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

CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

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

These forward-looking statements include, among other things, statements regarding:

• the effect, impact, potential duration or timing, or other implications of global geopolitical and other conflicts and tensions, and government and other responses thereto;

• future Refining segment margins, including gasoline and distillate margins, and differentials;

• future Renewable Diesel segment margins;

• future Ethanol segment margins;

• expectations regarding feedstock costs, including crude oil differentials, product prices for each of our segments, transportation costs, and operating expenses;

• anticipated levels of crude oil and liquid transportation fuel inventories, storage capacity, and production;

• expectations with respect to third-party refining, logistics, and low-carbon fuels projects and operations, and the effect and implications thereof on industry and market dynamics;

• expectations regarding the levels of, costs and timing with respect to, the production and operations at our existing refineries and plants, projects under evaluation, construction, or development, and former projects;

• our anticipated level of capital investments, including deferred turnaround and catalyst cost expenditures, our expected allocation between, and/or within, growth capital expenditures and sustaining capital expenditures, capital expenditures for environmental and other purposes, and joint venture investments, the expected costs and timing applicable to such capital investments and any related projects, and the effect of those capital investments on our business, financial condition, results of operations, and liquidity;

• our anticipated level of cash distributions or contributions, such as our dividend payment rate and contributions to our pension plans and other postretirement benefit plans;

• our ability to meet future cash and credit requirements, whether from funds generated from our operations or our ability to access financial markets effectively, and expectations regarding our liquidity;

• our evaluation of, and expectations regarding, any future activity under our share purchase program or transactions involving our debt securities;

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

• expectations regarding environmental, tax, and other regulatory matters, including the matters discussed in Note 2 of Condensed Notes to Consolidated Financial Statements and under “PART II, ITEM 1. LEGAL PROCEEDINGS,” the anticipated amounts and timing of payment

with respect to our deferred tax liabilities, unrecognized tax benefits, matters impacting our ability to repatriate cash held by our foreign subsidiaries, and the anticipated effect thereof on our business, financial condition, results of operations, and liquidity;

• the effect of general economic and other conditions, including inflation and economic activity levels, on refining, renewable diesel, and ethanol industry fundamentals;

• expectations regarding our risk management activities, including the anticipated effects of our hedge transactions;

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

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

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

We based our forward-looking statements on our current expectations, estimates, and projections about ourselves, current and potential counterparties, our industry, and the global economy and financial markets generally. We caution that these statements are not guarantees of future performance or results and involve known and unknown risks and uncertainties, the ultimate outcomes of which we cannot predict with certainty. In addition, we based many of these forward-looking statements on assumptions about future events, the ultimate outcomes of which we cannot predict with certainty and which may prove to be inaccurate. Accordingly, actual performance or results may differ materially from the future performance or results that we have expressed, suggested, or forecast in the forward-looking statements. Differences between actual performance or results and any future performance or results expressed, suggested, or forecast in these forward-looking statements could result from a variety of factors, including the following:

• the effects arising out of global geopolitical and other conflicts and tensions, including with respect to changes in trade flows and impacts to crude oil and other markets;

• demand for, and supplies of, refined petroleum products (such as gasoline, diesel, jet fuel, and petrochemicals), renewable diesel, and ethanol and corn related co-products;

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

• the effects of public health threats, pandemics, and epidemics, such as the COVID-19 pandemic and variants of the virus, governmental and societal responses thereto, and the adverse impacts of the foregoing on our business, financial condition, results of operations, and liquidity, and the global economy and financial markets generally;

• acts of terrorism aimed at either our refineries and plants or third-party facilities that could impair our ability to produce or transport refined petroleum products, renewable diesel, ethanol, or corn related co-products, to receive feedstocks, or otherwise operate efficiently;

• the effects of war or hostilities, and political and economic conditions, in countries that produce crude oil or other feedstocks or consume refined petroleum products, renewable diesel, ethanol or corn related co-products;

• the ability of the members of the Organization of Petroleum Exporting Countries (OPEC), and other petroleum-producing nations that collectively make up OPEC+, to agree on and to maintain crude oil price and production controls;

• the level of consumer demand, consumption, and overall economic activity, including the effects from seasonal fluctuations and market prices;

• refinery, renewable diesel plant, or ethanol plant overcapacity or undercapacity;

• the risk that any transactions or capital decisions may not provide the anticipated benefits or may result in unforeseen detriments;

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

• the level of competitors’ imports into markets that we supply;

• accidents, unscheduled shutdowns, weather events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, societal, or political events or developments, terrorism, cyberattacks, or other catastrophes or disruptions affecting our operations, production facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of our suppliers, customers, or third-party service providers;

• changes in the cost or availability of transportation or storage capacity for feedstocks and our products;

• pressure and influence of environmental groups and other stakeholders upon policies and decisions related to the production, transportation, storage, refining, processing, marketing, and sales of crude oil or other feedstocks, refined petroleum products, renewable diesel, ethanol, or corn related co-products;

• the price, availability, technology related to, and acceptance of alternative fuels and alternative-fuel vehicles, as well as sentiment and perceptions with respect to low-carbon projects and GHG emissions more generally;

• the levels of government subsidies for, and executive orders, mandates, or other policies with respect to, alternative fuels, alternative-fuel vehicles, and other low-carbon technologies or initiatives, including those related to carbon capture, carbon sequestration, and low-carbon fuels, or affecting the price of natural gas and/or electricity;

