August 1, 2019 - 6:30 AM EDT
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Marathon Petroleum Corp. Reports Second-Quarter Results

FINDLAY, Ohio, Aug. 1, 2019 /PRNewswire/ --

  • Reported second-quarter income of $1.1 billion, or earnings per diluted share of $1.66; adjusted income of $1.1 billion, or adjusted earnings per diluted share of $1.73
  • Generated $2.6 billion of operating cash flow and returned $852 million of capital to shareholders, including $500 million in share repurchases
  • Realized synergies of $270 million in the second quarter
  • Strong retail results driven by exceptional execution across Speedway system
  • Successfully combined MPLX and ANDX into one public midstream company
  • Continued focus on portfolio optimization, which could include asset divestitures

Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $1.1 billion, or $1.66 per diluted share, for the second quarter 2019 compared to $1.1 billion, or $2.27 per diluted share, for the second quarter of 2018. Excluding adjustments shown in the accompanying earnings release tables, second quarter 2019 adjusted net income was $1.1 billion, or $1.73 per diluted share, compared to $1.1 billion, or $2.29 per diluted share, for the second quarter of 2018.

MPC returned $852 million of capital to shareholders during the second quarter of 2019, including $500 million in share repurchases.

"This quarter we executed across our integrated business and progressed many strategic initiatives," said Gary R. Heminger, chairman and chief executive officer. "Our retail business, comprised of Speedway and our direct dealer network, had an exceptional quarter and demonstrated its ability to capture value. We simplified our midstream structure into one public company to high-grade commercial opportunities and progressed an impressive slate of high-return projects that are expected to enhance integration across our system. Lastly, today we also highlighted our continued focus on portfolio optimization, which could include asset divestitures to strategically streamline our integrated asset base.

"We are confident that strengthening business fundamentals throughout the year and the competitive advantages of our integrated business model will both support a growing cash flow profile," said Heminger.

Synergies

MPC realized $270 million of synergies in the second quarter. Some examples of realized synergies include: approximately $60 million of turnaround savings related to lower spending and incremental earnings from completing maintenance under budget and ahead of schedule, approximately $35 million from leveraging scale and logistics assets to optimize Canadian and Bakken supply sources, and approximately $10 million from improved catcracker yields at the company's Los Angeles refinery.

"Our team's impressive execution this quarter led to strong realized synergies," said Heminger. "Combined with our first quarter results, we have realized $403 million of synergies year to date. Our progress gives us great confidence in achieving our target of up to $600 million of annual gross run-rate synergies by year-end 2019 and $1.4 billion by the end of 2021."

Segment Results

In the second quarter of 2019, total income from operations was $2.0 billion compared to $1.7 billion for the second quarter of 2018. Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) was $3.2 billion in the second quarter of 2019 compared to $2.3 billion for the same quarter last year. Adjusted EBITDA excludes refining planned turnaround costs of $237 million in the second quarter of 2019 and $62 million in the second quarter of 2018.


Three Months Ended
June 30,

(In millions)

2019


2018

Income from Operations by Segment






Refining & Marketing

$

906



$

1,025


Retail


493




159


Midstream


878




617


Items not allocated to segments:






    Corporate and other unallocated items


(179)




(81)


    Transaction-related costs


(34)




(10)


    Litigation


(22)





    Impairments





1


        Income from operations

$

2,042



$

1,711


Midstream

Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX) and Andeavor Logistics (ANDX), was $878 million in the second quarter of 2019, compared with $617 million for the second quarter of 2018. The increase was due to contributions of $223 million from ANDX and a $38 million increase driven primarily by growth across MPLX's businesses. Segment EBITDA was $1.2 billion in the second quarter 2019 versus $808 million for the same quarter last year.

Retail

Retail segment income from operations was $493 million in the second quarter of 2019, compared with $159 million in the second quarter of 2018. The increase in earnings was largely related to the addition of the legacy Andeavor retail operations and higher fuel and merchandise margin contributions across the legacy Speedway system. Segment EBITDA was $623 million in the second quarter 2019 versus $232 million for the same quarter last year.

Retail fuel margin increased to 26.7 cents per gallon in the second quarter of 2019 from 16.5 cents per gallon in the second quarter of 2018. Same-store merchandise sales increased by 6.3 percent year-over-year and same-store gasoline sales volume decreased by 2.4 percent year-over-year.

