Marathon Petroleum Corporation · NYSE:MPC
Marathon Petroleum — Q3 2019 Earnings Presentation
44 slides from Marathon Petroleum's earnings presentation, Oct 31, 2019
Slide 1: MPC Strategic Review Update & Third Quarter 2019 Results
Slide 2: Forward Looking Statements
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 projec
Slide 3: Additional Information
Additional Information ci MPG, its directors and certain of its executive officers may be deemed to be participants in the solicitation of proxies from MPC shareholders in connection with the matters to be considered at MPC’s 2020 Annual Meeting. MPC intends to file a proxy statement with the SEC in
Slide 4: Continuous Value Creation
Continuous Value Creation g Track Record of Outperformance Next Phase of Value Creation ¢——— How We Got Here 5 ' fs d I % | 1. Separation of Soeedwa I 323% 1 @ Separation from P P y auoes | MRO 2. Committee to evaluate 1 . . ‘ 1 ® Public listing of MPLX Midstream alternatives ail : @ $20.7 B in capi
Slide 5: Ongoing Value Creation
Ongoing Value Separation of Midstream Special Continue Earnings Creation Speedway Committee Momentum and Through a tax-free spin-off Integration Success
Slide 6: Strategic Review Process
Strategic Review Process Integrate & Execute Plan, integrate combined business platforms, execute to achieve synergies Shalege Revien Analyze options for continued value creation - Today’s Announcement Separation of Speedway and Review of Midstream Assets 5? nn @ GES © EE © ES 0 EEE Apr. 2018 Oct. 2
Slide 7: Retail Segment: Separate Speedway, Retain Direct Dealer
Retail Segment: Separate Speedway, Retain Direct Dealer Company owned, company operated Long-term agreements: supply, transportation, etc. In-store merchandise and margin uplift Integrated customer loyalty platform Touchpoint with individual end consumer Direct Dealer West Coast Fuel Supply Business
Slide 8: Continuous Value Creation: Speedway Separation
Continuous Value Creation: Speedway Separation Separation Mechanics Benefits of Separation Illustrative $15 - $18 Speedway g Establish long-term g Ability to pursue growth . market-based opportunities Val U ati on agreements with onps Secee acy Scale benefits from (billions) nationwide platform, Spe
Slide 9: Speedway's Evolution Under Marathon Stewardship
Speedway’s Evolution Under Marathon Stewardship Target: Store Count ~300% EBITDA Growth 1,500 or ~19% CAGR ~4,000 stores in 36 states, coast-to- coast 1175 Over 6 million active 6.3 MM members in loyalty program 2011 2012-20138 2014. 2015 2016) 2017S «2018 = 2019E 2011 2019E
Slide 10: Speedway's Best in Class Metrics
Speedway’s Best in Class Metrics iy) Strong growth profile iy) Margin execution iy] Leading cash flow generation Same-Store Merchandise Growth” Fuel Margin® ('18-2Q'19 Avg) ('18-2Q'19 Avg, cents per gallon) anes 40% 3.5% 18.4 161 [| 2.1% ° 10.8 Speedway MUSA ATD CASY Speedway AID CASY MUSA Leading C
Slide 11: The New Speedway: Compelling for Investors
The New Speedway: Compelling for Investors Largest U.S. listed convenience store operator (7) Coast-to-coast retail network J) Strong, consistent cash generation J) Scale advantages 7) Leading customer loyalty program Proven track record of acquisition integration and synergy capture Strong Market D
Slide 12: Expected Timeline and Transaction Details
Expected Timeline and Transaction Details Pro-rata distribution of Speedway shares to MPC shareholders Prepare and file Transaction Transaction expected to be tax-free to MPC shareholders Form 10 i Details Target capital structure to optimize valuation for both sets of shareholders and position Soee
Slide 13: Continuous Value Creation: Midstream Special Committee
Continuous Value Creation: Midstream Special Committee MPL&y We have already begun evaluating options to unlock the value of our midstream business and aim to complete our review by the first quarter 2020 earnings call. g Review Already Underway g Key Considerations Significant work to date Strategi
Slide 14: MPC: Continuing Value Creation for Shareholders
MPC: Continuing Value Creation for Shareholders Integration Success MARATHON 2 $686 million synergies realized YTD and $1.4 billion Annual synergies: by 2021 (1) Decisive Action: The New Speedway ¢ Ability to pursue growth opportunities - Economies of scale benefits * Separate Board and Management *
