Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Q3 2014 Earnings Presentation
27 slides from Marathon Petroleum's earnings presentation, Oct 30, 2014
Slide 1: Third Quarter 2014 Earnings Conference Call and Webcast
Third Quarter 2014 Earnings Conference Call and Webcast October 30, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws regarding both MPC and MPLX. These forward- looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations
Slide 3: Highlights
Highlights Reported earnings of $672 million Closed Speedway acquisition of Hess’ retail operations Returned $442 million of capital to shareholders, including $301 million of share repurchases Announced plans to substantially accelerate the growth of MPLX, and authorized sale of remaining 3
Slide 4: Substantial Acceleration of MPLX Growth
Substantial Acceleration of MPLX Growth Grow MPLX to ~$450 MM of run- rate EBITDA (December 2015 Adjusted EBITDA attributable to MPLX 500 annualized), from current ~$160 450 MM run-rate (3Q 2014 annualized) 400 Accelerate MPLX’s annual LP ~3x 3Q 2014 annualized distribution growth rate to averag
Slide 5: Substantial Acceleration of MPLX Growth
Substantial Acceleration of MPLX Growth Rapidly changing midstream business environment creates multiple opportunities where size matters Hess retail acquisition has expanded MPC’s opportunity set and strategic options Identified fuels distribution EBITDA source Expands retained MLP-qualifyi
Slide 6: 3Q 2014 Earnings
3Q 2014 Earnings* 3Q 2014 3Q 2013 Earnings $672 MM $168 MM Earnings per Diluted Share $2.36 $0.54 Earnings Earnings per Diluted Share 2,500 8 2,112 6.64 2,000 5.95 626 1,726 6 2.07 1,500 2.36 $/Share $MM 168 672 0.54 4 1,000 593 1.83 500 855 2 2.95 725 2.17 0 199 0.67 0 2013 2014 2013 2014 1Q 2Q 3Q
Slide 7: Earnings: 3Q 2014 vs. 3Q 2013 Variance Analysis
Earnings* 3Q 2014 vs. 3Q 2013 Variance Analysis 1,000 17 15 744 900 (15) (3) 800 700 672 (252) (2) 600 $MM 500 400 300 200 168 100 0 3Q 2013 Refining & Speedway Pipeline Items not Interest Income Noncontrolling 3Q 2014 Marketing Transportation Allocated to Taxes Interests Segments *References to Ear
Slide 8: Refining and Marketing Segment Income (vs. 3Q 2013)
Refining and Marketing Segment Income 3Q 2014 vs. 3Q 2013 Variance Analysis 1,250 548 1,000 971 (152) (22) 750 118 379 8 $MM (40) (95) 500 250 227 0 3Q 2013 *LLS *Sweet/ *LLS/WTI *LLS *Market Other Direct Other 3Q 2014 6-3-2-1 Sour Diff. Diff. Prompt Structure Gross Operating Crack vs. Margin Costs
Slide 9: Refining and Marketing Segment Income (vs. 2Q 2014)
Refining and Marketing Segment Income 3Q 2014 vs. 2Q 2014 Variance Analysis 1,500 1,260 1,250 30 34 24 20 1,000 (33) (62) 971 (229) (73) $MM 750 500 250 0 2Q 2014 *LLS *Sweet/ *LLS/WTI *LLS *Market Other Direct Other 3Q 2014 6-3-2-1 Sour Diff. Diff. Prompt Structure Gross Operating Crack vs. Margin
Slide 10: Speedway Segment Income
Speedway Segment Income 3Q 2014 vs. 3Q 2013 Variance Analysis 160 140 11 22 119 120 (16) 102 100 $MM 80 60 40 20 0 3Q 2013 Light Product Gross Merchandise Gross Other 3Q 2014 Margin Margin 10
Slide 11: Pipeline Transportation Segment Income
Pipeline Transportation Segment Income 3Q 2014 vs. 3Q 2013 Variance Analysis 100 80 9 15 69 (9) 60 54 $MM 40 20 0 3Q 2013 Transportation Pipeline Other 3Q 2014 Revenue Affiliates 11
Slide 12: Total Company Cash Flow
Total Company Cash Flow 3Q 2014 6,000 2,608 5,000 (736) 4,000 1,010 68 $MM 3,000 2,125 2,000 (2,785) 6 1,854 (141) (301) 1,000 0 6/30/14 Operating Working Long-term Cash Capital Hess Acquisition, Dividends Share Other 9/30/14 Cash Cash Flow Capital Debt, Net Expenditures, Net of Cash Paid Repurchase
Slide 13: Select Balance Sheet/Cash Flow Data
Select Balance Sheet/Cash Flow Data ($MM) 2014 2014 2014 2013 3Q 2Q 1Q 4Q As of quarter ended: Cash and cash equivalents 1,854 2,125 2,166 2,292 Total debt 6,264 3,638 3,659 3,396 Equity 11,266 11,037 10,758 11,332 Debt-to-total-capital ratio 36% 25% 25% 23% Last Twelve Months (LTM) EBITDA 5,099 4,3
Slide 14: Focused Return of Capital to Shareholders
Focused Return of Capital to Shareholders LTM Ended 9/30/14 8,000 7,000 6,000 2,785 Hess Retail Acquisition 5,000 Dividends and share $MM repurchases* 4,000 ~1.2x of 2,413 $2,055 Free Investments, Excluding Hess Free Cash Cash Flow, Acquisition** 3,000 Flow*** Excluding Hess Net cash provided by Acq
