VALERO ENERGY CORP/TX0001035002FALSE2024Q1--12-31
Includes excise taxes on sales by certain of our foreign operations of $1,387 million and $1,422 million for the three months ended March 31, 2024 and 2023, respectively.
http://fasb.org/us-gaap/2023#CostDirectMaterialhttp://fasb.org/us-gaap/2023#CostDirectMaterial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
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
VLO Logo.jpg
VALERO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware74-1828067
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
One Valero Way
San Antonio, Texas
(Address of principal executive offices)
78249
(Zip Code)
(210345-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareVLONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging 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 April 19, 2024 was 326,996,383.



VALERO ENERGY CORPORATION
TABLE OF CONTENTS
Page


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Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(millions of dollars, except par value)
March 31,
2024
December 31,
2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$4,917 $5,424 
Receivables, net12,150 12,525 
Inventories7,912 7,583 
Prepaid expenses and other695 689 
Total current assets25,674 26,221 
Property, plant, and equipment, at cost51,943 51,668 
Accumulated depreciation(21,871)(21,459)
Property, plant, and equipment, net30,072 30,209 
Deferred charges and other assets, net6,828 6,626 
Total assets$62,574 $63,056 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations$853 $1,406 
Accounts payable12,458 12,567 
Accrued expenses1,097 1,240 
Taxes other than income taxes payable1,353 1,452 
Income taxes payable388 137 
Total current liabilities16,149 16,802 
Debt and finance lease obligations, less current portion10,044 10,118 
Deferred income tax liabilities5,260 5,349 
Other long-term liabilities2,297 2,263 
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized;
673,501,593 and 673,501,593 shares issued
7 7 
Additional paid-in capital6,916 6,901 
Treasury stock, at cost;
346,505,037 and 340,199,677 common shares
(26,330)(25,322)
Retained earnings46,519 45,630 
Accumulated other comprehensive loss
(1,055)(870)
Total Valero Energy Corporation stockholders’ equity26,057 26,346 
Noncontrolling interests2,767 2,178 
Total equity28,824 28,524 
Total liabilities and equity$62,574 $63,056 
See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
March 31,
20242023
Revenues (a)$31,759 $36,439 
Cost of sales:
Cost of materials and other27,682 30,005 
Operating expenses (excluding depreciation and amortization
expense reflected below)
1,411 1,477 
Depreciation and amortization expense683 650 
Total cost of sales29,776 32,132 
Other operating expenses34 10 
General and administrative expenses (excluding depreciation and
amortization expense reflected below)
258 244 
Depreciation and amortization expense12 10 
Operating income1,679 4,043 
Other income, net144 129 
Interest and debt expense, net of capitalized interest(140)(146)
Income before income tax expense1,683 4,026 
Income tax expense353 880 
Net income1,330 3,146 
Less: Net income attributable to noncontrolling interests85 79 
Net income attributable to Valero Energy Corporation stockholders
$1,245 $3,067 
Earnings per common share$3.75 $8.30 
Weighted-average common shares outstanding (in millions)331 369 
Earnings per common share – assuming dilution$3.75 $8.29 
Weighted-average common shares outstanding –
assuming dilution (in millions)
331 369 
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign
operations
$1,387 $1,422 

See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
20242023
Net income
$1,330 $3,146 
Other comprehensive income (loss):
Foreign currency translation adjustment(153)134 
Net loss on pension and other postretirement
benefits
(6)(7)
Net gain (loss) on cash flow hedges
(84)57 
Other comprehensive income (loss) before
income tax expense (benefit)
(243)184 
Income tax expense (benefit) related to items of
other comprehensive income (loss)
(15)1 
Other comprehensive income (loss)
(228)183 
Comprehensive income
1,102 3,329 
Less: Comprehensive income attributable
to noncontrolling interests
42 108 
Comprehensive income attributable to
Valero Energy Corporation stockholders
$1,060 $3,221 

See Condensed Notes to Consolidated Financial Statements.

