EX-99.1 2 mpcq22020earningsrelea.htm EXHIBIT 99.1 Exhibit


mpcnewsreleaseletterheada04.jpg


Marathon Petroleum Corp. Reports Second-Quarter 2020 Results
Reported second-quarter income of $9 million, or $0.01 per diluted share, including net pre-tax benefit of $1.4 billion; adjusted loss of $868 million, or $(1.33) per diluted share
Announced agreement to sell Speedway in $21 billion all-cash transaction; estimated after-tax proceeds of $16.5 billion expected to be used to both strengthen the balance sheet and return capital to shareholders
Indefinitely idling Gallup and Martinez refineries; evaluating strategic repositioning of Martinez to renewable diesel facility
On track to deliver $1.4 billion of capital spending and at least $950 million of operating expense reductions
Significant liquidity with $7.7 billion of available borrowing capacity at MPC
FINDLAY, Ohio, Aug. 3, 2020 – Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $9 million, or $0.01 per diluted share, for the second quarter of 2020, compared to $1.1 billion, or $1.66 per diluted share, for the second quarter of 2019.
Second-quarter 2020 results include a pre-tax lower of cost or market (LCM) inventory benefit of $1.5 billion. Details on this and other adjustments are shown in the accompanying release tables. Adjusted net loss was $868 million, or $(1.33) per diluted share, for the second quarter of 2020, compared to adjusted net income of $1.1 billion, or $1.73 per diluted share, for the second quarter of 2019.
“Our second quarter results reflect a full three months of the challenges COVID has created for our business,” said President and Chief Executive Officer Michael J. Hennigan. “We began April with demand at historic lows. Despite seeing some recovery during the quarter, demand for our products and services continues to be significantly depressed, particularly across the West Coast and Midwest.
“In response, we are executing on the actions we announced in May and are advancing the three strategic priorities which lay the foundation for our long-term success. First, we strengthened the competitive position of our assets with the decision to indefinitely idle our Gallup and Martinez refineries, and are evaluating strategic repositioning possibilities for Martinez. Second, we began implementing commercial strategy changes and I’ve been encouraged by the team’s quick progress. And third, we lowered our capital spending and tightly managed our operating expenses. I’m confident we will meet the $950 million expense reduction target we previously announced for 2020. We are also implementing plans to structurally lower costs in 2021 and beyond.”





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Segment Results
Income from operations was $981 million in the second quarter of 2020, compared to $2.0 billion in the second quarter of 2019. Second quarter 2020 results include a pre-tax LCM inventory benefit of $1.5 billion.
 
Three Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
Income (loss) from operations by segment:
 
 
 
 
 
Refining & Marketing
$
(1,619
)
 
$
906

Retail
 
494

 
 
493

Midstream
 
869

 
 
878

Corporate
 
(188
)
 
 
(179
)
Income (loss) from operations before items not allocated to segments
 
(444
)
 
 
2,098

 
 
 
 
 
 
Items not allocated to segments:
 
 
 
 
 
    Transaction-related costs
 
(30
)
 
 
(34
)
    Litigation
 

 
 
(22
)
    Impairments
 
(25
)
 
 

    LCM inventory valuation adjustment
 
1,480

 
 

Income from operations
$
981

 
$
2,042




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Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was $653 million in the second quarter of 2020, compared to $3.2 billion for the second quarter of 2019. Adjusted EBITDA excludes refining planned turnaround costs of $162 million for the second quarter of 2020 and $237 million for the second quarter of 2019.

Reconciliation of Segment Income (Loss) From Operations to Segment Adjusted EBITDA and Adjusted EBITDA
 
Three Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
Refining & Marketing Segment
 
 
 
 
 
Segment income (loss) from operations
$
(1,619
)
 
$
906

Add: Depreciation and amortization
 
433

 
 
411

        Refining planned turnaround costs
 
162

 
 
237

Segment Adjusted EBITDA
$
(1,024
)
 
$
1,554

Retail Segment
 
 
 
 
 
Segment income from operations
$
494

 
$
493

Add: Depreciation and amortization
 
132

 
 
130

Segment EBITDA
$
626

 
$
623

Midstream Segment
 
 
 
 
 
Segment income from operations
$
869

 
$
878

Add: Depreciation and amortization
 
330

 
 
318

Segment EBITDA
$
1,199

 
$
1,196

 
 
 
 
 
 
Segment Adjusted EBITDA
$
801

 
$
3,373

Corporate
 
(188
)
 
 
(179
)
Add: Depreciation and amortization
 
40

 
 
27

Adjusted EBITDA
$
653

 
$
3,221


Refining & Marketing (R&M)
R&M segment loss from operations was $1.6 billion in the second quarter of 2020, compared with income of $906 million for the second quarter of 2019. The decrease in R&M earnings was primarily due to reduced throughput and lower crack spreads driven by lower demand associated with COVID-19, and lower crude differentials.
Segment adjusted EBITDA was $(1.0) billion in the second quarter of 2020, versus $1.6 billion for the second quarter of 2019. Segment adjusted EBITDA excludes refinery planned turnaround costs, which totaled $162 million in the second quarter of 2020 and $237 million in the second quarter of 2019.
R&M margin was $7.13 per barrel for the second quarter of 2020. Crude capacity utilization was 71%, resulting in total throughputs of 2.3 million barrels per day, and clean product yield was 84%.
Retail
Retail segment income from operations was $494 million in the second quarter of 2020, compared with $493 million for the second quarter of 2019. Segment EBITDA was $626 million in the second quarter of 2020, versus $623 million for the second quarter of 2019. Quarterly results reflected lower fuel volumes, higher fuel margin per gallon, and operating cost reductions.


