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First Quarter 2019 Conference Call May 8, 2019

May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Page 1: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

First Quarter 2019 Conference CallMay 8, 2019

Page 2: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Forward-Looking Statements and Additional Information

Forward-Looking StatementsThis presentation contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (MPC). These forward-looking statements relate to, among other things, MPC’s acquisition of Andeavor and include expectations, estimates and projections concerning the business and operations, strategy and value creation plans of MPC. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as "anticipate," "believe," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan,“ “policy,” "position," "potential," "predict," “priority,” "project," "prospective," "pursue," "seek," "should," "strategy," "target," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict. Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include: the risk that the cost savings and any other synergies from the Andeavortransaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; risks related to the proposed transaction between MPLX LP (MPLX) and Andeavor Logistics LP (ANDX), including the ability to complete the proposed transaction on the proposed terms and timetable, the ability to satisfy various conditions to the closing of the transaction contemplated by the merger agreement, the ability to obtain regulatory approvals for the proposed transaction on the proposed terms and schedule, and any conditions imposed on the combined entity in connection with the consummation of the proposed transaction, the risk that anticipated opportunities and any other synergies from or anticipated benefits of the proposed transaction may not be fully realized or may take longer to realize than expected, including whether the proposed transaction will be accretive within the expected timeframe or at all, or disruption from the proposed transaction making it more difficult to maintain relationships with customers, employees or suppliers; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income or earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; the ability to manage disruptions in credit markets or changes to credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute business plans and to effect any share repurchases or dividend increases, including within the expected timeframe; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX or ANDX; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed with the SEC.

We have based our forward-looking statements on our current expectations, estimates and projections about our industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our respective management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law.

Additional Information and Where to Find ItIn connection with the proposed transaction, a registration statement on Form S-4 will be filed with the SEC. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE CONSENT STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final consent statement/prospectus will be sent to unitholders of ANDX. Investors and security holders will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov, from ANDX at its website, http://ir.andeavorlogistics.com, or by contacting ANDX’s Investor Relations at (419) 421-2414, or from MPLX at its website, http://ir.mplx.com, or by contacting MPLX’s Investor Relations at (419) 421-2414.

Participants in SolicitationMPLX, ANDX, MPC and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of consents in respect of the proposed transaction. Information concerning MPLX’s directors and executive officers is set forth in its Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed Feb. 28, 2019. Information concerning ANDX’s directors and executive officers is set forth in its Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed Feb. 28, 2019. Information concerning MPC’s executive officers is set forth in MPC’s Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed Feb. 28, 2019. Information about MPC’s directors is set forth in MPC’s Definitive Proxy Statement on Schedule 14A for its 2019 Annual Meeting of Shareholders, which was filed with the SEC on March 14, 2019. Investors and security holders will be able to obtain the documents free of charge from the sources indicated above, and with respect to MPC, from its website, https://www.marathonpetroleum.com/Investors, or by contacting MPC’s Investor Relations at (419) 421-2414. Additional information regarding the interests of such participants in the solicitation of consents in respect of the proposed transaction will be included in the registration statement and consent statement/prospectus and other relevant materials to be filed with the SEC when they become available.

Non-GAAP Financial MeasuresAdjusted EBITDA, cash provided from operations before changes in working capital, Refining and Marketing margin and Retail total margin are non-GAAP financial measures provided in this presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial measures are not defined by GAAP and should not be considered in isolation or as an alternative to net income attributable to MPC, net cash provided by (used in) operating, investing and financing activities, Refining and Marketing income from operations, Speedway income from operations or other financial measures prepared in accordance with GAAP.

Page 3: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Strategic Overview & Updates

Page 4: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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First Quarter Highlights

(a) See reconciliation table in the appendix. Includes $186 million of turnaround costs in the first quarter of 2019 (b) Includes capitalized interest

$ Millions (unless otherwise noted) 1Q19

Net Loss $(7)

Income from Operations $669

Cash from Operations, excluding Working Capital $1,153

Adjusted EBITDA(a) $1,472

Capital Expenditures(b) $1,331

Share Repurchases + Dividends $1,239

Parent Level Leverage(a) 1.4x

Page 5: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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37

-201

-7

+341

+75+14

-123

-82

-68

-200

-150

-100

-50

0

50

100

150

200

250

300

1Q 2018 Refining &Marketing

Midstream Retail Items notAllocated toSegments

(b)

Interest andOther

FinancingCosts

IncomeTaxes

(c)

NoncontrollingInterests

1Q 2019$M

M

Earnings(a)

1Q 2019 vs. 1Q 2018 Variance Analysis

(a) Earnings refer to net income attributable to MPC. (b) First quarter 2019 includes $207 million non-cash benefit related to Capline restructuring and $91 million of transaction-related costs.(c) First quarter 2019 includes an out-of-period adjustment of $(36) million to correct prior period state income taxes.

