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Press Release

Marathon Petroleum Corp. Reports Third Quarter 2018 Results

Company Release - 11/1/2018 6:33 AM ET

FINDLAY, Ohio, Nov. 1, 2018 /PRNewswire/ --

  • Reported third quarter earnings of $737 million, or $1.62 per diluted share
  • Refining and Marketing segment income from operations of $666 million as strong market fundamentals supported high utilization
  • Midstream segment income from operations of $679 million, achieved significant growth with higher volumes and multiple new assets coming online
  • Generated $1.2 billion in cash from operations during the quarter and returned $607 million to shareholders
  • Closed Andeavor acquisition on October 1st with integration underway

Marathon Petroleum Corp. (NYSE: MPC) today reported 2018 third quarter earnings of $737 million, or $1.62 per diluted share. Third quarter 2018 earnings included pre-tax charges of $49 million related to pension settlement and transaction costs, or approximately $0.08 per diluted share. This compares with $903 million, or $1.77 per diluted share, in the third quarter of 2017.

"On October 1, we closed on our strategic combination with Andeavor after a vote that demonstrated overwhelming support by both sets of shareholders. We are now the leading, integrated, downstream energy company in the U.S.," said Gary R. Heminger, chairman and chief executive officer. "As we look forward, we see extraordinary potential across our nationwide platform including over $1 billion of annual run-rate synergies within the first three years."

"This was another impressive quarter," Heminger continued. "Our team's strong execution drove over $1.2 billion of cash from operations, allowing us to return $607 million to shareholders, contributing to the $3.2 billion of capital returned so far in 2018. The market environment appears favorable and our integrated business model enables us to capture opportunities including wider crude differentials and the changing dynamics of low-sulfur fuel requirements which we expect to begin to see in the second half of 2019."

Segment Results

MPC's income from operations was $1.40 billion in the third quarter of 2018, compared with $1.58 billion in the third quarter of 2017, driven by strong contributions from the Midstream segment, offset by lower segment income from operations in the Refining and Marketing (R&M) and Speedway segments.


Three Months Ended
 September 30

(In millions)

2018


2017

Income from Operations by Segment






Refining & Marketing

$

666



$

1,097


Speedway


161




208


Midstream


679




355


Items not allocated to segments


(103)




(83)


        Income from operations(a)

$

1,403



$

1,577



(a)     We adopted Accounting Standards Update 2017-07, Retirement Benefits Presentation of Pension and Postretirement Cost, as 
         of Jan. 1, 2018, and applied the standard retrospectively. As a result, we reclassified prior period amounts from selling, general 
         and administrative expenses to net interest and other financial costs to conform to current period presentation.

Refining & Marketing

R&M segment income from operations was $666 million, compared with $1.1 billion in the third quarter of 2017. The year-over-year decrease in R&M segment results was primarily driven by lower Midwest and Gulf Coast crack spreads, partially offset by wider WCS- and WTI- based crude differentials. In addition, R&M segment income was $230 million lower resulting from the February 1, 2018 dropdown transaction. Prior period R&M segment results do not reflect the impact of the dropdown.

Refinery utilization was 97 percent during the quarter. The U.S. Gulf Coast and Chicago LLS blended 6-3-2-1 crack spread on an ex-RIN basis was $8.03 per barrel in the third quarter of 2018 as compared to $8.68 per barrel in the third quarter of 2017. These crack spreads are net of RIN crack adjustments of $1.73 and $4.00 per barrel for the third quarter of 2018 and 2017, respectively.

Midstream

Midstream segment income from operations, which largely reflects MPLX LP (NYSE: MPLX), was $679 million in the quarter, compared with $355 million in the third quarter of 2017. The results include $230 million from the February 1, 2018 drop of refining logistics and fuels distribution services to MPLX. Prior period Midstream segment results do not reflect the impact of these businesses. The incremental $94 million increase in third quarter Midstream segment results were driven by strong pipeline throughput volumes as well as record gathered, processed and fractionated volumes.

