Second Quarter 2021 Earnings Conference Call - August 4, 2021
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Second Quarter 2021
Earnings Conference Call
August 4, 2021
1
Forward-Looking Statements
This presentation contains forward-looking statements regarding Marathon Petroleum Corporation (MPC). These forward-looking statements may relate to, among other things,
MPC’s expectations, estimates and projections concerning its business and operations, financial priorities, strategic plans, capital return plans, including the intended use of the
Speedway sale proceeds, operating cost and capital expenditure reduction objectives, and environmental, social and governance goals. You can identify forward-looking
statements by words such as “anticipate,” “believe,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,”
“opportunity,” “outlook,” “plan,“ “policy,” “position,” “potential,” “predict,” “priority,” “project,” “proposition,” “prospective,” “pursue,” “seek,” “should,” “strategy,” “target,” “will,”
“would” or other similar expressions that convey the uncertainty of future events or outcomes. MPC cautions that these statements are based on management’s current knowledge
and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of MPC, that could cause actual results and events to differ materially
from the statements made herein. Factors that could cause MPC’s actual results to differ materially from those implied in the forward-looking statements include but are not limited
to: the magnitude, duration and potential resurgence of the COVID-19 pandemic and its effects, including the continuation or re-imposition of travel restrictions, business and school
closures, increased remote work, stay at home orders and other actions taken by individuals, government and the private sector to stem the spread of the virus; changes in the
regional, national and worldwide demand for refined products and related margins; changes in the regional, national or worldwide availability and pricing of crude oil and other
feedstocks and related pricing differentials; the success or timing of completion of ongoing or anticipated projects or transactions, including the conversion of the Martinez Refinery
to a renewable fuels facility; reliability of processing units and other equipment and unplanned maintenance; availability of opportunities to divest non-core assets on commercially
acceptable terms; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX; and the factors set forth under the heading “Risk Factors” in
MPC’s Annual Report on Form 10-K for the year ended Dec. 31, 2020, and in other filings with the SEC. Any forward-looking statements speak only as of the date of the applicable
communication and we undertake no obligation to update any forward-looking statements except to the extent required by applicable law.
Copies of MPC's Form 10-K, Forms 10-Q and other SEC filings are available on the SEC’s website, MPC's website at https://www.marathonpetroleum.com/Investors/ or by contacting
MPC's Investor Relations office. Copies of MPLX's Annual Report on Form 10-K for the year ended December 31, 2020, Forms 10-Q and other SEC filings are available on the SEC’s
website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.
.
Non-GAAP Financial Measures
Adjusted earnings, EBITDA, cash provided from operations before changes in working capital, Refining and Marketing margin and Retail total margin are non-GAAP financial
measures provided in this presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial
measures are not defined by GAAP and should not be considered in isolation or as an alternative to net income attributable to MPC, net cash provided by (used in) operating,
investing and financing activities, Refining and Marketing income from operations, Speedway income from operations or other financial measures prepared in accordance with
GAAP.