Income (loss) from Operationsby Segment ($ Millions) 1Q19 1Q18

Refining & Marketing (334) (133)

Midstream 908 567

Retail 170 95

Items not allocated to segments:

Corporate and other unallocated items (191) (89)

Capline restructuring gain 207 -

Transaction-related costs (91) -

Income from Operations 669 440

Page 6: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Total Consolidated Cash Flow1Q 2019

1,687

877

+1,153

+470

+573

-1,566

-1,239-230

+29

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

12/31/2018Cash Balance

Operating CashFlow before

Working Capital

WorkingCapital

Net Debt CapitalExpenditures,Investments

Return ofCapital to

Shareholders(a)

NetDistributions toNoncontrolling

Interests

Other 3/31/2019Cash Balance

$MM

(a) $354 MM dividends plus $885 MM share repurchasesNote: Excludes restricted cash

Page 7: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Realized Synergies – 1st Quarter 2019

$133 million of realized synergies in 1Q19

– Refining & Marketing = $89 million

• Refining = $55 million

• Crude oil supply and logistics = $30 million

• Marketing / Other = $4 million

– Corporate = $29 million

– Retail = $15 million

Realized synergies are incremental to Andeavor-Western synergies, which achieved targeted run-rate of $365 million prior to October 1, 2018 closing

Page 8: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Beginning 1Q19, Refining & Marketing margin(a) by region is now being provided

Due to differences in accounting policies and allocation of refineries into the three above regions, these are not comparable with historical ANDV metrics

Regional Margins

Region R&M Margin(a) ($/bbl)

Gulf Coast $7.82

Mid-Continent $15.26

West Coast $10.94

Refining & Marketing Margin(a) $11.17

(a) R&M Margin = Sales revenue less cost of refinery inputs and purchased products, divided by refinery throughputs, excluding inter-refinery transfer volumes.

Page 9: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Second-Quarter 2019 Outlook

Crude Throughput1

Other Charge/

Feedstocks Throughput1

Total Throughput1

SweetCrude

SourCrude

Turnaround and Major

Maintenance

Depreciation and

Amortization

Other Manufacturing

Cost2

Total Direct

Operating Costs

Corporate and Other

Unallocated Items3

in MBPD Percent of Throughput Refinery Direct Operating Costs ($/BBL of Total Throughput)

Proj

ecte

d 2Q

201

9

Gulf Coast Region 1,125 125 1,250 42% 58% $1.15 $1.15 $3.60 $5.90

Mid-Con Region 1,075 50 1,125 74% 26% $1.35 $1.60 $4.75 $7.70

West Coast Region 600 50 650 42% 58% $5.15 $1.50 $7.85 $14.50

MPC Total 2,800 125 2,925 55% 45% $2.15 $1.45 $5.10 $8.70 $200 MM

2Q 2

018

Gulf Coast Region 1,156 190 1,346 35% 65% $0.56 $0.99 $3.21 $4.76

Midwest Region 722 34 756 61% 39% $1.65 $1.66 $3.81 $7.12

MPC Total 1,878 160 2,038 45% 55% $0.98 $1.27 $3.54 $5.79 $90 MM

1 Region throughput data includes inter-refinery transfers, but MPC totals exclude transfers 2 Includes utilities, labor, routine maintenance and other operating costs 3 Includes transaction costs related to the merger with Andeavor

Note: The company provides certain financial and statistical data on its website not later than the close of business on the second business day following the end of each month, and may also provide additional updates within each month.

Page 10: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

Strategic OverviewQuestions & Answers

Page 11: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Appendix

Page 12: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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968

1,472

-26

+467+122

-59

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1Q 2018 Refining &Marketing

Midstream Retail Items notAllocated toSegments

(b)

1Q 2019

$MM

Adjusted EBITDA(a)

1Q 2019 vs. 1Q 2018 Variance Analysis

(a) See reconciliation table in the appendix. This number does not include $186 million of turnaround costs in the first quarter of 2019 and $173 million of turnaround costs in the first quarter of 2018.(b) First quarter 2019 includes $207 million non-cash benefit related to Capline restructuring and $91 million of transaction-related costs.

