UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 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

VALERO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

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

One Valero Way

San Antonio, Texas

(Address of principal executive offices)

78249

(Zip Code)

(210) 345-2000

(Registrant’s telephone number, including area code)

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VLO	New York Stock Exchange

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

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

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

Large accelerated filer		☑	Accelerated filer			☐	Non-accelerated filer		☐
	Smaller reporting company			☐	Emerging growth company			☐

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

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

The number of shares of the registrant’s only class of common stock, $0.01 par value, outstanding as of July 19, 2024 was 320,380,489.

VALERO ENERGY CORPORATION

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	1
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023	2
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	3
Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2024 and 2023	4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	6
Condensed Notes to Consolidated Financial Statements	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	63
ITEM 4. CONTROLS AND PROCEDURES	64
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	64
ITEM 1A. RISK FACTORS	64
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	65
ITEM 5. OTHER INFORMATION	65
ITEM 6. EXHIBITS	66
SIGNATURE	67

i

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(millions of dollars, except par value)

	June 30, 2024		December 31, 2023
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,246	$	5,424
Receivables, net	13,145		12,525
Inventories	8,028		7,583
Prepaid expenses and other	696		689
Total current assets	27,115		26,221
Property, plant, and equipment, at cost	52,074		51,668
Accumulated depreciation	(22,305)		(21,459)
Property, plant, and equipment, net	29,769		30,209
Deferred charges and other assets, net	6,731		6,626
Total assets	$	63,615	$	63,056
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	995	$	1,406
Accounts payable	14,565		12,567
Accrued expenses	1,065		1,240
Taxes other than income taxes payable	1,490		1,452
Income taxes payable	203		137
Total current liabilities	18,318		16,802
Debt and finance lease obligations, less current portion	9,746		10,118
Deferred income tax liabilities	5,224		5,349
Other long-term liabilities	2,077		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 capital	6,929		6,901
Treasury stock, at cost; 353,118,736 and 340,199,677 common shares	(27,373)		(25,322)
Retained earnings	47,052		45,630
Accumulated other comprehensive loss	(1,172)		(870)
Total Valero Energy Corporation stockholders’ equity	25,443		26,346
Noncontrolling interests	2,807		2,178
Total equity	28,250		28,524
Total liabilities and equity	$	63,615	$	63,056

See Condensed Notes to Consolidated Financial Statements.

1

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(millions of dollars, except per share amounts)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues (a)	$	34,490	$	34,509	$	66,249	$	70,948
Cost of sales:
Cost of materials and other	30,943		29,430		58,625		59,435
Operating expenses (excluding depreciation and amortization expense reflected below)	1,424		1,440		2,835		2,917
Depreciation and amortization expense	684		658		1,367		1,308
Total cost of sales	33,051		31,528		62,827		63,660
Other operating expenses	3		2		37		12
General and administrative expenses (excluding depreciation and amortization expense reflected below)	203		209		461		453
Depreciation and amortization expense	12		11		24		21
Operating income	1,221		2,759		2,900		6,802
Other income, net	122		106		266		235
Interest and debt expense, net of capitalized interest	(140)		(148)		(280)		(294)
Income before income tax expense	1,203		2,717		2,886		6,743
Income tax expense	277		595		630		1,475
Net income	926		2,122		2,256		5,268
Less: Net income attributable to noncontrolling interests	46		178		131		257
Net income attributable to Valero Energy Corporation stockholders	$	880	$	1,944	$	2,125	$	5,011
Earnings per common share	$	2.71	$	5.41	$	6.47	$	13.75
Weighted-average common shares outstanding (in millions)	324		358		327		363
Earnings per common share – assuming dilution	$	2.71	$	5.40	$	6.47	$	13.74
Weighted-average common shares outstanding – assuming dilution (in millions)	324		358		327		363
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign operations	$	1,456	$	1,449	$	2,843	$	2,871

See Condensed Notes to Consolidated Financial Statements.

