Valero Energy VLO · USD

17. REVENUES AND SEGMENT INFORMATIONRevenue from Contracts with CustomersDisaggregation of RevenueRevenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements.Contract BalancesContract balances were as follows (in millions):December 31,20252024Receivables from contracts with customers,included in receivables, net (see Note 3)$6,233 $5,812 Contract liabilities, included in accrued expenses (see Note 8)60 82 During the years ended December 31, 2025, 2024, and 2023, we recognized as revenue $81 million, $39 million, and $127 million, respectively, that was included in contract liabilities as of December 31, 2024, 2023, and 2022, respectively.Remaining Performance ObligationsWe have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of December 31, 2025, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.Segment InformationWe have three reportable segments—Refining, Renewable Diesel, and Ethanol. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income (loss) generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.

10. COMMITMENTS AND CONTINGENCIESPurchase ObligationsWe have various purchase obligations under certain crude oil and other feedstock supply arrangements, industrial gas supply arrangements (such as hydrogen supply arrangements), natural gas supply arrangements, and various throughput, transportation, and terminaling agreements. We enter into these contracts to ensure an adequate supply of feedstock and utilities and adequate storage capacity to operate our refineries, renewable diesel plants, and ethanol plants. Substantially all of our purchase obligations are based on market prices or adjustments based on market indices. Certain of these purchase obligations include fixed or minimum volume requirements, while others are based on our usage requirements. None of these obligations is associated with suppliers’ financing arrangements. These purchase obligations are not reflected as liabilities.Self-InsuranceWe are self-insured for certain medical and dental, workers’ compensation, automobile liability, general liability, and other third-party liability claims up to applicable retention limits. Liabilities are accrued for self-insured claims, or when estimated losses exceed coverage limits, and when sufficient information is available to reasonably estimate the amount of the loss. These liabilities are included in accrued expenses and other long-term liabilities.

9. DEBT AND FINANCE LEASE OBLIGATIONSDebt, at stated values, and finance lease obligations consisted of the following (in millions):FinalMaturityDecember 31,20252024Credit facilities:Valero Revolver2030$— $— Accounts Receivable Sales Facility2026— — DGD Revolver2026— — DGD Loan Agreement2026— — IEnova Revolver202823 58 Public debt:Valero Senior Notes2.850%2025— 251 3.65%2025— 189 3.400%2026426 426 2.150%2027564 564 4.350%2028591 591 4.000%2029439 439 5.150%2030650 — 8.75%2030200 200 2.800%2031462 462 7.5%2032729 729 6.625%20371,380 1,380 6.75%203724 24 10.500%2039113 113 4.90%2045621 621 3.650%2051829 829 4.000%2052508 508 7.45%209770 70 Valero Energy Partners LP (VLP) Senior Notes4.375%2026146 146 4.500%2028456 456 Debenture, 7.65%2026100 100 Net unamortized debt issuance costs and other(70)(71)Total debt8,261 8,085 Finance lease obligations (see Note 5)2,358 2,378 Total debt and finance lease obligations10,619 10,463 Less: Current portion949 743 Debt and finance lease obligations, less current portion$9,670 $9,720 Credit FacilitiesValero RevolverIn October 2025, we amended our revolving credit facility (the Valero Revolver), which has a borrowing capacity of $4 billion, to extend the maturity date from November 2027 to October 2030 and to modify the reference interest rate from the Adjusted Term SOFR, a secured overnight financing rate (SOFR), to the Term SOFR. We have the option to increase the aggregate commitments under the Valero Revolver to $5.5 billion, subject to certain conditions. The Valero Revolver also provides for the issuance of letters of credit of up to $2.4 billion.Effective October 2025, outstanding borrowings under the Valero Revolver bear interest, at our option, at either (i) the Term SOFR or (ii) the Alternate Base Rate (each of these rates is defined in the Valero Revolver), plus the applicable margins. The Valero Revolver also requires payments for customary fees, including facility fees, letter of credit participation fees, and administrative agent fees. The interest rate and facility fees under the Valero Revolver are subject to adjustment based upon the credit ratings assigned to our senior unsecured debt.Accounts Receivable Sales FacilityWe have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell up to $1.3 billion of eligible trade receivables on a revolving basis. In July 2025, we extended the maturity date of this facility to July 2026.