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

• delay of, cancellation of, or failure to implement planned capital or other strategic projects and realize the various assumptions and benefits projected for such projects or cost overruns in executing such planned projects;

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

• rulings, judgments, or settlements in litigation or other legal or regulatory matters, such as unexpected environmental remediation or enforcement costs, including those in excess of any reserves or insurance coverage;

• legislative or regulatory action, including the introduction or enactment of legislation or rulemakings by government authorities, environmental regulations, changes to income tax rates, introduction of a global minimum tax, windfall taxes or penalties, tax changes or restrictions impacting the foreign repatriation of cash, actions implemented under SBx 1-2, actions implemented under the Renewable and Low-Carbon Fuel Programs and other environmental emissions programs, including changes to volume requirements or other obligations or exemptions under the RFS, and actions arising from the EPA’s or other government agencies’ regulations, policies, or initiatives concerning GHGs, including mandates for or bans of specific technology, which may adversely affect our business or operations;

• changing economic, regulatory, and political environments and related events in the various countries in which we operate or otherwise do business, including trade restrictions, expropriation or impoundment of assets, failure of foreign governments and state-owned entities to honor their

contracts, property disputes, economic instability, restrictions on the transfer of funds, duties and tariffs, transportation delays, import and export controls, labor unrest, security issues involving key personnel, and decisions, investigations, regulations, issuances or revocations of permits and other authorizations, and other actions, policies, and initiatives by the states, counties, cities, and other jurisdictions in the countries in which we operate or otherwise do business;

• changes in the credit ratings assigned to our debt securities and trade credit;

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

• changes in currency exchange rates, including the value of the Canadian dollar, the pound sterling, the euro, the Mexican peso, and the Peruvian sol relative to the U.S. dollar;

• the adequacy of capital resources and liquidity, including availability, timing, and amounts of cash flow or our ability to borrow or access financial markets;

• the costs, disruption, and diversion of resources associated with lawsuits, proceedings, demands, or investigations, or campaigns and negative publicity commenced by government authorities, investors, stakeholders, or other interested parties;

• overall economic conditions, including the stability and liquidity of financial markets, and the effect thereof on consumer demand; and

• other factors generally described in the “RISK FACTORS” section included in our annual report on Form 10-K for the year ended December 31, 2023.

Any one of these factors, or a combination of these factors, could materially affect our future results of operations and whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those expressed, suggested, or forecast in any forward-looking statements. Such forward-looking statements speak only as of the date of this quarterly report on Form 10-Q and we do not intend to update these statements unless we are required by applicable securities laws to do so.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing, as it may be updated or modified by our future filings with the U.S. Securities and Exchange Commission (SEC). We undertake no obligation to publicly release any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events unless we are required by applicable securities laws to do so.

NON-GAAP FINANCIAL MEASURES

The following discussions in “OVERVIEW AND OUTLOOK,” “RESULTS OF OPERATIONS,” and “LIQUIDITY AND CAPITAL RESOURCES” include references to financial measures that are not defined under GAAP. These non-GAAP financial measures include adjusted operating income (including adjusted operating income for each of our reportable segments, as applicable); Refining, Renewable Diesel, and Ethanol segment margin; 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. See the tables in note (c) beginning on page 56 for reconciliations of adjusted operating income (including adjusted operating income for each of our reportable segments, as applicable) and Refining, Renewable Diesel, and Ethanol segment margin 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 61 for a reconciliation of capital investments attributable to Valero to its most directly comparable GAAP financial measure. Beginning on page 60, 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 2024 were favorably impacted by the continued strong worldwide demand for petroleum-based transportation fuels, while the worldwide supply of those products remained constrained. This global supply and demand imbalance contributed to strong refining margins for the first six months of 2024.

The strong demand for our products and continued strength in refining margins were the primary contributors to us reporting $880 million and $2.1 billion of net income attributable to Valero stockholders for the second quarter of 2024 and the first six months of 2024, 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 42.

Our operations generated $4.3 billion of cash during the first six months of 2024. This cash, along with cash on hand, was used to make $1.1 billion of capital investments in our business and return $2.8 billion to our stockholders through purchases of common stock for treasury and dividend payments. In addition, we reduced our outstanding debt during the first six months of 2024 through the repayment of the $167 million outstanding principal balance of our 1.200 percent Senior Notes that matured in March 2024. As a result of this and other activity, our cash, cash equivalents, and restricted cash decreased by $10 million during the first six months of 2024 to $5.4 billion as of June 30, 2024. We had $10.1 billion in liquidity as of June 30, 2024. The components of our liquidity and descriptions of our cash flows, capital investments, and other matters impacting our liquidity and capital resources can be found under “LIQUIDITY AND CAPITAL RESOURCES” beginning on page 58.

Second Quarter Results

For the second quarter of 2024, we reported net income attributable to Valero stockholders of $880 million compared to $1.9 billion for the second quarter of 2023. The decrease of $1.1 billion was primarily due to a decrease in operating income of $1.5 billion, partially offset by a decrease in income tax expense of $318 million. The details of our operating income and adjusted operating income by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustment reflected in the tables in note (c) beginning on page 56.

						Three Months Ended June 30,
						2024						2023						Change
Refining segment:
Operating income						$	1,224					$	2,432					$	(1,208)
Adjusted operating income						1,229						2,433						(1,204)
Renewable Diesel segment:
Operating income						112						440						(328)
Ethanol segment:
Operating income						105						127						(22)
Adjusted operating income						103						128						(25)
Total company:
Operating income						1,221						2,759						(1,538)
Adjusted operating income						1,224						2,761						(1,537)

While our operating income decreased by $1.5 billion in the second quarter of 2024 compared to the second quarter of 2023, adjusted operating income also decreased by $1.5 billion primarily due to the following:

• Refining segment. Refining segment adjusted operating income decreased by $1.2 billion primarily due to lower gasoline and distillate (primarily diesel) margins and a decline in crude oil differentials.