Page 13: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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-133

-678 -334

-259

+793

-97

+367+47

-809

+555

-120

-500

0

500

1,000

1,500

2,000

1Q 2018 Mid-ConWTI 3-2-1

Ex-RINCrack

USGCLLS 3-2-1

Ex-RINCrack

West CoastANS 3-2-1

Ex-RINCrack

SourDifferentials

SweetDifferentials

MarketStructure

OtherMargin

DirectOperating

Costs

Other 1Q 2019

$MM

Refining & Marketing Segment Income1Q 2019 vs. 1Q 2018 Variance Analysis

Volume Effect

Page 14: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

14(a) Represents ex-RIN/CBOB adjusted crack spread, which incorporates the market cost of Renewable Identification Numbers (RINs) for attributable products and the difference between 87 Octane Gasoline and 84 Octane CBOB Gasoline. (b) Based on market indicators using actual volumes.

Refining & Marketing Indicative Margin1Q 2019

2,578

3,100+412+418 +36

-344

-2,126

-1,308 -334

-1,000

0

1,000

2,000

3,000

4,000

Blended CrackSpread(a) (b)

SweetDifferential

(b)

SourDifferential

(b)

MarketStructure

OtherMargin

R&MMargin

DirectOperating

Costs

Other R&MSegmentIncome

$MM

Page 15: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Midstream Segment Income1Q 2019 vs. 1Q 2018 Variance Analysis

567

+121

+220 908

0

200

400

600

800

1,000

1Q 2018 MPLX ANDX(a)

1Q 2019

$MM

(a) Andeavor Logistics LP, acquired by Marathon on October 1, 2018

Page 16: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Retail Segment Income1Q 2019 vs. 1Q 2018 Variance Analysis

95

+173+39

+88

-199-47

+21 170

0

200

400

600

1Q 2018 FuelVolume

FuelMargin

MerchandiseMargin

OperatingExpense

(a)

Depreciation Other 1Q 2019

$MM

(a) Reflects operating, selling, general and administrative expenses.

Page 17: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Capitalization and Select Balance Sheet Data

MPCConsolidated

MPLX Adjustments(a)

ANDX Adjustments(a)

MPC Excluding MPLX & ANDX

As of March 31, 2019

($MM except ratio data)

Total Debt 28,115 13,833 5,132 9,150

Total Equity (b) 43,862 9,330 3,829 30,703

Debt-to-Capital Ratio 39% - - 23%

Cash and cash equivalents 877 93 29 755

Debt to LTM Adjusted Pro Forma EBITDA (c) 2.5x - - 1.4x

Debt to LTM Adjusted Pro Forma EBITDA, w/MPLX LP and ANDX LP distributions (c)

N/A - - 1.1x

(a) Adjustments made to exclude MPLX and ANDX debt (all non-recourse) and the public portions of MPLX and ANDX equity; (b) Includes MPLX mezzanine equity of $1,004 million; (c) Calculated using face value of total debt and LTM adjusted pro forma EBITDA. Refer to appendix for reconciliation

Page 18: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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Earnings

($MM unless otherwise noted)2018 2019

1Q 2Q 3Q 4Q 1QRefining & Marketing segment income (loss) (133) 1,025 666 923 (334)

Retail segment income 95 159 161 613 170

Midstream segment income 567 617 679 889 908

Corporate and other unallocated items (89) (81) (99) (233) (191)

Capline restructuring gain - - - - 207

Transaction-related costs - (10) (4) (183) (91)

Impairments - 1 - 8 -Income from operations 440 1,711 1,403 2,017 669Net interest and other financing costs 183 195 240 385 306

Income before income taxes 257 1,516 1,163 1,632 363

Income tax provision 22 281 222 437 104

Net income 235 1,235 941 1,195 259

Less net income attributable to:

Redeemable noncontrolling interest 16 20 19 20 20

Noncontrolling interests 182 160 185 224 246

Net income (loss) attributable to MPC 37 1,055 737 951 (7)

Effective tax rate 9% 19% 19% 27% 29%

Page 19: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

19

ReconciliationNet Income Attributable to MPC to Adjusted EBITDA and LTM Adjusted Pro Forma EBITDA

($MM) 2Q ‘18 3Q ‘18 4Q ‘18 1Q ‘19 LTMNet Income (loss) attributable to MPC 1,055 737 951 (7) 2,736

