Marathon Petroleum Corp. reports fourth-quarter and full-year 2017 results
FINDLAY, Ohio, Feb. 1, 2018 /PRNewswire/ -- Marathon Petroleum Corp. (NYSE: MPC) today reported 2017 fourth-quarter earnings of $2.02 billion, or $4.09 per diluted share, compared with $227 million, or $0.43 per diluted share, in the fourth quarter of 2016.
Earnings were $3.43 billion, or $6.70 per diluted share, for the full-year 2017, compared with $1.17 billion, or $2.21 per diluted share, for the full-year 2016.
During the fourth quarter, the Tax Cuts and Jobs Act significantly revised U.S. corporate income tax law by, among other things, reducing the corporate income tax rate to 21 percent. Earnings for the fourth quarter and full year include a tax benefit of approximately $1.5 billion (or $3.04 and $2.93 per diluted share for the fourth quarter and full year, respectively) as a result of remeasuring certain net deferred tax liabilities using the lower corporate tax rate.
"We delivered a strong operational and financial performance across the business," said Gary R. Heminger, chairman and chief executive officer. "We provided outstanding value for our investors in 2017. The Midstream and Speedway segments each achieved a record full-year performance, which, combined with a substantial increase in earnings from the Refining and Marketing segment, fully demonstrates the robust earnings power of MPC's integrated model."
MPC's Midstream segment, which primarily reflects the results of MPLX LP (NYSE: MPLX), reported record financial results in the fourth quarter and full-year 2017, contributing $1.34 billion in segment income from operations for the year. This record-setting performance was largely driven by gathered, processed and fractionated volume growth, resulting in high plant utilization.
Speedway continued its exceptional performance, finishing the year with segment income of $732 million, a record when excluding the favorable lower of cost or market inventory adjustment (LCM) reversal recorded in 2016, building upon several years of solid segment earnings growth. In 2017, Speedway delivered strong earnings from light product sales, an increase of 1.2 percent in same-store merchandise sales, lower operating expenses and contributions from its travel center joint venture. Speedway's sixth straight year of record segment earnings before interest, taxes, depreciation and amortization (EBITDA) and second consecutive year of approximately $1 billion of annual EBITDA reinforces the strategic value of this high-performing, stable cash-flow business.
The Refining and Marketing segment reported full-year segment income from operations of $2.32 billion, a $964 million increase over 2016. Results were largely driven by higher LLS-based blended crack spreads and high utilization rates. Numerous monthly process unit and production records were achieved in both the fourth quarter and throughout the year, including monthly records for crude throughput and gasoline and distillate production. As a result, MPC is now the second-largest refiner in the U.S. on a crude-throughput basis and Galveston Bay and Garyville are the second- and third-largest refineries, respectively.
"February marks the 5-year anniversary of our acquisition of the Galveston Bay refinery. The accomplishments during this time are impressive," Heminger said. "Since 2013, we have dramatically improved the environmental and safety performance of the refinery and advanced operational excellence, all while achieving lower operating expenses. Some of the accomplishments include an 80 percent reduction in environmental incidents and 33 monthly process-unit rate records in 2017 alone, while cutting unplanned downtime in half and lowering operating expenses nearly 25 percent."
MPC and its sponsored master limited partnership, MPLX, announced that they are today closing the dropdown of refining logistics assets and fuels distribution services as well as the exchange of MPC's general partner (GP) economic interests for newly issued MPLX common (LP) units, completing the previously announced strategic actions.
During 2017, MPC returned over $3 billion of capital to MPC shareholders through dividends and share repurchases, which were supported in part by proceeds from dropdown transactions during the year. The company plans further return of capital with the after-tax cash proceeds from today's dropdown transaction, in a manner consistent with maintaining its current investment grade credit profile.
On Jan. 29, the MPC board of directors announced a 15 percent increase in the quarterly dividend, to $0.46 per share. This represents a 26.5 percent compound annual growth rate in the dividend since becoming an independent company six years ago, demonstrating continued confidence in the cash-flow generation of the business.
"Building on 2017's strong operational and financial results, we are pleased to complete our strategic actions, adding to our long and successful track record of taking steps to create long-term value for our shareholders," Heminger said. "We have tremendous momentum going into 2018 and are encouraged by the high-returning investment opportunities across the business."
