In this edition, we will go through the Marathon Petroleum 24Q1 financial statement. Reading this lets you quickly visualise how Marathon makes money and its financial health. And you’ll learn the answer to the age-old question: what they do with all their money.

Today in a Snapshot

📈Financial Performance: Considerable drop in profits, U$1.3B in net profit with a total margin of 4.0%, down from 8.8% (U$3.1B) in 23Q1.
💵Cashflow: Significant reduction in free cashflow requiring U$2.3B for this period. However, U$2.2B was used for share buyback.
⚖️Balance Sheet: High L/A ratio of (65%), with a reduction in equity due to share buyback.

The reduction in profit is attributed to lower refining & marketing margins and high turnaround costs and turnaround activity.

Refining & Marketing: This segment produced an EBITA of U$1,874, considerably lower than 23Q1 at $U3,853 (-52%). As stated above this is attributed to lower margins and higher turnaround costs and activities.

Midstream: This segment produced an EBITA of U$1,589, slightly higher than 23Q1 at U$1,530 (+4%).

You may be wonder how Midstream has an EBITA higher than its revenue. Well this revenue in the chart above its external sales only. That is, it does not include revenue from intersegment sales. However, intersegment sales do contribute to EBITA.

The most interesting part of this statement is the U$2.3B from the cash reserves. This is considerable, as reduces the cash and equivalents on hand from U$5.5B to U$3.2B (-46%). That being said, this has only reduced the total current assets by 3% and is unlikely to impact the business’s health negatively. These cash reserves offset the spending on stock repurchases.

Other Notables

• Maryann Mannen will succeed Michael J. Hennigan as CEO on 01 Aug 24 when he reaches his mandatory retirement date.

• The board approved a U$5B share buyback scheme in late April. As of the end of Q1, U$4.63B remains available for share purchase.

• MPLX increased its ownership in other JVs and assets.

  • 73% interest in Ohio Gathering Company

  • 100% interest in Ohio Condensate Company

• Marathon acquired 49.9% of LF Bioenergy for U$56M

Marathon has a higher liability-asset (L/A) ratio than its peers at 65%. Notable changes include the significant reduction in cash & equivalents and the overall reduction in equity (see below).

We are back with an official equity walk. However, it is not without its challenges. You may notice the equity in the balance sheet is U$0.6B higher than the final equity value on the walk. This is because the Redeemable by Others Controlled portion of the equity is not included in the walk.

Fundamentally, the walk demonstrates that the erosion of equity is primarily due to the U$2.2B spent on share repurchases.

MPLX is a partnership primarily owned (64%) by Marathon, which owns and operates crude oil and gas pipelines.

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Cheers,

Connor

All data can be found on the Marathon Petroleum Investors website.