15. INCOME TAXESIncome Statement ComponentsIncome before income tax expense was as follows (in millions):Year Ended December 31,202520242023U.S. operations$899 $2,685 $9,335 Foreign operations2,106 1,013 2,433 Income before income tax expense$3,005 $3,698 $11,768 Statutory income tax rates applicable to the countries in which we operate during each of the years ended December 31, 2025, 2024, and 2023 were as follows:Statutory IncomeTax RatesU.S.21 %Canada15 %U.K. (a)25 %Ireland13 %Mexico30 %Peru30 %________________________(a)Statutory income tax rate was increased to 25 percent from 19 percent effective April 1, 2023.The following is a reconciliation of income tax expense computed by applying statutory income tax rates to actual income tax expense (dollars in millions):Year Ended December 31,202520242023AmountPercentAmountPercentAmountPercentU.S. federal statutory income tax rate$631 21.0 %$777 21.0 %$2,471 21.0 %Domestic federal:Tax creditsForeign tax credits(61)(2.0)%(46)(1.2)%(149)(1.3)%Biofuels tax credits (a)(4)(0.1)%(248)(6.7)%— — %Other(1)— %(1)— %(1)— %Nontaxable and nondeductible itemsNontaxable production tax credits (b)(66)(2.2)%— — %— — %Nontaxable blender’s tax credits (c)— — %(127)(3.4)%(125)(1.1)%Tax on biofuels tax credits1 — %52 1.4 %— — %Other (d)13 0.4 %14 0.4 %34 0.3 %Cross-border tax laws4 0.1 %7 0.2 %27 0.2 %Changes in valuation allowances63 2.1 %49 1.3 %149 1.3 %Other reconciling itemsTax effects of income associated withnoncontrolling interests25 0.8 %(50)(1.3)%(84)(0.7)%Other(3)(0.1)%(43)(1.2)%34 0.3 %Domestic state and local income taxes, net offederal effect (e)22 0.7 %19 0.5 %122 1.0 %Foreign tax effects:CanadaProvincial and local income taxes90 3.0 %101 2.7 %161 1.4 %Statutory income tax rate differential(47)(1.5)%(52)(1.4)%(84)(0.7)%Withholding taxes41 1.4 %59 1.6 %45 0.4 %Other— — %(2)(0.1)%21 0.2 %MexicoChanges in valuation allowances(61)(2.0)%57 1.5 %— — %Statutory income tax rate differential42 1.4 %(26)(0.7)%15 0.1 %Other1 — %(4)(0.1)%35 0.3 %U.K.Statutory income tax rate differential33 1.1 %14 0.4 %19 0.2 %Other1 — %1 — %(13)(0.1)%Other foreign8 0.3 %(4)(0.1)%(7)(0.1)%Worldwide changes in unrecognized tax benefits27 0.9 %145 3.9 %(51)(0.4)%Income tax expense$759 25.3 %$692 18.7 %$2,619 22.3 %________________________(a)As permitted under Section 40(b) of the Code, producers of second-generation biofuels that are registered with the Internal Revenue Service (IRS) were eligible for an income tax credit of up to $1.

14. STOCK-BASED COMPENSATIONOverviewOur 2020 Omnibus Stock Incentive Plan (the 2020 OSIP) was approved by our stockholders on April 30, 2020. Under the 2020 OSIP, various stock and stock-based awards may be granted to employees, non-employee directors, and third-party service providers. The 2020 OSIP permits grants of (i) restricted stock and restricted stock units; (ii) stock options (including incentive and non-qualified stock options); (iii) stock appreciation rights; (iv) performance awards of cash, stock, or other securities; and (v) other stock-based awards (e.g., stock unit awards). Awards under the 2020 OSIP are granted at the discretion of our Board’s Human Resources and Compensation Committee (and, as applicable, approved by the independent directors) and may be subject to vesting or performance periods, performance goals, or other restrictions. As of December 31, 2025, 10,512,602 shares of our common stock remained available to be awarded under the 2020 OSIP.The following table reflects activity related to our stock-based compensation arrangements (in millions):Year Ended December 31,202520242023Stock-based compensation expense:Restricted stock$73 $67 $69 Performance awards44 33 38 Total stock-based compensation expense$117 $100 $107 Tax benefit recognized on stock-based compensation expense$16 $13 $14 Tax benefit realized for tax deductions resulting fromexercises and vestings— — 2 Restricted StockRestricted stock is our most significant stock-based compensation arrangement. Employees, non-employee directors, and third-party service providers are eligible to receive restricted stock, which vests in accordance with individual written agreements between the participants and us, usually in equal annual installments over a period of three years beginning one year after the date of grant. The fair value of each share of restricted stock is equal to the market price of our common stock.A summary of the status of our restricted stock awards is presented in the following table:Number ofSharesWeighted-AverageGrant-DateFair ValuePer ShareNonvested shares as of January 1, 2025795,220 $126.63 Granted473,834 155.18 Vested(527,122)128.53 Forfeited(6,835)126.89 Nonvested shares as of December 31, 2025735,097 143.67 As of December 31, 2025, there was $54 million of unrecognized compensation cost related to outstanding unvested restricted stock awards, which is expected to be recognized over a weighted-average period of approximately two years.

