Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Q2 2020 Earnings Presentation
34 slides from Marathon Petroleum's earnings presentation, Aug 3, 2020
Slide 1: Second Quarter 2020 Conference Call
Second Quarter 2020 Conference Call August 3, 2020
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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 busine
Slide 3: Speedway Sale: Executing Strategic Priorities
Speedway Sale: Executing Strategic Priorities Certainty of Value Realization Balance Sheet Strength & Capital Return 100% cash transaction Long-Term Relationship $21 billion represents Approximately $16.5 billion of significant value unlock anticipated after-tax cash proceeds Long-term fuel supply a
Slide 4: MPC: Strategy for Continuing Value Creation
MPC: Strategy for Continuing Value Creation 1 2 3 Strengthen Improve Competitive Position Commercial Lower Cost of our Assets Performance Structure Achieve best-in-class Leverage cost, operating, and advantaged raw Strict capital financial performance material selection discipline Focus on contribut
Slide 5: Business Update
Business Update Progress on tactical and strategic initiatives: Indefinitely idling Gallup and Martinez refineries; evaluating strategic repositioning of Martinez to renewable diesel facility On track to achieve 2020 operating expense and capital spending reductions Enhanced liquidity with n
Slide 6: Second Quarter Highlights
Second Quarter Highlights $ Millions (unless otherwise noted) 2Q20 Adjusted Loss per Share ($/share) (a) $(1.33) Adjusted EBITDA $653 Cash from Operations, excluding Working Capital $172 Dividends $378 (a) Based on weighted average diluted shares 6
Slide 7: Second Quarter Highlights (cont’d)
Second Quarter Highlights (cont’d) 2Q 2020 vs. 1Q 2020 Adjusted EBITDA Reconciliation to Net Income 2,500 1,425 2,000 1,866 -51 -18 1,500 $ Millions 1,000 -972 -1,097 34 653 500 -1,178 9 0 1Q 2020 Midstream Retail Refining & Corporate 2Q 2020 LCM Benefit Turnaround Interest, 2Q 2020 Adj. EBITDA Mark
Slide 8: Midstream EBITDA
Midstream EBITDA 2Q 2020 vs. 1Q 2020 1,500 Through-cycle EBITDA 1,250 stability 18 1,199 - 69 1,000 Fee-based with volume $ Millions protections across businesses 500 Continued progress on organic growth projects 0 1Q 2020 MPLX Other 2Q 2020 EBITDA Midstream EBITDA 8
Slide 9: Retail EBITDA
Retail EBITDA 2Q 2020 vs. 1Q 2020 Fuel volumes down ~25% from 800 first quarter due to COVID-19 demand destruction; down 644 21 626 ~36% year-over-year 38 600 -3 -74 Fuel margins of nearly $ Millions 400 40 cpg Seasonal growth in 200 merchandise vs. 1Q; year-over-year same store sales down 4%
Slide 10: Refining & Marketing Adjusted EBITDA
Refining & Marketing Adjusted EBITDA 2Q 2020 vs. 1Q 2020 400 200 Full three month impact of 154 COVID-19 demand 0 destruction -200 $ Millions -400 -516 71% utilization during the -600 quarter -800 -540 76 Significantly weaker crack -1,000 366 -17 -1,024 spreads -1,200 -1,400 Strong expense c
Slide 11: Total Consolidated Cash Flow
Total Consolidated Cash Flow 2Q 2020 3,000 531 2,500 366 2,000 MPC 457 (b) 172 MPLX 74 1,690 $ Millions -1,062 1,500 -378 72 1,091 1,000 -300 500 0 3/31/2020 Operating Cash Working Net Debt Capital Return of Net Distributions Other 6/30/2020 Cash Balance Flow before Capital Expenditures, Capital to
Slide 12: Commitment to Cost Discipline