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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
TotalNon-
controlling
Interests
Total
Equity
Balance as of December 31, 2023$7 $6,901 $(25,322)$45,630 $(870)$26,346 $2,178 $28,524 
Net income— — — 1,245 — 1,245 85 1,330 
Dividends on common stock
($1.07 per share)
— — — (356)— (356)— (356)
Stock-based compensation
expense
— 39 — — — 39 — 39 
Transactions in connection
with stock-based
compensation plans
— (24)25 — — 1 — 1 
Purchases of common stock for
treasury
— — (1,033)— — (1,033)— (1,033)
Contributions from noncontrolling
interests
— — — — — — 90 90 
Conversion of IEnova Revolver
debt to equity (see Notes 4 and 6)
— — — — — — 457 457 
Other comprehensive loss— — — — (185)(185)(43)(228)
Balance as of March 31, 2024$7 $6,916 $(26,330)$46,519 $(1,055)$26,057 $2,767 $28,824 
Balance as of December 31, 2022$7 $6,863 $(20,197)$38,247 $(1,359)$23,561 $1,907 $25,468 
Net income— — — 3,067 — 3,067 79 3,146 
Dividends on common stock
($1.02 per share)
— — — (379)— (379)— (379)
Stock-based compensation
expense
— 39 — — — 39 — 39 
Transactions in connection
with stock-based
compensation plans
— (25)26 — — 1 — 1 
Purchases of common stock for
treasury
— — (1,466)— — (1,466)— (1,466)
Contributions from noncontrolling
interests
— — — — — — 75 75 
Other comprehensive income— — — — 154 154 29 183 
Balance as of March 31, 2023$7 $6,877 $(21,637)$40,935 $(1,205)$24,977 $2,090 $27,067 

See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
20242023
Cash flows from operating activities:
Net income$1,330 $3,146 
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense695 660 
Gain on early retirement of debt, net (11)
Deferred income tax expense (benefit)(69)54 
Changes in current assets and current liabilities(160)(534)
Changes in deferred charges and credits and other operating activities, net50 (145)
Net cash provided by operating activities
1,846 3,170 
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))(128)(175)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)(69)(90)
Other VIEs(3) 
Deferred turnaround and catalyst cost expenditures (excluding VIEs)(452)(235)
Deferred turnaround and catalyst cost expenditures of DGD(9)(24)
Purchases of available-for-sale (AFS) debt securities(11)(100)
Proceeds from sales and maturities of AFS debt securities33 71 
Other investing activities, net2 4 
Net cash used in investing activities
(637)(549)
Cash flows from financing activities:
Proceeds from debt borrowings (excluding VIEs)1,250 750 
Proceeds from debt borrowings of VIEs:
DGD100 150 
Other VIEs20 14 
Repayments of debt and finance lease obligations (excluding VIEs)(1,467)(973)
Repayments of debt and finance lease obligations of VIEs:
DGD(256)(156)
Other VIEs(2)(22)
Premiums paid on early retirement of debt (5)
Purchases of common stock for treasury(1,023)(1,451)
Common stock dividend payments(356)(379)
Contributions from noncontrolling interests90 75 
Other financing activities, net (1)
Net cash used in financing activities
(1,644)(1,998)
Effect of foreign exchange rate changes on cash(72)36 
Net increase (decrease) in cash and cash equivalents(507)659 
Cash and cash equivalents at beginning of period5,424 4,862 
Cash and cash equivalents at end of period$4,917 $5,521 

See Condensed Notes to Consolidated Financial Statements.

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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 have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these interim unaudited financial statements reflect all adjustments considered necessary for a fair statement of our results for the interim period presented. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 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, 2023.

The balance sheet as of December 31, 2023 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, 2023.