MPC also announced its 2018 capital investment plan, which remains focused on strengthening the sustained earnings power of its businesses through growth and margin-enhancing investments across the enterprise. MPC's investment plan, excluding MPLX, totals approximately $1.6 billion.
The capital plan for the Refining and Marketing segment is $950 million. Of that amount, approximately $400 million is growth capital focused on optimizing the Galveston Bay refinery, upgrading residual fuel oils to higher-value products, maximizing distillate production and expanding light product placement flexibility, including exports. Sustaining capital is approximately $550 million, which includes approximately $210 million related to regulatory spending for Tier 3 gasoline.
Speedway's capital plan is $530 million, a $150 million increase from last year. This significant increase in Speedway's capital allocation is primarily targeted for construction of new store locations as well as remodeling and rebuilding existing locations, consistent with MPC's commitment to aggressively grow the business and build upon its industry-leading position.
The capital plan also includes approximately $100 million to support corporate activities and the remaining assets in MPC's Midstream segment, excluding MPLX.
MPLX announced its 2018 capital investment plan, which includes approximately $2.2 billion of organic growth capital and $190 million of maintenance capital. This robust organic growth plan includes the addition of 8 processing plants representing nearly 1.5 billion cubic feet per day of incremental processing capacity as well as 100,000 barrels per day of additional fractionation capacity in the prolific Marcellus, Utica and Permian basins. The remaining growth capital is planned for the development of various crude oil and refined products infrastructure projects, including the export-capacity expansion project at the Galveston Bay refinery.
"Looking forward, we believe the global and U.S. macro picture remains solid and expect that good underlying economic growth will continue to support strong demand for our products. Export markets, which have been important to the high utilization of our refineries, are also expected to remain robust. Recent tax legislation complements our outlook and stimulates further investment in the business," Heminger said. "As the nation's second-largest refiner, the sponsor of one of the largest diversified master limited partnerships in MPLX, and an industry leader in retail through our Speedway business, we are uniquely positioned to deliver compelling and sustainable returns for our investors."
Segment Results
Total income from operations was $1.12 billion in the fourth quarter of 2017 and $3.97 billion for full-year 2017, compared with $553 million in the fourth quarter of 2016 and $2.38 billion for full-year 2016.
Three Months Ended Twelve Months Ended
December 31, December 31,
(In millions) 2017 2016 2017 2016
------------ ---- ---- ---- ----
Income from Operations by Segment
Refining & Marketing(a)(b) $732 $166 $2,321 $1,357
Speedway(b) 149 165 732 734
Midstream(a) 343 296 1,339 1,048
Items not allocated to segments:
Corporate and other unallocated items(a) (114) (74) (365) (268)
Pension settlement expenses (50) - (52) (7)
Litigation 57 - (29) -
Impairments 2 - 23 (486)
--- --- --- ----
Income from operations $1,119 $553 $3,969 $2,378
------ ---- ------ ------
(a) In the first quarter of 2017,
segment reporting was revised
in connection with the
contribution of certain
terminal, pipeline and storage
assets to MPLX. The results
related to these assets are now
presented in the Midstream
segment. Previously, these
results were reported in the
Refining & Marketing segment.
The results for the pipeline
and storage assets were recast
effective Jan. 1, 2015, and the
results for the terminal assets
were recast effective April 1,
2016. Prior to these dates
these assets were not
considered businesses and
therefore there are no
financial results from which to
recast segment results.
(b) Due to increased refined product
prices during the second
quarter of 2016, the company
reversed its lower of cost or
market inventory valuation
reserve resulting in a $370
million non-cash benefit to
income from operations for the
full-year 2016, which
increased Refining & Marketing
and Speedway segment results by
$345 million and $25 million,
respectively.
Refining & Marketing
Refining & Marketing (R&M) segment income from operations was $732 million in the fourth quarter of 2017 and $2.32 billion for full-year 2017, compared with $166 million and $1.36 billion in the fourth quarter of 2016 and full-year 2016, respectively.
