Marathon Petroleum Corp. Reports Fourth-Quarter 2020 Results
FINDLAY, Ohio, Feb. 2, 2021 /PRNewswire/ --
-- Reported fourth-quarter income of $192 million, or $0.29 per diluted
share, which includes net pre-tax benefits of $851 million; reported
adjusted loss of $608 million, or ($0.94) per diluted share
-- $21 billion Speedway sale targeted to close by end of first quarter;
reiterating commitment to use proceeds to strengthen the balance sheet
and return capital to shareholders
-- Advancing renewable fuels portfolio; Dickinson is 2nd largest renewable
diesel facility in the US and progressing Martinez strategic
repositioning
-- Continuing focus on lowering cost structure
-- Announced 2021 MPC standalone capital spending outlook of $1.4 billion,
a reduction of $350 million from 2020
Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $192 million, or $0.29 per diluted share, for the fourth quarter of 2020, compared with net income of $443 million, or $0.68 per diluted share, for the fourth quarter of 2019.
Fourth-quarter 2020 results include net pre-tax benefits of $851 million as shown in the accompanying release tables. Adjusted net loss was $608 million, or $(0.94) per diluted share, for the fourth quarter of 2020, compared with adjusted net income of $1.0 billion, or $1.56 per diluted share, for the fourth quarter of 2019.
"The COVID-19 pandemic presented unprecedented challenges in 2020," said President and Chief Executive Officer Michael J. Hennigan. "The rollout of vaccines in 2021 provides support for the return of global mobility and transportation fuel demand, increasing optimism around steps toward economic recovery and prospects for our industry.
"Throughout the year, we took aggressive action to reposition the company for long-term success. We focused on optimizing our portfolio through the sale of Speedway, indefinitely idling higher cost refineries, structurally reducing operating costs, and expanding our renewable fuel portfolio. Our Dickinson facility began producing renewable diesel and we are advancing discussions with feedstock suppliers and potential commercial partners for the Martinez renewables project. Today we announced our 2021 capital outlook which is yet again below prior year spending levels. And, as we enter 2021 and progress toward the close of the $21 billion sale of our Speedway business, our top priorities remain reducing debt to strengthen our balance sheet and efficiently returning capital to shareholders."
Results from Operations
As previously announced, on Aug. 2, 2020, MPC entered into a definitive agreement to sell Speedway to 7-Eleven, Inc. for $21 billion in cash. Consistent with the reporting from last quarter:
-- Speedway's results are required to be presented separately as
discontinued operations.
-- The retained direct dealer business results are reported within the
Refining & Marketing segment.
-- As a result of the above, MPC no longer presents a separate Retail
segment, which had previously included Speedway and the direct dealer
business.
Speedway's results are presented differently under discontinued operations accounting as compared to their previous presentation. The major changes include:
-- MPC ceased recording depreciation and amortization (D&A) for Speedway at
the time of signing the sale agreement.
-- Corporate costs are no longer allocable to Speedway under discontinued
operations accounting. Results for all periods exclude any allocation of
corporate costs to Speedway.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Income (loss) from continuing operations by segment
Refining & Marketing(a)(b) $
(1,579) $
1,106 $
(5,189) $
2,856
Midstream 974 889 3,708 3,594
Corporate(c) (175) (244) (800) (833)
Income (loss) from continuing operations before items (780) 1,751 (2,281) 5,617
not allocated to segments
Items not allocated to segments:
LCM inventory valuation adjustment 1,185
Impairments (146) (1,239) (9,741) (1,239)
Restructuring expenses (19) (367)
Litigation 84 84 (22)
Gain on sale of assets 66 66
Transaction-related costs (6) (8) (153)
Equity method investment restructuring gains 52 259
Income (loss) from continuing operations $
390 $
558 $
(12,247) $
4,462
Income from discontinued operations
Speedway(c) $
419 $
290 $
1,701 $
1,121
LCM inventory valuation adjustment 25
Transaction-related costs (39) (7) (114) (7)
Income from discontinued operations $
405 $
283 $
1,587 $
1,114
Income (loss) from continuing and discontinued operations $
795 $
841 $
(10,660) $
5,576
(a) Includes direct dealer income
from operations of $90 million,
$194 million, $393 million and
$489 million for the fourth
quarter 2020, the fourth quarter
2019, for the year 2020 and for
the year 2019, respectively, due
to our third quarter 2020 change
in segment presentation.
(b) Includes last-in, first-out
(LIFO) liquidation charges of
$305 million for the fourth
quarter 2020 and $561 million
for the year 2020.
(c) Reflects corporate costs of $6
million, $7 million, $26 million
and $28 million for the fourth
quarter 2020, the fourth quarter
2019, for the year 2020 and for
the year 2019, respectively,
that are no longer allocable to
Speedway under discontinued
operations accounting.
Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was $907 million in the fourth quarter of 2020, compared with $3.2 billion for the fourth quarter of 2019. As detailed in the table below, adjusted EBITDA is shown for both continuing and discontinued operations. Adjusted EBITDA from continuing operations excludes refining planned turnaround costs and LIFO liquidation charges.
Reconciliation of Income (Loss) From Operations to Adjusted EBITDA
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Refining & Marketing Segment
Segment income (loss) from operations $
(1,579) $
1,106 $
(5,189) $
2,856
Add: Depreciation and amortization 465 461 1,857 1,780
Refining planned turnaround costs 107 153 832 740
LIFO liquidation charge 305 561
Segment Adjusted EBITDA $
(702) $
1,720 $
(1,939) $
5,376
Midstream Segment
Segment income from operations $
974 $
889 $
3,708 $
3,594
Add: Depreciation and amortization 343 342 1,353 1,267
Segment EBITDA $
1,317 $
1,231 $
5,061 $
4,861
Segment Adjusted EBITDA $
615 $
2,951 $
3,122 $
10,237
Corporate (175) (244) (800) (833)
Add: Depreciation and amortization 41 47 165 178
Adjusted EBITDA from continuing operations $
481 $
2,754 $
2,487 $
9,582
Speedway
Speedway $
419 $
290 $
1,701 $
1,121
Add: Depreciation and amortization(a) 7 128 244 413
Adjusted EBITDA from discontinued operations $
426 $
418 $
1,945 $
1,534
Adjusted EBITDA from continuing and discontinued $
907 $
3,172 $
4,432 $
11,116
operations
(a) As of August 2, 2020, MPC
ceased recording depreciation
and amortization for Speedway.
Refining & Marketing (R&M)
As discussed above, R&M segment results now include the results of the direct dealer business. Prior periods reflect this change in segment presentation.
R&M segment loss from operations was $1.6 billion in the fourth quarter of 2020, compared with income of $1.1 billion for the fourth quarter of 2019. Fourth-quarter 2020 and fourth-quarter 2019 R&M segment results include direct dealer income from operations of $90 million and $194 million, respectively. Segment results also include a LIFO liquidation charge of $305 million in the fourth quarter of 2020.
Segment adjusted EBITDA was $(702) million in the fourth quarter of 2020, versus $1.7 billion for the fourth quarter of 2019. Segment adjusted EBITDA excludes refining planned turnaround costs, which totaled $107 million in the fourth quarter of 2020 and $153 million in the fourth quarter of 2019, and a LIFO liquidation charge of $305 million in the fourth quarter of 2020. The decrease in R&M earnings was primarily due to lower crack spreads, reduced throughput, and weaker crude differentials, partially offset by lower operating costs.
R&M margin, excluding the LIFO liquidation charge, was $7.42 per barrel for the fourth quarter of 2020, versus $16.35 for the fourth quarter of 2019. Crude capacity utilization was 82% (excluding idled facilities) resulting in total throughput of 2.5 million barrels per day. Clean product yield was 87%.
Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX), was $974 million in the fourth quarter of 2020, compared with $889 million for the fourth quarter of 2019.
Segment adjusted EBITDA was $1.3 billion in the fourth quarter of 2020, versus $1.2 billion for the fourth 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
As discussed above, corporate costs are no longer allocable to Speedway under discontinued operations accounting and all periods include corporate costs previously allocated to Speedway.
Corporate expenses totaled $175 million in the fourth quarter of 2020, compared with $244 million in the fourth quarter of 2019. Fourth-quarter 2020 and fourth-quarter 2019 corporate expenses include expenses of $6 million and $7 million, respectively, which are no longer allocable to Speedway.
Items not allocated to segments included net benefits of $1.2 billion in the fourth quarter of 2020, compared with net charges of $1.2 billion in the fourth quarter of 2019. Fourth-quarter 2020 results from continuing operations include a $1.2 billion lower of cost or market (LCM) inventory benefit, a favorable litigation settlement of $84 million and gains on asset sales of $66 million. These items are partially offset by impairment and restructuring charges of $165 million. Fourth-quarter 2019 results include $1.2 billion of impairment charges primarily related to MPLX goodwill and $6 million of costs incurred in connection with the midstream strategic review and other related activities. These items were partially offset by an equity method restructuring gain of $52 million. Discontinued operations for the fourth quarter of 2020 included a $25 million LCM inventory benefit and $39 million of costs related to the Speedway separation.
Speedway
As discussed above, the results of Speedway are required to be reported separately as discontinued operations. MPC ceased recording D&A for Speedway in August 2020. Therefore, fourth-quarter 2020 results reflect no D&A, as compared to $128 million of D&A in fourth-quarter 2019. Results for all periods presented exclude any allocation of corporate costs to Speedway.