Slide 15: Marathon Petroleum Corporation
Marathon Petroleum Corporation
Slide 16: Third Quarter Highlights
Third Quarter Highlights M Adjusted EBITDA Net Income =, Cash from Operations, excluding Working Capital Realized Synergies Share Repurchases + Dividends
Slide 17: Third Quarter Highlights (cont'd)
Third Quarter Highlights (cont’d) 3Q 2019 vs. 2Q 2019 Adjusted EBITDA Reconciliation to Net Income 3,500 I 1 3,221 23 3,065 3,000 -68 -110 2,500 = -1,019 1,095 1,000 -929 2Q 2019 Midstream Retail Refining & Corporateand 3Q2019 Transaction Turnaround Interest, 3Q 2019 Net Adj. EBITDA Marketing Unallo
Slide 18: Realized Synergies - 3Q19 and YTD
Realized Synergies - 3Q19 and YTD R&M Retail Midstream Corporate ($ MM) ($ MM) ($ MM) ($ MM) Total: 210 Total: 34 Total: 5 Total: 34 3Q19 realized synergies of $283 million, includes $23 million of one- time synergies @ 2019 YTD realized synergies of $686 million, includes $89 million of one-time sy
Slide 19: Realized Synergies Reducing Costs and Improving Margins
Realized Synergies Reducing Costs and Improving Margins $686 = Improved catcracker yields Operating cost improvements ($/bbl) 4918 1919 2Q19 3Q19 59 5.58: 5135 5.44 SG&A expense improvements” $283 ($MM) * Unit optimization improving distillate recovery = Marine optimization improvements 4918 1919 29
Slide 20: Midstream EBITDA
Midstream EBITDA 3Q 2019 vs. 2Q 2019 = Record MPLX gathered, 4,400 processed, and fractionated Liss 31 1,219 volumes 1,200 - — 8 = Sherwood 12 and Torfiado 1,000 Plants placed in service in _ October; Sherwood 13 remains = on-track for late 4Q19 * 600 = Purge of Capline as part of 400 reversal proje
Slide 21: Retail EBITDA
Retail EBITDA 3Q 2019 vs. 2Q 2019 = 5.2% year-over-year increase in same store merchandise sales = Converted ~550 stores to Speedway since combination (700 targeted by year-end) = Operating expense increase reflects seasonality |0 Reflects operating, seling, general and adminishative expenses. 800 6
Slide 22: Refining & Marketing Adjusted EBITDA
Refining & Marketing Adjusted EBITDA 3Q 2019 vs 2Q 2019 1,600 = Strong execution with 1,550 195 Of, ilireati 98% utilization 4800 1,450 68 26 = Completed planned s na 3 maintenance at St. Paul = 3 1400 60 and Gallup 1,350 -216 . . 1,300 = Synergies contributed to 94% capture 260 1,200 2Q 2019 Mid-Co
Slide 23: Total Consolidated Cash Flow
Total Consolidated Cash Flow 3Q 2019 +350 ae eT vec. 3)! ' MPLX 363 tee ee ee 1 $MM N a 8 -1,601 N = 1.525 1,500 1,247 -310 6/30/2019 Operating Cash Working Net Debt Capital Return of Net Distributions Other 9/30/2019 Cash Balance Flow before Capital Expenditures, Capital to to NCI Cash Balance Work
Slide 24: Strong Balance Sheet Supports Exceptional Value
Strong Balance Sheet Supports Exceptional Value MPC Debt-to-LTM Adj. EBITDA ® 2.0x 1.5x 1.0x 0.5x 0.0x 2011 2012 2013 2014 2015 2016 2017 2018 dos MPLX debt and EBIDA, $ Millions (unless otherwise noted) Total Debt (excl. MPLX) LTM Adj. EBITDA (excl. MPLX) MPLX Distributions to MPC Debt-to-Capital M
Slide 25: Fourth-Quarter 2019 Outlook
Fourth-Quarter 2019 Outlook Other ecu ; Charge/ a ea é Operating | Distribution Planned Depreciation roughput | Feedstocks Rouen Cost (b) Cost (c) Turnaround oe i) Throughput (a) © eee in MBPD Percent of Throughput eee ee $MM $MM $MM Gulf Coast Region 1,000 200 1,200 42% 58% $5.20 $75 $130 33 Mid-Co
Slide 26: Questions & Answers
Slide 27: Appendix
Appendix cia
Slide 28: Capitalization and Select Balance Sheet Data
Capitalization and Select Balance Sheet Data <e: . MPC MPLX MPC Excluding \ Consolidated Adjustments® MPLX uN 28,839 19,700 9,139 Total Equity © 43,624 12,257 31,367 Debt-to-Capital Ratio 40% : 23% Cash and cash equivalents i525 1,484 Debt to LTM Adjusted EBITDA © 2.6x = 1.4x Debt to LTM Adjusted EB
Slide 29: Refining & Marketing Segment Income
Refining & Marketing Segment Income 3Q 2019 5,000 4 +11 4,000 <277, ! Volume 273 ! ! Product 108 ! 3,000 - ' Crude -658 | = co sea a =. a L577 2,000 +14 71,251 1,000 - 883 -561 0 Blended Sweet Sour Market Other R&M Operating Distribution Other — Turnaround R&M Crack Differential Differential Structu
Slide 30: Refining & Marketing Margins — Market vs. Realized
$MM Refining & Marketing Margins — Market vs. Realized 5,000 4,500 4,000 3,500 3,000 2,500 R&M Margin Indicator -454 90% Capture Adjustment 177 Actual Capture Impact R&M Actual Margin Total system capture of 94% vs. ~90% historical average, key factors included: Uplift in price realization Synergies
