Marathon Petroleum Corp. Reports Second-Quarter 2020 Results
Marathon Petroleum Corp. reported a second-quarter income of $9 million, or $0.01 per diluted share, significantly down from $1.1 billion in the same quarter last year. The results included a $1.5 billion lower of cost or market inventory benefit. An adjusted net loss was $868 million, reflecting challenges due to COVID-19. The company announced a $21 billion agreement to sell Speedway, with expected after-tax proceeds of $16.5 billion to enhance the balance sheet and return capital to shareholders. Additionally, Gallup and Martinez refineries are indefinitely idled.
- Agreement to sell Speedway for $21 billion, expected after-tax proceeds of $16.5 billion.
- Liquidity enhanced with $7.7 billion available borrowing capacity.
- Adjusted loss of $868 million, down from net income of $1.1 billion year-over-year.
- Refining & Marketing segment reported a loss of $1.6 billion, compared to income of $906 million in 2019.
- Demand for products and services remains significantly depressed, especially in the West Coast and Midwest.
FINDLAY, Ohio, Aug. 3, 2020 /PRNewswire/ --
- Reported second-quarter income of
$9 million , or$0.01 per diluted share, including net pre-tax benefit of$1.4 billion ; adjusted loss of$868 million , or$(1.33) per diluted share - Announced agreement to sell Speedway in
$21 billion all-cash transaction; estimated after-tax proceeds of$16.5 billion expected to be used to both strengthen the balance sheet and return capital to shareholders - Indefinitely idling Gallup and Martinez refineries; evaluating strategic repositioning of Martinez to renewable diesel facility
- On track to deliver
$1.4 billion of capital spending and at least$950 million of operating expense reductions - Significant liquidity with
$7.7 billion of available borrowing capacity at MPC
Marathon Petroleum Corp. (NYSE: MPC) today reported net income of
Second-quarter 2020 results include a pre-tax lower of cost or market (LCM) inventory benefit of
"Our second quarter results reflect a full three months of the challenges COVID has created for our business," said President and Chief Executive Officer Michael J. Hennigan. "We began April with demand at historic lows. Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed, particularly across the West Coast and Midwest.
"In response, we are executing on the actions we announced in May and are advancing the three strategic priorities which lay the foundation for our long-term success. First, we strengthened the competitive position of our assets with the decision to indefinitely idle our Gallup and Martinez refineries, and are evaluating strategic repositioning possibilities for Martinez. Second, we began implementing commercial strategy changes and I've been encouraged by the team's quick progress. And third, we lowered our capital spending and tightly managed our operating expenses. I'm confident we will meet the
Segment Results
Income from operations was
Three Months Ended | |||||||
(In millions) | 2020 | 2019 | |||||
Income (loss) from operations by segment: | |||||||
Refining & Marketing | $ | (1,619) | $ | 906 | |||
Retail | 494 | 493 | |||||
Midstream | 869 | 878 | |||||
Corporate | (188) | (179) | |||||
Income (loss) from operations before items not allocated to segments | (444) | 2,098 | |||||
Items not allocated to segments: | |||||||
Transaction-related costs | (30) | (34) | |||||
Litigation | — | (22) | |||||
Impairments | (25) | — | |||||
LCM inventory valuation adjustment | 1,480 | — | |||||
Income from operations | $ | 981 | $ | 2,042 | |||
Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was
Reconciliation of Segment Income (Loss) From Operations to Segment Adjusted EBITDA and | |||||||
Three Months Ended | |||||||
(In millions) | 2020 | 2019 | |||||
Refining & Marketing Segment | |||||||
Segment income (loss) from operations | $ | (1,619) | $ | 906 | |||
Add: Depreciation and amortization | 433 | 411 | |||||
Refining planned turnaround costs | 162 | 237 | |||||
Segment Adjusted EBITDA | $ | (1,024) | $ | 1,554 | |||
Retail Segment | |||||||
Segment income from operations | $ | 494 | $ | 493 | |||
Add: Depreciation and amortization | 132 | 130 | |||||
Segment EBITDA | $ | 626 | $ | 623 | |||
Midstream Segment | |||||||
Segment income from operations | $ | 869 | $ | 878 | |||
Add: Depreciation and amortization | 330 | 318 | |||||
Segment EBITDA | $ | 1,199 | $ | 1,196 | |||
Segment Adjusted EBITDA | $ | 801 | $ | 3,373 | |||
Corporate | (188) | (179) | |||||
Add: Depreciation and amortization | 40 | 27 | |||||
Adjusted EBITDA | $ | 653 | $ | 3,221 | |||
Refining & Marketing (R&M)
R&M segment loss from operations was
Segment adjusted EBITDA was
R&M margin was
Retail
Retail segment income from operations was
Retail fuel margin increased to 39.60 cents per gallon in the second quarter of 2020, from 26.66 cents per gallon in the second quarter of 2019. Same-store merchandise sales decreased by
Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX), was
Segment EBITDA was
Corporate and Items Not Allocated to Segments
Corporate expenses totaled
Financial Position and Liquidity
As of June 30, 2020, the company had
The company previously reported that it drew
Strategic and Operations Update
Yesterday, the company announced an agreement with 7-Eleven to sell Speedway for
The company also announced the indefinite idling of the Gallup and Martinez refineries, and announced it is evaluating the strategic repositioning of Martinez to a renewable diesel facility.
