Valero(VLO) - 2025 Q2 - Quarterly Results

Executive Summary Valero's Q2 2025 net income fell to $714 million, with mixed segment results and $695 million returned to stockholders Key Financial Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :------- | :------- | :---------- | | Net Income Attributable to Valero Stockholders | $714 million | $880 million | -18.86% | | Earnings Per Share (EPS) | $2.28 | $2.71 | -15.87% | | Refining Operating Income | $1.3 billion | $1.2 billion | +8.33% | | Renewable Diesel Operating Income (Loss) | ($79 million) | $112 million | -170.54% | | Ethanol Operating Income | $54 million | $105 million | -48.57% | | Returned to Stockholders | $695 million | N/A | N/A | Company Overview Valero is a multinational energy company operating refineries, renewable diesel, and ethanol plants across three core segments - Valero is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, selling primarily in the U.S., Canada, U.K., Ireland, and Latin America[15] - The company owns 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day[15] - Valero is a joint venture member in Diamond Green Diesel (DGD), which produces low-carbon fuels including renewable diesel and SAF, with a production capacity of approximately 1.2 billion gallons per year[15] - Valero also owns 12 ethanol plants with a combined production capacity of approximately 1.7 billion gallons per year[15] - Operations are managed through its Refining, Renewable Diesel, and Ethanol segments[15] Consolidated Financial Performance Valero's Q2 2025 consolidated financial performance saw decreased net income and EPS, with total revenues declining year-over-year Statement of Income Highlights Q2 2025 revenues decreased to $29,889 million, with net income at $714 million and diluted EPS at $2.28, both down from Q2 2024 Consolidated Statement of Income Data (Millions of Dollars, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :----------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------- | | Revenues | $29,889 | $34,490 | -13.34% | | Operating income | $997 | $1,221 | -18.35% | | Net income attributable to Valero Energy Corporation stockholders | $714 | $880 | -18.86% | | Earnings per common share | $2.28 | $2.71 | -15.87% | Non-GAAP Financial Measures Reconciliation Non-GAAP measures adjust for non-core items like impairment losses, with Q2 2025 adjusted net income and EPS aligning with GAAP figures - Non-GAAP measures are used to facilitate comparison of operating results between periods by adjusting for certain items not indicative of core operating performance, such as asset impairment loss, project liability adjustment, and second-generation biofuel tax credit[19][62][64] Adjusted Net Income and EPS Reconciliation (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----------------------------------------------------------------- | :------------------------------- | :------------------------------- | | Net income attributable to Valero Energy Corporation stockholders | $714 | $880 | | Total adjustments | — | $7 | | Adjusted net income attributable to Valero Energy Corporation stockholders | $714 | $887 | | Earnings per common share – assuming dilution | $2.28 | $2.71 | | Total adjustments | — | $0.02 | | Adjusted earnings per common share – assuming dilution | $2.28 | $2.73 | - For the six months ended June 30, 2025, a significant adjustment was a $1.1 billion asset impairment loss related to the Benicia and Wilmington refineries, net of taxes[29][63][64] Segment Performance Valero's Q2 2025 segment performance was mixed, with Refining income up, Renewable Diesel reporting a loss, and Ethanol income declining Refining Segment Refining segment operating income rose to $1,266 million in Q2 2025, despite slightly lower throughput, due to improved refining margin per barrel Refining Segment Financials (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Operating Income (Millions $) | $1,266 | $1,224 | 3.43% | | Refining Margin (Millions $) | $3,284 | $3,052 | 7.60% | | Throughput volumes (thousand bbl/day) | 2,922 | 3,010 | -2.92% | | Refining margin per barrel of throughput | $12.35 | $11.14 | 10.86% | U.S. Gulf Coast Region U.S. Gulf Coast refining operating income increased to $846 million in Q2 2025, driven by higher throughput and improved margin per barrel - Set a record for refining throughput rate in the U.S. Gulf Coast region in the second quarter of 2025[4] U.S. Gulf Coast Refining Performance (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Refining operating income (Millions $) | $846 | $686 | 23.32% | | Throughput volumes (thousand bbl/day) | 1,841 | 