Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Q3 2020 Earnings Presentation
33 slides from Marathon Petroleum's earnings presentation, Nov 2, 2020
Slide 1: Third Quarter 2020 Conference Call
Third Quarter 2020 Conference Call November 2, 2020 (as revised Nov. 6)
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: MPC: Short-Term Strategic Focus
MPC: Short-Term Strategic Focus 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 contribution Enhance
Slide 4: Business Update
Business Update Progressing Speedway sale Growing renewables business Dickinson starting up Advancing Martinez conversion Focusing on cost reductions Positioning the company for long-term success and through-cycle resiliency 4
Slide 5: Third Quarter Adjusted Results
Third Quarter Adjusted Results Adjusted Loss per Share ($/share) (a) $(1.00) Adjusted EBITDA ($MM) (b) $1,006 Excluded from $MM Adj. EBITDA & Adj. EPS Restructuring expense $(348) Impairments $(433) LIFO liquidation $(256) LCM inventory valuation adjustment $530 Transaction-related costs $(18) Total
Slide 6: Speedway Discontinued Operations
Speedway Discontinued Operations Speedway required to be reported as Refining & Discontinued Midstream Retail Discontinued Operations Marketing Operations Direct Dealer MPLX Speedway Speedway R&M segment now Other Direct Midstream includes retained Direct Dealer Dealer business 6
Slide 7: Revised Reporting - Due to Speedway Sale
Revised Reporting - Due to Speedway Sale Speedway Historical New Sale-Related Reporting Reporting Effects 2Q20 3Q20 2Q20 3Q20 2Q20 3Q20 Adj. EBITDA Adj. EBITDA Adj. EBITDA Adj. EBITDA Refining & Marketing (1,024) (756) 105 133 (a) (919) (623) Direct Dealer to R&M Retail 626 618 - - Midstream 1,199 1
Slide 8: Adjusted EBITDA to Net Loss
Adjusted EBITDA to Net Loss 3Q 2020 vs. 2Q 2020 Adjusted EBITDA Reconciliation to Net Loss 1,200 96 1,006 296 -3 -36 800 492 653 Discontinued Operations 528 400 Discontinued 514 -525 Operations Continuing $ Millions Operations 125 -886 0 Continuing Operations -400 -1,100 -800 -267 -1,200 2Q 2020 Ref
Slide 9: Refining & Marketing 3Q 2020 vs. 2Q 2020
Refining & Marketing 3Q 2020 vs. 2Q 2020 R&M Adjusted EBITDA 0 includes Direct Dealer results ($105 MM in 2Q, -200 $133 MM in 3Q) 84% utilization during the $ Millions -400 quarter (excluding idled facilities) 73 7 -600 34 75 While improving, crack 200 -93 -623 spreads remained weak -800 acros
Slide 10: Midstream 3Q 2020 vs. 2Q 2020
Midstream 3Q 2020 vs. 2Q 2020 Through-cycle EBITDA 1,400 50 1,295 stability 1,199 46 1,200 Continued progress on 1,000 reducing forecasted operating expenses 800 $ Millions 600 Fee-based with volume protections across 400 businesses 200 Continued progress on 0 organic growth projects 2Q 2020
Slide 11: Speedway - Discontinued Operations
Speedway - Discontinued Operations 3Q 2020 vs. 2Q 2020 600 528 58 Fuel volumes recovering from 492 -7 2Q lows -15 -72 400 $ Millions Fuel margins of ~30 cpg 200 Year-over-year growth in same store merchandise sales 0 2Q 2020 Fuel Merchandise Operating Other 3Q 2020 Adj. EBITDA Expense Adj. EBI
Slide 12: Total Consolidated Cash Flow
Total Consolidated Cash Flow 3Q 2020 Discontinued Continuing Operations Operations 2,000 1,165 868 1,500 $ Millions 1,091 11 -687 1,000 -297 297 -240 442 716 MPC -18 -79 98 MPLX -222 -378 Discontinued 500 Operations 9 -321 0 6/30/2020 Adj Operating Adjustments Working Capital Net Debt Return of Net
Slide 13: Fourth-Quarter 2020 Outlook
Fourth-Quarter 2020 Outlook Other Crude Total Depreciation Charge/ Sweet Sour Operating Distribution Turnaround Throughput Throughput and Feedstocks Crude Crude Cost (b) Cost (c) Costs (a) (a) Amortization Throughput (a) $/BBL of Total in MBPD Percent of Throughput $MM $MM $MM Throughput Gulf Coast
Slide 14: 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 15: Questions & Answers
Questions & Answers Strategic Overview
Slide 16: Appendix
Appendix 16
Slide 17: Recently Published Sustainability & Climate Perspectives Reports
Recently Published Sustainability & Climate Perspectives Reports Recognitions Included in Dow Jones Sustainability Index for North America Lower Carbon Intensity EPA ENERGY STAR Partner of the Year – 3rd straight year with Sustained Excellence Award in 2020 Increase Renewable Fuels Production and En
Slide 18: Manageable Leverage and Maturities
Manageable Leverage and Maturities Debt-to-LTM Adj. EBITDA (a) 2.0x $ Millions YE18 YE19 3Q20 (unless otherwise noted) 1.5x 1.0x Total Debt (excl. MPLX) 9,114 9,125 11,648 0.5x LTM Adj. EBITDA (excl. MPLX) 6,893 5,506 840 0.0x 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM MPLX Distributions to MP