The increase in quarter-over-quarter segment results was primarily a result of a $1.81 per barrel increase in the R&M margin. This favorable effect was primarily due to higher blended crack spreads and utilization rates as well as the widening of the West Texas Intermediate (WTI) / Light Louisiana Sweet (LLS) crude oil differential. The U.S. Gulf Coast and Chicago LLS blended 6-3-2-1 crack spread increased to $9.75 per barrel in the fourth quarter of 2017 from $7.39 per barrel in the fourth quarter of 2016. These favorable effects were partially offset by less favorable product price realizations relative to the spot market prices used in the LLS blended crack spread. Refinery throughputs exceeded 2 million barrels per day in the fourth quarter and crude oil capacity utilization was 101 percent in the fourth quarter of 2017 as compared to 93 percent in the fourth quarter of 2016.
Excluding the $345 million LCM benefit recognized in 2016, the increase in segment results for full-year 2017 compared with full-year 2016 primarily resulted from higher LLS crack spreads in both the U.S. Gulf Coast and Chicago markets. The LLS blended crack spread for the full-year 2017 increased to $9.84 per barrel from $6.96 per barrel in 2016. These favorable effects were partially offset by less favorable product price realizations as compared to the spot market prices used in the LLS blended crack spread.
Speedway
Speedway segment income from operations was $149 million in the fourth quarter of 2017 and $732 million for full-year 2017, compared with $165 million in the fourth quarter of 2016 and $734 million for full-year 2016, which includes a $25 million LCM benefit.
The decrease in quarter-over-quarter segment results was primarily due to higher operating expenses and lower merchandise margin partially offset by an increase in the light product margin. Speedway's light product margin increased to 17.72 cents per gallon in the fourth quarter of 2017 from 16.17 cents per gallon in the fourth quarter of 2016.
Excluding the $25 million LCM benefit recognized in 2016, the increase in segment results for the full-year 2017 compared to full-year 2016 was primarily due to contributions from its travel center joint venture formed in the fourth quarter 2016 and lower operating expense partially offset by lower merchandise margin and lower gains from asset sales.
Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX's operations on a 100 percent basis, was $343 million in the fourth quarter of 2017 and $1.34 billion for full-year 2017, compared with $296 million and $1.05 billion for the fourth quarter and full-year 2016, respectively. The increases in segment results for the fourth quarter and full year of 2017 compared with respective periods in 2016 were primarily due to higher natural gas and NGL gathering, processing and fractionating volumes and changes in natural gas and NGL prices. Segment results also benefited from the first-quarter 2017 acquisitions of the Ozark Pipeline and our ownership interest in the Bakken Pipeline system.
Items Not Allocated to Segments
Corporate and other unallocated expenses of $114 million in the fourth quarter of 2017 and $365 million for the full-year 2017 compared with $74 million and $268 million for the full-year 2016. The increases for the quarter and full year were due to higher unallocated corporate costs and increases in employee-related expenses and corporate costs.
Strong Financial Position and Liquidity
On Dec. 31, 2017, the company had $3 billion in cash and cash equivalents, excluding MPLX's cash and cash equivalents of $5 million, $2.5 billion available under a revolving credit agreement, $1 billion available under a 364-day bank revolving credit facility and approximately $750 million available under its $750 million trade receivables securitization facility. The company's liquidity should provide it with sufficient flexibility to meet its day-to-day operational needs and continue its balanced approach to investing in the business and returning capital to shareholders. The company remains committed to maintaining an investment-grade credit profile.
Conference Call
At 9 a.m. EST 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 to the conference call by dialing 1-888-989-4720 (confirmation #4852094) or by visiting MPC's website at http://www.marathonpetroleum.com and clicking on the "2017 Fourth-Quarter and Full-Year Financial Results" link. Replays of the conference call will be available on the company's website through Thursday, Feb. 15. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at http://ir.marathonpetroleum.com in the Quarterly Investor Packet and Earnings Capsule.
About Marathon Petroleum Corporation
MPC is the nation's second-largest refiner, with a crude oil refining capacity of approximately 1.9 million barrels per calendar day in its six-refinery system. Marathon brand gasoline is sold through approximately 5,600 independently owned retail outlets across 20 states and the District of Columbia. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,740 convenience stores in 21 states. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership. Primarily through MPLX, MPC owns, leases or has ownership interests in approximately 10,800 miles of crude oil and light product pipelines. Also through MPLX, MPC has ownership interests in gathering and processing facilities with approximately 5.9 billion cubic feet per day of gathering capacity, 8.2 billion cubic feet per day of natural gas processing capacity and 610,000 barrels per day of fractionation capacity. MPC's fully integrated system provides operational flexibility to move crude oil, NGLs, feedstocks and petroleum-related products efficiently through the company's distribution network and midstream service businesses in the Midwest, Northeast, East Coast, Southeast and Gulf Coast regions.
