10-QPeriod: Q3 FY2018

MPLX LP Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 5, 2018For Securities:MPLXMPLXP

Summary

MPLX LP (MPLX) reported strong financial performance for the nine months ended September 30, 2018, with total revenues and other income increasing significantly to $4.71 billion, up from $2.78 billion in the prior year period. This growth was primarily driven by substantial acquisitions, including the significant dropdown of refining logistics and fuels distribution assets from Marathon Petroleum Corporation (MPC) in February 2018, and the acquisition of the Mt. Airy Terminal in September 2018. Net income attributable to MPLX LP more than doubled to $1.38 billion for the nine-month period. Adjusted EBITDA also saw a substantial increase, reflecting the expanded asset base and improved operational performance across both the Logistics and Storage (L&S) and Gathering and Processing (G&P) segments. The company's balance sheet shows a significant increase in total assets to $22.38 billion, largely due to the expansion of property, plant, and equipment, and goodwill resulting from acquisitions. Long-term debt also rose considerably to $12.89 billion, primarily to finance these strategic growth initiatives. Despite the increased debt, MPLX maintains a strong liquidity position with $2.28 billion in available liquidity at the end of the period, supported by its revolving credit facility and the MPC loan agreement. The company continues to focus on growth and operational efficiency, underpinned by its fee-based business model and strategic relationship with MPC.

Financial Highlights

36 data points
Beta

Revenue

$1.71B

Net Income

$510.00M

29.8% Net Margin

Total Assets

$22.38B

Cash & Equivalents

$37.00M

Free Cash Flow

$216.00M

Financial Statements
Beta
Revenue$1.71B
Operating Expenses$1.04B
Operating Income$672.00M
Net Income$510.00M

Key Highlights

  • 1Total revenues and other income for the nine months ended September 30, 2018, surged to $4.71 billion, a substantial increase from $2.78 billion in the same period of 2017, largely due to acquisitions.
  • 2Net income attributable to MPLX LP for the nine months ended September 30, 2018, was $1.38 billion, more than double the $556 million reported in the prior year period.
  • 3Adjusted EBITDA for the nine months ended September 30, 2018, increased to $2.56 billion, up from $1.44 billion in the prior year, indicating strong operational performance across segments.
  • 4The company completed significant acquisitions, including the Refining Logistics and Fuels Distribution assets from MPC for $8.4 billion and the Mt. Airy Terminal for $451 million, significantly expanding its asset base.
  • 5Total assets grew to $22.38 billion as of September 30, 2018, reflecting the substantial investments in property, plant, and equipment and goodwill from acquisitions.
  • 6Long-term debt increased to $12.89 billion, primarily to fund acquisitions and growth initiatives, while the company maintained healthy liquidity of $2.28 billion.
  • 7The GP/IDR exchange on February 1, 2018, eliminated incentive distribution rights and converted the economic GP interest to a non-economic interest, in exchange for 275 million common units, which is expected to be accretive to distributable cash flow per common unitholder.

Frequently Asked Questions

MPLX's revenue growth was primarily driven by significant acquisitions, most notably the $8.4 billion acquisition of Refining Logistics and Fuels Distribution assets from MPC and the $451 million acquisition of the Mt. Airy Terminal. Increased pricing and volume growth within the Gathering and Processing (G&P) segment, along with higher revenues from the Logistics and Storage (L&S) segment due to pipeline expansions and increased transportation volumes, also contributed to the revenue increase.

MPLX's long-term debt significantly increased to $12.89 billion as of September 30, 2018, mainly due to the issuance of $5.5 billion in senior notes and borrowings to fund acquisitions. Despite the increased debt, the company maintained a strong liquidity position of $2.28 billion, comprising available capacity under its revolving credit facility, the MPC Loan Agreement, and cash and cash equivalents.

On February 1, 2018, MPLX completed an exchange where its general partner's incentive distribution rights (IDRs) and economic general partner interest were converted into 275 million common units, creating a non-economic general partner interest. This transaction is expected to eliminate future cash distributions to the general partner and is anticipated to be accretive to distributable cash flow per common unitholder, positively impacting future distribution growth.

The adoption of ASC 606 on January 1, 2018, led to several changes in revenue recognition. This included grossing up third-party reimbursements, reclassifying certain revenues (like percent-of-proceeds revenues) to service revenue, and changes in the presentation of imbalances and non-cash consideration. These adjustments impacted reported revenues, costs, and net income, with the company providing detailed disclosures on the effects of adoption in Note 16 of the financial statements.