Marathon Petroleum Corp. Reports Second-Quarter 2020 Results
FINDLAY, Ohio, Aug. 3, 2020 /PRNewswire/ --
-- Reported second-quarter income of $9 million, or $0.01 per diluted
share, including net pre-tax benefit of $1.4 billion; adjusted loss of
$868 million, or $(1.33) per diluted share
-- Announced agreement to sell Speedway in $21 billion all-cash
transaction; estimated after-tax proceeds of $16.5 billion expected to
be used to both strengthen the balance sheet and return capital to
shareholders
-- Indefinitely idling Gallup and Martinez refineries; evaluating strategic
repositioning of Martinez to renewable diesel facility
-- On track to deliver $1.4 billion of capital spending and at least $950
million of operating expense reductions
-- Significant liquidity with $7.7 billion of available borrowing capacity
at MPC
Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $9 million, or $0.01 per diluted share, for the second quarter of 2020, compared to $1.1 billion, or $1.66 per diluted share, for the second quarter of 2019.
Second-quarter 2020 results include a pre-tax lower of cost or market (LCM) inventory benefit of $1.5 billion. Details on this and other adjustments are shown in the accompanying release tables. Adjusted net loss was $868 million, or $(1.33) per diluted share, for the second quarter of 2020, compared to adjusted net income of $1.1 billion, or $1.73 per diluted share, for the second quarter of 2019.
"Our second quarter results reflect a full three months of the challenges COVID has created for our business," said President and Chief Executive Officer Michael J. Hennigan. "We began April with demand at historic lows. Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed, particularly across the West Coast and Midwest.
"In response, we are executing on the actions we announced in May and are advancing the three strategic priorities which lay the foundation for our long-term success. First, we strengthened the competitive position of our assets with the decision to indefinitely idle our Gallup and Martinez refineries, and are evaluating strategic repositioning possibilities for Martinez. Second, we began implementing commercial strategy changes and I've been encouraged by the team's quick progress. And third, we lowered our capital spending and tightly managed our operating expenses. I'm confident we will meet the $950 million expense reduction target we previously announced for 2020. We are also implementing plans to structurally lower costs in 2021 and beyond."
Segment Results
Income from operations was $981 million in the second quarter of 2020, compared to $2.0 billion in the second quarter of 2019. Second quarter 2020 results include a pre-tax LCM inventory benefit of $1.5 billion.
Three Months Ended
June 30,
(In millions) 2020 2019
---
Income (loss) from operations by segment:
Refining & Marketing $
(1,619) $
906
Retail 494 493
Midstream 869 878
Corporate (188) (179)
Income (loss) from operations before items not allocated to segments (444) 2,098
Items not allocated to segments:
Transaction-related costs (30) (34)
Litigation (22)
Impairments (25)
LCM inventory valuation adjustment 1,480
Income from operations $
981 $
2,042
Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was $653 million in the second quarter of 2020, compared to $3.2 billion for the second quarter of 2019. Adjusted EBITDA excludes refining planned turnaround costs of $162 million for the second quarter of 2020 and $237 million for the second quarter of 2019.
Reconciliation of Segment Income (Loss) From Operations to Segment Adjusted EBITDA and
Adjusted EBITDA
Three Months Ended
June 30,
(In millions) 2020 2019
---
Refining & Marketing Segment
Segment income (loss) from operations $
(1,619) $
906
Add: Depreciation and amortization 433 411
Refining planned turnaround costs 162 237
Segment Adjusted EBITDA $
(1,024) $
1,554
Retail Segment
Segment income from operations $
494 $
493
Add: Depreciation and amortization 132 130
Segment EBITDA $
626 $
623
Midstream Segment
Segment income from operations $
869 $
878
Add: Depreciation and amortization 330 318
Segment EBITDA $
1,199 $
1,196
Segment Adjusted EBITDA $
801 $
3,373
Corporate (188) (179)
Add: Depreciation and amortization 40 27
Adjusted EBITDA $
653 $
3,221
Refining & Marketing (R&M)
R&M segment loss from operations was $1.6 billion in the second quarter of 2020, compared with income of $906 million for the second quarter of 2019. The decrease in R&M earnings was primarily due to reduced throughput and lower crack spreads driven by lower demand associated with COVID-19, and lower crude differentials.