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

Accounting Pronouncement Adopted on January 1, 2024
ASU 2023-07
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve the disclosures about a public entity’s reportable segments primarily through improved disclosures about significant segment expenses and other segment related items. We adopted this ASU effective January 1, 2024 and it did not affect our financial position or our results of operations, but will result in additional disclosures for our annual reporting periods beginning December 31, 2024 and interim reporting periods in 2025.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accounting Pronouncement Not Yet Adopted
ASU 2023-09
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve annual income tax disclosures by requiring further disaggregation of information in the rate reconciliation and disaggregation of income taxes paid by jurisdiction. This ASU also includes certain other amendments intended to improve the effectiveness of annual income tax disclosures. We expect to adopt this ASU effective January 1, 2025 and the adoption will not affect our financial position or our results of operations, but will result in additional disclosures.

2.    UNCERTAINTY

In September 2022, California adopted Senate Bill No. 1322 (SB 1322), which requires refineries in California to report monthly on the volume and cost of the crude oil they buy, the quantity and price of the wholesale gasoline they sell, and the gross gasoline margin per barrel, among other information. The provisions of SB 1322 were effective January 2023.

In March 2023, California adopted Senate Bill No. 2 (such statute, together with any regulations contemplated or issued thereunder, SBx 1-2), which, among other things, (i) authorized the establishment of a maximum gross gasoline refining margin (max margin) and the imposition of a financial penalty for profits above a max margin, (ii) significantly expanded the reporting obligations under SB 1322 and the Petroleum Industry Information Reporting Act of 1980, which include reporting requirements to the California Energy Commission (CEC) for all participants in the petroleum industry supply chain in California (e.g., refiners, marketers, importers, transporters, terminals, producers, renewables producers, pipelines, and ports), (iii) created the Division of Petroleum Market Oversight within the CEC to analyze the data provided under SBx 1-2, and (iv) authorized the CEC to regulate the timing and other aspects of refinery turnaround and maintenance activities in certain instances. SBx 1-2 imposes increased and substantial reporting requirements, which include daily, weekly, monthly, and annual reporting of detailed operational and financial data on all aspects of our operations in California, much of it at the transaction level. The operational data includes our plans for turnaround and maintenance activities at our two California refineries and the manner in which we expect to address the potential impacts on feedstock and product inventories in California as a result of such turnaround and maintenance activities. The provisions of SBx 1-2 became effective June 26, 2023.

In September 2023, Governor Newsom directed the CEC to immediately begin the regulatory processes concerning the potential imposition of a penalty for exceeding a max margin and the timing of refinery turnarounds and maintenance. Consequently, in October 2023, the CEC adopted an order instituting an informational proceeding on a max margin and penalty under SBx 1-2, as well as an order initiating rulemaking activity under SBx 1-2. The CEC indicated in a November 2023 workshop that the latter rulemaking process will be focused on rules relating to the timing of refinery maintenance and turnarounds, as well as the standardization of data collection and reporting. It remains uncertain as to what extent any regulations will address the remaining reporting requirements under SBx 1-2.

We continue to review and analyze the provisions of SBx 1-2 and the possible impacts to our refining and marketing operations in California. While the CEC has not yet established a max margin, imposed a financial penalty for profits above a max margin, or imposed restrictions on turnaround and maintenance

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
activities, the potential implementation of a financial penalty or of any restrictions or delays on our ability to undertake turnaround or maintenance activities creates uncertainty due to the potential adverse effects on us. Any adverse effects on our operations or financial performance in California could indicate that the carrying value of our assets in California is not recoverable, which would result in an impairment loss that could be material. In addition, if the circumstances that trigger an impairment loss result in a reduction in the estimated useful lives of the assets, we may be required to recognize an asset retirement obligation that could be material. Other jurisdictions are contemplating similarly focused legislation or actions.

The ultimate timing and impacts of SBx 1-2 and any other similarly focused legislation or actions are subject to considerable uncertainty due to a number of factors, including technological and economic feasibility, legal challenges, and potential changes in law, regulation, or policy, and it is not currently possible to predict the ultimate effects of these matters and developments on our financial condition, results of operations, and liquidity.

