Marathon Petroleum Corp. Reports Fourth-Quarter Results
FINDLAY, Ohio, Feb. 7, 2019 /PRNewswire/ --
-- Reported fourth-quarter earnings of $951 million, or $1.35 per diluted
share; results included costs of $1.06 per diluted share primarily from
transaction-related items
-- Refining and Marketing segment income from operations of $923
million driven by high utilization and wide crude differentials
-- Midstream segment income from operations of $889 million supported
by volume growth
-- Retail segment income from operations of $613 million with strong
margins
-- Returned $4.2 billion of capital to shareholders in 2018, including $675
million in share repurchases in the fourth quarter
-- Announced 15% increase in quarterly dividend to $0.53 per share
Marathon Petroleum Corp. (NYSE: MPC) today reported fourth-quarter 2018 earnings of $951 million, or $1.35 per diluted share. Earnings included costs of $745 million, or $1.06 per diluted share, due to purchase accounting related inventory effects, expenses associated with the Andeavor combination, and MPLX debt extinguishment costs. This compares with $2.02 billion, or $4.09 per diluted share, in the fourth quarter of 2017. Fourth quarter 2017 results included a benefit of $1.5 billion, or $3.04 per diluted share, resulting from a change in the corporate tax rate.
"This extraordinary fourth quarter represents an early indication of the tremendous value creation opportunities resulting from this powerful combination," said Gary R. Heminger, chairman and chief executive officer. "By executing the strategy outlined during our recent Investor Day, we have realized $160 million of synergies in just three months and continue to expect total annual gross run-rate synergies of up to $600 million at year-end 2019 and $1.4 billion by the end of 2021."
Heminger continued, "These successes combined with a favorable refining margin environment and record performance in our retail segment propelled significant earnings growth during the quarter. Despite normal seasonal trends, we remain optimistic about the prospects for our business in 2019. The transformative combination we have undertaken this past year not only expands our platform and broadens our commercial opportunities, we believe it uniquely positions us to capture market opportunities, enhance the stability of our cash flow, and create long-term value for our shareholders."
In 2018, MPC returned $4.2 billion of capital to shareholders, including $3.3 billion of share repurchases. Additionally, on January 28, 2019, MPC announced a 15 percent increase in the quarterly dividend, to $0.53 per share. The company remains committed to returning at least 50 percent of discretionary free cash flow* to shareholders over the long term through a combination of dividends and share repurchases while maintaining its investment grade credit profile.
Full-year 2018 earnings were $2.78 billion, or $5.28 per diluted share, compared with $3.43 billion, or $6.70 per diluted share, for full-year 2017. 2018 earnings reflect one quarter of results from the combined business following the closing of the Andeavor acquisition on October 1, 2018. Full-year earnings also included costs of $789 million, or $1.50 per diluted share, primarily due to purchase accounting related inventory effects and expenses associated with the Andeavor combination. 2017 earnings included a net benefit of $1.5 billion, or $2.93 per diluted share, resulting from a change in the corporate tax rate.
Total income from operations was $2.02 billion in the fourth quarter of 2018 and $5.57 billion for full-year 2018, compared with $1.17 billion in the fourth quarter of 2017 and $4.02 billion for full-year 2017. MPC reported adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) of $4.1 billion for the fourth quarter 2018 as compared to $1.8 billion for fourth quarter 2017. See accompanying reconciliation table.
*Discretionary free cash flow = operating cash flow less maintenance and regulatory capital
Synergy Update and Other Items
MPC realized $160 million of synergies related to the Andeavor combination in the fourth quarter. Approximately 60 percent were commercial synergies primarily related to crude acquisition and supply. The remaining synergy capture was the result of implementing refining best practices and expertise across the new enterprise as well as procurement and corporate synergies.
