Marathon Petroleum Corp. Reports Third-Quarter 2021 Results

Rhea-AI Summary

Marathon Petroleum Corp. (MPC) reported a third-quarter net income of $694 million, or $1.09 per diluted share, a significant turnaround from a net loss of $886 million in the same quarter last year. Adjusted net income for Q3 2021 was $464 million, up from a loss of $649 million in Q3 2020. The company is progressing with portfolio optimization, pursuing strategic alternatives for the Kenai refinery. Additionally, MPC completed 25% of its $10 billion capital return program and announced a 2.5% increase in quarterly distributions from its MPLX segment.

Positive

• Net income of $694 million for Q3 2021, compared to a net loss of $886 million in Q3 2020.
• Adjusted net income surged to $464 million in Q3 2021 from an adjusted net loss of $649 million in Q3 2020.
• Completed 25% of the $10 billion capital return program, reaffirming commitment to return the remaining $7.5 billion by year-end 2022.
• MPLX announced a 2.5% increase in base distribution amount for Q3 2021.

Negative

• Pre-tax charges of $48 million related to Hurricane Ida and impairments.

FINDLAY, Ohio, Nov. 2, 2021 /PRNewswire/ --

• Reported third-quarter net income of $694 million, or $1.09 per diluted share; reported adjusted net income of $464 million, or $0.73 per diluted share
• Progressing portfolio optimization by pursuing strategic alternatives for the Kenai refinery and related operations, which could include a sale; and continuing focus on lowering the cost structure
• Completed ~25% of $10 billion capital return program through Oct 31; committed to complete remaining $7.5 billion by year-end 2022
• Exceptionally strong year-to-date cash flow at MPLX supports a third quarter distribution consisting of a 2.5% increase to the base distribution amount and a special distribution amount; MPC expects to receive a total of $829 million

Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $694 million, or $1.09 per diluted share, for the third quarter of 2021, compared with a net loss of $886 million, or $(1.36) per diluted share, for the third quarter of 2020.

Adjusted net income was $464 million, or $0.73 per diluted share, for the third quarter of 2021. This compares to an adjusted net loss of $649 million, or $(1.00) per diluted share, for the third quarter of 2020.  For the third quarter of 2021, the adjustments exclude $48 million of pre-tax charges and include an incremental $272 million of tax expense to adjust all results to a 24% rate. The pre-tax charges were primarily related to Hurricane Ida, impairments, and idling costs. The accompanying release tables show these adjustments.

"This quarter we advanced several key initiatives while remaining committed to improving the aspects of the business within our control," said President and Chief Executive Officer Michael J. Hennigan. "We are pursuing a strategic transaction for the Kenai refinery, have added a new strategic partnership to progress our access to advantaged feedstocks across our renewables operations, achieved another project milestone for our Martinez renewable diesel conversion, and demonstrated the sustainability of our cost reduction initiatives.

"The year-to-date cash flow across the midstream business supported MPLX's decision to increase its base distribution amount and include a special distribution amount for the third quarter.

"Through today, we have completed 25% of our Speedway proceeds capital return program, which puts us well on track to meet our commitment of returning the full $10 billion by the end of 2022."

Results from Operations

Income from operations was $1.3 billion in the third quarter of 2021, compared to a loss of $619 million in the third quarter of 2020.

	Three Months Ended  September 30,
(In millions)		2021				2020
Income (loss) from continuing operations by segment
Refining & Marketing	$	509			$	(1,569)
Midstream		1,042				960
Corporate		(186)				(197)
Income (loss) from continuing operations before items not allocated to segments		1,365				(806)
Items not allocated to segments:
LCM inventory valuation adjustment		—				530
Impairment and idling expenses		(25)				(433)
Restructuring expenses		—				(348)
Income (loss) from continuing operations	$	1,340			$	(1,057)
Income from discontinued operations
Speedway	$	—			$	456
Transaction-related costs		—				(18)
Income from discontinued operations	$	—			$	438
Income (loss) from continuing and discontinued operations	$	1,340			$	(619)

Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was $2.4 billion in the third quarter of 2021, compared with $1.0 billion for the third quarter of 2020. As detailed in the table below, adjusted EBITDA is shown for both continuing and discontinued operations. Adjusted EBITDA from continuing operations excludes refining planned turnaround costs.

