10-QPeriod: Q1 FY2013

Marathon Petroleum Corp Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 9, 2013For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported strong financial performance for the first quarter of 2013, with net income attributable to MPC increasing to $725 million, or $2.17 per diluted share, compared to $596 million, or $1.70 per diluted share, in the same period of 2012. This significant growth was primarily driven by the Refining & Marketing segment, which saw its income from operations rise to $1.11 billion, boosted by higher refined product sales volumes, notably from the recent acquisition of the Galveston Bay refinery. While overall refining margins experienced a slight decrease, increased throughput and favorable crude oil differentials positively impacted results. The company also demonstrated a commitment to shareholder returns through an expanded share repurchase program, with an additional $2.0 billion authorization, totaling $2.65 billion available. MPC's liquidity remains strong, with substantial cash and cash equivalents and available credit facilities. The acquisition of the Galveston Bay refinery, along with its associated logistics and marketing assets, for approximately $1.49 billion is a key strategic move, significantly expanding MPC's refining capacity and market presence, though it introduces a potential contingent earnout payment of up to $700 million.

Financial Highlights

49 data points
Beta

Revenue

$23.33B

Net Income

$725.00M

3.1% Net Margin

EPS (Diluted)

$1.08

Total Assets

$30.77B

Cash & Equivalents

$4.74B

Free Cash Flow

$1.88B

Financial Statements
Beta
Revenue$23.33B
SG&A Expenses$249.00M
Operating Expenses$22.19B
Operating Income$1.16B
Interest Expense$48.00M
Net Income$725.00M
EPS (Basic)$1.09
EPS (Diluted)$1.08
Shares Outstanding (Basic)662.00M
Shares Outstanding (Diluted)666.00M

Key Highlights

  • 1Net income attributable to MPC increased by 21.6% to $725 million in Q1 2013 compared to $596 million in Q1 2012.
  • 2Diluted earnings per share rose to $2.17 in Q1 2013, up from $1.70 in Q1 2012.
  • 3The company completed the significant acquisition of the Galveston Bay Refinery and Related Assets from BP for $1.49 billion, expanding its refining capacity and market reach.
  • 4Total revenues and other income saw a substantial increase of $3.07 billion, reaching $23.345 billion in Q1 2013, largely driven by higher refined product sales volumes.
  • 5MPC's board approved an additional $2.0 billion share repurchase authorization, alongside an extension of the existing authorization, totaling $2.65 billion available for repurchases through December 2014.
  • 6Operating cash flow increased significantly to $2.079 billion in Q1 2013, compared to $347 million in Q1 2012, primarily due to favorable changes in working capital.
  • 7The Refining & Marketing segment's income from operations grew by 17% to $1.11 billion, driven by higher sales volumes from the new refinery.

Frequently Asked Questions

The primary driver of MPC's improved financial performance was the significant increase in net income attributable to MPC, which rose to $725 million. This was largely due to the strong performance of the Refining & Marketing segment, which benefited from higher refined product sales volumes, particularly from the recently acquired Galveston Bay refinery. Increased operating cash flow and a broader share repurchase authorization also contributed positively.

MPC acquired the Galveston Bay Refinery and related assets from BP for approximately $1.49 billion on February 1, 2013. This acquisition significantly expanded MPC's refining capacity (adding 451,000 barrels per calendar day) and integrated its operations with new pipelines, terminals, and marketing agreements. The transaction includes a potential contingent earnout payment to BP of up to an additional $700 million over six years, subject to certain performance conditions, which has been recorded as a preliminary fair value liability of $600 million.

MPC is actively returning capital to shareholders through its share repurchase program. In January 2013, the board of directors approved an additional $2.0 billion share repurchase authorization and extended the remaining portion of a previous authorization. This brings the total outstanding authorization to $2.65 billion available for repurchases through December 2014. The company also declared a quarterly dividend of $0.35 per share, an increase from $0.25 per share in the prior year's comparable quarter.

MPC's financial health and liquidity appear robust. The company ended the quarter with $4.737 billion in cash and cash equivalents and maintained significant available liquidity of $8.237 billion, including cash, revolving credit agreements, and a trade receivables securitization facility. The debt-to-total-capital ratio remained stable at 22%. The company has access to capital markets and generated strong operating cash flow, positioning it well to fund its operations, capital expenditures, and shareholder return programs.