Refining & Marketing (R&M)

R&M segment income from operations was $906 million in the second quarter of 2019 compared with $1.0 billion in the same quarter of 2018. The year-over-year decrease was primarily driven by narrower crude differentials and lower product realizations. R&M margin was $15.24 per barrel for the quarter with a clean product yield of 82 percent.

Segment adjusted EBITDA was $1.6 billion in the second quarter of 2019 versus $1.3 billion for the same quarter last year. Segment adjusted EBITDA excludes refinery planned turnaround costs which totaled $237 million in the second quarter of 2019, as the company completed maintenance work at its Garyville, Los Angeles, and Martinez refineries. This compares to $62 million of turnaround related work in the second quarter of 2018.

Refinery capacity utilization was 97 percent, resulting in total throughputs of 3.1 million barrels per day for the second quarter, which was 1.1 million barrels per day higher than the throughput for the second quarter of last year. The increase was primarily due to the addition of the Andeavor refineries.

Items Not Allocated to Segments and Other

Items not allocated to segments totaled $235 million of expenses in the second quarter of 2019 compared to $90 million in the second quarter of 2018. Second quarter 2019 results include $34 million of transaction-related expenses, $22 million of litigation charges, and the inclusion of legacy Andeavor corporate costs.

Strong Financial Position and Liquidity

As of June 30, 2019, the company had $1.2 billion in cash and cash equivalents (excluding MPLX and ANDX's cash and cash equivalents of $7 million and $25 million, respectively), approximately $5 billion available under a revolving credit agreement, $1 billion available under a 364-day bank revolving credit facility and $750 million available under its trade receivables securitization facility.

Strategic Update

"This quarter saw significant advancement of strategic initiatives that we expect to enhance the strength and cash generation of our integrated model," said Heminger.

MPC combined its two midstream businesses, MPLX and ANDX, to simplify its midstream structure into one public company to high-grade commercial opportunities. At the same time, the company progressed numerous high-return projects that are expected to advance its strategy of creating integrated crude oil and natural gas systems from the Permian Basin to the U.S. Gulf Coast.

During the quarter, MPLX announced a final investment decision on the Whistler natural gas pipeline. MPLX also signed definitive agreements on the Wink-to-Webster crude oil pipeline, in which it is expected to have an equity interest. The Gray Oak Pipeline, in which MPC has a 25 percent equity interest, remains on schedule and is expected to be placed in service in the fourth quarter of 2019. These pipelines will help connect growing domestic production with global demand while also providing refining value to MPC's integrated business.

In the retail segment, Speedway continues to expand its brand through store conversions. As of June 30, 2019, Speedway had completed 237 store conversions in 2019, bringing the total number of conversions since the combination with Andeavor to 407. The company remains on track to complete 700 total cumulative store conversions by the end of 2019 including locations in the Southwest and on the West Coast. In July 2019, Speedway closed on its acquisition of 33 NOCO Express convenience stores in the Buffalo, New York area. The acquisition further expands Speedway's brand presence in this region while supporting MPC's Midwest product placement strategy and builds upon prior investments to maximize refinery utilization.

MPC also continues to expand its presence in Mexico. In addition to expanding its refined product distribution into this region, the company now has 155 ARCO stations in Mexico as of June 30, 2019, with plans to continue growing its brand. These stores provide additional product outlets and enhanced integration with the refining business.

In anticipation of the expected favorable uplift from the International Maritime Organization low-sulfur marine fuel rule, MPC has positioned its integrated business to optimize around changing market dynamics associated with the bunker fuel regulation change in 2020. The company's preparations have included resid destruction strategies and bunker blending logistics capabilities.

During the quarter, the company progressed the completion of its Garyville crude revamp and coker drum replacement projects. The crude project is expected to be completed by the end of 2019. The coker project is expected to increase unit capacity by approximately 14 percent and remains on track to be completed in two phases, fourth quarter of 2019 and first quarter of 2020. On the logistics side, the company finalized plans to optimize its coker feed and resid processing capabilities between refineries and ensured readiness of its blending and storage capabilities near its key coastal export facilities.

Lastly, the company highlighted its continued focus on portfolio optimization, which could include asset divestitures. Proceeds from any divestitures would be used for general purposes, such as investments in high-return projects as well as debt reduction.