Fourth quarter 2018 results included several factors that reduced reported earnings. MPC's Refining & Marketing (R&M) segment results included estimated costs of $759 million reflecting the difference between recording acquired inventory at fair value on the closing date of the acquisition under purchase accounting and the costs used to value inventory at year end. MPC also incurred $183 million of transaction-related costs for financial and legal advisors, employee severance, and other expenses in connection with the Andeavor acquisition. Lastly, MPLX incurred approximately $60 million of debt extinguishment costs.
Segment Results
Three Months Ended
Twelve Months Ended
December 31, December 31,
(In millions) 2018 2017 2018 2017
---
Income from Operations by Segment
Refining & Marketing(a) $
923 $
732 $
2,481 $
2,321
Retail 613 148 1,028 729
Midstream 889 343 2,752 1,339
Items not allocated to segments:
Corporate and other unallocated items (233) (114) (502) (365)
Transaction-related costs (183) (197)
Litigation 57 (29)
Impairments 8 2 9 23
Income from operations $
2,017 $
1,168 $
5,571 $
4,018
(a) R&M segment results for the
2018 periods included
estimated costs of $759
million due to purchase
accounting related
inventory effects.
Refining & Marketing
R&M segment income from operations was $923 million in the fourth quarter of 2018 and $2.48 billion for full-year 2018. Results for the fourth quarter and full-year 2018 included estimated costs of $759 million due to purchase accounting related inventory effects. Fourth quarter and full-year 2017 segment income from operations was $732 million and $2.32 billion, respectively.
The increase in quarter-over-quarter segment results was primarily due to higher throughputs as a result of the Andeavor combination as well as wider WCS- and WTI-based crude differentials. Total refinery utilization was 94 percent during the quarter, resulting in total throughputs of 3.1 million barrels per day, compared to 2.0 million barrels per day in fourth quarter 2017. These favorable effects more than offset the $231 million reduction in R&M segment results associated with the February 1, 2018 dropdown transaction. Prior period R&M segment results do not reflect the impact of the dropdown.
The U.S. Gulf Coast, Chicago, and West Coast blended industry 3-2-1 crack spread was $9.43 in the fourth quarter of 2018 compared to $10.83 in the fourth quarter of 2017. These crack spreads are net of RIN crack adjustments of $0.95 and $3.99 for the fourth quarter of 2018 and 2017, respectively.
Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX and Andeavor Logistics, was $889 million in the fourth quarter of 2018 and $2.75 billion for full-year 2018, compared with $343 million and $1.34 billion for the fourth quarter and full-year 2017, respectively.
The increase in quarterly results was primarily due to contributions of $230 million from Andeavor Logistics, and $231 million from the February 1, 2018, dropdown of refining logistics and fuels distribution services to MPLX. Prior-period Midstream results do not reflect the impact of these items. The remaining $85 million increase in Midstream segment results was driven primarily by MPLX's record pipeline throughput volumes as well as record gathered and processed volumes.
Retail
Retail segment income from operations was $613 million in the fourth quarter of 2018 and $1.03 billion for full-year 2018, compared with $148 million in the fourth quarter of 2017 and $729 million for full-year 2017.
Fourth quarter 2018 results represented a record quarter for MPC's former Speedway segment, even before considering the significant earnings contribution from the legacy Andeavor retail operations. The increase in quarter-over-quarter segment results was primarily due to higher fuel margins and merchandise sales across the combined platform. The retail fuel margin increased to 32.35 cents per gallon in the fourth quarter of 2018 from 17.72 cents per gallon in the fourth quarter of 2017.
MPC continues to make progress converting the acquired company owned-and-operated stores to the Speedway brand, converting 170 sites in Minnesota in the fourth quarter. The company also converted 34 locations to company owned-and-operated stores during the quarter, allowing the company to benefit from merchandise sales at these locations.
Items Not Allocated to Segments
Items not allocated to segments totaled $408 million of expenses in the fourth quarter of 2018 compared to $55 million in the fourth quarter of 2017. The increase for the quarter was primarily due to $183 million of transaction related costs associated with the Andeavor acquisition and the absence of a $57 million litigation gain recognized in fourth quarter 2017. The balance of the increase largely reflects the increased corporate costs and expenses following the acquisition.
