01—Abstract
Summary
Summary of the 10-K filed February 26, 2021. Cited figures are marked; the original filing is the authoritative source.
Marathon Petroleum Corporation (MPC) reported a significant net loss for the fiscal year ended December 30, 2020, largely due to the adverse impacts of the COVID-19 pandemic on refining margins and product demand.
This resulted in substantial impairment charges for goodwill and long-lived assets. The company is actively managing its portfolio and costs, including the strategic repositioning of the Martinez refinery to a renewable diesel facility and the sale of its Speedway retail segment to 7-Eleven for $21 billiona, which is expected to strengthen its balance sheet and return capital to shareholders upon closing in Q1 2021.
The Midstream segment, primarily driven by MPLX, demonstrated resilience with stable fee-based earnings and contributions from organic growth projects, offsetting some of the weakness in the Refining & Marketing segment. MPC's liquidity remained adequate, supported by its credit facilities, and the company is focused on operational excellence and cost reduction measures for long-term success.
02—Key points
Key Highlights
- Reported a significant net loss attributable to MPC of $(9.83 billion) for 2020, primarily driven by COVID-19 impacts and substantial asset impairments.
- Agreed to sell the Speedway retail segment to 7-Eleven for $21 billion, with the transaction expected to close in Q1 2021, generating significant after-tax cash proceeds.
- The Refining & Marketing segment experienced a substantial loss from operations of $(5.19 billion) in 2020 due to reduced demand and lower margins.
- The Midstream segment, primarily MPLX, showed stable fee-based earnings, with income from operations increasing to $3.71 billion in 2020.
- The company identified and recorded significant impairment charges totaling $9.74 billion in 2020, primarily related to goodwill, equity method investments, and long-lived assets.
- MPC is strategically repositioning its Martinez refinery to a renewable diesel facility, with production expected to commence in the second half of 2022.
- Liquidity remained adequate, with $7.3 billion available on credit facilities at year-end 2020, and the company has taken steps to manage its debt and capital structure.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2020, Marathon Petroleum lost $0.14.
- Revenue$69.78B100.0%
- Cost of revenue−$65.73B94.2%
- Gross profit$4.05B5.8%
- Operating costs−$16.29B23.3%
- Operating income−$12.25B17.6%
- Interest, other & tax$2.42B3.5%
- Net income−$9.83B14.1%
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 26, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $69.78B$111.15B | −37.2% |
| Cost of Revenue | $65.73B$99.23B | −33.8% |
| Gross Profit | $4.05B$11.92B | −66.1% |
| SG&A Expenses | $2.71B$3.19B | −15.1% |
| Operating Expenses | $81.28B$107.40B | −24.3% |
| Operating Income | -$12.25B$4.46B | −374.5% |
| Interest Expense | $1.46B$1.39B | +5.3% |
| Net Income | -$9.83B$2.64B | −472.6% |
| EPS (Basic) | $-15.13$4.00 | −478.3% |
| EPS (Diluted) | $-15.13$3.97 | −481.1% |
| Shares Outstanding (Basic) | 649.00M659.00M | −1.5% |
| Shares Outstanding (Diluted) | 649.00M664.00M | −2.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of Marathon Petroleum's financial performance in 2020?
The primary driver of Marathon Petroleum's financial performance in 2020 was the significant negative impact of the COVID-19 pandemic. This led to reduced demand for refined petroleum products, volatile commodity prices, and consequently, lower refining margins. These factors, combined with substantial impairment charges on goodwill and other assets, resulted in a significant net loss for the year.
What is the status of the Speedway sale?
Marathon Petroleum entered into a definitive agreement to sell its Speedway retail transportation fuel and convenience store business to 7-Eleven, Inc. for $21 billion in cash. The transaction was targeted to close by the end of the first quarter of 2021, subject to customary closing conditions and regulatory approvals. The proceeds are intended to be used to strengthen the balance sheet and return capital to shareholders.
How did the company's midstream segment (MPLX) perform in 2020?
The Midstream segment, primarily through MPLX LP, demonstrated resilience in 2020. It generated stable, fee-based earnings and benefited from contributions from organic growth projects and reduced operating expenses. This performance helped to offset some of the challenges faced by the Refining & Marketing segment.
What were the significant impairment charges recorded in 2020, and why were they incurred?
Marathon Petroleum recorded significant impairment charges totaling $9.74 billion in 2020. These impairments were primarily related to goodwill ($7.39 billion), equity method investments ($1.32 billion), and long-lived assets ($1.03 billion). The primary reasons for these impairments were the adverse economic effects of the COVID-19 pandemic, lower commodity prices, and resulting reductions in forecasted future cash flows for affected reporting units and assets.
06—Continue