References to Earnings
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") and MPLX LP ("MPLX"). These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations of MPC and MPLX, including strategic initiatives and our value creation plans. You can identify forward-looking statements by words such as "anticipate," "believe," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "objective," "opportunity," "outlook," "plan," "position," "pursue," "prospective," "predict," "project," "potential," "seek," "strategy," "target," "could," "may," "should," "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 companies' 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 ability to consummate the strategic initiatives discussed herein; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein; our ability to manage disruptions in credit markets or changes to our credit rating; adverse changes in laws including with respect to tax and regulatory matters; changes to the expected construction costs and timing of projects; continued/further volatility in and/or degradation of market and industry conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply; the effects of the lifting of the U.S. crude oil export ban; completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics; the reliability of processing units and other equipment; MPC's ability to successfully implement growth opportunities; the impact of adverse market conditions affecting MPC's and MPLX's midstream businesses; modifications to MPLX earnings and distribution growth objectives, and other risks described below with respect to MPLX; 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; adverse results in litigation; changes to MPC's capital budget; other risk factors inherent to MPC's industry; 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, 2016, filed with Securities and Exchange Commission (SEC). Factors that could cause MPLX's actual results to differ materially from those implied in the forward-looking statements include: negative capital market conditions, including an increase of the current yield on common units, adversely affecting MPLX's ability to meet its distribution growth guidance; the ability to consummate the strategic initiatives discussed herein; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein and other proposed transactions; adverse changes in laws including with respect to tax and regulatory matters; the adequacy of MPLX's capital resources and liquidity, including, but not limited to, availability of sufficient cash flow to pay distributions and access to debt to fund anticipated dropdowns on commercially reasonable terms, and the ability to successfully execute its business plans and growth strategy; the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products; continued/further volatility in and/or degradation of market and industry conditions; changes to the expected construction costs and timing of projects; completion of midstream infrastructure by competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or termination of MPC's obligations under MPLX's commercial agreements; modifications to earnings and distribution growth objectives; our ability to manage disruptions in credit markets or changes to our credit rating; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder; adverse results in litigation; changes to MPLX's capital budget; other risk factors inherent to MPLX's industry; and the factors set forth under the heading "Risk Factors" in MPLX's Annual Report on Form 10-K for the year ended Dec. 31, 2016, filed with the SEC. In addition, the forward-looking statements included herein could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed here, in MPC's Form 10-K or in MPLX's Form 10-K could also have material adverse effects on forward-looking statements. Copies of MPC's Form 10-K are available on the SEC website, MPC's website at http://ir.marathonpetroleum.com 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.
