10-Q 1 vlo-20230930.htm 10-Q vlo-20230930
VALERO ENERGY CORP/TX0001035002FALSE2023Q3--12-31Includes excise taxes on sales by certain of our foreign operations of $1,468 million and $1,213 million for the three months ended September 30, 2023 and 2022, respectively, and $4,339 million and $3,890 million for the nine months ended September 30, 2023 and 2022, 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 001-13175
VLO Logo.jpg
VALERO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware74-1828067
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
One Valero Way
San Antonio, Texas
(Address of principal executive offices)
78249
(Zip Code)
(210) 345-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareVLONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐Non-accelerated filer☐
Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The number of shares of the registrant’s only class of common stock, $0.01 par value, outstanding as of October 20, 2023 was 340,452,942.


VALERO ENERGY CORPORATION
TABLE OF CONTENTS
Page


i

PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(millions of dollars, except par value)
September 30,
2023		December 31,
2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$5,831 $4,862 
Receivables, net12,566 11,919 
Inventories7,513 6,752 
Prepaid expenses and other667 600 
Total current assets26,577 24,133 
Property, plant, and equipment, at cost51,208 50,576 
Accumulated depreciation(20,955)(19,598)
Property, plant, and equipment, net30,253 30,978 
Deferred charges and other assets, net6,345 5,871 
Total assets$63,175 $60,982 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations$1,334 $1,109 
Accounts payable13,342 12,728 
Accrued expenses1,219 1,215 
Taxes other than income taxes payable1,419 1,568 
Income taxes payable278 841 
Total current liabilities17,592 17,461 
Debt and finance lease obligations, less current portion10,107 10,526 
Deferred income tax liabilities5,231 5,217 
Other long-term liabilities2,188 2,310 
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized;
673,501,593 and 673,501,593 shares issued
7 7 
Additional paid-in capital6,900 6,863 
Treasury stock, at cost;
333,047,642 and 301,372,958 common shares
(24,381)(20,197)
Retained earnings44,774 38,247 
Accumulated other comprehensive loss(1,325)(1,359)
Total Valero Energy Corporation stockholders’ equity25,975 23,561 
Noncontrolling interests2,082 1,907 
Total equity28,057 25,468 
Total liabilities and equity$63,175 $60,982 
See Condensed Notes to Consolidated Financial Statements.

1

VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Revenues (a)$38,404 $44,454 $109,352 $134,637 
Cost of sales:
Cost of materials and other32,385 38,064 91,820 115,959 
Operating expenses (excluding depreciation and amortization
expense reflected below)
1,578 1,746 4,495 4,751 
Depreciation and amortization expense671 621 1,979 1,806 
Total cost of sales34,634 40,431 98,294 122,516 
Other operating expenses6 6 18 40 
General and administrative expenses (excluding depreciation and
amortization expense reflected below)
250 214 703 652 
Depreciation and amortization expense11 11 32 34 
Operating income3,503 3,792 10,305 11,395 
Other income, net122 74 357 87 
Interest and debt expense, net of capitalized interest(149)(138)(443)(425)
Income before income tax expense3,476 3,728 10,219 11,057 
Income tax expense813 816 2,288 2,410 
Net income2,663 2,912 7,931 8,647 
Less: Net income attributable to noncontrolling interests41 95 298 232 
Net income attributable to Valero Energy Corporation stockholders
$2,622 $2,817 $7,633 $8,415 
Earnings per common share$7.49 $7.20 $21.22 $20.94 
Weighted-average common shares outstanding (in millions)349 390 359 400 
Earnings per common share – assuming dilution$7.49 $7.19 $21.21 $20.93 
Weighted-average common shares outstanding –
assuming dilution (in millions)
349 390 359 401 
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our foreign
operations
$1,468 $1,213 $4,339 $3,890 

See Condensed Notes to Consolidated Financial Statements.

2

VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions of dollars)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net income$2,663 $2,912 $7,931 $8,647 
Other comprehensive income (loss):
Foreign currency translation adjustment(314)(606)77 (1,035)
Net gain (loss) on pension and other postretirement
benefits
(12)8 (25)25 
Net gain (loss) on cash flow hedges(78)69 (68)74 
Other comprehensive loss before
income tax expense (benefit)
(404)(529)(16)(936)
Income tax expense (benefit) related to items of
other comprehensive income (loss)
(11)9 (16)16 
Other comprehensive loss
(393)(538)— (952)
Comprehensive income2,270 2,374 7,931 7,695 
Less: Comprehensive income attributable
to noncontrolling interests
2 129 264 269 
Comprehensive income attributable to
Valero Energy Corporation stockholders
$2,268 $2,245 $7,667 $7,426 

See Condensed Notes to Consolidated Financial Statements.