2

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions of dollars)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	926	$	2,122	$	2,256	$	5,268
Other comprehensive income (loss):
Foreign currency translation adjustment	(111)		257		(264)		391
Net loss on pension and other postretirement benefits	(5)		(6)		(11)		(13)
Net gain (loss) on cash flow hedges	(8)		(47)		(92)		10
Other comprehensive income (loss) before income tax benefit	(124)		204		(367)		388
Income tax benefit related to items of other comprehensive income (loss)	(3)		(6)		(18)		(5)
Other comprehensive income (loss)	(121)		210		(349)		393
Comprehensive income	805		2,332		1,907		5,661
Less: Comprehensive income attributable to noncontrolling interests	42		154		84		262
Comprehensive income attributable to Valero Energy Corporation stockholders	$	763	$	2,178	$	1,823	$	5,399

See Condensed Notes to Consolidated Financial Statements.

3

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(millions of dollars, except per share amounts)

(unaudited)

	Valero Energy Corporation Stockholders’ Equity
	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total		Non- controlling Interests		Total Equity
Balance as of March 31, 2024	$	7	$	6,916	$	(26,330)	$	46,519	$	(1,055)	$	26,057	$	2,767	$	28,824
Net income	—		—		—		880		—		880		46		926
Dividends on common stock ($1.07 per share)	—		—		—		(347)		—		(347)		—		(347)
Stock-based compensation expense	—		13		—		—		—		13		—		13
Purchases of common stock for treasury	—		—		(1,043)		—		—		(1,043)		—		(1,043)
Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)
Other comprehensive loss	—		—		—		—		(117)		(117)		(4)		(121)
Balance as of June 30, 2024	$	7	$	6,929	$	(27,373)	$	47,052	$	(1,172)	$	25,443	$	2,807	$	28,250
Balance as of March 31, 2023	$	7	$	6,877	$	(21,637)	$	40,935	$	(1,205)	$	24,977	$	2,090	$	27,067
Net income	—		—		—		1,944		—		1,944		178		2,122
Dividends on common stock ($1.02 per share)	—		—		—		(367)		—		(367)		—		(367)
Stock-based compensation expense	—		14		—		—		—		14		—		14
Transactions in connection with stock-based compensation plans	—		(2)		2		—		—		—		—		—
Purchases of common stock for treasury	—		—		(951)		—		—		(951)		—		(951)
Distributions to noncontrolling interests	—		—		—		—		—		—		(101)		(101)
Other comprehensive income (loss)	—		—		—		—		234		234		(24)		210
Balance as of June 30, 2023	$	7	$	6,889	$	(22,586)	$	42,512	$	(971)	$	25,851	$	2,143	$	27,994

See Condensed Notes to Consolidated Financial Statements.

4

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, 2023	$	7	$	6,901	$	(25,322)	$	45,630	$	(870)	$	26,346	$	2,178	$	28,524
Net income	—		—		—		2,125		—		2,125		131		2,256
Dividends on common stock ($2.14 per share)	—		—		—		(703)		—		(703)		—		(703)
Stock-based compensation expense	—		52		—		—		—		52		—		52
Transactions in connection with stock-based compensation plans	—		(24)		25		—		—		1		—		1
Purchases of common stock for treasury	—		—		(2,076)		—		—		(2,076)		—		(2,076)
Contributions from noncontrolling interests	—		—		—		—		—		—		90		90
Distributions to noncontrolling interests	—		—		—		—		—		—		(2)		(2)
Conversion of IEnova Revolver debt to equity (see Notes 4 and 6)	—		—		—		—		—		—		457		457
Other comprehensive loss	—		—		—		—		(302)		(302)		(47)		(349)
Balance as of June 30, 2024	$	7	$	6,929	$	(27,373)	$	47,052	$	(1,172)	$	25,443	$	2,807	$	28,250
Balance as of December 31, 2022	$	7	$	6,863	$	(20,197)	$	38,247	$	(1,359)	$	23,561	$	1,907	$	25,468
Net income	—		—		—		5,011		—		5,011		257		5,268
Dividends on common stock ($2.04 per share)	—		—		—		(746)		—		(746)		—		(746)
Stock-based compensation expense	—		53		—		—		—		53		—		53
Transactions in connection with stock-based compensation plans	—		(27)		28		—		—		1		—		1
Purchases of common stock for treasury	—		—		(2,417)		—		—		(2,417)		—		(2,417)
Contributions from noncontrolling interests	—		—		—		—		—		—		75		75
Distributions to noncontrolling interests	—		—		—		—		—		—		(101)		(101)
Other comprehensive income	—		—		—		—		388		388		5		393
Balance as of June 30, 2023	$	7	$	6,889	$	(22,586)	$	42,512	$	(971)	$	25,851	$	2,143	$	27,994

See Condensed Notes to Consolidated Financial Statements.