2
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 commercial Lowering costs and
of each asset to skills and technology driving efficiency
shareholder return improvements
3
Business Update
Closed Speedway sale; repurchased approximately $1 billion of
shares and commencing next steps towards completing
remaining $9 billion return of capital over next 12 to 16 months(a)
Repositioning the portfolio
- Dickinson reached design capacity; Martinez progressing
- Advancing projects to lower carbon intensity
Continuing focus on cost and capital discipline
Published annual Sustainability & Climate Reports
Positioning the company for long-term success and
through-cycle resiliency
(a )The timing of share repurchases are subject to market and other conditions and may be discontinued at any time
4
Challenging Ourselves to Lead in Sustainable Energy
Strengthen Resiliency
Strengthening our business for today, while building durability for tomorrow and beyond
Target: Reduce Target: Reduce Target: Reduce
Scope 1 and 2 GHG midstream methane freshwater
30% emissions intensity 50% emissions intensity 20% withdrawal intensity
30% by 2030 from 70% 50% by 2025 from 44% by 20% by 2030 45%
2014 levels 0% Complete 30%
2016 levels 0% Complete 50%
from 2016 levels 0% Complete 20%
Innovate for the Future
Investing in the energy evolution to lower carbon intensity and capture value
Martinez Renewable Fuels Dickinson Renewable Diesel Facility
of 2021 planned 730 million 60% reduction in GHG 184 million Second Producing a ~50%
>40% growth capital spend gallons/year emissions compared to gallons/year largest in lower carbon intensity
on renewables capacity previous refinery operations capacity the U.S. renewable diesel
Embed Sustainability
Embracing sustainability in decision-making, in how we engage our people and in how we create value with stakeholders
20% of Annual Bonus Program Strong Safety Performance No. 1 on S&P Global ESG Rating
Linked to ESG Metric
40% reduction in Tier 1 and Tier 2 for U.S. Oil and Gas Refining and
GHG intensity, Diversity, Equity and Inclusion, Marketing sector
and environmental and safety metrics refining process safety events since 2016
5Second Quarter Highlights
$ Millions (unless otherwise noted) 2Q21
Adjusted Earnings per Share ($/share) (a) $0.67
Adjusted EBITDA $2,194
Cash from Continuing Operations, excluding Working Capital $1,535
Dividends $381
Share Repurchases (b) $981
(a) Based on weighted average diluted shares (b) Excludes transaction costs 6Speedway Sale - Proceeds
21.0
Received Speedway 17.2
$ Billions
proceeds of $21 billion -3.8
Cash taxes and closing
adjustments
$17.2 billion after-tax
proceeds
Speedway Cash Taxes & After-Tax
Proceeds Closing Adjustments Speedway
Proceeds
7Progress on Use of Proceeds
17.2
$17.2 billion in after-tax proceeds from sale
-2.5
13.7 of Speedway
-1.0
Strengthening the balance sheet:
$ Billions
Reduced structural debt by
$2.5 billion
$10 billion of capital return:
Returned ~$1 billion to shareholders
$9 billion planned over next 12 to 16
After-Tax Debt Share Remaining
Speedway Reduction Buyback Proceeds months
Proceeds
Committed to meaningfully return capital to shareholders
8Lowering the Cost Structure
Refining Operating Costs Corporate Costs
($ / Barrel) $233 MM ($ Millions)
$6/bbl
Quarterly avg
Quarterly avg ~$170 MM
~$5/bbl
1Q 2Q 3Q 4Q 1Q (a) 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2020 2020 2020 2020 2021 2021 2021 2020 2020 2020 2020 2021 2021 2021
Guidance Guidance
Continued commitment to cost reduction
(a) Excludes winter storm effects 9Adjusted EBITDA to Net Income
2Q 2021 vs. 1Q 2021
Adjusted EBITDA Reconciliation to Net Income
15,000
11,603
12,000 -890
Speedway
Taxes
-3,726
9,000 8,512
$ Millions
-4,395
Discontinued operations
6,000
Continuing operations
3,000 728 2,194
1,552 -48
-14 -24
0
1Q 2021 Refining & Midstream Corporate Speedway 2Q 2021 Adjustments Turnaround Interest, 2Q 2021
Adj. EBITDA Marketing Discontinued Adj. EBITDA (b) and D&A Taxes, and Net Income
(a) Operations (a) Noncontrolling
Interests
(a)Includes Adj. EBITDA from discontinued operations of $332 million and $284 million for the first quarter 2021 and second quarter 2021, respectively (b)Pre-tax adjustments reflect gain on sale of assets of $11,682 million,
impairment expense of $56 million, and transaction-related expenses of $23 million.