Consolidated Statements of Income (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(In millions, except per-share data) 2017 2016 2017 2016
----------------------------------- ---- ---- ---- ----
Revenues and other income:
Sales and other operating revenues (including consumer $20,884 $17,098 $74,104 $63,277
excise taxes)
Sales to related parties 171 57 629 62
Income (loss) from equity method investments 82 51 306 (185)
Net gain (loss) on disposal of assets (2) 6 10 32
Other income 101 72 320 178
--- --- --- ---
Total revenues and other income 21,236 17,284 75,369 63,364
Costs and expenses:
Cost of revenues (excludes items below) 16,847 13,695 58,760 49,170
Purchases from related parties 150 150 570 509
Inventory market valuation charges - - - (370)
Consumer excise taxes 2,008 1,873 7,759 7,506
Impairment expense - - - 130
Depreciation and amortization 540 504 2,114 2,001
Selling, general and administrative expenses 457 406 1,743 1,605
Other taxes 115 103 454 435
--- --- --- ---
Total costs and expenses 20,117 16,731 71,400 60,986
------ ------ ------ ------
Income from operations 1,119 553 3,969 2,378
Net interest and other financial income (costs) (160) (136) (625) (556)
---- ----
Income before income taxes 959 417 3,344 1,822
(Benefit) provision for income taxes (1,166) 128 (460) 609
------ --- ---- ---
Net income 2,125 289 3,804 1,213
Less net income (loss) attributable to:
Redeemable noncontrolling interest 16 16 65 41
Noncontrolling interests 93 46 307 (2)
--- --- --- ---
Net income attributable to MPC $2,016 $227 $3,432 $1,174
------ ---- ------ ------
Per-share data
Basic:
Net income attributable to MPC per share $4.13 $0.43 $6.76 $2.22
Weighted average shares: 488 526 507 528
Diluted:
Net income attributable to MPC per share $4.09 $0.43 $6.70 $2.21
Weighted average shares: 493 529 512 530
Dividends paid $0.40 $0.36 $1.52 $1.36
Supplemental Statistics (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(In millions) 2017 2016 2017 2016
------------ ---- ---- ---- ----
Income from Operations by segment
Refining & Marketing(a)(b) $732 $166 $2,321 $1,357
Speedway(a) 149 165 732 734
Midstream(b) 343 296 1,339 1,048
Items not allocated to segments:
Corporate and other unallocated items(b) (114) (74) (365) (268)
Pension settlement expenses (50) - (52) (7)
Litigation 57 - (29) -
Impairments(c) 2 - 23 (486)
--- --- --- ----
Income from operations(a) 1,119 553 3,969 2,378
Net interest and other financial income (costs) (160) (136) (625) (556)
---- ---- ---- ----
Income before income taxes 959 417 3,344 1,822
(Benefit) provision for income taxes (1,166) 128 (460) 609
------ --- ---- ---
Net income 2,125 289 3,804 1,213
Less net income (loss) attributable to:
Redeemable noncontrolling interest 16 16 65 41
Noncontrolling interests 93 46 307 (2)
--- --- --- ---
Net income attributable to MPC $2,016 $227 $3,432 $1,174
------ ---- ------ ------
Capital Expenditures and Investments
Refining & Marketing(b) $262 $298 $832 $1,054
Speedway 160 112 381 303
Midstream(b)(d) 488 389 2,505 1,568
Corporate and Other(e) 46 38 138 144
--- --- --- ---
Total $956 $837 $3,856 $3,069
---- ---- ------ ------
(a) The company reversed a $370
million lower of cost or market
inventory valuation reserve due
to increased refined product
prices during the second
quarter of 2016 resulting in a
$370 million non-cash benefit
to income from operations for
the full-year 2016, which
increased Refining & Marketing
and Speedway segment results by
$345 million and $25 million,
respectively.
(b) In the first quarter of 2017,
segment reporting was revised
in connection with the
contribution of certain
terminal, pipeline and storage
assets to MPLX. The results
related to these assets are now
presented in the Midstream
segment. Previously, these
results were reported in the
Refining & Marketing segment.
The results for the pipeline
and storage assets were recast
effective Jan. 1, 2015, and the
results for the terminal assets
were recast effective April 1,
2016. Prior to these dates
these assets were not
considered businesses and
therefore there are no
financial results from which to
recast segment results.
(c) The fourth-quarter and full-
year 2017 impairments include
MPC's share of gains related to
the sale of assets from the
Sandpiper Pipeline project.
Full-year 2016 includes
impairments of our equity
method investments and
goodwill.
(d) Full-year 2017 includes $220
million for the acquisition of
the Ozark Pipeline and an
investment of $500 million in
MarEn Bakken related to the
Bakken Pipeline system.
(e) Includes capitalized interest of
$16 million, $16 million, $55
million and $63 million,
respectively.