Strong Financial Position and Liquidity
On Dec. 31, 2018, the company had $1.61 billion in cash and cash equivalents (excluding MPLX and ANDX's cash and cash equivalents of $68 million and $10 million, respectively), $5.0 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.
In connection with the redemption of its Senior Notes due 2023 during the quarter, MPLX incurred approximately $60 million of debt extinguishment costs.
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 by visiting MPC's website at http://www.marathonpetroleum.com and clicking on the "2018 Fourth-Quarter and Full-Year 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 http://ir.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 3.0 million barrels per day of crude oil capacity across sixteen 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 interests in two midstream companies, MPLX LP and Andeavor Logistics LP, which own and operate 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:
Kristina Kazarian (419) 421-2071
Media Contacts:
Chuck Rice (419) 421-2521
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). 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; the potential merger, consolidation or combination of MPLX with ANDX; 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; our ability to manage disruptions in credit markets or changes to our credit rating; 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 our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan 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 our 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 or ANDX; 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, 2017, and in MPC's Forms 10-Q, filed with Securities and Exchange Commission (SEC). 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. Copies of MPC's Form 10-K and Forms 10-Q are available on the SEC website, MPC's website at http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations office.
Consolidated Statements of Income
Three Months Ended
Twelve Months Ended
December 31, December 31,
(In millions, except per-share data) 2018 2017 2018 2017
--- ---
Revenues and other income:
Sales and other operating revenues(a) $
32,151 $
20,884 $
95,750 $
74,104
Sales to related parties 182 171 754 629
Income from equity method investments 111 82 373 306
Net gain (loss) on disposal of assets 17 (2) 23 10
Other income 80 101 202 320
Total revenues and other income 32,541 21,236 97,102 75,369
Costs and expenses:
Cost of revenues (excludes items below)(a) 28,112 18,855 85,456 66,519
Purchases from related parties 182 150 610 570
Depreciation and amortization 874 540 2,490 2,114
Selling, general and administrative expenses 1,147 408 2,418 1,694
Other taxes 209 115 557 454
Total costs and expenses 30,524 20,068 91,531 71,351
Income from operations 2,017 1,168 5,571 4,018
Net interest and other financial costs 385 209 1,003 674
Income before income taxes 1,632 959 4,568 3,344
(Benefit) provision for income taxes 437 (1,166) 962 (460)
Net income 1,195 2,125 3,606 3,804
Less net income attributable to:
Redeemable noncontrolling interest 20 16 75 65
Noncontrolling interests 224 93 751 307
Net income attributable to MPC $
951 $
2,016 $
2,780 $
3,432
Per-share data
Basic:
Net income attributable to MPC per share $
1.38 $
4.13 $
5.36 $
6.76
Weighted average shares: 687 488 518 507
Diluted:
Net income attributable to MPC per share $
1.35 $
4.09 $
5.28 $
6.70
Weighted average shares: 704 493 526 512
(a) The 2017 periods include
consumer excise taxes. In
2018, most of the consumer
excise taxes are reported on
a net basis following the
January 1, 2018 adoption of
ASC 606 -Revenue from
Contracts with Customers.
Income Summary
Three Months Ended
Twelve Months Ended
December 31, December 31,
(In millions) 2018(a) 2017 2018(a) 2017
--- ---
Income from Operations by segment
Refining & Marketing(b) $
923 $
732 $
2,481 $
2,321
Retail 613 148 1,028 729
Midstream 889 343 2,752 1,339
Items not allocated to segments:
Corporate and other unallocated items (233) (114) (502) (365)
Transaction-related costs(c) (183) (197)
Litigation 57 (29)
Impairments 8 2 9 23
Income from operations 2,017 1,168 5,571 4,018
Net interest and other financial costs(d) 385 209 1,003 674
Income before income taxes 1,632 959 4,568 3,344
(Benefit) provision for income taxes 437 (1,166) 962 (460)
Net income 1,195 2,125 3,606 3,804
Less net income attributable to:
Redeemable noncontrolling interest 20 16 75 65
Noncontrolling interests 224 93 751 307
Net income attributable to MPC $
951 $
2,016 $
2,780 $
3,432
(a) Includes the results of Andeavor from
the October 1, 2018 acquisition date
forward.