Commitment to Cost Discipline 1,800 R&M Operating Expenses 1,636 Guided 2Q R&M operating 1,600 expenses to be ~$300 million lower than 1Q20 $ Millions 1,400 1,334 1,270 1,200 2Q20 R&M costs reduced by $64 million more than 1,000 guidance 1Q20 Actual 2Q20 Guidance 2Q20 Actual Disciplined approach
Slide 13: Strong Liquidity Position
Strong Liquidity Position Credit Facility Availability March and April working capital impacts partially reversed in May 7.7 and June as crude prices 0.7 increased 2.0 4.8 Credit facility fully repaid in $ Billions 0.8 second quarter 1.0 $7.7 billion of available credit 5.0 capacity as of June
Slide 14: Third-Quarter 2020 Outlook
Third-Quarter 2020 Outlook Other Crude Total Depreciation Charge/ Sweet Sour Operating Distribution Planned Throughput Throughput and Feedstocks Crude Crude Cost (b) Cost (c) Turnaround (a) (a) Amortization Throughput (a) $/BBL of Total in MBPD Percent of Throughput $MM $MM $MM Throughput Gulf Coast
Slide 15: Focus on Sustainability and Corporate Leadership
Focus on Sustainability and Corporate Leadership Environment Social Governance Recognized for Energy Committed to Independent & Diverse Efficiency with EPA Energy Diversity & Inclusion Board of Directors Star Partner Awards Established new Human Transparency in reporting Targeting 30% GHG emissions
Slide 16: Questions & Answers
Questions & Answers Strategic Overview
Slide 17: Appendix
Appendix 17
Slide 18: Published 2019 Sustainability Report
Published 2019 Sustainability Report Highlights Recognitions 20% reduction in GHG intensity Included in Dow Jones Sustainability since 2014 Index for North America ~$470 million investment converting EPA Energy Star Partner of the Year – Dickinson refinery to renewable diesel plant Sustained Excelle
Slide 19: Manageable Leverage and Maturities
Manageable Leverage and Maturities Debt-to-LTM Adj. EBITDA (a) 2.0x 1.5x $ Millions YE18 YE19 2Q20 1.0x (unless otherwise noted) 0.5x Total Debt (excl. MPLX) 9,114 9,125 11,607 0.0x 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM Adj. EBITDA (excl. MPLX) 6,893 5,506 3,022 Senior Notes Maturities -
Slide 20: Capitalization and Select Balance Sheet Data
Capitalization and Select Balance Sheet Data MPC MPLX MPC Excluding As of June 30, 2020 Consolidated Adjustments(a) MPLX ($MM except ratio data) Total Debt 32,166 20,559 11,607 Total Equity(b) 31,817 10,437 21,380 Debt-to-Capital Ratio 50% - 35% Cash and cash equivalents 1,091 67 1,024 Debt to LTM A
Slide 21: Refining & Marketing Segment Loss
Refining & Marketing Segment Loss 2Q 2020 3,000 2,000 336 392 1,476 159 -369 958 1,000 Volume 123 $ Millions Product 464 Crude -956 0 -1,270 -1,000 -1,214 -16 -595 -1,619 -2,000 Blended Sweet Sour Market Other R&M Operating Distribution Other Turnaround R&M Crack Differential Differential Structure
Slide 22: Refining & Marketing Margins – Market vs. Realized
Refining & Marketing Margins – Market vs. Realized Total system capture of 80%, key factors included: Low crude flat price tightening differentials Lower product flat price muting impact of volumetric gain Lower West Coast utilization vs. indicator with Martinez idling Market structure benef
Slide 23: Distribution Costs – Components
Distribution Costs – Components 2Q 2020 1,500 373 1,214 1,200 900 468 $ Millions 600 373 300 0 Third Party MPLX MPLX Fuels Distribution and 2Q 2020 Fees and Other Fees Refinery Logistics Fees Distribution Costs Total distribution fees of $841 million paid to MPLX and $458 million returned to MPC thr