Speedway income from operations was $419 million in the fourth quarter of 2020, compared with $290 million for the fourth quarter of 2019. Speedway adjusted EBITDA was $426 million in the fourth quarter of 2020, versus $418 million for the fourth quarter of 2019. Fourth-quarter 2020 results reflect higher fuel margins partially offset by lower fuel volumes compared to the prior year.
Speedway fuel margin was 28.99 cents per gallon in the fourth quarter of 2020, versus 26.11 cents per gallon in the fourth quarter of 2019. Same-store merchandise sales increased by 1.8% year-over-year and Speedway same-store gasoline sales volume decreased by 18.1% year-over-year.
Financial Position and Liquidity
As of Dec. 31, 2020, the company had $540 million in cash and cash equivalents (excluding MPLX's cash and cash equivalents of $15 million), no borrowings outstanding under its $5 billion five-year bank revolving credit facility, no borrowings outstanding under its two $1 billion 364-day bank revolving credit facilities, and no borrowings outstanding under its $750 million trade receivables securitization facility. The company took advantage of attractive commercial paper rates available during the quarter and had $1.0 billion of outstanding commercial paper borrowings as of Dec. 31, 2020. MPC does not intend to have outstanding commercial paper borrowing in excess of available capacity under its bank revolving credit facilities.
In the fourth quarter, the company redeemed all of the $475 million outstanding aggregate principal amount of its senior notes due October 2022 and repaid all of the $650 million outstanding aggregate principal amount of its senior notes due December 2020.
Strategic and Operations Update
The company continues to progress activities related to the $21 billion sale of Speedway to 7-Eleven, targeting a close of the transaction by the end of the first quarter of 2021. 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 and the opportunity to supply additional 7-Eleven locations.
The Dickinson, North Dakota, renewable fuels facility is ramping operations and is on-track to reach full production by the end of the first quarter. At full capacity, the facility is expected to produce 12,000 barrels per day of 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.
The company also progressed activities associated with the conversion of the Martinez refinery to a renewable diesel facility. Discussions with feedstock suppliers and definition engineering activities continue to advance. As envisioned, the Martinez facility would be expected to start producing renewable diesel by the second half of 2022, with a potential to build to full capacity of 48,000 barrels per day by the end of 2023.
Consistent with MPC's midstream strategy of developing long-haul pipelines and other logistics solutions, several projects advanced during the quarter, including the Wink to Webster crude oil pipeline, the Whistler natural gas pipeline, and the reversal of the Capline crude pipeline. Each of these projects is backed by minimum volume commitments.
First Quarter 2021 Outlook
Refining & Marketing Segment:
Refining operating costs per
barrel(a) $
5.35
Distribution costs (in millions) $
1,290
Refining planned turnaround costs
(in millions) $
150
Depreciation and amortization (in
millions) $
465
Refinery throughputs (mbpd):
Crude oil refined 2,385
Other charge and blendstocks 175
Total 2,560
(a) Excludes refining planned
turnaround and depreciation
and amortization expense.
Speedway
Range
Fuel sales (millions of gallons) 1,300 1,500
Merchandise sales (in millions) $
1,425 $
1,525
Corporate and unallocated items (in millions) $
175
2021 Capital Plan ($ millions)
MPC (excluding MPLX)
Refining & Marketing Segment: $
1,050
Growth -Ongoing Projects 450
Growth - Renewables 350
Maintenance 250
Midstream Segment (excluding MPLX) 50
Speedway Discontinued Operations
for 1Q21 (a) 150
Corporate and Other (b) 150
Total MPC (excluding MPLX) $
1,400
MPLX Total (c) $
965
(a) Speedway represents outlook for only 1Q
2021
(b) Does not include capitalized interest
(c) MPLX outlook presented net of project
reimbursements and return of capital
Conference Call
At 11:00 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 www.marathonpetroleum.com. A replay of the webcast will be available on the company's website for two weeks. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at www.marathonpetroleum.com.