During the quarter, MPLX announced several new projects. First, the company plans to participate in a new 600-mile crude pipeline running from the Permian Basin to the Texas Gulf Coast region. Second, the company also plans to jointly develop the Whistler Pipeline, a 2.0 billion cubic feet per day (bcf/d) pipeline designed to deliver natural gas to the Agua Dulce market hub. Lastly, the company announced the acquisition of a Gulf Coast export terminal in Mt. Airy, Louisiana with 4 million barrels of third-party leased storage capacity and a 120 thousand barrel-per-day (mbpd) dock.

Additionally in October, MPLX announced with Crimson Midstream, LLC the commencement of an open season on the proposed 600 mbpd Swordfish Pipeline from St. James, Louisiana, and Raceland, Louisiana, to the Louisiana Offshore Oil Port LLC (LOOP) terminal facility in Clovelly, Louisiana.

Speedway

Speedway segment income from operations was $161 million in the quarter, compared with $208 million in the third quarter of 2017. The year-over-year decrease in segment results was primarily related to higher operating expenses and lower light product margins. Speedway's gasoline and distillate margin decreased to 16.51 cents per gallon in the third quarter of 2018 compared with 17.72 cents per gallon in the third quarter of 2017 primarily due to the effects of rising crude oil prices.

For the quarter, same-store merchandise sales increased by 4.9 percent and same-store gasoline sales volume decreased by 1.2 percent year-over-year. Expenses increased $28 million, primarily due to higher labor and benefits costs. Depreciation was $8 million higher, primarily due to increased investment in the business.

MPC has begun the process of converting the Andeavor company-owned-and-operated stores to the Speedway brand. Since the closing of the transaction on October 1st, roughly 90 sites in the St. Paul and Minneapolis markets have been converted and the company expects to complete approximately 200 sites in total by the end of 2018.

Items Not Allocated to Segments

Items not allocated to segments totaled $103 million of expenses in the third quarter of 2018, compared with $83 million in the third quarter of 2017. The increase was due to transaction costs related to the combination with Andeavor and increased employee benefit costs.

Strong Financial Position and Liquidity

On September 30, 2018, the company had $5.0 billion of cash and cash equivalents, including the approximately $3.5 billion necessary to close the Andeavor transaction on October 1, 2018; $2.5 billion available under a revolving credit agreement and full availability under its $750 million trade receivables securitization facility.

During the quarter, MPC returned $607 million to MPC shareholders, including $400 million in share repurchases. MPC remains committed to its disciplined capital strategy and returning capital beyond the needs of the business in a manner consistent with maintaining the company's current investment-grade credit profile.

MPC Revolving Credit Agreements

On August 28, 2018, in connection with the Andeavor transaction, MPC entered into agreements with a syndicate of lenders to replace MPC's previous credit facilities. The facilities, which became effective October 1, 2018, provide for a $5 billion five-year revolving credit agreement that expires in 2023 and a $1.0 billion 364-day revolving credit agreement that expires in 2019.

The financial covenants and the interest rate terms contained in the new credit agreements are substantially the same as those contained in the previous bank revolving credit facilities.

MPC Senior Notes

As a result of the completion of the Andeavor transaction, MPC assumed an aggregate principal amount of $3.375 billion senior notes issued by Andeavor. On October 2, 2018, approximately $2.905 billion aggregate principal amount of Andeavor's outstanding senior notes were part of an exchange offer and consent solicitation undertaken by MPC and Andeavor, where unsecured notes were exchanged for new unsecured senior notes issued by MPC having the same maturity and interest rates as the Andeavor senior notes and cash.

Other Strategic Updates

In October, MPC began evaluating the financial business plans of Andeavor Logistics LP (NYSE: ANDX), with the intent to move toward financial policies more consistent with its approach towards MPLX. This approach includes meaningfully higher distribution coverage, leverage levels at or below 4.0x EBITDA, no planned public equity issuances, and independent sustainability with limited parent support.

