Valero Energy VLO Form 10-Q filing Q2 FY2026

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See Condensed Notes to Consolidated Financial Statements.

See Condensed Notes to Consolidated Financial Statements.

See Condensed Notes to Consolidated Financial Statements.

See Condensed Notes to Consolidated Financial Statements.

See Condensed Notes to Consolidated Financial Statements.

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

See Condensed Notes to Consolidated Financial Statements.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

General

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

These interim unaudited financial statements were prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these interim unaudited financial statements reflect all adjustments considered necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These interim unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2025.

The balance sheet as of December 31, 2025, has been derived from our audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2025.

Reclassifications

Certain prior year amounts have been reclassified to conform to the 2026 presentation. The changes were due to the separate presentation of (i) taxes other than income taxes, which were previously included in cost of materials and other in our statements of income and (ii) changes in deferred charges and other assets and changes in long-term liabilities, which were previously included in “changes in deferred charges and credits and other operating activities, net” in our statements of cash flows. In addition, prior year amounts that were presented separately for activities related to investments in available-for-sale (AFS) debt securities have been reclassified to “other investing activities, net” in our statements of cash flows.

Significant Accounting Policies

Use of Estimates

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

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Accounting Pronouncement Not Yet Adopted

ASU 2026-02

In May 2026, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which provides guidance on the accounting for environmental credit assets and related obligations. This ASU establishes recognition, measurement, presentation, and disclosure requirements for entities that generate, purchase, or receive environmental credits or have regulatory compliance obligations that may be settled with such credits. We expect to adopt this ASU effective January 1, 2028. We are currently evaluating the effect that adopting this ASU will have on our financial position, results of operations, and related disclosures.

2. IMPAIRMENT AND OTHER MATTERS

In March 2025, we approved a plan to idle the processing units and cease refining operations at our Benicia Refinery by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result of these actions, the following impacts were recorded in our Refining segment:

• During the first quarter of 2025, we evaluated the Benicia and Wilmington refineries for potential impairment and concluded that their carrying values were not recoverable as of March 31, 2025. Therefore, we recognized a combined asset impairment loss of $1.1 billion.
• Included in the recoverability assessments discussed above was the recognition of expected asset retirement obligations of $337 million. During the three and six months ended June 30, 2026, we settled approximately $70 million and $170 million, respectively, of the asset retirement obligation related to our Benicia Refinery.
• We shortened the estimated useful life of the Benicia Refinery, and as a result, have depreciated the revised carrying value of the net property, plant, and equipment and other noncurrent assets since April 2025 to the estimated salvage value. Accordingly, we recorded incremental depreciation of approximately $33 million and $133 million in the three and six months ended June 30, 2026, respectively, and approximately $100 million in the three and six months ended June 30, 2025 in depreciation and amortization expense.
• We implemented a transition plan for the affected employees of the Benicia Refinery, which includes retention incentive payments and separation benefits. During the third quarter of 2025, we recognized a liability of $50 million for these one-time costs, which was included in operating expenses (excluding depreciation and amortization expense). Substantially all of this amount has been paid to eligible employees as of June 30, 2026.
• During the second quarter of 2026, we reduced certain inventory levels related to our California operations that resulted in the liquidation of last-in, first-out (LIFO) inventory layers with historical costs that were lower than current replacement costs. As a result, cost of materials and other includes a benefit of $44 million in the three and six months ended June 30, 2026. Similar reductions in inventory levels occurred during the fourth quarter of 2025, which increased cost of materials and other by $37 million in the year ended December 31, 2025.

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During the first quarter of 2026, we began idling the processing units through a phased approach and ceased operation of the fuel production units at our Benicia Refinery. In accordance with our plan, full idling of all processing units was completed in April 2026. While we continue to evaluate potential redevelopment options for the future use of the refinery property, we plan to maintain all required operating permits and keep the facilities in a safe, clean, and idled condition. In addition, we expect to continue to fulfill our contractual obligations to customers in the Northern California market through imports or other alternative supply arrangements. Effective in the second quarter of 2026, activities associated with the decommissioning and redevelopment of our Benicia Refinery are reported within other corporate expenses in our segment information, as disclosed in Note 10.

3. INVENTORIES

Inventories consisted of the following (in millions):

During the second quarter of 2026, we recognized a $44 million benefit in cost of materials and other resulting from the liquidation of LIFO inventory layers established in prior years at costs lower than current replacement costs. As discussed in Note 2, LIFO inventory levels related to our California operations declined during 2026 due to the phased idling of processing units and cessation of refining operations at the Benicia Refinery, which was completed by the end of April 2026. Consequently, inventory levels at December 31, 2026 are expected to remain below those at December 31, 2025.

As of June 30, 2026 and December 31, 2025, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by $7.5 billion and $2.6 billion, respectively. Our non-LIFO inventories accounted for $1.3 billion and $1.2 billion of our total inventories as of June 30, 2026 and December 31, 2025, respectively.

4. DEBT

Public Debt

On March 10, 2026, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036. Proceeds from this debt issuance totaled $850 million before deducting the underwriting discount and other debt issuance costs.

In July 2026, we repaid the $100 million outstanding principal balance of our 7.65 percent Debentures that matured on July 1, 2026.

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

Credit Facilities

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

(a)Letters of credit issued as of June 30, 2026 expire at various times in 2026 through 2029.

(b)In July 2026, we extended the maturity date of this facility to June 2027.

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

(d)In February 2026, DGD amended this unsecured revolving credit facility with a syndicate of financial institutions (the DGD Revolver) to (i) extend the maturity date to February 2029 and (ii) modify the reference interest rates from an adjusted term SOFR, a Secured Overnight Financing Rate (SOFR), to the term SOFR, and from an adjusted daily simple SOFR to the daily simple SOFR.

(e)In February 2026, DGD amended its unsecured revolving loan agreement with its members (the DGD Loan Agreement) to extend the maturity date to June 2029. The amounts shown for the DGD Loan Agreement represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation.

(f)Central Mexico Terminals (defined in Note 7) has an unsecured revolving credit facility (the IEnova Revolver) with IEnova (defined in Note 7). The variable interest rate on the IEnova Revolver was 7.542 percent and 7.835 percent as of June 30, 2026 and December 31, 2025, respectively.