3

VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(millions of dollars, except per share amounts)
(unaudited)
Valero Energy Corporation Stockholders’ Equity
Common
Stock		Additional
Paid-in
Capital		Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		TotalNon-
controlling
Interests		Total
Equity
Balance as of June 30, 2023$7 $6,889 $(22,586)$42,512 $(971)$25,851 $2,143 $27,994 
Net income— — — 2,622 — 2,622 41 2,663 
Dividends on common stock
($1.02 per share)
— — — (360)— (360)— (360)
Stock-based compensation
expense
— 15 — — — 15 — 15 
Transactions in connection
with stock-based
compensation plans
— (4)10 — — 6 — 6 
Purchases of common stock for
treasury
— — (1,805)— — (1,805)— (1,805)
Distributions to noncontrolling
interests
— — — — — — (63)(63)
Other comprehensive loss— — — — (354)(354)(39)(393)
Balance as of September 30, 2023$7 $6,900 $(24,381)$44,774 $(1,325)$25,975 $2,082 $28,057 
Balance as of June 30, 2022$7 $6,845 $(17,537)$33,079 $(1,425)$20,969 $1,764 $22,733 
Net income— — — 2,817 — 2,817 95 2,912 
Dividends on common stock
($0.98 per share)
— — — (386)— (386)— (386)
Stock-based compensation
expense
— 13 — — — 13 — 13 
Transactions in connection
with stock-based
compensation plans
— — (1)— — (1)— (1)
Purchases of common stock for
treasury
— — (928)— — (928)— (928)
Distributions to noncontrolling
interests
— — — — — — (90)(90)
Other comprehensive
income (loss)
— — — — (572)(572)34 (538)
Balance as of September 30, 2022$7 $6,858 $(18,466)$35,510 $(1,997)$21,912 $1,803 $23,715 

See Condensed Notes to Consolidated Financial Statements.

4

VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(millions of dollars, except per share amounts)
(unaudited)
Valero Energy Corporation Stockholders’ Equity
Common
Stock		Additional
Paid-in
Capital		Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		TotalNon-
controlling
Interests		Total
Equity
Balance as of December 31, 2022$7 $6,863 $(20,197)$38,247 $(1,359)$23,561 $1,907 $25,468 
Net income— — — 7,633 — 7,633 298 7,931 
Dividends on common stock
($3.06 per share)
— — — (1,106)— (1,106)— (1,106)
Stock-based compensation
expense
— 68 — — — 68 — 68 
Transactions in connection
with stock-based
compensation plans
— (31)38 — — 7 — 7 
Purchases of common stock for
treasury
— — (4,222)— — (4,222)— (4,222)
Contributions from noncontrolling
interests
— — — — — — 75 75 
Distributions to noncontrolling
interests
— — — — — — (164)(164)
Other comprehensive
income (loss)
— — — — 34 34 (34)— 
Balance as of September 30, 2023$7 $6,900 $(24,381)$44,774 $(1,325)$25,975 $2,082 $28,057 
Balance as of December 31, 2021$7 $6,827 $(15,677)$28,281 $(1,008)$18,430 $1,387 $19,817 
Net income— — — 8,415 — 8,415 232 8,647 
Dividends on common stock
($2.94 per share)
— — — (1,186)— (1,186)— (1,186)
Stock-based compensation
expense
— 60 — — — 60 — 60 
Transactions in connection
with stock-based
compensation plans
— (29)31 — — 2 — 2 
Purchases of common stock for
treasury
— — (2,820)— — (2,820)— (2,820)
Contributions from noncontrolling
interests
— — — — — — 240 240 
Distributions to noncontrolling
interests
— — — — — — (93)(93)
Other comprehensive
income (loss)
— — — — (989)(989)37 (952)
Balance as of September 30, 2022$7 $6,858 $(18,466)$35,510 $(1,997)$21,912 $1,803 $23,715 

See Condensed Notes to Consolidated Financial Statements.