Reconciliation of Income (Loss) from Operations to Adjusted EBITDA

	Three Months Ended September 30,
(In millions)		2021				2020
Refining & Marketing Segment
Segment income (loss) from operations	$	509			$	(1,569)
Add: Depreciation and amortization		462				456
Refining planned turnaround costs		205				234
Storm impacts		19				—
LIFO liquidation charge		—				256
Segment Adjusted EBITDA		1,195				(623)
Midstream Segment
Segment income from operations		1,042				960
Add: Depreciation and amortization		329				335
Storm impacts		4				—
Segment Adjusted EBITDA		1,375				1,295
Segment Adjusted EBITDA		2,570				672
Corporate		(186)				(197)
Add: Depreciation and amortization		32				39
Adjusted EBITDA from continuing operations	$	2,416			$	514
Speedway
Speedway	$	—			$	456
Add: Depreciation and amortization(a)		—				36
Adjusted EBITDA from discontinued operations	$	—			$	492
Adjusted EBITDA from continuing and discontinued operations	$	2,416			$	1,006

(a)	As of August 2, 2020, MPC ceased recording depreciation and amortization for Speedway.

Refining & Marketing (R&M)

R&M segment income from operations was $509 million in the third quarter of 2021, compared with a loss of $1.6 billion for the third quarter of 2020. Segment results include a LIFO liquidation charge of $256 million in the third quarter of 2020. 

Segment adjusted EBITDA was $1.2 billion in the third quarter of 2021, versus a loss of $623 million for the third quarter of 2020. Segment adjusted EBITDA excludes refining planned turnaround costs, which totaled $205 million in the third quarter of 2021 and $234 million in the third quarter of 2020. It also excludes storm impacts of $19 million in the third quarter of 2021 and a non-cash LIFO liquidation charge of $256 million in the third quarter of 2020. The increase in R&M earnings was primarily due to higher crack spreads in all regions, wider differentials and higher throughput.

R&M margin was $14.51 per barrel for the third quarter of 2021, versus $8.28 per barrel, excluding the LIFO liquidation charge, for the third quarter of 2020. Crude capacity utilization was 93%, resulting in total throughput of 2.8 million barrels per day. If adjusted to include capacity idled in 2020, utilization would have been approximately 88%.

Midstream

Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX), was $1.0 billion in the third quarter of 2021, compared with $960 million for the third quarter of 2020.

Segment adjusted EBITDA was $1.4 billion in the third quarter of 2021, versus $1.3 billion for the third quarter of 2020. Third-quarter 2021 segment adjusted EBITDA excludes storm impacts of $4 million.  Results for the quarter benefited from higher revenue and lower operating expenses.

Corporate and Items Not Allocated

Corporate expenses totaled $186 million in the third quarter of 2021, compared with $197 million in the third quarter of 2020. 

Items not allocated to segments included net charges of $25 million in the third quarter of 2021 for facility idling costs and non-cash impairments. This is compared with net charges of $251 million in the third quarter of 2020.  

Speedway

This business was sold on May 14, 2021. Historic results are reported as discontinued operations.

Financial Position and Liquidity

As of Sept. 30, 2021, MPC had $13.2 billion of cash, cash equivalents, and short-term investments. There are no borrowings outstanding under the company's $5 billion five-year bank revolving credit facility.

MPC debt at the end of the third quarter of 2021 totaled $9.1 billion, excluding MPLX debt. MPC's debt-to-capital ratio, excluding MPLX, was 24% at the end of the third quarter of 2021.