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Retail fuel margin increased to 39.60 cents per gallon in the second quarter of 2020, from 26.66 cents per gallon in the second quarter of 2019. Same-store merchandise sales decreased by 4% year-over-year and same-store gasoline sales volume decreased by 37% year-over-year.
Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX LP (NYSE: MPLX), was $869 million in the second quarter of 2020, compared with $878 million for the second quarter of 2019.
Segment EBITDA was $1.2 billion in the second quarter of 2020, versus $1.2 billion for the second quarter of 2019. Strong performance in the midstream segment in the current business environment was driven by stable, fee-based earnings, contributions from organic growth projects, and reduced operating expenses.
Corporate and Items Not Allocated to Segments
Corporate expenses totaled $188 million in the second quarter of 2020, compared to $179 million in the second quarter of 2019. Items not allocated to segments totaled $1.4 billion of income in the second quarter of 2020, compared with $56 million of expense in the second quarter of 2019. Second-quarter 2020 results include a $1.5 billion LCM inventory benefit, $25 million of impairment expense related to long-lived assets and $30 million of costs incurred in connection with the Speedway separation and other related activities. Second quarter 2019 results include $34 million of transaction-related expenses in connection with the Andeavor acquisition and $22 million of litigation charges.

Financial Position and Liquidity
As of June 30, 2020, the company had $1.0 billion in cash and cash equivalents (excluding MPLX’s cash and cash equivalents of $67 million), $5 billion available under a five-year bank revolving credit facility, $2 billion available under its two 364-day bank revolving credit facilities and $705 million available under its trade receivables securitization facility.
The company previously reported that it drew $2 billion on the five-year revolving credit facility in the first quarter of 2020, plus an additional $1.5 billion in April 2020. These borrowings were made to provide financial flexibility given the commodity price downturn and the significant working capital impact associated with the decline in crude oil prices. In late April, the company added an additional $1 billion 364-day revolver. Also, in late April, the company issued $2.5 billion of senior notes. Net proceeds from the senior notes issuance were used to repay a portion of the amounts outstanding on the five-year revolving credit facility. In June, the company completely repaid all amounts outstanding on the five-year revolving credit facility.

Strategic and Operations Update
Yesterday, the company announced an agreement with 7-Eleven to sell Speedway for $21 billion in cash. The company expects to use proceeds from the sale to strengthen the balance sheet and return capital to shareholders. The arrangement includes a 15-year fuel supply agreement for approximately 7.7 billion gallons of fuel per year and the opportunity to supply additional 7-Eleven locations.  
The company also announced the indefinite idling of the Gallup and Martinez refineries, and announced it is evaluating the strategic repositioning of Martinez to a renewable diesel facility.
Construction continues on the Dickinson Renewable Diesel project, which remains on schedule for planned completion in late 2020. The project will convert the Dickinson refinery into a 12,000 barrel per day biorefinery capable of producing renewable diesel from corn and soybean oil. MPC intends to sell the renewable diesel into the California market to comply with the California Low Carbon Fuel Standard.


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Consistent with MPC’s midstream strategy of developing long-haul pipelines and other logistics solutions, the company progressed several projects during the quarter, including the Wink-to-Webster crude oil pipeline, the Whistler natural gas pipeline, and the reversal of the Capline crude pipeline. Each of these projects is backed by minimum volume commitments from customers.
In addition, the South Texas Gateway terminal began crude oil export operations in July. MPC owns a 25% interest in the South Texas Gateway terminal.


Third Quarter 2020 Outlook
Refining & Marketing Segment:
 
 
Refining operating costs per barrel(a)
$
6.50

Distribution costs (in millions)
$
1,285

Refining planned turnaround costs (in millions)
$
270

Depreciation and amortization (in millions)
$
440

 
 
 
Refinery throughputs (mbpd):
 
 
    Crude oil refined
 
2,215

    Other charge and blendstocks
 
130

        Total
 
2,345

 
 
 
(a) 
Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expenses.

Retail Segment:
Range
Fuel sales (millions of gallons)
 
2,000

 
 
2,200

Merchandise sales (in millions)
$
1,700

 
$
1,800

 
 
 
 
 
 

Corporate and unallocated items (in millions)
$
195

 
 
 

Conference Call
At 9:30 a.m. EDT today, MPC will hold a conference call and webcast to discuss the reported results and provide an update on company operations. Interested parties may listen by visiting MPC’s website at http://www.marathonpetroleum.com and clicking on the “Join the Webcast” link. A replay of the webcast will be available on the company’s website for two weeks. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at https://www.marathonpetroleum.com.

