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Marathon (MPC) Q1 Earnings Top on Margin Gains, Buyback Raised
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Independent oil refiner and marketer, Marathon Petroleum Corporation (MPC - Free Report) reported adjusted earnings per share of $6.09, which comfortably beat the Zacks Consensus Estimate of $5.74 and compared with a profit of merely $1.49 per share in the year-ago period.
The company’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3 billion, ahead of its Zacks Consensus Estimate by 19.9%.
Marathon Petroleum reported revenues of $35.1 billion, which beat the Zacks Consensus Estimate of $32.4 billion but dropped 8.6% year over year on lower-than-expected throughput volumes.
In October 2022, the company completed its target of buying back $15 billion in common stock. This was after Marathon Petroleum concluded the sale of its Speedway business, comprising approximately 3,900 c-stores in 35 states to Japan-based retail group Seven &i Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion.
In the first quarter, MPC repurchased $3.2 billion of shares and a further $1.2 billion worth of shares in April. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $9 billion.
Marathon Petroleum Corporation Price, Consensus and EPS Surprise
Refining & Marketing: The Refining & Marketing segment reported an operating income of $3 billion, which soared from the year-ago profit of just $768 million. The jump primarily reflects higher year-over-year margins and refined product sales that more than offset lower capacity utilization.
Specifically, the refining margin of $26.15 per barrel improved significantly from $15.31 a year ago. Capacity utilization during the quarter was 89% compared to 91% in the corresponding period of 2022. The tickdown reflects planned maintenance activity in the Gulf Coast region.
Meanwhile, total refined product sales volumes were 3,352 thousand barrels per day (mbpd), up from 3,293 mbpd in the year-ago quarter. Throughput also edged up from 2,833 mbpd in the year-ago quarter to 2,837 mbpd but missed the Zacks Consensus Estimate of 2,851 mbpd.
Further, operating costs per barrel increased 8.8% year over year to $5.68. The cost escalation was blamed on turnaround-related outgo.
Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP (MPLX - Free Report) — a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment profitability was $1.2 billion, up 13.2% from the first quarter of 2022. Earnings were supported by higher tariff rates and the stable, fee-based revenues from MPLX’s wide range of midstream energy services.
Costs, Capex & Balance Sheet
Marathon Petroleum, carrying a Zacks Rank #3 (Hold), reported expenses of $31 billion in first-quarter 2023, down 4.2% from the year-ago quarter.
In the reported quarter, Marathon Petroleum spent $690 million on capital programs (61% on Refining & Marketing and 35% on the Midstream segment) compared to $573 million in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $8 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 45.5%.
Some Key Refining Earnings
While we have discussed MPC’s fourth-quarter results in detail, let’s see how some other refining companies have fared this earnings season.
Phillips 66 (PSX - Free Report) reported adjusted earnings per share of $4.21, beating the Zacks Consensus Estimate of $3.58. Moreover, the bottom line improved significantly from a profit of $1.32 per share in the year-ago quarter.
PSX’s worldwide margins almost doubled to $20.72 per barrel from the year-ago quarter’s $10.83. The same in the Central Corridor and Atlantic Basin/Europe increased to $26.86 and $16.13 per barrel from the year-ago levels of $7.89 and $11.71, respectively. In the Gulf Coast, the metric registered an improvement to $21.28 per barrel from $8.59 in the prior-year quarter. However, the West Coast witnessed a decline in margins from $17.74 per barrel in the year-ago quarter to $16.53 in the March-end quarter of 2023.
Another refining giant, Valero Energy (VLO - Free Report) , also reported strong first-quarter earnings. The bottom line of $8.27 per share came in well above the Zacks Consensus Estimate of $7.24. The outperformance reflects increased refinery throughput volumes and a higher refining margin. In particular, adjusted operating income in the Refining unit amounted to $4.1 billion, surging from $1.5 billion in the year-ago quarter.
At the end of the first quarter, VLO had cash and cash equivalents of $5.5 billion, while the company’s total debt and finance lease obligations amounted to $11.4 billion. Valero’s first-quarter capital investment was $524 million. Of the total, $341 million was allotted for sustaining the business.