5

VALERO ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)

(unaudited)

	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	2,256	$	5,268
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	1,391		1,329
Gain on early retirement of debt, net	—		(11)
Deferred income tax expense (benefit)	(100)		159
Changes in current assets and current liabilities	629		(1,728)
Changes in deferred charges and credits and other operating activities, net	142		(335)
Net cash provided by operating activities	4,318		4,682
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))	(247)		(311)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)	(142)		(122)
Other VIEs	(5)		(2)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)	(636)		(508)
Deferred turnaround and catalyst cost expenditures of DGD	(51)		(39)
Purchases of available-for-sale (AFS) debt securities	(14)		(354)
Proceeds from sales and maturities of AFS debt securities	68		251
Other investing activities, net	(2)		7
Net cash used in investing activities	(1,029)		(1,078)
Cash flows from financing activities:
Proceeds from debt borrowings (excluding VIEs)	2,850		1,450
Proceeds from debt borrowings of VIEs:
DGD	250		300
Other VIEs	23		54
Repayments of debt and finance lease obligations (excluding VIEs)	(3,117)		(1,726)
Repayments of debt and finance lease obligations of VIEs:
DGD	(513)		(386)
Other VIEs	(13)		(41)
Premiums paid on early retirement of debt	—		(5)
Purchases of common stock for treasury	(2,056)		(2,393)
Common stock dividend payments	(703)		(746)
Contributions from noncontrolling interests	90		75
Distributions to noncontrolling interests	(2)		(101)
Other financing activities, net	—		(1)
Net cash used in financing activities	(3,191)		(3,520)
Effect of foreign exchange rate changes on cash	(108)		129
Net increase (decrease) in cash, cash equivalents, and restricted cash	(10)		213
Cash and cash equivalents at beginning of period	5,424		4,862
Cash, cash equivalents, and restricted cash at end of period (a)	$	5,414	$	5,075

_____________________________

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

See Condensed Notes to Consolidated Financial Statements.

6

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

General

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

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

7

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. The workshops subsequently announced by the CEC regarding the management of refinery maintenance and turnarounds have since been canceled, and it remains uncertain as to whether and when they will be rescheduled. In May 2024, however, the CEC issued resolutions adopting emergency regulations implementing new and expanded refining margin, refinery maintenance, and marine import reporting requirements, all of which became

8

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

effective in June 2024. It remains uncertain as to what extent any regulations will address the remaining reporting requirements under SBx 1-2.

SBx 1-2 also requires that certain California agencies prepare specified reports and assessments, including that the CEC prepare and publish a Transportation Fuels Assessment. In April 2024, the CEC published a draft Transportation Fuels Assessment, which among other things, proposes various policy options intended to mitigate gasoline price spikes in California, including polices designed to reduce the demand for gasoline, encourage fuel conservation, and allow more active participation and management of the petroleum industry supply chain by the State. The Transportation Fuels Assessment has not yet been published in final form, and it remains uncertain whether and when the State will pursue any of the policy options proposed therein.

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, imposed restrictions on turnaround and maintenance activities, or finalized any of the policy options proposed in its draft Transportation Fuels Assessment, the potential implementation of a financial penalty or of any restrictions or delays on our ability to undertake turnaround or maintenance activities or of other undeveloped policy options 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. Consequently, we are evaluating strategic alternatives for our operations in California. As a result, we performed an impairment analysis and determined that the carrying value of these assets was recoverable as of June 30, 2024. Future developments from our evaluation of strategic alternatives could significantly impact our asset impairment assumptions and result in an impairment loss that could be material.