10Refining & Marketing
2Q 2021 vs. 1Q 2021
1,000
146
Refining margin -5
recovery across all 800 572
-113
751
regions -41
$ Millions
600
94% utilization during
the quarter (or 89%
400
adjusted for idled
capacity)
200 169
Continued execution
on cost control 0
23
1Q 2021 USGC Mid-Con West Coast Operating Distribution Other 2Q 2021
Adj, EBITDA Margin Margin Margin Costs Costs Adj, EBITDA
(a) (a)
Includes refining operating and maintenance costs. Excludes refining planned turnaround and winter storm effect
(a)
11Midstream
2Q 2021 vs. 1Q 2021
1,500
1,322
Through-cycle EBITDA 8 1,308
-22
stability
1,000
Continued progress on
$ Millions
reducing operating
expenses
500
Continued progress on
organic growth projects
0
1Q 2021 MPLX Other 2Q 2021
Adj. EBITDA (a) Midstream Adj. EBITDA
Excludes winter storm effects
(a)
12Total Consolidated Cash Flow
2Q 2021
Discontinued Speedway
30,000 Continuing Operations Operations Close Related
25,000
21,000 387
20,000
17,257
15,000 -3,481
MPC Share Tender - 981
MPC Debt - 2,500
10,000
MPC - 833
5,000 MPLX - 836
1,535
758 149
1 -364
0
-1,669 -381 -448 -156 -74
-5,000
3/31/2021 Operating Working Capital Net Debt Return of Return of Other Discontinued Discontinued Proceeds Closing Use of 6/30/2021
Cash Balance Cash Flow Capital Expenditures, Capital to Capital to Operations Operations from Adjustments Proceeds Cash +
(a) before Working Investments Shareholders Noncontrolling Operating Cash Capital Speedway (e) Short-term
Capital (b) Interests Flow Expenditures, Sale Investments
(c) (d) Investments (f)
(a)Includes Speedway’s cash and cash equivalents of $134 million at March 31, 2021, which was classified as assets held for sale on MPC’s consolidated balance sheets. (b) $381 million of dividends. (c) $293 million of MPLX distributions and $155
million of MPLX unit repurchases (d) Speedway working capital included in Discontinued Operations Operating Cash Flow (e) Includes $981 million of MPC share repurchases, excluding expenses. (f) Includes cash of $11,839 million and short-term 13
investments of $5,418 million at June 30, 2021 Note: Excludes restricted cashThird-Quarter 2021 Outlook
Other
Total Depreciation
Crude Charge/ Sweet Sour Operating Distribution Turnaround
Throughput and
Throughput Feedstocks Crude Crude Cost (b) Cost (c) Costs
(a) Amortization
Throughput (a)
$/BBL of Total
in MBPD Percent of Throughput $MM $MM $MM
Throughput
Gulf Coast Region 1,075 110 1,185 37% 63% $4.05 $20 $150
Mid-Con Region 1,100 55 1,155 74% 26% $4.50 $165 $165
Projected
3Q 2021
West Coast Region 490 50 540 36% 64% $7.85 $10 $70
R&M Total 2,665 135 2,800 52% 48% $5.05 $1,300 $195 $465 (d)
Corporate estimated at ~$175 MM for 3Q21
(a) Region
throughput data includes inter-refinery transfers, but MPC totals exclude transfers (b) Includes refining major maintenance and operating costs. Excludes refining planned turnaround and D&A expense. (c) Excludes D&A expense.(d) Includes
D&A expense associated with distribution assets.