###
About Marathon Petroleum Corporation
Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. 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
Brian Worthington, Manager, Investor Relations
Taryn Erie, Manager, Investor Relations
Media Contact: (419) 421-3312
Jamal Kheiry, Manager, Communications
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 magnitude and duration of the COVID-19 pandemic and its effects, including travel restrictions, business and school closures, increased remote work, stay at home orders and other actions taken by individuals, government and the private sector to stem the spread of the virus, 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; our ability to reduce capital and operating expenses; with respect to the planned sale of Speedway, the ability to successfully complete the sale within the expected timeframe, on the expected terms, or at all, based on numerous factors, including the failure to satisfy any of the conditions to the consummation of the planned transaction (including obtaining certain governmental or regulatory approvals on the proposed terms and schedule), the occurrence of any event, change or other circumstance that could give rise to the termination of the planned transaction; MPC's ability to utilize the proceeds as anticipated; the risk that the dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the planned transaction will exceed our estimates; and our ability to capture value and realize the other expected benefits from the associated ongoing supply relationship following consummation of the planned sale; the risk that the cost savings and any other synergies from our acquisitions may not be fully realized or may take longer to realize than expected; 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, 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, including the potential conversion of the Martinez Refinery to a renewable diesel facility; the receipt of relevant third party and/or regulatory approvals; the reliability of processing units and other equipment; the successful realization of 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, complete announced capital projects and to effect any share repurchases or to maintain or increase the dividend; the effect of restructuring or reorganization of business components, including those undertaken in connection with the planned sale of Speedway and workforce reduction; the potential effects of judicial or other proceedings, including remedial actions involving removal and reclamation obligations under environmental regulations, 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 (including any related government policies and actions), other infectious disease outbreaks, natural hazards, extreme weather events or otherwise; general economic, political or regulatory developments, including changes in governmental policies relating to refined petroleum products, crude oil, natural gas or NGLs, regulation or taxation and other economic and political developments (including those caused by public health issues and outbreaks); 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, permitting and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the 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 Annual Report on Form 10-K for the year ended December 31, 2019, 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. Any forward-looking statements speak only as of the date of the applicable communication and 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
Twelve Months Ended
December 31,
December 31,
(In millions, except per-share data) 2020 2019 2020 2019
---
Revenues and other income:
Sales and other operating revenues(a) $
17,972 $
28,008 $
69,779 $
111,148
Income (loss) from equity method investments(b) 102 40 (935) 312
Net gain on disposal of assets 64 58 70 278
Other income 49 34 118 127
Total revenues and other income 18,187 28,140 69,032 111,865
Costs and expenses:
Cost of revenues (excludes items below)(a) 17,216 24,602 65,733 99,228
LCM inventory valuation adjustment (1,185)
Impairment expense 146 1,197 8,426 1,197
Depreciation and amortization 849 850 3,375 3,225
Selling, general and administrative expenses 630 779 2,710 3,192
Restructuring expenses 19 367
Other taxes 122 154 668 561
Total costs and expenses 17,797 27,582 81,279 107,403
Income (loss) from continuing operations 390 558 (12,247) 4,462
Net interest and other financial costs 333 297 1,365 1,229
Income (loss) from continuing operations before income 57 261 (13,612) 3,233
taxes
Provision (benefit) for income taxes on continuing operations (100) 184 (2,337) 784
Income (loss) from continuing operations, net of tax 157 77 (11,275) 2,449
Income from discontinued operations, net of tax 324 185 1,205 806
Net income (loss) 481 262 (10,070) 3,255
Less net income (loss) attributable to:
Redeemable noncontrolling interest 20 20 81 81
Noncontrolling interests 269 (201) (232) 537
Net income (loss) attributable to MPC $
192 $
443 $
(9,919) $
2,637
Per share data
Basic:
Continuing operations $
(0.21) $
0.40 $
(17.14) $
2.78
Discontinued operations 0.50 0.28 1.86 1.22
Net income (loss) per share $
0.29 $
0.68 $
(15.28) $
4.00
Weighted average shares outstanding (in millions) 650 648 649 659
Diluted:
Continuing operations $
(0.21) $
0.40 $
(17.14) $
2.76
Discontinued operations 0.50 0.28 1.86 1.21
Net income (loss) per share $
0.29 $
0.68 $
(15.28) $
3.97
Weighted average shares outstanding (in millions) 650 653 649 664
(a) In accordance with discontinued
operations accounting, Speedway
sales to retail customers and net
results are reflected in income
from discontinued operations, net
of tax and Refining & Marketing
intercompany sales to Speedway
are presented as third-party
sales.
(b) The 2020 YTD period includes $1.3
billion of impairment expense.
Income Summary for Continuing Operations (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Income (loss) from continuing operations by segment
Refining & Marketing(a)(b) $
(1,579) $
1,106 $
(5,189) $
2,856
Midstream 974 889 3,708 3,594
Corporate(c) (175) (244) (800) (833)
Income (loss) from continuing operations before items not (780) 1,751 (2,281) 5,617
allocated to segments
Items not allocated to segments:
LCM inventory valuation adjustment 1,185
Impairments(d) (146) (1,239) (9,741) (1,239)
Restructuring expenses(e) (19) (367)
Litigation 84 84 (22)
Gain on sale of assets 66 66
Transaction-related costs(f) (6) (8) (153)
Equity method investment restructuring gains(g) 52 259
Income (loss) from continuing operations 390 558 (12,247) 4,462
Net interest and other financial costs 333 297 1,365 1,229
Income (loss) from continuing operations before income 57 261 (13,612) 3,233
taxes
Provision (benefit) for income taxes on continuing operations (100) 184 (2,337) 784
Income (loss) from continuing operations, net of tax $
157 $
77 $
(11,275) $
2,449
(a) Includes direct dealer income
from operations of $90 million,
$194 million, $393 million and
$489 million for the fourth
quarter 2020, the fourth quarter
2019, for the year 2020 and for
the year 2019, respectively, due
to our third quarter 2020 change
in segment presentation.