1,827 | 0.77% | | Refining margin per barrel of throughput | $11.78 | $10.36 | 13.71% | U.S. Mid-Continent Region U.S. Mid-Continent refining operating income rose to $127 million in Q2 2025, with improved margin per barrel offsetting slightly lower throughput U.S. Mid-Continent Refining Performance (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Refining operating income (Millions $) | $127 | $111 | 14.41% | | Throughput volumes (thousand bbl/day) | 423 | 438 | -3.39% | | Refining margin per barrel of throughput | $10.52 | $9.73 | 8.12% | North Atlantic Region North Atlantic refining operating income decreased to $219 million in Q2 2025 due to lower throughput volumes and a slight decline in margin per barrel North Atlantic Refining Performance (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Refining operating income (Millions $) | $219 | $325 | -32.62% | | Throughput volumes (thousand bbl/day) | 396 | 469 | -15.56% | | Refining margin per barrel of throughput | $13.20 | $13.32 | -0.90% | U.S. West Coast Region U.S. West Coast refining income fell to $74 million in Q2 2025, impacted by a $1.1 billion impairment loss and planned Benicia refinery closure U.S. West Coast Refining Performance (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Refining operating income (Millions $) | $74 | $102 | -27.45% | | Throughput volumes (thousand bbl/day) | 262 | 276 | -5.07% | | Refining margin per barrel of throughput | $18.02 | $14.86 | 21.26% | - Recognized a combined asset impairment loss of $1.1 billion in the six months ended June 30, 2025, related to the Benicia and Wilmington refineries[27][63] - Valero intends to cease refining operations at its Benicia Refinery by the end of April 2026, leading to accelerated depreciation of its long-lived assets[63][64] Renewable Diesel Segment The Renewable Diesel segment reported a $79 million operating loss in Q2 2025, a significant decline driven by lower sales volumes and margin per gallon Renewable Diesel Segment Financials (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Operating Income (Loss) (Millions $) | ($79) | $112 | -170.54% | | Renewable Diesel Margin (Millions $) | $54 | $254 | -78.74% | | Sales volumes (thousand gallons/day) | 2,732 | 3,492 | -21.76% | | Renewable Diesel margin per gallon of sales | $0.22 | $0.80 | -72.50% | Ethanol Segment Ethanol segment operating income decreased to $54 million in Q2 2025, as a significant decline in margin per gallon offset slightly increased production volumes Ethanol Segment Financials (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Operating Income (Millions $) | $54 | $105 | -48.57% | | Ethanol Margin (Millions $) | $217 | $247 | -12.15% | | Production volumes (thousand gallons/day) | 4,583 | 4,474 | 2.44% | | Ethanol margin per gallon of production | $0.52 | $0.61 | -14.80% | Liquidity, Capital Management & Shareholder Returns Valero maintained a strong balance sheet with $4.5 billion cash, generated $936 million in operating cash, and returned $695 million to stockholders in Q2 2025 Balance Sheet Data As of June 30, 2025, Valero reported $4.5 billion cash, $8.4 billion total debt, and a 19 percent net debt to capitalization ratio Balance Sheet Highlights (Millions of Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $4,537 | $4,657 | | Total debt | $8,370 | $8,085 | | Total finance lease obligations | $2,277 | $2,378 | | Valero Energy Corporation stockholders' equity | $24,078 | $24,512 | - The debt to capitalization ratio, net of cash and cash equivalents, was 19 percent as of June 30, 2025[12] - Valero repaid the $251 million outstanding principal balance of its 2.85% Senior Notes that matured in April 2025[5][12] Cash Flow and Capital Investments Q2 2025 net cash from operating activities was $936 million, with adjusted cash at $1.3 billion, and capital investments totaled $407 million Cash Flow and Capital Investments (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 (Millions $) | Three Months Ended June 30, 2024 (Millions $) | YoY Change (%) | | :----------------------------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | | Net cash provided by operating activities | $936 | $2,472 | -62.14% | | Adjusted net cash provided by operating activities | $1,347 | $1,600 | -15.81% | | Capital investments | $407 | $420 | -3.09% | | Capital investments attributable to Valero | $399 | $360 | 10.83% | - Included in net cash provided by operating activities was a $325 million unfavorable impact from working capital and $86 million of adjusted net cash used in operating activities associated with the other joint venture member's share of