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Activity under our credit facilities was as follows (in millions):

Other Disclosures

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

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5. COMMITMENTS AND CONTINGENCIES

Port Arthur Refinery Fire

On March 23, 2026, our Port Arthur Refinery experienced a fire in one of the refinery’s distillate hydrotreater units that prompted a full shut-down of the refinery. The refinery resumed operations in April 2026 at reduced throughput rates and returned to normal throughput rates during the second quarter. We have completed our assessment of the damages and efforts to complete necessary repairs and replacements are in progress. We expect that a substantial portion of the cost of repairs and capital expenditures in 2026 resulting from the incident will be covered by insurance, subject to our self-insured retention. Insurance proceeds may be received in periods different from those in which the related repair costs or capital expenditures are incurred. Uncertainties remain with respect to the ultimate outcomes from this incident and the resulting impact on our financial position, results of operations, and cash flows.

During the three and six months ended June 30, 2026, we recorded an insurance recovery receivable of $78 million to offset losses that we believe are probable of recovery. Any insurance recoveries attributable to property damage in excess of recognized losses represent a gain contingency and will be recognized when realized or realizable. No insurance proceeds were received during the three and six months ended June 30, 2026.

In addition, during the three and six months ended June 30, 2026, we incurred $15 million of repair costs directly attributable to the incident that may be recoverable through the insurance claims process. These costs are included in other operating expenses within our Refining segment.

As a result of this incident, we have received a number of lawsuits, including a proposed class action lawsuit, alleging personal injury, property damage, and nuisance in the adjacent community. Several of these actions seek unspecified damages in excess of $1 million. While we intend to vigorously defend against such pending actions, the ultimate outcomes and impacts thereof are currently uncertain and the full extent of any potential losses or damages cannot be reasonably estimated at this time. We continue to work cooperatively with various regulatory authorities reviewing the incident and discussions are ongoing. As of the date of this quarterly report on Form 10-Q, no formal regulatory enforcement actions or proceedings have been commenced. Regulatory enforcement actions or proceedings, if any, that may arise in the future, are currently uncertain and we are unable to make any reasonable estimates with respect thereto at this time.

Trade and Other Policy Matters

The U.S. federal government under the current administration implemented new or revised tariffs that negatively impacted our business, particularly our Renewable Diesel segment, during 2025 and into 2026, including those implemented pursuant to the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were invalid. On April 20, 2026, U.S. Customs and Border Protection (CBP) launched a system that was developed to process IEEPA tariff refund claims. Based on the eligibility parameters established by CBP for Phase 1 of the refund process, DGD prepared and filed a refund claim of $51 million, which was accepted by CBP. In accordance with the accounting for gain contingencies, we recorded a receivable for this amount in April 2026, which resulted in a decrease in cost of materials and other for our Renewable Diesel segment. As of June 30, 2026, a significant portion of the Phase 1 refund claim has been received. DGD may be

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eligible to participate in future phases of the refund process; however, the timing, amount, and ultimate recoverability of any additional refunds remain uncertain. Accordingly, no amounts have been recognized with respect to such potential future claims. We will continue to monitor developments related to trade and tariff-related matters and evaluate their potential effects on our business, financial position, results of operations, and cash flows.

6. EQUITY

Treasury Stock

We purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described in the table below) and with respect to our employee stock-based compensation plans. We purchased for treasury 9,011,171 shares and 2,567,930 shares for the three months ended June 30, 2026 and 2025, respectively, and 11,338,194 shares and 4,642,535 shares for the six months ended June 30, 2026 and 2025, respectively.

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

On July 16, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $5.0 billion with no expiration date, which is in addition to the amount remaining under the February 2026 Program.

Common Stock Dividends

On July 16, 2026, our Board declared a quarterly cash dividend of $1.20 per common share payable on August 31, 2026 to holders of record at the close of business on July 31, 2026.

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Accumulated Other Comprehensive Loss

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

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7. 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, 2026, the significant consolidated VIEs included:

• DGD, a joint venture with a subsidiary of Darling Ingredients Inc. that owns and operates two plants that process waste and renewable feedstocks (predominantly animal fats, used cooking oils, vegetable oils, and inedible distillers corn oils (DCOs)) into renewable diesel, renewable naphtha, and neat sustainable aviation fuel (SAF)1; and
• Central Mexico Terminals, a collective group of three subsidiaries of Infraestructura Energética Nova, S.A.P.I. de C.V. (IEnova), which is a Mexican company and indirect subsidiary of Sempra, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals.

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

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

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

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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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8. EMPLOYEE BENEFIT PLANS

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

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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9. EARNINGS PER COMMON SHARE

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

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan. Dilutive securities include participating securities. For the three and six months ended June 30, 2026 and 2025, we computed earnings per common share – assuming dilution using the two-class method for all dilutive securities.

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10. REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers

Disaggregation of Revenue

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

Contract Balances

Contract balances were as follows (in millions):

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, 2026, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations. See Note 2 for additional information regarding contractual obligations related to our Benicia Refinery.

Segment Information

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

• The Refining segment includes the operations of our petroleum refineries, the associated activities to market our refined petroleum products, and the logistics assets that support our refining operations. The principal products manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.
• The Renewable Diesel segment includes the operations of DGD, a consolidated joint venture as discussed in Note 7, and the associated activities to market low-carbon fuels. The principal products manufactured by DGD and sold by this segment are renewable diesel, renewable naphtha, and neat SAF. This segment sells some renewable diesel and neat SAF to the Refining

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

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

Operations that are not included in any of the reportable segments are included in the corporate and other category. As discussed in Note 2, effective in the second quarter of 2026, activities associated with the decommissioning and redevelopment of our Benicia Refinery are reported within other corporate expenses.

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

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The following tables reflect information about our reportable segments and include the reconciliation to our consolidated income before income tax expense (in millions):

See notes on page 24.

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See notes on page 24.

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See notes on page 24.

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(a)Cost of materials and other is net of the clean fuel production credit on qualifying sales of certain low-carbon transportation fuels of $177 million and $140 million for the three months ended June 30, 2026 and 2025, respectively, and $355 million and $191 million for the six months ended June 30, 2026 and 2025, respectively, for our Renewable Diesel segment and $99 million and $119 million for the three and six months ended June 30, 2026, respectively, for our Ethanol segment.

(b)Other corporate expenses include general and administrative expenses and depreciation and amortization expense, as reflected in our consolidated statements of income on page 2. Effective in the second quarter of 2026, other corporate expenses also include expenses associated with the decommissioning and redevelopment of our Benicia Refinery.

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

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Total assets for reportable segments reconciled to our consolidated assets were as follows (in millions):

Expenditures for long-lived assets for reportable segments reconciled to our consolidated expenditures for long-lived assets were as follows (in millions):

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

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As of June 30, 2026 and December 31, 2025, our investments in nonconsolidated joint ventures accounted for under the equity method were $680 million and $684 million, respectively, all of which related to the Refining segment and are reflected in “deferred charges and other assets, net” in our balance sheets.

