Transcript Second Quarter 2011 Earnings Conference Call and Web Cast

Second Quarter 2013
Earnings Conference Call and Webcast
August 1, 2013
Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of federal securities laws. These forward-looking
statements relate to, among other things, MPC's expectations, estimates and projections concerning MPC business and operations.
You can identify forward-looking statements by words such as "anticipate," "believe," "estimate," "expect," "forecast," "project,"
"could," "may," "should," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes.
Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other
factors, some of which are beyond MPC’s control and are difficult to predict. Factors that could cause actual results to differ
materially from those in the forward-looking statements include: volatility in and/or degradation of market and industry
conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply;
completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics;
the reliability of processing units and other equipment; our ability to successfully implement growth opportunities; impacts from
our repurchases of shares of MPC common stock under our share repurchase authorization, including the timing and amounts of
any common stock repurchases; state and federal environmental, economic, health and safety, energy and other policies and
regulations, including the cost of compliance with the Renewable Fuel Standard; other risk factors inherent to our industry; and the
factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended December 31, 2012
filed with the Securities and Exchange Commission (the "SEC"). In addition, the forward-looking statements included herein could
be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not
discussed here or in MPC's Form 10-K could also have material adverse effects on forward-looking statements. Copies of MPC's
Form 10-K are available on the SEC website, MPC’s website at http://ir.marathonpetroleum.com or by contacting MPC's Investor
Relations Office.
Other Information
EBITDA, cash provided from operations before changes in working capital, adjusted earnings and free cash flow are non-GAAP
financial measures provided in this presentation. EBITDA, cash provided from operations before changes in working capital,
adjusted earnings and free cash flow reconciliations to the nearest GAAP financial measures are included in the Appendix to this
presentation. EBITDA, cash provided from operations before changes in working capital, adjusted earnings and free cash flow 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 or other financial measures prepared in accordance with GAAP.
2
Highlights
 Achieved strong operating performance
 Delivered strong Speedway segment performance
 Impacted by changing market conditions
 Weaker USGC fundamentals
 Significant volatility in Chicago market
 Rapid escalation in price of RINs
 Returned nearly $1 billion to shareholders
 Announced a 20% increase in dividend to $0.42 per share
3
2Q 2013 Earnings*
2Q 2013
Earnings
$593 MM
$814 MM
Adjusted Earnings
$632 MM
$867 MM
Earnings per Diluted Share
$1.83
$2.38
Adjusted Earnings per Diluted Share
$1.95
$2.53
Adjusted Earnings
Adjusted Earnings per Diluted Share
3,352
$3,000
760
$2,000
1,129
$1,000
867
632
596
725
2012
2013
$0
1Q
$/Share
Millions
$4,000
2Q 2012
2Q
$12
$10
$8
$6
$4
$2
$0
3Q
9.79
2.26
3.31
2.53
1.95
1.70
2.17
2012
2013
4Q
*References to Earnings refer to Net Income attributable to MPC
4
Adjusted Earnings*
2Q 2013 vs. 2Q 2012 Variance Analysis
$1,000
$900
867
(422)
$800
Millions
$700
169
(6)
Income
Taxes
Noncontrolling
Interests
632
$600
$500
16
8
Speedway
Pipeline
Transportation
$400
$300
$200
$100
$0
2Q 2012
Refining &
Marketing
2Q 2013
*References to Earnings refer to Net Income attributable to MPC
5
Refining & Marketing Segment Income
2Q 2013 vs. 2Q 2012 Variance Analysis
$2,500
640
Millions
$2,000
$1,500
(117)
(101)
(117)
(6)
(381)
1,325
(313)
$1,000
(27)
903
Other
2Q 2013
$500
$0
2Q 2012
*LLS
6-3-2-1
Crack
*Sweet/ *LLS /WTI
*LLS
*Market
Direct
Sour Diff. Spread Prompt vs. Structure Operating
Delivered
Costs
Other
Gross
Margin
*Based on market indicators using actual volumes
6
Speedway Segment Income
2Q 2013 vs. 2Q 2012 Variance Analysis
$140
9
(5)
12
$120
123
107
Millions
$100
$80
$60
$40
$20
$0
2Q 2012
Light Product Gross Merchandise Gross
Margin
Margin
Other
2Q 2013
7
Pipeline Transportation Segment Income
2Q 2013 vs. 2Q 2012 Variance Analysis
$80
28
(6)
(14)
58
$60
Millions
50
$40
$20
$0
2Q 2012
Trans.