Construction continues on the Dickinson Renewable Diesel project, which remains on schedule for planned completion in late 2020. The project will convert the Dickinson refinery into a 12,000 barrel per day biorefinery capable of producing renewable diesel from corn and soybean oil. MPC intends to sell the renewable diesel into the California market to comply with the California Low Carbon Fuel Standard.
Consistent with MPC's midstream strategy of developing long-haul pipelines and other logistics solutions, the company progressed several projects during the quarter, including the Wink-to-Webster crude oil pipeline, the Whistler natural gas pipeline, and the reversal of the Capline crude pipeline. Each of these projects is backed by minimum volume commitments from customers.
In addition, the South Texas Gateway terminal began crude oil export operations in July. MPC owns a
Third Quarter 2020 Outlook
Refining & Marketing Segment: | |||
Refining operating costs per barrel(a) | $ | 6.50 | |
Distribution costs (in millions) | $ | 1,285 | |
Refining planned turnaround costs (in millions) | $ | 270 | |
Depreciation and amortization (in millions) | $ | 440 | |
Refinery throughputs (mbpd): | |||
Crude oil refined | 2,215 | ||
Other charge and blendstocks | 130 | ||
Total | 2,345 | ||
(a) | Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expenses. |
Retail Segment: | Range | ||||
Fuel sales (millions of gallons) | 2,000 | 2,200 | |||
Merchandise sales (in millions) | $ | 1,700 | $ | 1,800 | |
Corporate and unallocated items (in millions) | $ | 195 | |||
Conference Call
At 9:30 a.m. EDT today, MPC will hold a conference call and webcast to discuss the reported results and provide an update on company operations. Interested parties may listen by visiting MPC's website at http://www.marathonpetroleum.com and clicking on the "Join the Webcast" link. A replay of the webcast will be available on the company's website for two weeks. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at https://www.marathonpetroleum.com.
About Marathon Petroleum Corporation
Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company that owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure. More information is available at www.marathonpetroleum.com.
Investor Relations Contacts: (419) 421-2071
Kristina Kazarian, Vice President, Investor Relations
Taryn Erie, Manager, Investor Relations
Brian Worthington, Manager, Investor Relations
Media Contacts:
Hamish Banks, Vice President, Communications (419) 421-2521
Jamal Kheiry, Manager, Communications (419) 421-3312
References to Earnings and Defined Terms
References to earnings mean net income attributable to MPC from the statements of income. Unless otherwise indicated, references to earnings and earnings per share are MPC's share after excluding amounts attributable to noncontrolling interests.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC). These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations, strategy and value creation plans of MPC. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as "anticipate," "believe," "commitment," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan," "policy," "position," "potential," "predict," "priority," "project," "proposition," "prospective," "pursue," "seek," "should," "strategy," "target," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include but are not limited to: the effects of the recent outbreak of COVID-19 and the adverse impact thereof on our business, financial condition, results of operations and cash flows, including, but not limited to, our growth, operating costs, labor availability, logistical capabilities, customer demand for our products and industry demand generally, margins, inventory value, cash position, taxes, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally; the effects of the recent outbreak of COVID-19, and the current economic environment generally, on our working capital, cash flows and liquidity, which can be significantly affected by decreases in commodity prices; our ability to reduce capital and operating expenses; with respect to the planned Speedway sale, the ability to successfully complete the sale within the expected timeframe or at all, based on numerous factors, including our ability to satisfy customary conditions, including obtaining regulatory approvals on the proposed terms and schedule, and any conditions imposed in connection with the consummation of the transaction, our ability to utilize the proceeds as anticipated, and our ability to capture value from the associated on-going supply relationship and realize the other expected benefits; the risk that the cost savings and any other synergies from the Andeavor transaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; risks related to the acquisition of Andeavor Logistics LP by MPLX LP (MPLX), including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the risk of further impairments; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income and earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; the ability to manage disruptions in credit markets or changes to credit ratings; future levels of capital, environmental and maintenance expenditures; general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; share repurchase authorizations, including the timing and amounts of such repurchases; the adequacy of capital resources and liquidity, including availability, timing and amounts of free cash flow necessary to execute business plans and to effect any share repurchases or to maintain or increase the dividend; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks or otherwise; non-payment or non-performance by our producer and other customers; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2019, and in Forms 10-Q and other filings, filed with the SEC. Copies of MPC's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC's website, MPC's website at https://www.marathonpetroleum.com/Investors/ or by contacting MPC's Investor Relations office. Copies of MPLX's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC's website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.