3.    INVENTORIES

Inventories consisted of the following (in millions):
March 31,
2024
December 31,
2023
Refinery feedstocks$2,366 $2,223 
Refined petroleum products and blendstocks
3,847 3,790 
Renewable diesel feedstocks and products
1,051 913 
Ethanol feedstocks and products300 313 
Materials and supplies348 344 
Inventories$7,912 $7,583 

As of March 31, 2024 and December 31, 2023, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded their LIFO carrying amounts by $6.0 billion and $4.4 billion, respectively. Our non-LIFO inventories accounted for $1.3 billion and $1.5 billion of our total inventories as of March 31, 2024 and December 31, 2023, respectively.

4.    DEBT

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


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In February 2023, we used cash on hand to purchase and retire a portion of the following notes (in millions):
Debt Purchased and RetiredPrincipal
Amount
6.625% Senior Notes due 2037
$62 
3.650% Senior Notes due 2051
26 
4.000% Senior Notes due 2052
45 
Various other Valero and Valero Energy
Partners LP Senior Notes
66 
Total$199 

Credit Facilities
We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (in millions):
March 31, 2024
Facility
Amount
Maturity DateOutstanding
Borrowings
Letters of Credit
Issued (a)
Availability
Committed facilities:
Valero Revolver$4,000 November 2027$ $3 $3,997 
Accounts receivable
sales facility
1,300 July 2024 n/a1,300 
Committed facilities of
VIEs (b):
DGD Revolver (c)400 June 2026100 31 269 
DGD Loan Agreement (d)100 June 2026 n/a100 
IEnova Revolver (e)830 February 2028326 n/a504 
Uncommitted facilities:
Letter of credit facilitiesn/an/an/a n/a
________________________
(a)Letters of credit issued as of March 31, 2024 expire at various times in 2024 through 2026.
(b)Creditors of the VIEs do not have recourse against us.
(c)The variable interest rate on the unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) was 7.173 percent and 7.201 percent as of March 31, 2024 and December 31, 2023, respectively.
(d)The amounts shown for DGD’s unsecured revolving loan agreement with its members (the DGD Loan Agreement) represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation.
(e)Central Mexico Terminals (defined in Note 6) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 6). During the three months ended March 31, 2024, IEnova converted $457 million of outstanding borrowings under this facility to additional equity in Central Mexico Terminals, which resulted in an increase in the noncontrolling interest related to IEnova. The variable interest rate on the IEnova Revolver was 9.180 percent and 9.245 percent as of March 31, 2024 and December 31, 2023, respectively.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Borrowings and repayments under our credit facilities were as follows (in millions):
Three Months Ended
March 31,
20242023
Borrowings:
Accounts receivable sales facility$1,250 $750 
DGD Revolver 150 
DGD Loan Agreement100  
IEnova Revolver20 14 
Repayments:
Accounts receivable sales facility(1,250)(750)
DGD Revolver(150)(150)
DGD Loan Agreement(100) 
IEnova Revolver (21)
Other Disclosures
“Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):
Three Months Ended
March 31,
20242023
Interest and debt expense$147 $152 
Less: Capitalized interest7 6 
Interest and debt expense, net of
capitalized interest
$140 $146 


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5.    EQUITY

Treasury Stock
We purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described in the table below) and with respect to our employee stock-based compensation plans. During the three months ended March 31, 2024 and 2023, we purchased for treasury 6,633,843 shares and 10,993,341 shares, respectively.