5

VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions of dollars)
(unaudited)
Nine Months Ended
September 30,
20232022
Cash flows from operating activities:
Net income$7,931 $8,647 
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense2,011 1,840 
Loss (gain) on early retirement of debt, net(11)24 
Deferred income tax expense (benefit)32 (161)
Changes in current assets and current liabilities(1,695)(1,617)
Changes in deferred charges and credits and other operating activities, net(278)(255)
Net cash provided by operating activities7,990 8,478 
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))(468)(552)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)(183)(682)
Other VIEs(4)(30)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)(665)(820)
Deferred turnaround and catalyst cost expenditures of DGD(56)(13)
Purchases of available-for-sale (AFS) debt securities(237)— 
Proceeds from sales and maturities of AFS debt securities220 — 
Proceeds from sale of assets— 32 
Investments in nonconsolidated joint ventures— (1)
Other investing activities, net11 (4)
Net cash used in investing activities(1,382)(2,070)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings (excluding VIEs)1,750 1,839 
Proceeds from borrowings of VIEs:
DGD500 684 
Other VIEs86 73 
Repayments of debt and finance lease obligations (excluding VIEs)(2,071)(4,234)
Repayments of debt and finance lease obligations of VIEs:
DGD(474)(718)
Other VIEs(59)(51)
Premiums paid on early retirement of debt(5)(48)
Purchases of common stock for treasury(4,180)(2,769)
Common stock dividend payments(1,106)(1,186)
Contributions from noncontrolling interests75 240 
Distributions to noncontrolling interests(164)(93)
Other financing activities, net3 (6)
Net cash used in financing activities(5,645)(6,269)
Effect of foreign exchange rate changes on cash6 (292)
Net increase (decrease) in cash and cash equivalents969 (153)
Cash and cash equivalents at beginning of period4,862 4,122 
Cash and cash equivalents at end of period$5,831 $3,969 
See Condensed Notes to Consolidated Financial Statements.

6




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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

These interim unaudited financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these interim unaudited financial statements reflect all adjustments considered necessary for a fair statement of our results for the interim periods presented. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These interim unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022.

The balance sheet as of December 31, 2022 has been derived from our audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022.

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

2.    UNCERTAINTY

In September 2022, California adopted Senate Bill No. 1322 (SB 1322), which requires refineries in California to report monthly on the volume and cost of the crude oil they buy, the quantity and price of the wholesale gasoline they sell, and the gross gasoline margin per barrel, among other information. The provisions of SB 1322 were effective January 2023.

In March 2023, California adopted Senate Bill No. 2 (such statute, together with any regulations contemplated or issued thereunder, SBx 1-2), which, among other things, (i) authorized the establishment of a maximum gross gasoline refining margin (max margin) and the imposition of a financial penalty for profits above a max margin, (ii) significantly expanded the reporting obligations under SB 1322 and the Petroleum Industry Information Reporting Act of 1980, which include reporting requirements to the

7




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
California Energy Commission (CEC) for all participants in the petroleum industry supply chain in California (e.g., refiners, marketers, importers, transporters, terminals, producers, renewables producers, pipelines, and ports), (iii) created the Division of Petroleum Market Oversight within the CEC to analyze the data provided under SBx 1-2, and (iv) authorized the CEC to regulate the timing and other aspects of refinery turnaround and maintenance activities in certain instances. SBx 1-2 imposes increased and substantial reporting requirements, which include daily, weekly, monthly, and annual reporting of detailed operational and financial data on all aspects of our operations in California, much of it at the transaction level. The operational data includes our plans for turnaround and maintenance activities at our two California refineries and the manner in which we expect to address the potential impacts on feedstock and product inventories in California as a result of such turnaround and maintenance activities. The provisions of SBx 1-2 became effective June 26, 2023.

In September 2023, Governor Newsom directed the CEC to immediately begin the regulatory processes concerning the potential imposition of a penalty for exceeding a max margin and the timing of refinery turnarounds and maintenance. Consequently, the CEC adopted an order instituting an informational proceeding on a max margin and penalty under SBx 1-2, as well as an order initiating rulemaking activity under SBx 1-2. The CEC indicated the latter rulemaking process will be focused on refinery maintenance and turnarounds; however, it remains uncertain as to whether, when, and to what extent any regulations will address the remaining reporting requirements under SBx 1-2.