We have based our forward-looking statements on our current expectations, estimates and projections about our business and industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.
Consolidated Statements of Income (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions, except per-share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Revenues and other income: | |||||||||||||||
Sales and other operating revenues | $ | 15,024 | $ | 33,529 | $ | 40,239 | $ | 61,782 | |||||||
Income (loss) from equity method investments(a) | 105 | 107 | (1,105) | 206 | |||||||||||
Net gain on disposal of assets | 2 | 4 | 6 | 218 | |||||||||||
Other income | 67 | 30 | 138 | 65 | |||||||||||
Total revenues and other income | 15,198 | 33,670 | 39,278 | 62,271 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of revenues (excludes items below) | 13,777 | 29,682 | 36,598 | 55,642 | |||||||||||
LCM inventory valuation adjustment | (1,480) | — | 1,740 | — | |||||||||||
Impairment expense | 25 | — | 7,847 | — | |||||||||||
Depreciation and amortization | 935 | 886 | 1,897 | 1,805 | |||||||||||
Selling, general and administrative expenses | 746 | 886 | 1,567 | 1,753 | |||||||||||
Other taxes | 214 | 174 | 465 | 360 | |||||||||||
Total costs and expenses | 14,217 | 31,628 | 50,114 | 59,560 | |||||||||||
Income (loss) from operations | 981 | 2,042 | (10,836) | 2,711 | |||||||||||
Net interest and other financial costs | 345 | 322 | 683 | 628 | |||||||||||
Income (loss) before income taxes | 636 | 1,720 | (11,519) | 2,083 | |||||||||||
Provision (benefit) for income taxes | 360 | 353 | (1,577) | 457 | |||||||||||
Net income (loss) | 276 | 1,367 | (9,942) | 1,626 | |||||||||||
Less net income (loss) attributable to: | |||||||||||||||
Redeemable noncontrolling interest | 21 | 21 | 41 | 41 | |||||||||||
Noncontrolling interests | 246 | 240 | (758) | 486 | |||||||||||
Net income (loss) attributable to MPC | $ | 9 | $ | 1,106 | $ | (9,225) | $ | 1,099 | |||||||
Per-share data | |||||||||||||||
Basic: | |||||||||||||||
Net income (loss) attributable to MPC per share | $ | 0.01 | $ | 1.67 | $ | (14.21) | $ | 1.65 | |||||||
Weighted average shares outstanding | 650 | 662 | 649 | 667 | |||||||||||
Diluted: | |||||||||||||||
Net income (loss) attributable to MPC per share | $ | 0.01 | $ | 1.66 | $ | (14.21) | $ | 1.63 | |||||||
Weighted average shares outstanding | 653 | 666 | 649 | 672 | |||||||||||
(a) | The 2020 YTD period includes |
Income Summary (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Income (loss) from operations by segment | |||||||||||||||
Refining & Marketing | $ | (1,619) | $ | 906 | $ | (2,241) | $ | 572 | |||||||
Retail | 494 | 493 | 1,013 | 663 | |||||||||||
Midstream | 869 | 878 | 1,774 | 1,786 | |||||||||||
Corporate | (188) | (179) | (415) | (370) | |||||||||||
Income (loss) from operations before items not | (444) | 2,098 | 131 | 2,651 | |||||||||||
Items not allocated to segments: | |||||||||||||||
Equity method investment restructuring gains(a) | — | — | — | 207 | |||||||||||
Transaction-related costs(b) | (30) | (34) | (65) | (125) | |||||||||||
Litigation | — | (22) | — | (22) | |||||||||||
Impairments(c) | (25) | — | (9,162) | — | |||||||||||
LCM inventory valuation adjustment | 1,480 | — | (1,740) | — | |||||||||||
Income (loss) from operations | 981 | 2,042 | (10,836) | 2,711 | |||||||||||
Net interest and other financial costs | 345 | 322 | 683 | 628 | |||||||||||
Income (loss) before income taxes | 636 | 1,720 | (11,519) | 2,083 | |||||||||||
Provision (benefit) for income taxes | 360 | 353 | (1,577) | 457 | |||||||||||
Net income (loss) | 276 | 1,367 | (9,942) | 1,626 | |||||||||||
