10-QPeriod: Q2 FY2019

Marathon Petroleum Corp Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 5, 2019For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported solid financial results for the second quarter and first six months of 2019, demonstrating the strategic benefits of the Andeavor acquisition completed in October 2018. Total revenues and other income significantly increased year-over-year, driven by higher sales volumes across all segments, particularly in Refining & Marketing due to the expanded operational footprint. While net income attributable to MPC saw a modest increase for the quarter and six-month period, this was against a backdrop of higher costs and expenses, including increased depreciation and amortization stemming from the Andeavor acquisition, and higher net interest and other financial costs. The company continued to return capital to shareholders through share repurchases and dividends, underscoring a commitment to shareholder value. Liquidity remains strong, supported by significant available credit facilities and cash on hand, positioning MPC to navigate market dynamics and pursue future growth opportunities. The successful integration of Andeavor and the upcoming merger of MPLX and ANDX are key strategic initiatives that are expected to further enhance the company's financial performance and operational efficiency.

Financial Highlights

49 data points
Beta

Revenue

$30.24B

1.8% Gross Margin

Net Income

$1.11B

3.7% Net Margin

EPS (Diluted)

$1.66

Total Assets

$96.90B

Cash & Equivalents

$1.25B

Free Cash Flow

$1.44B

Financial Statements
Beta
Revenue$30.24B
Cost of Revenue$29.68B
Gross Profit$557.00M
SG&A Expenses$886.00M
Operating Expenses$31.63B
Operating Income$1.70B
Interest Expense$350.00M
Net Income$1.11B
EPS (Basic)$1.67
EPS (Diluted)$1.66
Shares Outstanding (Basic)662.00M
Shares Outstanding (Diluted)666.00M

Key Highlights

  • 1Total revenues and other income increased significantly in both the second quarter and the first six months of 2019 compared to the prior year, largely driven by the inclusion of Andeavor's operations and increased sales volumes.
  • 2Net income attributable to MPC showed modest growth, reaching $1.11 billion ($1.66/diluted share) for Q2 2019 and $1.10 billion ($1.63/diluted share) for the first six months of 2019, despite higher operating costs and interest expenses.
  • 3The Refining & Marketing segment saw a substantial increase in throughput and revenues, benefiting from the expanded refinery network post-Andeavor acquisition, though segment income from operations decreased due to higher costs.
  • 4The Retail segment experienced strong revenue growth, driven by the integration of Andeavor's retail locations, with significant improvements in fuel and merchandise margins.
  • 5The Midstream segment reported increased revenues and operating income, with contributions from ANDX and growth in MPLX's businesses, highlighting the strategic value of these integrated operations.
  • 6The company returned substantial capital to shareholders through share repurchases ($1.39 billion in H1 2019) and dividends, with $3.52 billion remaining on its share repurchase authorization as of June 30, 2019.
  • 7Liquidity remains robust with $7.93 billion in total liquidity at June 30, 2019, including cash and available credit facilities, supporting ongoing operations and strategic investments.

Frequently Asked Questions

The acquisition of Andeavor, completed on October 1, 2018, significantly boosted MPC's revenues and sales volumes across all segments, particularly in Refining & Marketing and Retail, due to the expanded operational footprint. However, it also led to increased costs and expenses, including higher depreciation and amortization and net interest expenses, which partially offset the revenue growth, resulting in a modest increase in net income attributable to MPC compared to the prior year periods.

The Refining & Marketing segment saw higher throughput and revenues but lower income from operations due to increased costs. The Retail segment demonstrated strong revenue growth and improved profitability, benefiting from the acquired locations and higher fuel and merchandise margins. The Midstream segment reported increased revenues and operating income, driven by contributions from ANDX and growth within MPLX's operations.

MPC maintains a strong liquidity position, with $7.93 billion in cash and available credit facilities as of June 30, 2019. The company continued to return capital to shareholders through significant share repurchases ($1.39 billion in H1 2019) and dividend payments. The ongoing integration of Andeavor and the recent merger of MPLX and ANDX are key strategic moves aimed at enhancing operational efficiency and cash flow generation.

The merger of MPLX and ANDX, completed on July 30, 2019, creates a leading, large-scale diversified midstream company. This transaction simplifies MPLX's structure, is expected to enhance long-term growth opportunities, and improve its sustainable cash flow profile. MPC accounts for this as a common control transaction, which will lead to adjustments in its noncontrolling interest and additional paid-in capital balances.