14Questions & Answers
Appendix
16Manageable Leverage and Maturities
Debt-to-Capital (a)
75%
MPC MPLX MPC Excluding
51% As of June 30, 2021 Consolidated Adjustments (c) MPLX
50% 38% 40%
34% ($MM except ratio data)
20% 21%
25% Cash(d) 17,257 8 17,249
0% Total Debt 28,320 19,235 9,085
2018 2019 2020
MPC Consolidated MPC Excl. MPLX Total Equity(e) 36,693 7,772 28,921
Debt-to-Capital Ratio(a) 44% - 24%
Senior Notes Maturities - Next 10 Years (b)
3.0
2.0 MPC debt, excluding MPLX, reduced by $3.3 billion from 1Q21,
$B
including $2.5 billion using Speedway proceeds
1.0
MPLX debt excludes $493 million outstanding under the MPC
intercompany loan at June 30, 2021
0.0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
(a) Debt-to-Capital Ratio calculated as Total Debt divided by the sum of Total Debt plus Total Equity (b) Senior Notes Maturities as of 6/30/2021 (c) Adjustments made to exclude MPLX cash, debt (all non-recourse), and MPC’s noncontrolling
interest attributable to MPLX (d) Cash includes cash and cash equivalents of $11,839 million plus short term investments of $5,418 million (e) Includes MPLX mezzanine equity of $968 million
17Speedway Sale
Financial Statement Impacts as of Sale Close
21.0
0.4
21.0
17.2
0.4
Financial Tax Provision -3.7
-4.2
11.7
-9.7 8.0
0.5
-4.2
Speedway Closing Speedway Pre-Tax Cash Deferred After-Tax Speedway Cash Closing After-Tax
Proceeds Adjustments Net Assets Gain on Sale Taxes Tax Benefit Gain on Sale Proceeds Taxes Adjustments Proceeds
Statement of Cash Flows Income Statement Balance Sheet
Assets
Investing Activities Discontinued Operations
Cash provided by investing activities Cash 11.8
A
– discontinued operations 21.4
B Gain on sale of assets 11.7 C D
Short-term investments 5.4
Provision for income taxes (3.7)
Income from discontinued
C Liabilities & Equity
operations, net of tax 8.0
Accrued taxes 4.2
Deferred income taxes (0.5)
(A) Proceeds from Speedway sale reflected in Investing Activities
(B) Speedway pretax gain on sale reflected in discontinued operations
MPC stockholders’ equity 8.0
(C) Provision for Income Taxes reflected in discontinued operations and estimated Cash Taxes reflected as Accrued Taxes on the balance sheet
(D) Proceeds reflected on the balance sheet as Cash and Short Term Investments (if maturity greater than three months)
18MPC Shares Outstanding
1Q21 ended with 652 million
shares
millions of shares
15.6 million shares repurchased
652
2Q21 ended with 638 million
638 shares
Weighted average share count for
10-Q 10-Q
3/31/21 6/30/21 EPS calculation only includes two
week impact of repurchases
19Refining & Marketing Segment Income
2Q 2021
4,000
368 -16 45 3,233
3,000 2,802 34 Volume 306
Product 525
Crude -786
$ Millions
2,000
-1,193
1,000
-1,310
21 224
-527
0
Blended Sweet Sour Market Other R&M Margin Operating Distribution Turnaround Other R&M
Crack Differential Differential Structure Margin Costs Costs and D&A Segment
Spread (a) (a) (b) (c) Income
(a)
(a) Based on market indicators using actual volumes (b) Includes refining major maintenance and operating costs. Excludes refining planned turnaround and D&A expense. (c) Excludes D&A expense.
20Refining & Marketing Margins – Market vs. Realized
3,500
Total system capture of 101%, key
203 3,233
3,189 factors included:
3,000
-159 Strong gasoline margins
$ Millions
Tailwind from petrochemicals
feedstock prices
2,500
Weaker secondary product pricing
2,000
R&M Margin 95% Capture Actual Capture R&M Margin
Indicator Adjustment Impact
21Refining & Marketing Segment Income (Loss)
2Q 2021 vs. 1Q 2021 Variance Analysis
500 47
973
31
-80 -15 -5 22 224
-38
-113
0
Volume 32
Product 51
$ Millions
Crude - 121
-500
-598
-1,000
1Q 2021 Blended Sour Sweet Market Other Winter Storm Operating Distribution Turnaround, 2Q 2021
Segment Crack Differential Differential Structure Margin Effects Costs Costs D&A and Other Segment
Loss Spread (a) (a) (b) (c) (d) Income
(a)
(a)Based on market indicators using actual volumes (b) Winter storm effects in the first quarter of 2021 resulted in higher costs, including maintenance and repair. (c) Includes refining major maintenance and operating costs. Excludes
refining planned turnaround, D&A expense, and winter storm effects. (d) Excludes D&A expense.