Less net income (loss) attributable to: | |||||||||||||||
Redeemable noncontrolling interest | 21 | 21 | 41 | 41 | |||||||||||
Noncontrolling interests | 246 | 240 | (758) | 486 | |||||||||||
Net income (loss) attributable to MPC | $ | 9 | $ | 1,106 | $ | (9,225) | $ | 1,099 | |||||||
(a) | Represents gain related to the formation of a new joint venture: Capline LLC in the 2019 YTD period. |
(b) | 2020 includes costs incurred in connection with the Speedway separation and Midstream strategic review. 2019 includes employee severance, retention and other costs related to the acquisition of Andeavor. |
(c) | Includes |
Capital Expenditures and Investments (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Refining & Marketing | $ | 263 | $ | 430 | $ | 722 | $ | 824 | |||||||
Retail | 74 | 120 | 150 | 193 | |||||||||||
Midstream | 425 | 814 | 899 | 1,637 | |||||||||||
Corporate(a) | 45 | 38 | 101 | 79 | |||||||||||
Total | $ | 807 | $ | 1,402 | $ | 1,872 | $ | 2,733 | |||||||
(a) | Includes capitalized interest of |
Refining & Marketing Operating Statistics (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Dollar per barrel of net refinery throughput: | |||||||||||||||
Refining & Marketing margin(a) | $ | 7.13 | $ | 15.24 | $ | 9.50 | $ | 13.23 | |||||||
Less: | |||||||||||||||
Refining operating costs(b) | 6.13 | 5.35 | 6.06 | 5.47 | |||||||||||
Distribution costs(c) | 5.86 | 4.48 | 5.22 | 4.56 | |||||||||||
Refining planned turnaround costs | 0.78 | 0.83 | 1.02 | 0.75 | |||||||||||
Depreciation and amortization | 2.09 | 1.44 | 1.83 | 1.49 | |||||||||||
Plus (Less): | |||||||||||||||
Other(d) | (0.09) | 0.04 | (0.04) | 0.06 | |||||||||||
Refining & Marketing income (loss) from operations | $ | (7.82) | $ | 3.18 | $ | (4.67) | $ | 1.02 | |||||||
Refining & Marketing refined product sales volume (mbpd)(e) | 2,878 | 3,814 | 3,233 | 3,742 | |||||||||||
Crude oil capacity utilization (percent)(f) | 71 | 97 | 81 | 96 | |||||||||||
Refinery throughputs (mbpd):(g) | |||||||||||||||
Crude oil refined | 2,165 | 2,937 | 2,475 | 2,902 | |||||||||||
Other charge and blendstocks | 111 | 198 | 160 | 207 | |||||||||||
Net refinery throughput | 2,276 | 3,135 | 2,635 | 3,109 | |||||||||||
Sour crude oil throughput (percent) | 53 | 47 | 50 | 49 | |||||||||||
Sweet crude oil throughput (percent) | 47 | 53 | 50 | 51 | |||||||||||
Refined product yields (mbpd):(g) | |||||||||||||||
Gasoline | 1,114 | 1,528 | 1,301 | 1,531 | |||||||||||
Distillates | 834 | 1,080 | 927 | 1,086 | |||||||||||
Propane | 45 | 57 | 52 | 55 | |||||||||||
Feedstocks and special products | 217 | 370 | 284 | 350 | |||||||||||
Heavy fuel oil | 27 | 51 | 32 | 48 | |||||||||||
Asphalt | 76 | 83 | 78 | 81 | |||||||||||
Total | 2,313 | 3,169 | 2,674 | 3,151 | |||||||||||
(a) | Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput. |
(b) | Includes refining major maintenance and operating costs. Excludes planned turnaround and depreciation and amortization expense. |
(c) | Includes fees paid to MPLX, on a per barrel throughput basis, of |
(d) | Includes income (loss) from equity method investments, net gain (loss) on disposal of assets and other income. |
(e) | Includes intersegment sales. |
(f) | Based on calendar day capacity, which is an annual average that includes downtime for planned maintenance and other normal operating activities. |
(g) | Excludes inter-refinery volumes of 70 mbpd,102 mbpd, 74 mbpd and 88 mbpd, respectively. |
Refining & Marketing Operating Statistics by Region (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Gulf Coast | |||||||||||||||
Dollar per barrel of refinery throughput:(a) | |||||||||||||||