MPC intends to redeem all of the $1.25 billion outstanding aggregate principal amount of MPC's 4.5% senior notes due May 1, 2023, and the $850 million outstanding aggregate principal amount of MPC's 4.75% senior notes due December 15, 2023, including the portion of such notes for which Andeavor LLC, a wholly-owned subsidiary of MPC, is the obligor. The notes are expected to be redeemed on December 2, 2021, at a price equal to par, plus a make-whole premium calculated in accordance with the terms of the senior notes and accrued and unpaid interest to, but not including, the redemption date. MPC expects to fund the redemption amount with cash on hand.

Strategic and Operations Update

MPC continues to progress its portfolio optimization by pursuing strategic alternatives for the Kenai refinery, including a potential sale.

Since the end of the second quarter of 2021 through October 31, MPC repurchased approximately $1.5 billion of shares. The company has now completed approximately 25% of its $10 billion capital return program and reiterated its commitment to repurchase the remaining $7.5 billion of shares by the end of 2022.

MPC may utilize various methods to effect the repurchases, which could include open market repurchases, negotiated block transactions, accelerated share repurchases, tender offers or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. The timing of repurchases will depend upon several factors, including market and business conditions, and repurchases may be discontinued at any time. 

The company progressed its renewables initiatives. On October 15, 2021, the draft environmental impact report for the Martinez renewables fuels project was published by Contra Costa County in California. The Martinez facility is expected to produce 260 million gallons per year of renewable diesel by the second half of 2022, with pretreatment capabilities coming online in 2023. The facility is expected to be capable of producing 730 million gallons per year by the end of 2023.

During the quarter, the Dickinson renewable diesel facility has been running above its design charge rate, continues to increase its use of advantaged feedstocks, and continues to focus on actions to lower its carbon intensity.

In August, MPC announced an agreement to form a joint venture with Archer-Daniels-Midland Company ("ADM") for the production of soybean oil to supply rapidly growing demand for renewable diesel fuel. Under the terms of the agreement, the joint venture will own and operate ADM's previously announced soybean processing complex in Spiritwood, North Dakota, with ADM owning 75% of the joint venture and MPC owning 25 percent. When complete in 2023, the Spiritwood facility will source and process local soybeans and supply the resulting soybean oil exclusively to MPC. The Spiritwood complex is expected to produce approximately 600 million pounds of refined soybean oil annually, enough feedstock for approximately 75 million gallons of renewable diesel per year. 

The Midstream segment remains focused on executing the strategic priorities of strict capital discipline, lowering the cost structure, and portfolio optimization. Several projects advanced during the quarter, including the Wink to Webster crude oil pipeline, the Whistler natural gas pipeline, and the reversal of the Capline crude pipeline. MPLX continues to evaluate opportunities to expand its logistics to meet the needs of today and participate in an energy-diverse future.

Today, MPLX declared a quarterly cash distribution of $1.28 per common unit for the third quarter of 2021, including a base distribution amount of $0.705 per common unit and a special distribution amount of $0.575 per common unit. The base distribution amount represents a 2.5% increase over the second quarter 2021 distribution. MPC expects to receive a total of $829 million.

Fourth Quarter 2021 Outlook
Refining & Marketing Segment:
Refining operating costs per barrel(a)(b)	$	5.40
Distribution costs (in millions)	$	1,300
Refining planned turnaround costs (in millions)	$	200
Depreciation and amortization (in millions)	$	465
Refinery throughputs (mbpd):
Crude oil refined		2,595
Other charge and blendstocks		200
Total		2,795
(a)       Excludes refining planned turnaround and depreciation and amortization expense
(b)       Includes impact from expected higher natural gas prices for the fourth quarter
Corporate (in millions)	$	170

Conference Call

At 11:00 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 www.marathonpetroleum.com. 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 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. 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
Brian Worthington, Manager
Kenan Kinsey, Analyst