11. SUPPLEMENTAL CASH FLOW INFORMATION

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

Changes in current assets and current liabilities for the six months ended June 30, 2026 were primarily due to the following:

• The increase in receivables was primarily due to an increase in refined petroleum product prices in June 2026 compared to December 2025; and
• The increase in accounts payable was primarily due to an increase in crude oil and other feedstock prices in June 2026 compared to December 2025.

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

• The increase in receivables was primarily due to an increase in refined petroleum product sales volumes, partially offset by a decrease in related prices in June 2025 compared to December 2024 and the collection of $246 million for a blender’s tax credit receivable;
• The decrease in inventories was primarily due to lower inventory levels in June 2025 compared to December 2024; and
• The decrease in accounts payable was primarily due to a decrease in crude oil and other feedstock prices in June 2025 compared to December 2024.

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

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

There were no significant noncash investing and financing activities during the six months ended June 30, 2026, except as noted in the table above. Noncash investing activities for the six months ended June 30, 2025 included the recognition of expected asset retirement obligations of $337 million, as described in Note 2. There were no other significant noncash investing and financing activities during the six months ended June 30, 2025, except as noted in the table above.

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12. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of June 30, 2026 and December 31, 2025.

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

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

• Commodity derivative contracts consist primarily of exchange-traded futures, which are used to reduce the impact of price volatility on our results of operations and cash flows as discussed in Note 13. These contracts are measured at fair value using a market approach based on quoted prices from the commodity exchange and are categorized in Level 1 of the fair value hierarchy.
• Physical purchase contracts represent the fair value of fixed-price corn purchase contracts. The fair values of these purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy.
• Clean fuel production credits represent the fair value of the tax credits that DGD intends to sell on behalf of the other joint venture member. These tax credits are categorized in Level 3 of the fair value hierarchy and are measured at fair value using a market approach based on historical sales prices and third-party consultant estimates. Significant unobservable inputs used in the valuation include the expected market discount per $1.00 of credit value.

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• Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The plan assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer.
• Investments in AFS debt securities consist primarily of commercial paper and U.S. government Treasury bills and have maturities within one year. The securities categorized in Level 1 are measured at fair value using a market approach based on quoted prices from national securities exchanges and the securities categorized in Level 2 are measured at fair value using a market approach based on quoted prices from independent pricing services. The amortized cost basis of the securities approximates fair value. Realized and unrealized gains and losses were de minimis for the three and six months ended June 30, 2026 and 2025.
• Blending program obligations represent our liability for the purchase of compliance credits needed to satisfy our blending obligations under various government and regulatory blending programs, such as the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS), California Low Carbon Fuel Standard (LCFS), Canada Clean Fuel Regulations, U.K. Renewable Transport Fuel Obligation, and similar programs in other jurisdictions in which we operate (collectively, the Renewable and Low-Carbon Fuel Programs). The blending program obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.
• Foreign currency contracts consist of foreign currency exchange and purchase contracts related to our foreign operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of our operations. These contracts are measured at fair value using a market approach based on quoted foreign currency exchange rates and are categorized in Level 1 of the fair value hierarchy.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025.

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Financial Instruments

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

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

13. PRICE RISK MANAGEMENT ACTIVITIES

General

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

Risk Management Activities by Type of Risk

Commodity Price Risk

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

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We primarily use commodity derivative instruments that are either designated as cash flow hedges or entered into for economic hedging purposes. While both types of derivatives are used to manage exposure to commodity price risk, they differ in their risk management focus and accounting treatment, as described below.

• Cash flow hedges – Cash flow hedges are derivative instruments that are formally designated and qualify for hedge accounting. The objective of these hedges is to reduce variability in cash flows by locking in the price of forecasted purchases and/or product sales at market prices.
• Economic hedges – Economic hedges are derivative instruments that are not designated as hedging instruments for accounting purposes. These derivatives are primarily used to manage exposure to commodity price volatility associated with certain feedstock and product inventories and, in some cases, forecasted purchases and/or product sales. Although economic hedges may achieve similar economic risk management objectives as cash flow hedges, changes in their fair value are recognized currently in our statements of income.

As of June 30, 2026, we had the following outstanding commodity derivative instruments that were used as cash flow hedges and economic hedges, as well as commodity derivative instruments related to the physical purchase of corn at a fixed price. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels, except corn contracts that are presented in thousands of bushels).

Renewable and Low-Carbon Fuel Programs Price Risk

We are exposed to market risk related to the volatility in the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs. To manage this risk, we enter into contracts to purchase these credits. Some of these contracts are derivative instruments; however, we elect the normal purchase exception and do not record these contracts at their fair values. The Renewable and Low-Carbon Fuel Programs require us to blend a certain volume of renewable and low-carbon fuels into the petroleum-

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

based transportation fuels we produce in, or import into, the respective jurisdiction to be consumed therein based on annual quotas. To the degree we are unable to blend at the required quotas, we must purchase compliance credits (primarily Renewable Identification Numbers (RINs)). The cost of meeting our credit obligations under the Renewable and Low-Carbon Fuel Programs was $731 million and $408 million for the three months ended June 30, 2026 and 2025, respectively, and $1.4 billion and $740 million for the six months ended June 30, 2026 and 2025, respectively. These amounts are reflected in cost of materials and other.

Foreign Currency Risk

We are exposed to exchange rate fluctuations on transactions related to our foreign operations that are denominated in currencies other than the local (functional) currencies of our operations. To manage our exposure to these exchange rate fluctuations, we often use foreign currency contracts. These contracts are not designated as hedging instruments for accounting purposes and therefore are classified as economic hedges. As of June 30, 2026, we had foreign currency contracts to purchase $445 million of U.S. dollars. These commitments matured before July 30, 2026.

Fair Values of Derivative Instruments

The following table provides information about the fair values of our derivative instruments as of June 30, 2026 and December 31, 2025 (in millions) and the line items in our balance sheets in which the fair values are reflected. See Note 12 for additional information related to the fair values of our derivative instruments.

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

VALERO ENERGY CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Market Risk

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

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

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

For cash flow hedges, no component of any derivative instrument’s gain or loss was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2026 and 2025. For the three and six months ended June 30, 2026 and 2025, cash flow hedges primarily related to forecasted sales of renewable diesel. As of June 30, 2026, the estimated deferred after-tax gain that is expected to be reclassified into revenues within the next 12 months was not material. The changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2026 and 2025 are described in Note 6.

