VALERO ENERGY CORPTX

Previous wording

This Form 10-Q, including without limitation our disclosures below under “OVERVIEW AND OUTLOOK,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by the words “anticipate,” “believe,” “expect,” “plan,” “intend,” “scheduled,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “ambition,” “could,” “would,” “should,” “may,” “strive,” “seek,” “potential,” “opportunity,” “aimed,” “considering,” “continue,” “evaluate,” and similar expressions.

Current wording

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

Previous wording

•expectations regarding the levels of, 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;

Current wording

•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;

Previous wording

•anticipated trends in the supply of, and demand for, crude oil and other feedstocks, refined petroleum products, renewable diesel, sustainable aviation fuel (SAF)1, ethanol, and corn related co-products in the regions where we operate, as well as globally;

Current wording

•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;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

•expectations regarding adoptions of new, or changes to existing Renewable and Low-Carbon Fuel Programs, blending and tax credits, or efficiency standards that impact demand for renewable fuels; and

Current wording

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

Previous wording

•expectations regarding our low-carbon fuels strategy, publicly announced greenhouse gas (GHG) emissions reduction/displacement targets and ambitions, and our current, former, and any future low-carbon projects.

Current wording

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

Previous wording

•demand for, and supplies of, crude oil and other feedstocks;

Current wording

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

Previous wording

•the effects of public health threats, pandemics, and epidemics, such as the COVID-19 pandemic and variants of the virus, 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;

Current wording

•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;

Previous wording

•acts of terrorism aimed at 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;

Current wording

•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;

Previous wording

•the actions taken by competitors, including both pricing and adjustments to refining capacity or renewable fuels production in response to market conditions;

Current wording

•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;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

•legislative or regulatory action, including the introduction or enactment of legislation or rulemakings by government authorities, environmental regulations, changes to income tax rates, introduction of a global minimum tax, windfall 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 and other environmental emissions 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 or operations;

Current wording

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;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Any one of these factors, or a combination of these factors, could materially affect our future results of operations 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.

Current wording

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.

Previous wording

We reported $364 million and $2.5 billion of net income attributable to Valero stockholders for the third quarter of 2024 and the first nine months of 2024, 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 42.

Current wording

We reported a net loss attributable to Valero stockholders of $595 million for the first quarter of 2025. Our operating results, including operating results by segment, are described in the following summary under “First Quarter Results,” and detailed descriptions can be found under “RESULTS OF OPERATIONS” beginning on page 36.

Previous wording

Our operations generated $5.6 billion of cash during the first nine months of 2024. This cash, along with cash on hand, was used to make $1.5 billion of capital investments in our business and return $3.7 billion to our stockholders through purchases of common stock for treasury and dividend payments. In addition, we reduced our outstanding debt during the first nine months of 2024 through the repayment of the $167 million outstanding principal balance of our 1.200 percent Senior Notes that matured in March 2024. As a result of this and other activity, our cash, cash equivalents, and restricted cash decreased by $70 million during the first nine months of 2024 to $5.4 billion as of September 30, 2024. We had $10.3 billion in liquidity as of September 30, 2024. 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 58.

Current wording

Our operations generated $952 million of cash during the first quarter of 2025. In addition, we issued $650 million of 5.150 percent Senior Notes due February 15, 2030 during the first quarter of 2025, as described in Note 4 of Condensed Notes to Consolidated Financial Statements. The cash generated by our operations, along with the net proceeds from our debt issuance and cash on hand, was used to make $660 million of capital investments in our business, return $630 million to our stockholders through purchases of common stock for treasury and dividend payments, and repay the $189 million outstanding principal balance of our 3.65 percent Senior Notes that matured in March 2025. As a result of this and other activity, our cash, cash equivalents, and restricted cash decreased by $22 million during the first quarter of 2025 to $4.8 billion as of March 31, 2025. We had $9.7 billion in liquidity as of March 31, 2025. The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found under “LIQUIDITY AND CAPITAL RESOURCES” beginning on page 45.