Media Contact: (419) 421-3312
Jamal Kheiry, Communications Manager

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 regarding Marathon Petroleum Corporation (MPC). These forward-looking statements may relate to, among other things, MPC's expectations, estimates and projections concerning its business and operations, financial priorities, strategic plans and initiatives, capital return plans, including the completion of the Speedway sale proceeds capital return program within the anticipated timeframe, operating cost and capital expenditure reduction objectives, and environmental, social and governance goals. 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," "will," "would" or other similar expressions that convey the uncertainty of future events or outcomes. MPC cautions that these statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of MPC, that could cause actual results and events to differ materially from the statements made herein. 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: general economic, political or regulatory developments, including inflation, changes in governmental policies relating to refined petroleum products, crude oil, natural gas or NGLs, or taxation; the magnitude, duration and extent of future resurgences of the COVID-19 pandemic and its effects, including the continuation or re-imposition of travel restrictions, business and school closures, increased remote work, stay at home orders and other actions taken by individuals, government and the private sector to stem the spread of the virus; the regional, national and worldwide demand for refined products and related margins; the regional, national or worldwide availability and pricing of crude oil and other feedstocks and related pricing differentials; the success or timing of completion of ongoing or anticipated projects or transactions, including the conversion of the Martinez Refinery to a renewable fuels facility and contemplated joint venture with ADM; the availability of desirable strategic alternatives for the Kenai refinery or other portfolio assets and the ability to obtain regulatory and other approvals with respect thereto; accidents or other unscheduled shutdowns affecting our refineries, machinery, pipelines, processing, fractionation and treating facilities or equipment, means of transportation, or those of our suppliers or customers; 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, 2020, and in other filings with the SEC. Any forward-looking statement speaks only as of the date of the applicable communication and we undertake no obligation to update any forward-looking statement except to the extent required by applicable law.

Copies of MPC's Annual Report on Form 10-K, Quarterly Reports on Form 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 Annual Report on Form 10-K, Quarterly Reports on Form 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.

 

Consolidated Statements of Income (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions, except per-share data)		2021				2020				2021				2020
Revenues and other income:
Sales and other operating revenues(a)	$	32,321			$	17,408			$	84,647			$	51,807
Income (loss) from equity method investments(b)		122				117				306				(1,037)
Net gain on disposal of assets		—				1				3				6
Other income		170				22				366				69
Total revenues and other income		32,613				17,548				85,322				50,845
Costs and expenses:
Cost of revenues (excludes items below)(a)		29,563				16,673				77,824				48,517
LCM inventory valuation adjustment		—				(530)				—				1,185
Impairment expense		—				433				—				8,280
Depreciation and amortization		836				830				2,551				2,526
Selling, general and administrative expenses		681				673				1,881				2,080
Restructuring expenses		—				348				—				348
Other taxes		193				178				544				546
Total costs and expenses		31,273				18,605				82,800				63,482
Income (loss) from continuing operations		1,340				(1,057)				2,522				(12,637)
Net interest and other financial costs		328				359				1,053				1,032
Income (loss) from continuing operations before income taxes		1,012				(1,416)				1,469				(13,669)
Provision (benefit) for income taxes on continuing operations		(18)				(436)				21				(2,237)
Income (loss) from continuing operations, net of tax		1,030				(980)				1,448				(11,432)
Income from discontinued operations, net of tax		—				371				8,448				881
Net income (loss)		1,030				(609)				9,896				(10,551)
Less net income (loss) attributable to:
Redeemable noncontrolling interest		38				20				79				61
Noncontrolling interests		298				257				853				(501)
Net income (loss) attributable to MPC	$	694			$	(886)			$	8,964			$	(10,111)
Per share data
Basic:
Continuing operations	$	1.10			$	(1.93)			$	0.80			$	(16.93)
Discontinued operations		—				0.57				13.10				1.35
Net income (loss) per share	$	1.10			$	(1.36)			$	13.90			$	(15.58)
Weighted average shares outstanding (in millions)		633				650				645				649
Diluted:
Continuing operations	$	1.09			$	(1.93)			$	0.79			$	(16.93)
Discontinued operations		—				0.57				13.02				1.35
Net income (loss) per share	$	1.09			$	(1.36)			$	13.81			$	(15.58)
Weighted average shares outstanding (in millions)		637				650				649				649

(a)	In accordance with discontinued operations accounting, Speedway sales to retail customers and net results are reflected in income from discontinued operations, net of tax, and Refining & Marketing intercompany sales to Speedway prior to May 14, 2021, are presented as third-party sales.
(b)	The YTD 2020 period includes $1.3 billion of impairment expense.