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

34

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

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

NON-GAAP FINANCIAL MEASURES

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

OVERVIEW AND OUTLOOK

Overview

Business Operations Update

Our results for the second quarter and first six months of 2026 benefited from strong global demand for petroleum-based transportation fuels amid constrained worldwide supply. Geopolitical developments continued to disrupt global commodity markets and further limited refining capacity, exacerbating the imbalance between supply and demand. These conditions led to higher market prices for petroleum-based transportation fuels, as well as increased prices for crude oil and other feedstocks used in their production. Despite higher feedstock costs, the spread between product prices and input costs resulted in strong refining margins during the second quarter and first six months of 2026. However, refining margins remain sensitive to changes in global supply and demand dynamics, feedstock costs, and geopolitical developments, and sustained price volatility or shifts in these factors could impact future results.

Our results for the second quarter and first six months of 2026 were also impacted by the phased idling of processing units and cessation of refining operations at our Benicia Refinery, which was completed by the end of April. See Note 2 of Condensed Notes to Consolidated Financial Statements for additional information related to our Benicia Refinery.

In addition, on March 23, 2026, our Port Arthur Refinery experienced a fire in one of its distillate hydrotreater units, which prompted a full shut-down of the refinery. The refinery resumed operations in April 2026 at reduced throughput rates and returned to normal throughput rates during the second quarter. As a result of the outage and the phased restart of the processing units, the refinery’s throughput volumes during the second quarter of 2026 were lower than typical throughput rates. See Note 5 of Condensed Notes to Consolidated Financial Statements for additional information related to this incident.

The strong demand for our products and continued strength in refining margins are the primary contributors to us reporting $3.7 billion and $5.0 billion of net income attributable to Valero stockholders

for the second quarter of 2026 and the first six months of 2026, respectively. Our operating results, including operating results by segment, are described in the following summary under “Second Quarter Results” and “First Six Months Results,” and detailed descriptions can be found under “RESULTS OF OPERATIONS” beginning on page 43.

Our operations generated $7.0 billion of cash during the first six months of 2026. Also, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036 during the first six months of 2026, as described in Note 4 of Condensed Notes to Consolidated Financial Statements. The cash generated by our operations was used to make $798 million of capital investments in our business and return $3.6 billion to our stockholders through purchases of common stock for treasury and dividend payments. As a result of these items, along with the net proceeds from our debt issuance and other activities, our cash, cash equivalents, and restricted cash increased by $3.2 billion during the first six months of 2026 to $8.1 billion as of June 30, 2026. We had $12.7 billion in liquidity as of June 30, 2026. The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found under “LIQUIDITY AND CAPITAL RESOURCES” beginning on page 60.

Second Quarter Results

For the second quarter of 2026, we reported net income attributable to Valero stockholders of $3.7 billion compared to $714 million for the second quarter of 2025. The increase of $3.0 billion was primarily due to an increase in operating income of $4.2 billion, partially offset by an increase in income tax expense of $815 million and an increase in net income attributable to noncontrolling interests of $404 million. The details of our operating income and adjusted operating income, where applicable, by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustments reflected in the tables in note (c) beginning on page 57.

While our operating income increased by $4.2 billion in the second quarter of 2026 compared to the second quarter of 2025, adjusted operating income also increased by $4.2 billion primarily due to the following:

• Refining segment. Refining segment adjusted operating income increased by $3.2 billion primarily due to higher gasoline and distillate (primarily diesel) margins, partially offset by a decline in sweet crude oil differentials.
• Renewable Diesel segment. Renewable Diesel segment operating income increased by $796 million primarily due to higher product prices (primarily renewable diesel), partially offset by higher feedstock costs.
• Ethanol segment. Ethanol segment operating income increased by $264 million primarily due to the recognition of clean fuel production credits in 2026, higher ethanol and corn-related co-product prices, and lower corn prices.

First Six Months Results

For the first six months of 2026, we reported net income attributable to Valero stockholders of $5.0 billion compared to $119 million for the first six months of 2025. The increase of $4.9 billion was primarily due to an increase in operating income of $6.8 billion, partially offset by an increase in income tax expense of $1.5 billion and an increase in net income attributable to noncontrolling interests of $520 million. The details of our operating income and adjusted operating income, where applicable, by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustments reflected in the tables in note (c) beginning on page 57.

While our operating income increased by $6.8 billion in the first six months of 2026 compared to the first six months of 2025, adjusted operating income increased by $5.7 billion primarily due to the following:

• Refining segment. Refining segment adjusted operating income increased by $4.4 billion primarily due to higher gasoline and distillate (primarily diesel) margins and an increase in throughput volumes, partially offset by a decline in sweet crude oil differentials.
• Renewable Diesel segment. Renewable Diesel segment operating income increased by $1.1 billion primarily due to higher product prices (primarily renewable diesel) and an increase in clean fuel production credits recognized on qualifying sales, partially offset by higher feedstock costs.
• Ethanol segment. Ethanol segment operating income increased by $334 million primarily due to the recognition of clean fuel production credits in 2026, higher ethanol and corn-related co-product prices, and lower corn prices.

Outlook

Many uncertainties exist with respect to the supply and demand balances in petroleum-based product markets worldwide. While it is difficult to predict future worldwide economic and geopolitical activity and the resulting impact on product supply and demand, we have noted several factors below that have impacted or may impact our results of operations during the third quarter of 2026.

• Although global demand for gasoline, diesel, and jet fuel has been resilient, demand growth has moderated amid market disruptions related to ongoing conflict in the Middle East.
• Continued disruption to global refining capacity is expected due to unplanned outages at refineries and export infrastructure in the Middle East and Russia resulting from ongoing conflicts in those regions, as well as reduced production in other regions driven by crude supply constraints. As a result, global refined product inventories are expected to remain low.
• Crude oil differentials are expected to remain volatile as ongoing conflict in the Middle East continues to disrupt global transportation routes. However, use of alternative transportation routes that partially bypass the Strait of Hormuz, coordinated releases from strategic petroleum reserves, and increased crude oil production from other regions could mitigate supply disruptions and ease volatility in the crude oil market.
• Renewable diesel demand is expected to remain strong as a result of the increase in the renewable volume obligations (RVOs) imposed by the EPA for 2026 and 2027, particularly with respect to biomass-based diesel.
• Ethanol demand is expected to follow typical seasonal patterns.

RESULTS OF OPERATIONS

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

Second Quarter Results -

Financial Highlights by Segment and Total Company

(millions of dollars)

Second Quarter Results -

Financial Highlights by Segment and Total Company (continued)

(millions of dollars)

Second Quarter Results -

Average Market Reference Prices and Differentials

Second Quarter Results -

Average Market Reference Prices and Differentials (continued)

Total Company, Corporate, and Other

The following table includes selected financial data for the total company, corporate, and other for the second quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Revenues increased by $14.6 billion in the second quarter of 2026 compared to the second quarter of 2025 primarily due to increases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This increase in revenues was partially offset by an increase in cost of sales of $10.4 billion primarily due to increases in crude oil and other feedstock costs. These changes resulted in a $4.2 billion increase in operating income, from $997 million in the second quarter of 2025 to $5.2 billion in the second quarter of 2026.

