | |||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | |||||||||||||||||||
| Nine months ended September 30 | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||
| Net actuarial gain | ( | ( | ( | ( | |||||||||||||||||||
| Prior service cost | |||||||||||||||||||||||
| Settlement loss | |||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | |||||||||||||||||||
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.”
17
Table of Contents
VALERO ENERGY CORPORATION
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Net income attributable to Valero stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Less: Income allocated to participating securities | |||||||||||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||
Earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
Earnings per common share – assuming dilution: | |||||||||||||||||||||||
Net income attributable to Valero stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Less: Income allocated to participating securities | |||||||||||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
Weighted-average common shares outstanding – assuming dilution | |||||||||||||||||||||||
Earnings per common share – assuming dilution | $ | $ | $ | $ | |||||||||||||||||||
Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan. Dilutive securities include participating securities. For the three and nine months ended September 30, 2026 and 2025, we computed earnings per common share – assuming dilution using the two-class method for all dilutive securities.
18
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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):
| September 30, 2026 | December 31, 2025 | ||||||||||
Receivables from contracts with customers, included in receivables, net | $ | $ | |||||||||
| Contract liabilities, included in accrued expenses | |||||||||||
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 September 30, 2026, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations. See Note 2 for additional information regarding contractual obligations related to our Benicia Refinery.
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 (loss) 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 includes the operations of DGD, a consolidated joint venture as discussed in Note 7, 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
19
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
segment for blending into petroleum-based diesel and conventional jet fuel, respectively, which are then sold to that segment’s customers as finished products.
•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 and other category. As discussed in Note 2, effective in the second quarter of 2026, activities associated with the decommissioning and redevelopment of our Benicia Refinery are reported within other corporate expenses.
Our chief operating decision maker (CODM) is our Chairman of the Board, Chief Executive Officer and President. Our CODM uses operating income (loss) 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 (loss) by segment when evaluating the operating performance of each segment.
20
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables reflect information about our reportable segments and include the reconciliation to our consolidated income before income tax expense (in millions):
| Refining | Renewable Diesel | Ethanol | Total | ||||||||||||||||||||
| Three months ended September 30, 2026 | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
| Intersegment revenues | |||||||||||||||||||||||
Reconciliation of revenues by segment to consolidated revenues | |||||||||||||||||||||||
| Elimination of intersegment revenues | ( | ||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| Cost of materials and other (a) | |||||||||||||||||||||||
| Taxes other than income taxes | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Other operating expenses | ( | ||||||||||||||||||||||
Operating income by segment | $ | $ | $ | $ | |||||||||||||||||||
Reconciliation of operating income by segment to income before income tax expense | |||||||||||||||||||||||
| Elimination of intersegment losses | |||||||||||||||||||||||
| Unallocated amounts: | |||||||||||||||||||||||
| Other corporate expenses (b) | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | ( | ||||||||||||||||||||||
| Income before income tax expense | $ | ||||||||||||||||||||||
| Other segment disclosures | |||||||||||||||||||||||
| Expenditures for long-lived assets (c) | $ | $ | $ | $ | |||||||||||||||||||
________________________
See notes on page 24.
21
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Refining | Renewable Diesel | Ethanol | Total | ||||||||||||||||||||
| Three months ended September 30, 2025 | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
| Intersegment revenues | |||||||||||||||||||||||
Reconciliation of revenues by segment to consolidated revenues | |||||||||||||||||||||||
| Elimination of intersegment revenues | ( | ||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| Cost of materials and other (a) | |||||||||||||||||||||||
| Taxes other than income taxes | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
Operating income (loss) by segment | $ | $ | ( | $ | $ | ||||||||||||||||||
Reconciliation of operating income (loss) by segment to income before income tax expense | |||||||||||||||||||||||
| Elimination of intersegment losses | |||||||||||||||||||||||
| Unallocated amounts: | |||||||||||||||||||||||
| Other corporate expenses (b) | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | ( | ||||||||||||||||||||||
| Income before income tax expense | $ | ||||||||||||||||||||||
| Other segment disclosures | |||||||||||||||||||||||
| Expenditures for long-lived assets (c) | $ | $ | $ | $ | |||||||||||||||||||
________________________
See notes on page 24.
22
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Refining | Renewable Diesel | Ethanol | Total | ||||||||||||||||||||
| Nine months ended September 30, 2026 | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
| Intersegment revenues | |||||||||||||||||||||||
Reconciliation of revenues by segment to consolidated revenues | |||||||||||||||||||||||
| Elimination of intersegment revenues | ( | ||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| Cost of materials and other (a) | |||||||||||||||||||||||
| Taxes other than income taxes | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
Operating income by segment | $ | $ | $ | $ | |||||||||||||||||||
Reconciliation of operating income by segment to income before income tax expense | |||||||||||||||||||||||
| Elimination of intersegment profits | ( | ||||||||||||||||||||||
| Unallocated amounts: | |||||||||||||||||||||||
| Other corporate expenses (b) | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | ( | ||||||||||||||||||||||
| Income before income tax expense | $ | ||||||||||||||||||||||
| Other segment disclosures | |||||||||||||||||||||||
| Segment assets | $ | $ | $ | $ | |||||||||||||||||||
| Expenditures for long-lived assets (c) | |||||||||||||||||||||||
________________________
See notes on page 24.
23
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Refining | Renewable Diesel | Ethanol | Total | ||||||||||||||||||||
| Nine months ended September 30, 2025 | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
| Intersegment revenues | |||||||||||||||||||||||
Reconciliation of revenues by segment to consolidated revenues | |||||||||||||||||||||||
| Elimination of intersegment revenues | ( | ||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| Cost of materials and other (a) | |||||||||||||||||||||||
| Taxes other than income taxes | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Asset impairment loss | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
Operating income (loss) by segment | $ | $ | ( | $ | $ | ||||||||||||||||||
Reconciliation of operating income (loss) by segment to income before income tax expense | |||||||||||||||||||||||
| Elimination of intersegment losses | |||||||||||||||||||||||
| Unallocated amounts: | |||||||||||||||||||||||
| Other corporate expenses (b) | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | ( | ||||||||||||||||||||||
| Income before income tax expense | $ | ||||||||||||||||||||||
| Other segment disclosures | |||||||||||||||||||||||
| Segment assets | $ | $ | $ | $ | |||||||||||||||||||
| Expenditures for long-lived assets (c) | |||||||||||||||||||||||
________________________
(a)Cost of materials and other is net of the clean fuel production credit on qualifying sales of certain low-carbon transportation fuels of $150 million and $206 million for the three months ended September 30, 2026 and 2025, respectively, and $505 million and $397 million for the nine months ended September 30, 2026 and 2025, respectively, for our Renewable Diesel segment and $92 million and $211 million for the three and nine months ended September 30, 2026, respectively, for our Ethanol segment.
(b)Other corporate expenses include general and administrative expenses and depreciation and amortization expense, as reflected in our consolidated statements of income on page 2. Effective in the second quarter of 2026, other corporate expenses also include expenses associated with the decommissioning and redevelopment of our Benicia Refinery.
(c)Total expenditures for long-lived assets include amounts related to capital expenditures and deferred turnaround and catalyst costs.
24
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Total assets for reportable segments reconciled to our consolidated assets were as follows (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Total assets for reportable segments | $ | $ | |||||||||
| Corporate assets | |||||||||||
Elimination of intercompany receivables and other assets | ( | ( | |||||||||
| Total consolidated assets | $ | $ | |||||||||
Expenditures for long-lived assets for reportable segments reconciled to our consolidated expenditures for long-lived assets were as follows (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Expenditures for long-lived assets for reportable segments | $ | $ | $ | $ | |||||||||||||||||||
Corporate expenditures for long-lived assets | |||||||||||||||||||||||
Total consolidated expenditures for long-lived assets | $ | $ | $ | $ | |||||||||||||||||||
The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Refining: | |||||||||||||||||||||||
Gasolines and blendstocks | $ | $ | $ | $ | |||||||||||||||||||
Distillates | |||||||||||||||||||||||
Other product revenues | |||||||||||||||||||||||
| Total Refining revenues | |||||||||||||||||||||||
| Renewable Diesel: | |||||||||||||||||||||||
Renewable diesel | |||||||||||||||||||||||
| Renewable naphtha | |||||||||||||||||||||||
| Neat SAF | |||||||||||||||||||||||
| Total Renewable Diesel revenues | |||||||||||||||||||||||
| Ethanol: | |||||||||||||||||||||||
Ethanol | |||||||||||||||||||||||
Distillers grains | |||||||||||||||||||||||
| Total Ethanol revenues | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||
25
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of September 30, 2026 and December 31, 2025, our investments in nonconsolidated joint ventures accounted for under the equity method were $675 million and $684 million, respectively, all of which related to the Refining segment and are reflected in “deferred charges and other assets, net” in our balance sheets.
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):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Decrease (increase) in current assets: | |||||||||||
| Receivables, net | $ | ( | $ | ||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other | ( | ||||||||||
| Increase (decrease) in current liabilities: | |||||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses | ( | ||||||||||
| Taxes other than income taxes payable | |||||||||||
| Income taxes payable | |||||||||||
| Changes in current assets and current liabilities | $ | ( | $ | ||||||||
Changes in current assets and current liabilities for the nine months ended September 30, 2026 were primarily due to the following:
•The increase in receivables was primarily due to an increase in refined petroleum product prices in September 2026 compared to December 2025;
•The increase in accounts payable was primarily due to an increase in crude oil and other feedstock prices in September 2026 compared to December 2025; and
•The increase in income taxes payable was primarily due to higher income before income tax expense in the third quarter of 2026.
