Thursday, April 30, 2015 10:00 a.m. ET
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Marathon Petroleum Corporation Reports First-Quarter 2015 Results
"Our record first-quarter earnings highlight Marathon Petroleum's ability to take full advantage of favorable market conditions," said Gary R. Heminger, president and chief executive officer. "Our extensive logistics and retail networks give us tremendous flexibility in feedstock acquisition and the ability to optimize refining operations and product distribution throughout our marketing footprint."
Heminger noted that MPC's integrated refining system made a significant contribution to the quarter's earnings. "Our refineries operated very well during the first quarter, and we were able to capture the strong Gulf Coast and Midwest crack spreads," he said, noting that the facilities also benefited from lower maintenance activity relative to the prior year. "I am particularly proud of the dedicated employees at both our Catlettsburg and Galveston Bay refineries for operating our facilities safely, efficiently, and without production impact during the recent work stoppage."
Heminger said MPC had finalized labor agreements at its Catlettsburg, Ky.; Texas City, Texas; and Canton, Ohio, refineries. "We are pleased that we were able to reach these agreements, and we look forward to an equally successful outcome at our Galveston Bay refinery complex in Texas," he added.
Speedway, MPC's retail segment, performed very well, achieving record first-quarter earnings even before the contribution from its newly acquired locations. "Speedway continues to make excellent progress converting its new retail locations to the Speedway brand," Heminger said. "As of today, we have rebranded more than 400 stores, including 260 completed during the first quarter. The rapid pace of store conversions contributes to our confidence that we will achieve the synergies and marketing enhancements we expect as we integrate this business."
In the midstream, Heminger announced that the MPC board of directors authorized the sale of its marine business to MPLX LP (NYSE: MPLX), a master limited partnership (MLP) sponsored by MPC. The marine operations are a fully integrated waterborne transportation service provider, capable of moving light products, heavy oils, crude oil, renewable fuels, chemicals and feedstocks throughout the Midwest and Gulf Coast regions of the U.S. Its assets include 18 towboats and 203 tank barges, among other related assets.
Heminger also noted that MPLX completed a binding open season for its Cornerstone Pipeline project, which he said is being increased in size to 16 inches to provide an industry logistics solution in the region. "This type of organic growth, in addition to both third-party acquisitions and MPC-sponsored drop-downs, demonstrates our commitment to grow MPLX into a large-cap, diversified MLP with an attractive distribution profile," Heminger said. "It is our intent to grow the partnership substantially and increase its limited partner distributions by 29 percent this calendar year, which further supports the value proposition for MPC shareholders."
Heminger added that MPC continued its commitment to capital returns in the quarter, with $209 million of its shares repurchased, in addition to $136 million in dividends. A total of $1.5 billion remains on the existing share repurchase authorization.
MPC also announced yesterday that its board of directors declared a two-for-one stock split in the form of a stock dividend, to be distributed to MPC shareholders on June 10. The shares are expected to begin trading on a split basis June 11. "MPC has performed very well for its owners since we became an independent company in mid-2011," said Heminger. "Our share price has increased substantially since the spinoff, and we believe the stock split will make our shares attractive and affordable for a wider range of investors, and reflects our confidence in MPC's continued value creation."
MPC's geographic footprint and integrated system, coupled with favorable market conditions, create a positive outlook for the business, Heminger concluded. "Our large, integrated platform provides us excellent access to price-advantaged domestic crude oil and low-cost natural gas, and the significant planned maintenance activity performed in 2014 has positioned us to run at high utilization through the balance of the year," he said. "Our efforts to accelerate the pace of growth at MPLX, grow our retail segment and enhance refining margins support the diversified earnings power of the business, and we remain confident in our ability to deliver long-term value for our shareholders."
Total income from operations was $1.47 billion in the first quarter of 2015, compared with $361 million in the first quarter of 2014.
Refining & Marketing
Refining & Marketing segment income from operations was $1.32 billion in the first quarter of 2015, compared with $362 million in the first quarter of 2014. The increase was primarily due to higher U.S. Gulf Coast and Chicago crack spreads and lower turnaround and other direct operating costs. The Gulf Coast and Chicago Light Louisiana Sweet 6-3-2-1 blended crack spread increased to $9.69 per barrel in the first quarter of 2015 from $7.85 per barrel in the first quarter of 2014. Compared to the heavy turnaround activity during the first quarter of 2014, turnaround and major maintenance costs decreased to $0.79 per barrel in the first quarter of 2015 from $3.15 per barrel in 2014. During the quarter, MPC recorded a pre-tax charge of approximately $30 million from valuing its inventory using the last-in, first-out (LIFO) method of accounting.