Adjusted operating income, which excludes the adjustments in the table in note (c), also increased by $4.2 billion, from $1.0 billion in the second quarter of 2025 to $5.2 billion in the second quarter of 2026. The primary components of this $4.2 billion increase in adjusted operating income are discussed by segment in the segment analyses that follow.

Income tax expense increased by $815 million in the second quarter of 2026 compared to the second quarter of 2025 primarily as a result of higher income before income tax expense.

Net income attributable to noncontrolling interests increased by $404 million in the second quarter of 2026 compared to the second quarter of 2025 primarily due to higher earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 7 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis on page 48.

Refining Segment Results

The following table includes selected financial and operating data of our Refining segment for the second quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Refining segment operating income increased by $3.2 billion in the second quarter of 2026. Refining segment adjusted operating income, which excludes the adjustments in the table in note (c), also increased by $3.2 billion in the second quarter of 2026 compared to the second quarter of 2025 primarily due to an increase in Refining segment margin of $3.1 billion.

Refining segment margin is primarily affected by the prices for the petroleum-based transportation fuels that we sell and the cost of crude oil and other feedstocks that we process. The table on page 45 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the second quarter of 2026 compared to the second quarter of 2025.

The increase in Refining segment margin was primarily due to the following:

• An increase in distillate (primarily diesel) margins had a favorable impact of approximately $2.9 billion.
• An increase in gasoline margins had a favorable impact of approximately $980 million.
• A decline in sweet crude oil differentials had an unfavorable impact of approximately $780 million.

Renewable Diesel Segment Results

The following table includes selected financial and operating data of our Renewable Diesel segment for the second quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Renewable Diesel segment operating income increased by $796 million in the second quarter of 2026 compared to the second quarter of 2025 primarily due to an increase in Renewable Diesel margin of $825 million.

Renewable Diesel segment margin is primarily affected by the prices for the renewable fuels that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of the feedstocks that we process. The table on page 46 reflects market reference prices that we believe impacted our Renewable Diesel segment margin in the second quarter of 2026 compared to the second quarter of 2025.

The increase in Renewable Diesel segment margin was primarily due to the following:

• An increase in product prices, primarily renewable diesel, had a favorable impact of approximately $1.0 billion.
• An increase in the cost of the feedstocks that we process had an unfavorable impact of approximately $200 million.

Ethanol Segment Results

The following table includes selected financial and operating data of our Ethanol segment for the second quarter of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Ethanol segment operating income increased by $264 million in the second quarter of 2026 compared to the second quarter of 2025 primarily due to an increase in Ethanol segment margin of $272 million.

Ethanol segment margin is primarily affected by prices for the ethanol and corn-related co-products that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of corn that we process. The table on page 46 reflects market reference prices that we believe impacted our Ethanol segment margin in the second quarter of 2026 compared to the second quarter of 2025.

The increase in Ethanol segment margin was primarily due to the following:

• The recognition of clean fuel production credits had a favorable impact of $99 million. Provisions of the One Big Beautiful Bill Act (OBBB) became effective on January 1, 2026, making certain ethanol produced and sold by us eligible for the clean fuel production credit. During the second quarter of 2026, updated emissions modeling methodologies were released and additional actions were taken that increased the amount of clean fuel production credits generated from qualifying ethanol sales. Accordingly, we recognized clean fuel production credits on qualifying sales of ethanol in the second quarter of 2026, along with an amount related to qualifying sales in the first quarter of 2026.
• An increase in ethanol prices had a favorable impact of approximately $90 million.
• An increase in prices for the corn-related co-products that we produce, primarily dry distillers grains (DDGs) and inedible DCOs, had a favorable impact of approximately $50 million.
• A decrease in corn prices had a favorable impact of approximately $30 million.

First Six Months Results -

Financial Highlights by Segment and Total Company

(millions of dollars)

First Six Months Results -

Financial Highlights by Segment and Total Company (continued)

(millions of dollars)

First Six Months Results -

Average Market Reference Prices and Differentials

First Six Months Results -

Average Market Reference Prices and Differentials (continued)

Total Company, Corporate, and Other

The following table includes selected financial data for the total company, corporate, and other for the first six months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Revenues increased by $16.7 billion in the first six months of 2026 compared to the first six months of 2025 primarily due to increases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This increase in revenues, along with the effect of an asset impairment loss of $1.1 billion in the first six months of 2025 (see note (b)), was partially offset by an increase in cost of sales of $10.9 billion primarily due to increases in crude oil and other feedstock costs.

Operating income increased by $6.8 billion in the first six months of 2026; however, adjusted operating income, which excludes the adjustments in the table in note (c), increased by $5.7 billion, from $1.2 billion in the first six months of 2025 to $6.9 billion in the first six months of 2026. The primary components of this $5.7 billion increase in adjusted operating income are discussed by segment in the segment analyses that follow.

Income tax expense increased by $1.5 billion in the first six months of 2026 compared to the first six months of 2025 primarily as a result of higher income before income tax expense.

Net income attributable to noncontrolling interests increased by $520 million in the first six months of 2026 compared to the first six months of 2025 primarily due to higher earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 7 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis on page 55.

Refining Segment Results

The following table includes selected financial and operating data of our Refining segment for the first six months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Refining segment operating income increased by $5.5 billion in the first six months of 2026 compared to the first six months of 2025; however, Refining segment adjusted operating income, which excludes the adjustments in the table in note (c), increased by $4.4 billion in the first six months of 2026 compared to the first six months of 2025 primarily due to an increase in Refining segment margin of $4.5 billion.

Refining segment margin is primarily affected by the prices for the petroleum-based transportation fuels that we sell and the cost of crude oil and other feedstocks that we process. The table on page 52 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the first six months of 2026 compared to the first six months of 2025.

The increase in Refining segment margin was primarily due to the following:

• An increase in distillate (primarily diesel) margins had a favorable impact of approximately $3.9 billion.
• An increase in gasoline margins had a favorable impact of approximately $630 million.
• An increase in throughput volumes of 57,000 barrels per day had a favorable impact of approximately $200 million. During the first six months of 2026, we idled the processing units and ceased operation of the fuel production units at our Benicia Refinery, which was completed by the end of April 2026. In addition, in March 2026, an incident at our Port Arthur Refinery prompted a full shutdown of the refinery followed by a phased restart of the processing units by the end of the second quarter of 2026. These events, which are discussed in “OVERVIEW AND OUTLOOK—Overview—Business Operations Update” beginning on page 39 and in Notes 2 and 5 of Condensed Notes to Consolidated Financial Statements, resulted in lower volumes at our

Benicia Refinery and our Port Arthur Refinery during the first six months of 2026; however, the overall impact was more than offset by increased volumes at our other refineries, resulting in higher aggregate volumes in the first six months of 2026 compared to the first six months of 2025.