Revenue
Depreciation
Operating
Expenses
2Q 2013
8
Total Company Cash Flow
2Q 2013
$6,000
$5,000
859
(1,295)
4,737
(251)
Millions
$4,000
(113)
(882)
$3,000
14
3,069
Other
6/30/13
Cash
Balance
$2,000
$1,000
$0
3/31/13
Cash
Balance
Operating
Cash Flow
before
Working
Capital
Working
Capital
Cash Capital
Expenditures
and
Acquisitions
Dividends
Paid
Share
Repurchases
9
Select Balance Sheet/Cash Flow Data
2013
2013
2012
2012
2Q
1Q
4Q
3Q
Cash and cash equivalents
3,069
4,737
4,860
3,387
Total debt
3,410
3,416
3,361
3,349
Equity
12,197
12,412
12,105
11,467
Debt-to-total-capital ratio
22%
22%
22%
23%
Last Twelve Months (LTM) EBITDA
6,318
6,599
6,342
4,942
Debt to LTM EBITDA
0.5x
0.5x
0.5x
0.7x
Cash provided by (used in) operations
(436)
2,079
2,043
1,833
Cash provided by operations before
changes in working capital
859
1,046
1,124
1,320
($MM)
As of quarter ended:
Quarter to date:
10
Focused Return of Capital to Shareholders
$6,000
Net cash provided by operations
$5,519
$5,000
Millions
$4,000
$3,000
Free Cash
Flow**
$2,819
$2,277
$542
~81% of
Free Cash
Flow**
Dividends and share
repurchases*
Change in cash and all
other
$2,000
$2,700
$1,000
Cash capital expenditures
and acquisitions
$0
LTM Ended 6/30/13
* $464 MM dividends plus $1,813 MM share repurchases
** Cash flow provided by operations less cash capital expenditures and acquisitions
11
3Q 2013 Outlook
Projected
3Q 2013
3Q 2012
Crude throughput
1.65 MMBD
1.19 MMBD
Total throughput
1.85 MMBD
1.35 MMBD
22%
26%
$1.15
$1.18
Depreciation & amortization
1.30
1.44
Other manufacturing cost**
4.15
3.16
$6.60
$5.78
$75 million
$74 million
Percent of WTI-priced crude
Refinery direct operating costs in Refining & Marketing
gross margin*:
Turnaround and major maintenance
Total
Corporate and other unallocated items
* Per barrel of total throughput
** Includes utilities, labor, routine maintenance and other operating costs
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Appendix
Reconciliation
Earnings to Adjusted Earnings*
2012
($MM)
Earnings
1Q
2Q
3Q
4Q
1Q
2Q
596
814
1,224
755
725
593
53
22
5
Pension settlement expenses**
MN asset sale settlement gain**
Adjusted Earnings
2013
39
(117)
596
867
1,129
760
725
632
*References to Earnings refer to Net Income attributable to MPC
**Net of tax
14
Reconciliation
Free Cash Flow to Net Cash Provided from Operations
2012
($MM)
(Quarter to date)
2013
3Q
4Q
1Q
2Q
Net cash provided by (used in)
operating activities
1,833
2,043
2,079
(436)
Additions to property, plant and
equipment
(331)
(403)
(195)
(229)
Acquisitions*
(27)
-
(1,493)
(22)
Free cash flow
1,475
1,640
391
(687)
Last twelve months free cash flow
2,819
*Represents cash paid
15
Income
($MM unless otherwise noted)
2012
1Q
2013
2Q
3Q
4Q
1Q
943
1,325
1,691
1,139
1,105
903
Speedway segment income
50
107
76
77
67
123
Pipeline Transportation segment income
42
50
52
72
51
58
(79)
(92)
(74)
(91)
(67)
(64)
Pension settlement expenses
