Why does the year-over-year comparison look so dramatic, and what is the underlying improvement?

Q1 2025 reported a $595 million net loss ($1.90 per share) because of a $1.1 billion pre-tax asset impairment on the Benicia and Wilmington refineries. On an adjusted basis, which excludes that impairment, Q1 2025 EPS was $0.89, so the underlying improvement is about $3.33 per share, driven mainly by stronger refining margins.

How did the refining and renewable fuels segments contribute to earnings?

Refining operating income reached $1.8 billion, up from an adjusted $605 million, as refining margin rose to $14.90 per barrel from $9.78. Renewable Diesel swung to $139 million of operating income from a $141 million loss, and Ethanol operating income rose to $90 million from $20 million.

Is the dividend and shareholder return program sustainable based on this quarter?

Valero returned $938 million to stockholders, equal to a 59 percent payout of adjusted net cash from operations of $1.59 billion, and raised the quarterly dividend 6 percent to $1.20. Coverage is solid for the quarter, but the release notes working capital swings of $303 million, so cash flow can vary materially from quarter to quarter.

What are the key operational and capital events investors should watch?

The Benicia Refinery is being idled, with refining operations ceasing by the end of April 2026, and the company recorded about $100 million of incremental depreciation tied to that shortened useful life. The $230 million St. Charles FCC Unit optimization project is expected to begin operations in Q3 2026. Capital investments attributable to Valero were $430 million in Q1.

How strong is Valero's balance sheet after the recent debt issuance?

Valero issued $850 million of 5.150% senior notes due 2036 in March 2026, using proceeds to repay 2026 maturities and for general corporate purposes. At March 31, 2026, total debt was $9.2 billion, total finance lease obligations were $2.3 billion, cash was $5.7 billion, and the net debt-to-capitalization ratio was 18 percent.

VLO 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 30, 2026. Cited figures are marked; the original filing is the authoritative source.

Valero Energy reported net income attributable to stockholders of $1.3 billion^a, or $4.22 per diluted share, for Q1 2026, compared with a net loss of $595 million, or $1.90 per share, in Q1 2025.

The prior-year loss included a $1.1 billion^b pre-tax asset impairment on the Benicia and Wilmington refineries. Adjusted for that charge, Q1 2025 earnings were $0.89 per share, so the year-over-year improvement is roughly $3.33 per share on an adjusted basis. Refining drove the result: segment operating income was $1.8 billion versus an adjusted $605 million a year earlier, and refining margin rose to $14.90 per barrel from $9.78.

Throughput averaged 2.9 million barrels per day. The Renewable Diesel segment (Diamond Green Diesel) swung to $139 million^c of operating income from a $141 million loss, and Ethanol operating income rose to $90 million from $20 million. Cash generation and shareholder returns were strong.

Net cash provided by operating activities was $1.4 billion^d, or $1.6 billion on an adjusted basis after a $303 million unfavorable working capital impact and a $102 million adjustment for the other DGD member's share. Capital investments attributable to Valero were $430 million, with most of the total spending sustaining the business. Stockholder cash returns totaled $938 million, a 59 percent payout of adjusted operating cash flow.

The quarterly dividend was raised 6 percent to $1.20 per share. Balance sheet metrics remain solid, with $9.2 billion of total debt, $5.7 billion of cash, and a net debt-to-capitalization ratio of 18 percent, after an $850 million note issuance in March used to repay 2026 maturities and for general corporate purposes. Looking ahead, the St. Charles FCC Unit optimization project ($230 million) is expected to begin operations in Q3 2026.

The filing also notes that Benicia Refinery operations are being idled in a phased approach, with refining operations to cease by the end of April 2026, and that depreciation for Q1 2026 included about $100 million of incremental expense tied to the shortened useful life of that refinery. Management highlighted that the company remains well positioned to benefit from the current margin environment, though the release cautions that results depend on volatile commodity markets, tariffs, geopolitical tensions, and low-carbon fuel policy.

02—Key points

Key Highlights

Q1 2026 net income attributable to Valero stockholders of $1.263 billion, or $4.22 per share, versus a $595 million loss ($1.90 per share) in Q1 2025, which included a $1.1 billion asset impairment; adjusted Q1 2025 EPS was $0.89.
Refining operating income of $1.8 billion versus an adjusted $605 million in Q1 2025; refining margin per barrel rose to $14.90 from $9.78, and adjusted refining operating income per barrel reached $6.98 versus $2.38.
Renewable Diesel segment operating income of $139 million versus a $141 million loss a year earlier, with margin per gallon of $1.11 versus $0.02.
Ethanol segment operating income of $90 million versus $20 million, with margin per gallon of $0.66 versus $0.48.
Net cash from operations of $1.39 billion (adjusted $1.59 billion); stockholder cash returns of $938 million, a 59 percent payout of adjusted operating cash flow.
Quarterly dividend increased 6 percent to $1.20 per share from $1.13; total debt of $9.2 billion, cash of $5.7 billion, and net debt-to-capitalization of 18 percent at March 31, 2026.
Benicia Refinery idling and cessation of refining operations by end of April 2026, with about $100 million of incremental Q1 depreciation; St. Charles FCC project ($230 million) expected online in Q3 2026.

03—Questions

Frequently Asked Questions

Why does the year-over-year comparison look so dramatic, and what is the underlying improvement?
Q1 2025 reported a $595 million net loss ($1.90 per share) because of a $1.1 billion pre-tax asset impairment on the Benicia and Wilmington refineries. On an adjusted basis, which excludes that impairment, Q1 2025 EPS was $0.89, so the underlying improvement is about $3.33 per share, driven mainly by stronger refining margins.
How did the refining and renewable fuels segments contribute to earnings?
Refining operating income reached $1.8 billion, up from an adjusted $605 million, as refining margin rose to $14.90 per barrel from $9.78. Renewable Diesel swung to $139 million of operating income from a $141 million loss, and Ethanol operating income rose to $90 million from $20 million.
Is the dividend and shareholder return program sustainable based on this quarter?
Valero returned $938 million to stockholders, equal to a 59 percent payout of adjusted net cash from operations of $1.59 billion, and raised the quarterly dividend 6 percent to $1.20. Coverage is solid for the quarter, but the release notes working capital swings of $303 million, so cash flow can vary materially from quarter to quarter.
What are the key operational and capital events investors should watch?
The Benicia Refinery is being idled, with refining operations ceasing by the end of April 2026, and the company recorded about $100 million of incremental depreciation tied to that shortened useful life. The $230 million St. Charles FCC Unit optimization project is expected to begin operations in Q3 2026. Capital investments attributable to Valero were $430 million in Q1.
How strong is Valero's balance sheet after the recent debt issuance?
Valero issued $850 million of 5.150% senior notes due 2036 in March 2026, using proceeds to repay 2026 maturities and for general corporate purposes. At March 31, 2026, total debt was $9.2 billion, total finance lease obligations were $2.3 billion, cash was $5.7 billion, and the net debt-to-capitalization ratio was 18 percent.

04—Continue

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