Changes in current assets and current liabilities for the nine months ended September 30, 2025 were primarily due to the following:
•The decrease in receivables was due to a decrease in refined petroleum product sales volumes in September 2025 compared to December 2024 and the collection of $246 million for a blender’s tax credit receivable, partially offset by an increase in related prices in September 2025 compared to December 2024;
26
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
•The decrease in inventories was primarily due to lower inventory levels in September 2025 compared to December 2024; and
•The decrease in accounts payable was due to a decrease in crude oil and other feedstock prices combined with a decrease in related volumes purchased in September 2025 compared to December 2024.
Cash flows related to interest and income taxes were as follows (in millions):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Interest paid in excess of amount capitalized, including interest on finance leases | $ | $ | |||||||||
| Income taxes paid, net | |||||||||||
Supplemental cash flow information related to our operating and finance leases was as follows (in millions):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
| Operating cash flows | $ | $ | $ | $ | |||||||||||||||||||
| Financing cash flows | — | — | |||||||||||||||||||||
Changes in lease balances resulting from new and modified leases | |||||||||||||||||||||||
There were no significant noncash investing and financing activities during the nine months ended September 30, 2026, except as noted in the table above. Noncash investing activities for the nine months ended September 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 nine months ended September 30, 2025, except as noted in the table above.
27
Table of Contents
VALERO ENERGY CORPORATION
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 September 30, 2026 and December 31, 2025.
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.
| September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Clean fuel production credits | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Investments of certain benefit plans | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Investments in AFS debt securities | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
Commodity derivative contracts | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Blending program obligations | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
28
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| December 31, 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 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Clean fuel production credits | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Investments of certain benefit plans | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Investments in AFS debt securities | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
Commodity derivative contracts | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
Physical purchase contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Blending program obligations | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
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 is 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.
•Clean fuel production credits represent the fair value of the tax credits that DGD intends to sell on behalf of the other joint venture member. These tax credits are categorized in Level 3 of the fair value hierarchy and are measured at fair value using a market approach based on historical sales prices and third-party consultant estimates. Significant unobservable inputs used in the valuation include the expected market discount per $1.00 of credit value.
29
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
•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 nine months ended September 30, 2026 and 2025.
•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 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.
•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 measured at fair value using a market approach 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
30
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial Instruments
Our financial instruments include cash and cash equivalents, restricted cash, receivables, investments of certain benefit plans, investments in AFS debt securities, 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 are shown in the table below (in millions).
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Fair Value Hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
Debt (excluding finance lease obligations) | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Investments of certain benefit plans, 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.
13. PRICE RISK MANAGEMENT ACTIVITIES
General
We are exposed to market risks primarily related to the volatility in the price of commodities, the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs, and foreign currency exchange rates. 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.
31
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We primarily use commodity derivative instruments that are either designated as cash flow hedges or entered into for economic hedging purposes. While both types of derivatives are used to manage exposure to commodity price risk, they differ in their risk management focus and accounting treatment, as described below.
•Cash flow hedges – Cash flow hedges are derivative instruments that are formally designated and qualify for hedge accounting. The objective of these hedges is to reduce variability in cash flows by locking in the price of forecasted purchases and/or product sales at market prices.
•Economic hedges – Economic hedges are derivative instruments that are not designated as hedging instruments for accounting purposes. These derivatives are primarily used to manage exposure to commodity price volatility associated with certain feedstock and product inventories and, in some cases, forecasted purchases and/or product sales. Although economic hedges may achieve similar economic risk management objectives as cash flow hedges, changes in their fair value are recognized currently in our statements of income.
As of September 30, 2026, 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 | ||||||||||||||
| 2026 | 2027 | |||||||||||||
| Derivatives designated as cash flow hedges: | ||||||||||||||
| Refined petroleum products: | ||||||||||||||
| Futures – short | ||||||||||||||
| Derivatives designated as economic hedges: | ||||||||||||||
Crude oil and refined petroleum products: | ||||||||||||||
| Futures – long | ||||||||||||||
| Futures – short | ||||||||||||||
| Corn: | ||||||||||||||
| Futures – long | ||||||||||||||
| Futures – short | ||||||||||||||
| Physical contracts – long | ||||||||||||||
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-
32
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 $658 million and $431 million for the three months ended September 30, 2026 and 2025, respectively, and $2.0 billion and $1.2 billion for the nine months ended September 30, 2026 and 2025, respectively. These amounts are reflected in cost of materials and other.
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 September 30, 2026, we had foreign currency contracts to purchase $675 million of U.S. dollars. These commitments matured on or before October 27, 2026.
Fair Values of Derivative Instruments
The following table provides information about the fair values of our derivative instruments as of September 30, 2026 and December 31, 2025 (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 | September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||
| Asset Derivatives | Liability Derivatives | Asset Derivatives | Liability Derivatives | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||
| Commodity contracts | Receivables, net | $ | $ | $ | $ | ||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||
| Commodity contracts | Receivables, net | $ | $ | $ | $ | ||||||||||||||||||||||||
| Physical purchase contracts | Inventories | ||||||||||||||||||||||||||||
| Foreign currency contracts | Receivables, net | ||||||||||||||||||||||||||||
| Foreign currency contracts | Accrued expenses | ||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||||||||
33
Table of Contents
VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
Effect of Derivative Instruments on Income and Other Comprehensive Income (Loss)
The following table provides information about the 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 Loss Recognized in Income on Derivatives | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Commodity contracts: | ||||||||||||||||||||||||||||||||
Loss recognized in other comprehensive income (loss) | n/a | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
Loss reclassified from accumulated other comprehensive loss into income | Revenues | ( | ( | ( | ( | |||||||||||||||||||||||||||
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 nine months ended September 30, 2026 and 2025. For the three and nine months ended September 30, 2026 and 2025, cash flow hedges related to forecasted sales of renewable diesel and neat SAF. As of September 30, 2026, 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 nine months ended September 30, 2026 and 2025 are described in Note 6.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Commodity contracts | Revenues | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
| Commodity contracts | Cost of materials and other | ( | ||||||||||||||||||||||||||||||
| Foreign currency contracts | ( | |||||||||||||||||||||||||||||||
34
Table of Contents
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,” “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 (including natural gas, electricity, and water availability and prices);
•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;
•our evaluation of strategic opportunities, including our 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, operational, or strategic impacts;
•our anticipated level of capital investments, including deferred turnaround and catalyst cost and other capital 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, as well as any insurance proceeds related thereto, 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 and future sources and uses of cash;
•our evaluation of, and expectations regarding, any future activity under our share purchase program or transactions involving our debt securities, including the use of proceeds from any debt offering;
35
Table of Contents
•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;
•expectations regarding environmental, tax, and other legal or regulatory matters, including the matters discussed in Note 2 of Condensed Notes to Consolidated Financial Statements, 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, tariffs and refund claims, 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, as well as our capital allocation;
•expectations regarding our risk management activities, including the anticipated effects of our hedge transactions;
•expectations regarding the matters discussed in Note 5 of Condensed Notes to Consolidated Financial Statements;
•expectations regarding our counterparties and VIEs, including our ability to pass on increased compliance costs and collect receivables in a timely manner, and the credit risk within our accounts receivable or accounts payable;
•expectations regarding the adoption 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, tax credits, efficiency standards, or other waivers, benefits, or incentives that impact the demand for low-carbon fuels; and
•expectations regarding our low-carbon fuels strategy, publicly disclosed GHG emissions reductions/displacements target, 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, as well as actions in response to supply and demand imbalances for refined petroleum products;
•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;
36
Table of Contents
•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;
•the effects of war or hostilities, and political and economic conditions, in or affecting geographic areas that produce crude oil or other feedstocks, are key areas for crude oil and refined petroleum product transportation, or produce or consume refined petroleum products, renewable diesel, SAF, ethanol, or corn-related co-products;
•the ability of the members of the Organization of the Petroleum Exporting Countries (OPEC) and other petroleum-producing nations to collectively 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 sequestration, carbon capture and storage, and low-carbon fuels, including ethanol blending levels, or affecting the price of natural gas, electricity, and/or water;
•the volatility in the market price and availability of compliance credits (primarily RINs needed to comply with the RFS) under the Renewable and Low-Carbon Fuel Programs, as well as governmental actions regarding, and the impact associated with, small refinery exemptions and reallocations of compliance obligations under the RFS;
•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 projects;
•natural disasters/acts of nature and severe weather events, such as earthquakes, storms, hurricanes, droughts, floods, wildfires, and other similar events, which can unforeseeably affect the price or availability of electricity, natural gas, crude oil, waste and renewable feedstocks,
37
Table of Contents
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, procedures, 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 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 tariffs, duties, and other trade restrictions, including any refunds related thereto, de-globalized supply chains or the diversification of historic trade patterns, 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, government shutdowns, 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, 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, cash requirements, 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, 2025.
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
38
Table of Contents
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.
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 Refining, Renewable Diesel, and Ethanol segment margin; adjusted operating income (including adjusted operating income for each of our reportable segments, as applicable); Refining segment adjusted operating expenses (excluding depreciation and amortization expense); 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. Refer to the tables in note (d), beginning on page 56, for the reconciliations of Refining, Renewable Diesel, and Ethanol segment margin; adjusted operating income (including adjusted operating income for each of our reportable segments, as applicable); and adjusted Refining operating expenses (excluding depreciation and amortization expense) to their most directly comparable GAAP financial measures. Also in note (d), 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 third quarter and first nine months of 2026 benefited from resilient global demand for petroleum-based transportation fuels amid constrained worldwide supply. Geopolitical developments continued to disrupt global commodity markets and further limited refining capacity, exacerbating the imbalance between supply and demand. These conditions led to higher market prices for petroleum-based transportation fuels, as well as increased prices for crude oil and other feedstocks used in their production. Despite higher feedstock costs, the spread between product prices and input costs resulted in strong refining margins during the third quarter and first nine months of 2026. However, refining margins remain sensitive to changes in global supply and demand dynamics, feedstock costs, and geopolitical developments, and sustained price volatility or shifts in these factors could impact future results.