Segment adjusted EBITDA was $(1.0) billion in the second quarter of 2020, versus $1.6 billion for the second quarter of 2019. Segment adjusted EBITDA excludes refinery planned turnaround costs, which totaled $162 million in the second quarter of 2020 and $237 million in the second quarter of 2019.
R&M margin was $7.13 per barrel for the second quarter of 2020. Crude capacity utilization was 71%, resulting in total throughputs of 2.3 million barrels per day, and clean product yield was 84%.
Retail
Retail segment income from operations was $494 million in the second quarter of 2020, compared with $493 million for the second quarter of 2019. Segment EBITDA was $626 million in the second quarter of 2020, versus $623 million for the second quarter of 2019. Quarterly results reflected lower fuel volumes, higher fuel margin per gallon, and operating cost reductions.
Retail fuel margin increased to 39.60 cents per gallon in the second quarter of 2020, from 26.66 cents per gallon in the second quarter of 2019. Same-store merchandise sales decreased by 4% year-over-year and same-store gasoline sales volume decreased by 37% year-over-year.
Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX), was $869 million in the second quarter of 2020, compared with $878 million for the second quarter of 2019.
Segment EBITDA was $1.2 billion in the second quarter of 2020, versus $1.2 billion for the second quarter of 2019. Strong performance in the midstream segment in the current business environment was driven by stable, fee-based earnings, contributions from organic growth projects, and reduced operating expenses.
Corporate and Items Not Allocated to Segments
Corporate expenses totaled $188 million in the second quarter of 2020, compared to $179 million in the second quarter of 2019. Items not allocated to segments totaled $1.4 billion of income in the second quarter of 2020, compared with $56 million of expense in the second quarter of 2019. Second-quarter 2020 results include a $1.5 billion LCM inventory benefit, $25 million of impairment expense related to long-lived assets and $30 million of costs incurred in connection with the Speedway separation and other related activities. Second quarter 2019 results include $34 million of transaction-related expenses in connection with the Andeavor acquisition and $22 million of litigation charges.
Financial Position and Liquidity
As of June 30, 2020, the company had $1.0 billion in cash and cash equivalents (excluding MPLX's cash and cash equivalents of $67 million), $5 billion available under a five-year bank revolving credit facility, $2 billion available under its two 364-day bank revolving credit facilities and $705 million available under its trade receivables securitization facility.
The company previously reported that it drew $2 billion on the five-year revolving credit facility in the first quarter of 2020, plus an additional $1.5 billion in April 2020. These borrowings were made to provide financial flexibility given the commodity price downturn and the significant working capital impact associated with the decline in crude oil prices. In late April, the company added an additional $1 billion 364-day revolver. Also, in late April, the company issued $2.5 billion of senior notes. Net proceeds from the senior notes issuance were used to repay a portion of the amounts outstanding on the five-year revolving credit facility. In June, the company completely repaid all amounts outstanding on the five-year revolving credit facility.
Strategic and Operations Update
Yesterday, the company announced an agreement with 7-Eleven to sell Speedway for $21 billion in cash. The company expects to use proceeds from the sale to strengthen the balance sheet and return capital to shareholders. The arrangement includes a 15-year fuel supply agreement for approximately 7.7 billion gallons of fuel per year and the opportunity to supply additional 7-Eleven locations.
The company also announced the indefinite idling of the Gallup and Martinez refineries, and announced it is evaluating the strategic repositioning of Martinez to a renewable diesel facility.
Construction continues on the Dickinson Renewable Diesel project, which remains on schedule for planned completion in late 2020. The project will convert the Dickinson refinery into a 12,000 barrel per day biorefinery capable of producing renewable diesel from corn and soybean oil. MPC intends to sell the renewable diesel into the California market to comply with the California Low Carbon Fuel Standard.