9

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.    INVENTORIES

Inventories consisted of the following (in millions):

	June 30, 2024		December 31, 2023
Refinery feedstocks	$	2,036	$	2,223
Refined petroleum products and blendstocks	4,307		3,790
Renewable diesel feedstocks and products	1,024		913
Ethanol feedstocks and products	307		313
Materials and supplies	354		344
Inventories	$	8,028	$	7,583

As of June 30, 2024 and December 31, 2023, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded their LIFO carrying amounts by $5.3 billion and $4.4 billion, respectively. Our non-LIFO inventories accounted for $1.5 billion of our total inventories as of June 30, 2024 and December 31, 2023.

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.

In February 2023, we used cash on hand to purchase and retire a portion of the following notes (in millions):

Debt Purchased and Retired	Principal 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

10

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Facilities

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

				June 30, 2024
	Facility Amount		Maturity Date	Outstanding Borrowings		Letters of Credit Issued (a)		Availability
Committed facilities:
Valero Revolver	$	4,000	November 2027	$	—	$	2	$	3,998
Accounts receivable sales facility (b)	1,300		July 2024	—		n/a		1,300
Committed facilities of VIEs (c):
DGD Revolver (d)	400		June 2026	—		112		288
DGD Loan Agreement (e)	100		June 2026	—		n/a		100
IEnova Revolver (f)	830		February 2028	329		n/a		501
Uncommitted facilities:
Letter of credit facilities	n/a		n/a	n/a		—		n/a

________________________

(a)Letters of credit issued as of June 30, 2024 expire at various times in 2024 through 2026.

(b)In July 2024, we extended the maturity date of this facility to July 2025.

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

(d)The variable interest rate on the unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) was 7.201 percent as of December 31, 2023.

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

(f)Central Mexico Terminals (defined in Note 6) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 6). 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 9.152 percent and 9.245 percent as of June 30, 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):

	Six Months Ended June 30,
	2024		2023
Borrowings:
Accounts receivable sales facility	$	2,850	$	1,450
DGD Revolver	150		300
DGD Loan Agreement	100		—
IEnova Revolver	23		54
Repayments:
Accounts receivable sales facility	(2,850)		(1,450)
DGD Revolver	(400)		(350)
DGD Loan Agreement	(100)		(25)
IEnova Revolver	—		(38)

Other Disclosures

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest and debt expense	$	146	$	151	$	293	$	303
Less: Capitalized interest	6		3		13		9
Interest and debt expense, net of capitalized interest	$	140	$	148	$	280	$	294

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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 and six months ended June 30, 2024, we purchased for treasury 6,622,185 shares and 13,256,028 shares, respectively. During the three and six months ended June 30, 2023, we purchased for treasury 8,421,452 shares and 19,414,793 shares, respectively.

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

Program Name	Announcement Date	Total Cost Authorized		Remaining Available for Purchase as of June 30, 2024
September 2023 Program	September 15, 2023	$	2,500	$	145
February 2024 Program	February 22, 2024	2,500		2,500

Common Stock Dividends

On July 18, 2024, our Board declared a quarterly cash dividend of $1.07 per common share payable on September 3, 2024 to holders of record at the close of business on August 1, 2024.

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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 June 30,
	2024								2023
	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	$	(883)	$	(167)	$	(5)	$	(1,055)	$	(1,031)	$	(188)	$	14	$	(1,205)
Other comprehensive income (loss) before reclassifications	(110)		—		8		(102)		257		—		12		269
Amounts reclassified from accumulated other comprehensive loss	—		(3)		(12)		(15)		—		(6)		(30)		(36)
Effect of exchange rates	—		—		—		—		—		1		—		1
Other comprehensive income (loss)	(110)		(3)		(4)		(117)		257		(5)		(18)		234
Balance as of end of period	$	(993)	$	(170)	$	(9)	$	(1,172)	$	(774)	$	(193)	$	(4)	$	(971)