5. LEASESGeneralWe have entered into long-term leasing arrangements for the right to use various classes of underlying assets as follows:•Pipelines, Terminals, and Tanks includes facilities and equipment used in the storage, transportation, production, and sale of our feedstocks and products;•Marine Transportation includes time charters for ocean-going tankers and coastal vessels;•Rail Transportation includes railcars and related storage facilities; and•Other includes machinery, equipment, and various facilities used in our operations; facilities and equipment related to industrial gases and power used in our operations; land and rights-of-way associated with our refineries, plants, and pipelines and other logistics assets, as well as office facilities; and equipment primarily used at our corporate offices, such as printers and copiers.In addition to fixed lease payments, some arrangements contain provisions for variable lease payments. Certain leases for pipelines, terminals, and tanks provide for variable lease payments based on, among other things, throughput volumes in excess of a base amount. Certain marine transportation leases contain provisions for payments that are contingent on usage. Additionally, if the rental increases are not scheduled in the lease, such as an increase based on subsequent changes in the index or rate, those rents are considered variable lease payments. In all instances, variable lease payments are recognized in the period in which the obligation for those payments is incurred.Lease Costs and Other Supplemental InformationOur total lease cost comprises costs that are included in our statements of income, as well as costs capitalized as part of an item of property, plant, and equipment or inventory.

RISK MANAGEMENT AND STRATEGYWe take an enterprise approach to information security risk management and governance. Our information security program and framework comprise processes, policies, practices, systems, and technologies that are designed to identify, assess, prioritize, manage, and monitor risks to our information systems, including risks from cybersecurity threats and risks associated with the use of third-party service providers. Our established recovery approach is designed to provide for the ready availability and use of our business-critical processes in the event of any downtime, disaster, or outages. We also seek to identify and mitigate the risks associated with the use of third-party service providers through the review of their security programs prior to our engagement thereof. Additionally, our control environment and internal audit process are designed to bring a systematic, disciplined approach to evaluate our risk management, control, and governance processes concerning cybersecurity and our information security framework. We have a cybersecurity Incident Response Plan (IRP) that sets forth a process designed to effectively respond to an incident by obtaining information, coordinating activities, assessing results, and communicating applicable developments to our stakeholders, including employees, law enforcement, other external parties and agencies, and our Board. The IRP includes the following major components: preparation, detection and analysis, containment, eradication, notification, recovery, reporting, and lessons learned. Specific technical and legal playbooks have also been developed for data breaches, malware, unauthorized remote access, ransomware, and ransom-related incidents. We have also retained certain third-party experts to assist us with various aspects of incident assessment and response in the event those services become necessary or useful.

11. EQUITYShare ActivityActivity in the number of shares of common stock and treasury stock was as follows (in millions):CommonStockTreasuryStockBalance as of December 31, 2022673 (301)Transactions in connection withstock-based compensation plans— 1 Purchases of common stock for treasury— (40)Balance as of December 31, 2023673 (340)Purchases of common stock for treasury— (19)Balance as of December 31, 2024673 (359)Transactions in connection withstock-based compensation plans— 1 Purchases of common stock for treasury— (17)Balance as of December 31, 2025673 (375)Preferred StockWe have 20 million shares of preferred stock authorized with a par value of $0.01 per share. No shares of preferred stock were outstanding as of December 31, 2025 or 2024.Treasury StockWe purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described in the table below) and with respect to our employee stock-based compensation plans.Our Board authorized us to purchase shares of our outstanding common stock under various programs with no expiration dates as follows (in millions):Program NameAuthorizationDateTotal CostAuthorizedCompletion ofAuthorized SharePurchasesRemainingAvailable forPurchase as ofDecember 31,2025October 2022 ProgramOctober 26, 2022$2,500 Second quarter of 2023$— February 2023 ProgramFebruary 23, 20232,500 Fourth quarter of 2023— September 2023 ProgramSeptember 15, 20232,500 Third quarter of 2024— February 2024 ProgramFebruary 22, 20242,500 Fourth quarter of 2025— September 2024 ProgramSeptember 19, 20242,500 n/a1,739 On February 25, 2026, our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date, which is in addition to the amount remaining under the September 2024 Program.Common Stock DividendsOn January 22, 2026, our Board declared a quarterly cash dividend of $1.20 per common share payable on March 9, 2026 to holders of record at the close of business on February 5, 2026.