We continue to review and analyze the provisions of SBx 1-2 and the possible impacts to our refining and marketing operations in California. While the CEC has not yet established a max margin, imposed a financial penalty for profits above a max margin, or imposed restrictions on turnaround and maintenance activities, Governor Newsom’s direction to the CEC to begin the regulatory processes related to each of those matters, as described above, and the potential implementation of a financial penalty or any restrictions or delays on our ability to undertake turnaround or maintenance activities creates uncertainty due to the potential adverse effects on us. Any adverse effects on our operations or financial performance in California could indicate that the carrying value of our assets in California is not recoverable, which would result in an impairment loss that could be material. In addition, if the circumstances that trigger an impairment loss result in a reduction in the estimated useful lives of the assets, we may be required to recognize an asset retirement obligation that could be material. Other jurisdictions are contemplating similarly focused legislation or actions.

The ultimate timing and impacts of SBx 1-2 and any other similarly focused legislation or actions are subject to considerable uncertainty due to a number of factors, including technological and economic feasibility, legal challenges, and potential changes in law, regulation, or policy, and it is not currently possible to predict the ultimate effects of these matters and developments on us.


8




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.    INVENTORIES

Inventories consisted of the following (in millions):
September 30,
2023		December 31,
2022
Refinery feedstocks$1,878 $1,949 
Refined petroleum products and blendstocks
4,232 3,579 
Renewable diesel feedstocks and products
797 583 
Ethanol feedstocks and products270 328 
Materials and supplies336 313 
Inventories$7,513 $6,752 

As of September 30, 2023 and December 31, 2022, the replacement cost (market value) of last-in, first-out (LIFO) inventories exceeded their LIFO carrying amounts by $6.1 billion and $6.3 billion, respectively. Our non-LIFO inventories accounted for $1.3 billion and $1.6 billion of our total inventories as of September 30, 2023 and December 31, 2022, respectively.

4.    DEBT

Public Debt
In February 2023, we used cash on hand to purchase and retire a portion of the following notes (in millions):
Debt Purchased and RetiredPrincipal
Amount
6.625% Senior Notes due 2037
$62 
3.650% Senior Notes due 2051
26 
4.000% Senior Notes due 2052
45 
Various other Valero and Valero Energy
Partners (VLP) Senior Notes
66 
Total$199 


9




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During the nine months ended September 30, 2022, the following activity occurred:
•In September 2022, we used cash on hand to purchase and retire a portion of the following notes in connection with cash tender offers that we publicly announced in August 2022 and completed in September 2022 (in millions):
Debt Purchased and RetiredPrincipal
Amount
3.65% Senior Notes due 2025
$48 
2.850% Senior Notes due 2025
291 
4.375% VLP Senior Notes due 2026
62 
3.400% Senior Notes due 2026
166 
4.350% Senior Notes due 2028
131 
4.000% Senior Notes due 2029
552 
Total$1,250 

•In June 2022, we reduced our debt through the acquisition of the $300 million of 4.00 percent Gulf Opportunity Zone Revenue Bonds Series 2010 that are due December 1, 2040, but were subject to mandatory tender on June 1, 2022. We have the option to effectuate a remarketing of these bonds.

•In February 2022, we issued $650 million of 4.000 percent Senior Notes due June 1, 2052. Proceeds from this debt issuance totaled $639 million before deducting the underwriting discount and other debt issuance costs. The proceeds and cash on hand were used to purchase and retire a portion of the following notes in connection with cash tender offers that we publicly announced and completed in February 2022 (in millions):
Debt Purchased and RetiredPrincipal
Amount
3.65% Senior Notes due 2025
$72 
2.850% Senior Notes due 2025
507 
4.375% VLP Senior Notes due 2026
168 
3.400% Senior Notes due 2026
653 
Total$1,400 