Our results for the first nine months of 2026 were also impacted by the phased idling of processing units and cessation of refining operations at our Benicia Refinery, which was completed by the end of April. See Note 2 of Condensed Notes to Consolidated Financial Statements for additional information related to our Benicia Refinery.
In addition, on March 23, 2026, our Port Arthur Refinery experienced a fire in one of its distillate hydrotreater units, which prompted a full shut-down of the refinery. The refinery resumed operations in April 2026 at reduced throughput rates and returned to normal throughput rates during the second quarter. See Note 5 of Condensed Notes to Consolidated Financial Statements for additional information related to this incident.
39
Table of Contents
The resilient demand for our products and continued strength in refining margins are the primary contributors to us reporting $6.8 billion and $11.8 billion of net income attributable to Valero stockholders for the third quarter of 2026 and the first nine months of 2026, respectively. Our operating results, including operating results by segment, are described in the following summary under “Third Quarter Results” and “First Nine Months Results,” and detailed descriptions can be found under “RESULTS OF OPERATIONS” beginning on page 43.
Our operations generated $13.9 billion of cash during the first nine months of 2026. Also, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036 during the first nine months of 2026, 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, was used to make $1.2 billion of capital investments in our business, return $7.3 billion to our stockholders through purchases of common stock for treasury and dividend payments, and repay $526 million of our public debt that matured in the first nine months of 2026. As a result of this and other activity, our cash, cash equivalents, and restricted cash increased by $5.2 billion during the first nine months of 2026 to $10.0 billion as of September 30, 2026. We had $14.7 billion in liquidity as of September 30, 2026. 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.
Third Quarter Results
For the third quarter of 2026, we reported net income attributable to Valero stockholders of $6.8 billion compared to $1.1 billion for the third quarter of 2025. The increase of $5.7 billion was primarily due to an increase in operating income of $7.6 billion, partially offset by an increase in income tax expense of $1.7 billion and an increase in net income attributable to noncontrolling interests of $190 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 (d) beginning on page 56.
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Refining segment: | |||||||||||||||||
| Operating income | $ | 8,782 | $ | 1,610 | $ | 7,172 | |||||||||||
| Adjusted operating income | 8,774 | 1,665 | 7,109 | ||||||||||||||
| Renewable Diesel segment: | |||||||||||||||||
| Operating income (loss) | 353 | (28) | 381 | ||||||||||||||
| Ethanol segment: | |||||||||||||||||
| Operating income | 272 | 183 | 89 | ||||||||||||||
| Total company: | |||||||||||||||||
| Operating income | 9,073 | 1,509 | 7,564 | ||||||||||||||
| Adjusted operating income | 9,084 | 1,564 | 7,520 | ||||||||||||||
While our operating income increased by $7.6 billion in the third quarter of 2026 compared to the third quarter of 2025, adjusted operating income increased by $7.5 billion primarily due to the following:
•Refining segment. Refining segment adjusted operating income increased by $7.1 billion primarily due to higher gasoline and distillate margins, partially offset by a decrease in throughput volumes.
40
Table of Contents
•Renewable Diesel segment. Renewable Diesel segment operating income increased by $381 million primarily due to higher product prices (primarily renewable diesel), partially offset by higher feedstock costs.
•Ethanol segment. Ethanol segment operating income increased by $89 million primarily due to the recognition of clean fuel production credits in 2026 and higher ethanol and corn-related co-product prices, partially offset by higher corn prices.
First Nine Months Results
For the first nine months of 2026, we reported net income attributable to Valero stockholders of $11.8 billion compared to $1.2 billion for the first nine months of 2025. The increase of $10.6 billion was primarily due to an increase in operating income of $14.4 billion, partially offset by an increase in income tax expense of $3.2 billion and an increase in net income attributable to noncontrolling interests of $710 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 (d) beginning on page 56.
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Refining segment: | |||||||||||||||||
| Operating income | $ | 15,058 | $ | 2,346 | $ | 12,712 | |||||||||||
| Adjusted operating income | 15,048 | 3,540 | 11,508 | ||||||||||||||
| Renewable Diesel segment: | |||||||||||||||||
| Operating income (loss) | 1,209 | (248) | 1,457 | ||||||||||||||
| Ethanol segment: | |||||||||||||||||
| Operating income | 680 | 257 | 423 | ||||||||||||||
| Total company: | |||||||||||||||||
| Operating income | 16,000 | 1,606 | 14,394 | ||||||||||||||
| Adjusted operating income | 16,017 | 2,800 | 13,217 | ||||||||||||||
While our operating income increased by $14.4 billion in the first nine months of 2026 compared to the first nine months of 2025, adjusted operating income increased by $13.2 billion primarily due to the following:
•Refining segment. Refining segment adjusted operating income increased by $11.5 billion primarily due to higher gasoline and distillate margins, partially offset by lower margins for products other than gasoline and distillate.
•Renewable Diesel segment. Renewable Diesel segment operating income increased by $1.5 billion primarily due to higher product prices (primarily renewable diesel), partially offset by higher feedstock costs.
•Ethanol segment. Ethanol segment operating income increased by $423 million primarily due to the recognition of clean fuel production credits in 2026 and higher ethanol and corn-related co-product prices.
41
Table of Contents
Outlook
Many uncertainties exist with respect to the supply and demand balances in petroleum-based product markets worldwide. While it is difficult to predict future worldwide economic and geopolitical activity and the resulting impact on product supply and demand, we have noted several factors below that have impacted or may impact our results of operations during the fourth quarter of 2026.
•Although global demand for gasoline, diesel, and jet fuel has been resilient, demand growth is expected to remain measured amid market disruptions related to ongoing conflict in the Middle East.
•Continued disruption to global refining capacity is expected due to unplanned outages at refineries and export infrastructure in the Middle East and Russia resulting from ongoing conflicts in those regions, as well as reduced production in other regions driven by crude supply constraints. As a result, global refined product inventories are expected to remain low.
•Crude oil differentials are expected to remain volatile as ongoing conflict in the Middle East continues to disrupt global transportation routes. However, use of alternative transportation routes that partially bypass the Strait of Hormuz, coordinated releases from strategic petroleum reserves, and increased crude oil production from other regions could mitigate supply disruptions and ease volatility in the crude oil market.
•Renewable diesel demand is expected to remain strong as a result of the increase in the renewable volume obligations (RVOs) imposed by the EPA for 2026 and 2027, particularly with respect to biomass-based diesel.
•Ethanol demand is expected to follow typical seasonal patterns, with margins further supported by the recognition of clean fuel production credits.
42
Table of Contents
RESULTS OF OPERATIONS
The following tables, including the reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures in note (d) beginning on page 56, 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 56 through 59.
Third Quarter Results -
Financial Highlights by Segment and Total Company
(millions of dollars)
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Refining | Renewable Diesel | Ethanol | Corporate and Other | Total | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
Revenues from external customers | $ | 44,369 | $ | 664 | $ | 1,065 | $ | — | $ | 46,098 | |||||||||||||||||||
Intersegment revenues | 3 | 1,729 | 352 | (2,084) | — | ||||||||||||||||||||||||
Total revenues | 44,372 | 2,393 | 1,417 | (2,084) | 46,098 | ||||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||||||||
| Cost of materials and other | 31,988 | 1,883 | 962 | (2,092) | 32,741 | ||||||||||||||||||||||||
| Taxes other than income taxes | 1,654 | — | — | — | 1,654 | ||||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 1,376 | 86 | 165 | — | 1,627 | ||||||||||||||||||||||||
| Depreciation and amortization expense | 580 | 71 | 18 | — | 669 | ||||||||||||||||||||||||
Total cost of sales | 35,598 | 2,040 | 1,145 | (2,092) | 36,691 | ||||||||||||||||||||||||
| Other operating expenses | (8) | — | — | 19 | 11 | ||||||||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 308 | 308 | ||||||||||||||||||||||||
| Depreciation and amortization expense | — | — | — | 15 | 15 | ||||||||||||||||||||||||
Operating income by segment | $ | 8,782 | $ | 353 | $ | 272 | $ | (334) | 9,073 | ||||||||||||||||||||
Other income, net | 127 | ||||||||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | (144) | ||||||||||||||||||||||||||||
Income before income tax expense | 9,056 | ||||||||||||||||||||||||||||
Income tax expense | 2,067 | ||||||||||||||||||||||||||||
Net income | 6,989 | ||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | 161 | ||||||||||||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 6,828 | |||||||||||||||||||||||||||
43
Table of Contents
Third Quarter Results -
Financial Highlights by Segment and Total Company (continued)
(millions of dollars)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Refining | Renewable Diesel | Ethanol | Corporate and Other | Total | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
Revenues from external customers | $ | 30,414 | $ | 719 | $ | 1,035 | $ | — | $ | 32,168 | |||||||||||||||||||
Intersegment revenues | 1 | 484 | 259 | (744) | — | ||||||||||||||||||||||||
Total revenues | 30,415 | 1,203 | 1,294 | (744) | 32,168 | ||||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||||||||
| Cost of materials and other | 24,858 | 1,077 | 942 | (745) | 26,132 | ||||||||||||||||||||||||
| Taxes other than income taxes | 1,826 | — | — | — | 1,826 | ||||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) (c) | 1,388 | 78 | 148 | — | 1,614 | ||||||||||||||||||||||||
| Depreciation and amortization expense | 728 | 76 | 21 | (1) | 824 | ||||||||||||||||||||||||
Total cost of sales | 28,800 | 1,231 | 1,111 | (746) | 30,396 | ||||||||||||||||||||||||
