Summary
Marathon Petroleum Corporation (MPC) reported its 2016 annual results, showcasing a diversified business model across refining, marketing, retail (Speedway), and midstream operations. The company experienced a notable decrease in net income attributable to MPC, falling to $1.17 billion in 2016 from $2.85 billion in 2015. This decline was primarily driven by a significant decrease in income from operations in the Refining & Marketing segment, which was impacted by lower crack spreads and higher operating costs. While the Speedway segment saw an increase in income from operations due to higher merchandise gross margin and asset sales, and the Midstream segment benefited from the inclusion of MarkWest’s results following the 2015 merger, these positive contributions were not enough to offset the drop in refining profits. MPC also incurred substantial impairment charges in 2016 related to equity method investments, notably the Sandpiper pipeline project, and goodwill associated with the MarkWest Merger. Looking ahead, MPC announced strategic actions to enhance shareholder value, including accelerating the dropdown of midstream assets to MPLX, with plans to exchange economic interests in MPLX's general partner for common units. The company also initiated a review of its Speedway business to ensure optimal shareholder value. MPC maintained a strong liquidity position and reported a manageable debt-to-total-capital ratio, underscoring its financial stability while pursuing strategic growth initiatives.
Financial Highlights
52 data points| Revenue | $63.28B |
| Cost of Revenue | $56.68B |
| Gross Profit | $6.60B |
| SG&A Expenses | $1.60B |
| Operating Expenses | $60.98B |
| Operating Income | $2.39B |
| Interest Expense | $602.00M |
| Net Income | $1.17B |
| EPS (Basic) | $2.22 |
| EPS (Diluted) | $2.21 |
| Shares Outstanding (Basic) | 528.00M |
| Shares Outstanding (Diluted) | 530.00M |
Key Highlights
- 1Net income attributable to MPC decreased by 59% to $1.17 billion in 2016, largely due to weaker performance in the Refining & Marketing segment.
- 2The Refining & Marketing segment's income from operations declined significantly, primarily due to lower crack spreads and higher operating costs, partially offset by a favorable inventory valuation adjustment.
- 3The Speedway segment showed improved income from operations, driven by higher merchandise gross margin and asset sales, despite lower gasoline and distillate margins.
- 4The Midstream segment's income from operations increased, benefiting from the full year inclusion of MarkWest results post-merger and earnings from new equity investments.
- 5MPC recognized substantial impairment charges totaling $486 million in 2016, including $267 million for the Sandpiper pipeline project and $130 million related to goodwill from the MarkWest Merger.
- 6The company announced strategic actions to enhance shareholder value, including accelerating midstream asset dropdowns to MPLX and reviewing Speedway's strategic alternatives.
- 7MPC maintained a strong financial position with $887 million in cash and cash equivalents and $4.18 billion in unused committed borrowing facilities as of December 31, 2016.