• Renewable Diesel segment. Renewable Diesel segment operating income decreased by $328 million primarily due to a lower product prices (primarily renewable diesel) and a decrease in sales volumes, partially offset by lower feedstock costs.

• Ethanol segment. Ethanol segment adjusted operating income decreased by $25 million primarily due to lower ethanol and corn related co-product prices, partially offset by lower corn prices.

First Six Months Results

For the first six months of 2024, we reported net income attributable to Valero stockholders of $2.1 billion compared to $5.0 billion for the first six months of 2023. The decrease of $2.9 billion was primarily due to a decrease in operating income of $3.9 billion, partially offset by a decrease in income tax expense of $845 million. The details of our operating income and adjusted operating income by segment and in total are reflected below (in millions). Adjusted operating income excludes the adjustment reflected in the tables in note (c) beginning on page 56.

						Six Months Ended June 30,
						2024						2023						Change
Refining segment:
Operating income						$	2,969					$	6,489					$	(3,520)
Adjusted operating income						2,979						6,500						(3,521)
Renewable Diesel segment:
Operating income						302						645						(343)
Ethanol segment:
Operating income						115						166						(51)
Adjusted operating income						142						167						(25)
Total company:
Operating income						2,900						6,802						(3,902)
Adjusted operating income						2,937						6,814						(3,877)

While our operating income decreased by $3.9 billion in the first six months of 2024 compared to the first six months of 2023, adjusted operating income also decreased by $3.9 billion primarily due to the following:

• Refining segment. Refining segment adjusted operating income decreased by $3.5 billion primarily due to lower margins for gasoline, distillate (primarily diesel), and other products; a decline in crude oil differentials; and a decrease in throughput volumes.

• Renewable Diesel segment. Renewable Diesel operating income decreased by $343 million primarily due to lower product prices (primarily renewable diesel), partially offset by lower feedstock costs.

• Ethanol segment. Ethanol segment adjusted operating income decreased by $25 million primarily due to lower ethanol and corn related co-product prices, partially offset by lower corn prices and an increase in production volumes.

Outlook

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

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

• Combined light product (gasoline, diesel, and jet fuel) inventories in the U.S. and Europe remain below historical levels reflecting tight petroleum-based product balances.

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

• Renewable diesel demand is expected to remain consistent with current levels.

• 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 56, highlight our results of operations, our operating performance, and market reference prices that directly impact our operations. Note references in this section can be found on pages 55 through 58.

Second Quarter Results -

Financial Highlights by Segment and Total Company

(millions of dollars)

						Three Months Ended June 30, 2024
						Refining						Renewable Diesel						Ethanol						Corporate and Eliminations						Total
Revenues:
Revenues from external customers						$	33,044					$	554					$	892					$	—					$	34,490
Intersegment revenues						3						630						229						(862)						—
Total revenues						33,047						1,184						1,121						(862)						34,490
Cost of sales:
Cost of materials and other						29,995						930						874						(856)						30,943
Operating expenses (excluding depreciation and amortization expense reflected below)						1,219						80						125						—						1,424
Depreciation and amortization expense						604						62						19						(1)						684
Total cost of sales						31,818						1,072						1,018						(857)						33,051
Other operating expenses						5						—						(2)						—						3
General and administrative expenses (excluding depreciation and amortization expense reflected below)						—						—						—						203						203
Depreciation and amortization expense						—						—						—						12						12
Operating income by segment						$	1,224					$	112					$	105					$	(220)					1,221
Other income, net																														122
Interest and debt expense, net of capitalized interest																														(140)
Income before income tax expense																														1,203
Income tax expense																														277
Net income																														926
Less: Net income attributable to noncontrolling interests																														46
Net income attributable to Valero Energy Corporation stockholders																														$	880

Second Quarter Results -

Financial Highlights by Segment and Total Company (continued)

(millions of dollars)

						Three Months Ended June 30, 2023
						Refining						Renewable Diesel						Ethanol						Corporate and Eliminations						Total
Revenues:
Revenues from external customers						$	31,996					$	1,296					$	1,217					$	—					$	34,509
Intersegment revenues						(3)						950						257						(1,204)						—
Total revenues						31,993						2,246						1,474						(1,204)						34,509
Cost of sales:
Cost of materials and other						27,773						1,643						1,199						(1,185)						29,430
Operating expenses (excluding depreciation and amortization expense reflected below)						1,205						104						128						3						1,440
Depreciation and amortization expense						582						59						19						(2)						658
Total cost of sales						29,560						1,806						1,346						(1,184)						31,528
Other operating expenses						1						—						1						—						2
General and administrative expenses (excluding depreciation and amortization expense reflected below)						—						—						—						209						209
Depreciation and amortization expense						—						—						—						11						11
Operating income by segment						$	2,432					$	440					$	127					$	(240)					2,759
Other income, net																														106
Interest and debt expense, net of capitalized interest																														(148)
Income before income tax expense																														2,717
Income tax expense																														595
Net income																														2,122
Less: Net income attributable to noncontrolling interests																														178
Net income attributable to Valero Energy Corporation stockholders																														$	1,944