| Other operating expenses | 5 | — | — | — | 5 | ||||||||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 246 | 246 | ||||||||||||||||||||||||
| Depreciation and amortization expense | — | — | — | 12 | 12 | ||||||||||||||||||||||||
Operating income (loss) by segment | $ | 1,610 | $ | (28) | $ | 183 | $ | (256) | 1,509 | ||||||||||||||||||||
Other income, net | 86 | ||||||||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | (139) | ||||||||||||||||||||||||||||
Income before income tax expense | 1,456 | ||||||||||||||||||||||||||||
Income tax expense | 390 | ||||||||||||||||||||||||||||
Net income | 1,066 | ||||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests | (29) | ||||||||||||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 1,095 | |||||||||||||||||||||||||||
44
Table of Contents
Third Quarter Results -
Average Market Reference Prices and Differentials
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Refining | |||||||||||
| Feedstocks (dollars per barrel) | |||||||||||
| Brent crude oil | $ | 91.61 | $ | 68.14 | |||||||
| Brent less West Texas Intermediate (WTI) crude oil | 5.37 | 3.11 | |||||||||
| Brent less WTI Houston crude oil | 4.29 | 2.09 | |||||||||
| Brent less Dated Brent crude oil | (5.75) | (0.91) | |||||||||
| Brent less Argus Sour Crude Index crude oil | 6.07 | 3.46 | |||||||||
Brent less Maya crude oil | 13.37 | 7.14 | |||||||||
| Brent less Western Canadian Select Houston crude oil | 16.49 | 6.93 | |||||||||
WTI crude oil | 86.24 | 65.03 | |||||||||
| Natural gas (dollars per million British thermal units) | 2.47 | 2.70 | |||||||||
RVO (dollars per barrel) (e) | 14.34 | 6.38 | |||||||||
Product margins (RVO adjusted unless otherwise noted) (dollars per barrel) | |||||||||||
| U.S. Gulf Coast: | |||||||||||
Conventional Blendstock for Oxygenate Blending (CBOB) gasoline less Brent | 24.08 | 7.78 | |||||||||
Ultra-low-sulfur (ULS) diesel less Brent | 72.27 | 21.05 | |||||||||
| Polymer Grade Propylene less Brent (not RVO adjusted) | (17.02) | (8.22) | |||||||||
U.S. Mid-Continent: | |||||||||||
CBOB gasoline less WTI | 34.16 | 12.79 | |||||||||
ULS diesel less WTI | 73.54 | 26.16 | |||||||||
North Atlantic: | |||||||||||
CBOB gasoline less Brent | 33.46 | 14.58 | |||||||||
ULS diesel less Brent | 77.12 | 24.64 | |||||||||
U.S. West Coast: | |||||||||||
California Reformulated Gasoline Blendstock for Oxygenate Blending 87 gasoline less Brent | 50.89 | 26.69 | |||||||||
| California Air Resources Board diesel less Brent | 81.83 | 29.83 | |||||||||
45
Table of Contents
Third Quarter Results -
Average Market Reference Prices and Differentials (continued)
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Renewable Diesel | |||||||||||
New York Mercantile Exchange ULS diesel (dollars per gallon) | $ | 4.33 | $ | 2.35 | |||||||
| Biodiesel RIN (dollars per RIN) | 2.23 | 1.13 | |||||||||
| California LCFS carbon credit (dollars per metric ton) | 80.60 | 53.36 | |||||||||
| U.S. Gulf Coast (USGC) used cooking oil (dollars per pound) | 0.76 | 0.62 | |||||||||
| USGC DCO (dollars per pound) | 0.77 | 0.64 | |||||||||
| USGC fancy bleachable tallow (dollars per pound) | 0.75 | 0.62 | |||||||||
| Ethanol | |||||||||||
| Chicago Board of Trade corn (dollars per bushel) | 4.78 | 4.02 | |||||||||
| New York Harbor ethanol (dollars per gallon) | 2.10 | 1.96 | |||||||||
Total Company, Corporate, and Other
The following table includes selected financial data for the total company, corporate, and other for the third quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Revenues | $ | 46,098 | $ | 32,168 | $ | 13,930 | |||||||||||
| Cost of sales | 36,691 | 30,396 | 6,295 | ||||||||||||||
| Operating income | 9,073 | 1,509 | 7,564 | ||||||||||||||
Adjusted operating income (see note (d)) | 9,084 | 1,564 | 7,520 | ||||||||||||||
Income tax expense | 2,067 | 390 | 1,677 | ||||||||||||||
Net income (loss) attributable to noncontrolling interests | 161 | (29) | 190 | ||||||||||||||
Revenues increased by $13.9 billion in the third quarter of 2026 compared to the third quarter of 2025 primarily due to increases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This increase in revenues was partially offset by an increase in cost of sales of $6.3 billion primarily due to increases in crude oil and other feedstock costs.
Operating income increased by $7.6 billion in the third quarter of 2026; however, adjusted operating income, which excludes the adjustments in the table in note (d), increased by $7.5 billion, from $1.6 billion in the third quarter of 2025 to $9.1 billion in the third quarter of 2026. The primary components of this $7.5 billion increase in adjusted operating income are discussed by segment in the segment analyses that follow.
Income tax expense increased by $1.7 billion in the third quarter of 2026 compared to the third quarter of 2025 primarily as a result of higher income before income tax expense.
46
Table of Contents
Net income attributable to noncontrolling interests increased by $190 million in the third quarter of 2026 compared to the third quarter of 2025 primarily due to higher earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 7 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis on page 48.
Refining Segment Results
The following table includes selected financial and operating data of our Refining segment for the third quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Operating income | $ | 8,782 | $ | 1,610 | $ | 7,172 | |||||||||||
Adjusted operating income (see note (d)) | 8,774 | 1,665 | 7,109 | ||||||||||||||
Refining margin (see note (d)) | 10,730 | 3,731 | 6,999 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) (see note (c)) | 1,376 | 1,388 | (12) | ||||||||||||||
Adjusted operating expenses (excluding depreciation and amortization expense reflected below) (see note (d)) | 1,376 | 1,338 | 38 | ||||||||||||||
| Depreciation and amortization expense | 580 | 728 | (148) | ||||||||||||||
Throughput volumes (thousand barrels per day) (see note (f)) | 2,972 | 3,087 | (115) | ||||||||||||||
Refining segment operating income increased by $7.2 billion in the third quarter of 2026; however, Refining segment adjusted operating income, which excludes the adjustments in the table in note (d), increased by $7.1 billion in the third quarter of 2026 compared to the third quarter of 2025 primarily due to an increase in Refining segment margin of $7.0 billion.
Refining segment margin is primarily affected by the prices for the petroleum-based transportation fuels that we sell and the cost of crude oil and other feedstocks that we process. The table on page 45 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the third quarter of 2026 compared to the third quarter of 2025.
The increase in Refining segment margin was primarily due to the following:
•An increase in distillate margins had a favorable impact of approximately $5.5 billion.
•An increase in gasoline margins had a favorable impact of approximately $2.3 billion.
•A decrease in throughput volumes of 115,000 barrels per day had an unfavorable impact of approximately $420 million. As discussed in Note 2 of Condensed Notes to Consolidated Financial Statements, we idled the processing units and ceased operation of the fuel production units at our Benicia Refinery by the end of April 2026. As a result of these actions, throughput volumes were lower in the third quarter of 2026 compared to the third quarter of 2025.
47
Table of Contents
Renewable Diesel Segment Results
The following table includes selected financial and operating data of our Renewable Diesel segment for the third quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Operating income (loss) | $ | 353 | $ | (28) | $ | 381 | |||||||||||
Renewable Diesel margin (see note (d)) | 510 | 126 | 384 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 86 | 78 | 8 | ||||||||||||||
| Depreciation and amortization expense | 71 | 76 | (5) | ||||||||||||||
Sales volumes (thousand gallons per day) (see note (f)) | 3,423 | 2,717 | 706 | ||||||||||||||
Renewable Diesel segment operating income increased by $381 million in the third quarter of 2026 compared to the third quarter of 2025 primarily due to an increase in Renewable Diesel margin of $384 million.
Renewable Diesel segment margin is primarily affected by the prices for the renewable fuels that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of the feedstocks that we process. The table on page 46 reflects market reference prices that we believe impacted our Renewable Diesel segment margin in the third quarter of 2026 compared to the third quarter of 2025.
The increase in Renewable Diesel segment margin was primarily due to the following:
•An increase in product prices, primarily renewable diesel, had a favorable impact of approximately $1.2 billion.
•An increase in the cost of the feedstocks that we process had an unfavorable impact of approximately $750 million.
48
Table of Contents
Ethanol Segment Results
The following table includes selected financial and operating data of our Ethanol segment for the third quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Three Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Operating income | $ | 272 | $ | 183 | $ | 89 | |||||||||||
Ethanol margin (see note (d)) | 455 | 352 | 103 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 165 | 148 | 17 | ||||||||||||||
| Depreciation and amortization expense | 18 | 21 | (3) | ||||||||||||||
Production volumes (thousand gallons per day) (see note (f)) | 4,799 | 4,635 | 164 | ||||||||||||||
Ethanol segment operating income increased by $89 million in the third quarter of 2026 compared to the third quarter of 2025 primarily due to an increase in Ethanol segment margin of $103 million.
Ethanol segment margin is primarily affected by prices for the ethanol and corn-related co-products that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of corn that we process. The table on page 46 reflects market reference prices that we believe impacted our Ethanol segment margin in the third quarter of 2026 compared to the third quarter of 2025.
The increase in Ethanol segment margin was primarily due to the following:
•The recognition of clean fuel production credits had a favorable impact of $92 million. Provisions of the One Big Beautiful Bill Act (OBBB) became effective on January 1, 2026, making certain ethanol produced and sold by us eligible for the clean fuel production credit. During the first nine months of 2026, updated emissions modeling methodologies were released and additional actions were taken that increased the amount of clean fuel production credits generated from qualifying ethanol sales. Accordingly, we recognized clean fuel production credits on qualifying sales of ethanol in the third quarter of 2026, along with an amount related to qualifying sales in the first six months of 2026.
•An increase in ethanol prices had a favorable impact of approximately $55 million.