(b) Includes last-in, first-out
(LIFO) liquidation charges of
$305 million for the fourth
quarter 2020 and $561 million
for the year 2020.
(c) Reflects corporate costs of $6
million, $7 million, $26 million
and $28 million for the fourth
quarter 2020, the fourth quarter
2019, for the year 2020 and for
the year 2019, respectively,
that are no longer allocated to
Speedway under discontinued
operations accounting.
(d) Includes $7.4 billion goodwill
impairment, $1.3 billion
impairment of equity method
investments and $1.0 billion
impairment of long-lived assets
in 2020 YTD period.
(e) Restructuring expenses for the
year 2020 include $195 million
of exit costs related to the
Martinez and Gallup refineries
and $172 million of employee
separation costs.
(f) 2020 includes costs incurred in
connection with the Midstream
strategic review. 2019 includes
employee severance, retention
and other costs related to the
acquisition of Andeavor.
(g) Represents gain related to the
formation of a new joint
venture: Capline LLC in the 2019
YTD period.
Income Summary for Discontinued Operations (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Income from discontinued operations
Speedway $
419 $
290 $
1,701 $
1,121
LCM inventory valuation adjustment 25
Transaction-related costs(a) (39) (7) (114) (7)
Income from discontinued operations 405 283 1,587 1,114
Net interest and other financial costs 5 5 20 18
Income from discontinued operations before income taxes 400 278 1,567 1,096
Provision for income taxes on discontinued operations 76 93 362 290
Income from discontinued operations, net of tax $
324 $
185 $
1,205 $
806
(a) Costs related to the Speedway
separation.
Capital Expenditures and Investments (Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Refining &
Marketing(a) $
175 $
634 $
1,170 $
2,045
Midstream 199 870 1,398 3,290
Corporate(b) 40 96 186 237
Speedway 77 217 277 561
Total $
491 $
1,817 $
3,031 $
6,133
(a) Includes direct dealer capital
expenditures of $13 million, $20
million, $38 million and $46
million for the fourth quarter
2020, the fourth quarter 2019,
for the year 2020 and for the
year 2019, respectively, due to
our third quarter 2020 change in
segment presentation.
(b) Includes capitalized interest of
$21 million, $40 million, $106
million and $137 million for the
fourth quarter 2020, the fourth
quarter 2019, for the year 2020
and for the year 2019,
respectively.
Refining & Marketing Operating Statistics (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020 2019 2020 2019
Dollar per barrel of net refinery throughput:
Refining & Marketing margin, excluding LIFO liquidation $
7.42 $
16.35 $
8.96 $
14.77
charge(a)(b)
LIFO liquidation charge (1.31) (0.59)
Refining & Marketing margin(a)(b) 6.11 16.35 8.37 14.77
Less:
Refining operating costs 5.14 6.25 5.68 5.66
Distribution costs(a)(d) 5.44 4.61 5.37 4.52
Refining planned turnaround costs 0.46 0.54 0.88 0.65
Depreciation and amortization(a) 2.00 1.63 1.96 1.58
Plus (Less):
Biodiesel tax credit 0.55 0.08
Other(a)(e) 0.14 0.05 0.03 0.08
Refining & Marketing income (loss) from operations(a) $
(6.79) $
3.92 $
(5.49) $
2.52
Fees paid to MPLX included in distribution costs above $
3.74 $
2.99 $
3.66 $
2.84
Refining & Marketing refined product sales volume (mbpd)(f) 3,223 3,750 3,222 3,735
Crude oil refining capacity (mbpcd)(g) 2,860 3,021 2,963 3,021
Crude oil capacity utilization (percent)(g) 82 94 82 96
Refinery throughputs (mbpd):
Crude oil refined 2,335 2,831 2,418 2,902
Other charge and blendstocks 193 238 165 210
Net refinery throughput 2,528 3,069 2,583 3,112
Sour crude oil throughput (percent) 47 45 49 48
Sweet crude oil throughput (percent) 53 55 51 52
Refined product yields (mbpd):
Gasoline 1,344 1,623 1,314 1,560
Distillates 892 1,074 905 1,087
Propane 51 56 51 55
Feedstocks and special products 176 228 244 315
Heavy fuel oil 28 54 28 49
Asphalt 76 81 81 87
Total 2,567 3,116 2,623 3,153
Inter-region refinery transfers excluded from throughput and 36 148 60 110
yields above (mbpd)
(a) Includes direct dealer results
due to our third quarter 2020
change in segment presentation.