MPC plans to engage advisors and begin the process of assessing all options for the two MLPs, which could include MPLX acquiring ANDX and ANDX acquiring MPLX.

Conference Call

At 9 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 "2018 Third Quarter Financial Results" link. A replay of the webcast will be available on the company's website for two weeks. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at http://ir.marathonpetroleum.com.

2018 Investor Day

Marathon Petroleum Corporation, MPLX LP, and Andeavor Logistics LP will host their 2018 Investor Day at the Mandarin Oriental Hotel in New York City on December 4, 2018 at 8:30 a.m. EST. Reservations are required to attend. Interested parties can request an invitation by contacting the Investor Relations department via email at investorrelations@marathonpetroleum.com. The presentation will also be webcast live at http://marathonpetroleum.com, http://mplx.com, and http://andeavorlogistics.com.

About Marathon Petroleum Corporation

Marathon Petroleum Corporation (NYSE: MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system with over 3.0 million barrels per day of crude oil capacity across sixteen refineries. MPC's marketing system includes approximately 7,800 branded locations across the United States, including approximately 5,600 Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates approximately 3,900 retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interests in two midstream companies, MPLX LP (NYSE: MPLX) and Andeavor Logistics LP (NYSE: ANDX), which own and operate gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure.

Investor Relations Contact:
Kristina Kazarian (419) 421-2071

Media Contact:
Chuck Rice (419) 421-2521

References to Earnings
References to earnings mean net income attributable to MPC from the statements of income. Unless otherwise indicated, references to earnings and earnings per share are MPC's share after excluding amounts attributable to noncontrolling interests.

Forward-looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC). These forward-looking statements relate to, among other things, the acquisition of Andeavor and include expectations, estimates and projections concerning the business and operations, strategic initiatives and value creation plans of MPC. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as "anticipate," "believe," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan," "position," "potential," "predict," "project," "prospective," "pursue," "seek," "should," "strategy," "target," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include: the risk that the cost savings and any other synergies from the Andeavor transaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income or earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; our ability to manage disruptions in credit markets or changes to our credit rating; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; MPC's share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan and to effect any share repurchases, including within the expected timeframe; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX or ANDX; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2017, and in MPC's Form 10-Q for the quarter ended June 30, 2018, filed with Securities and Exchange Commission (SEC). We have based our forward-looking statements on our current expectations, estimates and projections about our industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law. Copies of MPC's Form 10-K and Forms 10-Q are available on the SEC website, MPC's website at http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations office. 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. Copies of ANDX's Form 10-K are available on the SEC website, ANDX's website at http://ir.andeavorlogistics.com or by contacting ANDX's Investor Relations office.

Consolidated Statements of Income (Unaudited)



Three Months Ended
 September 30


Nine Months Ended
 September 30

(In millions, except per-share data)

2018


2017


2018


2017

Revenues and other income:












    Sales and other operating revenues(a)

$

22,787


$

19,053


$

63,599


$

53,220

    Sales to related parties


201



157



572



458

    Income from equity method investments


96



84



262



224

    Net gain on disposal of assets


1





6



12

    Other income


47



92



122



219

        Total revenues and other income


23,132



19,386



64,561



54,133

Costs and expenses:












    Cost of revenues (excludes items below)(a)


20,457



16,617



57,344



47,664

    Purchases from related parties


149



148



428



420

    Depreciation and amortization


555



517



1,616



1,574

    Selling, general and administrative expenses(b)


445



411



1,271



1,286

    Other taxes


123



116



348



339

        Total costs and expenses


21,729



17,809



61,007



51,283

Income from operations(b)


1,403



1,577



3,554



2,850

    Net interest and other financial costs(b)


240



158



618



465

Income before income taxes


1,163



1,419



2,936



2,385

    Provision for income taxes


222



415



525



706

Net income


941



1,004



2,411



1,679

Less net income attributable to:












Redeemable noncontrolling interest


19



16



55



49

Noncontrolling interests


185



85



527



214

Net income attributable to MPC

$

737


$

903


$

1,829


$

1,416













Per-share data












Basic:












    Net income attributable to MPC per share

$

1.63


$

1.79


$

3.96


$

2.75

    Weighted average shares:


451



504



462



514

Diluted:












    Net income attributable to MPC per share

$

1.62


$

1.77


$

3.92


$

2.73

    Weighted average shares:


456



508



466



518


(a)     We adopted Accounting Standards Update 2014-09, Revenue - Revenue from contracts with customers, as of Jan. 1, 2018, 
         and elected to report certain taxes on a net basis. We applied the standard using the modified retrospective method and, 
         therefore, comparative information continues to reflect certain taxes on a gross basis.

(b)     We adopted Accounting Standards Update 2017-07, Retirement Benefits Presentation of Pension and Postretirement Cost, as 
         of Jan. 1, 2018, and applied the standard retrospectively. As a result, we reclassified prior period amounts from selling, general 
         and administrative expenses to net interest and other financial costs to conform to current period presentation.

 

Supplemental Statistics (Unaudited)



Three Months Ended
 September 30


Nine Months Ended
 September 30

(In millions)

2018


2017


2018


2017

Income from Operations by Segment












  Refining & Marketing(a)

$

666


$

1,097


$

1,558


$

1,589

  Speedway


161



208



415



581

  Midstream(a)


679



355



1,863



996

  Items not allocated to segments:












      Corporate and other unallocated items(b)(c)


(103)



(85)



(283)



(251)

      Litigation








(86)

      Impairments




2



1



21

Income from operations(b)


1,403



1,577



3,554



2,850

Net interest and other financial costs(b)


240



158



618



465

Income before income taxes


1,163



1,419



2,936



2,385

Provision for income taxes


222



415



525



706

Net income


941



1,004



2,411



1,679

Less net income attributable to:












Redeemable noncontrolling interest


19



16



55



49

Noncontrolling interests


185



85



527



214

Net income attributable to MPC

$

737


$

903


$

1,829


$

1,416













Capital Expenditures and Investments(d)












  Refining & Marketing

$

226


$

198


$

613


$

570

  Speedway


98



108



225



221

  Midstream


593



423



1,676



1,267

  Corporate and Other(e)


28



32



97



92

      Total

$

945


$

761


$

2,611


$

2,150


(a)     On Feb. 1, 2018, we contributed certain refining logistics assets and fuels distribution services to MPLX. The results of these 
         businesses are reported in the Midstream segment prospectively from Feb. 1, resulting in a net increase of $230 million and 
         $643 million to Midstream segment results and a net decrease to Refining & Marketing segment results of the same amounts 
         in the third quarter and first nine months of 2018, respectively. No effect was given to prior periods as these entities were not 
         considered businesses prior to Feb. 1, 2018.

(b)     We adopted Accounting Standards Update 2017-07, Retirement Benefits Presentation of Pension and Postretirement Cost, as 
         of Jan. 1, 2018, and applied the standard retrospectively. As a result, we reclassified prior period amounts from selling, general 
         and administrative expenses to net interest and other financial costs to conform to current period presentation.

(c)       Includes transaction-related costs from the Andeavor merger of $4 million and $14 million in the three and nine months ended 
         September 30, 2018, respectively.

(d)       Capital expenditures include changes in capital accruals and investments in affiliates, excluding acquisitions.

(e)       Includes capitalized interest of $21 million, $13 million, $55 million and $39 million, respectively.