Previous wording

For the third quarter of 2024, we reported net income attributable to Valero stockholders of $364 million compared to $2.6 billion for the third quarter of 2023. The decrease of $2.3 billion was primarily due to a decrease in operating income of $3.0 billion, partially offset by a decrease in income tax expense of $717 million. The details of our operating income and adjusted operating income by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustment reflected in the tables in note (a) beginning on page 55.

Current wording

For the first quarter of 2025, we reported a net loss attributable to Valero stockholders of $595 million compared to net income attributable to Valero stockholders of $1.2 billion for the first quarter of 2024. The decrease of $1.8 billion was primarily due to a decrease in operating income of $2.6 billion, partially offset by a decrease in income tax expense of $618 million. The details of our operating income (loss) and adjusted operating income, where applicable, by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustments reflected in the tables in note (b) beginning on page 43.

Previous wording

While our operating income decreased by $3.0 billion in the third quarter of 2024 compared to the third quarter of 2023, adjusted operating income also decreased by $3.0 billion primarily due to the following:

Current wording

While our operating income decreased by $2.6 billion in the first quarter of 2025 compared to the first quarter of 2024, adjusted operating income decreased by $1.5 billion primarily due to the following:

Previous wording

•Refining segment. Refining segment adjusted operating income decreased by $2.9 billion primarily due to lower gasoline and distillate (primarily diesel) margins and a decline in crude oil differentials, partially offset by higher margins on other products and lower operating expenses (excluding depreciation and amortization expense).

Current wording

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

Previous wording

•Ethanol segment. Ethanol segment adjusted operating income decreased by $69 million primarily due to lower ethanol and corn related co-product prices, partially offset by lower corn prices and an increase in production volumes.

Current wording

•Ethanol segment. Ethanol segment adjusted operating income decreased by $19 million primarily due to higher corn prices, lower corn related co-product prices, and higher operating expenses (excluding depreciation and amortization expense), partially offset by higher ethanol prices.

Previous wording

Many uncertainties remain with respect to the supply and demand balances in petroleum-based product markets worldwide. While it is difficult to predict future worldwide economic activity and its impact on product supply and demand, as well as any effect that the uncertainty described in Note 2 of Condensed Notes to Consolidated Financial Statements or other political or regulatory developments may have on us, we have noted several factors below that have impacted or may impact our results of operations during the fourth quarter of 2024.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

•Combined light product (gasoline, diesel, and jet fuel) inventories in the U.S. and Europe are expected to remain comparable to recent historical levels.

Current wording

•Combined light product (gasoline, diesel, and jet fuel) inventories across the U.S. and Europe remain comparable to recent historical levels. Expected reductions in refining capacity in 2025 should support utilization of refining capacity.

Previous wording

•Crude oil differentials are expected to remain relatively stable as a result of increased availability of sour crude oils from Latin America and the potential increase in production by OPEC+ suppliers. However, potential sanction adjustments related to Iran, Russia, and Venezuela, the Russia-Ukraine conflict, and conflict in the Middle East, including impacts on shipping routes and freight costs, could result in increased volatility in the crude oil market and potentially impact crude oil differentials.

Current wording

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

Previous wording

The following tables, including the reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures in note (a) beginning on page 55, 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 55 through 58.

Current wording

The following tables, including the reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures in note (b) beginning on page 43, 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 42 through 45.

Previous wording

The following table includes selected financial data for the total company, corporate, and other for the third quarter of 2024 and 2023. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Current wording

The following table includes selected financial data for the total company, corporate, and other for the first quarter of 2025 and 2024. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Previous wording

Revenues decreased by $5.5 billion in the third quarter of 2024 compared to the third quarter of 2023 primarily due to decreases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This decrease in revenues was partially offset by a decrease in cost of sales of $2.5 billion primarily due to decreases in crude oil and other feedstock costs. These changes resulted in a $3.0 billion decrease in operating income, from $3.5 billion in the third quarter of 2023 to $507 million in the third quarter of 2024.