###

About Marathon Petroleum Corporation
Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation’s largest refining system. MPC’s marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company that owns and operates gathering, processing, and fractionation assets, as well as


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crude oil and light product transportation and logistics infrastructure. More information is available at www.marathonpetroleum.com.

Investor Relations Contacts: (419) 421-2071
Kristina Kazarian, Vice President, Investor Relations
Taryn Erie, Manager, Investor Relations
Brian Worthington, Manager, Investor Relations

Media Contacts:
Hamish Banks, Vice President, Communications (419) 421-2521
Jamal Kheiry, Manager, Communications (419) 421-3312


References to Earnings and Defined Terms
References to earnings mean net income attributable to MPC from the statements of income. Unless otherwise indicated, references to earnings and earnings per share are MPC’s share after excluding amounts attributable to noncontrolling interests.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC). These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations, strategy and value creation plans of MPC. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,“ “policy,” “position,” “potential,” “predict,” “priority,” “project,” “proposition,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” “would,” “will” or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict. Factors that could cause MPC’s actual results to differ materially from those implied in the forward-looking statements include but are not limited to: the effects of the recent outbreak of COVID-19 and the adverse impact thereof on our business, financial condition, results of operations and cash flows, including, but not limited to, our growth, operating costs, labor availability, logistical capabilities, customer demand for our products and industry demand generally, margins, inventory value, cash position, taxes, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally; the effects of the recent outbreak of COVID-19, and the current economic environment generally, on our working capital, cash flows and liquidity, which can be significantly affected by decreases in commodity prices; our ability to reduce capital and operating expenses; with respect to the planned Speedway sale, the ability to successfully complete the sale within the expected timeframe or at all, based on numerous factors, including our ability to satisfy customary conditions, including obtaining regulatory approvals on the proposed terms and schedule, and any conditions imposed in connection with the consummation of the transaction, our ability to utilize the proceeds as anticipated, and our ability to capture value from the associated on-going supply relationship and realize the other expected benefits; the risk that the cost savings and any other synergies from the Andeavor transaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; risks related to the acquisition of Andeavor Logistics LP by MPLX LP (MPLX), including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may


6




take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the risk of further impairments; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income and earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; the ability to manage disruptions in credit markets or changes to credit ratings; future levels of capital, environmental and maintenance expenditures; general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; share repurchase authorizations, including the timing and amounts of such repurchases; the adequacy of capital resources and liquidity, including availability, timing and amounts of free cash flow necessary to execute business plans and to effect any share repurchases or to maintain or increase the dividend; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions as a result of the COVID-19 pandemic, other infectious disease outbreaks or otherwise; non-payment or non-performance by our producer and other customers; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX; and the factors set forth under the heading “Risk Factors” in MPC’s Annual Report on Form 10-K for the year ended Dec. 31, 2019, and in Forms 10-Q and other filings, filed with the SEC. Copies of MPC's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC’s website, MPC's website at https://www.marathonpetroleum.com/Investors/ or by contacting MPC's Investor Relations office. Copies of MPLX's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC’s website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.

We have based our forward-looking statements on our current expectations, estimates and projections about our business and industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.




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Consolidated Statements of Income (Unaudited)

Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions, except per-share data)
 
2020
 
 
2019
 
 
2020
 
 
2019
Revenues and other income:
 
 
 
 
 
 
 
 
 
 
 
    Sales and other operating revenues
$
15,024

 
$
33,529

 
$
40,239

 
$
61,782

    Income (loss) from equity method investments(a)
 
105

 
 
107

 
 
(1,105
)
 
 
206

    Net gain on disposal of assets
 
2

 
 
4

 
 
6

 
 
218

    Other income
 
67

 
 
30

 
 
138

 
 
65

        Total revenues and other income
 
15,198

 
 
33,670

 
 
39,278

 
 
62,271

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
    Cost of revenues (excludes items below)
 
13,777

 
 
29,682

 
 
36,598

 
 
55,642

    LCM inventory valuation adjustment
 
(1,480
)
 
 

 
 
1,740

 
 

    Impairment expense
 
25

 
 

 
 
7,847

 
 

    Depreciation and amortization
 
935

 
 
886

 
 
1,897

 
 
1,805

    Selling, general and administrative expenses
 
746

 
 
886

 
 
1,567

 
 
1,753

    Other taxes
 
214

 
 
174

 
 
465

 
 
360

        Total costs and expenses
 
14,217

 
 
31,628

 
 
50,114

 
 
59,560

Income (loss) from operations
 
981

 
 
2,042

 
 
(10,836
)
 
 
2,711

    Net interest and other financial costs
 
345

 
 
322

 
 
683

 
 
628

Income (loss) before income taxes
 
636

 
 