Slide 15: 4Q 2014 Outlook
4Q 2014 Outlook Other Total Corporate Percent of Turnaround Depreciation Other Crude Charge/ Total Direct and Other WTI-priced and Major and Manufacturing Throughput* Feedstocks Throughput* Operating Unallocated Crude Maintenance Amortization Cost** Throughput* Costs Items*** in MBD Refinery Direct
Slide 16: Illustrative Value of MPC Ownership in MPLX
Illustrative Value of MPC Ownership in MPLX* Illustrative Value of MPC Ownership Total Distributions to MPC based on 2019E Distributions** 25 24.8 600 557 500 20.4 20 389 GP Distributions 16.0 400 GP 15 $MM @ 55x GP $B 300 267 10 @ 45x GP 187 200 @ 35x 124 LP Distributions 82 CAGR 25% 5 LP 100 LP LP
Slide 17: Appendix
Marathon MARATHON § Petroleum Corporation Appendix
Slide 18: MPLX LP and GP Illustrative Valuation
MPLX LP and GP Illustrative Valuation MPC Distributions & Asset Sales Proceeds from MPLX ($MM) 3Q 2013 YTD 3Q 2014 YTD GP Distributions, including IDRs 1 3 LP Distributions 40 53 Total Cash Distribution Received from MPLX 41 56 Asset Sales Proceeds from MPLX 100 310 Illustrative MPLX Value to MPC* 2
Slide 19: MPC's Currently Identified Eligible MLP EBITDA
MPC’s Currently Identified Eligible MLP EBITDA Sources of ~ $1.7 B Retained by MPC ~ 5,400 miles of additional crude and products pipelines Pipelines – Owns, leases or has an ownership interest in these pipelines – 31% of MPLX Pipe Line Holdings LP Southern Access Extension, Sandpiper and Utica
Slide 20: Capital Expenditures & Investments
Capital Expenditures & Investments* ($MM) 2014 Budget 3Q 2014 2014 YTD Refining & Marketing (R&M) 864 151 445 Midstream included in R&M 348 113 232 Speedway 327 77 153 Pipeline Transportation 760 224 418 Corporate and Other 133 22 60 Subtotal 2,432 587 1,308 Capitalized Interest 38 7 20 Total Capita
Slide 21: MPLX Adjusted EBITDA Reconciliation from Net Income
MPLX Adjusted EBITDA Reconciliation from Net Income 3Q 2014 Dec. 2015 ($MM) 2013 Annualized Annualized Net income 146 172 304 Less: Net income attributable to MPC- 68 56 - retained interest Net income attributable to MPLX LP 78 116 304 Plus: Net income attributable to MPC- retained interest 68 56 -
Slide 22: Reconciliation: Free Cash Flow to Net Cash Provided by Operations
Reconciliation Free Cash Flow to Net Cash Provided by Operations ($MM) 2013 2014 (For the Quarter) 4Q 1Q 2Q 3Q Net cash provided by operating activities 1,355 766 878 1,078 Additions to property, plant and equipment (473) (267) (302) (383) Acquisitions* - - (42) (4) Investments (38) (123) (41) (177)
Slide 23: Earnings
Earnings ($MM unless otherwise noted) 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Refining & Marketing segment income 1,105 903 227 971 362 1,260 971 Speedway segment income 67 123 102 83 58 94 119 Pipeline Transportation segment income 51 58 54 47 72 81 69 Corporate and other unallocated items (67) (64) (59) (8
Slide 24: Reconciliation: EBITDA to Net Income Attributable to MPC
Reconciliation EBITDA to Net Income Attributable to MPC ($MM) 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net Income attributable to MPC 725 593 168 626 199 855 672 Less: Net interest and other financial income (costs) (48) (45) (47) (39) (46) (48) (50) Add: Net income attributable to noncontrolling interests 5
Slide 25: Cash Provided from Operations Before Changes in Working Capital Reconciliation
Cash Provided from Operations Before Changes in Working Capital Reconciliation to Net Cash Provided by Operations ($MM) 2013 2014 (For the Quarter) 4Q 1Q 2Q 3Q Net cash provided by operations 1,355 766 878 1,078 Less changes in working capital: Changes in current receivables 34 139 (300) 585 Changes
Slide 26: Refining & Marketing Indicative Gross Margin – 3Q 2014
Refining & Marketing Indicative Gross Margin – 3Q 2014 3,000 501 2,516 2,500 95 19 546 2,000 (150) 1,505 $MM 1,500 (1,245) 1,000 971 (300) 500 0 *LLS *Sweet/ *LLS/WTI *LLS *Market Other R&M Direct Other R&M 6-3-2-1 Sour Diff. Diff. Prompt vs. Structure Gross Gross Operating Segment Crack Delivered M
Slide 27: Marathon Petroleum Corporation
Marathon MARATHON § Petroleum Corporation