Slide 31: Distribution Costs - Components
Distribution Costs - Components 3Q 2019 369 1,254 A457 Third Party MPLX, MPLX Fuels Distribution and 3Q 2019 Fees and Other Fees Refinery Logistics Fees Distribution Costs Total distribution fees of $794 million paid to MPLX and $438 million returned to MPC through distributions paid by MPLX®) fed f
Slide 32: Refining & Marketing Segment Income
Refining & Marketing Segment Income 3Q 2019 vs. 2Q 2019 Variance Analysis 1,200 » "Volume +15 i 4,000 | Product +655 | 1000 5 906 ‘Crude 437 I=! +87 883 +707 3 800 + z -50 & 800 5 400 + +51 | | 200 + -649 -187 “11 te) 29 2019 Blended Sour Sweet Market Other Operating Distribution Other Tumaround 3.2
Slide 33: Reconciliation
Reconciliation Retail Income from Operations to Retail EBITDA ($MM) Speedway Income from operations Depreciation and amortization Speedway EBITDA 2004 «4,475 Direct Dealer Income from operations Depreciation and amortization Direct Dealer EBITDA Retail Segment EBITDA Income from operations 729° 1,02
Slide 34: Reconciliation
Reconciliation Retail Income from Operations to Retail EBITDA Speedway Income from operations Depreciation and amortization Speedway EBITDA Direct Dealer Income from operations Depreciation and amortization Direct Dealer EBITDA Retail Segment EBITDA Income from operations Depreciation and amortizati
Slide 35: Earnings
Earnings ($MM un! Refining & Marketing segment income (loss) Retail segment income 170 493 442 Midstream segment income 908 878 919 Corporate and other unallocated items (191) (479) (298) Capline restructuring gain 207 - Transaction-related costs (91) (34) (22) Litigation (22) Impairments - - - Inco
Slide 36: Reconciliation
Reconciliation Net Income Attributable to MPC to Adjusted Net Income Attributable to MPC ($m™) Net income attributable to MPC Pre-tax adjustments: Transaction-related costs Pension Settlement Purchase Accounting — depreciation and amortization® Tax impact of adjustments® NCI impact of adjustments Ad
Slide 37: Reconciliation
Reconciliation Net Income Attributable to MPC to Adjusted EBITDA and LTM Adjusted Pro Forma EBITDA Net Income (loss) attributable to MPC Add: Net interest and other financial costs Net income attributable to noncontrolling interests Provision for income taxes Depreciation and amortization Refining p
Slide 38: Reconciliation
ore ge Reconciliation Net Income Attributable to MPC to EBITDA, Adjusted EBITDA and Adjusted Pro Forma EBITDA (sm) oss) attributable to MPC Add Net interest and other financial costs Net income attributable to noncontroling interests Provision forincome taxes Depreciation and amortization EBITDA Ref
Slide 39: Reconciliation
Reconciliation MPLX Net Income to EBITDA Related to MPLX MPLX Net Income Add: Net interest and other financial costs Provision (benefit) for income taxes Depreciation and amortization EBITDA related to MPLX 1,193 1,214 1,197 1,228 4,832 3a
Slide 40: Reconciliation
Reconciliation Cash Provided by Operations to Operating Cash Flow Before Changes in Working Capital Cash provided by operations Less changes in working capital: Changes in current receivables Changes in inventories Changes in current accounts payable and accrued liabilities Changes in the fair value
Slide 41: Reconciliation
Reconciliation Refining & Marketing Income from Operations to Refining & Marketing Margin ($MM) Refining & Marketing income (loss) from operations Plus: Refining operating costs‘ Refining depreciation and amortization Refining planned turnaround costs Distribution costs" Distribution depreciation an
Slide 42: Reconciliation
Reconciliation Segment Income from Operations to Segment Adjusted EBITDA and Adjusted EBITDA Refining & Marketing Segment Segment income from operations Add: Depreciation and amortization Refining planned turnaround costs Purchase accounting inventory effect, net of UFO Segment Adjusted EBITDA Retai
Slide 43: Reconciliation
Reconciliation Retail Income from Operations to Retail Total Margin Retail income from operations Plus (Less): Operating, selling, general and administrative expenses Depreciation and amortization Income from equity method investments Net gain on disposal of assets Other income Retail total margin R
Slide 44: Marathon
MARATHON ®