1,720

 
 
(11,519
)
 
 
2,083

    Provision (benefit) for income taxes
 
360

 
 
353

 
 
(1,577
)
 
 
457

Net income (loss)
 
276

 
 
1,367

 
 
(9,942
)
 
 
1,626

Less net income (loss) attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
21

 
 
21

 
 
41

 
 
41

Noncontrolling interests
 
246

 
 
240

 
 
(758
)
 
 
486

Net income (loss) attributable to MPC
$
9

 
$
1,106

 
$
(9,225
)
 
$
1,099

 
 
 
 
 
 
 
 
 
 
 
 
Per-share data
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
    Net income (loss) attributable to MPC per share
$
0.01

 
$
1.67

 
$
(14.21
)
 
$
1.65

    Weighted average shares outstanding
 
650

 
 
662

 
 
649

 
 
667

Diluted:
 
 
 
 
 
 
 
 
 
 
 
    Net income (loss) attributable to MPC per share
$
0.01

 
$
1.66

 
$
(14.21
)
 
$
1.63

    Weighted average shares outstanding
 
653

 
 
666

 
 
649

 
 
672

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
The 2020 YTD period includes $1,315 million of impairment expense.



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Income Summary (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Income (loss) from operations by segment
 
 
 
 
 
 
 
 
 
 
 
  Refining & Marketing
$
(1,619
)
 
$
906

 
$
(2,241
)
 
$
572

  Retail
 
494

 
 
493

 
 
1,013

 
 
663

  Midstream
 
869

 
 
878

 
 
1,774

 
 
1,786

Corporate
 
(188
)
 
 
(179
)
 
 
(415
)
 
 
(370
)
Income (loss) from operations before items not allocated to segments
 
(444
)
 
 
2,098

 
 
131

 
 
2,651

Items not allocated to segments:
 
 
 
 
 
 
 
 
 
 
 
      Equity method investment restructuring gains(a)
 

 
 

 
 

 
 
207

      Transaction-related costs(b)
 
(30
)
 
 
(34
)
 
 
(65
)
 
 
(125
)
      Litigation
 

 
 
(22
)
 
 

 
 
(22
)
      Impairments(c)
 
(25
)
 
 

 
 
(9,162
)
 
 

      LCM inventory valuation adjustment
 
1,480

 
 

 
 
(1,740
)
 
 

Income (loss) from operations
 
981

 
 
2,042

 
 
(10,836
)
 
 
2,711

Net interest and other financial costs
 
345

 
 
322

 
 
683

 
 
628

Income (loss) before income taxes
 
636

 
 
1,720

 
 
(11,519
)
 
 
2,083

Provision (benefit) for income taxes
 
360

 
 
353

 
 
(1,577
)
 
 
457

Net income (loss)
 
276

 
 
1,367

 
 
(9,942
)
 
 
1,626

Less net income (loss) attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
21

 
 
21

 
 
41

 
 
41

Noncontrolling interests
 
246

 
 
240

 
 
(758
)
 
 
486

Net income (loss) attributable to MPC
$
9

 
$
1,106

 
$
(9,225
)
 
$
1,099

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Represents gain related to the formation of a new joint venture: Capline LLC in the 2019 YTD period.
(b) 
2020 includes costs incurred in connection with the Speedway separation and Midstream strategic review. 2019 includes employee severance, retention and other costs related to the acquisition of Andeavor.
(c) 
Includes $7.3 billion goodwill impairment, $1.3 billion impairment of equity method investments and $517 million impairment of long lived assets in 2020 YTD period.


Capital Expenditures and Investments (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Refining & Marketing
$
263

 
$
430

 
$
722

 
$
824

Retail
 
74

 
 
120

 
 
150

 
 
193

Midstream
 
425

 
 
814

 
 
899

 
 
1,637

Corporate(a)
 
45

 
 
38

 
 
101

 
 
79

    Total
$
807

 
$
1,402

 
$
1,872

 
$
2,733

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes capitalized interest of $27 million, $34 million, $56 million and $65 million, respectively.



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Refining & Marketing Operating Statistics (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,

 
2020
 
 
2019
 
 
2020
 
 
2019
Dollar per barrel of net refinery throughput:
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin(a)
$
7.13

 
$
15.24

 
$
9.50

 
$
13.23

Less:
 
 
 
 
 
 
 
 
 
 
 
Refining operating costs(b)
 
6.13

 
 
5.35

 
 
6.06

 
 
5.47

Distribution costs(c)
 
5.86

 
 
4.48

 
 
5.22

 
 
4.56

Refining planned turnaround costs
 
0.78

 
 
0.83

 
 
1.02

 
 
0.75

Depreciation and amortization
 
2.09

 
 
1.44

 
 
1.83

 
 
1.49

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Other(d)
 
(0.09
)
 
 
0.04

 
 
(0.04
)
 
 
0.06

Refining & Marketing income (loss) from operations
$
(7.82
)
 
$
3.18

 
$
(4.67
)
 
