Visibility to Growth and Disciplined Capital Management
Non-GAAP Disclosures
Adjusted EBITDA and Net Debt-to-Adjusted EBITDA
VLO defines EBITDA as net income before income tax expense, interest and debt expense, net of capitalized interest, and depreciation and amortization
expense. VLO defines net debt-to-adjusted EBITDA as the ratio of total debt, net of cash, divided by adjusted EBITDA, which is defined as EBITDA further
adjusted for deferred turnaround and catalyst cost expenditures, blender's tax credit, loss on early redemption of debt, Texas City fire expenses, and
environmental reserve adjustment. VLO defines adjusted EBITDA for the trailing 12-month period (TTM) as the sum of adjusted EBITDA for the year ended
December 31, 2018 and the nine months ended September 30, 2019, less that for the nine months ended September 30, 2018. VLO believes that the
presentation of adjusted EBITDA provides useful information to investors to assess our ongoing financial performance because, when reconciled to net income,
it provides improved comparability between periods through the exclusion of certain items that VLO believes are not indicative of our core operating performance
and that may obscure our underlying business results and trends. VLO believes that the presentation of net debt-to-adjusted EBITDA provides useful information
to investors to assess VLO's ability to incur and service debt. The GAAP measures most directly comparable to adjusted EBITDA are net income and net cash
provided by operating activities. Adjusted EBITDA should not be considered an alternative to net income or net cash provided by operating activities presented in
accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income or net
cash provided by operating activities. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of our results as reported under
GAAP. Additionally, because adjusted EBITDA may be defined differently by other companies in our industry, VLO's definition of adjusted EBITDA may not be
comparable to similarly titled measures of other companies, thereby diminishing its utility.
Refining EBITDA Per Barrel of Throughput
VLO defines refining EBITDA per barrel of throughput as refining margin less operating expenses (excluding depreciation and amortization expenses) divided by
total throughput volumes. VLO defines refining margin as refining operating income excluding operating expenses (excluding depreciation and amortization
expense), depreciation and amortization expense, lower cost or market inventory valuation adjustment, and asset impairment loss. VLO believes refining
EBITDA provides useful information to investors to assess our ongoing financial performance because, when reconciled to refining operating income, it provides
improved comparability between periods through the exclusion of certain items that VLO believes are not indicative of our core operating performance and that
may obscure our underlying business results and trends. The GAAP measure most directly comparable to refining EBITDA is refining operating income. Refining
EBITDA should not be considered an alternative to refining operating income presented in accordance with GAAP. Refining EBITDA has important limitations as
an analytical tool because it excludes some, but not all, items that affect refining operating income. Refining EBITDA should not be considered in isolation or as a
substitute for analysis of our results as reported under GAAP. Additionally, because refining EBITDA may be defined differently by other companies in our
industry, VLO's definition of refining EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
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