DGD[8] - Of the total capital investments, $371 million was for sustaining the business, including costs for turnarounds, catalysts, and regulatory compliance[9] Shareholder Returns Valero returned $695 million to stockholders in Q2 2025 through $354 million in dividends and $341 million in stock buybacks - Returned $695 million to stockholders in the second quarter of 2025[5][10] Shareholder Returns (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 (Millions $) | Three Months Ended June 30, 2024 (Millions $) | YoY Change (%) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------- | | Dividends paid | $354 | N/A | N/A | | Stock buybacks | $341 | N/A | N/A | | Dividends per common share | $1.13 | $1.07 | 5.61% | - The payout ratio was 52 percent of adjusted net cash provided by operating activities[10] Strategic Update Valero is advancing an FCC Unit optimization project at its St. Charles Refinery, costing $230 million, to boost high-value product yield by 2026 - Valero is progressing with an FCC Unit optimization project at the St. Charles Refinery[13] - The project aims to increase the yield of high-value products[13] - The project is estimated to cost $230 million and is expected to be completed in 2026[13] Market Reference Prices and Differentials Q2 2025 market reference prices for crude, natural gas, and product margins, along with renewable diesel and ethanol indicators, showed varied changes impacting profitability Refining Market Data Q2 2025 saw lower crude oil prices, higher natural gas and RVO costs, and varied regional product margins impacting refining profitability Key Refining Market Prices (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Brent crude oil ($/barrel) | $66.59 | $84.96 | -21.62% | | WTI crude oil ($/barrel) | $63.87 | $80.74 | -20.90% | | Natural gas ($/million British thermal units) | $2.83 | $1.74 | 62.64% | | Renewable volume obligation (RVO) ($/barrel) | $6.14 | $3.39 | 81.12% | Selected Refining Product Margins (RVO adjusted, $/barrel) (Q2 2025 vs Q2 2024) | Region/Product | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | U.S. Gulf Coast CBOB gasoline less Brent | $8.99 | $7.95 | 13.08% | | U.S. Gulf Coast ULS diesel less Brent | $14.79 | $14.12 | 4.74% | | North Atlantic CBOB gasoline less Brent | $13.43 | $16.22 | -17.20% | | U.S. West Coast California Reformulated Gasoline Blendstock for Oxygenate Blending 87 gasoline less Brent | $36.98 | $31.88 | 16.00% | Renewable Diesel Market Data Renewable Diesel markets in Q2 2025 saw lower ULS diesel prices, significantly higher RIN prices, stable LCFS credits, and increased feedstock costs Key Renewable Diesel Market Prices (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | NYMEX ULS diesel ($/gallon) | $2.16 | $2.51 | -13.94% | | Biodiesel RIN ($/RIN) | $1.09 | $0.51 | 113.73% | | California LCFS carbon credit ($/metric ton) | $52.36 | $51.29 | 2.09% | | USGC used cooking oil ($/pound) | $0.56 | $0.42 | 33.33% | Ethanol Market Data Q2 2025 ethanol market data indicated slightly higher corn prices and lower New York Harbor ethanol prices compared to the prior year Key Ethanol Market Prices (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Chicago Board of Trade corn ($/bushel) | $4.52 | $4.43 | 2.03% | | New York Harbor ethanol ($/gallon) | $1.84 | $1.90 | -3.16% | Notes to Earnings Release Tables This section defines and reconciles non-GAAP measures, detailing adjustments for impairment losses, project liabilities, and biofuel tax credits, and clarifies cash flow and capital investment calculations - Non-GAAP measures are used to assess ongoing financial performance by adjusting for items not indicative of core operating performance, such as asset impairment loss, project liability adjustment, and second-generation biofuel tax credit[62][64][67] - Key adjustments include a $1.1 billion asset impairment loss for the Benicia and Wilmington refineries (six months ended June 30, 2025), a project liability adjustment related to the Navigator carbon capture project cancellation (six months ended June 30, 2024), and a second-generation biofuel tax credit (three and six months ended June 30, 2024)[63][64] - Adjusted net cash provided by operating activities excludes changes in current assets and liabilities and the other joint venture member's share of DGD's operating cash flow to more accurately reflect cash available to Valero[67][68] - Capital investments attributable to Valero exclude the portion of DGD's capital investments attributable to the other joint venture member and capital expenditures of other consolidated variable interest entities (VIEs)[68]