$
1.02

 
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing refined product sales volume (mbpd)(e)
 
2,878

 
 
3,814

 
 
3,233

 
 
3,742

Crude oil capacity utilization (percent)(f)
 
71

 
 
97

 
 
81

 
 
96

Refinery throughputs (mbpd):(g)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
2,165

 
 
2,937

 
 
2,475

 
 
2,902

    Other charge and blendstocks
 
111

 
 
198

 
 
160

 
 
207

Net refinery throughput
 
2,276

 
 
3,135

 
 
2,635

 
 
3,109

Sour crude oil throughput (percent)
 
53

 
 
47

 
 
50

 
 
49

Sweet crude oil throughput (percent)
 
47

 
 
53

 
 
50

 
 
51

Refined product yields (mbpd):(g)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
1,114

 
 
1,528

 
 
1,301

 
 
1,531

    Distillates
 
834

 
 
1,080

 
 
927

 
 
1,086

    Propane
 
45

 
 
57

 
 
52

 
 
55

    Feedstocks and special products
 
217

 
 
370

 
 
284

 
 
350

    Heavy fuel oil
 
27

 
 
51

 
 
32

 
 
48

    Asphalt
 
76

 
 
83

 
 
78

 
 
81

        Total
 
2,313

 
 
3,169

 
 
2,674

 
 
3,151

(a) 
Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput.
(b) 
Includes refining major maintenance and operating costs. Excludes planned turnaround and depreciation and amortization expense.
(c) 
Includes fees paid to MPLX, on a per barrel throughput basis, of $4.06, $2.80, $3.54 and $2.81, respectively. Excludes depreciation and amortization expense.
(d) 
Includes income (loss) from equity method investments, net gain (loss) on disposal of assets and other income.
(e) 
Includes intersegment sales.
(f) 
Based on calendar day capacity, which is an annual average that includes downtime for planned maintenance and other normal operating activities.
(g) 
Excludes inter-refinery volumes of 70 mbpd,102 mbpd, 74 mbpd and 88 mbpd, respectively.


10




Refining & Marketing Operating Statistics by Region (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2020
 
 
2019
 
 
2020
 
 
2019
Gulf Coast
 
 
 
 
 
 
 
 
 
 
 
Dollar per barrel of refinery throughput:(a)
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin(b)
$
5.22

 
$
9.32

 
$
7.15

 
$
8.58

Refining operating costs(c)
 
5.03

 
 
4.03

 
 
4.62

 
 
3.95

Refining planned turnaround costs
 
1.31

 
 
0.23

 
 
1.16

 
 
0.20

Refining depreciation and amortization
 
1.69

 
 
1.03

 
 
1.42

 
 
1.08

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(d)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
854

 
 
1,154

 
 
995

 
 
1,162

    Other charge and blendstocks
 
116

 
 
177

 
 
140

 
 
173

Gross refinery throughput
 
970

 
 
1,331

 
 
1,135

 
 
1,335

Sour crude oil throughput (percent)
 
74

 
 
59

 
 
65

 
 
61

Sweet crude oil throughput (percent)
 
26

 
 
41

 
 
35

 
 
39

Refined product yields (mbpd):(d)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
404

 
 
564

 
 
476

 
 
569

    Distillates
 
346

 
 
440

 
 
381

 
 
443

    Propane
 
22

 
 
29

 
 
26

 
 
28

    Feedstocks and special products
 
201

 
 
293

 
 
251

 
 
293

    Heavy fuel oil
 
11

 
 
15

 
 
11

 
 
14

    Asphalt
 
18

 
 
21

 
 
19

 
 
21

        Total
 
1,002

 
 
1,362

 
 
1,164

 
 
1,368

 
 
 
 
 
 
 
 
 
 
 
 
Mid-Continent
 
 
 
 
 
 
 
 
 
 
 
Dollar per barrel of refinery throughput:(a)
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin(b)
$
9.49

 
$
20.21

 
$
11.42

 
$
17.84

Refining operating costs(c)
 
5.02

 
 
4.82

 
 
5.47

 
 
5.21

Refining planned turnaround costs
 
0.32

 
 
0.27

 
 
0.97

 
 
0.47

Refining depreciation and amortization
 
1.91

 
 
1.46

 
 
1.83

 
 
1.55

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(e)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
923

 
 
1,155

 
 
999

 
 
1,106

    Other charge and blendstocks
 
34

 
 
48

 
 
46

 
 
52

Gross refinery throughput
 
957

 
 
1,203

 
 
1,045

 
 
1,158

Sour crude oil throughput (percent)
 
28

 
 
28

 
 
26

 
 
27

Sweet crude oil throughput (percent)
 
72

 
 
72

 
 
74

 
 
73

Refined product yields (mbpd):(e)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
476

 
 
626

 
 
540

 
 
612

    Distillates
 
340

 
 
412

 
 
365

 
 
400

    Propane
 
17

 
 
20

 
 
18

 
 
19

    Feedstocks and special products
 
59

 
 
71

 
 