Our Board authorized us to purchase shares of our outstanding common stock under various programs with no expiration dates as follows (in millions):
Program NameAnnouncement
Date
Total Cost
Authorized
Remaining
Available for
Purchase as of
March 31,
2024
September 2023 ProgramSeptember 15, 2023$2,500 $1,187 
February 2024 ProgramFebruary 22, 20242,500 2,500 
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):
Three Months Ended March 31,
20242023
Foreign
Currency
Translation
Adjustment
Defined
Benefit
Plans
Items
Gains
(Losses)
on
Cash Flow
Hedges
TotalForeign
Currency
Translation
Adjustment
Defined
Benefit
Plans
Items
Gains
(Losses)
on
Cash Flow
Hedges
Total
Balance as of beginning
of period
$(735)$(162)$27 $(870)$(1,168)$(183)$(8)$(1,359)
Other comprehensive
income (loss) before
reclassifications
(148) (23)(171)137  37 174 
Amounts reclassified
from accumulated
other comprehensive
loss
 (4)(9)(13) (7)(15)(22)
Effect of exchange rates (1) (1) 2  2 
Other comprehensive
income (loss)
(148)(5)(32)(185)137 (5)22 154 
Balance as of end of
period
$(883)$(167)$(5)$(1,055)$(1,031)$(188)$14 $(1,205)


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.    VARIABLE INTEREST ENTITIES

Consolidated VIEs
We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of March 31, 2024, the significant consolidated VIEs included:

DGD, a joint venture with a subsidiary of Darling Ingredients Inc. that owns and operates two plants that process waste and renewable feedstocks (predominately animal fats, used cooking oils, vegetable oils, and inedible distillers corn oils) into renewable diesel and renewable naphtha; and

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

The assets of the consolidated VIEs can only be used to settle their own obligations and the creditors of the consolidated VIEs have no recourse to our other assets. We generally do not provide financial guarantees to the VIEs. Although we have provided credit facilities to some of the VIEs in support of their construction or acquisition activities, 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):
DGDCentral
Mexico
Terminals
OtherTotal
March 31, 2024
Assets
Cash and cash equivalents$170 $ $35 $205 
Other current assets1,582 9 40 1,631 
Property, plant, and equipment, net3,805 660 71 4,536 
Liabilities
Current liabilities, including current portion
of debt and finance lease obligations
$385 $352 $17 $754 
Debt and finance lease obligations,
less current portion
662   662 

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DGDCentral
Mexico
Terminals
OtherTotal
December 31, 2023
Assets
Cash and cash equivalents$237 $ $23 $260 
Other current assets1,520 11 46 1,577 
Property, plant, and equipment, net3,772 665 75 4,512 
Liabilities
Current liabilities, including current portion
of debt and finance lease obligations
$616 $808 $19 $1,443 
Debt and finance lease obligations,
less current portion
669   669 

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.

7.    EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):
Pension PlansOther Postretirement
Benefit Plans
2024202320242023
Three months ended March 31
Service cost$28 $28 $1 $1 
Interest cost31 30 3 3 
Expected return on plan assets(53)(50)  
Amortization of:
Net actuarial gain(1)(2)(1)(1)
Prior service credit(3)(5) (1)
Net periodic benefit cost$2 $1 $3 $2 

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


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.    EARNINGS PER COMMON SHARE

Earnings per common share was computed as follows (dollars and shares in millions, except per share amounts):
Three Months Ended
March 31,
20242023
Earnings per common share:
Net income attributable to Valero stockholders
$1,245 $3,067 
Less: Income allocated to participating securities3 10 
Net income available to common stockholders$1,242 $3,057 
Weighted-average common shares outstanding331 369 
Earnings per common share$3.75 $8.30 
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders
$1,245 $3,067 
Less: Income allocated to participating securities3 10 
Net income available to common stockholders$1,242 $3,057 
Weighted-average common shares outstanding331 369 
Effect of dilutive securities  
Weighted-average common shares outstanding –
assuming dilution
331 369 
Earnings per common share – assuming dilution$3.75 $8.29 

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan (OSIP) or our 2011 OSIP. Dilutive securities include participating securities as well as outstanding stock options. For the three months ended March 31, 2024 and 2023, we computed earnings per common share – assuming dilution using the two-class method for all dilutive securities.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.    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):
March 31,
2024
December 31,
2023
Receivables from contracts with customers,
included in receivables, net
$6,788 $7,209 
Contract liabilities, included in accrued expenses34 40 

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 March 31, 2024, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.