Refining & Marketing margin(b) | $ | 5.22 | $ | 9.32 | $ | 7.15 | $ | 8.58 | |||||||
Refining operating costs(c) | 5.03 | 4.03 | 4.62 | 3.95 | |||||||||||
Refining planned turnaround costs | 1.31 | 0.23 | 1.16 | 0.20 | |||||||||||
Refining depreciation and amortization | 1.69 | 1.03 | 1.42 | 1.08 | |||||||||||
Refinery throughputs (mbpd):(d) | |||||||||||||||
Crude oil refined | 854 | 1,154 | 995 | 1,162 | |||||||||||
Other charge and blendstocks | 116 | 177 | 140 | 173 | |||||||||||
Gross refinery throughput | 970 | 1,331 | 1,135 | 1,335 | |||||||||||
Sour crude oil throughput (percent) | 74 | 59 | 65 | 61 | |||||||||||
Sweet crude oil throughput (percent) | 26 | 41 | 35 | 39 | |||||||||||
Refined product yields (mbpd):(d) | |||||||||||||||
Gasoline | 404 | 564 | 476 | 569 | |||||||||||
Distillates | 346 | 440 | 381 | 443 | |||||||||||
Propane | 22 | 29 | 26 | 28 | |||||||||||
Feedstocks and special products | 201 | 293 | 251 | 293 | |||||||||||
Heavy fuel oil | 11 | 15 | 11 | 14 | |||||||||||
Asphalt | 18 | 21 | 19 | 21 | |||||||||||
Total | 1,002 | 1,362 | 1,164 | 1,368 | |||||||||||
Mid-Continent | |||||||||||||||
Dollar per barrel of refinery throughput:(a) | |||||||||||||||
Refining & Marketing margin(b) | $ | 9.49 | $ | 20.21 | $ | 11.42 | $ | 17.84 | |||||||
Refining operating costs(c) | 5.02 | 4.82 | 5.47 | 5.21 | |||||||||||
Refining planned turnaround costs | 0.32 | 0.27 | 0.97 | 0.47 | |||||||||||
Refining depreciation and amortization | 1.91 | 1.46 | 1.83 | 1.55 | |||||||||||
Refinery throughputs (mbpd):(e) | |||||||||||||||
Crude oil refined | 923 | 1,155 | 999 | 1,106 | |||||||||||
Other charge and blendstocks | 34 | 48 | 46 | 52 | |||||||||||
Gross refinery throughput | 957 | 1,203 | 1,045 | 1,158 | |||||||||||
Sour crude oil throughput (percent) | 28 | 28 | 26 | 27 | |||||||||||
Sweet crude oil throughput (percent) | 72 | 72 | 74 | 73 | |||||||||||
Refined product yields (mbpd):(e) | |||||||||||||||
Gasoline | 476 | 626 | 540 | 612 | |||||||||||
Distillates | 340 | 412 | 365 | 400 | |||||||||||
Propane | 17 | 20 | 18 | 19 | |||||||||||
Feedstocks and special products | 59 | 71 | 55 | 55 | |||||||||||
Heavy fuel oil | 11 | 16 | 13 | 16 | |||||||||||
Asphalt | 57 | 61 | 58 | 59 | |||||||||||
Total | 960 | 1,206 | 1,049 | 1,161 | |||||||||||
West Coast | |||||||||||||||
Dollar per barrel of refinery throughput:(a) | |||||||||||||||
Refining & Marketing margin(b) | $ | 5.93 | $ | 17.77 | $ | 10.59 | $ | 14.33 | |||||||
Refining operating costs(c) | 10.19 | 8.01 | 9.45 | 8.10 | |||||||||||
Refining planned turnaround costs | 0.45 | 2.80 | 0.70 | 2.18 | |||||||||||
Refining depreciation and amortization | 1.81 | 1.29 | 1.48 | 1.31 | |||||||||||
Refinery throughputs (mbpd):(f) | |||||||||||||||
Crude oil refined | 388 | 628 | 481 | 634 | |||||||||||
Other charge and blendstocks | 31 | 75 | 48 | 70 | |||||||||||
Gross refinery throughput | 419 | 703 | 529 | 704 | |||||||||||
Sour crude oil throughput (percent) | 64 | 58 | 70 | 66 | |||||||||||
Sweet crude oil throughput (percent) | 36 | 42 | 30 | 34 | |||||||||||
Refined product yields (mbpd):(f) | |||||||||||||||
Gasoline | 234 | 338 | 285 | 350 | |||||||||||
Distillates | 148 | 228 | 181 | 243 | |||||||||||
Propane | 6 | 8 | 8 | 8 | |||||||||||
Feedstocks and special products | 17 | 104 | 40 | 84 | |||||||||||
Heavy fuel oil | 15 | 24 | 20 | 24 | |||||||||||
Asphalt | 1 | 1 | 1 | 1 | |||||||||||
Total | 421 | 703 | 535 | 710 | |||||||||||
(a) | The per barrel for Refining & Marketing margin is calculated based on net refinery throughput (excludes inter-refinery transfer volumes). The per barrel for the remaining items is calculated based on the gross refinery throughput (includes inter-refinery transfer volumes). |