10




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Credit Facilities
We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (amounts in millions and currency in U.S. dollars, except as noted):
September 30, 2023
Facility
Amount		Maturity DateOutstanding
Borrowings		Letters of Credit
Issued (a)		Availability
Committed facilities:
Valero Revolver$4,000 November 2027$— $4 $3,996 
Canadian Revolver (b)C$150 November 2023C$— C$5 C$145 
Accounts receivable
sales facility
$1,300 July 2024$— n/a$1,300 
Committed facilities of
VIEs (c):
DGD Revolver (d)$400 June 2026$200 $106 $94 
DGD Loan Agreement (e)$100 June 2026$— n/a$100 
IEnova Revolver (f)$830 February 2028$748 n/a$82 
Uncommitted facilities:
Letter of credit facilitiesn/an/an/a$177 n/a
________________________
(a)Letters of credit issued as of September 30, 2023 expire at various times in 2023 through 2026.
(b)On October 24, 2023, we amended this facility to (i) extend the maturity date to February 2024 and (ii) reduce the facility amount so that, effective October 31, 2023, the facility amount will equal the amount of the outstanding letters of credit thereunder, and will not permit further borrowings other than certain deemed borrowings to satisfy the reimbursement obligations under such letters of credit.
(c)Creditors of the VIEs do not have recourse against us.
(d)In June 2023, DGD amended this facility to (i) extend the maturity date to June 2026 and (ii) transition the benchmark reference interest rate previously based on the London Interbank Offered Rate (LIBOR) to a secured overnight financing rate (SOFR). The variable interest rate on the DGD Revolver was 7.173 percent and 5.880 percent as of September 30, 2023 and December 31, 2022, respectively.
(e)The amounts shown for this facility represent the facility amount available from, and borrowings outstanding to, the noncontrolling member as any transactions between DGD and us under this facility are eliminated in consolidation. In April 2023, DGD extended the maturity date of this agreement to June 2023. In June 2023, DGD entered into a new unsecured revolving loan agreement that replaced and superseded the previous agreement. The new agreement includes the following modifications from the previous agreement: (i) extends the maturity date to June 2026, (ii) increases each member’s commitment from $25 million to $100 million, resulting in an increase in aggregate commitments from $50 million to $200 million, and (iii) transitions the benchmark reference interest rate previously based on the LIBOR to Term SOFR. The variable interest rate on the DGD Loan Agreement was 6.672 percent as of December 31, 2022.
(f)Both parties to this facility have agreed to use a SOFR as the interest rate applied to outstanding borrowings. The variable interest rate on the IEnova Revolver was 9.097 percent and 7.393 percent as of September 30, 2023 and December 31, 2022, respectively.


11




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Activity under our credit facilities was as follows (in millions):
Nine Months Ended
September 30,
20232022
Borrowings:
Accounts receivable sales facility$1,750 $1,200 
DGD Revolver500 659 
DGD Loan Agreement— 25 
IEnova Revolver86 73 
Repayments:
Accounts receivable sales facility(1,750)(1,200)
DGD Revolver(400)(659)
DGD Loan Agreement(25)(50)
IEnova Revolver(55)(47)
Other Disclosures
“Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Interest and debt expense$153 $154 $456 $467 
Less: Capitalized interest4 16 13 42 
Interest and debt expense, net of
capitalized interest
$149 $138 $443 $425 

5.    EQUITY

Treasury Stock
We purchase shares of our outstanding common stock as authorized by our board of directors (Board), including under share purchase programs (described below) and with respect to our employee stock-based compensation plans.

During the three and nine months ended September 30, 2023, we purchased for treasury 12,805,162 shares and 32,219,955 shares, respectively. During the three and nine months ended September 30, 2022, we purchased for treasury 8,444,754 shares and 24,202,035 shares, respectively. On October 26, 2022, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date, and we completed all authorized share purchases under that program during the second quarter of 2023. On February 23, 2023, we announced that our Board authorized us to purchase shares of our outstanding common stock for a total cost of up to $2.5 billion with no expiration date (the February 2023 Program). As of September 30, 2023, we had $649 million remaining available for purchase under the February 2023 Program. On September 15, 2023, we announced that our Board authorized us to purchase shares of our outstanding