•An increase in prices for the corn-related co-products that we produce, primarily dry distillers grains (DDGs) and inedible DCOs, had a favorable impact of approximately $30 million.
•An increase in corn prices had an unfavorable impact of approximately $75 million.
49
Table of Contents
First Nine Months Results -
Financial Highlights by Segment and Total Company
(millions of dollars)
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Refining | Renewable Diesel | Ethanol | Corporate and Other | Total | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
Revenues from external customers | $ | 117,474 | $ | 2,551 | $ | 2,930 | $ | — | $ | 122,955 | |||||||||||||||||||
Intersegment revenues | 7 | 3,938 | 965 | (4,910) | — | ||||||||||||||||||||||||
Total revenues | 117,481 | 6,489 | 3,895 | (4,910) | 122,955 | ||||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||||||||
| Cost of materials and other (a) | 91,434 | 4,798 | 2,678 | (4,854) | 94,056 | ||||||||||||||||||||||||
| Taxes other than income taxes | 5,023 | — | — | — | 5,023 | ||||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 3,985 | 262 | 481 | — | 4,728 | ||||||||||||||||||||||||
| Depreciation and amortization expense | 1,947 | 220 | 56 | (3) | 2,220 | ||||||||||||||||||||||||
Total cost of sales | 102,389 | 5,280 | 3,215 | (4,857) | 106,027 | ||||||||||||||||||||||||
| Other operating expenses | 34 | — | — | 27 | 61 | ||||||||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 826 | 826 | ||||||||||||||||||||||||
| Depreciation and amortization expense | — | — | — | 41 | 41 | ||||||||||||||||||||||||
Operating income by segment | $ | 15,058 | $ | 1,209 | $ | 680 | $ | (947) | 16,000 | ||||||||||||||||||||
Other income, net | 375 | ||||||||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | (429) | ||||||||||||||||||||||||||||
Income before income tax expense | 15,946 | ||||||||||||||||||||||||||||
Income tax expense | 3,562 | ||||||||||||||||||||||||||||
Net income | 12,384 | ||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | 573 | ||||||||||||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 11,811 | |||||||||||||||||||||||||||
50
Table of Contents
First Nine Months Results -
Financial Highlights by Segment and Total Company (continued)
(millions of dollars)
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Refining | Renewable Diesel | Ethanol | Corporate and Other | Total | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
Revenues from external customers | $ | 87,495 | $ | 1,777 | $ | 3,043 | $ | — | $ | 92,315 | |||||||||||||||||||
Intersegment revenues | 5 | 1,424 | 681 | (2,110) | — | ||||||||||||||||||||||||
Total revenues | 87,500 | 3,201 | 3,724 | (2,110) | 92,315 | ||||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||||||||
| Cost of materials and other | 73,015 | 3,016 | 2,962 | (2,135) | 76,858 | ||||||||||||||||||||||||
| Taxes other than income taxes | 4,980 | — | — | — | 4,980 | ||||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) (c) | 3,986 | 228 | 446 | (1) | 4,659 | ||||||||||||||||||||||||
| Depreciation and amortization expense | 2,029 | 205 | 59 | (3) | 2,290 | ||||||||||||||||||||||||
Total cost of sales | 84,010 | 3,449 | 3,467 | (2,139) | 88,787 | ||||||||||||||||||||||||
| Asset impairment loss (b) | 1,131 | — | — | — | 1,131 | ||||||||||||||||||||||||
| Other operating expenses | 13 | — | — | — | 13 | ||||||||||||||||||||||||
General and administrative expenses (excluding depreciation and amortization expense reflected below) | — | — | — | 727 | 727 | ||||||||||||||||||||||||
| Depreciation and amortization expense | — | — | — | 51 | 51 | ||||||||||||||||||||||||
Operating income (loss) by segment | $ | 2,346 | $ | (248) | $ | 257 | $ | (749) | 1,606 | ||||||||||||||||||||
Other income, net | 292 | ||||||||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | (417) | ||||||||||||||||||||||||||||
Income before income tax expense | 1,481 | ||||||||||||||||||||||||||||
Income tax expense | 404 | ||||||||||||||||||||||||||||
Net income | 1,077 | ||||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests | (137) | ||||||||||||||||||||||||||||
Net income attributable to Valero Energy Corporation stockholders | $ | 1,214 | |||||||||||||||||||||||||||
51
Table of Contents
First Nine Months Results -
Average Market Reference Prices and Differentials
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Refining | |||||||||||
| Feedstocks (dollars per barrel) | |||||||||||
| Brent crude oil | $ | 88.87 | $ | 69.87 | |||||||
| Brent less WTI crude oil | 5.06 | 3.08 | |||||||||
| Brent less WTI Houston crude oil | 3.44 | 2.02 | |||||||||
| Brent less Dated Brent crude oil | (5.49) | (0.91) | |||||||||
| Brent less ASCI crude oil | 4.71 | 2.68 | |||||||||
| Brent less Maya crude oil | 10.97 | 8.35 | |||||||||
| Brent less WCS Houston crude oil | 14.66 | 6.81 | |||||||||
WTI crude oil | 83.81 | 66.79 | |||||||||
| Natural gas (dollars per MMBtu) | 2.68 | 2.97 | |||||||||
RVO (dollars per barrel) (e) | 12.51 | 5.76 | |||||||||
Product margins (RVO adjusted unless otherwise noted) (dollars per barrel) | |||||||||||
| U.S. Gulf Coast: | |||||||||||
| CBOB gasoline less Brent | 14.17 | 6.78 | |||||||||
| ULS diesel less Brent | 47.80 | 17.51 | |||||||||
| Polymer Grade Propylene less Brent (not RVO adjusted) | (13.22) | (3.07) | |||||||||
| U.S. Mid-Continent: | |||||||||||
| CBOB gasoline less WTI | 17.87 | 12.32 | |||||||||
| ULS diesel less WTI | 46.49 | 21.09 | |||||||||
| North Atlantic: | |||||||||||
| CBOB gasoline less Brent | 20.56 | 10.97 | |||||||||
| ULS diesel less Brent | 53.72 | 21.44 | |||||||||
| U.S. West Coast: | |||||||||||
| CARBOB 87 gasoline less Brent | 40.62 | 28.94 | |||||||||
| CARB diesel less Brent | 56.98 | 23.47 | |||||||||
52
Table of Contents
First Nine Months Results -
Average Market Reference Prices and Differentials (continued)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Renewable Diesel | |||||||||||
New York Mercantile Exchange ULS diesel (dollars per gallon) | $ | 3.66 | $ | 2.30 | |||||||
| Biodiesel RIN (dollars per RIN) | 1.93 | 1.00 | |||||||||
| California LCFS carbon credit (dollars per metric ton) | 71.43 | 57.30 | |||||||||
| USGC UCO (dollars per pound) | 0.74 | 0.56 | |||||||||
| USGC DCO (dollars per pound) | 0.76 | 0.58 | |||||||||
| USGC Tallow (dollars per pound) | 0.73 | 0.56 | |||||||||
| Ethanol | |||||||||||
| CBOT corn (dollars per bushel) | 4.53 | 4.42 | |||||||||
| New York Harbor ethanol (dollars per gallon) | 1.97 | 1.87 | |||||||||
Total Company, Corporate, and Other
The following table includes selected financial data for the total company, corporate, and other for the first nine months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Revenues | $ | 122,955 | $ | 92,315 | $ | 30,640 | |||||||||||
| Cost of sales (see note (a)) | 106,027 | 88,787 | 17,240 | ||||||||||||||
| Asset impairment loss (see note (b)) | — | 1,131 | (1,131) | ||||||||||||||
Operating income | 16,000 | 1,606 | 14,394 | ||||||||||||||
Adjusted operating income (see note (d)) | 16,017 | 2,800 | 13,217 | ||||||||||||||
Income tax expense | 3,562 | 404 | 3,158 | ||||||||||||||
Net income (loss) attributable to noncontrolling interests | 573 | (137) | 710 | ||||||||||||||
Revenues increased by $30.6 billion in the first nine months of 2026 compared to the first nine months of 2025 primarily due to increases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This increase in revenues, along with the effect of an asset impairment loss of $1.1 billion in the first nine months of 2025 (see note (b)), was partially offset by an increase in cost of sales of $17.2 billion primarily due to increases in crude oil and other feedstock costs.
Operating income increased by $14.4 billion in the first nine months of 2026; however, adjusted operating income, which excludes the adjustments in the table in note (d), increased by $13.2 billion, from $2.8 billion in the first nine months of 2025 to $16.0 billion in the first nine months of 2026. The primary components of this $13.2 billion increase in adjusted operating income are discussed by segment in the segment analyses that follow.
Income tax expense increased by $3.2 billion in the first nine months of 2026 compared to the first nine months of 2025 primarily as a result of higher income before income tax expense.
53
Table of Contents
Net income attributable to noncontrolling interests increased by $710 million in the first nine months of 2026 compared to the first nine months of 2025 primarily due to higher earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 7 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis on page 55.
Refining Segment Results
The following table includes selected financial and operating data of our Refining segment for the first nine months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
Operating income | $ | 15,058 | $ | 2,346 | $ | 12,712 | |||||||||||
Adjusted operating income (see note (d)) | 15,048 | 3,540 | 11,508 | ||||||||||||||
Refining margin (see note (d)) | 20,980 | 9,505 | 11,475 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) (see note (c)) | 3,985 | 3,986 | (1) | ||||||||||||||
Adjusted operating expenses (excluding depreciation and amortization expense reflected below) (see note (d)) | 3,985 | 3,936 | 49 | ||||||||||||||
| Depreciation and amortization expense | 1,947 | 2,029 | (82) | ||||||||||||||
| Asset impairment loss (see note (b)) | — | 1,131 | (1,131) | ||||||||||||||
Throughput volumes (thousand barrels per day) (see note (f)) | 2,946 | 2,947 | (1) | ||||||||||||||
Refining segment operating income increased by $12.7 billion in the first nine months of 2026 compared to the first nine months of 2025; however, Refining segment adjusted operating income, which excludes the adjustments in the table in note (d), increased by $11.5 billion in the first nine months of 2026 compared to the first nine months of 2025 primarily due to an increase in Refining segment margin of $11.5 billion.