	Six Months Ended June 30,
	2024								2023
	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	$	(735)	$	(162)	$	27	$	(870)	$	(1,168)	$	(183)	$	(8)	$	(1,359)
Other comprehensive income (loss) before reclassifications	(258)		—		(15)		(273)		394		—		49		443
Amounts reclassified from accumulated other comprehensive loss	—		(7)		(21)		(28)		—		(13)		(45)		(58)
Effect of exchange rates	—		(1)		—		(1)		—		3		—		3
Other comprehensive income (loss)	(258)		(8)		(36)		(302)		394		(10)		4		388
Balance as of end of period	$	(993)	$	(170)	$	(9)	$	(1,172)	$	(774)	$	(193)	$	(4)	$	(971)

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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 June 30, 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 (predominantly 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):

	DGD		Central Mexico Terminals		Other		Total
June 30, 2024
Assets
Cash and cash equivalents	$	400	$	—	$	16	$	416
Other current assets	1,369		9		47		1,425
Property, plant, and equipment, net	3,823		656		69		4,548
Liabilities
Current liabilities, including current portion of debt and finance lease obligations	$	384	$	357	$	2	$	743
Debt and finance lease obligations, less current portion	656		—		—		656

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	DGD		Central Mexico Terminals		Other		Total
December 31, 2023
Assets
Cash and cash equivalents	$	237	$	—	$	23	$	260
Other current assets	1,520		11		46		1,577
Property, plant, and equipment, net	3,772		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.

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VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    EMPLOYEE BENEFIT PLANS

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

	Pension Plans				Other Postretirement Benefit Plans
	2024		2023		2024		2023
Three months ended June 30
Service cost	$	28	$	28	$	1	$	1
Interest cost	32		30		3		3
Expected return on plan assets	(54)		(51)		—		—
Amortization of:
Net actuarial gain	(2)		(1)		(1)		(2)
Prior service credit	(2)		(4)		—		(1)
Net periodic benefit cost	$	2	$	2	$	3	$	1
Six months ended June 30
Service cost	$	56	$	56	$	2	$	2
Interest cost	63		60		6		6
Expected return on plan assets	(107)		(101)		—		—
Amortization of:
Net actuarial gain	(3)		(3)		(2)		(3)
Prior service credit	(5)		(9)		—		(2)
Net periodic benefit cost	$	4	$	3	$	6	$	3

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Earnings per common share:
Net income attributable to Valero stockholders	$	880	$	1,944	$	2,125	$	5,011
Less: Income allocated to participating securities	3		6		6		16
Net income available to common stockholders	$	877	$	1,938	$	2,119	$	4,995
Weighted-average common shares outstanding	324		358		327		363
Earnings per common share	$	2.71	$	5.41	$	6.47	$	13.75
Earnings per common share – assuming dilution:
Net income attributable to Valero stockholders	$	880	$	1,944	$	2,125	$	5,011
Less: Income allocated to participating securities	3		6		6		16
Net income available to common stockholders	$	877	$	1,938	$	2,119	$	4,995
Weighted-average common shares outstanding	324		358		327		363
Effect of dilutive securities	—		—		—		—
Weighted-average common shares outstanding – assuming dilution	324		358		327		363
Earnings per common share – assuming dilution	$	2.71	$	5.40	$	6.47	$	13.74

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 and six months ended June 30, 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):

	June 30, 2024		December 31, 2023
Receivables from contracts with customers, included in receivables, net	$	6,821	$	7,209
Contract liabilities, included in accrued expenses	33		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 June 30, 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):

	Refining		Renewable Diesel		Ethanol		Corporate and Eliminations		Total
Three months ended June 30, 2024
Revenues:
Revenues from external customers	$	33,044	$	554	$	892	$	—	$	34,490
Intersegment revenues	3		630		229		(862)		—
Total revenues	33,047		1,184		1,121		(862)		34,490
Cost of sales:
Cost of materials and other (a)	29,995		930		874		(856)		30,943
Operating expenses (excluding depreciation and amortization expense reflected below)	1,219		80		125		—		1,424
Depreciation and amortization expense	604		62		19		(1)		684
Total cost of sales	31,818		1,072		1,018		(857)		33,051
Other operating expenses	5		—		(2)		—		3
General and administrative expenses (excluding depreciation and amortization expense reflected below)