 

Supplementary Statistics (Unaudited) (continued)



Three Months Ended
 September 30


Nine Months Ended
 September 30


2018


2017


2018


2017

MPC Consolidated Refined Product Sales Volumes
(thousands of barrels per day (mbpd))(a)


2,394



2,357



2,358



2,272

Refining & Marketing (R&M) Operating Statistics












R&M refined product sales volume (mbpd)(b)


2,382



2,357



2,346



2,263

Export sales volume (mbpd)(c)


280



331



289



291

R&M margin (dollars per barrel)(d)

$

14.25


$

14.14


$

13.48


$

12.42

Crude oil capacity utilization (percent)(e)


97.4



101.5



96.7



95.8

Refinery throughputs (mbpd):(f)












    Crude oil refined


1,833



1,845



1,819



1,741

    Other charge and blendstocks


199



172



173



176

        Total


2,032



2,017



1,992



1,917

Sour crude oil throughput (percent)


52



57



53



61

WTI-priced crude oil throughput (percent)


30



23



28



20

Refined product yields (mbpd):(f)












    Gasoline


942



939



942



910

    Distillates


676



673



659



627

    Propane


40



38



37



35

    Feedstocks and special products


313



298



294



285

    Heavy fuel oil


29



45



30



36

    Asphalt


73



67



68



64

        Total


2,073



2,060



2,030



1,957

Refinery direct operating costs ($/barrel):(g)












    Planned turnaround and major maintenance

$

1.77


$

1.20


$

1.64


$

1.69

    Depreciation and amortization


1.29



1.34



1.31



1.44

    Other manufacturing(h)


3.54



3.83



3.71



4.10

        Total

$

6.60


$

6.37


$

6.66


$

7.23

R&M Operating Statistics by Region - Gulf Coast












Refinery throughputs (mbpd):(i)












    Crude oil refined


1,150



1,123



1,121



1,041

    Other charge and blendstocks


204



217



187



219

        Total


1,354



1,340



1,308



1,260

Sour crude oil throughput (percent)


63



69



62



75

WTI-priced crude oil throughput (percent)


17



14



15



10

Refined product yields (mbpd):(i)












    Gasoline


567



538



557



525

    Distillates


442



438



421



393

    Propane


27



25



24



25

    Feedstocks and special products


314



326



301



310

    Heavy fuel oil


16



31



18



24

    Asphalt


22



19



21



17

        Total


1,388



1,377



1,342



1,294


 

Supplementary Statistics (Unaudited) (continued)



Three Months Ended
 September 30


Nine Months Ended
 September 30


2018


2017


2018


2017

Refinery direct operating costs ($/barrel):(g)












    Planned turnaround and major maintenance

$

0.64



$

0.90



$

1.30



$

1.86


    Depreciation and amortization


1.03




1.05




1.03




1.15


    Other manufacturing(h)


3.20




3.52




3.43




3.81


        Total

$

4.87



$

5.47



$

5.76



$

6.82


R&M Operating Statistics by Region - Midwest












Refinery throughputs (mbpd):(i)












    Crude oil refined


683




722




698




700


    Other charge and blendstocks


49




35




39




31


        Total


732




757




737




731


Sour crude oil throughput (percent)


34




38




37




41


WTI-priced crude oil throughput (percent)


52




38




49




34


Refined product yields (mbpd):(i)












    Gasoline


375




401




385




385


    Distillates


234




235




238




234


    Propane


13




14




13




11


    Feedstocks and special products


53




50




46




47


    Heavy fuel oil


13




15




12




13


    Asphalt


51




48




47




47


        Total


739




763




741




737


Refinery direct operating costs ($/barrel):(g)












    Planned turnaround and major maintenance

$

3.74



$

1.60



$

2.13



$

1.22


    Depreciation and amortization


1.68




1.72




1.70




1.80


    Other manufacturing(h)


3.89




3.96




3.96




4.19


        Total

$

9.31



$

7.28



$

7.79



$

7.21


Speedway Operating Statistics












Convenience stores at period-end


2,745




2,734








Gasoline and distillate sales (millions of gallons)


1,474




1,464




4,317




4,332


Gasoline and distillate margin (dollars per gallon)(j)