Refining segment margin is primarily affected by the prices for the petroleum-based transportation fuels that we sell and the cost of crude oil and other feedstocks that we process. The table on page 52 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the first nine months of 2026 compared to the first nine months of 2025.
The increase in Refining segment margin was primarily due to the following:
•An increase in distillate margins had a favorable impact of approximately $9.2 billion.
•An increase in gasoline margins had a favorable impact of approximately $2.8 billion.
•A decrease in margins for products other than gasoline and distillate had an unfavorable impact of approximately $510 million.
54
Table of Contents
Renewable Diesel Segment Results
The following table includes selected financial and operating data of our Renewable Diesel segment for the first nine months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
Operating income (loss) | $ | 1,209 | $ | (248) | $ | 1,457 | |||||||||||
Renewable Diesel margin (see note (d)) | 1,691 | 185 | 1,506 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 262 | 228 | 34 | ||||||||||||||
| Depreciation and amortization expense | 220 | 205 | 15 | ||||||||||||||
Sales volumes (thousand gallons per day) (see note (f)) | 3,429 | 2,629 | 800 | ||||||||||||||
Renewable Diesel segment operating income increased by $1.5 billion in the first nine months of 2026 compared to the first nine months of 2025 primarily due to an increase in Renewable Diesel segment margin of $1.5 billion.
Renewable Diesel segment margin is primarily affected by the prices for the renewable fuels that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of the feedstocks that we process. The table on page 53 reflects market reference prices that we believe impacted our Renewable Diesel segment margin in the first nine months of 2026 compared to the first nine months of 2025.
The increase in Renewable Diesel segment margin was primarily due to the following:
•An increase in product prices, primarily renewable diesel, had a favorable impact of approximately $2.6 billion.
•An increase in the cost of the feedstocks that we process had an unfavorable impact of approximately $1.1 billion.
Ethanol Segment Results
The following table includes selected financial and operating data of our Ethanol segment for the first nine months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
Operating income | $ | 680 | $ | 257 | $ | 423 | |||||||||||
Ethanol margin (see note (d)) | 1,217 | 762 | 455 | ||||||||||||||
Operating expenses (excluding depreciation and amortization expense reflected below) | 481 | 446 | 35 | ||||||||||||||
| Depreciation and amortization expense | 56 | 59 | (3) | ||||||||||||||
Production volumes (thousand gallons per day) (see note (f)) | 4,695 | 4,562 | 133 | ||||||||||||||
55
Table of Contents
Ethanol segment operating income increased by $423 million in the first nine months of 2026 compared to the first nine months of 2025 primarily due to an increase in Ethanol segment margin of $455 million.
Ethanol segment margin is primarily affected by prices for the ethanol and corn-related co-products that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of corn that we process. The table on page 53 reflects market reference prices that we believe impacted our Ethanol segment margin in the first nine months of 2026 compared to the first nine months of 2025.
The increase in Ethanol segment margin was primarily due to the following:
•The recognition of clean fuel production credits had a favorable impact of $211 million. Provisions of the OBBB became effective on January 1, 2026, making certain ethanol produced and sold by us eligible for the clean fuel production credit. Accordingly, we recognized clean fuel production credits on qualifying sales of ethanol in the first nine months of 2026.
•An increase in ethanol prices had a favorable impact of approximately $150 million.
•An increase in prices for the corn-related co-products that we produce, primarily DDGs and inedible DCOs, had a favorable impact of approximately $80 million.
________________________
The following notes relate to references on pages 43 through 55.
(a)Cost of materials and other for the nine months ended September 30, 2026 includes a benefit of $44 million resulting from the liquidation of certain LIFO inventory layers attributable to our Refining segment. Inventory levels for our West Coast refining operations decreased during 2026 due to the phased idling of processing units and cessation of refining operations at our Benicia Refinery, which was completed by the end of April 2026. Consequently, inventory levels at December 31, 2026 are expected to remain below those at December 31, 2025.
(b)In March 2025, we approved a plan to idle the processing units and cease refining operations at our Benicia Refinery by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result, we evaluated the assets of the Benicia and Wilmington refineries for impairment as of March 31, 2025 and concluded that the carrying values of these assets were not recoverable. Therefore, we reduced the carrying values of the Benicia and Wilmington refineries to their estimated fair values and recognized a combined asset impairment loss of $1.1 billion in the nine months ended September 30, 2025.
(c)Operating expenses (excluding depreciation and amortization expense) for the three and nine months ended September 30, 2025 includes employee retention and separation costs of $50 million related to the Benicia Refinery. In connection with our plan to cease refining operations at the Benicia Refinery, we implemented a transition plan for eligible employees that included retention incentive payments and separation benefits.
(d)We use certain financial measures (as noted below) that are not defined under GAAP and are considered to be non-GAAP measures.
We have defined these non-GAAP measures and believe they are useful to the external users of our financial statements, including industry analysts, investors, lenders, and rating agencies. We believe these measures are useful to assess our ongoing financial performance because, when reconciled to their most comparable GAAP measures, they provide improved comparability between periods after adjusting for certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These non-GAAP measures should not be considered as alternatives to their most comparable GAAP measures nor should they be considered in isolation or as a substitute for an analysis of our results of operations
56
Table of Contents
as reported under GAAP. In addition, these non-GAAP measures may not be comparable to similarly titled measures used by other companies because we may define them differently, which diminishes their utility.
Non-GAAP measures are as follows (in millions):
◦Refining margin is defined as Refining segment operating income excluding the LIFO liquidation adjustment, operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, the asset impairment loss, and other operating expenses, as reflected in the table below.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of Refining operating income to Refining margin | |||||||||||||||||||||||
| Refining operating income | $ | 8,782 | $ | 1,610 | $ | 15,058 | $ | 2,346 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
LIFO liquidation adjustment (see note (a)) | — | — | (44) | — | |||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense) (see note (c)) | 1,376 | 1,388 | 3,985 | 3,986 | |||||||||||||||||||
| Depreciation and amortization expense | 580 | 728 | 1,947 | 2,029 | |||||||||||||||||||
Asset impairment loss (see note (b)) | — | — | — | 1,131 | |||||||||||||||||||
| Other operating expenses | (8) | 5 | 34 | 13 | |||||||||||||||||||
| Refining margin | $ | 10,730 | $ | 3,731 | $ | 20,980 | $ | 9,505 | |||||||||||||||
◦Renewable Diesel margin is defined as Renewable Diesel segment operating income (loss) excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense, as reflected in the table below.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of Renewable Diesel operating income (loss) to Renewable Diesel margin | |||||||||||||||||||||||
| Renewable Diesel operating income (loss) | $ | 353 | $ | (28) | $ | 1,209 | $ | (248) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense) (see note (c)) | 86 | 78 | 262 | 228 | |||||||||||||||||||
| Depreciation and amortization expense | 71 | 76 | 220 | 205 | |||||||||||||||||||
| Renewable Diesel margin | $ | 510 | $ | 126 | $ | 1,691 | $ | 185 | |||||||||||||||
57
Table of Contents
◦Ethanol margin is defined as Ethanol segment operating income excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense, as reflected in the table below.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of Ethanol operating income to Ethanol margin | |||||||||||||||||||||||
| Ethanol operating income | $ | 272 | $ | 183 | $ | 680 | $ | 257 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense) (see note (c)) | 165 | 148 | 481 | 446 | |||||||||||||||||||
| Depreciation and amortization expense | 18 | 21 | 56 | 59 | |||||||||||||||||||
| Ethanol margin | $ | 455 | $ | 352 | $ | 1,217 | $ | 762 | |||||||||||||||
◦Adjusted Refining operating income is defined as Refining segment operating income excluding the LIFO liquidation adjustment, employee retention and separation costs, the asset impairment loss, and other operating expenses, as reflected in the table below.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of Refining operating income to adjusted Refining operating income | |||||||||||||||||||||||
| Refining operating income | $ | 8,782 | $ | 1,610 | $ | 15,058 | $ | 2,346 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
LIFO liquidation adjustment (see note (a)) | — | — | (44) | — | |||||||||||||||||||
Employee retention and separation costs (see note (c)) | — | 50 | — | 50 | |||||||||||||||||||
Asset impairment loss (see note (b)) | — | — | — | 1,131 | |||||||||||||||||||
| Other operating expenses | (8) | 5 | 34 | 13 | |||||||||||||||||||
| Adjusted Refining operating income | $ | 8,774 | $ | 1,665 | $ | 15,048 | $ | 3,540 | |||||||||||||||
◦Adjusted operating income is defined as total company operating income excluding the LIFO liquidation adjustment, employee retention and separation costs, the asset impairment loss, and other operating expenses, as reflected in the table below.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of total company operating income to adjusted operating income | |||||||||||||||||||||||
| Total company operating income | $ | 9,073 | $ | 1,509 | $ | 16,000 | $ | 1,606 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
LIFO liquidation adjustment (see note (a)) | — | — | (44) | — | |||||||||||||||||||
Employee retention and separation costs (see note (c)) | — | 50 | — | 50 | |||||||||||||||||||
Asset impairment loss (see note (b)) | — | — | — | 1,131 | |||||||||||||||||||
| Other operating expenses | 11 | 5 | 61 | 13 | |||||||||||||||||||
| Adjusted operating income | $ | 9,084 | $ | 1,564 | $ | 16,017 | $ | 2,800 | |||||||||||||||
58
Table of Contents
◦Adjusted Refining operating expenses (excluding depreciation and amortization expense) is defined as Refining segment operating expenses (excluding depreciation and amortization expense) excluding employee retention and separation costs.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of Refining operating expenses (excluding depreciation and amortization expense) to adjusted Refining operating expenses (excluding depreciation and amortization expense) | |||||||||||||||||||||||
Operating expenses (excluding depreciation and amortization expense) | $ | 1,376 | $ | 1,388 | $ | 3,985 | $ | 3,986 | |||||||||||||||
Adjustment: Employee retention and separation costs (see note (c)) | — | (50) | — | (50) | |||||||||||||||||||
Adjusted Refining operating expenses (excluding depreciation and amortization expense) | $ | 1,376 | $ | 1,338 | $ | 3,985 | $ | 3,936 | |||||||||||||||
(e)The RVO cost represents the average market cost on a per barrel basis to comply with the RFS program. The RVO cost is calculated by multiplying (i) the average market price during the applicable period for the RINs associated with each class of renewable fuel (i.e., biomass-based diesel, cellulosic biofuel, advanced biofuel, and total renewable fuel) by (ii) the quotas for the volume of each class of renewable fuel that must be blended into petroleum-based transportation fuels consumed in the U.S., as set or proposed by the EPA, on a percentage basis for each class of renewable fuel and adding together the results of each calculation.