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Marathon (MPC) Q1 Earnings Top on Margin Gains, Buyback Raised
Independent oil refiner and marketer, Marathon Petroleum Corporation (MPC - Free Report) reported adjusted earnings per share of $6.09, which comfortably beat the Zacks Consensus Estimate of $5.74 and compared with a profit of merely $1.49 per share in the year-ago period.
The company’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3 billion, ahead of its Zacks Consensus Estimate by 19.9%.
Marathon Petroleum reported revenues of $35.1 billion, which beat the Zacks Consensus Estimate of $32.4 billion but dropped 8.6% year over year on lower-than-expected throughput volumes.
In October 2022, the company completed its target of buying back $15 billion in common stock. This was after Marathon Petroleum concluded the sale of its Speedway business, comprising approximately 3,900 c-stores in 35 states to Japan-based retail group Seven &i Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion.
In the first quarter, MPC repurchased $3.2 billion of shares and a further $1.2 billion worth of shares in April. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $9 billion.
Marathon Petroleum Corporation Price, Consensus and EPS Surprise
Marathon Petroleum Corporation price-consensus-eps-surprise-chart | Marathon Petroleum Corporation Quote
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $3 billion, which soared from the year-ago profit of just $768 million. The jump primarily reflects higher year-over-year margins and refined product sales that more than offset lower capacity utilization.
Specifically, the refining margin of $26.15 per barrel improved significantly from $15.31 a year ago. Capacity utilization during the quarter was 89% compared to 91% in the corresponding period of 2022. The tickdown reflects planned maintenance activity in the Gulf Coast region.
Meanwhile, total refined product sales volumes were 3,352 thousand barrels per day (mbpd), up from 3,293 mbpd in the year-ago quarter. Throughput also edged up from 2,833 mbpd in the year-ago quarter to 2,837 mbpd but missed the Zacks Consensus Estimate of 2,851 mbpd.
Further, operating costs per barrel increased 8.8% year over year to $5.68. The cost escalation was blamed on turnaround-related outgo.
Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP (MPLX - Free Report) — a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment profitability was $1.2 billion, up 13.2% from the first quarter of 2022. Earnings were supported by higher tariff rates and the stable, fee-based revenues from MPLX’s wide range of midstream energy services.
Costs, Capex & Balance Sheet
Marathon Petroleum, carrying a Zacks Rank #3 (Hold), reported expenses of $31 billion in first-quarter 2023, down 4.2% from the year-ago quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
In the reported quarter, Marathon Petroleum spent $690 million on capital programs (61% on Refining & Marketing and 35% on the Midstream segment) compared to $573 million in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $8 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 45.5%.
Some Key Refining Earnings
While we have discussed MPC’s fourth-quarter results in detail, let’s see how some other refining companies have fared this earnings season.
Phillips 66 (PSX - Free Report) reported adjusted earnings per share of $4.21, beating the Zacks Consensus Estimate of $3.58. Moreover, the bottom line improved significantly from a profit of $1.32 per share in the year-ago quarter.
PSX’s worldwide margins almost doubled to $20.72 per barrel from the year-ago quarter’s $10.83. The same in the Central Corridor and Atlantic Basin/Europe increased to $26.86 and $16.13 per barrel from the year-ago levels of $7.89 and $11.71, respectively. In the Gulf Coast, the metric registered an improvement to $21.28 per barrel from $8.59 in the prior-year quarter. However, the West Coast witnessed a decline in margins from $17.74 per barrel in the year-ago quarter to $16.53 in the March-end quarter of 2023.
Another refining giant, Valero Energy (VLO - Free Report) , also reported strong first-quarter earnings. The bottom line of $8.27 per share came in well above the Zacks Consensus Estimate of $7.24. The outperformance reflects increased refinery throughput volumes and a higher refining margin. In particular, adjusted operating income in the Refining unit amounted to $4.1 billion, surging from $1.5 billion in the year-ago quarter.
At the end of the first quarter, VLO had cash and cash equivalents of $5.5 billion, while the company’s total debt and finance lease obligations amounted to $11.4 billion. Valero’s first-quarter capital investment was $524 million. Of the total, $341 million was allotted for sustaining the business.
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