$

0.1651



$

0.1772



$

0.1620



$

0.1727


Merchandise sales (in millions)

$

1,339



$

1,295



$

3,753



$

3,693


Merchandise margin (in millions)

$

384



$

374



$

1,069



$

1,065


Merchandise margin percent


28.7

%



28.9

%



28.5

%



28.8

%

Same store gasoline sales volume (period over period)(k)


(1.2)

%



(3.1)

%



(1.8)

%



(1.6)

%

Same store merchandise sales (period over period)(k)(l)


4.9

%



0.3

%



3.4

%



1.5

%

Midstream Operating Statistics












Crude oil & refined product pipeline throughputs (mbpd)(m)


3,829




3,562




3,694




3,299


Terminal throughput (mbpd)


1,474




1,496




1,468




1,470


Gathering system throughput (million cubic feet per day)(n)


4,737




3,729




4,403




3,415


Natural gas processed (million cubic feet per day)(n)


7,171




6,581




6,874




6,336


C2 (ethane) + NGLs fractionated (mbpd)(n)


488




397




451




384



(a)     Total average daily volumes of refined product sales to wholesale, branded and retail customers.

(b)     Includes intersegment sales.

(c)       Represents fully loaded export cargoes for each time period. These sales volumes are included in the total sales volume 
         amounts.

(d)     Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs.

(e)     Based on calendar-day capacity, which is an annual average that includes down time for planned maintenance and other 
         normal operating activities.

(f)      Excludes inter-refinery volumes of 54 mbpd and 80 mbpd for the third quarter of 2018 and 2017, respectively and 53 mbpd and 
         74 mbpd for the nine months ended September 30, 2018, and 2017, respectively.

(g)     Per barrel of total refinery throughputs. Effective with the Feb. 1, 2018, dropdown, direct operating costs related to certain 
         refining logistics assets are now reported in the Midstream segment. Comparative information has not been adjusted.

(h)     Includes utilities, labor, routine maintenance and other operating costs.

(i)      Includes inter-refinery transfer volumes.

(j)      The price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bank card 
         processing fees, divided by gasoline and distillate sales volumes.

(k)       Same store comparison includes only locations owned at least 13 months.

(l)      Excludes cigarettes.

(m)    Includes common-carrier pipelines and private pipelines owned or operated by MPLX, excluding equity method investments.

(n)      Includes amounts related to unconsolidated equity method investments on a 100% basis.

 

Segment Earnings Before Interest, Taxes, Depreciation & Amortization (Segment EBITDA) (Unaudited)



Three Months Ended
 September 30


Nine Months Ended
 September 30

(In millions)

2018


2017


2018


2017

Segment EBITDA(a)












  Refining & Marketing(b)

$

923


$

1,363


$

2,319


$

2,394

  Speedway


237



276



643



778

  Midstream(b)


884



524



2,440



1,524

    Total Segment EBITDA(a)


2,044



2,163



5,402



4,696

Total segment depreciation & amortization


(538)



(503)



(1,566)



(1,530)

Items not allocated to segments


(103)



(83)



(282)



(316)

Income from operations


1,403



1,577



3,554



2,850

Net interest and other financial costs


240



158



618



465

Income before income taxes


1,163



1,419



2,936



2,385

Income tax provision


222



415



525



706

Net income


941



1,004



2,411



1,679

Less net income attributable to:












Redeemable noncontrolling interest


19



16



55



49

Noncontrolling interests


185



85



527



214

Net income attributable to MPC

$

737


$

903


$

1,829


$

1,416


(a)        Segment EBITDA represents segment earnings before interest and financing costs, interest income, income taxes and 
          depreciation and amortization expense. Segment EBITDA is used by some investors and analysts to analyze and compare 
          companies on the basis of operating performance. Segment EBITDA should not be considered as an alternative to net income 
          attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial 
          performance presented in accordance with accounting principles generally accepted in the United States. Segment EBITDA 
          may not be comparable to similarly titled measures used by other entities.