-
(83)
(33)
(8)
-
(60)
MN asset sale settlement gain
-
-
183
-
-
-
Income from operations
956
1,307
1,895
1,189
1,156
960
Net interest and other financing income (costs)
(22)
(17)
(25)
(45)
(48)
(45)
Income before income taxes
934
1,290
1,870
1,144
1,108
915
Income tax provision
338
476
646
385
378
316
Net income
596
814
1,224
759
730
599
-
-
-
4
5
6
Net income attributable to MPC
596
814
1,224
755
725
593
Effective tax rate
36%
37%
35%
34%
34%
35%
Refining & Marketing segment income
Corporate and other unallocated items
Less net income attributable to noncontrolling
interests
2Q
16
EBITDA Reconciliation to Net Income (Loss) Attributable to MPC
($MM)
2011
2012
2013
4Q
1Q
2Q
3Q
4Q
1Q
2Q
Net Income (Loss) attributable to MPC
(75)
596
814
1,224
755
725
593
Less: Net interest and other financial income (costs)
(22)
(22)
(17)
(25)
(45)
(48)
(45)
-
-
-
-
4
5
6
(105)
338
476
646
385
378
316
230
230
236
246
283
287
302
72
1,186
1,543
2,141
1,472
1,443
1,262
4,942
6,342
6,599
6,318
Add: Net income attributable to noncontrolling
interests
Add: Provision (benefit) for income taxes
Add: Depreciation and amortization
EBITDA
Last Twelve Months EBITDA
17
Cash Provided from Operations Before Changes in Working
Capital Reconciliation to Cash Provided by (Used in) Operations
($MM)
2012
2013
3Q
4Q
1Q
2Q
1,833
2,043
2,079
(436)
(393)
491
(884)
(655)
Changes in inventories
142
440
(517)
62
Changes in current accounts payable and accrued liabilities
862
(63)
2,491
(702)
Changes in the fair value of derivative instruments
(98)
51
(57)
--
513
919
1,033
(1,295)
1,320
1,124
1,046
859
(Quarter to date)
Net cash provided by (used in) operations
Less changes in working capital:
Changes in current receivables
Total changes in working capital
Cash provided from operations before changes in working capital
18
Capital Expenditures & Investments*
($MM)
2013 Budget
2Q 2013
2013 YTD
1,016
134
257
Speedway
255
76
112
Pipeline Transportation
184
41
61
Corporate and Other
160
28
52
1,615
279
482
43
4
8
1,658
283
490
Refining & Marketing
Subtotal
Capitalized Interest
Total Capital Expenditures & Investments
*Excludes $1.37 billion in capital expenditures and investments attributable to the acquisition of the Galveston Bay refinery and related assets
19
MPC Crude Slate
100%
90%
80%
21
31
23
22
24
23
25
22
22
20
26
30
Other Sweet
70%
60%
50%
40%
Other Sour
56
52
52
49
48
45
50
52
55
48
52
48
WTI Based
30%
20%
10%
21
23
25
26
27
29
30
28
26
25
22
22
0%
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
20
Refining & Marketing Indicative Gross Margin – 2Q 2013
$3,000
364
$2,500
(179)
43
(1,030)
506
Millions
$2,000
1,671
$1,500
(180)
1,195
(292)
$1,000
903
$500
$0
*LLS
6-3-2-1
Crack
*Sweet/ *LLS/WTI
*LLS
*Market
Direct
Sour Diff. Spread Prompt vs. Structure Operating
Delivered
Costs
Other
Gross
Margin
R&M
Gross
Margin
Other
R&M
Segment
Income
*Based on market indicators using actual volumes
21