Second Quarter Results -

Average Market Reference Prices and Differentials

			Three Months Ended June 30,
			2024						2023
Refining
Feedstocks (dollars per barrel)
Brent crude oil			$	84.96					$	77.98
Brent less West Texas Intermediate (WTI) crude oil			4.22						4.22
Brent less WTI Houston crude oil			2.73						3.07
Brent less Dated Brent crude oil			0.09						(0.45)
Brent less Argus Sour Crude Index (ASCI) crude oil			3.90						4.74
Brent less Maya crude oil			11.49						14.31
Brent less Western Canadian Select (WCS) Houston crude oil			11.14						9.23
WTI crude oil			80.74						73.76
Natural gas (dollars per million British Thermal Units (MMBTu))			1.74						2.00
Renewable volume obligation (RVO) (dollars per barrel) (b)			3.39						7.69
Product margins (RVO adjusted unless otherwise noted) (dollars per barrel)
U.S. Gulf Coast:
Conventional Blendstock of Oxygenate Blending (CBOB) gasoline less Brent			7.95						12.98
Ultra-low-sulfur (ULS) diesel less Brent			14.12						14.64
Propylene less Brent (not RVO adjusted)			(45.72)						(38.78)
U.S. Mid-Continent:
CBOB gasoline less WTI			13.28						23.60
ULS diesel less WTI			17.17						25.16
North Atlantic:
CBOB gasoline less Brent			16.22						22.63
ULS diesel less Brent			16.27						17.36
U.S. West Coast:
California Reformulated Gasoline Blendstock of Oxygenate Blending (CARBOB) 87 gasoline less Brent			31.88						30.63
California Air Resources Board (CARB) diesel less Brent			18.12						14.80

Second Quarter Results -

Average Market Reference Prices and Differentials (continued)

			Three Months Ended June 30,
			2024						2023
Renewable Diesel
New York Mercantile Exchange ULS diesel (dollars per gallon)			$	2.51					$	2.44
Biodiesel RIN (dollars per RIN)			0.51						1.51
California LCFS carbon credit (dollars per metric ton)			51.29						80.81
U.S. Gulf Coast (USGC) used cooking oil (UCO) (dollars per pound)			0.42						0.57
USGC distillers corn oil (DCO) (dollars per pound)			0.46						0.60
USGC fancy bleachable tallow (Tallow) (dollars per pound)			0.43						0.57
Ethanol
Chicago Board of Trade corn (dollars per bushel)			4.43						6.27
New York Harbor ethanol (dollars per gallon)			1.90						2.56

Total Company, Corporate, and Other

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

						Three Months Ended June 30,
						2024						2023						Change
Revenues						$	34,490					$	34,509					$	(19)
Cost of sales						33,051						31,528						1,523
Operating income						1,221						2,759						(1,538)
Adjusted operating income (see note (c))						1,224						2,761						(1,537)
Income tax expense						277						595						(318)
Net income attributable to noncontrolling interests						46						178						(132)

While revenues decreased by $19 million in the second quarter of 2024 compared to the second quarter of 2023, cost of sales increased by $1.5 billion primarily due to increases in crude oil and other feedstock costs. These changes resulted in a $1.5 billion decrease in operating income, from $2.8 billion in the second quarter of 2023 to $1.2 billion in the second quarter of 2024.

Adjusted operating income also decreased by $1.5 billion, from $2.8 billion in the second quarter of 2023 to $1.2 billion in the second quarter of 2024. The components of this $1.5 billion decrease in adjusted operating income are discussed by segment in the segment analyses that follow.

Income tax expense decreased by $318 million in the second quarter of 2024 compared to the second quarter of 2023 primarily as a result of a decrease in income before income tax expense.

Net income attributable to noncontrolling interests decreased by $132 million in the second quarter of 2024 compared to the second quarter of 2023 primarily due to lower earnings associated with DGD, whose operations compose our Renewable Diesel segment. See Note 6 of Condensed Notes to

Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis beginning on page 47.

Refining Segment Results

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

						Three Months Ended June 30,
						2024						2023						Change
Operating income						$	1,224					$	2,432					$	(1,208)
Adjusted operating income (see note (c))						1,229						2,433						(1,204)
Refining margin (see note (c))						3,052						4,220						(1,168)
Operating expenses (excluding depreciation and amortization expense reflected below)						1,219						1,205						14
Depreciation and amortization expense						604						582						22
Throughput volumes (thousand barrels per day) (see note (d))						3,010						2,969						41

Refining segment operating income decreased by $1.2 billion in the second quarter of 2024 compared to the second quarter of 2023. Refining segment adjusted operating income, which excludes the adjustment in the table in note (c), also decreased by $1.2 billion in the second quarter of 2024 compared to the second quarter of 2023 primarily due to a decrease in Refining segment margin of $1.2 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 44 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the second quarter of 2024 compared to the second quarter of 2023.

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

• A decrease in gasoline margins had an unfavorable impact of approximately $684 million.

• A decline in crude oil differentials had an unfavorable impact of approximately $235 million.

• A decrease in distillate (primarily diesel) margins had an unfavorable impact of approximately $195 million.

Renewable Diesel Segment Results

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

						Three Months Ended June 30,
						2024						2023						Change
Operating income						$	112					$	440					$	(328)
Renewable Diesel margin (see note (c))						254						603						(349)
Operating expenses (excluding depreciation and amortization expense reflected below)						80						104						(24)
Depreciation and amortization expense						62						59						3
Sales volumes (thousand gallons per day) (see note (d))						3,492						4,400						(908)

Renewable Diesel segment operating income decreased by $328 million in the second quarter of 2024 compared to the second quarter of 2023 primarily due to a decrease in Renewable Diesel segment margin of $349 million.