(b) Sales revenue less cost of
refinery inputs and purchased
products, divided by net
refinery throughput.
(c) Excludes refining planned
turnaround and depreciation and
amortization expense.
(d) Excludes depreciation and
amortization expense.
(e) Includes income (loss) from
equity method investments, net
gain (loss) on disposal of
assets and other income.
(f) Includes intersegment sales.
(g) Based on calendar day capacity,
which is an annual average that
includes downtime for planned
maintenance and other normal
operating activities. YTD 2020
crude oil refining capacity
excludes idled Martinez, Gallup
and Dickinson facilities for the
third and fourth quarters of
2020.
Refining & Marketing Operating Statistics by Region (Unaudited)
Twelve Months Ended Twelve Months Ended
December 31, December 31,
2020 2019 2020 2019
Gulf Coast
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b) $
5.96 $
11.49 $
6.71 $
9.94
Refining operating costs(c) 3.42 5.00 4.13 4.27
Refining planned turnaround costs 0.12 0.65 0.70 0.30
Refining depreciation and amortization 1.47 1.16 1.45 1.10
Refinery throughputs (mbpd):
Crude oil refined 997 1,022 987 1,115
Other charge and blendstocks 113 257 129 202
Gross refinery throughput 1,110 1,279 1,116 1,317
Sour crude oil throughput (percent) 57 58 63 61
Sweet crude oil throughput (percent) 43 42 37 39
Refined product yields (mbpd):
Gasoline 538 569 498 566
Distillates 389 400 385 428
Propane 28 29 26 28
Feedstocks and special products 172 280 215 291
Heavy fuel oil 3 17 7 15
Asphalt 15 15 17 20
Total 1,145 1,310 1,148 1,348
Inter-region refinery transfers included in throughput and yields 12 113 36 69
above (mbpd)
Mid-Continent
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b) $
8.22 $
17.30 $
10.07 $
17.70
Refining operating costs(c) 5.03 5.36 5.19 5.16
Refining planned turnaround costs 0.84 0.42 0.86 0.66
Refining depreciation and amortization 1.83 1.45 1.79 1.51
Refinery throughputs (mbpd):
Crude oil refined 936 1,189 989 1,150
Other charge and blendstocks 71 64 52 54
Gross refinery throughput 1,007 1,253 1,041 1,204
Sour crude oil throughput (percent) 26 26 26 27
Sweet crude oil throughput (percent) 74 74 74 73
Refined product yields (mbpd):
Gasoline 560 674 550 632
Distillates 346 434 355 413
Propane 17 17 18 18
Feedstocks and special products 15 44 48 60
Heavy fuel oil 11 20 11 16
Asphalt 61 66 63 67
Total 1,010 1,255 1,045 1,206
Inter-region refinery transfers included in throughput and yields 12 12 10 10
above (mbpd)
West Coast
Dollar per barrel of refinery throughput:(a)
Refining & Marketing margin(b)(d) $
9.28 $
23.15 $
11.69 $
18.54
Refining operating costs(c) 9.27 8.84 9.57 8.19
Refining planned turnaround costs 0.42 0.46 1.23 1.20
Refining depreciation and amortization 1.61 1.26 1.56 1.11
Refinery throughputs (mbpd):
Crude oil refined 402 620 442 637
Other charge and blendstocks 45 65 44 64
Gross refinery throughput 447 685 486 701
Sour crude oil throughput (percent) 72 61 70 63
Sweet crude oil throughput (percent) 28 39 30 37
Refined product yields (mbpd):
Gasoline 246 380 266 362
Distillates 157 240 165 246
Propane 6 10 7 9
Feedstocks and special products 19 45 32 68
Heavy fuel oil 20 24 19 24
Asphalt 1
Total 448 699 490 709
Inter-region refinery transfers included in throughput and yields 12 23 14 31
above (mbpd)
(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. Excludes
LIFO liquidation charges of $305
million for the fourth quarter
2020 and $561 million for the
year 2020.
(c) Excludes refining planned
turnaround and depreciation and
amortization expense.
(d) Includes direct dealer results
due to our third quarter 2020
change in segment presentation.
Midstream Operating Statistics (Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2020 2019 2020 2019
Pipeline throughputs (mbpd)(a) 4,838 5,231 4,805 5,245
Terminal throughput (mbpd) 2,606 3,313 2,673 3,279
Gathering system throughput (million cubic feet per day)(b) 5,265 6,192 5,475 6,094
Natural gas processed (million cubic feet per day)(b) 8,677 8,759 8,613 8,661
C2 (ethane) + NGLs fractionated (mbpd)(b) 585 557 562 534
(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.