Current wording

Revenues decreased by $1.5 billion in the first quarter of 2025 compared to the first quarter of 2024 primarily due to decreases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This decrease in revenues, along with the effect of an asset impairment loss of $1.1 billion in the first quarter of 2025 (see note (a)), resulted in a $2.6 billion decrease in operating income, from operating income of $1.7 billion in the first quarter of 2024 to an operating loss of $900 million in the first quarter of 2025.

Previous wording

Adjusted operating income also decreased by $3.0 billion, from $3.5 billion in the third quarter of 2023 to $510 million in the third quarter of 2024. The components of this $3.0 billion decrease in adjusted operating income are discussed by segment in the segment analyses that follow.

Current wording

Adjusted operating income decreased by $1.5 billion, from $1.7 billion in the first quarter of 2024 to $235 million in the first quarter of 2025. The components of this $1.5 billion decrease in adjusted operating income are discussed by segment in the segment analyses that follow.

Previous wording

Income tax expense decreased by $717 million in the third quarter of 2024 compared to the third quarter of 2023 primarily as a result of lower income before income tax expense.

Current wording

Income tax expense decreased by $618 million in the first quarter of 2025 compared to the first quarter of 2024 primarily as a result of lower income before income tax expense. Our effective tax rate was 29 percent in the first quarter of 2025 compared to 21 percent in the first quarter of 2024. The increase in the effective tax rate was primarily due to a decrease in U.S. income before income tax expense resulting from the asset impairment loss associated with our operations in California, as described in Note 2 of Condensed Notes to Consolidated Financial Statements.

Previous wording

Net income attributable to noncontrolling interests decreased by $138 million in the first nine months of 2024 compared to the first nine months of 2023 primarily due to lower earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 6 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis on page 54.

Current wording

Net income attributable to noncontrolling interests decreased by $142 million in the first quarter of 2025 compared to the first quarter of 2024 primarily due to lower earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 6 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis beginning on page 41.

Previous wording

The following table includes selected financial and operating data of our Refining segment for the third quarter of 2024 and 2023. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Current wording

The following table includes selected financial and operating data of our Refining segment for the first quarter of 2025 and 2024. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Previous wording

Refining segment operating income decreased by $2.9 billion in the third quarter of 2024 compared to the third quarter of 2023. Refining segment adjusted operating income, which excludes the adjustment in the table in note (a), also decreased by $2.9 billion in the third quarter of 2024 compared to the third quarter of 2023. The components of this decrease in the adjusted results, along with the reasons for the changes in those components, are outlined below.

Current wording

Refining segment operating income decreased by $2.3 billion in the first quarter of 2025; however, Refining segment adjusted operating income, which excludes the adjustments in the table in note (b), decreased by $1.1 billion in the first quarter of 2025 compared to the first quarter of 2024. The components of this decrease in the adjusted results, along with the reasons for the changes in those components, are outlined below.

Previous wording

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 44 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the third quarter of 2024 compared to the third quarter of 2023.

Current wording

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 38 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the first quarter of 2025 compared to the first quarter of 2024.

Previous wording

◦A decrease in distillate (primarily diesel) margins had an unfavorable impact of approximately $2.0 billion.

Current wording

◦A decrease in distillate (primarily diesel) margins had an unfavorable impact of approximately $680 million.

Previous wording

◦A decrease in gasoline margins had an unfavorable impact of approximately $1.2 billion.

Current wording

◦A decrease in gasoline margins had an unfavorable impact of approximately $300 million.

Previous wording

◦A decline in crude oil differentials had an unfavorable impact of approximately $189 million.

Current wording

◦A decline in crude oil differentials had an unfavorable impact of approximately $300 million.

Previous wording

◦An increase in margins for other products had a favorable impact of approximately $319 million.

Current wording

◦An increase in margins for other products had a favorable impact of approximately $180 million.