Renewable Diesel segment margin is primarily affected by the price for the renewable diesel that we sell and the cost of the feedstocks that we process. The table on page 45 reflects market reference prices that we believe impacted our Renewable Diesel segment margin in the second quarter of 2024 compared to the second quarter of 2023.

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

• A decrease in product prices, primarily renewable diesel, had an unfavorable impact of approximately $413 million.

• A decrease in sales volumes of 908,000 gallons per day had an unfavorable impact of approximately $132 million. The decrease in sales volumes was primarily due to planned maintenance activities during the second quarter of 2024.

• A decrease in the cost of the feedstocks that we process had a favorable impact of approximately $214 million.

Ethanol Segment Results

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

						Three Months Ended June 30,
						2024						2023						Change
Operating income						$	105					$	127					$	(22)
Adjusted operating income (see note (c))						103						128						(25)
Ethanol margin (see note (c))						247						275						(28)
Operating expenses (excluding depreciation and amortization expense reflected below)						125						128						(3)
Depreciation and amortization expense						19						19						—
Production volumes (thousand gallons per day) (see note (d))						4,474						4,443						31

Ethanol segment operating income decreased by $22 million in the second quarter of 2024 compared to the second quarter of 2023; however, Ethanol segment adjusted operating income, which excludes the adjustment in the table in note (c), decreased by $25 million in the second quarter of 2024 compared to the second quarter of 2023 primarily due to a decrease in Ethanol segment margin of $28 million.

Ethanol segment margin is primarily affected by prices for the ethanol and corn related co-products that we sell and the cost of corn that we process. The table on page 45 reflects market reference prices that we believe impacted our Ethanol segment margin in the second quarter of 2024 compared to the second quarter of 2023.

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

• A decrease in ethanol prices had an unfavorable impact of approximately $259 million.

• A decrease in prices for the co-products that we produce, primarily dry distillers grains (DDGs) and inedible DCOs, had an unfavorable impact of approximately $81 million.

• A decrease in corn prices had a favorable impact of approximately $311 million.

First Six Months Results -

Financial Highlights by Segment and Total Company

(millions of dollars)

						Six Months Ended June 30, 2024
						Refining						Renewable Diesel						Ethanol						Corporate and Eliminations						Total
Revenues:
Revenues from external customers						$	63,187					$	1,256					$	1,806					$	—					$	66,249
Intersegment revenues						5						1,339						419						(1,763)						—
Total revenues						63,192						2,595						2,225						(1,763)						66,249
Cost of sales:
Cost of materials and other						56,606						1,996						1,783						(1,760)						58,625
Operating expenses (excluding depreciation and amortization expense reflected below)						2,403						170						262						—						2,835
Depreciation and amortization expense						1,204						127						38						(2)						1,367
Total cost of sales						60,213						2,293						2,083						(1,762)						62,827
Other operating expenses						10						—						27						—						37
General and administrative expenses (excluding depreciation and amortization expense reflected below)						—						—						—						461						461
Depreciation and amortization expense						—						—						—						24						24
Operating income by segment						$	2,969					$	302					$	115					$	(486)					2,900
Other income, net																														266
Interest and debt expense, net of capitalized interest																														(280)
Income before income tax expense																														2,886
Income tax expense																														630
Net income																														2,256
Less: Net income attributable to noncontrolling interests																														131
Net income attributable to Valero Energy Corporation stockholders																														$	2,125

First Six Months Results -

Financial Highlights by Segment and Total Company (continued)

(millions of dollars)

						Six Months Ended June 30, 2023
						Refining						Renewable Diesel						Ethanol						Corporate and Eliminations						Total
Revenues:
Revenues from external customers						$	66,403					$	2,231					$	2,314					$	—					$	70,948
Intersegment revenues						—						1,695						480						(2,175)						—
Total revenues						66,403						3,926						2,794						(2,175)						70,948
Cost of sales:
Cost of materials and other						56,283						2,974						2,330						(2,152)						59,435
Operating expenses (excluding depreciation and amortization expense reflected below)						2,466						190						258						3						2,917
Depreciation and amortization expense						1,154						117						39						(2)						1,308
Total cost of sales						59,903						3,281						2,627						(2,151)						63,660
Other operating expenses						11						—						1						—						12
General and administrative expenses (excluding depreciation and amortization expense reflected below)						—						—						—						453						453
Depreciation and amortization expense						—						—						—						21						21
Operating income by segment						$	6,489					$	645					$	166					$	(498)					6,802
Other income, net (a)																														235
Interest and debt expense, net of capitalized interest																														(294)
Income before income tax expense																														6,743
Income tax expense																														1,475
Net income																														5,268
Less: Net income attributable to noncontrolling interests																														257
Net income attributable to Valero Energy Corporation stockholders																														$	5,011

