Valero Energy NYSE: VLO reported second-quarter 2026 net income attributable to stockholders of $3.7 billion, or $12.62 per share, compared with $714 million, or $2.28 per share, a year earlier, as refining, renewable diesel and ethanol operations all posted stronger results.
Adjusted net income was also $3.7 billion, or $12.54 per share, excluding items detailed in the company’s earnings-release tables. Chairman, Chief Executive Officer and President Lane Riggs said the quarter reflected “exceptional operational and commercial performance” across Valero’s three business segments amid geopolitical and macroeconomic volatility.
“Our refineries operated safely and reliably, helping meet resilient demand for transportation fuels,” Riggs said. He added that the company’s renewable diesel and ethanol operations also supplied additional liquid fuels to the market.
Refining Leads Earnings Growth
Valero’s refining segment generated $4.5 billion in operating income during the second quarter, versus $1.3 billion in the same period of 2025. Adjusted refining operating income was $4.4 billion. Throughput averaged 3 million barrels per day, while refining cash operating expenses were $4.70 per barrel.
Executive Vice President and Chief Operating Officer Gary Simmons said early third-quarter conditions appeared constructive relative to the second quarter, citing improved feedstock economics and crude purchases at discounts to benchmark prices. He said naphtha had moved to a premium to Brent crude, while propylene and sulfur prices remained strong.
Simmons said jet fuel had provided a favorable contribution in the second quarter, though that benefit had not yet materialized in the third quarter. However, he noted that an arbitrage opportunity had opened to export jet fuel to Europe and said jet demand could strengthen as winter-grade diesel specifications take effect.
For the third quarter, Valero expects refining throughput of:
- 1.78 million to 1.83 million barrels per day on the Gulf Coast;
- 460,000 to 480,000 barrels per day in the Mid-Continent;
- 110,000 to 120,000 barrels per day on the West Coast; and
- 450,000 to 470,000 barrels per day in the North Atlantic.
The company forecast refining cash operating expenses of about $4.75 per barrel in the third quarter.
Management also offered a more favorable view of mid-cycle refining margins than historical averages might imply. Simmons said that, as global supply-and-demand balances have tightened, product crack spreads appear increasingly set by hydro-skimming margins in Northwest Europe rather than cracking margins. He cited carbon-credit costs, operating and capital-cost inflation, and the outlook for heavy-sour crude discounts as factors that could support a higher margin floor.
Renewable Diesel and Ethanol Improve
Valero’s renewable diesel segment posted operating income of $717 million, compared with an operating loss of $79 million a year earlier. Renewable diesel sales volumes averaged 3.8 million gallons per day during the quarter.
Senior Vice President of Product Supply, Trading and Wholesale Eric Fisher said renewable diesel benefited as the D4 renewable identification number, or RIN, increased faster than feedstock costs. He said the company sees D4 values remaining above fat prices through 2026 and 2027 under the renewable volume obligation, or RVO, that has been established.
Fisher said agricultural feedstocks were well supplied, supported by stronger-than-expected crop yields globally. While this has pressured feedstock costs, he said tariff developments could become a headwind later in the year.
Valero expects renewable diesel sales volumes of about 335 million gallons in the third quarter, with operating expenses of $0.49 per gallon, including $0.21 per gallon of non-cash costs.
The ethanol segment reported $318 million in operating income, up from $54 million a year earlier. Production averaged 4.7 million gallons per day. Fisher cited higher gasoline and octane values, along with the production tax credit, as contributors to the outlook. The company said it has captured a year-to-date ethanol production tax credit of $0.14 per gallon and expects roughly $0.17 per gallon for the full year.
Valero expects ethanol production of 4.8 million gallons per day in the third quarter and operating expenses of $0.39 per gallon, including $0.04 per gallon of non-cash costs. Fisher said the company is evaluating ethanol debottleneck projects that could add 100 million to 200 million gallons of annual capacity over the next one to two years. He said there is currently little intent to expand renewable diesel capacity because of uncertainty surrounding policy.
Cash Build, Capital Spending and Projects
Net cash provided by operating activities totaled $5.6 billion in the second quarter. Excluding a $706 million favorable working-capital effect and $389 million tied to the other joint-venture member’s share of Diamond Green Diesel, adjusted operating cash flow was $4.5 billion.
Valero made $350 million of capital investments during the quarter, including $290 million for sustaining activities such as turnarounds, catalysts and regulatory compliance. Shareholder cash returns totaled $2.6 billion, representing a 59% payout ratio. The company announced a quarterly cash dividend of $1.20 per share on July 16.
At quarter-end, Valero held $7.9 billion in cash and cash equivalents, against $9.1 billion in total debt and $2.2 billion in finance-lease obligations. Its debt-to-capitalization ratio, net of cash, was 11%. Chief Financial Officer Homer Bhullar said Valero built cash above its long-term $4 billion to $5 billion target to preserve flexibility in a volatile commodity-price environment while maintaining shareholder returns above its minimum commitment.
The company maintained 2026 capital investment guidance of about $2 billion attributable to Valero, including approximately $1.7 billion for sustaining operations. This includes estimated costs to repair the DHT unit at its Port Arthur refinery, which is expected to return to service by year-end. Total repair costs are estimated at $250 million, with Valero expecting insurance to cover a substantial portion. The refinery continues to operate at normal throughput rates, according to the company.
Riggs said Valero also expects to complete a $230 million fluid catalytic cracking unit optimization project at its St. Charles refinery in the third quarter. The project is intended to increase output of higher-value products, including finished gasoline.
About Valero Energy (NYSE:VLO)
Valero Energy Corporation is a San Antonio, Texas–based integrated downstream energy company that manufactures and markets transportation fuels, petrochemical feedstocks and other industrial products. The company's operations focus on refining crude oil into finished fuels such as gasoline, diesel and jet fuel, as well as producing asphalt and other refined product streams for commercial and industrial customers.
In addition to refining, Valero has significant operations in renewable fuels, including the production of ethanol and other biofuels, and it manages an extensive logistics network of pipelines, terminals, rail and marine assets to move feedstocks and finished products.
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