10-QPeriod: Q1 FY2014

Marathon Petroleum Corp Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 5, 2014For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported a significant decrease in net income attributable to MPC for the first quarter of 2014 compared to the same period in 2013. Net income fell from $725 million ($2.17 per diluted share) in Q1 2013 to $199 million ($0.67 per diluted share) in Q1 2014. This decline was primarily driven by the Refining & Marketing segment, which saw its income from operations drop substantially due to narrower crude oil differentials and increased turnaround costs, despite some benefit from higher crack spreads and product price realizations. The company's overall revenues remained largely flat year-over-year. While the Pipeline Transportation segment showed an increase in income from operations, driven by higher transportation revenue and equity affiliate income, the Speedway segment experienced a decline due to lower gasoline and distillate margins and increased operating expenses, partially offset by improved merchandise margins. MPC also announced a significant share repurchase program, spending $689 million on buybacks in the first quarter of 2014.

Financial Highlights

49 data points
Beta

Revenue

$23.29B

Net Income

$199.00M

0.9% Net Margin

EPS (Diluted)

$0.34

Total Assets

$29.16B

Cash & Equivalents

$2.17B

Free Cash Flow

$499.00M

Financial Statements
Beta
Revenue$23.29B
SG&A Expenses$346.00M
Operating Expenses$22.98B
Operating Income$361.00M
Interest Expense$49.00M
Net Income$199.00M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)586.00M
Shares Outstanding (Diluted)590.00M

Key Highlights

  • 1Net income attributable to MPC significantly decreased by $526 million to $199 million in Q1 2014 from $725 million in Q1 2013, with diluted EPS dropping to $0.67 from $2.17.
  • 2The Refining & Marketing segment's income from operations declined by $743 million, primarily due to narrower crude oil differentials and higher turnaround costs.
  • 3Total revenues and other income remained flat at $23.3 billion for both Q1 2014 and Q1 2013.
  • 4Speedway segment income from operations decreased by $9 million due to lower gasoline and distillate margins, partially offset by higher merchandise margins.
  • 5Pipeline Transportation segment income from operations increased by $21 million, driven by higher transportation revenue and equity affiliate income.
  • 6MPC repurchased $689 million of its common stock in Q1 2014, a significant increase from $431 million in Q1 2013.
  • 7The company reported $2.17 billion in cash and cash equivalents as of March 31, 2014.

Frequently Asked Questions

The primary reason for the significant decrease in net income was a substantial decline in the performance of the Refining & Marketing segment. This was mainly due to narrower crude oil differentials (the difference between the price of sweet and sour crude oil, and WTI and LLS crude oil) and increased costs associated with planned refinery maintenance (turnarounds).

The Speedway segment experienced a decrease in income from operations by $9 million year-over-year. This was driven by lower gross margins on gasoline and distillate sales and higher operating expenses. However, this was partially offset by an increase in merchandise gross margins, which are a significant contributor to Speedway's profitability.

MPC significantly increased its share repurchases in Q1 2014, spending $689 million compared to $431 million in the prior year. As of March 31, 2014, the company had approximately $1.17 billion remaining under its share repurchase authorization, which expires in September 2015.

Yes, MPC expects to pay approximately $178 million in the second quarter of 2014 related to the contingent earnout for the Galveston Bay Refinery acquisition. Additionally, the company recorded $64 million in pension settlement expenses in Q1 2014 due to lump-sum retirement distributions.