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

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

The Renewable Diesel segment represents the operations of DGD, a consolidated joint venture as discussed in Note 6, and the associated activities to market renewable diesel and renewable naphtha. The principal products manufactured by DGD and sold by this segment are renewable diesel and renewable naphtha. This segment sells some renewable diesel to the Refining segment, which is then sold to that segment’s customers.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Ethanol segment includes the operations of our ethanol plants and the associated activities to market our ethanol and co-products. The principal products manufactured by our ethanol plants are ethanol and distillers grains. This segment sells some ethanol to the Refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.

Operations that are not included in any of the reportable segments are included in the corporate category.
The following tables reflect information about our operating income, including a reconciliation to our consolidated income before income tax expense, by reportable segment (in millions):
RefiningRenewable
Diesel
EthanolCorporate
and
Eliminations
Total
Three months ended March 31, 2024
Revenues:
Revenues from external customers
$30,143 $702 $914 $ $31,759 
Intersegment revenues
2 709 190 (901)— 
Total revenues
30,145 1,411 1,104 (901)31,759 
Cost of sales:
Cost of materials and other (a)26,611 1,066 909 (904)27,682 
Operating expenses (excluding depreciation
and amortization expense reflected below)
1,184 90 137  1,411 
Depreciation and amortization expense
600 65 19 (1)683 
Total cost of sales
28,395 1,221 1,065 (905)29,776 
Other operating expenses5  29  34 
General and administrative expenses (excluding
depreciation and amortization expense
reflected below)
   258 258 
Depreciation and amortization expense
   12 12 
Operating income by segment$1,745 $190 $10 $(266)1,679 
Other income, net144 
Interest and debt expense, net of capitalized
interest
(140)
Income before income tax expense$1,683 
________________________
See note (a) on page 17.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
RefiningRenewable
Diesel
EthanolCorporate
and
Eliminations
Total
Three months ended March 31, 2023
Revenues:
Revenues from external customers
$34,407 $935 $1,097 $ $36,439 
Intersegment revenues
3 745 223 (971)— 
Total revenues
34,410 1,680 1,320 (971)36,439 
Cost of sales:
Cost of materials and other (a)28,510 1,331 1,131 (967)30,005 
Operating expenses (excluding depreciation
and amortization expense reflected below)
1,261 86 130  1,477 
Depreciation and amortization expense
572 58 20  650 
Total cost of sales
30,343 1,475 1,281 (967)32,132 
Other operating expenses10    10 
General and administrative expenses (excluding
depreciation and amortization expense
reflected below)
   244 244 
Depreciation and amortization expense
   10 10 
Operating income by segment$4,057 $205 $39 $(258)4,043 
Other income, net129 
Interest and debt expense, net of capitalized
interest
(146)
Income before income tax expense$4,026 
________________________
(a)Cost of materials and other for our Renewable Diesel segment is net of the blender’s tax credit on qualified fuel mixtures of $331 million and $246 million for the three months ended March 31, 2024 and 2023, respectively.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table provides a disaggregation of revenues from external customers for our principal products by reportable segment (in millions):
Three Months Ended
March 31,
20242023
Refining:
Gasolines and blendstocks
$13,126 $15,048 
Distillates
14,128 16,838 
Other product revenues
2,889 2,521 
Total Refining revenues30,143 34,407 
Renewable Diesel:
Renewable diesel
679 876 
Renewable naphtha23 59 
Total Renewable Diesel revenues702 935 
Ethanol:
Ethanol
638 763 
Distillers grains
276 334 
Total Ethanol revenues914 1,097 
Revenues
$31,759 $36,439 

Total assets by reportable segment were as follows (in millions):
March 31,
2024
December 31,
2023
Refining$49,070 $49,031 
Renewable Diesel5,852 5,790 
Ethanol1,496 1,549 
Corporate and eliminations6,156 6,686 
Total assets$62,574 $63,056 