Slide 19: Capitalization and Select Balance Sheet Data
Capitalization and Select Balance Sheet Data MPC MPLX MPC Excluding As of September 30, 2020 Consolidated Adjustments(a) MPLX ($MM except ratio data) Total Debt 31,997 20,349 11,648 Total Equity(b) 30,514 10,404 20,110 Debt-to-Capital Ratio(c) 51% - 37% Cash and cash equivalents 716 28 688 Debt to L
Slide 20: Refining & Marketing Segment Loss
Refining & Marketing Segment Loss 3Q 2020 2,000 286 1,931 34 246 66 -256 1,299 Volume 188 Product 473 1,000 Crude -375 $ Millions -1,263 0 18 -1,000 -1,309 -690 -1,569 -2,000 Blended Sweet Sour Market Other R&M Margin, LIFO Operating Distribution Other Turnaround R&M Crack Differential Differential
Slide 21: Refining & Marketing Margins – Market vs. Realized
Refining & Marketing Margins – Market vs. Realized Total system capture of 117%, key factors included: Direct Dealer business contributed 8% to R&M margin capture Crude timing impacts Favorable pricing of non- transportation fuels relative to index 21
Slide 22: Distribution Costs – Components
Distribution Costs – Components 3Q 2020 1,500 374 1,309 1,200 515 $ Millions 900 600 420 300 0 Third Party MPLX MPLX Fuels Distribution and 3Q 2020 Fees and Other Fees Refinery Logistics Fees Distribution Costs Total distribution fees of $889 million paid to MPLX and $445 million returned to MPC thr
Slide 23: Refining & Marketing Segment Loss
Refining & Marketing Segment Loss 3Q 2020 vs. 2Q 2020 Variance Analysis -500 Volume 65 Product - 99 Crude 582 -1,000 341 548 -146 6 $ Millions -1,500 -94 -256 -1,544 -93 -30 -1,569 -301 -2,000 -2,500 2Q 2020 Blended Sour Sweet Market Other LIFO Operating Distribution Turnaround, 3Q 2020 Segment Crac
Slide 24: Income Summary for Operations
Income Summary for Operations 2019 2020 ($MM unless otherwise noted) 1Q 2Q 3Q 4Q 1Q 2Q 3Q (a) Effective in the third quarter of 2020, R&M historical results have been recast and Refining & Marketing segment income (loss) (a) (303) 1,064 989 1,106 (497) (1,544) (1,569) now include the results of the
Slide 25: Reconciliation
Reconciliation Net Income (Loss) Attributable to MPC to Adjusted Net Income (Loss) Attributable to MPC ($MM) 3Q20 3Q19 (a) Reflects the cumulative effects related Net income (loss) attributable to MPC (886) 1,095 to a measurement period adjustment arising of the finalization of purchase Pre-tax adju
Slide 26: Reconciliation
Reconciliation Net Income (Loss) Attributable to MPC to Adjusted EBITDA and LTM Adjusted Pro Forma EBITDA ($MM) 4Q19 1Q20 2Q20 3Q20 LTM Net Income (loss) attributable to MPC 443 (9,234) 9 (886) (9,668) Add: Net interest and other financial costs 302 338 345 364 1,349 Net income (loss) attributable t
Slide 27: Reconciliation
Reconciliation Net Income Attributable to MPC to EBITDA, Adjusted EBITDA and Adjusted Pro Forma EBITDA ($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 28: Reconciliation
Reconciliation MPLX Net Income (Loss) to Adjusted EBITDA Related to MPLX ($MM) 4Q19 1Q20 2Q20 3Q20 LTM MPLX Net Income / (Loss) (573) (2,716) 655 674 (1,960) Add: Net interest and other financial costs 229 230 223 224 906 Provision (benefit) for income taxes (2) - - 1 (1) Impairments 1,239 3,429 - 2
Slide 29: Reconciliation
Reconciliation Cash Provided by (Used in) Operations to Continuing Operating Cash Flow Before Changes in Working Capital 2020 ($MM) 3Q Cash provided by (used in) operating activities from continuing operations 879 Less changes: Current receivables (767) Inventories 750 Current accounts payable and a
Slide 30: Reconciliation
Reconciliation Segment Income (Loss) from Operations to Segment Adjusted EBITDA and Adjusted EBITDA 2019 2020 ($MM) 1Q 2Q 3Q 4Q 1Q 2Q 3Q Refining & Marketing Segment Effective in the third quarter of 2020, Segment income (loss) from operations (303) 1,064 989 1,106 (497) (1,544) (1,569) R&M historic
Slide 31: Reconciliation
Reconciliation Refining & Marketing Income (Loss) from Operations to Refining & Marketing Margin 2019 2020 ($MM) 1Q 2Q 3Q 4Q 1Q 2Q 3Q Effective in the third quarter of 2020, R&M historical results have been recast and now Refining & Marketing income (loss) from operations (a) (303) 1,064 989 1,106 (
Slide 32: Reconciliation
Reconciliation Income from Discontinued Operations to Speedway Total Margin 2019 2020 ($MM) 1Q 2Q 3Q 4Q 1Q 2Q 3Q (a) LCM inventory valuation adjustments Income from Discontinued Operations(a) 143 344 344 283 338 406 438 are excluded from income from Plus (Less): discontinued operations and Speedway
Slide 33: Marathon
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