Slide 24: Refining & Marketing Segment Loss
Refining & Marketing Segment Loss 2Q 2020 vs. 1Q 2020 Variance Analysis -500 -622 -1,000 $ Millions Volume - 93 -1,500 Product - 425 Crude 24 164 343 -1,619 76 366 -2,000 -1,307 69 -214 -494 -2,500 1Q 2020 Blended Sour Sweet Market Other Operating Distribution Turnaround, 2Q 2020 Segment Crack Diffe
Slide 25: Earnings
Earnings 2018 2019 2020 ($MM unless otherwise noted) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Refining & Marketing segment income (loss) (133) 1,025 666 923 (334) 906 883 912 (622) (1,619) Retail segment income 95 159 161 613 170 493 442 477 519 494 Midstream segment income 567 617 679 889 908 878 919 889 905
Slide 26: Reconciliation
Reconciliation Net Income Attributable to MPC to Adjusted Net Income (Loss) Attributable to MPC ($MM) 2Q20 2Q19 Net income attributable to MPC 9 1,106 Pre-tax adjustments: Transaction-related costs 30 34 Impairments 25 - LCM inventory valuation adjustment (1,480) - Litigation - 22 Tax impact of adju
Slide 27: Reconciliation
Reconciliation Net Income (Loss) Attributable to MPC to Adjusted EBITDA and LTM Adjusted Pro Forma EBITDA ($MM) 3Q ‘19 4Q ‘19 1Q ’20 2Q ’20 LTM Net Income (loss) attributable to MPC 1,095 443 (9,234) 9 (7,687) Add: Net interest and other financial costs 317 302 338 345 1,302 Net income (loss) attrib
Slide 28: Reconciliation
Reconciliation Net Income Attributable to MPC to EBITDA, Adjusted EBITDA and Adjusted Pro Forma EBITDA ($MM) 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Income (loss) attributable to MPC 2,389 3,389 2,112 2,524 2,852 1,174 3,432 2,780 2,637 Add: Net interest and other financial costs 26 109 179
Slide 29: Reconciliation
Reconciliation MPLX Net Income (Loss) to EBITDA Related to MPLX ($MM) 3Q ’19 4Q ‘19 1Q ‘20 2Q ‘20 LTM MPLX Net Income / (Loss) 689 (573) (2,716) 655 (1,945) Add: Net interest and other financial costs 233 229 230 223 915 Provision (benefit) for income taxes 4 (2) - - 2 Impairments - 1,239 3,429 - 4,
Slide 30: Reconciliation
Reconciliation Cash Provided by (Used in) Operations to Operating Cash Flow Before Changes in Working Capital 2019 2020 ($MM) 1Q 2Q 3Q 4Q 1Q 2Q Net cash provided by (used in) operations 1,623 2,622 2,787 2,409 (768) 538 Less changes: Current receivables (1,018) (679) 280 (303) 1,899 1,218 Inventorie
Slide 31: Reconciliation
Reconciliation Segment Income (Loss) from Operations to Segment Adjusted EBITDA and Adjusted EBITDA 2018 2019 2020 ($MM) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Refining & Marketing Segment Segment income (loss) from operations (133) 1,025 666 923 (334) 906 883 912 (622) (1,619) Add: Depreciation and amortiza
Slide 32: Reconciliation
Reconciliation Refining & Marketing Income (Loss) from Operations to Refining & Marketing Margin 2019 2020 (a) LCM inventory valuation adjustments ($MM) 1Q 2Q 1Q 2Q are excluded from Refining & Marketing income from operations and Refining & Refining & Marketing income (loss) from operations (a) (33
Slide 33: Reconciliation
Reconciliation Retail Income from Operations to Retail Total Margin 2019 2020 ($MM) 1Q 2Q 3Q 4Q 1Q 2Q (a) LCM inventory valuation adjustments Retail income from operations (a) 170 493 442 477 519 494 are excluded from Retail income from Plus (Less): operations and Retail margin. (b) Retail fuel marg
Slide 34: MARATHON
MARATHON ®