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10.    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):
Three Months Ended
March 31,
20242023
Decrease (increase) in current assets:
Receivables, net$257 $2,381 
Inventories(356)(641)
Prepaid expenses and other86 (37)
Increase (decrease) in current liabilities:
Accounts payable(130)(2,269)
Accrued expenses(163)(61)
Taxes other than income taxes payable(102)(23)
Income taxes payable248 116 
Changes in current assets and current liabilities$(160)$(534)

Changes in current assets and current liabilities for the three months ended March 31, 2024 were primarily due to the following:

The decrease in receivables was primarily due to a decrease in refined petroleum product sales volumes in March 2024 compared to December 2023, partially offset by an increase in related prices; and

The increase in inventories was due to an increase in inventory volumes valued at higher unit prices in March 2024 compared to December 2023.

Changes in current assets and current liabilities for the three months ended March 31, 2023 were primarily due to the following:

The decrease in receivables was primarily due to a decrease in refined petroleum product sales volumes in March 2023 compared to December 2022;

The increase in inventories was due to an increase in inventory volumes valued at higher unit prices in March 2023 compared to December 2022; and

The decrease in accounts payable was due to a decrease in crude oil and other feedstock volumes purchased combined with a decrease in related prices in March 2023 compared to December 2022.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cash flows related to interest and income taxes were as follows (in millions):
Three Months Ended
March 31,
20242023
Interest paid in excess of amount capitalized,
including interest on finance leases
$100 $82 
Income taxes paid, net103 616 

Supplemental cash flow information related to our operating and finance leases was as follows (in millions):
Three Months Ended March 31,
20242023
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
Cash paid for amounts included in the
measurement of lease liabilities:
Operating cash flows$124 $29 $102 $27 
Financing cash flows— 56 — 49 
Changes in lease balances resulting from new
and modified leases
153 186 67 47 
Noncash financing activities for the three months ended March 31, 2024 included the conversion by IEnova of $457 million of outstanding borrowings under the IEnova Revolver to additional equity in Central Mexico Terminals, as described in Note 4. There were no other significant noncash investing and financing activities during the three months ended March 31, 2024, except as noted in the table above.

There were no significant noncash investing and financing activities during the three months ended March 31, 2023, except as noted in the table above.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11.    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 March 31, 2024 and December 31, 2023.

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.
March 31, 2024
Total
Gross
Fair
Value
Effect of
Counter-
party
Netting
Effect of
Cash
Collateral
Netting
Net
Carrying
Value on
Balance
Sheet
Cash
Collateral
Paid or
Received
Not Offset
Fair Value Hierarchy
Level 1Level 2Level 3
Assets
Commodity derivative
contracts
$936 $ $ $936 $(904)$(5)$27 $ 
Physical purchase
contracts
 1  1 n/an/a1 n/a
Investments of certain
benefit plans
82  4 86 n/an/a86 n/a
Investments in AFS
debt securities
33 64  97 n/an/a97 n/a
Foreign currency
contracts
2   2 n/an/a2 n/a
Total$1,053 $65 $4 $1,122 $(904)$(5)$213 
Liabilities
Commodity derivative
contracts
$975 $ $ $975 $(904)$(71)$ $(137)
Physical purchase
contracts
 2  2 n/an/a2 n/a
Blending program
obligations
 41  41 n/an/a41 n/a
Total$975 $43 $ $1,018 $(904)$(71)$43 

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Table of Contents



VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023
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 1Level 2Level 3
Assets
Commodity derivative
contracts
$803 $ $ $803 $(642)$(66)$95 $ 
Investments of certain
benefit plans
76  4 80 n/an/a80 n/a
Investments in AFS
debt securities
36 75  111 n/an/a111 n/a
Total$915 $75 $4 $994 $(642)$(66)$286 
Liabilities