Valero Energy Corporation

Greetings and welcome to Valero Energy Corp second quarter 2025 earnings conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Homer Ballar, Vice President, Investor Relations and Finance. Thank you. Please go ahead.

Good morning, everyone, and welcome to Valero Energy Corporation's second quarter 2025 earnings conference call. With me today are Lane Riggs, our Chairman, CEO, and President, Jason Frazier, our Executive Vice President and CFO, Gary Simmons, our Executive Vice President and COO, Rich Walsh, our Executive Vice President and General Counsel, and several other members of Valero's senior management team. If you have not received the earnings release and would like a copy, you can find one on our website at InvestorValero.com. Also attached to the earnings release are tables that provide additional financial information on our business segments and reconciliations and disclosures for adjusted financial metrics mentioned on this call. If you have any questions after reviewing these tables, please feel free to contact our investor relations team after the call. I would now like to direct your attention to the forward-looking statement disclaimer contained in the press release. In summary, it says that statements in the press release and on this conference call that state the company's or management's expectations or predictions of the future Our forward-looking statements intended to be covered by the Safe Harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we've described in our earnings release and filings with the SEC. Now, I'll turn the call over to Lane for opening remarks.

Thank you, Homer, and good morning, everyone. We are pleased to report solid financial results for the second quarter. driven by our strong operational and commercial execution. In fact, we set a record for refining throughput rate in our U.S. Gulf Coast region in the second quarter, demonstrating the benefits of our investments in growth and optimization projects. Refining margins were supported by strong product demand against the backdrop of low product inventories globally. In particular, early July U.S. diesel inventories and days of supply are at the lowest level for the month in almost 30 years. We continue to see strong demand with our quarterly diesel sales volumes up approximately 10% over the same period last year and gasoline sales about the same as last year. On the financial side, we continue to honor our commitment to shareholder returns with a payout ratio of 52% in the second quarter. And last week, we announced a quarterly cash dividend on our common stock of $1.13 per share. On the strategic front, we continue to progress the FCC unit optimization project at St. Charles that will enable the refinery to increase the yield of high-valued products, including high-octane alkaloid. The project is expected to cost $230 million to start up in 2026. Looking ahead, we remain optimistic on refining fundamentals with several planned refinery closures this year and a limited announced capacity addition to beyond 2025. Additionally, we expect our sour crude oil differentials to widen as OPEC Plus and Canada continue to increase production during the third and fourth quarters. In closing, we remain committed to maintain our track record of commercial and operational excellence, which has been the hallmark of our strategy for over a decade. And our commitment remains underpinned by a strong balance sheet that also provides us plenty of financial flexibility. So with that, Homer, I'll hand the call back to you.