(b) R&M segment results for the 2018
periods included estimated costs of
$759 million due to purchase
accounting related inventory
effects.
(c) Includes costs related to the
Andeavor acquisition including
financial advisor and legal fees,
employee severance, and other
expenses.
(d) The 2018 periods include
approximately $60 million related to
the extinguishment of MPLX debt.
Capital Expenditures and Investments
Three Months Ended
Twelve Months Ended
December 31, December 31,
(In millions) 2018(a) 2017 2018(a) 2017
--- ---
Refining & Marketing $
444 $
262 $
1,057 $
832
Retail 235 160 460 381
Midstream 954 488 2,630 1,755
Corporate and Other(b) 60 46 157 138
Total $
1,693 $
956 $
4,304 $
3,106
(a) Includes the results of Andeavor from the October 1, 2018 acquisition date forward.
(b) Includes capitalized interest of $25 million, $16 million, $80 million and $55 million, respectively.
Refining & Marketing Operating Statistics (Unaudited)
Three Months Ended
Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
---
R&M refined product sales volume (mbpd)(a) 3,764 2,414 2,703 2,301
R&M margin (dollars per barrel)(b) $
15.07 $
13.12 $
14.03 $
12.60
Crude oil capacity utilization (percent)(c) 94 101 96 97
Refinery throughputs (mbpd):(d)
Crude oil refined 2,857 1,837 2,081 1,765
Other charge and blendstocks 254 187 193 179
Total 3,111 2,024 2,274 1,944
Sour crude oil throughput (percent) 50 53 52 59
Sweet crude oil throughput (percent) 50 47 48 41
Refined product yields (mbpd):(d)
Gasoline 1,593 997 1,107 932
Distillates 1,111 679 773 641
Propane 53 40 41 36
Feedstocks and special products 273 254 288 277
Heavy fuel oil 62 42 38 37
Asphalt 74 62 69 63
Total 3,166 2,074 2,316 1,986
Refinery direct operating costs ($/barrel):(e)
Planned turnaround and major maintenance $
1.49 $
1.80 $
1.59 $
1.72
Depreciation and amortization 1.32 1.38 1.31 1.43
Other manufacturing(f) 5.11 4.03 4.20 4.07
Total $
7.92 $
7.21 $
7.10 $
7.22
Memo: Total includes turnaround costs ($/barrel) of: (g) $
0.79 $
0.57 $
0.79 $
0.71
(a) Includes intersegment sales.
(b) Sales revenue less cost of
refinery inputs and purchased
products, divided by total
refinery throughputs.
(c) Based on calendar day capacity,
which is an annual average that
includes downtime for planned
maintenance and other normal
operating activities.
(d) Excludes inter-refinery volumes
of 85 mbpd and 88 mbpd for
fourth quarter 2018 and 2017,
respectively, and 61 mbpd and 78
mbpd for the full-year 2018 and
2017, respectively.
(e) Per barrel of total refinery
throughputs.
(f) Includes utilities, labor,
routine maintenance and other
operating costs.
(g) Reflects costs for turnaround
activity which we expense as
incurred.
