10-QPeriod: Q2 FY2016

Marathon Petroleum Corp Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 3, 2016For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported solid financial results for the second quarter and first six months of 2016, demonstrating resilience despite a challenging market environment. Net income attributable to MPC for the second quarter was $801 million ($1.51 per diluted share), a slight decrease from $826 million ($1.51 per diluted share) in the prior year period. For the first six months, net income attributable to MPC was $802 million ($1.51 per diluted share), down from $1.72 billion ($3.14 per diluted share) in the first half of 2015. The year-over-year decline in the first six months was significantly influenced by lower commodity prices impacting the Refining & Marketing segment, though this was partially offset by improved performance in the Speedway retail and Midstream segments. The company's Midstream segment, bolstered by the integration of MarkWest Energy Partners following its merger with MPLX, showed significant growth in income from operations. MPLX also successfully completed a private placement of preferred units, raising approximately $984 million to fund capital expenditures and debt repayment, enhancing its financial flexibility. MPC's liquidity remains strong, supported by substantial cash and cash equivalents and available credit facilities, positioning the company to navigate market volatility and pursue strategic growth opportunities.

Financial Highlights

48 data points
Beta

Revenue

$16.81B

Net Income

$801.00M

4.8% Net Margin

EPS (Diluted)

$1.51

Total Assets

$44.13B

Cash & Equivalents

$1.75B

Free Cash Flow

$1.58B

Financial Statements
Beta
Revenue$16.81B
SG&A Expenses$401.00M
Operating Expenses$15.47B
Operating Income$1.31B
Interest Expense$149.00M
Net Income$801.00M
EPS (Basic)$1.51
EPS (Diluted)$1.51
Shares Outstanding (Basic)528.00M
Shares Outstanding (Diluted)531.00M

Key Highlights

  • 1Net income attributable to MPC for Q2 2016 was $801 million ($1.51/share), a modest decrease from $826 million ($1.51/share) in Q2 2015.
  • 2For the first six months of 2016, net income attributable to MPC was $802 million ($1.51/share), down from $1.72 billion ($3.14/share) in the same period of 2015, largely due to lower commodity prices impacting the Refining & Marketing segment.
  • 3The Midstream segment demonstrated strong performance, with income from operations increasing significantly due to the inclusion of MarkWest's results following the December 2015 merger with MPLX.
  • 4MPLX successfully completed a $984 million private placement of Series A Convertible Preferred Units, strengthening its financial position for capital expenditures and debt repayment.
  • 5The company maintained robust liquidity, with $1.75 billion in cash and cash equivalents and substantial availability under its revolving credit facilities as of June 30, 2016.
  • 6Despite lower commodity prices impacting revenue, MPC's Refining & Marketing segment benefited from a $370 million LCM reserve reversal, contributing positively to cost of revenues.
  • 7Speedway, MPC's retail segment, showed improved income from operations driven by higher merchandise margins and gasoline/distillate gross margins, alongside a gain from a retail location sale.

Frequently Asked Questions

The primary driver for the decrease in net income for the first six months of 2016 compared to 2015 was the significant decline in commodity prices, which negatively impacted the Refining & Marketing segment's profitability. This was partially offset by improved performance in the Speedway and Midstream segments.

The merger of MPLX with MarkWest Energy Partners, completed in December 2015, has significantly boosted MPC's Midstream segment. The integration of MarkWest's operations, including natural gas gathering, processing, and NGL infrastructure, has led to increased segment income from operations and is a key factor in the segment's growth.

MPC maintains a strong liquidity position with $1.75 billion in cash and cash equivalents as of June 30, 2016. Additionally, the company had access to a $2.5 billion bank revolving credit facility and significant availability under its trade receivables securitization facility. MPC expects its liquidity to be adequate to fund operations, capital expenditures, share repurchases, and debt obligations.

Yes, MPLX recorded an impairment charge of approximately $130 million in the first six months of 2016 related to goodwill acquired in the MarkWest merger. Additionally, an equity method investment in Ohio Condensate experienced impairment charges totaling approximately $89 million during the second quarter of 2016.