Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Corporate Update (September 2017)
18 slides from Marathon Petroleum's corporate update, Sep 5, 2017
Slide 1: Strategic Actions Update
Strategic Actions Update September 5, 2017
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“) and MPLX LP (“MPLX”). These forward-looking statements relate to, among other things, expectations, estimates and projection
Slide 3: Strategic Actions Announced in January
Strategic Actions Announced in January Significantly accelerate dropdowns to MPLX Exchange of MPC’s economic interest in the general partner (GP) for MPLX LP units in conjunction with completion of accelerated dropdowns Conduct a full and thorough Speedway evaluation 3
Slide 4: Strategic Actions – Status Update
Strategic Actions – Status Update 1st dropdown in March - transaction value of $2.015 B 1Q17 ~$250 MM annual EBITDA ~8x EBITDA multiple Share repurchases of $420 MM • $1.55 B returned to shareholders in first Share repurchases of $750 MM; expanded board authorization by $3 B half of 2017 2Q17 2nd dr
Slide 5: Speedway Evaluation Process Overview
Speedway Evaluation Process Overview Established an independent Special Committee – Five independent directors of the MPC Board; no executive management on committee – Held 11 meetings since formation – Special Committee provided recommendation to MPC Board of Directors Engaged independent finan
Slide 6: Board’s Conclusion
Board’s Conclusion Maintaining Speedway as an integrated business within MPC drives the greatest long-term value for MPC shareholders – Substantial integration synergies (~$270 - $390 MM per year1) – Speedway is operated as a best-in-class retailer, delivering substantial value – Speedway’s perfor
Slide 7: Tax Considerations of a Potential Separation
Tax Considerations of a Potential Separation Engaged Ernst & Young and Crowell & Moring to explore tax-free separation – Value impact of a separation if treated as taxable would be significant, potentially over $5 B in total borne by MPC and its shareholders Submitted request to IRS for a PLR on
Slide 8: Speedway Integration Synergy Value
Speedway Integration Synergy Value Integration synergy value loss beyond term of an initial supply % of Total Annual Synergies (Midpoint) agreement is substantial (~$270 - $390 MM per year) Vertical integration synergies 6% – Wholesale volume 12% 34% – Production and supply optimization • Produc
Slide 9: Speedway Integration Synergy Value
Speedway Integration Synergy Value Annual Value Loss1 Description ($ millions) Wholesale volume Value uplift captured by MPC wholesale sales to Speedway ~$105 - $120 Value MPC’s refineries, supply, and marketing groups create through Production and supply assured Speedway sales, including high-value
Slide 10: Leverage and Liquidity Impacts of Separation
Leverage and Liquidity Impacts of Separation MPC is committed to maintaining its current investment grade credit profile Speedway’s contribution to diversified cash flows is an important component of MPC’s risk profile for rating agencies and fixed income investors – MPC placed on negative outlo
Slide 11: Illustrative Cash Impact of Separation
Illustrative Cash Impact of Separation Pro Forma MPC Sources Uses ($ millions) Cash Distribution from Speedway $3,0001 Debt Reduction ($2,500)2 Cash to Balance Sheet ($1,000)3 One Time Debt Tendering and Transaction Costs ($240)4 Retained Cash from Operations $740 (otherwise returned to shareholders
Slide 12: Speedway Valuation
Speedway Valuation Stable retail business segment – transparent, easy to understand and value MPC provides transparency into Speedway operating and financial performance consistent with public retail peers Sell-side research places Speedway value within a tight band (8.0-10.5x) EV/EBITDA Multi
Slide 13: Industry Leader with Significant Growth Opportunities
Industry Leader with Significant Growth Opportunities #1 in EBITDA/store/month vs. public peers $30 Peer Median = $20 M $20 $M $10 $0 Speedway Murphy USA Casey's Couche-Tard Sunoco CST Alon USA Western Refining Industry leading performance with focused retail management team Continued earnings g
Slide 14: Summary
Summary Thorough review of Speedway was conducted Board’s conclusion: Speedway as an integrated business within MPC drives the greatest long-term value for MPC shareholders Significant opportunities to continue value-enhancing/aggressive investment in Speedway Continue our action plan to del
Slide 15: Delivering Significant Capital Returns for Our Shareholders
Delivering Significant Capital Returns for Our Shareholders ~$12 billion returned to shareholders since spin ~$3.5 B in dividends1 ~$8.6 B in share repurchases $/Share Repurchased ~32% 1.60 $1.52 $ MM 10,000 of Outstanding Common Shares 1,400 $1.36 1.40 1,200 8,000 1.20 $1.14 1,000 Cumulative $ MM 1
Slide 16: Executing Our Strategic Plan and Delivering Results
Executing Our Strategic Plan and Delivering Results Total Shareholder Return Since Spin-Off (6/30/2011) Since 2011 spinoff we have: – Returned approximately $12 billion to our shareholders – Consistently grown dividend, 26% CAGR since spin – More than tripled stable cash flow – Executed transforma
Slide 17: Marathon
MARATHON ®
Slide 18: Speedway Reconciliation
Speedway Reconciliation Segment EBITDA to Segment Income from Operations ($MM) 2016 Speedway Segment Income from Operations 734 Plus: Depreciation and Amortization 273 Speedway Segment EBITDA 1,007 18
Marathon Petroleum — Corporate Update (September 2017) on 6ix