(b)        On Feb. 1, 2018, we contributed certain refining logistics assets and fuels distribution services to MPLX. The results of these 
          businesses are reported in the Midstream segment prospectively from Feb. 1, resulting in a net increase of $230 million and 
          $643 million to Midstream segment results and a net decrease to Refining & Marketing segment results of the same amounts 
          in the third quarter and first nine months of 2018, respectively. No effect was given to prior periods as these entities were not 
          considered businesses prior to Feb. 1, 2018.

 

Select Financial Data (Unaudited)


(In millions)

September 30
 2018


June 30
 2018

Cash and cash equivalents

$

4,992



$

4,999


MPLX debt


12,890




11,875


Total consolidated debt


18,449




17,267


Redeemable noncontrolling interest


1,003




1,003


Equity


19,031




18,818


Debt-to-total-capital ratio (percent)


48




47


Shares outstanding


451




456








Net cash provided by operations (quarter ended)

$

1,182



$

2,386








 


Three Months Ended
 September 30


Nine Months Ended
 September 30


2018


2017


2018


2017

Dividends paid per share

$

0.46


$

0.40


$

1.38


$

1.12













 

Reconciliation of Refining & Marketing Margin to Refining & Marketing Income from Operations



Three Months Ended
 September 30


Nine Months Ended
 September 30

(In millions)

2018


2017


2018


2017

Refining & Marketing income from operations

$

666


$

1,097


$

1,558


$

1,589

Plus:












Refinery direct operating costs(a)


992



933



2,912



3,029

Refinery depreciation and amortization


241



249



712



755

Other:












Operating expenses, net(a)(b)


748



328



2,101



1,075

Depreciation and amortization


16



17



49



50

Refining & Marketing margin(c)

$

2,663


$

2,624


$

7,332


$

6,498


(a)        Excludes depreciation and amortization.

(b)      Includes fees paid to MPLX for various midstream services. MPLX's results are reported in MPC's Midstream segment.

(c)        Refining & Marketing margin is defined as sales revenue less cost of refinery inputs and purchased products, excluding any 
          LCM inventory market adjustment. We believe this non-GAAP financial measure is useful to investors and analysts to assess 
          our ongoing financial performance because, when reconciled to its most comparable GAAP measure, it provides improved 
          comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating 
          performance and that may obscure our underlying business results and trends. This measure should not be considered a 
          substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations 
          thereof may not be comparable to similarly titled measures reported by other companies.

 

Reconciliation of Speedway Total Margin to Speedway Income from Operations



Three Months Ended
 September 30


Nine Months Ended
 September 30

(in millions)

2018


2017


2018


2017

Speedway income from operations

$

161


$

208


$

415


$

581

Plus (Less):












Operating, selling, general and administrative expenses


418



390



1,203



1,133

Depreciation and amortization


76



68



228



197

Income from equity method investments


(18)



(20)



(51)



(54)

Net gain on disposal of assets


(1)



(2)



(1)



(12)

Other income


(2)



(3)



(5)



(9)

Speedway total margin

$

634


$

641


$

1,789


$

1,836













Speedway total margin:(a)












Gasoline and distillate margin

$

243


$

259


$

699


$

748

Merchandise margin


384



374



1,069



1,065

Other margin


7



8



21



23

Speedway total margin

$

634


$

641


$

1,789


$

1,836


(a)        Speedway gasoline and distillate margin is defined as the price paid by consumers less the cost of refined products, including 
          transportation, consumer excise taxes and bank card processing fees and excluding any LCM inventory market adjustment. 
          Speedway merchandise margin is defined as the price paid by consumers less the cost of merchandise. We believe these non-
          GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when 
          reconciled to the most comparable GAAP measures, they provide improved comparability between periods through the 
          exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our 
          underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of 
          financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly 
          titled measures reported by other companies.

 

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SOURCE Marathon Petroleum Corporation