Refining & Marketing Operating Statistics by Region (Unaudited)
Three Months Ended
Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
---
Gulf Coast
Refinery throughputs (mbpd):(a)
Crude oil refined 1,177 1,158 1,135 1,070
Other charge and blendstocks 197 237 190 224
Total 1,374 1,395 1,325 1,294
Sour crude oil throughput (percent) 60 62 62 71
Sweet crude oil throughput (percent) 40 38 38 29
Refined product yields (mbpd):(a)
Gasoline 622 608 574 546
Distillates 467 440 432 405
Propane 28 29 25 26
Feedstocks and special products 260 313 291 311
Heavy fuel oil 20 30 18 25
Asphalt 16 17 19 17
Total 1,413 1,437 1,359 1,330
Refinery direct operating costs ($/barrel):(b)
Planned turnaround and major maintenance $
0.61 $
1.45 $
1.12 $
1.75
Depreciation and amortization 1.03 1.05 1.03 1.12
Other manufacturing(c) 3.35 3.55 3.41 3.74
Total $
4.99 $
6.05 $
5.56 $
6.61
Mid-Continent
Refinery throughputs (mbpd):(a)
Crude oil refined 1,069 679 792 695
Other charge and blendstocks 72 38 47 33
Total 1,141 717 839 728
Sour crude oil throughput (percent) 26 36 33 40
Sweet crude oil throughput (percent) 74 64 67 60
Refined product yields (mbpd):(a)
Gasoline 617 389 444 386
Distillates 398 239 279 236
Propane 18 12 14 11
Feedstocks and special products 36 27 43 42
Heavy fuel oil 19 13 14 13
Asphalt 58 45 50 46
Total 1,146 725 844 734
Refinery direct operating costs ($/barrel):(b)
Planned turnaround and major maintenance $
1.67 $
2.25 $
1.97 $
1.48
Depreciation and amortization 1.60 1.86 1.67 1.81
Other manufacturing(c) 5.08 4.46 4.34 4.26
Total $
8.35 $
8.57 $
7.98 $
7.55
West Coast
Refinery throughputs (mbpd):(a)
Crude oil refined 611 154
Other charge and blendstocks 70 17
Total 681 171
Sour crude oil throughput (percent) 72 72
Sweet crude oil throughput (percent) 28 28
Refined product yields (mbpd):(a)
Gasoline 354 89
Distillates 246 62
Propane 7 2
Feedstocks and special products 56 14
Heavy fuel oil 29 7
Asphalt
Total 692 174
Refinery direct operating costs ($/barrel):(b)
Planned turnaround and major maintenance $
2.79
$ $
2.79
$
Depreciation and amortization 1.26 1.26
Other manufacturing(c) 8.07 8.07
Total $
12.12
$ $
12.12
$
(a) Includes inter-refinery transfer volumes.
(b) Per barrel of total refinery throughputs.
(c) Includes utilities, labor, routine maintenance and other operating costs.
Retail Operating Statistics (Unaudited)
Three Months Ended
Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
---
Speedway fuel sales (millions of gallons) 1,976 1,467 6,293 5,799
Direct dealer fuel sales (millions of gallons) 644 N/A 644 N/A
Retail fuel margin (dollars per gallon)(a) $
0.3235 $
0.1772 $
0.2230 $
0.1738
Merchandise sales (in millions) $
1,479 $
1,200 $
5,232 $
4,893
Merchandise margin (in millions) $
417 $
337 $
1,486 $
1,402
Merchandise margin percent 28.2 28.1 28.4 28.7
% % % %
Same store gasoline sales volume (period over period)(b) (0.7) (0.3) (1.5) (1.3)
% % % %
Same store merchandise sales (period over period)(b)(c) 6.5 0.5 4.2 1.2
% % % %
Total convenience stores at period-end 3,923 2,744
Direct dealer locations at period-end 1,081 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
Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
Pipeline throughputs (mbpd)(a) 5,612 3,610 4,177 3,377
Terminal throughput (mbpd) 3,188 1,497 1,901 1,477
Gathering system throughput (million cubic feet per day)(b) 5,893 4,181 4,779 3,608
Natural gas processed (million cubic feet per day)(b) 8,161 6,828 7,199 6,460
C2 (ethane) + NGLs fractionated (mbpd)(b) 501 423 464 394
(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) December 31, September 30
2018 2018
---
Cash
and
cash
equivalents $
1,687 $
4,992
MPLX debt 13,393 12,890