• A decline in sweet crude oil differentials had an unfavorable impact of approximately $580 million.

Renewable Diesel Segment Results

The following table includes selected financial and operating data of our Renewable Diesel segment for the first six months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Renewable Diesel segment operating income increased by $1.1 billion in the first six months of 2026 compared to the first six months of 2025 primarily due to an increase in Renewable Diesel segment margin of $1.1 billion.

Renewable Diesel segment margin is primarily affected by the prices for the renewable fuels that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of the feedstocks that we process. The table on page 53 reflects market reference prices that we believe impacted our Renewable Diesel segment margin in the first six months of 2026 compared to the first six months of 2025.

The increase in Renewable Diesel segment margin was primarily due to the following:

• An increase in product prices, primarily renewable diesel, had a favorable impact of approximately $1.4 billion.
• An increase in clean fuel production credits recognized on qualifying sales had a favorable impact of $164 million.
• An increase in the cost of the feedstocks that we process had an unfavorable impact of approximately $390 million.

Ethanol Segment Results

The following table includes selected financial and operating data of our Ethanol segment for the first six months of 2026 and 2025. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

Ethanol segment operating income increased by $334 million in the first six months of 2026 compared to the first six months of 2025 primarily due to an increase in Ethanol segment margin of $352 million.

Ethanol segment margin is primarily affected by prices for the ethanol and corn-related co-products that we sell, the recognition of clean fuel production credits on qualifying sales, and the cost of corn that we process. The table on page 53 reflects market reference prices that we believe impacted our Ethanol segment margin in the first six months of 2026 compared to the first six months of 2025.

The increase in Ethanol segment margin was primarily due to the following:

• The recognition of clean fuel production credits had a favorable impact of $119 million. Provisions of the OBBB became effective on January 1, 2026, making certain ethanol produced and sold by us eligible for the clean fuel production credit. Accordingly, we recognized clean fuel production credits on qualifying sales of ethanol in the first six months of 2026.
• An increase in ethanol prices had a favorable impact of approximately $90 million.
• A decrease in corn prices had a favorable impact of approximately $80 million.
• An increase in prices for the corn-related co-products that we produce, primarily DDGs and inedible DCOs, had a favorable impact of approximately $50 million.

The following notes relate to references on pages 43 through 56.

(a)Cost of materials and other for the three and six months ended June 30, 2026 includes a benefit of $44 million related to the liquidation of certain LIFO inventory layers attributable to our Refining segment. Inventory levels for our California refining operations decreased during the six months ended June 30, 2026 due to the phased idling of processing units and cessation of refining operations at our Benicia Refinery, which was completed by the end of April 2026. As a result, inventory levels at December 31, 2026 are expected to remain below those at December 31, 2025.

(b)In March 2025, we approved a plan to idle the processing units and cease refining operations at our Benicia Refinery by the end of April 2026. In addition, we considered strategic alternatives for our remaining operations in California. As a result, we evaluated the assets of the Benicia and Wilmington refineries for impairment as of March 31, 2025 and concluded that the carrying values of these assets were not recoverable. Therefore, we reduced the carrying values of the Benicia and Wilmington refineries to their estimated fair values and recognized a combined asset impairment loss of $1.1 billion in the six months ended June 30, 2025.

(c)We use certain financial measures (as noted below) that are not defined under GAAP and are considered to be non-GAAP measures.

We have defined these non-GAAP measures and believe they are useful to the external users of our financial statements, including industry analysts, investors, lenders, and rating agencies. We believe these measures are useful to assess our ongoing financial performance because, when reconciled to their most comparable GAAP measures, they provide improved comparability between periods after adjusting for certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These non-GAAP measures should not be considered as alternatives to their most comparable GAAP measures nor should they be considered in isolation or as a substitute for an analysis of our results of operations as reported under GAAP. In addition, these non-GAAP measures may not be comparable to similarly titled measures used by other companies because we may define them differently, which diminishes their utility.

Non-GAAP measures are as follows (in millions):

• Refining margin is defined as Refining segment operating income excluding the LIFO liquidation adjustment, operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, the asset impairment loss, and other operating expenses, as reflected in the table below.

• Renewable Diesel margin is defined as Renewable Diesel segment operating income (loss) excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense, as reflected in the table below.

• Ethanol margin is defined as Ethanol segment operating income excluding operating expenses (excluding depreciation and amortization expense) and depreciation and amortization expense, as reflected in the table below.

• Adjusted Refining operating income is defined as Refining segment operating income excluding the LIFO liquidation adjustment, the asset impairment loss, and other operating expenses, as reflected in the table below.

• Adjusted operating income is defined as total company operating income excluding the LIFO liquidation adjustment, the asset impairment loss, and other operating expenses, as reflected in the table below.

(d)The RVO cost represents the average market cost on a per barrel basis to comply with the RFS program. The RVO cost is calculated by multiplying (i) the average market price during the applicable period for the RINs associated with each class of renewable fuel (i.e., biomass-based diesel, cellulosic biofuel, advanced biofuel, and total renewable fuel) by (ii) the quotas for the volume of each class of renewable fuel that must be blended into petroleum-based transportation fuels consumed in the U.S., as set or proposed by the EPA, on a percentage basis for each class of renewable fuel and adding together the results of each calculation.

(e)We use throughput volumes, sales volumes, and production volumes for the Refining segment, Renewable Diesel segment, and Ethanol segment, respectively, due to their general use by others who operate facilities similar to those included in our segments.

LIQUIDITY AND CAPITAL RESOURCES

Our Liquidity

Our liquidity consisted of the following as of June 30, 2026 (in millions):

(a)Excludes the committed facilities of the consolidated VIEs.

(b)Excludes $443 million of cash and cash equivalents related to the consolidated VIEs that is for their use only.

Information about our outstanding borrowings, letters of credit issued, and availability under our credit facilities is reflected in Note 4 of Condensed Notes to Consolidated Financial Statements.