 

Income Summary for Continuing Operations (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Income (loss) from continuing operations by segment
Refining & Marketing	$	509			$	(1,569)			$	135			$	(3,610)
Midstream		1,042				960				2,991				2,734
Corporate		(186)				(197)				(523)				(625)
Income (loss) from continuing operations before items not allocated to segments		1,365				(806)				2,603				(1,501)
Items not allocated to segments:
LCM inventory valuation adjustment		—				530				—				(1,185)
Impairment and idling expenses(a)		(25)				(433)				(81)				(9,595)
Restructuring expenses		—				(348)				—				(348)
Transaction-related costs(b)		—				—				—				(8)
Income (loss) from continuing operations		1,340				(1,057)				2,522				(12,637)
Net interest and other financial costs		328				359				1,053				1,032
Income (loss) from continuing operations before income taxes		1,012				(1,416)				1,469				(13,669)
Provision (benefit) for income taxes on continuing operations		(18)				(436)				21				(2,237)
Income (loss) from continuing operations, net of tax	$	1,030			$	(980)			$	1,448			$	(11,432)

(a)	The 2021 YTD period includes impairment expenses related to long-lived assets and equity method investments. The 2020 YTD period includes $7.4 billion goodwill impairment, $1.3 billion impairment of equity method investments and $886 million impairment of long-lived assets.
(b)	2020 includes costs incurred in connection with the Midstream strategic review.

 

Income Summary for Discontinued Operations (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Income from discontinued operations
Speedway	$	—			$	456			$	613			$	1,282
LCM inventory valuation adjustment		—				—				—				(25)
Gain on sale of assets		—				—				11,682				—
Transaction-related costs(a)		—				(18)				(46)				(75)
Income from discontinued operations		—				438				12,249				1,182
Net interest and other financial costs		—				5				6				15
Income from discontinued operations before income taxes		—				433				12,243				1,167
Provision for income taxes on discontinued operations		—				62				3,795				286
Income from discontinued operations, net of tax	$	—			$	371			$	8,448			$	881

(a)	Costs related to the Speedway separation.

 

Capital Expenditures and Investments (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Refining & Marketing	$	228			$	254			$	538			$	995
Midstream		190				300				506				1,199
Corporate(a)		46				45				120				146
Speedway		—				69				177				200
Total	$	464			$	668			$	1,341			$	2,540

(a)	Includes capitalized interest of $18 million, $29 million, $48 million and $85 million for the third quarter 2021, the third quarter 2020, the first nine months of 2021 and the first nine months of 2020, respectively.

 