Supplementary Statistics (Unaudited) (continued)
Three Months Ended Twelve Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
MPC Consolidated Refined Product Sales Volumes 2,427 2,252 2,311 2,269
(thousands of barrels per day (mbpd)(a)
Refining & Marketing (R&M) Operating Statistics
R&M refined product sales volume (mbpd)(b) 2,414 2,240 2,301 2,259
R&M margin (dollars per barrel)(c) $13.12 $11.31 $12.60 $11.16
Crude oil capacity utilization (percent)(d) 101 93 97 95
Refinery throughputs (mbpd):(e)
Crude oil refined 1,837 1,672 1,765 1,699
Other charge and blendstocks 187 138 179 151
--- --- --- ---
Total 2,024 1,810 1,944 1,850
----- ----- ----- -----
Sour crude oil throughput (percent) 53 61 59 60
WTI-priced crude oil throughput (percent) 26 18 21 19
Refined product yields (mbpd):(e)
Gasoline 997 877 932 900
Distillates 679 621 641 617
Propane 40 34 36 35
Feedstocks and special products 254 227 277 241
Heavy fuel oil 42 19 37 32
Asphalt 62 58 63 58
--- --- --- ---
Total 2,074 1,836 1,986 1,883
----- ----- ----- -----
Refinery direct operating costs ($/barrel):(f)
Planned turnaround and major maintenance $1.80 $2.16 $1.72 $1.83
Depreciation and amortization 1.38 1.48 1.43 1.47
Other manufacturing(g) 4.03 4.29 4.07 4.09
---- ---- ---- ----
Total $7.21 $7.93 $7.22 $7.39
----- ----- ----- -----
R&M Operating Statistics by Region - Gulf Coast
Refinery throughputs (mbpd):(h)
Crude oil refined 1,158 986 1,070 1,039
Other charge and blendstocks 237 184 224 195
--- --- --- ---
Total 1,395 1,170 1,294 1,234
----- ----- ----- -----
Sour crude oil throughput (percent) 62 73 71 73
WTI-priced crude oil throughput (percent) 14 10 11 8
Refined product yields (mbpd):(h)
Gasoline 608 466 546 514
Distillates 440 377 405 399
Propane 29 24 26 26
Feedstocks and special products 313 294 311 286
Heavy fuel oil 30 10 25 21
Asphalt 17 16 17 15
--- --- --- ---
Total 1,437 1,187 1,330 1,261
----- ----- ----- -----
Refinery direct operating costs ($/barrel):(f)
Planned turnaround and major maintenance $1.45 $2.82 $1.75 $2.09
Depreciation and amortization 1.05 1.16 1.12 1.14
Other manufacturing(g) 3.55 3.94 3.74 3.70
Total $6.05 $7.92 $6.61 $6.93
----- ----- ----- -----
Supplementary Statistics (Unaudited) (continued) Three Months Ended Twelve Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
R&M Operating Statistics by Region - Midwest
Refinery throughputs (mbpd):(h)
Crude oil refined 679 686 695 660
Other charge and blendstocks 38 44 33 39
--- --- --- ---
Total 717 730 728 699
--- --- --- ---
Sour crude oil throughput (percent) 36 43 40 40
WTI-priced crude oil throughput (percent) 46 29 37 38
Refined product yields (mbpd):(h)
Gasoline 389 411 386 386
Distillates 239 244 236 218
Propane 12 12 11 11
Feedstocks and special products 27 20 42 35
Heavy fuel oil 13 10 13 12
Asphalt 45 42 46 43
--- --- --- ---
Total 725 739 734 705
--- --- --- ---
Refinery direct operating costs ($/barrel):(f)
Planned turnaround and major maintenance $2.25 $0.84 $1.48 $1.15
Depreciation and amortization 1.86 1.81 1.81 1.88
Other manufacturing(g) 4.46 4.31 4.26 4.29
---- ---- ---- ----
Total $8.57 $6.96 $7.55 $7.32
----- ----- ----- -----
Speedway Operating Statistics(i)
Convenience stores at period-end 2,744 2,733
Gasoline and distillate sales (millions of gallons) 1,467 1,489 5,799 6,094
Gasoline and distillate margin (dollars per gallon)(j) $0.1772 $0.1617 $0.1738 $0.1656
Merchandise sales (in millions) $1,200 $1,230 $4,893 $5,007
Merchandise margin (in millions) $337 $350 $1,402 $1,435
Merchandise margin percent 28.1% 28.4% 28.7% 28.7%
Same store gasoline sales volume (period over period) (0.3)% (2.4)% (1.3)% (0.4)%
Same store merchandise sales (period over period)(k) 0.5% 3.7% 1.2% 3.2%
Midstream Operating Statistics
Crude oil and refined product pipeline throughputs (mbpd)(l) 3,610 2,930 3,377 2,948
Terminal throughput (mbpd)(m) 1,497 1,496 1,477 1,505
Gathering system throughput (million cubic feet per day)(n) 4,181 3,164 3,608 3,275
Natural gas processed (million cubic feet per day)(n) 6,828 5,970 6,460 5,761
C2 (ethane) + NGLs fractionated (mbpd)(n) 423 346 394 335
(a) Total average daily volumes of
refined product sales to wholesale,
branded and retail customers.