Consistent with MPC's midstream strategy of developing long-haul pipelines and other logistics solutions, the company progressed several projects during the quarter, including the Wink-to-Webster crude oil pipeline, the Whistler natural gas pipeline, and the reversal of the Capline crude pipeline. Each of these projects is backed by minimum volume commitments from customers.
In addition, the South Texas Gateway terminal began crude oil export operations in July. MPC owns a 25% interest in the South Texas Gateway terminal.
Third Quarter 2020 Outlook
Refining & Marketing Segment:
Refining operating costs per barrel(a) $
6.50
Distribution costs (in millions) $
1,285
Refining planned turnaround costs (in millions) $
270
Depreciation and amortization (in millions) $
440
Refinery throughputs (mbpd):
Crude oil refined 2,215
Other charge and blendstocks 130
Total 2,345
(a) Includes refining major
maintenance and operating
costs. Excludes turnaround and
depreciation and amortization
expenses.
Retail Segment:
Range
Fuel sales (millions of gallons) 2,000 2,200
Merchandise sales (in millions) $
1,700 $
1,800
Corporate and unallocated items (in millions) $
195
Conference Call
At 9:30 a.m. EDT today, MPC will hold a conference call and webcast to discuss the reported results and provide an update on company operations. Interested parties may listen by visiting MPC's website at http://www.marathonpetroleum.com and clicking on the "Join the Webcast" link. A replay of the webcast will be available on the company's website for two weeks. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at https://www.marathonpetroleum.com.
About Marathon Petroleum Corporation
Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company that owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure. More information is available at www.marathonpetroleum.com.
Investor Relations Contacts: (419) 421-2071
Kristina Kazarian, Vice President, Investor Relations
Taryn Erie, Manager, Investor Relations
Brian Worthington, Manager, Investor Relations
Media Contacts:
Hamish Banks, Vice President, Communications (419) 421-2521
Jamal Kheiry, Manager, Communications (419) 421-3312
References to Earnings and Defined Terms
References to earnings mean net income attributable to MPC from the statements of income. Unless otherwise indicated, references to earnings and earnings per share are MPC's share after excluding amounts attributable to noncontrolling interests.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC). These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations, strategy and value creation plans of MPC. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as "anticipate," "believe," "commitment," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan," "policy," "position," "potential," "predict," "priority," "project," "proposition," "prospective," "pursue," "seek," "should," "strategy," "target," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include but are not limited to: the effects of the recent outbreak of COVID-19 and the adverse impact thereof on our business, financial condition, results of operations and cash flows, including, but not limited to, our growth, operating costs, labor availability, logistical capabilities, customer demand for our products and industry demand generally, margins, inventory value, cash position, taxes, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally; the effects of the recent outbreak of COVID-19, and the current economic environment generally, on our working capital, cash flows and liquidity, which can be significantly affected by decreases in commodity prices; our ability to reduce capital and operating expenses; with respect to the planned Speedway sale, the ability to successfully complete the sale within the expected timeframe or at all, based on numerous factors, including our ability to satisfy customary conditions, including obtaining regulatory approvals on the proposed terms and schedule, and any conditions imposed in connection with the consummation of the transaction, our ability to utilize the proceeds as anticipated, and our ability to capture value from the associated on-going supply relationship and realize the other expected benefits; the risk that the cost savings and any other synergies from the Andeavor transaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; risks related to the acquisition of Andeavor Logistics LP by MPLX LP (MPLX), including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the risk of further impairments; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income and earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; the ability to manage disruptions in credit markets or changes to credit ratings; future levels of capital, environmental and maintenance expenditures; general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; share repurchase authorizations, including the timing and amounts of such repurchases; the adequacy of capital resources and liquidity, including availability, timing and amounts of free cash flow necessary to execute business plans and to effect any share repurchases or to maintain or increase the dividend; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks or otherwise; non-payment or non-performance by our producer and other customers; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2019, and in Forms 10-Q and other filings, filed with the SEC. Copies of MPC's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC's website, MPC's website at https://www.marathonpetroleum.com/Investors/ or by contacting MPC's Investor Relations office. Copies of MPLX's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC's website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.