Third Quarter 2019 Outlook


Refining & Marketing Segment:



Refining operating costs per barrel(a)(b)

$

5.90


Distribution costs (in millions)(a)

$

1,300


Refining planned turnaround costs (in millions)(a)

$

155


Depreciation and amortization (in millions)(a)

$

420





Refinery throughputs (mbpd):



    Crude oil refined


2,900


    Other charge and blendstocks


150


        Total


3,050



(a)

We revised our Refining & Marketing segment supplemental reporting in the second quarter. Costs formerly included in MPC's direct operating costs category are now reported in three categories: operating costs, planned turnaround costs, and depreciation and amortization. We also report distribution costs which are primarily related to transportation and marketing of refined products, including fees paid to MPLX and ANDX.

(b)

Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expenses.

 

Retail Segment:

Range

Speedway fuel sales (millions of gallons)


2,525




2,675


Merchandise sales (in $ millions)


1,625




1,725








Corporate and unallocated items (in $ millions)





190


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 "2019 Second-Quarter Financial Results" 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 with more than 3 million barrels per day of crude oil capacity across 16 refineries. 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 which 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
Doug Wendt, 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.  Discretionary free cash flow is defined as operating cash flow less maintenance and regulatory capital.

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, MPC's acquisition of Andeavor and include 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," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan," "policy," "position," "potential," "predict," "priority," "project," "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: 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 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 or 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 or 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 any common stock repurchases; the adequacy of capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute business plans and to effect any share repurchases or dividend increases, including within the expected timeframe; 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; 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, 2018, filed with the SEC. Copies of MPC's Form 10-K are available on the SEC 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 are available on the SEC 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 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
June 30,


Six Months Ended
June 30,

(In millions, except per-share data)

2019


2018


2019


2018

Revenues and other income:












    Sales and other operating revenues

$

33,547



$

22,317



$

61,814



$

41,183


    Income from equity method investments


107




80




206




166


    Net gain on disposal of assets


4




3




218




5


    Other income


30




45




65




75


        Total revenues and other income


33,688




22,445




62,303




41,429


Costs and expenses:












    Cost of revenues (excludes items below)


29,682




19,655




55,642




37,166


    Depreciation and amortization


886




533




1,805




1,061


    Selling, general and administrative expenses


904




424




1,785




826


    Other taxes


174




122




360




225


        Total costs and expenses


31,646




20,734




59,592




39,278


Income from operations


2,042




1,711




2,711




2,151


    Net interest and other financial costs


322




195




628




378


Income before income taxes


1,720




1,516




2,083




1,773


    Provision for income taxes


353




281




457




303


Net income


1,367




1,235




1,626




1,470


Less net income attributable to:












Redeemable noncontrolling interest


21




20




41




36


Noncontrolling interests


240




160




486




342


Net income attributable to MPC

$

1,106



$

1,055



$

1,099



$

1,092














Per-share data












Basic:












    Net income attributable to MPC per share

$

1.67



$

2.30



$

1.65



$

2.34


    Weighted average shares:


662




459




667




467


Diluted:












    Net income attributable to MPC per share

$

1.66



$

2.27



$

1.63



$

2.31


    Weighted average shares:


666




464




672




472














 

Income Summary (Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,

(In millions)

2019(a)


2018


2019(a)


2018

Income from Operations by segment












  Refining & Marketing

$

906



$

1,025



$

572



$

892


  Retail


493




159




663




254


  Midstream


878




617




1,786




1,184


  Items not allocated to segments:












      Corporate and other unallocated items


(179)




(81)




(370)




(170)


      Capline restructuring gain








207





      Transaction-related costs(b)


(34)




(10)




(125)




(10)


      Litigation


(22)







(22)





      Impairments





1







1


Income from operations


2,042




1,711




2,711




2,151


Net interest and other financial costs


322




195




628




378


Income before income taxes


1,720




1,516




2,083




1,773


Provision for income taxes


353




281




457




303


Net income


1,367




1,235




1,626




1,470


Less net income attributable to:












Redeemable noncontrolling interest


21




20




41




36


Noncontrolling interests


240




160




486




342


Net income attributable to MPC

$

1,106



$

1,055



$

1,099



$

1,092














(a)

Includes the results of Andeavor from the October 1, 2018 acquisition date forward.

(b)

Includes costs related to the Andeavor acquisition including financial advisor and legal fees, employee severance, and other expenses.