(b) Includes intersegment sales.
(c) Excludes LCM inventory valuation
adjustments. Sales revenue less cost
of refinery inputs and purchased
products, divided by total refinery
throughputs. Comparable prior period
information for R&M margin has been
recast in connection with the
contribution of certain pipeline
assets to MPLX on March 1, 2017.
(d) Based on calendar day capacity, which
is an annual average that includes
downtime for planned maintenance and
other normal operating activities.
(e) Excludes inter-refinery volumes of
88 mbpd and 90 mbpd for fourth
quarter 2017 and 2016, respectively,
and 78 mbpd and 83 mbpd for the
full-year 2017 and 2016,
respectively.
(f) Per barrel of total refinery
throughputs.
(g) Includes utilities, labor, routine
maintenance and other operating
costs.
(h) Includes inter-refinery transfer
volumes.
(i) Fourth quarter and year-to-date
2017 operating statistics do not
reflect any information for the 41
travel centers contributed to PFJ
Southeast, whereas they are
reflected in the fourth quarter and
year-to-date 2016 operating
statistics.
(j) Excludes LCM inventory valuation
adjustments. The price paid by
consumers less the cost of refined
products, including transportation,
consumer excise taxes and bankcard
processing fees, divided by gasoline
and distillate sales volumes.
(k) Excludes cigarettes.
(l) Includes common-carrier pipelines
and private pipelines contributed to
MPLX, excluding equity method
investments.
(m) Includes the results of the terminal
assets beginning on April 1, 2016,
the date the assets became a
business.
(n) Includes amounts related to
unconsolidated equity method
investments on a 100% basis.
Segment Earnings Before Interest, Taxes, Depreciation & Amortization (Segment EBITDA) (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(In millions) 2017 2016 2017 2016
------------ ---- ---- ---- ----
Segment EBITDA(a)
Refining & Marketing(b)(c) $1,009 $428 $3,403 $2,420
Speedway(b) 227 235 1,007 1,007
Midstream(c) 514 453 2,038 1,653
--- --- ----- -----
Total Segment EBITDA(a)(b) 1,750 1,116 6,448 5,080
Total segment depreciation & amortization (526) (489) (2,056) (1,941)
Items not allocated to segments(c)(d) (105) (74) (423) (761)
---- --- ---- ----
Income from operations 1,119 553 3,969 2,378
Net interest and other financial income (costs) (160) (136) (625) (556)
---- ---- ---- ----
Income before income taxes 959 417 3,344 1,822
(Benefit) provision for income taxes (1,166) 128 (460) 609
------ --- ---- ---
Net income 2,125 289 3,804 1,213
Less net income (loss) attributable to:
Redeemable noncontrolling interest 16 16 65 41
Noncontrolling interests 93 46 307 (2)
--- --- --- ---
Net income attributable to MPC $2,016 $227 $3,432 $1,174
------ ---- ------ ------
(a) Segment EBITDA represents segment
earnings before interest and
financing costs, interest
income, income taxes,
depreciation and amortization
expense. Segment EBITDA is a
non-GAAP financial measure used
by some investors and analysts
to analyze and compare companies
on the basis of operating
performance. Segment EBITDA
should not be considered as a
substitute for, or superior to
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. Segment
EBITDA may not be comparable to
similarly titled measures
reported by other companies.
(b) The company reversed a $370
million lower of cost or market
inventory valuation reserve due
to increased refined product
prices during the second quarter
of 2016 resulting in a $370
million non-cash benefit to
income from operations for the
full-year 2016, which increased
Refining & Marketing and
Speedway segment results by $345
million and $25 million,
respectively.