(b) | Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput. |
(c) | Includes refining major maintenance and operating costs. Excludes planned turnaround and depreciation and amortization expense. |
(d) | Includes inter-refinery transfer volumes of 51 mbpd, 47 mbpd, 48 mbpd and 42 mbpd, respectively. |
(e) | Includes inter-refinery transfer volumes of 9 mbpd, 10 mbpd, 9 mbpd and 9 mbpd, respectively. |
(f) | Includes inter-refinery transfer volumes of 10 mbpd, 45 mbpd, 17 mbpd and 37 mbpd, respectively. |
Retail Operating Statistics (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Speedway fuel sales (millions of gallons) | 1,197 | 1,957 | 2,833 | 3,828 | |||||||||||
Direct dealer fuel sales (millions of gallons) | 462 | 646 | 1,047 | 1,276 | |||||||||||
Retail fuel margin (dollars per gallon)(a) | $ | 0.3960 | $ | 0.2666 | $ | 0.3577 | $ | 0.2200 | |||||||
Merchandise sales (in millions) | $ | 1,603 | $ | 1,620 | $ | 3,064 | $ | 3,033 | |||||||
Merchandise margin (in millions) | $ | 452 | $ | 471 | $ | 866 | $ | 878 | |||||||
Merchandise margin percent | 28.2 | % | 29.1 | % | 28.3 | % | 29.0 | % | |||||||
Same store gasoline sales volume (period over period)(b) | (36.6) | % | (2.4) | % | (22.7) | % | (2.8) | % | |||||||
Same store merchandise sales (period over period)(b)(c) | (4.0) | % | 6.3 | % | (1.8) | % | 5.9 | % | |||||||
Total convenience stores at period-end | 3,873 | 3,913 | |||||||||||||
Direct dealer locations at period-end | 1,074 | 1,062 | |||||||||||||
(a) | Includes bankcard processing fees (as applicable). |
(b) | Same store comparison includes only locations owned at least 13 months. |
(c) | Excludes cigarettes. |
Midstream Operating Statistics (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Pipeline throughputs (mbpd)(a) | 4,380 | 5,178 | 4,800 | 5,214 | |||||||||||
Terminal throughput (mbpd) | 2,420 | 3,287 | 2,693 | 3,254 | |||||||||||
Gathering system throughput (million cubic feet per day)(b) | 5,490 | 5,948 | 5,621 | 5,950 | |||||||||||
Natural gas processed (million cubic feet per day)(b) | 8,476 | 8,535 | 8,632 | 8,528 | |||||||||||
C2 (ethane) + NGLs fractionated (mbpd)(b) | 543 | 520 | 548 | 517 | |||||||||||
(a) | Includes common-carrier pipelines and private pipelines contributed to MPLX. Excludes equity method affiliate pipeline volumes. |
(b) | Includes amounts related to unconsolidated equity method investments on a |
Select Financial Data (Unaudited) | |||||||
(In millions) | June 30 | March 31 | |||||
Cash and cash equivalents | $ | 1,091 | $ | 1,690 | |||
MPC debt | 11,607 | 11,138 | |||||
MPLX debt | 20,559 | 20,471 | |||||
Total consolidated debt | 32,166 | 31,609 | |||||
Redeemable noncontrolling interest | 968 | 968 | |||||
Equity | 30,849 | 31,228 | |||||
Shares outstanding | 650 | 650 | |||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cash provided by (used in) operations | $ | 538 | $ | 2,622 | $ | (230) | $ | 4,245 | |||||||
Dividends paid per share | $ | 0.58 | $ | 0.53 | $ | 1.16 | $ | 1.06 | |||||||
Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to their most comparable GAAP financial measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measures we use are as follows:
Adjusted Net Income Attributable to MPC
Adjusted net income attributable to MPC is defined as net income attributable to MPC excluding the items in the table below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends.
Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is defined as adjusted net income attributable to MPC divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.
Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted Net Income (Loss) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net income (loss) attributable to MPC | $ | 9 | $ | 1,106 | $ | (9,225) | $ | 1,099 | |||||||
Pre-tax adjustments: | |||||||||||||||
Equity method investment restructuring gains | — | — | — | (207) | |||||||||||
Transaction-related costs | 30 | 34 | 65 | 125 | |||||||||||
Litigation | — | 22 | — | 22 | |||||||||||
Impairments | 25 | — | 9,162 | — | |||||||||||
LCM inventory valuation adjustment | (1,480) | — | 1,740 | — | |||||||||||
Out of period tax adjustment | — | — | — | 36 | |||||||||||
Tax impact of adjustments(a) | 548 | (14) | (1,445) | 14 | |||||||||||
Non-controlling interest impact of adjustments | — | — | (1,271) | — | |||||||||||
Adjusted net income (loss) attributable to MPC | $ | (868) | $ | 1,148 | $ | (974) | $ | 1,089 | |||||||
Diluted income (loss) per share | $ | 0.01 | $ | 1.66 | $ | (14.21) | $ | 1.63 | |||||||
Adjusted diluted income (loss) per share(b) | $ | (1.33) | $ | 1.73 | $ | (1.50) | $ | 1.62 | |||||||
(a) | We generally tax effect taxable adjustments to reported earnings using a combined federal and state statutory rate of approximately 24 percent. |
(b) | Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted earnings per share calculation except for the three months ended June 30, 2020 which assumes no dilution and uses basic shares as a result of an adjusted loss attributable to MPC. |
Operating Cash Flow Before Changes in Working Capital
Operating cash flow before changes in working capital is defined as net cash provided by (used in) operations less changes in current receivables, inventories, current accounts payable and accrued liabilities, the fair value of derivative instruments and right of use assets and operating lease liabilities. We believe operating cash flow before changes in working capital is useful as it is indicative of cash received or used for operations based on current operating conditions without the effects of working capital account fluctuations that result from commodity price changes, timing of cash collections, inventory purchases or accounts payable payments as compared to the prior year-end reporting period.
Reconciliation of Cash Provided by (Used in) Operations to Operating Cash Flow Before | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net cash provided by (used in) operations | $ | 538 | $ | 2,622 | $ | (230) | $ | 4,245 | |||||||
Less changes in: | |||||||||||||||
Current receivables | 1,218 | (679) | 3,117 | (1,697) | |||||||||||
Inventories | 839 | 744 | 417 | 740 | |||||||||||
Current accounts payable and accrued liabilities | (1,767) | (186) | (5,220) | 1,297 | |||||||||||
Fair value of derivative instruments | 70 | (56) | 23 | (27) | |||||||||||
Right of use assets and operating lease liabilities, net | 6 | 10 | 2 | 9 | |||||||||||
Total changes in working capital | 366 | (167) | (1,661) | 322 | |||||||||||
Operating cash flow before changes in working capital | $ | 172 | $ | 2,789 | $ | 1,431 | $ | 3,923 | |||||||
Adjusted EBITDA & Segment Adjusted EBITDA
Adjusted EBITDA and Segment Adjusted EBITDA represent earnings before net interest and other financial costs, income taxes, depreciation and amortization expense as well as adjustments to exclude refining turnaround costs, items not allocated to segment results and other items shown in the table below. We believe these non-GAAP financial measures are useful to investors and analysts to analyze and compare our operating performance between periods by excluding items that do not reflect the core operating results of our business or in the case of turnarounds, which provide benefits over multiple years. We also believe that excluding turnaround costs from this metric is useful for comparability to other companies as certain of our competitors defer these costs and amortize them between turnarounds. Adjusted EBITDA and Segment Adjusted EBITDA should not be considered as a substitute for, or superior to segment income (loss) from operations, net income attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA and Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted EBITDA | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net income (loss) attributable to MPC | $ | 9 | $ | 1,106 | $ | (9,225) | $ | 1,099 | |||||||
Plus (Less): | |||||||||||||||
Net interest and other financial costs | 345 | 322 | 683 | 628 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 267 | 261 | (717) | 527 | |||||||||||
Provision (benefit) for income taxes | 360 | 353 | (1,577) | 457 | |||||||||||
Depreciation and amortization | 935 | 886 | 1,897 | 1,805 | |||||||||||
Refining planned turnaround costs | 162 | 237 | 491 | 423 | |||||||||||
Equity method investment restructuring gains | — | — | — | (207) | |||||||||||
Transaction-related costs | 30 | 34 | 65 | 125 | |||||||||||
Litigation | — | 22 | — | 22 | |||||||||||
Impairments | 25 | — | 9,162 | — | |||||||||||
LCM inventory valuation adjustment | (1,480) | — | 1,740 | — | |||||||||||
Adjusted EBITDA | $ | 653 | $ | 3,221 | $ | 2,519 | $ | 4,879 | |||||||
Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products.