First Six Months Results -

Average Market Reference Prices and Differentials

			Six Months Ended June 30,
			2024						2023
Refining
Feedstocks (dollars per barrel)
Brent crude oil			$	83.40					$	80.09
Brent less WTI crude oil			4.49						5.16
Brent less WTI Houston crude oil			2.83						3.68
Brent less Dated Brent crude oil			(0.65)						0.24
Brent less ASCI crude oil			4.43						6.58
Brent less Maya crude oil			11.89						16.85
Brent less WCS Houston crude oil			11.36						13.30
WTI crude oil			78.91						74.94
Natural gas (dollars per MMBtu)			1.77						2.13
RVO (dollars per barrel) (b)			3.54						7.95
Product margins (RVO adjusted unless otherwise noted) (dollars per barrel)
U.S. Gulf Coast:
CBOB gasoline less Brent			8.04						11.51
ULS diesel less Brent			19.37						22.46
Propylene less Brent (not RVO adjusted)			(46.49)						(40.50)
U.S. Mid-Continent:
CBOB gasoline less WTI			11.20						20.65
ULS diesel less WTI			20.05						29.63
North Atlantic:
CBOB gasoline less Brent			12.54						16.98
ULS diesel less Brent			22.24						25.33
U.S. West Coast:
CARBOB 87 gasoline less Brent			25.91						27.67
CARB diesel less Brent			22.36						23.32

First Six Months Results -

Average Market Reference Prices and Differentials (continued)

			Six Months Ended June 30,
			2024						2023
Renewable Diesel
New York Mercantile Exchange ULS diesel (dollars per gallon)			$	2.61					$	2.69
Biodiesel RIN (dollars per RIN)			0.55						1.57
California LCFS carbon credit (dollars per metric ton)			57.42						73.25
USGC UCO (dollars per pound)			0.41						0.60
USGC DCO (dollars per pound)			0.47						0.62
USGC Tallow (dollars per pound)			0.42						0.59
Ethanol
CBOT corn (dollars per bushel)			4.39						6.44
New York Harbor ethanol (dollars per gallon)			1.77						2.43

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 2024 and 2023. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

						Six Months Ended June 30,
						2024						2023						Change
Revenues						$	66,249					$	70,948					$	(4,699)
Cost of sales						62,827						63,660						(833)
Operating income						2,900						6,802						(3,902)
Adjusted operating income (see note (c))						2,937						6,814						(3,877)
Income tax expense						630						1,475						(845)
Net income attributable to noncontrolling interests						131						257						(126)

Revenues decreased by $4.7 billion in the first six months of 2024 compared to the first six months of 2023 primarily due to decreases in product prices for the petroleum-based transportation fuels associated with sales made by our Refining segment. This decrease in revenues was partially offset by a decrease in cost of sales of $833 million primarily due to decreases in crude oil and other feedstock costs. These changes resulted in a $3.9 billion decrease in operating income, from $6.8 billion in the first six months of 2023 to $2.9 billion in the first six months of 2024.

Adjusted operating income also decreased by $3.9 billion, from $6.8 billion in the first six months of 2023 to $2.9 billion in the first six months of 2024. The components of this $3.9 billion decrease in adjusted operating income are discussed by segment in the segment analyses that follow.

Income tax expense decreased by $845 million in the first six months of 2024 compared to the first six months of 2023 primarily as a result of lower income before income tax expense.

Net income attributable to noncontrolling interests decreased by $126 million in the first six months of 2024 compared to the first six months of 2023 primarily due to lower earnings associated with DGD,

whose operations compose our Renewable Diesel segment. See Note 6 of Condensed Notes to Consolidated Financial Statements regarding our accounting for DGD and the Renewable Diesel segment analysis beginning on page 54.

Refining Segment Results

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

						Six Months Ended June 30,
						2024						2023						Change
Operating income						$	2,969					$	6,489					$	(3,520)
Adjusted operating income (see note (c))						2,979						6,500						(3,521)
Refining margin (see note (c))						6,586						10,120						(3,534)
Operating expenses (excluding depreciation and amortization expense reflected below)						2,403						2,466						(63)
Depreciation and amortization expense						1,204						1,154						50
Throughput volumes (thousand barrels per day) (see note (d))						2,885						2,950						(65)

Refining segment operating income decreased by $3.5 billion in the first six months of 2024 compared to the first six months of 2023. Refining segment adjusted operating income, which excludes the adjustment in the table in note (c), also decreased by $3.5 billion in the first six months of 2024 compared to the first six months of 2023 primarily due to a decrease in Refining segment margin of $3.5 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 51 reflects market reference prices and differentials that we believe impacted our Refining segment margin in the first six months of 2024 compared to the first six months of 2023.

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

• A decrease in gasoline margins had an unfavorable impact of approximately $1.3 billion.

• A decrease in distillate (primarily diesel) margins had an unfavorable impact of approximately $904 million.

• A decline in crude oil differentials had an unfavorable impact of approximately $510 million.

• A decrease in margins for other products had an unfavorable impact of approximately $215 million.

• A decrease in throughput volumes of 65,000 barrels per day had an unfavorable impact of approximately $148 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 2024 and 2023. The selected financial data is derived from the Financial Highlights by Segment and Total Company tables, unless otherwise noted.

						Six Months Ended June 30,
						2024						2023						Change
Operating income						$	302					$	645					$	(343)
Renewable Diesel margin (see note (c))						599						952						(353)
Operating expenses (excluding depreciation and amortization expense reflected below)						170						190						(20)
Depreciation and amortization expense						127						117						10
Sales volumes (thousand gallons per day) (see note (d))						3,610						3,698						(88)

Renewable Diesel segment operating income decreased by $343 million in the first six months of 2024 compared to the first six months of 2023 primarily due to a decrease in Renewable Diesel segment margin of $353 million.

Renewable Diesel segment margin is primarily affected by the price for the renewable diesel that we sell and the cost of the feedstocks that we process. The table on page 52 reflects market reference prices that we believe impacted our Renewable Diesel segment margin in the first six months of 2024 compared to the first six months of 2023.

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

• A decrease in product prices, primarily renewable diesel, had an unfavorable impact of approximately $1.2 billion.

• A decrease in the cost of the feedstocks that we process had a favorable impact of approximately $852 million.

Ethanol Segment Results

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

						Six Months Ended June 30,
						2024						2023						Change
Operating income						$	115					$	166					$	(51)
Adjusted operating income (see note (c))						142						167						(25)
Ethanol margin (see note (c))						442						464						(22)
Operating expenses (excluding depreciation and amortization expense reflected below)						262						258						4
Depreciation and amortization expense						38						39						(1)
Production volumes (thousand gallons per day) (see note (d))						4,470						4,314						156

Ethanol segment operating income decreased by $51 million in the first six months of 2024 compared to the first six months of 2023; however, Ethanol segment adjusted operating income, which excludes the adjustment in the table in note (c), decreased by $25 million in the first six months of 2024 compared to the first six months of 2023 primarily due to a decrease in Ethanol segment margin of $22 million.

Ethanol segment margin is primarily affected by prices for the ethanol and corn related co-products that we sell and the cost of corn that we process. The table on page 52 reflects market reference prices that we believe impacted our Ethanol segment margin in the first six months of 2024 compared to the first six months of 2023.

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

• A decrease in ethanol prices had an unfavorable impact of approximately $503 million.

• A decrease in prices for the co-products that we produce, primarily DDGs and inedible DCOs, had an unfavorable impact of approximately $159 million.

• A decrease in corn prices had a favorable impact of approximately $626 million.

• An increase in production volumes of 156,000 gallons per day had a favorable impact of approximately $14 million.

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The following notes relate to references on pages 42 through 55.

(a)“Other income, net” includes a net gain of $11 million in the six months ended June 30, 2023 related to the early retirement of $199 million aggregate principal amount of various series of our senior notes.

(b)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.

(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 operating expenses (excluding depreciation and amortization expense), depreciation and amortization expense, and other operating expenses, as reflected in the table below.

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Reconciliation of Refining operating income to Refining margin
Refining operating income						$	1,224					$	2,432					$	2,969					$	6,489
Adjustments:
Operating expenses (excluding depreciation and amortization expense)						1,219						1,205						2,403						2,466
Depreciation and amortization expense						604						582						1,204						1,154
Other operating expenses						5						1						10						11
Refining margin						$	3,052					$	4,220					$	6,586					$	10,120

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

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Reconciliation of Renewable Diesel operating income to Renewable Diesel margin
Renewable Diesel operating income						$	112					$	440					$	302					$	645
Adjustments:
Operating expenses (excluding depreciation and amortization expense)						80						104						170						190
Depreciation and amortization expense						62						59						127						117
Renewable Diesel margin						$	254					$	603					$	599					$	952

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

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Reconciliation of Ethanol operating income to Ethanol margin
Ethanol operating income						$	105					$	127					$	115					$	166
Adjustments:
Operating expenses (excluding depreciation and amortization expense)						125						128						262						258
Depreciation and amortization expense						19						19						38						39
Other operating expenses						(2)						1						27						1
Ethanol margin						$	247					$	275					$	442					$	464

**◦**Adjusted Refining operating income is defined as Refining segment operating income excluding other operating expenses, as reflected in the table below.

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Reconciliation of Refining operating income to adjusted Refining operating income
Refining operating income						$	1,224					$	2,432					$	2,969					$	6,489
Adjustment: Other operating expenses						5						1						10						11
Adjusted Refining operating income						$	1,229					$	2,433					$	2,979					$	6,500

**◦**Adjusted Ethanol operating income is defined as Ethanol segment operating income excluding other operating expenses, as reflected in the table below.

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Reconciliation of Ethanol operating income to adjusted Ethanol operating income
Ethanol operating income						$	105					$	127					$	115					$	166
Adjustment: Other operating expenses						(2)						1						27						1
Adjusted Ethanol operating income						$	103					$	128					$	142					$	167

**◦**Adjusted operating income is defined as total company operating income excluding other operating expenses, as reflected in the table below.

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Reconciliation of total company operating income to adjusted operating income
Total company operating income						$	1,221					$	2,759					$	2,900					$	6,802
Adjustment: Other operating expenses						3						2						37						12
Adjusted operating income						$	1,224					$	2,761					$	2,937					$	6,814

(d)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, 2024 (in millions):

Available capacity from our committed facilities (a):
Valero Revolver																								$	3,998
Accounts receivable sales facility																								1,300
Total available capacity																								5,298
Cash and cash equivalents (b)																								4,830
Total liquidity																								$	10,128

---

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

(b)Excludes $416 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.

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):

			Six Months Ended June 30,
			2024						2023
Cash flows provided by (used in):
Operating activities			$	4,318					$	4,682
Investing activities			(1,029)						(1,078)
Financing activities:
Debt borrowings			3,123						1,804
Repayments of debt and finance lease obligations (including premiums paid on early retirement of debt)			(3,643)						(2,158)
Return to stockholders:
Purchases of common stock for treasury			(2,056)						(2,393)
Common stock dividend payments			(703)						(746)
Return to stockholders			(2,759)						(3,139)
Other financing activities			88						(27)
Financing activities			(3,191)						(3,520)
Effect of foreign exchange rate changes on cash			(108)						129
Net increase (decrease) in cash, cash equivalents, and restricted cash			$	(10)					$	213

Cash Flows for the Six Months Ended June 30, 2024

In the first six months of 2024, we used the $4.3 billion of cash generated by our operations, $3.1 billion in debt borrowings, and $10 million of cash on hand to make $1.0 billion of investments in our business, repay $3.6 billion of debt and finance lease obligations, and return $2.8 billion to our stockholders through purchases of our common stock for treasury and dividend payments. The debt borrowings and repayments are described in Note 4 of Condensed Notes to Consolidated Financial Statements.