 

Capital Expenditures and Investments (Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,

(In millions)

2019(a)


2018


2019(a)


2018

Refining & Marketing

$

430



$

196



$

824



$

387


Retail


120




88




193




127


Midstream


814




601




1,637




1,083


Corporate and Other(b)


38




33




79




69


    Total

$

1,402



$

918



$

2,733



$

1,666














(a)

Includes the results of Andeavor from the October 1, 2018 acquisition date forward.

(b)

Includes capitalized interest of $34 million, $16 million, $65 million and $34 million, respectively.

 

Refining & Marketing Operating Statistics (Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,


2019


2018


2019


2018

Refining & Marketing margin per barrel(a)

$

15.24



$

15.40



$

13.23



$

13.08


Less:












Refining operating costs per barrel(b)


5.35




4.19




5.47




4.72


Distribution costs per barrel(c)


4.48




4.17




4.56




3.93


Other per barrel(d)


(0.04)




(0.18)




(0.06)




(0.14)


Refining planned turnaround costs per barrel


0.83




0.33




0.75




0.66


Depreciation and amortization per barrel


1.44




1.36




1.49




1.41


Refining & Marketing segment income per barrel

$

3.18



$

5.53



$

1.02



$

2.50














Refining & Marketing refined product sales volume

(mbpd)(e)


3,814




2,392




3,742




2,327


Crude oil capacity utilization (percent)(f)


97




100




96




96


Refinery throughputs (mbpd):(g)












    Crude oil refined


2,937




1,878




2,902




1,812


    Other charge and blendstocks


198




160




207




160


        Total


3,135




2,038




3,109




1,972


Sour crude oil throughput (percent)


47




55




49




53


Sweet crude oil throughput (percent)


53




45




51




47


Refined product yields (mbpd):(g)












    Gasoline


1,528




970




1,531




943


    Distillates


1,080




691




1,086




651


    Propane


57




40




55




35


    Feedstocks and special products


370




278




350




283


    Heavy fuel oil


51




27




48




31


    Asphalt


83




72




81




65


        Total


3,169




2,078




3,151




2,008



(a)

Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.

(b)

Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.

(c)

Includes fees paid to our two sponsored master limited partnerships, MPLX and ANDX, on a per barrel throughput basis, these fees were $2.80, $3.21, $2.81 and $3.01, respectively. Excludes depreciation and amortization expense.

(d)

Includes income from equity method investments, net gain 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 102 mbpd, 64 mbpd, 88 mbpd and 53 mbpd, respectively.

 

Refining & Marketing Operating Statistics by Region (Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,


2019


2018


2019


2018

Gulf Coast












Refining & Marketing margin dollars per barrel(a)

$

9.32



$

N/A



$

8.58



$

N/A


Refining operating costs per barrel(b)

$

4.03



$

3.69



$

3.95




4.47


Refining planned turnaround costs per barrel

$

0.23



$

0.08



$

0.20




0.72


Refining depreciation and amortization per barrel

$

1.03



$

0.99



$

1.08




1.04














Refinery throughputs (mbpd):(c)












    Crude oil refined


1,154




1,156




1,162




1,106


    Other charge and blendstocks


177




190




173




179


        Total


1,331




1,346




1,335




1,285


Sour crude oil throughput (percent)


59




65




61




63


Sweet crude oil throughput (percent)


41




35




39




37


Refined product yields (mbpd):(c)












    Gasoline


564




570




569




552


    Distillates


440




458




443




410


    Propane


29




26




28




22


    Feedstocks and special products


293




290




293




294


    Heavy fuel oil


15




16




14




20


    Asphalt


21




23




21




20


        Total


1,362




1,383




1,368




1,318














Mid-Continent












Refining & Marketing margin per barrel(a)

$

20.21



$

N/A



$

17.84



$

N/A


Refining operating costs per barrel(b)

$

4.82



$

4.70



$

5.21



$

4.80


Refining planned turnaround costs per barrel

$

0.27



$

0.76



$

0.47



$

0.51


Refining depreciation and amortization per barrel

$

1.46



$

1.66



$

1.55



$

1.71














Refinery throughputs (mbpd):(c)












    Crude oil refined


1,155




722




1,106




706


    Other charge and blendstocks


48




34




52




34


        Total


1,203




756




1,158




740


Sour crude oil throughput (percent)


28




39




27




38


Sweet crude oil throughput (percent)


72




61




73




62


Refined product yields (mbpd):(c)