22Sustainability & Climate Perspectives Reports
23Income Summary for Operations
2020 2021
($MM unless otherwise noted)
1Q 2Q 3Q 4Q 1Q 2Q (a) Corporate reflects corporate costs that
Refining & Marketing segment income (loss) (497) (1,544) (1,569) (1,579) (598) 224 are no longer allocated to Speedway under
discontinued operations accounting.
Midstream segment income 905 869 960 974 972 977
(b) 2Q20 tax rate impacted by changes in
Corporate (a) (233) (195) (197) (175) (157) (180) our estimated annual effective rate applied
Income (loss) from continuing operations before items not to income for the year to date interim
175 (870) (806) (780) 217 1,021
allocated to segments period. 4Q20 tax rate impacted by an
Items not allocated to segments: increase in the expected NOL carryback
benefit
LCM inventory valuation adjustment (3,185) 1,470 530 1,185 - -
Impairments (9,137) (25) (433) (146) - (56)
Restructuring expenses - - (348) (19) - -
Litigation - - - 84 - -
Gain on sale of assets 66 - -
Transaction-related costs (8) - - - - -
Income (loss) from continuing operations
(12,155) 575 (1,057) 390 217 965
Net interest and other financing costs
332 341 359 333 353 372
Income (loss) from continuing operations before income taxes (12,487) 234 (1,416) 57 (136) 593
Provision (benefit) for income taxes (1,951) 150 (436) (193) 34 5
Income (loss) from continuing operations, net of tax (10,536) 84 (980) 250 (170) 588
Income from discontinued operations, net of tax 318 192 371 324 234 8,214
Net income (loss) (10,218) 276 (609) 574 64 8,802
Less net income (loss) attributable to:
Redeemable noncontrolling interest 20 21 20 20 20 21
Noncontrolling interests (1,004) 246 257 269 286 269
Net income (loss) attributable to MPC (9,234) 9 (886) 285 (242) 8,512
Effective tax rate on continuing operations (b) 16% 64% 31% (339)% (25)% 1%
24Reconciliation
Net Income Attributable to MPC to Adjusted Net Income (Loss) Attributable to MPC
(a) Income taxes for adjusted earnings was
calculated by applying a combined federal
($MM) 2Q21 2Q20 and state statutory tax rate of 24% to the
adjusted pre-tax income (loss) for these
Net Income attributable to MPC 8,512 9 periods. The corresponding adjustments to
reported income taxes are shown in the
Pre-tax adjustments: table.
(b) Weighted-average diluted shares in the
Gain on Speedway Sale (11,682) - applicable period are used for the adjusted
net income (loss) per share calculations.
LCM inventory valuation adjustment - (1,480)
Impairments 56 25
Pension settlement 49 -
Transaction related costs 23 30
Subtotal of pre-tax adjustments (11,554) (1,425)
Tax impact of adjustments (a) 3,497 548
NCI impact of adjustments (18) -
Adjusted net income (loss) attributable to MPC 437 (868)
Diluted income per share $13.00 $0.01
Adjusted diluted income (loss) per share (b) $0.67 $(1.33)
25Reconciliation
Cash Provided by Operations to Continuing Operating Cash Flow Before Changes in Working Capital
2021
($MM)
2Q
Cash provided by operating activities from continuing operations 1,536
Less changes:
Current receivables (2,224)
Inventories (472)
Current accounts payable and accrued liabilities 2,656
Fair value of derivative instruments 42
Right of use assets and operating lease liabilities, net (1)
Total changes in working capital 1
Operating cash flow from continuing operations before changes in working capital 1,535
26Reconciliation
Segment Income (Loss) from Operations to Segment Adjusted EBITDA and Adjusted EBITDA
2020 2021
($MM) 1Q 2Q 3Q 4Q 1Q 2Q
Refining & Marketing Segment
Segment income (loss) from operations (497) (1,544) (1,569) (1,579) (598) 224
(a) As of August 2, 2020 Speedway
Add: Depreciation and amortization 473 463 456 465 478 466
ceased recording depreciation and
Refining planned turnaround costs 329 162 234 107 112 61 amortization.