On March 10, 2026, we issued $850 million of 5.150 percent Senior Notes due March 10, 2036. Proceeds from this debt issuance totaled $850 million before deducting the underwriting discount and other debt issuance costs. A portion of the net proceeds from this debt issuance was used for the repayment of the $100 million outstanding principal balance of our 7.65 percent Debentures due July 1, 2026. The remaining net proceeds are expected to be used for general corporate purposes, including the repayment, repurchase, or redemption of the remaining $426 million aggregate principal amount of our 3.400 percent Senior Notes due September 15, 2026 and the remaining $146 million aggregate principal amount of the 4.375 percent Senior Notes due December 15, 2026 issued by Valero Energy Partners LP and guaranteed by us.

We believe we have sufficient funds from operations and from available capacity under our credit facilities to fund our ongoing operating requirements and other commitments over the next 12 months and thereafter for the foreseeable future. We expect that, to the extent necessary, we can raise additional cash through equity or debt financings in the public and private capital markets or the arrangement of additional credit facilities. However, there can be no assurances regarding the availability of any future financings or additional credit facilities or whether such financings or additional credit facilities can be made available on terms that are acceptable to us.

Cash Flows

Components of our cash flows are set forth below (in millions):

Cash Flows for the Six Months Ended June 30, 2026

In the first six months of 2026, we used the $7.0 billion of cash generated by our operations and the $3.2 billion from our debt issuance and borrowings to make $761 million of investments in our business, repay $2.4 billion of debt and finance lease obligations, return $3.6 billion to our stockholders through purchases of our common stock for treasury and dividend payments, and increase our available cash on hand by $3.2 billion. The debt issuance, borrowings, and repayments are described in Note 4 of Condensed Notes to Consolidated Financial Statements.

As previously noted, our operations generated $7.0 billion of cash in the first six months of 2026, driven primarily by net income of $5.4 billion, noncash charges to income of $1.4 billion, and a positive change in working capital of $403 million. Noncash charges primarily included $1.6 billion of depreciation and amortization expense, partially offset by a $268 million deferred income tax benefit. Details regarding the components of the change in working capital, along with the reasons for the changes in those components, are described in Note 11 of Condensed Notes to Consolidated Financial Statements. In addition, see “RESULTS OF OPERATIONS” for an analysis of the significant components of our net income.

Our investing activities of $761 million primarily consisted of $798 million in capital investments, as defined on the following page under “Capital Investments,” of which $40 million related to capital investments made by DGD.

Cash Flows for the Six Months Ended June 30, 2025

In the first six months of 2025, we used the $1.9 billion of cash generated by our operations, $5.0 billion from our debt issuance and borrowings, and $117 million of cash on hand to make $1.0 billion of investments in our business, repay $4.9 billion of debt and finance lease obligations, and return $1.3 billion to our stockholders through purchases of our common stock for treasury and dividend payments. The debt issuance, borrowings, and repayments are described in Note 4 of Condensed Notes to Consolidated Financial Statements.

As previously noted, our operations generated $1.9 billion of cash in the first six months of 2025, resulting from noncash charges to income of $2.0 billion, partially offset by an unfavorable change in working capital of $168 million. Noncash charges primarily included a $1.1 billion asset impairment loss associated with our operations in California, as described in Note 2 of Condensed Notes to Consolidated Financial Statements, and $1.5 billion of depreciation and amortization expense, partially offset by a $259 million deferred income tax benefit. Details regarding the components of the change in working capital, along with the reasons for the changes in those components, are described in Note 11 of Condensed Notes to Consolidated Financial Statements. In addition, see “RESULTS OF OPERATIONS” for an analysis of the significant components of our net income.

Our investing activities of $1.0 billion primarily consisted of $1.1 billion in capital investments, of which $109 million related to capital investments made by DGD.

Our Capital Resources

Our material cash requirements as of June 30, 2026 primarily consisted of working capital requirements, capital investments, contractual obligations, and other matters, as described below. Our operations have historically generated positive cash flows to fulfill our working capital requirements and other uses of cash as discussed below.

Capital Investments

Capital investments consist of our capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in nonconsolidated joint ventures, as reflected in our statements of cash flows on page 6. Capital investments exclude acquisitions, if any.

We have developed an extensive multi-year capital investment program, which we update and revise based on changing internal and external factors. For additional information, see “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—LIQUIDITY AND CAPITAL RESOURCES—Our Capital Resources—Capital Investments” and the “RISK FACTORS” section included in our annual report on Form 10-K for the year ended December 31, 2025.

Capital Investments Attributable to Valero

Capital investments attributable to Valero is a non-GAAP financial measure that reflects our net share of capital investments and is defined as all capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in nonconsolidated joint ventures, excluding the portion of DGD’s capital investments attributable to the other joint venture member and all of the capital expenditures of other consolidated VIEs.

We are a 50 percent joint venture member in DGD and consolidate its financial statements, and DGD’s operations compose our Renewable Diesel segment. As a result, all of DGD’s net cash provided by operating activities (or operating cash flow) is included in our consolidated net cash provided by operating activities. In general, DGD’s members use DGD’s operating cash flow (excluding changes in its current assets and current liabilities) to fund its capital investments rather than distribute all of that cash to themselves. Because DGD’s operating cash flow is effectively attributable to each member, only 50 percent of DGD’s capital investments should be attributed to our net share of capital investments. We also exclude all of the capital expenditures of other VIEs that we consolidate because we do not operate those VIEs. See Note 7 of Condensed Notes to Consolidated Financial Statements for more information

about the VIEs that we consolidate. We believe capital investments attributable to Valero is an important measure because it more accurately reflects our capital investments.

Capital investments attributable to Valero should not be considered as an alternative to capital investments, which is the most comparable GAAP measure, nor should it be considered in isolation or as a substitute for an analysis of our cash flows as reported under GAAP. In addition, this non-GAAP measure may not be comparable to similarly titled measures used by other companies because we may define it differently, which may diminish its utility.

The following table (in millions) reconciles our capital investments to capital investments attributable to Valero for the six months ended June 30, 2026 and 2025.

We expect both capital investments and capital investments attributable to Valero in 2026 to be approximately $2.0 billion, which includes estimated capital investments of $250 million related to the March 2026 incident at our Port Arthur Refinery, as described in Note 5 of Condensed Notes to Consolidated Financial Statements. We anticipate that a substantial portion of the capital expenditures resulting from the March 2026 incident at our Port Arthur Refinery will be covered by insurance, subject to our self-insured retention. Approximately $1.7 billion is allocated to sustaining the business, with the remainder directed toward growth projects.

Contractual Obligations

As of June 30, 2026, our contractual obligations included debt obligations, interest payments related to debt obligations, operating lease liabilities, finance lease obligations, other long-term liabilities, and purchase obligations. In the ordinary course of business, we had debt-related activities during the six months ended June 30, 2026, as described in Note 4 of Condensed Notes to Consolidated Financial Statements. There were no material changes outside the ordinary course of business with respect to our contractual obligations during the six months ended June 30, 2026. See Note 2 of Condensed Notes to

Consolidated Financial Statements for additional information regarding contractual obligations for our Benicia Refinery.