    Gasoline


626




400




612




391


    Distillates


412




233




400




241


    Propane


20




14




19




13


    Feedstocks and special products


71




52




55




42


    Heavy fuel oil


16




11




16




11


    Asphalt


61




49




59




45


        Total


1,206




759




1,161




743














West Coast












Refining & Marketing margin per barrel(a)

$

17.77



$

N/A



$

14.33



$

N/A


Refining operating costs per barrel(b)

$

8.01



$



$

8.10



$


Refining planned turnaround costs per barrel

$

2.80



$



$

2.18



$


Refining depreciation and amortization per barrel

$

1.29



$



$

1.31



$














Refinery throughputs (mbpd):(c)












    Crude oil refined


628







634





    Other charge and blendstocks


75







70





        Total


703







704





Sour crude oil throughput (percent)


58







66





Sweet crude oil throughput (percent)


42







34





Refined product yields (mbpd):(c)












    Gasoline


338







350





    Distillates


228







243





    Propane


8







8





    Feedstocks and special products


104







84





    Heavy fuel oil


24







24





    Asphalt


1







1





        Total


703







710

















(a)

Sales revenue less cost of refinery inputs and purchased products, divided by refinery throughputs, excluding inter-refinery transfer volumes.

(b)

Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.

(c)

Includes inter-refinery transfer volumes.

 

Retail Operating Statistics (Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,


2019


2018


2019


2018

Speedway fuel sales (millions of gallons)


1,957




1,450




3,828




2,843


Direct dealer fuel sales (millions of gallons)


646




 N/A




1,276




 N/A


Retail fuel margin (dollars per gallon)(a)

$

0.2666



$

0.1645



$

0.2200



$

0.1604


Merchandise sales (in millions)

$

1,620



$

1,285



$

3,033



$

2,414


Merchandise margin (in millions)

$

471



$

366



$

878



$

685


Merchandise margin percent


29.1

%



28.5

%



29.0

%



28.4

%

Same store gasoline sales volume (period over period)(b)


(2.4)

%



(2.6)

%



(2.8)

%



(2.1)

%

Same store merchandise sales (period over period)(b)(c)


6.3

%



2.9

%



5.9

%



2.6

%

Total convenience stores at period-end


3,913




2,744








Direct dealer locations at period-end


1,062




 N/A




















(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
June 30,


Six Months Ended
June 30,


2019


2018


2019


2018

Pipeline throughputs (mbpd)(a)


5,178




3,789




5,214




3,625


Terminal throughput (mbpd)


3,287




1,485




3,254




1,465


Gathering system throughput (million cubic feet per day)(b)


5,948




4,295




5,950




4,233


Natural gas processed (million cubic feet per day)(b)


8,535




6,850




8,528




6,740


C2 (ethane) + NGLs fractionated (mbpd)(b)


520




439




517




432














(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)

June 30,
2019


March 31
2019

Cash and cash equivalents

$

1,247



$

877


MPC debt


9,142




9,150


MPLX debt


14,036




13,833


ANDX debt


5,229




5,132


Total consolidated debt


28,407




28,115


Redeemable noncontrolling interest


1,005




1,004


Equity


43,061




42,858


Shares outstanding


660




667


 


Three Months Ended
June 30,


Six Months Ended
June 30,


2019


2018


2019


2018

Cash provided by operations

$

2,622



$

2,386



$

4,245



$

2,249


Dividends paid per share

$

0.53



$

0.46



$

1.06



$

0.92


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 Attributable to MPC to Adjusted Net Income Attributable to MPC



Three Months Ended
June 30,


Six Months Ended
June 30,

(In millions)

2019


2018


2019


2018

Net income attributable to MPC

$

1,106



$

1,055



$

1,099



$

1,092


Pre-tax adjustments:












Capline restructuring gain








(207)





Transaction-related costs


34




10




125




10


Litigation


22







22





Impairments





(1)







(1)


Out of period tax adjustment








36





Tax impact of adjustments(a)


(14)




(2)




14




(2)


Adjusted net income attributable to MPC

$

1,148



$

1,062



$

1,089



$

1,099














Diluted earnings per share

$

1.66



$

2.27



$

1.63



$

2.31


Adjusted diluted earnings per share(b)

$

1.73



$

2.29



$

1.62



$

2.33



(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.