Winter storm effects - - - - 31 -
LIFO liquidation charge - - 256 305 - -
Segment Adjusted EBITDA 305 (919) (623) (702) 23 751
Midstream Segment
Segment income from operations 905 869 960 974 972 977
Add: Depreciation and amortization 345 330 335 343 334 331
Winter storm effects - - - - 16 -
Segment EBITDA 1,250 1,199 1,295 1,317 1,322 1,308
Segment Adjusted EBITDA 1,555 280 672 615 1,345 2,059
Corporate (233) (195) (197) (175) (157) (180)
Add: Depreciation and amortization 45 40 39 41 32 31
Adjusted EBITDA from continuing operations 1,367 125 514 481 1,220 1,910
Speedway
Speedway 400 426 456 419 330 283
Add: Depreciation and amortization (a) 99 102 36 7 2 1
Adjusted EBITDA from discontinued operations 499 528 492 426 332 284
Adjusted EBITDA from continuing and discontinued operations 1,866 653 1,006 907 1,552 2,194
27Reconciliation
Refining & Marketing Income (Loss) from Operations to Refining & Marketing Margin
2020 2021
($MM) 1Q 2Q 3Q 4Q 1Q 2Q (a) LCM inventory valuation adjustments are
excluded from Refining & Marketing income
Refining & Marketing income (loss) from operations (a) (497) (1,544) (1,569) (1,579) (598) 224 from operations and Refining & Marketing
margin.
Plus (Less): (b) Reflects the gross margin, excluding
depreciation and amortization, of other related
Selling, general and administrative expenses 556 502 518 454 456 499
operations included in the Refining &
LCM inventory valuation adjustment (3,185) 1,470 530 1,185 - - Marketing segment and processing of credit
(Income) loss from equity method investments 3 19 (16) (8) (5) (14)
card transactions on behalf of certain of our
marketing customers.
Net (gain) loss on disposal of assets - 1 (1) (1) (3) - (c) Refining & Marketing margin is defined as
Other Income (4) (4) (1) (26) (54) (89) sales revenue less cost of refinery inputs and
purchased products. We believe this non-GAAP
Refining & Marketing gross margin (3,127) 444 (539) 25 (204) 620 financial measure is useful to investors and
Plus (Less): analysts to assess our ongoing financial
performance because, when reconciled to its
Operating expenses (excluding depreciation and amortization) 2,833 2,240 2,408 2,213 2,275 2,305 most comparable GAAP measure, it provides
improved comparability between periods
LCM inventory valuation adjustment 3,185 (1,470) (530) (1,185) - -
through the exclusion of certain items that we
Depreciation and amortization 473 463 456 465 478 466 believe are not indicative of our core operating
performance and that may obscure our
Gross margin excluded from Refining & Marketing margin (b) (109) (75) (101) (80) (179) (198)
underlying business results and trends. This
Other income included in Refining & Marketing margin - - - - - 82 measure should not be considered a substitute
for, or superior to, measures of financial
Other taxes included in Refining & Marketing margin (24) (19) (19) (17) (24) (42)
performance prepared in accordance with
Refining & Marketing margin (a, c) 3,231 1,583 1,675 1,421 2,346 3,233 GAAP, and our calculations thereof may not be
LIFO liquidation charge - - 256 305 - -
comparable to similarly titled measures
reported by other companies.
Refining & Marketing margin, excluding LIFO liquidation charge 3,231 1,583 1,931 1,726 2,346 3,233
Refining & Marketing margin by region:
Gulf Coast 977 437 637 601 834 1,003
Mid-Continent 1,335 819 894 753 978 1,550
West Coast 919 327 400 372 534 680
Refining & Marketing margin, excluding LIFO liquidation charge 3,231 1,583 1,931 1,726 2,346 3,233
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