Speedway Operating Statistics (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020 2019 2020 2019
Speedway fuel sales (millions of gallons) 1,503 1,838 5,919 7,658
Speedway fuel margin (dollars per gallon)(a) $
0.2899 $
0.2611 $
0.3452 $
0.2434
Merchandise sales (in millions) $
1,587 $
1,569 $
6,384 $
6,305
Merchandise margin (in millions) $
470 $
451 $
1,846 $
1,827
Merchandise margin percent 29.7 28.7 28.9 29.0
% % % %
Same store gasoline sales volume (period over period)(b) (18.1) (4.2) (20.0) (3.3)
% % % %
Same store merchandise sales (period over period)(b)(c) 1.8 4.7 (0.2) 5.4
% % % %
Total convenience stores at period-end 3,839 3,898
(a) Includes bankcard processing
fees (as applicable).
(b) Same store comparison includes
only locations owned at least
13 months.
(c) Excludes cigarettes.
Select Financial Data (Unaudited)
(In millions) December 31 September 30
2020 2020
--- ---
Cash and cash equivalents(a) $
555 $
716
MPC debt(b) 11,575 11,648
MPLX debt 20,139 20,349
Total consolidated debt(b) 31,714 31,997
Redeemable noncontrolling interest 968 968
Equity 29,159 29,546
Shares outstanding 651 651
(a) Includes Speedway's cash and
cash equivalents of $140
million and $98 million,
respectively, which is
classified as assets held for
sale on MPC's consolidated
balance sheets. Includes MPLX
cash and cash equivalents of
$15 million and $28 million,
respectively.
(b) Includes Speedway's debt of $130
million and $120 million,
respectively, which is
classified as liabilities held
for sale on MPC's consolidated
balance sheets.
Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to their most comparable GAAP financial measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measures we use are as follows:
Adjusted Net Income Attributable to MPC
Adjusted net income attributable to MPC is defined as net income attributable to MPC excluding the items in the table below, along with their related income tax effect. For the three and twelve months ended Dec. 31, 2020, we applied a combined federal and state statutory tax rate of 24% to the adjusted pre-tax loss for those periods. 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
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Net income (loss) attributable to MPC $
192 $
443 $
(9,919) $
2,637
Pre-tax adjustments:
LCM inventory valuation adjustment (1,210)
Impairments 146 1,239 9,741 1,239
Restructuring expenses 19 367
LIFO liquidation charge 305 561
Litigation (84) (84) 22
Gain on sale of assets (66) (66)
Transaction-related costs 39 13 122 160
Equity method investment restructuring gains (52) (259)
Biodiesel tax credit (175) (104)
Out of period tax adjustment 36
Purchase accounting - depreciation and amortization (17)
Tax impact of adjustments(a) 71 9 (1,638) 22
Non-controlling interest impact of adjustments (20) (459) (1,315) (457)
Adjusted net income (loss) attributable to MPC $
(608) $
1,018 $
(2,231) $
3,279
Diluted income (loss) per share $
0.29 $
0.68 $
(15.28) $
3.97
Adjusted diluted income (loss) per share
(b) $
(0.94) $
1.56 $
(3.44) $
4.94
(a) For the three and twelve months
ended Dec. 31, 2020, income taxes
for adjusted earnings was
calculated by applying a combined
federal and state statutory tax
rate of 24% to the adjusted pre-
tax loss for these periods. The
corresponding adjustments to
reported income taxes is shown in
the table above.
(b) For the three and twelve months
ended Dec. 31, 2020, weighted-
average diluted shares used for
the adjusted net loss per share
calculations do not assume the
conversion of share-based awards,
as the effect would be
antidilutive.