We have based our forward-looking statements on our current expectations, estimates and projections about our business and industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.
Consolidated Statements of Income (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions, except per-share data) 2020 2019 2020 2019
---
Revenues and other income:
Sales and other operating revenues $
15,024 $
33,529 $
40,239 $
61,782
Income (loss) from equity method investments(a) 105 107 (1,105) 206
Net gain on disposal of assets 2 4 6 218
Other income 67 30 138 65
Total revenues and other income 15,198 33,670 39,278 62,271
Costs and expenses:
Cost of revenues (excludes items below) 13,777 29,682 36,598 55,642
LCM inventory valuation adjustment (1,480) 1,740
Impairment expense 25 7,847
Depreciation and amortization 935 886 1,897 1,805
Selling, general and administrative expenses 746 886 1,567 1,753
Other taxes 214 174 465 360
Total costs and expenses 14,217 31,628 50,114 59,560
Income (loss) from operations 981 2,042 (10,836) 2,711
Net interest and other financial costs 345 322 683 628
Income (loss) before income taxes 636 1,720 (11,519) 2,083
Provision (benefit) for income taxes 360 353 (1,577) 457
Net income (loss) 276 1,367 (9,942) 1,626
Less net income (loss) attributable to:
Redeemable noncontrolling interest 21 21 41 41
Noncontrolling interests 246 240 (758) 486
Net income (loss) attributable to MPC $
9 $
1,106 $
(9,225) $
1,099
Per-share data
Basic:
Net income (loss) attributable to MPC per share $
0.01 $
1.67 $
(14.21) $
1.65
Weighted average shares outstanding 650 662 649 667
Diluted:
Net income (loss) attributable to MPC per share $
0.01 $
1.66 $
(14.21) $
1.63
Weighted average shares outstanding 653 666 649 672
(a) The 2020 YTD period includes
$1,315 million of impairment
expense.
Income Summary (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions) 2020 2019 2020 2019
---
Income (loss) from operations by segment
Refining & Marketing $
(1,619) $
906 $
(2,241) $
572
Retail 494 493 1,013 663
Midstream 869 878 1,774 1,786
Corporate (188) (179) (415) (370)
Income (loss) from operations before items not (444) 2,098 131 2,651
allocated to segments
Items not allocated to segments:
Equity method investment restructuring gains(a) 207
Transaction-related costs(b) (30) (34) (65) (125)
Litigation (22) (22)
Impairments(c) (25) (9,162)
LCM inventory valuation adjustment 1,480 (1,740)
Income (loss) from operations 981 2,042 (10,836) 2,711
Net interest and other financial costs 345 322 683 628
Income (loss) before income taxes 636 1,720 (11,519) 2,083
Provision (benefit) for income taxes 360 353 (1,577) 457
Net income (loss) 276 1,367 (9,942) 1,626
Less net income (loss) attributable to:
Redeemable noncontrolling interest 21 21 41 41
Noncontrolling interests 246 240 (758) 486
Net income (loss) attributable to MPC $
9 $
1,106 $
(9,225) $
1,099
(a) Represents gain related to the
formation of a new joint
venture: Capline LLC in the
2019 YTD period.
(b) 2020 includes costs incurred in
connection with the Speedway
separation and Midstream
strategic review. 2019
includes employee severance,
retention and other costs
related to the acquisition of
Andeavor.
(c) Includes $7.3 billion goodwill
impairment, $1.3 billion
impairment of equity method
investments and $517 million
impairment of long lived
assets in 2020 YTD period.
Capital Expenditures and Investments (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions) 2020 2019 2020 2019
---
Refining & Marketing $
263 $
430 $
722 $
824
Retail 74 120 150 193
Midstream 425 814 899 1,637
Corporate(a) 45 38 101 79
Total $
807 $
1,402 $
1,872 $
2,733
(a) Includes capitalized interest of
$27 million, $34 million, $56
million and $65 million,
respectively.
