10-QPeriod: Q2 FY2014

MPLX LP Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 4, 2014For Securities:MPLXMPLXP

Summary

MPLX LP reported solid financial performance for the second quarter and first six months of 2014, demonstrating growth driven by increased related-party sales and higher average tariffs. Total revenues and other income saw a notable increase, largely fueled by a significant rise in sales to related parties, primarily Marathon Petroleum Corporation (MPC), reflecting expanded services and potentially higher throughput. While third-party volumes saw a slight decrease, strategic acquisitions, including an increased stake in Pipe Line Holdings, contributed to the company's growth trajectory. The company also maintained healthy operational cash flow, which supported its dividend payouts and capital expenditure plans. Management's outlook remains positive, emphasizing continued growth and attractive distribution policies. Financially, MPLX LP showed a healthy increase in net income attributable to MPLX LP and its limited partners, highlighting improved operational efficiency and revenue generation. The company's balance sheet indicates a robust asset base, with significant investments in property, plant, and equipment. Liquidity appears sufficient, supported by operating cash flows and available credit facilities. The increased debt level is primarily attributable to the financing of strategic acquisitions. Overall, the report indicates a company on a growth path, leveraging its relationship with MPC while expanding its midstream operations.

Financial Highlights

31 data points
Beta

Revenue

$126.00M

Net Income

$28.00M

22.2% Net Margin

Total Assets

$1.18B

Cash & Equivalents

$43.20M

Free Cash Flow

$48.40M

Financial Statements
Beta
Revenue$126.00M
Operating Expenses$89.60M
Operating Income$60.00M
Net Income$28.00M

Key Highlights

  • 1MPLX LP's net income attributable to limited partners increased by approximately 50% to $27.6 million for the three months ended June 30, 2014, compared to $18.3 million in the prior year period.
  • 2Sales to related parties (primarily MPC) increased by 11.2% to $108.1 million for the three months ended June 30, 2014, and by 19.0% to $221.9 million for the six months ended June 30, 2014.
  • 3The company increased its ownership interest in Pipe Line Holdings to 69.0% as of March 1, 2014, through an acquisition funded by cash and borrowings, indicating strategic expansion.
  • 4Net cash provided by operating activities increased by approximately 18.0% to $128.4 million for the six months ended June 30, 2014, compared to $108.6 million in the prior year period.
  • 5The quarterly cash distribution per limited partner common unit increased to $0.3425 for the second quarter of 2014, up from $0.2850 in the prior year, reflecting a commitment to returning value to unitholders.
  • 6Total assets decreased slightly to $1,181.4 million as of June 30, 2014, from $1,208.5 million as of December 31, 2013, mainly due to debt repayments and distributions.
  • 7Long-term debt significantly increased to $264.4 million as of June 30, 2014, from $9.8 million as of December 31, 2013, primarily due to borrowings to finance the acquisition of an additional interest in Pipe Line Holdings.

Frequently Asked Questions

The primary driver of MPLX LP's revenue growth was the significant increase in sales to related parties, predominantly Marathon Petroleum Corporation (MPC). This was bolstered by higher average tariffs received and increased revenue from volume deficiency credits, indicating expanded services and stronger commercial relationships.

The acquisition increased MPLX LP's ownership in Pipe Line Holdings to 69.0%. This strategic move was financed through $40 million in cash and $270 million in borrowings, leading to a substantial increase in long-term debt. This acquisition is expected to contribute to future growth and integration of midstream assets.

MPLX LP demonstrated a commitment to increasing unitholder distributions. The declared quarterly cash distribution for the second quarter of 2014 was $0.3425 per unit, an increase from the prior year. Management intends to maintain an attractive distribution growth profile.

MPLX LP's liquidity is supported by operating cash flows and revolving credit facilities. While cash and cash equivalents decreased from year-end 2013 to June 30, 2014, net cash provided by operating activities increased. The company reported compliance with its debt covenants and had significant unused revolving credit availability, indicating sufficient resources to meet its funding needs.