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Marathon Petroleum (MPC) Q1 Loss Narrower Than Expected
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Independent oil refiner and marketer Marathon Petroleum Corporation (MPC - Free Report) reported adjusted loss per share of 16 cents, narrower than the Zacks Consensus Estimate of a loss of 24 cents. The company’s bottom line was favorably impacted by strong performance by the Retail segment. Operating income from the unit totaled $519 million, breezing past the Zacks Consensus Estimate of $336 million.
However, the bottom line loss was wider than the year-earlier quarter's loss of 9 cents due to weak showing from the Refining & Marketing segment. The unit’s results were dragged down by lower-than-expected throughput. Total throughput of 2,994 thousand barrels per day (mbpd) came below the Zacks Consensus Estimate of 3,053 mbpd, respectively.
Marathon Petroleum reported revenues of $24.1 billion that missed the Zacks Consensus Estimate of $27.9 billion and declined 15.8% year over year.
Forced by the historic oil market crash and the coronavirus-induced demand destruction for the fuel, Marathon Petroleum announced a cut to its 2020 capital spending plan by $1.4 billion, or 30%, to $3 billion. The company is also targeting a reduction in its operating expenses to $950 million and said it would temporarily its stock repurchase program.
As part of Marathon Petroleum’s efforts to shore up its financial strength, the company issued senior notes worth $2.5 billion in April, apart from securing $1 billion in additional revolving credit facility.
Marathon Petroleum Corporation Price, Consensus and EPS Surprise
Refining & Marketing: The Refining & Marketing segment reported operating loss of $622 million, widening from the $334 million loss in the year-ago quarter. The deterioration reflects lower y/y throughputs.
Specifically, refining margin of $11.30 per barrel increased slightly versus $11.17 a year ago. Total refined product sales volumes were 3,588 mbpd, down from the 3,669 mbpd in the year-ago quarter. Moreover, throughput fell from 3,084 mbpd in the year-ago quarter to 2,994 mbpd. Capacity utilization during the quarter was down 4% year over year to 91%.
Retail: Income from the Retail segment totaled $519 million, more than tripling from the year-ago period as a result of higher fuel margins. In particular, the company's retail fuel margin surged from 17.15 cents per gallon in the first quarter of 2019 to 32.91 cents per gallon in the quarter under review. Meanwhile, same-store merchandise sales edged up by 0.7% year over year. However, same-store gasoline fuel volume fell 8.3% from the year-ago period.
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 partnerships that own, operate, develop and acquire pipelines and other midstream assets.
Segment profitability was $905 million, essentially same as the fourth quarter of 2018. Earnings were buoyed by strong overall growth across MPLX’s businesses, plus contribution from organic growth projects.
Costs, Capex & Balance Sheet
Marathon Petroleum – which spun off from Marathon Oil Corporation (MRO - Free Report) in 2011 – reported expenses of $35.9 billion in first-quarter 2020, up 28.5% from the year-ago quarter.
In the reported quarter, Marathon Petroleum spent $1.1 billion on capital programs (43% on Refining & Marketing and 45% on the Midstream segment). As of Mar 31, the company had cash and cash equivalents of $1.7 billion and a total debt of $31.6 billion, with a debt-to-capitalization ratio of 50.3%.
Zacks Rank & Stock Pick
Marathon Petroleum holds a Zacks Rank #3 (Hold).
Meanwhile, investors interested in the energy space could look at a better option like Murphy USA (MUSA - Free Report) , carrying a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for Murphy USA’s 2020 earnings indicates year-over-year improvement of 48.2%.
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Marathon Petroleum (MPC) Q1 Loss Narrower Than Expected
Independent oil refiner and marketer Marathon Petroleum Corporation (MPC - Free Report) reported adjusted loss per share of 16 cents, narrower than the Zacks Consensus Estimate of a loss of 24 cents. The company’s bottom line was favorably impacted by strong performance by the Retail segment. Operating income from the unit totaled $519 million, breezing past the Zacks Consensus Estimate of $336 million.
However, the bottom line loss was wider than the year-earlier quarter's loss of 9 cents due to weak showing from the Refining & Marketing segment. The unit’s results were dragged down by lower-than-expected throughput. Total throughput of 2,994 thousand barrels per day (mbpd) came below the Zacks Consensus Estimate of 3,053 mbpd, respectively.
Marathon Petroleum reported revenues of $24.1 billion that missed the Zacks Consensus Estimate of $27.9 billion and declined 15.8% year over year.
Forced by the historic oil market crash and the coronavirus-induced demand destruction for the fuel, Marathon Petroleum announced a cut to its 2020 capital spending plan by $1.4 billion, or 30%, to $3 billion. The company is also targeting a reduction in its operating expenses to $950 million and said it would temporarily its stock repurchase program.
As part of Marathon Petroleum’s efforts to shore up its financial strength, the company issued senior notes worth $2.5 billion in April, apart from securing $1 billion in additional revolving credit facility.
Marathon Petroleum Corporation Price, Consensus and EPS Surprise
Marathon Petroleum Corporation price-consensus-eps-surprise-chart | Marathon Petroleum Corporation Quote
Y/Y Segmental Performance
Refining & Marketing: The Refining & Marketing segment reported operating loss of $622 million, widening from the $334 million loss in the year-ago quarter. The deterioration reflects lower y/y throughputs.
Specifically, refining margin of $11.30 per barrel increased slightly versus $11.17 a year ago. Total refined product sales volumes were 3,588 mbpd, down from the 3,669 mbpd in the year-ago quarter. Moreover, throughput fell from 3,084 mbpd in the year-ago quarter to 2,994 mbpd. Capacity utilization during the quarter was down 4% year over year to 91%.
Retail: Income from the Retail segment totaled $519 million, more than tripling from the year-ago period as a result of higher fuel margins. In particular, the company's retail fuel margin surged from 17.15 cents per gallon in the first quarter of 2019 to 32.91 cents per gallon in the quarter under review. Meanwhile, same-store merchandise sales edged up by 0.7% year over year. However, same-store gasoline fuel volume fell 8.3% from the year-ago period.
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 partnerships that own, operate, develop and acquire pipelines and other midstream assets.
Segment profitability was $905 million, essentially same as the fourth quarter of 2018. Earnings were buoyed by strong overall growth across MPLX’s businesses, plus contribution from organic growth projects.
Costs, Capex & Balance Sheet
Marathon Petroleum – which spun off from Marathon Oil Corporation (MRO - Free Report) in 2011 – reported expenses of $35.9 billion in first-quarter 2020, up 28.5% from the year-ago quarter.
In the reported quarter, Marathon Petroleum spent $1.1 billion on capital programs (43% on Refining & Marketing and 45% on the Midstream segment). As of Mar 31, the company had cash and cash equivalents of $1.7 billion and a total debt of $31.6 billion, with a debt-to-capitalization ratio of 50.3%.
Zacks Rank & Stock Pick
Marathon Petroleum holds a Zacks Rank #3 (Hold).
Meanwhile, investors interested in the energy space could look at a better option like Murphy USA (MUSA - Free Report) , carrying a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Murphy USA’s 2020 earnings indicates year-over-year improvement of 48.2%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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