10-QPeriod: Q2 FY2013

Marathon Petroleum Corp Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 8, 2013For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported a decrease in net income attributable to MPC for the second quarter and first six months of 2013 compared to the same periods in 2012. This decline was primarily driven by lower refining and marketing gross margins, despite an increase in refined product sales volumes due to the acquisition of the Galveston Bay Refinery. Speedway segment income from operations saw an increase, benefiting from higher gasoline, distillate, and merchandise gross margins. The company completed a significant acquisition of the Galveston Bay Refinery and Related Assets in February 2013, which contributed to increased revenues and costs. MPC also continued its share repurchase program, returning substantial capital to shareholders. While overall profitability declined year-over-year for the reported periods, the company's liquidity remains strong, supported by cash on hand and revolving credit facilities.

Financial Highlights

49 data points
Beta

Revenue

$25.68B

Net Income

$593.00M

2.3% Net Margin

EPS (Diluted)

$0.92

Total Assets

$29.70B

Cash & Equivalents

$3.07B

Free Cash Flow

-$665.00M

Financial Statements
Beta
Revenue$25.68B
SG&A Expenses$358.00M
Operating Expenses$24.74B
Operating Income$960.00M
Interest Expense$49.00M
Net Income$593.00M
EPS (Basic)$0.92
EPS (Diluted)$0.92
Shares Outstanding (Basic)644.00M
Shares Outstanding (Diluted)648.00M

Key Highlights

  • 1Net income attributable to MPC decreased in the second quarter and first six months of 2013 compared to the prior year, primarily due to lower refining and marketing gross margins.
  • 2Acquisition of the Galveston Bay Refinery and Related Assets in February 2013 contributed to increased revenues and refined product sales volumes, but also increased costs.
  • 3Speedway segment income from operations increased due to higher gasoline, distillate, and merchandise gross margins.
  • 4Pipeline Transportation segment income from operations saw an increase, reflecting higher transportation tariffs and volumes.
  • 5The company repurchased a significant amount of its common stock, totaling $1.31 billion in the first six months of 2013, demonstrating a commitment to returning capital to shareholders.
  • 6Liquidity remains strong with $3.07 billion in cash and cash equivalents and $2.5 billion available under its revolving credit agreement as of June 30, 2013.

Frequently Asked Questions

The primary drivers of the decrease in net income attributable to MPC were lower refining and marketing gross margins. While sales volumes increased due to the acquisition of the Galveston Bay refinery, this was not enough to offset the decline in margins during the reported periods.

The acquisition of the Galveston Bay Refinery in February 2013 contributed to an increase in sales and other operating revenues, as well as refined product sales volumes. However, it also led to higher cost of revenues due to increased crude oil and other feedstock purchases. The refinery's operations are now integrated into the Refining & Marketing and Pipeline Transportation segments.

Marathon Petroleum continued to execute its share repurchase program. In the first six months of 2013, the company spent $1.31 billion to repurchase its common shares. As of June 30, 2013, approximately $1.34 billion remained available under its outstanding repurchase authorization through December 2014.

The company maintained strong liquidity as of June 30, 2013, with $3.07 billion in cash and cash equivalents and $2.5 billion available under its revolving credit agreement. MPC believes its liquidity is adequate to fund operations, capital expenditures, share repurchases, dividends, and other obligations. The company also maintains an investment-grade credit profile with positive outlooks from rating agencies.