Other Matters Impacting Liquidity and Capital Resources

Stock Purchase Programs

During the six months ended June 30, 2026, we purchased for treasury 11,338,194 of our shares for a total cost of $2.8 billion. See Note 6 of Condensed Notes to Consolidated Financial Statements for additional information related to our stock purchase programs. As of June 30, 2026, we had $1.4 billion remaining available for purchase under the February 2026 Program. On July 16, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $5.0 billion with no expiration date, which is in addition to the amount remaining under the February 2026 Program. We will continue to evaluate the timing of purchases when appropriate. We have no obligation to make purchases under these programs.

Pension Plan Funding

As disclosed in our annual report on Form 10-K for the year ended December 31, 2025, we plan to contribute approximately $70 million to our pension plans and $20 million to our other postretirement benefit plans during 2026. No significant contributions were made to these plans during the six months ended June 30, 2026.

Trade and Other Policy Matters

See Note 5 of Condensed Notes to Consolidated Financial Statements for information regarding trade and other policy changes that have impacted our business.

Cash Held by Our Foreign Subsidiaries

As of June 30, 2026, $4.8 billion of our cash and cash equivalents was held by our foreign subsidiaries. Cash held by our foreign subsidiaries can be repatriated to us through dividends without any U.S. federal income tax consequences, but certain other taxes may apply, including, but not limited to, withholding taxes imposed by certain foreign jurisdictions, U.S. state income taxes, and U.S. federal income tax on foreign exchange gains. Therefore, there is a cost to repatriate cash held by certain of our foreign subsidiaries to us.

Asset Retirement Obligations

See Note 2 of Condensed Notes to Consolidated Financial Statements for information regarding our expected asset retirement obligations and settlement activity during the six months ended June 30, 2026.

Environmental Matters

Our operations are subject to extensive environmental regulations by government authorities relating to, among other matters, the release or discharge of materials into the environment, climate, waste management, pollution prevention measures, GHG and other emissions, our facilities and operations, and characteristics and composition of many of our products. Because environmental laws and regulations have become more complex and stringent and new or revised environmental laws and regulations are continuously being enacted or proposed, the level of future costs and expenditures required for environmental matters could increase.

Concentration of Customers

Our operations have a concentration of customers in the refining industry and customers who are refined petroleum product wholesalers and retailers. These concentrations of customers may impact our overall exposure to credit risk, either positively or negatively, in that these customers may be similarly affected by changes in economic or other conditions, including the uncertainties concerning worldwide events

causing volatility in the global crude oil markets. However, we believe that our portfolio of accounts receivable is sufficiently diversified to the extent necessary to minimize potential credit risk. Historically, we have not had any significant problems collecting our accounts receivable.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ from those estimates. There have been no changes to the critical accounting policies that involve critical accounting estimates disclosed in our annual report on Form 10-K for the year ended December 31, 2025.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The following tables provide information about our debt instruments (dollars in millions), the fair values of which are sensitive to changes in interest rates. A 10 percent increase or decrease in our floating interest rates would not have a material effect on our results of operations. Principal cash flows and related weighted-average interest rates by expected maturity dates are presented. See Note 4 of Condensed Notes to Consolidated Financial Statements for additional information related to our debt.

(a)Excludes unamortized discounts and debt issuance costs.

OTHER MARKET RISKS

We are exposed to market risks primarily related to the volatility in the price of commodities, the price of credits needed to comply with the Renewable and Low-Carbon Fuel Programs, and foreign currency exchange rates. There have been no material changes to these market risks disclosed in our annual report on Form 10-K for the year ended December 31, 2025. See Note 13 of Condensed Notes to Consolidated Financial Statements for a discussion about these market risks as of June 30, 2026.

ITEM 4. CONTROLS AND PROCEDURES

(a)Evaluation of disclosure controls and procedures.

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of June 30, 2026.

(b)Changes in internal control over financial reporting.

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information below describes a new proceeding required to be disclosed in this item under SEC regulations for the three months ended June 30, 2026.

Environmental Enforcement Matters

We are reporting the following proceeding to comply with SEC regulations, which require us to disclose certain information about proceedings arising under federal, state, or local provisions regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment if a governmental authority is a party to such proceeding and we reasonably believe that such proceeding will result in monetary sanctions that exceed a specified threshold. Pursuant to SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceeding is required. We believe any such proceedings less than this threshold are not material to our business and financial condition.

Bay Area Air Quality Management District (BAAQMD) (Benicia Refinery). Between 2019 and 2023, our Benicia Refinery received various Violation Notices (VNs) from the BAAQMD for excess emissions, among other violations. While no single VN exceeded the materiality threshold, such VNs were aggregated and resolved with the BAAQMD during the second quarter of 2026.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table discloses purchases of shares of our common stock made by us or on our behalf during the second quarter of 2026.

(a)The shares reported in this column include 3,945 shares related to our purchases of shares from participants in our stock-based compensation plans in connection with the vesting of restricted stock and other stock compensation transactions in accordance with the terms of our stock-based compensation plans.

(b)The average price paid per share reported in this column excludes brokerage commissions and a one percent excise tax on share purchases.

(c)On October 29, 2024, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date. This authorization was granted on September 19, 2024, and we completed all authorized share purchases under this program during the second quarter of 2026. On February 25, 2026, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date (the February 2026 Program). As of June 30, 2026, we had $1.4 billion remaining available for purchase under the February 2026 Program. On July 16, 2026, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $5.0 billion with no expiration date, which is in addition to the amount remaining under the February 2026 Program.

ITEM 5. OTHER INFORMATION

(a)None.

(b)None.

(c)During the three months ended June 30, 2026, no director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) of Valero adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

ITEM 6. EXHIBITS

Exhibit No. Description

22.01 Subsidiary Issuer of Guaranteed Securities–incorporated by reference to Exhibit 22.01 to Valero’s quarterly report on Form 10-Q for the quarter ended June 30, 2025 (SEC File No. 001-13175).

*31.01 Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.

*31.02 Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.

**32.01 Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002).

***101.INS Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

***101.SCH Inline XBRL Taxonomy Extension Schema Document.

***101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.

***101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.

***101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.

***101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.

***104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ________________________

* Filed herewith.

** Furnished herewith.

*** Submitted electronically herewith.

Pursuant to paragraph 601(b)(4)(iii)(A) of Regulation S-K, the registrant has omitted from the foregoing listing of exhibits, and hereby agrees to furnish to the SEC upon its request, copies of certain instruments, each relating to debt not exceeding 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis.

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