Refining & Marketing Operating Statistics (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Dollar per barrel of net refinery throughput:
Refining & Marketing margin(a) $
7.13 $
15.24 $
9.50 $
13.23
Less:
Refining operating costs(b) 6.13 5.35 6.06 5.47
Distribution costs(c) 5.86 4.48 5.22 4.56
Refining planned turnaround costs 0.78 0.83 1.02 0.75
Depreciation and amortization 2.09 1.44 1.83 1.49
Plus (Less):
Other(d) (0.09) 0.04 (0.04) 0.06
Refining & Marketing income (loss) from operations $
(7.82) $
3.18 $
(4.67) $
1.02
Refining & Marketing refined product sales volume (mbpd)(e) 2,878 3,814 3,233 3,742
Crude oil capacity utilization (percent)(f) 71 97 81 96
Refinery throughputs (mbpd):(g)
Crude oil refined 2,165 2,937 2,475 2,902
Other charge and blendstocks 111 198 160 207
Net refinery throughput 2,276 3,135 2,635 3,109
Sour crude oil throughput (percent) 53 47 50 49
Sweet crude oil throughput (percent) 47 53 50 51
Refined product yields (mbpd):(g)
Gasoline 1,114 1,528 1,301 1,531
Distillates 834 1,080 927 1,086
Propane 45 57 52 55
Feedstocks and special products 217 370 284 350
Heavy fuel oil 27 51 32 48
Asphalt 76 83 78 81
Total 2,313 3,169 2,674 3,151
(a) Sales revenue less cost of
refinery inputs and purchased
products, divided by net
refinery throughput.
(b) Includes refining major
maintenance and operating
costs. Excludes planned
turnaround and depreciation and
amortization expense.
(c) Includes fees paid to MPLX, on a
per barrel throughput basis, of
$4.06, $2.80, $3.54 and $2.81,
respectively. Excludes
depreciation and amortization
expense.
(d) Includes income (loss) from
equity method investments, net
gain (loss) on disposal of
assets and other income.
(e) Includes intersegment sales.
(f) Based on calendar day capacity,
which is an annual average that
includes downtime for planned
maintenance and other normal
operating activities.
(g) Excludes inter-refinery volumes
of 70 mbpd,102 mbpd, 74 mbpd
and 88 mbpd, respectively.
Refining & Marketing Operating Statistics by Region (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Gulf Coast
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b) $
5.22 $
9.32 $
7.15 $
8.58
Refining operating costs(c) 5.03 4.03 4.62 3.95
Refining planned turnaround costs 1.31 0.23 1.16 0.20
Refining depreciation and amortization 1.69 1.03 1.42 1.08
Refinery throughputs (mbpd):(d)
Crude oil refined 854 1,154 995 1,162
Other charge and blendstocks 116 177 140 173
Gross refinery throughput 970 1,331 1,135 1,335
Sour crude oil throughput (percent) 74 59 65 61
Sweet crude oil throughput (percent) 26 41 35 39
Refined product yields (mbpd):(d)
Gasoline 404 564 476 569
Distillates 346 440 381 443
Propane 22 29 26 28
Feedstocks and special products 201 293 251 293
Heavy fuel oil 11 15 11 14
Asphalt 18 21 19 21
Total 1,002 1,362 1,164 1,368
Mid-Continent
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b) $
9.49 $
20.21 $
11.42 $
17.84
Refining operating costs(c) 5.02 4.82 5.47 5.21
Refining planned turnaround costs 0.32 0.27 0.97 0.47
Refining depreciation and amortization 1.91 1.46 1.83 1.55
Refinery throughputs (mbpd):(e)
Crude oil refined 923 1,155 999 1,106
Other charge and blendstocks 34 48 46 52
Gross refinery throughput 957 1,203 1,045 1,158
Sour crude oil throughput (percent) 28 28 26 27
Sweet crude oil throughput (percent) 72 72 74 73
