01—Abstract
Summary
Summary of the 10-K filed February 28, 2020. Cited figures are marked; the original filing is the authoritative source.
Marathon Petroleum Corporation (MPC) reported relatively flat income from operations in 2019 compared to 2018, primarily driven by increased performance in the Retail and Midstream segments, which was offset by higher impairments and increased net interest and other financial costs.
The company is undertaking significant strategic actions, including plans to separate its retail transportation fuel and convenience store business (Speedway) into an independent publicly traded company, targeted for completion in late 2020. Additionally, MPC's Board of Directors has formed a special committee to evaluate strategic alternatives for its Midstream business, primarily conducted through MPLX. Financially, MPC has a strong liquidity position, with significant availability under its credit facilities.
The company continued its commitment to returning capital to shareholders through share repurchases and dividends. The Andeavor acquisition, completed in late 2018, significantly increased the scale and geographic diversification of MPC's assets, though it also contributed to increased debt and integration-related costs. The company's business is organized into three segments: Refining & Marketing, Retail, and Midstream.
Refining & Marketing remains the largest segment by revenue, operating the nation's largest refining system. The Retail segment benefits from the Speedway brand and loyalty program, while the Midstream segment, largely through MPLX, provides integrated logistics and infrastructure services. MPC is also investing in renewable diesel production, converting its Dickinson refinery by the end of 2020.
02—Key points
Key Highlights
- Marathon Petroleum Corporation (MPC) announced its intention to separate its retail transportation fuel and convenience store business (Speedway) into an independent, publicly traded company, with the separation targeted for completion in the fourth quarter of 2020.
- MPC's Board of Directors is evaluating strategic alternatives for its Midstream business, which is primarily conducted through its MLP, MPLX.
- The company operates the largest refining system in the United States, with 16 refineries and a total crude oil refining capacity of 3,067 mbpcd.
- MPC's Retail segment, primarily the Speedway brand, operates the second-largest chain of company-owned and operated retail gasoline and convenience stores in the United States.
- The company's Midstream segment, primarily through MPLX, owns and operates extensive crude oil and refined product pipelines, terminals, and natural gas gathering, processing, and fractionation assets.
- MPC has a strong liquidity position, with significant available capacity under its credit facilities.
- The company demonstrates a commitment to shareholder returns, having repurchased $1.95 billion of its common stock in 2019 and maintaining a consistent dividend payment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Marathon Petroleum kept $0.02.
- Revenue$111.15B100.0%
- Cost of revenue−$99.23B89.3%
- Gross profit$11.92B10.7%
- Operating costs−$7.46B6.7%
- Operating income$4.46B4.0%
- Interest, other & tax−$1.82B1.6%
- Net income$2.64B2.4%
Where FY2019 revenue went
$111.15B- Cost of revenue: $99.23B, 89% of revenue
- Net income: $2.64B, 2.4% of revenue
- SG&A: $3.19B, 2.9% of revenue
- Other operating costs: $4.27B, 3.8% of revenue
- Interest, other & tax: $1.82B, 1.6% of revenue
Kept 2.4% as net incomeNet income $2.64B · 2.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 28, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $111.15B$86.09B | +29.1% |
| Cost of Revenue | $99.23B$77.05B | +28.8% |
| Gross Profit | $11.92B$9.04B | +31.9% |
| SG&A Expenses | $3.19B$2.28B | +40.2% |
| Operating Expenses | $107.40B$81.90B | +31.1% |
| Operating Income | $4.46B$4.69B | −4.9% |
| Interest Expense | $1.39B$1.02B | +35.5% |
| Net Income | $2.64B$2.78B | −5.1% |
| EPS (Basic) | $4.00$5.36 | −25.4% |
| EPS (Diluted) | $3.97$5.28 | −24.8% |
| Shares Outstanding (Basic) | 659.00M518.00M | +27.2% |
| Shares Outstanding (Diluted) | 664.00M526.00M | +26.2% |
05—Questions
Frequently Asked Questions
What are the key strategic initiatives MPC is undertaking?
MPC is planning to separate its retail transportation fuel and convenience store business (Speedway) into a new, independent publicly traded company, with this separation expected by the end of 2020. Additionally, the company is evaluating strategic options for its Midstream business, managed through MPLX, to enhance shareholder value.
How did the Andeavor acquisition impact MPC's financial performance in 2019?
The Andeavor acquisition, completed in October 2018, significantly increased MPC's scale and asset base. In 2019, the acquired operations contributed to higher refined product sales volumes and retail segment revenues. However, the acquisition also led to increased debt, integration-related costs, and importantly, a $1.2 billion goodwill impairment charge related to MPLX's Western Gathering & Processing reporting unit, impacting overall profitability.
What is MPC's approach to capital allocation and shareholder returns?
MPC has demonstrated a commitment to returning capital to shareholders. In 2019, the company repurchased approximately $1.95 billion of its common stock and paid dividends totaling $1.40 billion. As of December 31, 2019, approximately $3.0 billion of share repurchase authorization remained available.
What are MPC's primary business segments and their significance?
MPC operates through three reportable segments: Refining & Marketing, Retail, and Midstream. The Refining & Marketing segment is the largest by revenue, operating the largest refining system in the U.S. The Retail segment, primarily driven by the Speedway brand, focuses on convenience stores and fuel sales. The Midstream segment, largely through its controlled MLP, MPLX, provides critical infrastructure and logistics services.
06—Continue