55

 
 
55

    Heavy fuel oil
 
11

 
 
16

 
 
13

 
 
16

    Asphalt
 
57

 
 
61

 
 
58

 
 
59

        Total
 
960

 
 
1,206

 
 
1,049

 
 
1,161

 
 
 
 
 
 
 
 
 
 
 
 


11




 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2020
 
 
2019
 
 
2020
 
 
2019
West Coast
 
 
 
 
 
 
 
 
 
 
 
Dollar per barrel of refinery throughput:(a)
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin(b)
$
5.93

 
$
17.77

 
$
10.59

 
$
14.33

Refining operating costs(c)
 
10.19

 
 
8.01

 
 
9.45

 
 
8.10

Refining planned turnaround costs
 
0.45

 
 
2.80

 
 
0.70

 
 
2.18

Refining depreciation and amortization
 
1.81

 
 
1.29

 
 
1.48

 
 
1.31

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(f)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
388

 
 
628

 
 
481

 
 
634

    Other charge and blendstocks
 
31

 
 
75

 
 
48

 
 
70

Gross refinery throughput
 
419

 
 
703

 
 
529

 
 
704

Sour crude oil throughput (percent)
 
64

 
 
58

 
 
70

 
 
66

Sweet crude oil throughput (percent)
 
36

 
 
42

 
 
30

 
 
34

Refined product yields (mbpd):(f)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
234

 
 
338

 
 
285

 
 
350

    Distillates
 
148

 
 
228

 
 
181

 
 
243

    Propane
 
6

 
 
8

 
 
8

 
 
8

    Feedstocks and special products
 
17

 
 
104

 
 
40

 
 
84

    Heavy fuel oil
 
15

 
 
24

 
 
20

 
 
24

    Asphalt
 
1

 
 
1

 
 
1

 
 
1

        Total
 
421

 
 
703

 
 
535

 
 
710

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
The per barrel for Refining & Marketing margin is calculated based on net refinery throughput (excludes inter-refinery transfer volumes). The per barrel for the remaining items is calculated based on the gross refinery throughput (includes inter-refinery transfer volumes).
(b) 
Sales revenue less cost of refinery inputs and purchased products, divided by net refinery throughput.
(c)
Includes refining major maintenance and operating costs. Excludes planned turnaround and depreciation and amortization expense.
(d) 
Includes inter-refinery transfer volumes of 51 mbpd, 47 mbpd, 48 mbpd and 42 mbpd, respectively.
(e) 
Includes inter-refinery transfer volumes of 9 mbpd, 10 mbpd, 9 mbpd and 9 mbpd, respectively.
(f) 
Includes inter-refinery transfer volumes of 10 mbpd, 45 mbpd, 17 mbpd and 37 mbpd, respectively.



12




Retail Operating Statistics (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2020
 
 
2019
 
 
2020
 
 
2019
Speedway fuel sales (millions of gallons)
 
1,197

 
 
1,957

 
 
2,833

 
 
3,828

Direct dealer fuel sales (millions of gallons)
 
462

 
 
646
 
 
1,047

 
 
1,276
Retail fuel margin (dollars per gallon)(a)
$
0.3960

 
$
0.2666

 
$
0.3577

 
$
0.2200

Merchandise sales (in millions)
$
1,603

 
$
1,620

 
$
3,064

 
$
3,033

Merchandise margin (in millions)
$
452

 
$
471

 
$
866

 
$
878

Merchandise margin percent
 
28.2
 %
 
 
29.1
 %
 
 
28.3
 %
 
 
29.0
 %
Same store gasoline sales volume (period over period)(b)
 
(36.6
)%
 
 
(2.4
)%
 
 
(22.7
)%
 
 
(2.8
)%
Same store merchandise sales (period over period)(b)(c)
 
(4.0
)%
 
 
6.3
 %
 
 
(1.8
)%
 
 
5.9
 %
Total convenience stores at period-end
 
3,873

 
 
3,913

 
 
 
 
 
 
Direct dealer locations at period-end
 
1,074

 
 
1,062
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes bankcard processing fees (as applicable).
(b) 
Same store comparison includes only locations owned at least 13 months.
(c) 
Excludes cigarettes.


Midstream Operating Statistics (Unaudited)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2020
 
 
2019
 
 
2020
 
 
2019
Pipeline throughputs (mbpd)(a)
 
4,380

 
 
5,178

 
 
4,800

 
 
5,214

Terminal throughput (mbpd)
 
2,420

 
 
3,287

 
 
2,693

 
 
3,254

Gathering system throughput (million cubic feet per day)(b)
 
5,490

 
 
5,948

 
 
5,621

 
 
5,950

Natural gas processed (million cubic feet per day)(b)
 
8,476

 
 
8,535

 
 
8,632

 
 
8,528

C2 (ethane) + NGLs fractionated (mbpd)(b)
 
543

 
 
520

 
 
548

 
 
517

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes common-carrier pipelines and private pipelines contributed to MPLX. Excludes equity method affiliate pipeline volumes.
(b) 
Includes amounts related to unconsolidated equity method investments on a 100% basis.