(f)We use throughput volumes, sales volumes, and production volumes for the Refining segment, Renewable Diesel segment, and Ethanol segment, respectively, due to their general use by others who operate facilities similar to those included in our segments.
59
Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
Our Liquidity
Our liquidity consisted of the following as of September 30, 2026 (in millions):
| Available capacity from our committed facilities (a): | ||||||||
| Valero Revolver | $ | 3,998 | ||||||
| Accounts receivable sales facility | 1,300 | |||||||
| Total available capacity | 5,298 | |||||||
| Cash and cash equivalents (b) | 9,441 | |||||||
Total liquidity | $ | 14,739 | ||||||
________________________
(a)Excludes the committed facilities of the consolidated VIEs.
(b)Excludes $399 million of cash and cash equivalents related to the consolidated VIEs that is for their use only.
Information about our outstanding borrowings, letters of credit issued, and availability under our credit facilities is reflected in Note 4 of Condensed Notes to Consolidated Financial Statements.
On March 10, 2026, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036. Proceeds from this debt issuance totaled $850 million before deducting the underwriting discount and other debt issuance costs. A portion of the net proceeds from this debt issuance was used for the repayment of the $100 million outstanding principal balance of our 7.65 percent Debentures due July 1, 2026 and the $426 million outstanding principal balance of our 3.400 percent Senior Notes due September 15, 2026. The remaining net proceeds are expected to be used for general corporate purposes, including the repayment, repurchase, or redemption of the $146 million outstanding principal amount of the 4.375 percent Senior Notes due December 15, 2026 issued by Valero Energy Partners LP and guaranteed by us.
We believe we have sufficient funds from operations and from available capacity under our credit facilities to fund our ongoing operating requirements and other commitments over the next 12 months and thereafter for the foreseeable future. We expect that, to the extent necessary, we can raise additional cash through equity or debt financings in the public and private capital markets or the arrangement of additional credit facilities. However, there can be no assurances regarding the availability of any future financings or additional credit facilities or whether such financings or additional credit facilities can be made available on terms that are acceptable to us.
60
Table of Contents
Cash Flows
Components of our cash flows are set forth below (in millions):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows provided by (used in): | |||||||||||
| Operating activities | $ | 13,902 | $ | 3,769 | |||||||
| Investing activities | (1,180) | (1,426) | |||||||||
| Financing activities: | |||||||||||
Debt issuances and borrowings | 3,250 | 5,999 | |||||||||
| Repayments of debt and finance lease obligations | (3,132) | (5,913) | |||||||||
| Return to stockholders: | |||||||||||
| Purchases of common stock for treasury | (6,198) | (1,534) | |||||||||
| Common stock dividend payments | (1,059) | (1,061) | |||||||||
| Return to stockholders | (7,257) | (2,595) | |||||||||
| Other financing activities | (295) | 79 | |||||||||
| Financing activities | (7,434) | (2,430) | |||||||||
| Effect of foreign exchange rate changes on cash | (132) | 199 | |||||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 5,156 | $ | 112 | |||||||
Cash Flows for the Nine Months Ended September 30, 2026
In the first nine months of 2026, we used the $13.9 billion of cash generated by our operations and the $3.3 billion from our debt issuance and borrowings to make $1.2 billion of investments in our business, repay $3.1 billion of debt and finance lease obligations, return $7.3 billion to our stockholders through purchases of our common stock for treasury and dividend payments, and increase our available cash on hand by $5.2 billion. The debt issuance, borrowings, and repayments are described in Note 4 of Condensed Notes to Consolidated Financial Statements.
As previously noted, our operations generated $13.9 billion of cash in the first nine months of 2026, driven primarily by net income of $12.4 billion and noncash charges to income of $1.9 billion, partially offset by an unfavorable change in working capital of $123 million. Noncash charges primarily included $2.3 billion of depreciation and amortization expense, partially offset by a $575 million deferred income tax benefit. Details regarding the components of the change in working capital, along with the reasons for the changes in those components, are described in Note 11 of Condensed Notes to Consolidated Financial Statements. In addition, see “RESULTS OF OPERATIONS” for an analysis of the significant components of our net income.
Our investing activities primarily consisted of $1.2 billion in capital investments, as defined on the following page under “Capital Investments,” of which $44 million related to capital investments made by DGD.
Cash Flows for the Nine Months Ended September 30, 2025
In the first nine months of 2025, we used the $3.8 billion of cash generated by our operations and the $6.0 billion from our debt issuance and borrowings to make $1.4 billion of investments in our business, repay $5.9 billion of debt and finance lease obligations, return $2.6 billion to our stockholders through purchases of our common stock for treasury and dividend payments, and increase our available cash on
61
Table of Contents
hand by $112 million. The debt issuance, borrowings, and repayments are described in Note 4 of Condensed Notes to Consolidated Financial Statements.
As previously noted, our operations generated $3.8 billion of cash in the first nine months of 2025, primarily resulting from net income of $1.1 billion, noncash charges to income of $2.5 billion, and a favorable change in working capital of $157 million. Noncash charges primarily included a $1.1 billion asset impairment loss associated with our operations in California, as described in Note 2 of Condensed Notes to Consolidated Financial Statements, and $2.3 billion of depreciation and amortization expense, partially offset by a $288 million deferred income tax benefit. Details regarding the components of the change in working capital, along with the reasons for the changes in those components, are described in Note 11 of Condensed Notes to Consolidated Financial Statements. In addition, see “RESULTS OF OPERATIONS” for an analysis of the significant components of our net income.
Our investing activities of $1.4 billion primarily consisted of $1.5 billion in capital investments, of which $158 million related to capital investments made by DGD.
Our Capital Resources
Our material cash requirements as of September 30, 2026 primarily consisted of working capital requirements, capital investments, contractual obligations, and other matters, as described below. Our operations have historically generated positive cash flows to fulfill our working capital requirements and other uses of cash as discussed below.
Capital Investments
Capital investments consist of our capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in nonconsolidated joint ventures, as reflected in our statements of cash flows on page 6. Capital investments exclude acquisitions, if any.
We have developed an extensive multi-year capital investment program, which we update and revise based on changing internal and external factors. For additional information, see “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—LIQUIDITY AND CAPITAL RESOURCES—Our Capital Resources—Capital Investments” and the “RISK FACTORS” section included in our annual report on Form 10-K for the year ended December 31, 2025.
Capital Investments Attributable to Valero
Capital investments attributable to Valero is a non-GAAP financial measure that reflects our net share of capital investments and is defined as all capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in nonconsolidated joint ventures, excluding the portion of DGD’s capital investments attributable to the other joint venture member and all of the capital expenditures of other consolidated VIEs.
We are a 50 percent joint venture member in DGD and consolidate its financial statements, and DGD’s operations compose our Renewable Diesel segment. As a result, all of DGD’s net cash provided by operating activities (or operating cash flow) is included in our consolidated net cash provided by operating activities. In general, DGD’s members use DGD’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. Because DGD’s operating cash flow is effectively attributable to each member, only 50 percent of DGD’s capital investments should be attributed to our net share of capital investments. We also exclude all of the capital expenditures of other VIEs that we consolidate because we do not operate
62
Table of Contents
those VIEs. See Note 7 of Condensed Notes to Consolidated Financial Statements for more information about the VIEs that we consolidate. We believe capital investments attributable to Valero is an important measure because it more accurately reflects our capital investments.
Capital investments attributable to Valero should not be considered as an alternative to capital investments, which is the most comparable GAAP measure, nor should it be considered in isolation or as a substitute for an analysis of our cash flows as reported under GAAP. In addition, this non-GAAP measure may not be comparable to similarly titled measures used by other companies because we may define it differently, which may diminish its utility.
The following table (in millions) reconciles our capital investments to capital investments attributable to Valero for the nine months ended September 30, 2026 and 2025.
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Reconciliation of capital investments to capital investments attributable to Valero | |||||||||||
| Capital expenditures (excluding VIEs) | $ | 654 | $ | 504 | |||||||
| Capital expenditures of VIEs: | |||||||||||
| DGD | 4 | 67 | |||||||||
| Other VIEs | 3 | 5 | |||||||||
Deferred turnaround and catalyst cost expenditures (excluding VIEs) | 529 | 808 | |||||||||
Deferred turnaround and catalyst cost expenditures of DGD | 40 | 91 | |||||||||
| Investments in nonconsolidated joint ventures | — | 1 | |||||||||
| Capital investments | 1,230 | 1,476 | |||||||||
| Adjustments: | |||||||||||
DGD’s capital investments attributable to the other joint venture member | (22) | (79) | |||||||||
| Capital expenditures of other VIEs | (3) | (5) | |||||||||
| Capital investments attributable to Valero | $ | 1,205 | $ | 1,392 | |||||||
We expect both capital investments and capital investments attributable to Valero in 2026 to be approximately $2.0 billion, which includes estimated capital investments of $250 million related to the March 2026 incident at our Port Arthur Refinery, as described in Note 5 of Condensed Notes to Consolidated Financial Statements. We anticipate that a substantial portion of the capital expenditures resulting from the March 2026 incident at our Port Arthur Refinery will be covered by insurance, subject to our self-insured retention. Of the $2.0 billion of capital investments attributable to Valero, approximately $1.7 billion is allocated to sustaining the business, with the remainder directed toward organic growth projects. In addition to organic growth projects, we continue to evaluate strategic opportunities, including potential acquisitions and other investment opportunities, that could further enhance the competitiveness and long-term value of our business.