Speedway segment income from operations was $168 million in the first quarter of 2015, compared with $58 million in the first quarter of 2014. Approximately two-thirds of this increase was related to the legacy Speedway stores, and was primarily the result of higher light product and merchandise margins, partially offset by higher operating and administrative expenses. Speedway's newly acquired locations are performing better than expected, contributing income of approximately $36 million to the quarter's results. Speedway's consolidated light product margin increased to 19.7 cents per gallon in the first quarter of 2015, from 11.56 cents per gallon in the first quarter of 2014.
Pipeline Transportation segment income from operations, which includes 100 percent of MPLX's operations, was $67 million in the first quarter of 2015, compared with $72 million for the first quarter of 2014. The decrease was primarily due to an increase in various operating expenses.
Items Not Allocated to Segments
Corporate and other unallocated expenses of $80 million in the first quarter of 2015 were $13 million higher than the first quarter of 2014 largely due to lower allocated employee benefit costs. During the first quarter of 2015, MPC recorded pretax pension settlement expenses of $1 million resulting from the level of employee lump-sum retirement distributions occurring in 2015, compared with $64 million of pretax pension settlement expenses in the first quarter of 2014.
Strong Financial Position and Liquidity
On March 31, the company had $2.1 billion in cash and cash equivalents, an unused $2.5 billion revolving credit agreement and $1 billion of availability on its undrawn $1.3 billion trade receivables securitization facility. Availability under the trade receivables facility is a function of refined product selling prices, which will be lower in a sustained lower price environment. The company's liquidity should provide it with sufficient flexibility to meet its day-to-day operational needs and continue its balanced approach to investing in the business and returning capital to shareholders.
At 10 a.m. EDT today, MPC will hold a webcast and conference call to discuss the reported results and provide an update on company operations. Interested parties may listen to the conference call on MPC's website at http://www.marathonpetroleum.com by clicking on the "2015 First-Quarter Financial Results" link. Replays of the conference call will be available on the company's website through Wednesday, May 13. Financial information, including the earnings release and other investor-related material, will also be available online prior to the webcast and conference call at http://ir.marathonpetroleum.com in the Quarterly Investor Packet and Earnings Capsule.
About Marathon Petroleum Corporation
MPC is the nation's fourth-largest refiner, with a crude oil refining capacity of approximately 1.7 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,500 independently owned retail outlets across 19 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,750 convenience stores in 22 states. MPC also owns, leases or has ownership interests in approximately 8,300 miles of pipeline. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership. MPC's fully integrated system provides operational flexibility to move crude oil, feedstocks and petroleum-related products efficiently through the company's distribution network in the Midwest, Southeast and Gulf Coast regions. For additional information about the company, please visit our website at http://www.marathonpetroleum.com.
Investor Relations Contacts:
References to Earnings
Copies of MPC's Form 10-K are available on the SEC website, MPC's website at http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations Office. Copies of MPLX's Form 10-K are available on the SEC website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.
Consolidated Statements of Income (Unaudited)
Supplemental Statistics (Unaudited)
(a) Includes capitalized interest.
Supplementary Statistics (Unaudited) (continued)
Supplementary Statistics (Unaudited) (continued)
(a) Total average daily volumes of refined product sales to wholesale, branded and retail (Speedway segment) customers.
Segment Earnings Before Interest, Taxes, Depreciation & Amortization (Segment EBITDA) (Unaudited)
Select Financial Data (Unaudited)
(a) Includes long-term debt due within one year.
Marathon Petroleum Corporation to Announce 2015 First-Quarter Financial Results April 30
FINDLAY, Ohio, March 20, 2015 - Marathon Petroleum Corporation (NYSE: MPC) announced today that it will host a conference call on Thursday, April 30, at 10 a.m. EDT to provide an update on company operations and to discuss 2015 first-quarter financial results, which will be released earlier that day.
MPC participants will be Gary Heminger, president and chief executive officer; Don Templin, executive vice president of Supply, Transportation and Marketing; Tim Griffith, senior vice president and chief financial officer; and Mike Palmer, senior vice president of Supply, Distribution and Planning. The call will be hosted by Geri Ewing, director of investor relations.
Interested parties may listen to the conference call on MPC's website at http://www.marathonpetroleum.com by clicking on the "2015 First-Quarter Financial Results" link. Replays of the conference call will be available on the company's website through Wednesday, May 13. Financial information, including the earnings release and other investor-related material, also will be available online.
About Marathon Petroleum Corporation
Investor Relations Contacts: