VLO Valero Energy 10-Q 2026-09-30 section summaries

Valero (VLO) — nine months and quarter ended September 30, 2026

Earnings and segment performance

Valero’s Q3 2026 revenue rose to $46.098B from $32.168B. Cost of sales was $36.691B from $30.396B, leaving revenue less cost of sales of $9.407B from $1.772B. Operating income increased to $9.073B from $1.509B; net income was $6.989B from $1.066B, including $6.828B attributable to Valero stockholders from $1.095B. Diluted EPS was $23.89 from $3.53. For 9M, revenue was $122.955B from $92.315B, cost of sales $106.027B from $88.787B, and revenue less cost of sales $16.928B from $3.528B. Operating income was $16.000B from $1.606B; net income was $12.384B from $1.077B, including $11.811B attributable to stockholders from $1.214B. Prior-year 9M results included a $1.131B impairment loss; none was recorded in 2026. The sharp improvement in earnings also reflects the much stronger refining environment.

Segment revenue below includes intersegment sales; segment operating income is as reported:

Nine-month segment operating income totaled $16.947B from $2.355B. The 2026 pretax income was $15.946B; for 2025, segment results reconciled to pretax income of $1.481B, including $29M of intersegment-loss eliminations, $778M of other corporate expenses, $292M of other income, and $417M of net interest and debt expense. Refining’s 9M external revenue growth included gasoline/blendstocks of $47.780B from $38.382B and distillates of $58.152B from $40.736B. Renewable Diesel growth included renewable diesel revenue of $2.056B from $1.484B and neat SAF of $358M from $179M.

Cash flow, balance sheet and capital returns

Nine-month operating cash flow was $13.902B from $3.769B. Cash capital expenditures were $661M from $576M, with deferred turnaround and catalyst expenditures adding $569M from $899M. Consolidated expenditures for long-lived assets were $1.230B from $1.475B. Working-capital changes used $123M, versus providing $157M in 9M 2025; higher receivables used $5.021B, partly offset by higher payables providing $3.635B and higher income taxes payable providing $1.513B. Income taxes paid rose to $1.880B from $398M.

At September 30, total assets were $67.951B, versus $57.988B at year-end 2025; total equity was $31.084B, including $27.974B attributable to Valero stockholders and $3.110B of noncontrolling interests. Goodwill and intangible assets other than goodwill are not separately itemized in the summarized balance-sheet figures. Cash and cash equivalents were $9.840B from $4.688B. Current and long-term debt and finance lease obligations totaled $11.001B ($989M current; $10.012B long-term), versus $10.619B at year-end. Debt carrying amount was $8.579B and fair value $8.089B. The $4.0B revolver and $1.3B receivables facility had no borrowings and were substantially available.

Valero repurchased 20.395M shares in 9M, versus 10.310M, and 9.057M in Q3, versus 5.667M. Shares outstanding fell from 298,940,136 at December 31, 2025 to 278,886,375 at September 30, 2026. Treasury-stock purchases used $6.198B of cash in 9M, versus $1.534B; dividends paid were $1.059B, versus $1.061B. On October 27, the Board authorized an additional $10B repurchase program and declared a $1.20-per-share dividend. Nine-month stock-based compensation was $70M from $68M.

Business developments and exposures

Valero completed idling Benicia’s processing units in April and ceased fuel production, with Northern California supply expected to come through imports or other arrangements. The shortened useful life generated $133M of incremental 9M depreciation. A $44M benefit arose from liquidation of lower-cost California LIFO inventory layers. LIFO replacement cost exceeded carrying value by $11.9B, versus $2.6B at year-end; non-LIFO inventory was $1.5B, versus $1.2B.

A March 23 fire shut down Port Arthur’s distillate hydrotreater; operations resumed at reduced rates in April and returned to normal throughput during Q2, while repairs continued. Valero recorded $99M of insurance-recovery receivables year to date, with no proceeds received by September 30, and $19M of year-to-date repair costs. Litigation and regulatory losses cannot currently be reasonably estimated.

Renewable and low-carbon fuel compliance costs, primarily RINs, were $658M in Q3 from $431M and $2.0B in 9M from $1.2B, exposing margins to credit-price and blending-quota volatility. A DGD tariff-refund claim for $51M was accepted and substantially received by September 30; possible future claims remain uncertain.

Derivative positions are exposed to market volatility, and economic hedges are not designated for hedge accounting. At September 30, gross derivative assets were $2.611B and liabilities $2.918B, versus $460M and $452M at year-end, before applicable netting. Commodity-hedge losses recognized in OCI were $418M in 9M, versus $15M; $258M, versus $23M, was reclassified from accumulated OCI into revenue. Derivatives not designated as hedges produced commodity-contract losses in revenue of $382M in 9M, versus $7M. Accumulated other comprehensive loss widened to $797M from $469M, mainly reflecting foreign-currency translation and hedge losses.

Valero — Q3 and first nine months of 2026

Valero’s results rebounded sharply from weak 2025 comparisons, led by stronger refining margins amid resilient fuel demand and constrained global refining supply. Geopolitical disruptions supported product prices and margins despite higher crude and feedstock costs. Results remain sensitive to supply-demand shifts, commodity and feedstock prices, and geopolitical developments. The 2025 nine-month comparison also included a $1.131B impairment loss related to California refineries.

Consolidated results

• Q3 2026: Revenue was $46.098B, up from $32.168B; cost of sales was $36.691B, up from $30.396B, mainly reflecting higher crude and feedstock costs. Operating income increased to $9.073B from $1.509B; adjusted operating income, a non-GAAP measure, was $9.084B versus $1.564B. Net income was $6.989B versus $1.066B, and net income attributable to Valero stockholders was $6.828B versus $1.095B. Higher operating income was partly offset by increased income tax expense ($2.067B versus $390M) and noncontrolling interests ($161M versus a $29M loss).
• First nine months of 2026: Revenue was $122.955B versus $92.315B; cost of sales was $106.027B versus $88.787B. Operating income was $16.000B versus $1.606B, and adjusted operating income was $16.017B versus $2.800B. Net income was $12.384B versus $1.077B; net income attributable to Valero stockholders was $11.811B versus $1.214B. Higher taxes ($3.562B versus $404M) and noncontrolling interests ($573M versus a $137M loss) partly offset the operating-income improvement.

Segment performance

Q3 2026 revenue and operating income (prior-year comparison):

Refining’s Q3 adjusted operating income rose to $8.774B from $1.665B, primarily because refining margin increased $6.999B: stronger distillate margins contributed about $5.5B and gasoline about $2.3B. Lower throughput reduced results by $420M; throughput fell 115,000 barrels per day to 2.972M barrels per day. Benicia’s processing units were idled in phases and fuel production ceased by the end of April 2026.

Renewable Diesel’s Q3 operating-income improvement reflected a $384M increase in margin. Higher product prices contributed about $1.2B, partly offset by roughly $750M of higher feedstock costs; sales volume rose to 3,423 thousand gallons per day from 2,717 thousand. Ethanol operating income increased $89M, with margin up $103M. Clean-fuel production credits contributed $92M, alongside higher ethanol and coproduct prices, partly offset by higher corn costs. Credits were available for qualifying ethanol under OBBB provisions effective January 1, 2026.

Cash, investment and capital returns

Nine-month operating cash flow was $13.902B, up from $3.769B. It included $1.9B of noncash charges and an unfavorable $123M working-capital change; the 2025 period included $2.5B of noncash charges and a favorable $157M working-capital change. Investing cash flow used $1.180B, compared with $1.426B used in 2025.

Nine-month capital investments were $1.230B versus $1.476B; Valero-attributable capital investments were $1.205B versus $1.392B. Capital expenditures excluding VIEs were $654M versus $504M, while deferred turnaround and catalyst expenditures excluding VIEs were $529M versus $808M. Valero returned $7.257B to stockholders—$6.198B of repurchases and $1.059B of dividends—versus $2.595B in 2025. It repurchased 20,395,132 shares during the period. The July 2026 authorization had $3.0B remaining at September 30; on October 27, the board authorized an additional $10.0B program.

Valero expects 2026 capital investments and Valero-attributable investments of approximately $2.0B, including an estimated $250M related to the Port Arthur incident, a substantial portion of which is expected to be insured subject to the self-insured retention. Approximately $1.7B of the attributable plan is for sustaining investment.

Liquidity, operations and risks

At September 30, liquidity was $14.739B, comprising $9.441B of cash and $5.298B of available committed capacity. Cash excludes $399M held by consolidated VIEs for their use; $5.4B of cash and cash equivalents was held by foreign subsidiaries. Cash, cash equivalents and restricted cash increased $5.156B during the nine months. Valero issued $850M of 5.150% senior notes due 2036 and repaid $526M of matured public debt; proceeds also partly repaid other notes, with some intended for notes due December 2026 and general corporate purposes. Management expects sufficient liquidity for foreseeable needs but notes future financing may not be available on acceptable terms.

A March fire at Port Arthur forced a refinery shutdown; operations resumed at reduced rates in April and returned to normal throughput during Q2. Valero’s refining and low-carbon-fuel businesses face exposure to volatile margins, feedstock costs, outages and weather, transport constraints, regulatory and credit-market changes, and demand and geopolitical shifts. Environmental regulation may increase future compliance costs; customer and counterparty, project-execution, legal and tax risks also remain. Valero uses non-GAAP measures, with reconciliations elsewhere in the filing.

Debt and Market Risk

At September 30, 2026, Valero had $8.632 billion of fixed-rate debt principal, excluding unamortized discounts and debt issuance costs, compared with $8.308 billion at December 31, 2025. The fixed-rate debt’s fair value was $8.069 billion, down from $8.167 billion.

Fixed-rate principal maturities were $146 million for the remainder of 2026 (compared with $672 million due in 2026 at December 31, 2025), $564 million in 2027, $1.047 billion in 2028, $439 million in 2029, $850 million in 2030, and $5.586 billion thereafter (versus $4.736 billion thereafter at December 31, 2025). Weighted-average rates by maturity were 4.4% for the remainder of 2026, 2.2% in 2027, 4.4% in 2028, 4.0% in 2029, 6.0% in 2030, and 5.4% thereafter. The overall weighted-average fixed rate was 5.0%, unchanged from December 2025.

Floating-rate debt principal declined to $3 million at September 30, 2026, from $23 million at December 31, 2025; fair value equaled principal at both dates. Its weighted-average rate was 7.6%, compared with 7.8% at year-end 2025. Management stated that a 10% increase or decrease in floating interest rates would not materially affect results of operations.

Other significant market exposures include commodity-price volatility, prices of credits required under Renewable and Low-Carbon Fuel Programs, and foreign-exchange rates. Valero reported no material change in these risks from those disclosed in its FY2025 Form 10-K.

Item 4 — Controls and Procedures

Management, with the participation of the CEO and CFO, assessed Valero’s disclosure controls and procedures as effective as of September 30, 2026. No change in internal control over financial reporting during the quarter materially affected, or was reasonably likely to materially affect, those controls. This section reports no financial metrics or other material business developments.

Valero reported no material changes to the risk factors disclosed in its Form 10-K for the year ended December 31, 2025.

Item 5 — Other Information

No other information was reported under subsections (a) and (b). During the three months ended September 30, 2026, no Valero director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement. No financial metrics, business developments, or material changes were reported.