(c) In the first quarter of 2017,
segment reporting was revised in
connection with the contribution
of certain terminal, pipeline
and storage assets to MPLX. The
results related to these assets
are now presented in the
Midstream segment. Previously,
these results were reported in
the Refining & Marketing
segment. The results for the
pipeline and storage assets were
recast effective Jan. 1, 2015,
and the results for the terminal
assets were recast effective
April 1, 2016. Prior to these
dates these assets were not
considered businesses and
therefore there are no financial
results from which to recast
segment results.
(d) The three months ended Dec. 31,
2017, includes MPC's share of
gains related to the sale of
assets remaining from the
Sandpiper pipeline project of $2
million, pension settlement
expense of $50 million and a
favorable litigation settlement
of $57 million. Full-year 2017
includes charges for losses of
$29 million related to
litigation, pension settlement
expenses of $52 million and
MPC's share of gains related to
the sale of assets remaining
from the Sandpiper pipeline
project of $23 million. Full-
year 2016 includes pension
settlement expenses of $7
million and impairment charges
of $486 million.
Select Financial Data (Unaudited)
(In millions) December 31, September 30,
2017 2017
---
Cash and cash equivalents $3,011 $2,088
MPLX debt 6,946 6,849
Total consolidated debt 12,946 12,782
Redeemable noncontrolling interest 1,000 1,000
Equity 20,828 19,802
Shares outstanding 486 498
Cash provided from operations (quarter ended) $2,746 $1,901
Reconciliation of Refining & Marketing Margin to Refining & Marketing Income from Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
(In millions) 2017 2016 2017 2016
------------ ---- ---- ---- ----
Refining & Marketing income from operations $732 $166 $2,321 $1,357
Plus (Less):
Refinery direct operating costs(a) 1,084 1,072 4,113 4,007
Refinery depreciation and amortization 258 247 1,013 994
Other:
Operating expenses(a)(b) 499 494 1,924 1,835
Segment (income) expense, net(a) (149) (111) (499) (360)
Depreciation and amortization 19 15 69 69
Inventory market valuation adjustment - - - (345)
Refining & Marketing margin(c) $2,443 $1,883 $8,941 $7,557
------ ------ ------ ------
(a) Excludes depreciation and
amortization.
(b) Includes fees paid to MPLX for
various midstream services, which
includes marine and pipeline
transportation and terminal and
storage services, but excludes
costs related to delivery of
crude and feedstocks to our
refineries.
(c) Refining & Marketing margin is
defined as sales revenue less
cost of refinery inputs and
purchased products, excluding any
LCM inventory market adjustment.
We believe this non-GAAP
financial measure is useful to
investors and analysts to assess
our ongoing financial performance
because, when reconciled to its
most comparable GAAP measure, it
provides 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. This measure 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.
Reconciliation of Speedway Total Margin to Speedway Income from Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
(in millions) 2017 2016 2017 2016
------------ ---- ---- ---- ----
Speedway income from operations $149 $165 $732 $734
Plus (Less):
Operating, selling, general and administrative expenses(a) 399 383 1,530 1,554
Depreciation and amortization(a) 78 70 275 273
Income from equity method investments (15) (5) (69) (5)
Net gain on disposal of assets (2) (5) (14) (30)
Other income(a) (5) (10) (14) (18)
Inventory market valuation adjustment - - - (25)
Speedway total margin $604 $598 $2,440 $2,483
---- ---- ------ ------
Speedway total margin:(a)(b)
Gasoline and distillate margin $260 $241 $1,008 $1,009
Merchandise margin 337 350 1,402 1,435
Other margin 7 7 30 39
Speedway total margin $604 $598 $2,440 $2,483
---- ---- ------ ------
(a) Fourth-quarter and year-to-date
2017 margin and expenses do not
reflect any results from the 41
travel centers contributed to PFJ
Southeast, whereas they are
reflected in the fourth-quarter
and year-to-date 2016
information. Our share of the net
results from the joint venture is
reflected in income from equity
method investments.
(b) Speedway gasoline and distillate
margin is defined as the price
paid by consumers less the cost of
refined products, including
transportation, consumer excise
taxes and bankcard processing fees
and excluding any LCM inventory
market adjustment. Speedway
merchandise margin is defined as
the price paid by consumers less
the cost of merchandise. We
believe these non-GAAP financial
measures are useful to investors
and analysts to assess our ongoing
financial performance because,
when reconciled to the most
comparable GAAP 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.
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SOURCE Marathon Petroleum Corporation