Refining & Marketing Operating Statistics (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
		2021				2020				2021				2020
Dollar per barrel of net refinery throughput:
Refining & Marketing margin, excluding LIFO liquidation charge(a)	$	14.51			$	8.28			$	12.46			$	9.46
LIFO liquidation charge		—				(1.10)				—				(0.36)
Refining & Marketing margin(a)	$	14.51			$	7.18			$	12.46			$	9.10
Less:
Refining operating costs, excluding storm impacts(b)		4.97				5.41				4.89				5.85
Storm impacts on refining operating cost(c)		0.07				—				0.07				—
Distribution costs(d)		5.02				5.61				5.08				5.35
Refining planned turnaround costs		0.78				1.01				0.50				1.02
Depreciation and amortization		1.77				1.96				1.87				1.95
Plus (Less):
Other(e)		0.05				0.08				0.13				0.01
Refining & Marketing income (loss) from operations	$	1.95			$	(6.73)			$	0.18			$	(5.06)
Fees paid to MPLX included in distribution costs above	$	3.23			$	3.81			$	3.40			$	3.63
Refining & Marketing refined product sales volume (mbpd)(f)		3,539				3,201				3,366				3,222
Crude oil refining capacity (mbpcd)(g)		2,874				2,860				2,874				2,997
Crude oil capacity utilization (percent)(g)		93				84				90				82
Refinery throughputs (mbpd):
Crude oil refined		2,684				2,390				2,594				2,446
Other charge and blendstocks		152				146				159				155
Net refinery throughput		2,836				2,536				2,753				2,601
Sour crude oil throughput (percent)		45				49				47				50
Sweet crude oil throughput (percent)		55				51				53				50
Refined product yields (mbpd):
Gasoline		1,451				1,311				1,404				1,305
Distillates		968				872				944				908
Propane		53				50				51				51
Feedstocks and special products		272				230				265				266
Heavy fuel oil		32				21				32				28
Asphalt		93				92				94				83
Total		2,869				2,576				2,790				2,641
Inter-region refinery transfers excluded from throughput and yields above (mbpd)		61				55				55				68

(a)	Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput.
(b)	Excludes refining planned turnaround and depreciation and amortization expense.
(c)	Storms in the first and third quarters of 2021 resulted in higher costs, including maintenance and repairs.
(d)	Excludes depreciation and amortization expense.
(e)	Includes income (loss) from equity method investments, net gain (loss) on disposal of assets and other income.
(f)	Includes intersegment sales.
(g)	Based on calendar day capacity, which is an annual average that includes downtime for planned maintenance and other normal operating activities. 2021 crude oil refining capacity excludes idled Martinez and Gallup facilities and our Dickinson plant in renewable diesel service.

 

Refining & Marketing Operating Statistics by Region (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
		2021				2020				2021				2020
Gulf Coast
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b)	$	13.03			$	6.59			$	10.65			$	6.96
Refining operating costs(c)(d)		4.06				3.83				3.97				4.36
Refining planned turnaround costs		0.13				0.35				0.47				0.90
Refining depreciation and amortization		1.42				1.49				1.47				1.45
Refinery throughputs (mbpd):
Crude oil refined		1,034				962				1,011				984
Other charge and blendstocks		110				122				108				134
Gross refinery throughput		1,144				1,084				1,119				1,118
Sour crude oil throughput (percent)		58				65				60				65
Sweet crude oil throughput (percent)		42				35				40				35
Refined product yields (mbpd):
Gasoline		544				502				520				485
Distillates		380				388				376				383
Propane		27				25				25				26
Feedstocks and special products		195				182				201				228
Heavy fuel oil		7				4				6				8
Asphalt		16				16				19				18
Total		1,169				1,117				1,147				1,148
Inter-region refinery transfers included in throughput and yields above (mbpd)		26				34				26				44
Mid-Continent
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b)	$	15.44			$	9.18			$	13.46			$	10.66
Refining operating costs(c)(d)		4.27				4.79				4.30				5.24
Refining planned turnaround costs		1.66				0.68				0.69				0.87
Refining depreciation and amortization		1.50				1.65				1.59				1.77
Refinery throughputs (mbpd):
Crude oil refined		1,146				1,024				1,103				1,007
Other charge and blendstocks		61				42				55				45
Gross refinery throughput		1,207				1,066				1,158				1,052
Sour crude oil throughput (percent)		26				26				26				26
Sweet crude oil throughput (percent)		74				74				74				74
Refined product yields (mbpd):
Gasoline		613				559				602				546
Distillates		412				343				395				358
Propane		19				19				19				18
Feedstocks and special products		77				66				62				59
Heavy fuel oil		12				9				12				12
Asphalt		76				75				74				64
Total		1,209				1,071				1,164				1,057
Inter-region refinery transfers included in throughput and yields above (mbpd)		13				8				9				9
West Coast
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b)	$	15.56			$	10.15			$	14.08			$	12.42
Refining operating costs(c)(d)		7.87				10.15				7.63				9.66
Refining planned turnaround costs		0.12				3.28				0.12				1.47
Refining depreciation and amortization		1.36				1.69				1.50				1.54
Refinery throughputs (mbpd):
Crude oil refined		504				404				480				455
Other charge and blendstocks		42				37				51				44
Gross refinery throughput		546				441				531				499
Sour crude oil throughput (percent)		63				70				67				70
Sweet crude oil throughput (percent)		37				30				33				30
Refined product yields (mbpd):
Gasoline		294				250				282				274
Distillates		176				141				173				167
Propane		7				6				7				7
Feedstocks and special products		48				30				46				37
Heavy fuel oil		26				15				25				18
Asphalt		1				1				1				1
Total		552				443				534				504
Inter-region refinery transfers included in throughput and yields above (mbpd)		22				13				20				15