Select Financial Data (Unaudited)
(In millions)
June 30 
2020
 
March 31 
2020
Cash and cash equivalents
$
1,091

 
$
1,690

MPC debt
 
11,607

 
 
11,138

MPLX debt
 
20,559

 
 
20,471

Total consolidated debt
 
32,166

 
 
31,609

Redeemable noncontrolling interest
 
968

 
 
968

Equity
 
30,849

 
 
31,228

Shares outstanding
 
650

 
 
650

 
 
 
 
 
 



13




 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
 
2020
 
 
2019
 
 
2020
 
 
2019
Cash provided by (used in) operations
$
538

 
$
2,622

 
$
(230
)
 
$
4,245

Dividends paid per share
$
0.58

 
$
0.53

 
$
1.16

 
$
1.06

 
 
 
 
 
 
 
 
 
 
 
 

Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to their most comparable GAAP financial measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies. The non-GAAP financial measures we use are as follows:
Adjusted Net Income Attributable to MPC
Adjusted net income attributable to MPC is defined as net income attributable to MPC excluding the items in the table below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends.

Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is defined as adjusted net income attributable to MPC divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.


14




Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted Net Income (Loss) Attributable to MPC
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Net income (loss) attributable to MPC
$
9

 
$
1,106

 
$
(9,225
)
 
$
1,099

Pre-tax adjustments:
 
 
 
 
 
 
 
 
 
 
 
Equity method investment restructuring gains
 

 
 

 
 

 
 
(207
)
Transaction-related costs
 
30

 
 
34

 
 
65

 
 
125

Litigation
 

 
 
22

 
 

 
 
22

Impairments
 
25

 
 

 
 
9,162

 
 

LCM inventory valuation adjustment
 
(1,480
)
 
 

 
 
1,740

 
 

Out of period tax adjustment
 

 
 

 
 

 
 
36

Tax impact of adjustments(a)
 
548

 
 
(14
)
 
 
(1,445
)
 
 
14

Non-controlling interest impact of adjustments
 

 
 

 
 
(1,271
)
 
 

Adjusted net income (loss) attributable to MPC
$
(868
)
 
$
1,148

 
$
(974
)
 
$
1,089

 
 
 
 
 
 
 
 
 
 
 
 
Diluted income (loss) per share
$
0.01

 
$
1.66

 
$
(14.21
)
 
$
1.63

Adjusted diluted income (loss) per share(b)
$
(1.33
)
 
$
1.73

 
$
(1.50
)
 
$
1.62

(a) 
We generally tax effect taxable adjustments to reported earnings using a combined federal and state statutory rate of approximately 24 percent.
(b) 
Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted earnings per share calculation except for the three months ended June 30, 2020 which assumes no dilution and uses basic shares as a result of an adjusted loss attributable to MPC.




15




Operating Cash Flow Before Changes in Working Capital
Operating cash flow before changes in working capital is defined as net cash provided by (used in) operations less changes in current receivables, inventories, current accounts payable and accrued liabilities, the fair value of derivative instruments and right of use assets and operating lease liabilities. We believe operating cash flow before changes in working capital is useful as it is indicative of cash received or used for operations based on current operating conditions without the effects of working capital account fluctuations that result from commodity price changes, timing of cash collections, inventory purchases or accounts payable payments as compared to the prior year-end reporting period.


Reconciliation of Cash Provided by (Used in) Operations to Operating Cash Flow Before Changes in Working Capital
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Net cash provided by (used in) operations
$
538

 
$
2,622

 
$
(230
)
 
$
4,245

Less changes in:
 
 
 
 
 
 
 
 
 
 
 
Current receivables
 
1,218

 
 
(679
)
 
 
3,117

 
 
(1,697
)
Inventories
 
839

 
 
744

 
 
417

 
 
740

Current accounts payable and accrued liabilities
 
(1,767
)
 
 
(186
)
 
 
(5,220
)
 
 
1,297

Fair value of derivative instruments
 
70

 
 
(56
)
 
 
23

 
 
(27
)
Right of use assets and operating lease liabilities, net
 
6

 
 
10

 
 
2

 
 
9

Total changes in working capital
 
366

 
 
(167
)
 
 
(1,661
)
 
 
322

Operating cash flow before changes in working capital
$
172

 
$
2,789

 
$
1,431

 
$
3,923



Adjusted EBITDA & Segment Adjusted EBITDA
Adjusted EBITDA and Segment Adjusted EBITDA represent earnings before net interest and other financial costs, income taxes, depreciation and amortization expense as well as adjustments to exclude refining turnaround costs, items not allocated to segment results and other items shown in the table below. We believe these non-GAAP financial measures are useful to investors and analysts to analyze and compare our operating performance between periods by excluding items that do not reflect the core operating results of our business or in the case of turnarounds, which provide benefits over multiple years. We also believe that excluding turnaround costs from this metric is useful for comparability to other companies as certain of our competitors defer these costs and amortize them between turnarounds. Adjusted EBITDA and Segment Adjusted EBITDA should not be considered as a substitute for, or superior to segment income (loss) from operations, net income attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA and Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.