Refined product yields (mbpd):(e)
Gasoline 476 626 540 612
Distillates 340 412 365 400
Propane 17 20 18 19
Feedstocks and special products 59 71 55 55
Heavy fuel oil 11 16 13 16
Asphalt 57 61 58 59
Total 960 1,206 1,049 1,161
West Coast
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b) $
5.93 $
17.77 $
10.59 $
14.33
Refining operating costs(c) 10.19 8.01 9.45 8.10
Refining planned turnaround costs 0.45 2.80 0.70 2.18
Refining depreciation and amortization 1.81 1.29 1.48 1.31
Refinery throughputs (mbpd):(f)
Crude oil refined 388 628 481 634
Other charge and blendstocks 31 75 48 70
Gross refinery throughput 419 703 529 704
Sour crude oil throughput (percent) 64 58 70 66
Sweet crude oil throughput (percent) 36 42 30 34
Refined product yields (mbpd):(f)
Gasoline 234 338 285 350
Distillates 148 228 181 243
Propane 6 8 8 8
Feedstocks and special products 17 104 40 84
Heavy fuel oil 15 24 20 24
Asphalt 1 1 1 1
Total 421 703 535 710
(a) The per barrel for Refining &
Marketing margin is calculated
based on net refinery
throughput (excludes inter-
refinery transfer volumes). The
per barrel for the remaining
items is calculated based on
the gross refinery throughput
(includes inter-refinery
transfer volumes).
(b) Sales revenue less cost of
refinery inputs and purchased
products, divided by net
refinery throughput.
(c) Includes refining major
maintenance and operating
costs. Excludes planned
turnaround and depreciation and
amortization expense.
(d) Includes inter-refinery
transfer volumes of 51 mbpd, 47
mbpd, 48 mbpd and 42 mbpd,
respectively.
(e) Includes inter-refinery
transfer volumes of 9 mbpd, 10
mbpd, 9 mbpd and 9 mbpd,
respectively.
(f) Includes inter-refinery
transfer volumes of 10 mbpd, 45
mbpd, 17 mbpd and 37 mbpd,
respectively.
Retail Operating Statistics (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Speedway fuel sales (millions of gallons) 1,197 1,957 2,833 3,828
Direct dealer fuel sales (millions of gallons) 462 646 1,047 1,276
Retail fuel margin (dollars per gallon)(a) $
0.3960 $
0.2666 $
0.3577 $
0.2200
Merchandise sales (in millions) $
1,603 $
1,620 $
3,064 $
3,033
Merchandise margin (in millions) $
452 $
471 $
866 $
878
Merchandise margin percent 28.2 29.1 28.3 29.0
% % % %
Same store gasoline sales volume (period over period)(b) (36.6) (2.4) (22.7) (2.8)
% % % %
Same store merchandise sales (period over period)(b)(c) (4.0) 6.3 (1.8) 5.9
% % % %
Total convenience stores at period-end 3,873 3,913
Direct dealer locations at period-end 1,074 1,062
(a) Includes bankcard processing
fees (as applicable).
(b) Same store comparison includes
only locations owned at least
13 months.
(c) Excludes cigarettes.
Midstream Operating Statistics (Unaudited)
Three Months Ended
Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Pipeline throughputs (mbpd)(a) 4,380 5,178 4,800 5,214
Terminal throughput (mbpd) 2,420 3,287 2,693 3,254
Gathering system throughput (million cubic feet per day)(b) 5,490 5,948 5,621 5,950
Natural gas processed (million cubic feet per day)(b) 8,476 8,535 8,632 8,528
C2 (ethane) + NGLs fractionated (mbpd)(b) 543 520 548 517
(a) Includes common-carrier pipelines
and private pipelines contributed to
MPLX. Excludes equity method
affiliate pipeline volumes.
(b) Includes amounts related to
unconsolidated equity method
investments on a 100% basis.
