Marathon Petroleum is this week’s choice. As usual, we will take their financial statement and produce some visuals to make it easier to understand how they performed in 24Q2.

In case you missed it, here is the Marathon 24Q1 analysis.

Today in a Snapshot

📈Financial Performance: U$2.0B in net profit with a total margin of 5.1%, down from U$2.6B (7.0%) in 23Q2.
💵Cashflow: Added U$1.3B to cash reserves.
⚖️Balance Sheet: Increase of D:E ratio to 2.03.

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Marathon made U$38.4B in revenue, up from U$36.8B in 23Q1. However, this didn’t convert as well, resulting in U$2.0B net profit at a 5.1% margin, down from U$2.6B at a 7.0% margin. Marathon attributes this to a lower margin environment as supply was at record seasonal levels.

Refining & Marketing: Revenue increased due to an increased volume of sales of 3,742mbpd, up from 3,581mbpd (161mbpd 4.4%). However, this was partially offset by a reduction in average sales price from U$2.41 in 23Q1 to U$2.39 this period. However, the overall margin per barrel reduced from U$22.10 to U$17.39 (a ~21% reduction). This was attributed to increased distribution costs and narrow crack spreads. Ultimately, this resulted in an adjusted EBITDA of U$7.07 per barrel, down from U$11.88 per barrel in 23Q2. This resulted in a net EBITDA of U$1,972M, down from U$3,163M in 23Q2.

Midstream: This segment benefited from marginally higher pipeline throughput at 6,129mbpd, up from 6,032mbpd in 23Q2. In addition, the segment benefited from higher natural gas benchmark pricing. Overall these two factors produced an adjusted EBITDA of U$1,620M, up from U$1,532M in 23Q2.

Marathon didn’t publish a cash flow statement for Q2 specifically. This has been interpolated from their H1 and Q1 statements.

It isn’t often that investing activities produce a positive cashflow alongside operational cashflow (even if it was only U$17M). It is good to see the surplus cash flow of U$1.3B. This will help offset the -U$2.3B that was consumed in 24Q1. However, upon further inspection, we can see that a long-term debt of U$1.6B was introduced in this quarter.

The debt-to-equity ratio is getting worse at 2.03, which is up from 1.87. Marathon has the second highest D:E ratio compared to its peers; check out the 24Q1 roundup for a comparison.

This is primarily fueled by the reduction of equity and the increase in debt. The share repurchases can explain the equity reduction, as seen in the equity walk below. And we can see the increase of debt due by 100% in the balance sheet and some of it in the cashflow statement as ‘long-term debt’.

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Cheers,

Connor

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