(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)	Excludes refining planned turnaround and depreciation and amortization expense.
(d)	Estimated storm impacts on refining operating costs excluded from regional refining operating costs.

 

Midstream Operating Statistics (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
		2021				2020				2021				2020
Pipeline throughputs (mbpd)(a)		5,596				4,783				5,497				4,794
Terminal throughput (mbpd)		3,046				2,701				2,884				2,696
Gathering system throughput (million cubic feet per day)(b)		5,419				5,396				5,195				5,546
Natural gas processed (million cubic feet per day)(b)		8,383				8,512				8,375				8,592
C2 (ethane) + NGLs fractionated (mbpd)(b)		553				567				552				555

(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 100% basis.

 

Select Financial Data (Unaudited)
(In millions)	September 30,  2021				June 30,  2021
Cash and cash equivalents	$	5,874			$	11,839
Short-term investments		7,352				5,418
MPC debt		9,089				9,085
MPLX debt		18,254				19,235
Total consolidated debt(a)		27,343				28,320
Redeemable noncontrolling interest		986				968
Equity		34,978				35,725
Shares outstanding		622				638

(a)	Net of unamortized debt issuance costs and unamortized premium/discount, net.

 

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. For all periods presented, we applied a combined federal and state statutory tax rate of 24% to the adjusted pre-tax income or loss. 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) Attributable to MPC
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Net income (loss) attributable to MPC	$	694			$	(886)			$	8,964			$	(10,111)
Pre-tax adjustments:
Gain on Speedway sale		—				—				(11,682)				—
LCM inventory valuation adjustment		—				(530)				—				1,210
Impairment and idling expenses		25				433				81				9,595
Restructuring expenses		—				348				—				348
LIFO liquidation charge		—				256				—				256
Pension settlement		—				—				49				—
Transaction-related costs		—				18				46				83
Storm impacts		23				—				70				—
Tax impact of adjustments(a)		(272)				(264)				3,271				(1,709)
Non-controlling interest impact of adjustments		(6)				(24)				(30)				(1,295)
Adjusted net income (loss) attributable to MPC	$	464			$	(649)			$	769			$	(1,623)
Diluted income (loss) per share	$	1.09			$	(1.36)			$	13.81			$	(15.58)
Adjusted diluted income (loss) per share	$	0.73			$	(1.00)			$	1.18			$	(2.50)

(a)

Income taxes for adjusted earnings was calculated by applying a combined federal and state statutory tax rate of 24% to the adjusted pre-tax income (loss) for these periods. The corresponding adjustments to reported income taxes are shown in the table above. For the three months ended September 30, 2021, we recorded a combined federal, state and foreign income tax benefit of $18 million which was lower than the tax computed at the U.S. statutory rate primarily due to certain permanent tax benefits related to net income attributable to noncontrolling interests, state taxes, and an increase in benefit related to the net operating loss carryback provided under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act').