Select Financial Data (Unaudited)
(In millions) June 30 March 31
2020 2020
---
Cash and cash equivalents $
1,091 $
1,690
MPC debt 11,607 11,138
MPLX debt 20,559 20,471
Total consolidated debt 32,166 31,609
Redeemable noncontrolling interest 968 968
Equity 30,849 31,228
Shares outstanding 650 650
Three Months Ended
Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Cash provided by (used in) operations $
538 $
2,622 $
(230) $
4,245
Dividends paid per share $
0.58 $
0.53 $
1.16 $
1.06
Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to their most comparable GAAP financial measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measures we use are as follows:
Adjusted Net Income Attributable to MPC
Adjusted net income attributable to MPC is defined as net income attributable to MPC excluding the items in the table below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends.
Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is defined as adjusted net income attributable to MPC divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.
Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted Net Income (Loss)
Attributable to MPC
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions) 2020 2019 2020 2019
---
Net income (loss) attributable to MPC $
9 $
1,106 $
(9,225) $
1,099
Pre-tax adjustments:
Equity method investment restructuring gains (207)
Transaction-related costs 30 34 65 125
Litigation 22 22
Impairments 25 9,162
LCM inventory valuation adjustment (1,480) 1,740
Out of period tax adjustment 36
Tax impact of adjustments(a) 548 (14) (1,445) 14
Non-controlling interest impact of adjustments (1,271)
Adjusted net income (loss) attributable to MPC $
(868) $
1,148 $
(974) $
1,089
Diluted income (loss) per share $
0.01 $
1.66 $
(14.21) $
1.63
Adjusted diluted income (loss) per share
(b) $
(1.33) $
1.73 $
(1.50) $
1.62
(a) We generally tax effect taxable
adjustments to reported earnings
using a combined federal and state
statutory rate of approximately 24
percent.
(b) Weighted-average diluted shares
outstanding and income allocated
to participating securities, if
applicable, in the adjusted
earnings per share calculation are
the same as those used in the GAAP
diluted earnings per share
calculation except for the three
months ended June 30, 2020 which
assumes no dilution and uses basic
shares as a result of an adjusted
loss attributable to MPC.
Operating Cash Flow Before Changes in Working Capital
Operating cash flow before changes in working capital is defined as net cash provided by (used in) operations less changes in current receivables, inventories, current accounts payable and accrued liabilities, the fair value of derivative instruments and right of use assets and operating lease liabilities. We believe operating cash flow before changes in working capital is useful as it is indicative of cash received or used for operations based on current operating conditions without the effects of working capital account fluctuations that result from commodity price changes, timing of cash collections, inventory purchases or accounts payable payments as compared to the prior year-end reporting period.
Reconciliation of Cash Provided by (Used in) Operations to Operating Cash Flow Before
Changes in Working Capital
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions) 2020 2019 2020 2019
---
Net cash provided by (used in) operations $
538 $
2,622 $
(230) $
4,245
Less changes in:
Current receivables 1,218 (679) 3,117 (1,697)
Inventories 839 744 417 740
Current accounts payable and accrued liabilities (1,767) (186) (5,220) 1,297
Fair value of derivative instruments 70 (56) 23 (27)
Right of use assets and operating lease liabilities, net 6 10 2 9
Total changes in working capital 366 (167) (1,661) 322
Operating cash flow before changes in working capital $
172 $
2,789 $
1,431 $
3,923
Adjusted EBITDA & Segment Adjusted EBITDA
Adjusted EBITDA and Segment Adjusted EBITDA represent earnings before net interest and other financial costs, income taxes, depreciation and amortization expense as well as adjustments to exclude refining turnaround costs, items not allocated to segment results and other items shown in the table below. We believe these non-GAAP financial measures are useful to investors and analysts to analyze and compare our operating performance between periods by excluding items that do not reflect the core operating results of our business or in the case of turnarounds, which provide benefits over multiple years. We also believe that excluding turnaround costs from this metric is useful for comparability to other companies as certain of our competitors defer these costs and amortize them between turnarounds. Adjusted EBITDA and Segment Adjusted EBITDA should not be considered as a substitute for, or superior to segment income (loss) from operations, net income attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA and Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted EBITDA
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions) 2020 2019 2020 2019
---
Net income (loss) attributable to MPC $
9 $
1,106 $
(9,225) $
1,099
Plus (Less):
Net interest and other financial costs 345 322 683 628
Net income (loss) attributable to noncontrolling interests 267 261 (717) 527
Provision (benefit) for income taxes 360 353 (1,577) 457
Depreciation and amortization 935 886 1,897 1,805
Refining planned turnaround costs 162 237 491 423
Equity method investment restructuring gains (207)
Transaction-related costs 30 34 65 125
Litigation 22 22
Impairments 25 9,162
LCM inventory valuation adjustment (1,480) 1,740
Adjusted EBITDA $
653 $
3,221 $
2,519 $
4,879
Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products.
