Ohio-based independent oil refiner and marketer, Marathon Petroleum Corp. (MPC - Analyst Report) reported strong second-quarter results, owing to higher product price realization and improved crack spread. The earnings strength has reflected in its share price on the NYSE, where it has risen more than 5% in early trade.
The company, in its current form, came into existence following the 2011 spin-off of Houston, TX-based Marathon Oil Corp’s (MRO - Analyst Report) refining/sales business into a separate, independent, publicly traded entity.
Marathon Petroleum reported earnings per share of $3.00 (excluding expenses related to pension settlement), surpassing the Zacks Consensus Estimate of $2.15 and the year-ago period adjusted profit of $2.00.
Moreover, revenues – at $26,933 million – beat the Zacks Consensus Estimate of $23,718 million. The top line also increased from the year-ago figure of $25,703 million.
Refining & Marketing: The unit earned $1,260 million during the quarter compared to profits of $903 million in the year-ago quarter.
Higher realization of product prices and increased crack spread in the U.S. Gulf Coast led to the improvement.
Total refined product sales volumes increased marginally from the year-earlier level to 2,145 thousand barrels per day, however throughput fell 1.7% year over year to 1,832 thousand barrels per day.
Speedway: Income from the Speedway retail stations totaled $94 million, down from $123 million in the year-ago period. Higher operating cost hampered the results. The negative comparison was also due to reduced distillate and gasoline gross margin during the quarter.
Pipeline Transportation: Segment profitability was $81 million, up from $58 million in the second quarter of 2013. Earnings were propped up by improved equity affiliate earnings.
Yesterday, Marathon Petroleum reported its quarterly dividend of 50 cents per common share, reflecting a sequential hike of 19%. The increased dividend will likely be paid on Sep 10, 2014 to shareholders of record as of Aug 20.
Capital Expenditure, Balance Sheet & Share Repurchase
During the quarter, Marathon Petroleum spent $363 million on capital programs (64.7% on Refining & Marketing). As of Jun 30, 2014, the company had cash and cash equivalents of $2,125 million and total debt of $3,638 million, with a debt-to-capitalization ratio of 25%.
Yesterday, the company got approval from the board of directors to buyback another $2 billion worth shares through Jul 2016.
Moreover, during the reported quarter, Marathon Petroleum repurchased shares worth $459 million.
Marathon Petroleum currently carries a Zacks Rank #3 (Hold), implying that it is expected perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Eagle Rock Energy Partners L.P (EROC - Snapshot Report) and Ferrellgas Partners LP (FGP - Analyst Report). Both stocks sport a Zacks Rank #1 (Strong Buy).