12




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 February 2023 Program.
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):
Three Months Ended September 30,
20232022
Foreign
Currency
Translation
Adjustment		Defined
Benefit
Plans
Items		Gains
(Losses)
on
Cash Flow
Hedges		TotalForeign
Currency
Translation
Adjustment		Defined
Benefit
Plans
Items		Gains
(Losses)
on
Cash Flow
Hedges		Total
Balance as of beginning
of period
$(774)$(193)$(4)$(971)$(991)$(430)$(4)$(1,425)
Other comprehensive
income (loss) before
reclassifications
(315)— (77)(392)(606)— 30 (576)
Amounts reclassified
from accumulated
other comprehensive
loss
— (7)47 40 — 7 (3)4 
Effect of exchange rates— (2)— (2)— — — — 
Other comprehensive
income (loss)
(315)(9)(30)(354)(606)7 27 (572)
Balance as of end of
period
$(1,089)$(202)$(34)$(1,325)$(1,597)$(423)$23 $(1,997)
Nine Months Ended September 30,
20232022
Foreign
Currency
Translation
Adjustment		Defined
Benefit
Plans
Items		Gains
(Losses)
on
Cash Flow
Hedges		TotalForeign
Currency
Translation
Adjustment		Defined
Benefit
Plans
Items		Gains
(Losses)
on
Cash Flow
Hedges		Total
Balance as of beginning
of period
$(1,168)$(183)$(8)$(1,359)$(562)$(441)$(5)$(1,008)
Other comprehensive
income (loss) before
reclassifications
79 — (28)51 (1,035)(2)(84)(1,121)
Amounts reclassified
from accumulated
other comprehensive
loss
— (20)2 (18)— 18 112 130 
Effect of exchange rates— 1 — 1 — 2 — 2 
Other comprehensive
income (loss)
79 (19)(26)34 (1,035)18 28 (989)
Balance as of end of
period
$(1,089)$(202)$(34)$(1,325)$(1,597)$(423)$23 $(1,997)

13




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.    VARIABLE INTEREST ENTITIES

Consolidated VIEs
We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of September 30, 2023, the significant consolidated VIEs included:

•DGD, a joint venture with a subsidiary of Darling Ingredients Inc. that owns and operates two plants that process waste and renewable feedstocks (predominately animal fats, used cooking oils, and inedible distillers corn oils) into renewable diesel and renewable naphtha; and

•Central Mexico Terminals, a collective group of three subsidiaries of Infraestructura Energetica Nova, S.A.P.I. de C.V. (IEnova), which is a Mexican company and indirect subsidiary of Sempra Energy, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals.

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

The following tables present summarized balance sheet information for the significant assets and liabilities of the consolidated VIEs, which are included in our balance sheets (in millions):
DGDCentral
Mexico
Terminals		OtherTotal
September 30, 2023
Assets
Cash and cash equivalents$198 $— $25 $223 
Other current assets1,387 8 30 1,425 
Property, plant, and equipment, net3,764 668 71 4,503 
Liabilities
Current liabilities, including current portion
of debt and finance lease obligations
$549 $799 $18 $1,366 
Debt and finance lease obligations,
less current portion
676 — — 676 

14




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DGDCentral
Mexico
Terminals		OtherTotal
December 31, 2022
Assets
Cash and cash equivalents$133 $— $16 $149 
Other current assets1,106 7 32 1,145 
Property, plant, and equipment, net3,785 681 79 4,545 
Liabilities
Current liabilities, including current portion
of debt and finance lease obligations
$626 $737 $21 $1,384 
Debt and finance lease obligations,
less current portion
693 — — 693 

Nonconsolidated VIEs
We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These nonconsolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments.


15




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7.    EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):
Pension PlansOther Postretirement
Benefit Plans
2023202220232022
Three months ended September 30
Service cost$28 $37 $1 $1 
Interest cost30 22 3 2 
Expected return on plan assets(50)(48)— — 
Amortization of:
Net actuarial (gain) loss(2)14 (1)— 
Prior service credit(5)(5)(1)(1)
Settlement loss— 12 — — 
Net periodic benefit cost$1 $32 $2 $2 
Nine months ended September 30
Service cost$84 $114 $3 $4 
Interest cost90 64 9 6 
Expected return on plan assets(151)(144)— — 
Amortization of:
Net actuarial (gain) loss
(5)40 (4)— 
Prior service credit(14)(14)(3)(3)
Settlement loss— 12 — — 
Net periodic benefit cost
$4 $72 $5 $7 

The components of net periodic benefit cost other than the service cost component (i.e., the non-service cost components) are included in “other income, net.”


16




VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.    EARNINGS PER COMMON SHARE

Earnings per common share was computed as follows (dollars and shares in millions, except per share amounts):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Earnings per common share:
Net income attributable to Valero stockholders$2,622 $2,817 $7,633 $8,415 
Less: Income allocated to participating securities8 11 24 31 
Net income available to common stockholders$2,614 $2,806 $7,609 $8,384