 

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 from Continuing Operations
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Net income (loss) attributable to MPC	$	694			$	(886)			$	8,964			$	(10,111)
Plus (Less):
Income from discontinued operations, net of tax		—				(371)				(8,448)				(881)
Net interest and other financial costs		328				359				1,053				1,032
Net income (loss) attributable to noncontrolling interests		336				277				932				(440)
Provision (benefit) for income taxes		(18)				(436)				21				(2,237)
Depreciation and amortization		823				830				2,495				2,526
Refining planned turnaround costs		205				234				378				725
Storm impacts		23				—				70				—
LCM inventory valuation adjustment		—				(530)				—				1,185
Impairment and idling expenses(a)		25				433				81				9,595
Restructuring expenses		—				348				—				348
LIFO liquidation charge		—				256				—				256
Transaction-related costs		—				—				—				8
Adjusted EBITDA from continuing operations	$	2,416			$	514			$	5,546			$	2,006

(a)	Impairments of $13 million and $56 million in the three and nine months ended September 30, 2021, respectively, are included in depreciation and amortization expense on the statements of income.

 

Reconciliation of Income from Discontinued Operations, Net of Tax to EBITDA from Discontinued Operations (Unaudited)
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Income from discontinued operations, net of tax	$	—			$	371			$	8,448			$	881
Plus (Less):
Net interest and other financial costs		—				5				6				15
Provision for income taxes		—				62				3,795				286
Depreciation and amortization(a)		—				36				3				237
LCM inventory valuation adjustment		—				—				—				25
Gain on sale of assets		—				—				(11,682)				—
Transaction-related costs		—				18				46				75
Adjusted EBITDA from discontinued operations	$	—			$	492			$	616			$	1,519

(a)	As of August 2, 2020, MPC ceased recording depreciation and amortization for Speedway. Asset write-offs and retirements charges are presented as depreciation and amortization in our financial statements for all periods presented.

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 Gross Margin and Refining & Marketing Margin
	Three Months Ended  September 30,								Nine Months Ended  September 30,
(In millions)		2021				2020				2021				2020
Refining & Marketing income (loss) from operations(a)	$	509			$	(1,569)			$	135			$	(3,610)
Plus (Less):
Selling, general and administrative expenses		540				518				1,495				1,576
LCM inventory valuation adjustment		—				530				—				(1,185)
(Income) loss from equity method investments		(8)				(16)				(27)				6
Net gain on disposal of assets		(3)				(1)				(6)				—
Other income		(146)				(1)				(289)				(9)
Refining & Marketing gross margin		892				(539)				1,308				(3,222)
Plus (Less):
Operating expenses (excluding depreciation and amortization)		2,527				2,408				7,107				7,481
LCM inventory valuation adjustment		—				(530)				—				1,185
Depreciation and amortization		462				456				1,406				1,392
Gross margin excluded from and other income included in Refining & Marketing margin(b)		(58)				(101)				(353)				(285)
Other taxes included in Refining & Marketing margin		(38)				(19)				(104)				(62)
Refining & Marketing margin(a)	$	3,785			$	1,675			$	9,364			$	6,489
LIFO liquidation charge		—				256				—				256
Refining & Marketing margin, excluding LIFO liquidation charge	$	3,785			$	1,931			$	9,364			$	6,745
Refining & Marketing margin by region:
Gulf Coast	$	1,339			$	637			$	3,176			$	2,051
Mid-Continent		1,695				894				4,223				3,048
West Coast		751				400				1,965				1,646
Refining & Marketing margin	$	3,785			$	1,931			$	9,364			$	6,745

(a)	LCM inventory valuation adjustments are excluded from Refining & Marketing income from operations and Refining & Marketing margin.
(b)	Reflects the gross margin, excluding depreciation and amortization, of other related operations included in the Refining & Marketing segment and processing of credit card transactions on behalf of certain of our marketing customers, net of other income.

 

View original content:https://www.prnewswire.com/news-releases/marathon-petroleum-corp-reports-third-quarter-2021-results-301413803.html

SOURCE Marathon Petroleum Corporation