16





Reconciliation of Net Income (Loss) Attributable to MPC to Adjusted EBITDA
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Net income (loss) attributable to MPC
$
9

 
$
1,106

 
$
(9,225
)
 
$
1,099

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Net interest and other financial costs
 
345

 
 
322

 
 
683

 
 
628

Net income (loss) attributable to noncontrolling interests
 
267

 
 
261

 
 
(717
)
 
 
527

Provision (benefit) for income taxes
 
360

 
 
353

 
 
(1,577
)
 
 
457

Depreciation and amortization
 
935

 
 
886

 
 
1,897

 
 
1,805

Refining planned turnaround costs
 
162

 
 
237

 
 
491

 
 
423

Equity method investment restructuring gains
 

 
 

 
 

 
 
(207
)
Transaction-related costs
 
30

 
 
34

 
 
65

 
 
125

Litigation
 

 
 
22

 
 

 
 
22

Impairments
 
25

 
 

 
 
9,162

 
 

LCM inventory valuation adjustment
 
(1,480
)
 
 

 
 
1,740

 
 

Adjusted EBITDA
$
653

 
$
3,221

 
$
2,519

 
$
4,879





17




Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products.
Reconciliation of Refining & Marketing Income (Loss) from Operations to Refining & Marketing Gross Margin and Refining & Marketing Margin
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(In millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Refining & Marketing income (loss) from operations(a)
$
(1,619
)
 
$
906

 
$
(2,241
)
 
$
572

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
500

 
 
574

 
 
1,054

 
 
1,118

LCM inventory valuation adjustment
 
1,470

 
 

 
 
(1,715
)
 
 

(Income) loss from equity method investments
 
19

 
 
(3
)
 
 
22

 
 
(4
)
Net (gain) loss on disposal of assets
 
1

 
 

 
 
1

 
 
(6
)
Other income
 
(4
)
 
 
(8
)
 
 
(8
)
 
 
(22
)
Refining & Marketing gross margin
 
367

 
 
1,469

 
 
(2,887
)
 
 
1,658

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Operating expenses (excluding depreciation and amortization)
 
2,231

 
 
2,610

 
 
5,053

 
 
5,215

LCM inventory valuation adjustment
 
(1,470
)
 
 

 
 
1,715

 
 

Depreciation and amortization
 
433

 
 
411

 
 
880

 
 
838

Gross margin excluded from Refining & Marketing margin(b)
 
(66
)
 
 
(142
)
 
 
(163
)
 
 
(259
)
Other taxes included in Refining & Marketing margin
 
(19
)
 
 
(1
)
 
 
(43
)
 
 
(5
)
Refining & Marketing margin(a)
$
1,476

 
$
4,347

 
$
4,555

 
$
7,447

 
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin by region:
 
 
 
 
 
 
 
 
 
 
 
Gulf Coast
$
437

 
$
1,090

 
$
1,414

 
$
2,007

Mid-Continent
 
819

 
 
2,193

 
 
2,154

 
 
3,710

West Coast
 
220

 
 
1,064

 
 
987

 
 
1,730

Refining & Marketing margin
$
1,476

 
$
4,347

 
$
4,555

 
$
7,447

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
LCM inventory valuation adjustments are excluded from Refining & Marketing income from operations and Refining & Marketing margin.
(b) 
The gross margin, excluding depreciation and amortization, of operations that support Refining & Marketing such as biodiesel and ethanol ventures, power facilities and processing of credit card transactions.



18




Retail Fuel Margin
Retail fuel margin is defined as the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees (where applicable).
Retail Merchandise Margin
Retail merchandise margin is defined as the price paid by consumers less the cost of merchandise.
Reconciliation of Retail Income from Operations to Retail Gross Margin and Retail Margin
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
(in millions)
 
2020
 
 
2019
 
 
2020
 
 
2019
Retail income from operations(a)
$
494

 
$
493

 
$
1,013

 
$
663

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Operating, selling, general and administrative expenses
 
577

 
 
597

 
 
1,175

 
 
1,180

LCM inventory valuation adjustment
 
10

 
 

 
 
(25
)
 
 

Income from equity method investments
 
(27
)
 
 
(21
)
 
 
(49
)
 
 
(38
)
Net gain on disposal of assets
 

 
 

 
 
(1
)
 
 
(2
)
Other income
 
(44
)
 
 
(4
)
 
 
(93
)
 
 
(6
)
Retail gross margin
 
1,010

 
 
1,065

 
 
2,020

 
 
1,797

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
LCM inventory valuation adjustment
 
(10
)
 
 

 
 
25

 
 

Depreciation and amortization
 
132

 
 
130

 
 
257

 
 
256

Retail margin(a)
$
1,132

 
$
1,195

 
$
2,302

 
$
2,053