Reconciliation of Refining & Marketing Income (Loss) from Operations to Refining & Marketing | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Refining & Marketing income (loss) from operations(a) | $ | (1,619) | $ | 906 | $ | (2,241) | $ | 572 | |||||||
Plus (Less): | |||||||||||||||
Selling, general and administrative expenses | 500 | 574 | 1,054 | 1,118 | |||||||||||
LCM inventory valuation adjustment | 1,470 | — | (1,715) | — | |||||||||||
(Income) loss from equity method investments | 19 | (3) | 22 | (4) | |||||||||||
Net (gain) loss on disposal of assets | 1 | — | 1 | (6) | |||||||||||
Other income | (4) | (8) | (8) | (22) | |||||||||||
Refining & Marketing gross margin | 367 | 1,469 | (2,887) | 1,658 | |||||||||||
Plus (Less): | |||||||||||||||
Operating expenses (excluding depreciation and amortization) | 2,231 | 2,610 | 5,053 | 5,215 | |||||||||||
LCM inventory valuation adjustment | (1,470) | — | 1,715 | — | |||||||||||
Depreciation and amortization | 433 | 411 | 880 | 838 | |||||||||||
Gross margin excluded from Refining & Marketing margin(b) | (66) | (142) | (163) | (259) | |||||||||||
Other taxes included in Refining & Marketing margin | (19) | (1) | (43) | (5) | |||||||||||
Refining & Marketing margin(a) | $ | 1,476 | $ | 4,347 | $ | 4,555 | $ | 7,447 | |||||||
Refining & Marketing margin by region: | |||||||||||||||
Gulf Coast | $ | 437 | $ | 1,090 | $ | 1,414 | $ | 2,007 | |||||||
Mid-Continent | 819 | 2,193 | 2,154 | 3,710 | |||||||||||
West Coast | 220 | 1,064 | 987 | 1,730 | |||||||||||
Refining & Marketing margin | $ | 1,476 | $ | 4,347 | $ | 4,555 | $ | 7,447 | |||||||
(a) | LCM inventory valuation adjustments are excluded from Refining & Marketing income from operations and Refining & Marketing margin. |
(b) | The gross margin, excluding depreciation and amortization, of operations that support Refining & Marketing such as biodiesel and ethanol ventures, power facilities and processing of credit card transactions. |
Retail Fuel Margin
Retail fuel margin is defined as the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable).
Retail Merchandise Margin
Retail merchandise margin is defined as the price paid by consumers less the cost of merchandise.
Reconciliation of Retail Income from Operations to Retail Gross Margin and Retail Margin | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Retail income from operations(a) | $ | 494 | $ | 493 | $ | 1,013 | $ | 663 | |||||||
Plus (Less): | |||||||||||||||
Operating, selling, general and administrative expenses | 577 | 597 | 1,175 | 1,180 | |||||||||||
LCM inventory valuation adjustment | 10 | — | (25) | — | |||||||||||
Income from equity method investments | (27) | (21) | (49) | (38) | |||||||||||
Net gain on disposal of assets | — | — | (1) | (2) | |||||||||||
Other income | (44) | (4) | (93) | (6) | |||||||||||
Retail gross margin | 1,010 | 1,065 | 2,020 | 1,797 | |||||||||||
Plus (Less): | |||||||||||||||
LCM inventory valuation adjustment | (10) | — | 25 | — | |||||||||||
Depreciation and amortization | 132 | 130 | 257 | 256 | |||||||||||
Retail margin(a) | $ | 1,132 | $ | 1,195 | $ | 2,302 | $ | 2,053 | |||||||
Retail margin: | |||||||||||||||
Fuel margin | $ | 657 | $ | 694 | $ | 1,388 | $ | 1,123 | |||||||
Merchandise margin | 452 | 471 | 866 | 878 | |||||||||||
Other margin | 23 | 30 | 48 | 52 | |||||||||||
Retail margin | $ | 1,132 | $ | 1,195 | $ | 2,302 | $ | 2,053 | |||||||
(a) | LCM inventory valuation adjustments are excluded from Retail income from operations and Retail margin. |
View original content:http://www.prnewswire.com/news-releases/marathon-petroleum-corp-reports-second-quarter-2020-results-301104550.html
SOURCE Marathon Petroleum Corporation
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