Adjusted EBITDA & Segment Adjusted EBITDA
Adjusted EBITDA and Segment Adjusted EBITDA represent earnings before net interest and other financial costs, income taxes, depreciation and amortization expense as well as adjustments to exclude refining turnaround costs, items not allocated to segment results and other items shown in the table below. We believe these non-GAAP financial measures are useful to investors and analysts to analyze and compare our operating performance between periods by excluding items that do not reflect the core operating results of our business or in the case of turnarounds, which provide benefits over multiple years. We also believe that excluding turnaround costs from this metric is useful for comparability to other companies as certain of our competitors defer these costs and amortize them between turnarounds. Adjusted EBITDA and Segment Adjusted EBITDA should not be considered as a substitute for, or superior to segment income (loss) from operations, net income attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA and Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted EBITDA from Continuing
Operations
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Net income (loss) attributable to MPC $
192 $
443 $
(9,919) $
2,637
Plus (Less):
Income from discontinued operations, net of tax (324) (185) (1,205) (806)
Net interest and other financial costs 333 297 1,365 1,229
Net income (loss) attributable to noncontrolling interests 289 (181) (151) 618
Provision (benefit) for income taxes (100) 184 (2,337) 784
Depreciation and amortization 849 850 3,375 3,225
Refining planned turnaround costs 107 153 832 740
LCM inventory valuation adjustment (1,185)
Impairments 146 1,239 9,741 1,239
Restructuring expenses 19 367
LIFO liquidation charge 305 561
Litigation (84) (84) 22
Gain on sale of assets (66) (66)
Transaction-related costs 6 8 153
Equity method investment restructuring gains (52) (259)
Adjusted EBITDA from continuing operations $
481 $
2,754 $
2,487 $
9,582
Reconciliation of Income from Discontinued Operations, Net of Tax to EBITDA from Discontinued
Operations (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In millions) 2020 2019 2020 2019
---
Income from discontinued operations, net of tax $
324 $
185 $
1,205 $
806
Plus (Less):
Net interest and other financial costs 5 5 20 18
Provision for income taxes 76 93 362 290
Depreciation and amortization(a) 7 128 244 413
LCM inventory valuation adjustment (25)
Transaction-related costs 39 7 114 7
Adjusted EBITDA from discontinued operations $
426 $
418 $
1,945 $
1,534
(a) As of August 2, 2020, MPC
ceased recording depreciation
and amortization for Speedway.
Asset write-offs and
retirements charges, which
totaled $7 million for the
fourth quarter 2020, are
presented as depreciation and
amortization in our financial
statements for all periods
presented.
Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products.
Reconciliation of Refining & Marketing Income (Loss) from Operations to Refining & Marketing
Gross Margin and Refining & Marketing Margin
Effective in the third quarter of 2020, Refining & Marketing historical results have been recast and now
include the results of the retained direct dealer business.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
---
(In millions) 2020 2019 2020 2019
---
Refining & Marketing income (loss) from operations
(a) $
(1,579) $
1,106 $
(5,189) $
2,856
Plus (Less):
Selling, general and administrative expenses 454 549 2,030 2,211
LCM inventory valuation adjustment 1,185
(Income) loss from equity method investments (8) (1) (2) (11)
Net (gain) loss on disposal of assets (1) (1) (8)
Other income (26) (13) (35) (43)
Refining & Marketing gross margin 25 1,641 (3,197) 5,005
Plus (Less):
Operating expenses (excluding depreciation and amortization) 2,213 2,829 9,694 10,710
LCM inventory valuation adjustment (1,185)
Depreciation and amortization 465 461 1,857 1,780
Gross margin excluded from Refining & Marketing margin(b) (80) (157) (365) (621)
Other taxes included in Refining & Marketing margin (17) (3) (79) (11)
Biodiesel tax credit (153) (93)
Refining & Marketing margin
(a) 1,421 4,618 7,910 16,770
LIFO liquidation charge 305 561
Refining & Marketing margin, excluding LIFO liquidation charge $
1,726 $
4,618 $
8,471 $
16,770
Refining & Marketing margin by region:
Gulf Coast $
601 $
1,233 $
2,652 $
4,525
Mid-Continent 753 1,975 3,801 7,712
West Coast 372 1,410 2,018 4,533
Refining & Marketing margin, excluding LIFO liquidation charge $
1,726 $
4,618 $
8,471 $
16,770
(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 other related operations
included in the Refining &
Marketing segment such as
biodiesel facilities, ethanol
ventures, cogeneration power
facilities and processing of
credit card transactions on
behalf of certain of our
marketing customers.
Speedway Fuel Margin
Speedway fuel margin is defined as the price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable).
Speedway Merchandise Margin
Speedway merchandise margin is defined as the price paid by consumers less the cost of merchandise.
Reconciliation of Income from Discontinued Operations to Speedway Gross Margin and Speedway Margin
Three Months Ended
Twelve Months Ended
December 31,
December 31,
---
(in millions) 2020 2019 2020 2019
---
Income from discontinued operations $
405 $
283 $
1,587 $
1,114
Plus (Less):
Operating, selling, general and administrative expenses 597 617 2,376 2,371
Income from equity method investments (23) (24) (93) (82)
Net gain on disposal of assets (1) (27) (1) (29)
Other income (43) (35) (170) (44)
Speedway gross margin 935 814 3,699 3,330
Plus (Less):
LCM inventory valuation adjustment (25)
Depreciation and amortization 7 128 244 413
Speedway margin
(a) $
917 $
942 $
3,943 $
3,743
Speedway margin:
Fuel margin $
436 $
479 $
2,043 $
1,864
Merchandise margin 470 451 1,846 1,827
Other margin 11 12 54 52
Speedway margin $
917 $
942 $
3,943 $
3,743
(a) LCM inventory valuation
adjustments are excluded from
Speedway margin.
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SOURCE Marathon Petroleum Corporation