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 and items not allocated to segment results. 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 Attributable to MPC to Adjusted EBITDA



Three Months Ended
June 30,


Six Months Ended
June 30,

(In millions)

2019


2018


2019


2018

Net income attributable to MPC

$

1,106



$

1,055



$

1,099



$

1,092


Plus (Less):












Net interest and other financial costs


322




195




628




378


Net income attributable to noncontrolling interests


261




180




527




378


Provision for income taxes


353




281




457




303


Depreciation and amortization


886




533




1,805




1,061


Refining planned turnaround costs


237




62




423




235


Capline restructuring gain








(207)





Transaction-related costs


34




10




125




10


Litigation


22







22





Impairments





(1)







(1)


Adjusted EBITDA

$

3,221



$

2,315



$

4,879



$

3,456


 

Reconciliation of Segment Income From Operations to Segment Adjusted EBITDA and Adjusted EBITDA



Three Months Ended
June 30,


Six Months Ended
June 30,

(In millions)

2019


2018


2019


2018

Refining & Marketing Segment












Segment income from operations

$

906



$

1,025



$

572



$

892


Add: Depreciation and amortization


411




252




838




504


        Refining planned turnaround costs


237




62




423




235


Segment Adjusted EBITDA

$

1,554



$

1,339



$

1,833



$

1,631


Retail Segment












Segment income from operations

$

493



$

159



$

663



$

254


Add: Depreciation and amortization


130




73




256




152


Segment EBITDA

$

623



$

232



$

919



$

406


Midstream Segment












Segment income from operations

$

878



$

617



$

1,786



$

1,184


Add: Depreciation and amortization


318




191




625




372


Segment EBITDA

$

1,196



$

808



$

2,411



$

1,556














Segment Adjusted EBITDA

$

3,373



$

2,379



$

5,163



$

3,593


Corporate and other unallocated items


(179)




(81)




(370)




(170)


Add: Depreciation and amortization


27




17




86




33


Adjusted EBITDA

$

3,221



$

2,315



$

4,879



$

3,456


Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products and excludes any LCM inventory market adjustment.

 

Reconciliation of Refining & Marketing Income from Operations to Refining & Marketing Margin



Three Months Ended
June 30,


Six Months Ended
June 30,

(In millions)

2019


2018


2019


2018

Refining & Marketing income from operations

$

906



$

1,025



$

572



$

892


Plus (Less):












Refining operating costs(a)


1,527




776




3,079




1,685


Refining depreciation and amortization


368




235




755




471


Refining planned turnaround costs


237




62




423




235


Distribution costs(b)


1,277




774




2,567




1,403


Distribution depreciation and amortization


43




17




83




33


Income from equity method investments


(3)




(4)




(4)




(7)


Net gain on disposal of assets





(3)




(6)




(4)


Other income


(8)




(27)




(22)




(39)


Refining & Marketing margin

$

4,347



$

2,855



$

7,447



$

4,669














Refining & Marketing margin by region:












Gulf Coast

$

1,090



$

N/A



$

2,007



$

N/A


Mid-Continent


2,193




N/A




3,710




N/A


West Coast


1,064




N/A




1,730




N/A


Refining & Marketing margin

$

4,347



$

N/A



$

7,447



$

N/A



(a)

Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expense.

(b) 

Includes fees paid to our two sponsored master limited partnerships, MPLX and ANDX, of $798 million, $596 million, $1,584 million and $1,074 million, respectively. Excludes depreciation and amortization expense.


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) and excluding any LCM inventory market adjustment.

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 Total Margin



Three Months Ended
June 30,


Six Months Ended
June 30,

(in millions)

2019


2018


2019


2018

Retail income from operations

$

493



$

159



$

663



$

254


Plus (Less):












Operating, selling, general and administrative expenses


597




401




1,180




785


Depreciation and amortization


130




73




256




152


Income from equity method investments


(21)




(19)




(38)




(33)


Net gain on disposal of assets








(2)





Other income


(4)




(2)




(6)




(3)


Retail total margin

$

1,195



$

612



$

2,053



$

1,155














Retail total margin:












Fuel margin

$

694



$

239



$

1,123



$

456


Merchandise margin


471




366




878




685


Other margin


30




7




52




14


Retail total margin

$

1,195



$

612



$

2,053



$

1,155


 

Cision View original content:http://www.prnewswire.com/news-releases/marathon-petroleum-corp-reports-second-quarter-results-300894819.html

SOURCE Marathon Petroleum Corporation


Source: PR Newswire (August 1, 2019 - 6:30 AM EDT)

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