Contractual Obligations
As of September 30, 2026, our contractual obligations included debt obligations, interest payments related to debt obligations, operating lease liabilities, finance lease obligations, other long-term liabilities, and
63
Table of Contents
purchase obligations. In the ordinary course of business, we had debt-related activities during the nine months ended September 30, 2026, as described in Note 4 of Condensed Notes to Consolidated Financial Statements. There were no material changes outside the ordinary course of business with respect to our contractual obligations during the nine months ended September 30, 2026. See Note 2 of Condensed Notes to Consolidated Financial Statements for additional information regarding contractual obligations for our Benicia Refinery.
Other Matters Impacting Liquidity and Capital Resources
Stock Purchase Programs
During the nine months ended September 30, 2026, we purchased for treasury 20,395,132 of our shares for a total cost of $6.2 billion. See Note 6 of Condensed Notes to Consolidated Financial Statements for additional information related to our stock purchase programs. On July 16, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $5.0 billion with no expiration date. As of September 30, 2026, we had $3.0 billion remaining available for purchase under the July 2026 Program. On October 27, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $10.0 billion with no expiration date, which is in addition to the amount remaining under the July 2026 Program. We will continue to evaluate the timing of purchases when appropriate. We have no obligation to make purchases under these programs.
Pension Plan Funding
We contributed $21 million to our pension plans and $14 million to our other postretirement benefit plans during the nine months ended September 30, 2026.
Trade and Other Policy Matters
See Note 5 of Condensed Notes to Consolidated Financial Statements for information regarding trade and other policy changes that have impacted our business.
Cash Held by Our Foreign Subsidiaries
As of September 30, 2026, $5.4 billion of our cash and cash equivalents was held by our foreign subsidiaries. Cash held by our foreign subsidiaries can be repatriated to us through dividends without any U.S. federal income tax consequences, but certain other taxes may apply, including, but not limited to, withholding taxes imposed by certain foreign jurisdictions, U.S. state income taxes, and U.S. federal income tax on foreign exchange gains. Therefore, there is a cost to repatriate cash held by certain of our foreign subsidiaries to us.
Asset Retirement Obligations
See Note 2 of Condensed Notes to Consolidated Financial Statements for information regarding our expected asset retirement obligations and settlement activity during the nine months ended September 30, 2026.
Environmental Matters
Our operations are subject to extensive environmental regulations by government authorities relating to, among other matters, the release or discharge of materials into the environment, climate, waste management, pollution prevention measures, GHG and other emissions, our facilities and operations, and characteristics and composition of many of our products. Because environmental laws and regulations are complex and stringent and new or revised environmental laws and regulations are continuously being enacted or proposed, the level of future costs and expenditures required for environmental matters could increase.
64
Table of Contents
Concentration of Customers
Our operations have a concentration of customers in the refining industry and customers who are refined petroleum product wholesalers and retailers. These concentrations of customers may impact our overall exposure to credit risk, either positively or negatively, in that these customers may be similarly affected by changes in economic or other conditions, including the uncertainties concerning worldwide events causing volatility in the global crude oil markets. However, we believe that our portfolio of accounts receivable is sufficiently diversified to the extent necessary to minimize potential credit risk. Historically, we have not had any significant problems collecting our accounts receivable.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ from those estimates. There have been no changes to the critical accounting policies that involve critical accounting estimates disclosed in our annual report on Form 10-K for the year ended December 31, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The following tables provide information about our debt instruments (dollars in millions), the fair values of which are sensitive to changes in interest rates. A 10 percent increase or decrease in our floating interest rates would not have a material effect on our results of operations. Principal cash flows and related weighted-average interest rates by expected maturity dates are presented. See Note 4 of Condensed Notes to Consolidated Financial Statements for additional information related to our debt.
September 30, 2026 (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Expected Maturity Dates | |||||||||||||||||||||||||||||||||||||||||||||||
Remainder of 2026 | 2027 | 2028 | 2029 | 2030 | There- after | Total | Fair Value | ||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | 146 | $ | 564 | $ | 1,047 | $ | 439 | $ | 850 | $ | 5,586 | $ | 8,632 | $ | 8,069 | |||||||||||||||||||||||||||||||
| Average interest rate | 4.4 | % | 2.2 | % | 4.4 | % | 4.0 | % | 6.0 | % | 5.4 | % | 5.0 | % | |||||||||||||||||||||||||||||||||
| Floating rate | $ | 3 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3 | $ | 3 | |||||||||||||||||||||||||||||||
| Average interest rate | 7.6 | % | — | % | — | % | — | % | — | % | — | % | 7.6 | % | |||||||||||||||||||||||||||||||||
December 31, 2025 (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Expected Maturity Dates | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | There- after | Total | Fair Value | ||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | 672 | $ | 564 | $ | 1,047 | $ | 439 | $ | 850 | $ | 4,736 | $ | 8,308 | $ | 8,167 | |||||||||||||||||||||||||||||||
| Average interest rate | 4.2 | % | 2.2 | % | 4.4 | % | 4.0 | % | 6.0 | % | 5.5 | % | 5.0 | % | |||||||||||||||||||||||||||||||||
| Floating rate | $ | 23 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 23 | $ | 23 | |||||||||||||||||||||||||||||||
| Average interest rate | 7.8 | % | — | % | — | % | — | % | — | % | — | % | 7.8 | % | |||||||||||||||||||||||||||||||||
________________________
(a)Excludes unamortized discounts and debt issuance costs.
65
Table of Contents
OTHER MARKET RISKS
We are exposed to market risks primarily related to the volatility in the price of commodities, the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs, and foreign currency exchange rates. There have been no material changes to these market risks disclosed in our annual report on Form 10-K for the year ended December 31, 2025. See Note 13 of Condensed Notes to Consolidated Financial Statements for a discussion about these market risks as of September 30, 2026.
ITEM 4. CONTROLS AND PROCEDURES
(a)Evaluation of disclosure controls and procedures.
Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of September 30, 2026.
(b)Changes in internal control over financial reporting.
There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the three months ended September 30, 2026, there were no proceedings required to be disclosed in this item under SEC regulations. Pursuant to SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of certain environmental proceedings is required in this item. We believe any such proceedings less than this threshold are not material to our business and financial condition.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2025.
66
Table of Contents
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table discloses purchases of shares of our common stock made by us or on our behalf during the third quarter of 2026.
| Period | Total Number of Shares Purchased (a) | Average Price Paid per Share (b) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (c) | ||||||||||||||||||||||
| July 2026 | 4,071 | $308.80 | — | $6.4 billion | ||||||||||||||||||||||
| August 2026 | 3,042,477 | $334.89 | 3,042,337 | $5.4 billion | ||||||||||||||||||||||
| September 2026 | 6,010,390 | $389.63 | 6,008,233 | $3.0 billion | ||||||||||||||||||||||
| Total | 9,056,938 | $371.20 | 9,050,570 | $3.0 billion | ||||||||||||||||||||||
________________________
(a)The shares reported in this column include 6,368 shares related to our purchases of shares from participants in our stock-based compensation plans in connection with the vesting of restricted stock and other stock compensation transactions in accordance with the terms of our stock-based compensation plans.
(b)The average price paid per share reported in this column excludes brokerage commissions and a one percent excise tax on share purchases.
(c)On February 25, 2026, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date, and we completed all authorized share purchases under this program during the third quarter of 2026. On July 16, 2026, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $5.0 billion with no expiration date. As of September 30, 2026, we had $3.0 billion remaining available for purchase under the July 2026 Program. On October 27, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $10.0 billion with no expiration date, which is in addition to the amount remaining under the July 2026 Program.
ITEM 5. OTHER INFORMATION
(a)None.
(b)None.
(c)During the three months ended September 30, 2026, no director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) of Valero adopted or terminated
67
Table of Contents
ITEM 6. EXHIBITS
Exhibit No. | Description | |||||||
22.01 | Subsidiary Issuer of Guaranteed Securities–incorporated by reference to Exhibit 22.01 to Valero’s quarterly report on Form 10-Q for the quarter ended June 30, 2025 (SEC File No. 001-13175). | |||||||
*31.01 | Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer. | |||||||
*31.02 | Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer. | |||||||
**32.01 | Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002). | |||||||
| ***101.INS | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| ***101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| ***101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| ***101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| ***101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| ***101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| ***104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
| * | Filed herewith. | ||||
| ** | Furnished herewith. | ||||
| *** | Submitted electronically herewith. | ||||
Pursuant to paragraph 601(b)(4)(iii)(A) of Regulation S-K, the registrant has omitted from the foregoing listing of exhibits, and hereby agrees to furnish to the SEC upon its request, copies of certain instruments, each relating to debt not exceeding 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis.
68
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
VALERO ENERGY CORPORATION (Registrant) | |||||||||||
Date: October 27, 2026 | By: | /s/ Homer S. Bhullar | |||||||||
| Homer S. Bhullar | |||||||||||
| Senior Vice President and | |||||||||||
| Chief Financial Officer | |||||||||||
| (Duly Authorized Officer and Principal | |||||||||||
| Financial and Accounting Officer) | |||||||||||
69