As previously noted, our operations generated $4.3 billion of cash in the first six months of 2024, driven primarily by net income of $2.3 billion, noncash charges to income of $1.4 billion, and a positive change in working capital of $629 million. Noncash charges primarily included $1.4 billion of depreciation and amortization expense. Details regarding the components of the change in working capital, along with the reasons for the changes in those components, are described in Note 10 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, as defined on the following page under “Capital Investments,” of which $193 million related to capital investments made by DGD.

Cash Flows for the Six Months Ended June 30, 2023

In the first six months of 2023, we used the $4.7 billion of cash generated by our operations and the $1.8 billion in debt borrowings to make $1.1 billion of investments in our business, repay $2.2 billion of debt and finance lease obligations (including premiums paid on the early retirement of debt), return $3.1 billion to our stockholders through purchases of our common stock for treasury and dividend payments, and increase our available cash on hand by $213 million. The debt borrowings and repayments are described in Note 4 of Condensed Notes to Consolidated Financial Statements.

As previously noted, our operations generated $4.7 billion of cash in the first six months of 2023, driven primarily by net income of $5.3 billion and noncash charges to income of $1.1 billion, partially offset by an unfavorable change in working capital of $1.7 billion. Noncash charges primarily included $1.3 billion of depreciation and amortization expense. Details regarding the components of the change in working capital, along with the reasons for the changes in those components, are described in Note 10 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 $1.1 billion primarily consisted of $982 million in capital investments, of which $161 million related to capital investments made by DGD.

Our Capital Resources

Our material cash requirements as of June 30, 2024 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 are composed of our capital expenditures, deferred turnaround and catalyst cost expenditures, and investments in nonconsolidated joint ventures, as reflected in our statements of cash flows as shown on page 6. Capital investments exclude acquisitions, if any.

We have publicly announced GHG emissions reduction/displacement targets and a long-term ambition. We believe that our allocation of growth capital into low-carbon projects to date has been consistent with such targets and ambition. Certain low-carbon projects have been completed or are already in execution and the associated capital investments are included in our expected capital investments for 2024. Our capital investments in future years to achieve these targets and ambition are expected to include investments associated with certain low-carbon projects currently at various stages of progress, evaluation, or approval.

As previously disclosed, in January 2023, we announced that DGD approved a large-scale sustainable aviation fuel (SAF)1 project. The SAF project is expected to be operational in the fourth quarter of 2024, with a total cost of $315 million, half of which is attributable to Valero.

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. DGD’s members use DGD’s operating cash flow (excluding changes in its current

1 DGD expects to produce synthetic paraffinic kerosene (SPK), a renewable blending component, using the Hydrotreated Esters and Fatty Acids (HEFA) process. SPK is also commonly referred to as “SAF” or “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 “SAF” or “blended SAF.” This document refers to both SPK and blended SAF as SAF.

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 6 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, 2024 and 2023.

									Six Months Ended June 30,
						2024						2023
Reconciliation of capital investments to capital investments attributable to Valero
Capital expenditures (excluding VIEs)									$	247					$	311
Capital expenditures of VIEs:
DGD									142						122
Other VIEs									5						2
Deferred turnaround and catalyst cost expenditures (excluding VIEs)									636						508
Deferred turnaround and catalyst cost expenditures of DGD									51						39
Capital investments									1,081						982
Adjustments:
DGD’s capital investments attributable to the other joint venture member									(97)						(80)
Capital expenditures of other VIEs									(5)						(2)
Capital investments attributable to Valero									$	979					$	900

We have developed an extensive multi-year capital investment program, which we update and revise based on changing internal and external factors. As previously disclosed in our annual report on Form 10-K for the year ended December 31, 2023, we expect to incur approximately $2.0 billion for capital investments attributable to Valero during 2024. Approximately $1.6 billion of the expected capital investments attributable to Valero are for sustaining the business and the balance towards growth strategies, of which approximately half is allocated to expanding our low-carbon businesses.

Contractual Obligations

As of June 30, 2024, 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, 2024, 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, 2024.

Other Matters Impacting Liquidity and Capital Resources

Stock Purchase Programs

During the six months ended June 30, 2024, we purchased for treasury 13,256,028 of our shares for a total cost of $2.1 billion. See Note 5 of Condensed Notes to Consolidated Financial Statements for additional information related to our stock purchase programs. As of June 30, 2024, we had $145 million and $2.5 billion remaining available for purchase under the September 2023 Program and February 2024 Program, respectively. 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, 2023, we plan to contribute $113 million to our pension plans and $22 million to our other postretirement benefit plans during 2024. No significant contributions were made during the six months ended June 30, 2024.

Cash Held by Our Foreign Subsidiaries

As of June 30, 2024, $4.3 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.

Environmental Matters

Our operations are subject to extensive environmental regulations by government authorities relating to, among other matters, the discharge of materials into the environment, climate, waste management, pollution prevention measures, GHG and other emissions, our facilities and operations, and characteristics and composition of many of our products. Because environmental laws and regulations are becoming more complex and stringent and new 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, 2023.