Reconciliation of Refining & Marketing Income (Loss) from Operations to Refining & Marketing
Gross Margin and Refining & Marketing Margin
Three Months Ended
Six Months Ended
June 30, June 30,
(In millions) 2020 2019 2020 2019
---
Refining & Marketing income (loss) from operations
(a) $
(1,619) $
906 $
(2,241) $
572
Plus (Less):
Selling, general and administrative expenses 500 574 1,054 1,118
LCM inventory valuation adjustment 1,470 (1,715)
(Income) loss from equity method investments 19 (3) 22 (4)
Net (gain) loss on disposal of assets 1 1 (6)
Other income (4) (8) (8) (22)
Refining & Marketing gross margin 367 1,469 (2,887) 1,658
Plus (Less):
Operating expenses (excluding depreciation and amortization) 2,231 2,610 5,053 5,215
LCM inventory valuation adjustment (1,470) 1,715
Depreciation and amortization 433 411 880 838
Gross margin excluded from Refining & Marketing margin(b) (66) (142) (163) (259)
Other taxes included in Refining & Marketing margin (19) (1) (43) (5)
Refining & Marketing margin
(a) $
1,476 $
4,347 $
4,555 $
7,447
Refining & Marketing margin by region:
Gulf Coast $
437 $
1,090 $
1,414 $
2,007
Mid-Continent 819 2,193 2,154 3,710
West Coast 220 1,064 987 1,730
Refining & Marketing margin $
1,476 $
4,347 $
4,555 $
7,447
(a) LCM inventory valuation
adjustments are excluded from
Refining & Marketing income
from operations and Refining &
Marketing margin.
(b) The gross margin, excluding
depreciation and amortization,
of operations that support
Refining & Marketing such as
biodiesel and ethanol ventures,
power facilities and processing
of credit card transactions.
Retail Fuel Margin
Retail fuel margin is defined as the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable).
Retail Merchandise Margin
Retail merchandise margin is defined as the price paid by consumers less the cost of merchandise.
Reconciliation of Retail Income from Operations to Retail Gross Margin and Retail Margin
Three Months Ended
Six Months Ended
June 30, June 30,
(in millions) 2020 2019 2020 2019
---
Retail income from operations
(a) $
494 $
493 $
1,013 $
663
Plus (Less):
Operating, selling, general and administrative expenses 577 597 1,175 1,180
LCM inventory valuation adjustment 10 (25)
Income from equity method investments (27) (21) (49) (38)
Net gain on disposal of assets (1) (2)
Other income (44) (4) (93) (6)
Retail gross margin 1,010 1,065 2,020 1,797
Plus (Less):
LCM inventory valuation adjustment (10) 25
Depreciation and amortization 132 130 257 256
Retail margin
(a) $
1,132 $
1,195 $
2,302 $
2,053
Retail margin:
Fuel margin $
657 $
694 $
1,388 $
1,123
Merchandise margin 452 471 866 878
Other margin 23 30 48 52
Retail margin $
1,132 $
1,195 $
2,302 $
2,053
(a) LCM inventory valuation
adjustments are excluded from
Retail income from operations
and Retail margin.
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SOURCE Marathon Petroleum Corporation