ANDX debt 4,973 N/A
Total
consolidated
debt 27,524 18,449
Redeemable
noncontrolling
interest 1,004 1,003
Equity 44,084 19,031
Shares
outstanding 680 451
Cash
provided
from
operations
(quarter
ended) $
2,727 $
1,182
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
Dividends paid per
share $
0.46 $
0.40 $
1.84 $
1.52
Reconciliation of Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization (Adjusted EBITDA) to Net Income Attributable to MPC
Three Months Ended
Twelve Months Ended
December 31, December 31,
(In millions) 2018 2017 2018 2017
--- ---
Adjusted EBITDA(a)
Refining & Marketing $
2,321 $
1,115 $
5,072 $
3,904
Retail 738 226 1,381 1,004
Midstream 1,197 514 3,637 2,038
Corporate and other unallocated items (205) (100) (424) (307)
Total Adjusted EBITDA(a) 4,051 1,755 9,666 6,639
Less:
Depreciation & amortization (874) (540) (2,490) (2,114)
Turnaround costs (226) (106) (658) (501)
Purchase accounting related inventory effects (759) (759)
Transaction-related costs (183) (197)
Litigation 57 (29)
Impairments 8 2 9 23
Income from operations 2,017 1,168 5,571 4,018
Net interest and other financial costs 385 209 1,003 674
Income before income taxes 1,632 959 4,568 3,344
(Benefit) provision for income taxes 437 (1,166) 962 (460)
Net income 1,195 2,125 3,606 3,804
Less net income attributable to:
Redeemable noncontrolling interest 20 16 75 65
Noncontrolling interests 224 93 751 307
Net income attributable to MPC $
951 $
2,016 $
2,780 $
3,432
(a) Adjusted EBITDA represents
earnings before net interest and
other financial costs, income
taxes, depreciation and
amortization expense as well as
adjustments to exclude R&M
turnaround costs and the
purchase accounting related
inventory effects reported in
fourth-quarter 2018 R&M segment
results. We believe this non-
GAAP financial measure is 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. 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 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. Adjusted
EBITDA may not be comparable to
similarly titled measures
reported by other companies.
Reconciliation of Refining & Marketing Income from Operations to Refining & Marketing Margin
Three Months Ended
Twelve Months Ended
December 31, December 31,
(In millions) 2018 2017 2018 2017
--- ---
Refining & Marketing income from operations $
923 $
732 $
2,481 $
2,321
Plus (Less):
Refinery direct operating costs(a) 1,889 1,084 4,801 4,113
Refinery depreciation and amortization 377 258 1,089 1,013
Other:
Operating expenses, net(a)(b) 1,088 350 3,189 1,425
Depreciation and amortization 36 19 85 69
Refining & Marketing margin(c) $
4,313 $
2,443 $
11,645 $
8,941
(a) Excludes depreciation and
amortization.
(b) Includes fees paid to MPLX for
various midstream services.
MPLX's results are reported in
MPC's Midstream segment.
(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 Retail Income from Operations to Retail Total Margin
Three Months Ended
Twelve Months Ended
December 31, December 31,
(in millions) 2018 2017 2018 2017
--- ---
Retail income from operations $
613 $
148 $
1,028 $
729
Plus (Less):
Operating, selling, general and administrative expenses 593 400 1,796 1,533
Depreciation and amortization 125 78 353 275
Income from equity method investments (23) (15) (74) (69)
Net gain on disposal of assets (16) (2) (17) (14)
Other income (2) (5) (7) (14)
Retail total margin $
1,290 $
604 $
3,079 $
2,440
Retail total margin:(a)
Fuel margin $
848 $
260 $
1,547 $
1,008
Merchandise margin 417 337 1,486 1,402
Other margin 25 7 46 30
Retail total margin $
1,290 $
604 $
3,079 $
2,440
(a) Fuel margin includes bankcard
processing fees (as applicable).
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