Add: Net interest and other financial costs 195 240 385 306 1,126

Net income attributable to noncontrolling interests 180 204 244 266 894

Provision for income taxes 281 222 437 104 1,044

Depreciation and amortization 533 555 874 919 2,881

Purchase Accounting Inventory- Related Effects - - 759 - 759

Transaction related costs 10 4 183 91 288

Capline restructuring gain - - - (207) (207)

Impairments (1) - (8) - (9)

Adjusted EBITDA 2,253 1,962 3,825 1,472 9,512

Credit Metric Adjustments:

Add: LTM Pro Forma EBITDA related to ANDV 1,888

LTM Adjusted Pro Forma EBITDA 11,400

Less: LTM Adjusted EBITDA related to MPLX and ANDX (4,670)

LTM Adjusted Pro Forma EBITDA excluding MPLX and ANDX 6,730

Add: Distributions to MPC from MPLX and ANDX 1,777

LTM Adjusted Pro Forma EBITDA excluding MPLX and ANDX EBITDA, including LP distributions to MPC 8,507

Page 20: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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ReconciliationMPLX Net Income to Adjusted EBITDA Related to MPLX

($MM)2018 2019

LTM2Q 3Q 4Q 1Q

MPLX Net Income 456 516 439 509 1,920

Add: Net interest and other financial costs 151 153 227 171 702

Provision (benefit) for income taxes 1 3 - (2) 2

Depreciation and amortization 188 201 201 211 801

Adjusted EBITDA related to MPLX 796 873 867 889 3,425

Page 21: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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ReconciliationANDX Net Income to Adjusted EBITDA Related to ANDX

($MM)2018 2019

LTM2Q 3Q 4Q 1Q

ANDX Net Income 132 166 171 157 626

Add: Net interest and other financial costs 60 57 61 61 239

Provision (benefit) for income taxes - - - - -

Depreciation and amortization 93 85 101 101 380

Adjusted EBITDA related to ANDX 285 308 333 319 1,245

Page 22: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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ReconciliationCash Provided by (used in) Operations to Operating Cash Flow Before Changes in Working Capital

($MM)2018 2019

2Q 3Q 4Q 1Q

Cash provided by (used in) operations 2,386 1,182 2,727 1,623

Less changes in working capital:

Changes in current receivables (321) (484) 2,298 (1,037)

Changes in inventories (374) 149 716 (4)

Changes in current accounts payable and accrued liabilities 1,224 (85) (2,482) 1,483

Changes in the fair value of derivative instruments 15 12 (75) 29

Changes in right of use assets/operating leases - - - (1)

Total changes in working capital 544 (408) 457 470

Operating cash flow before changes in working capital 1,842 1,590 2,270 1,153

Page 23: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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ReconciliationRefining & Marketing Income from Operations to Refining & Marketing Margin

($MM) 1Q 2019 1Q 2018

Refining & Marketing loss from operations (334) (133)

Plus:

Refinery direct operating costs(a) 1,739 1,081

Refinery depreciation and amortization 387 236

Other:

Operating expenses, net(a)(b) 1,268 614

Depreciation and amortization 40 16

Refining & Marketing margin(c) 3,100 1,814

(a) Excludes depreciation and amortization.(b) Includes fees paid to MPLX and ANDX (1Q19 only) for various midstream services. MPLX’s and ANDX’s results are reported in MPC’s Midstream segment.(c) Refining & Marketing margin is defined as sales revenue less cost of refinery inputs and purchased products, excluding any LCM inventory market adjustment. We believe this non-GAAP financial measure is useful to investors and analysts to assess our ongoing

financial performance because, when reconciled to its most comparable GAAP measure, it provides improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. This measure should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies.

Page 24: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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ReconciliationRetail Income from Operations to Retail Total Margin

($MM) 1Q 2019 1Q 2019Retail income from operations 170 95

Plus (Less):

Operating, selling, general and administrative expenses 583 384

Depreciation and amortization 126 79

Income from equity method investments (17) (14)

Net gain on disposal of assets (2) -

Other income (2) (1)

Retail total margin 858 543

Retail total margin:(a)

Fuel margin 429 217

Merchandise margin 407 319

Other margin 22 7

Retail total margin 858 543

(a)Retail fuel margin is defined as the price paid by consumers or direct dealers less the cost of refined products, including transportation, consumer excise taxes and bank card processing fees (where applicable) and excluding any LCM inventory market adjustment. Retail merchandise margin is defined as the price paid by consumers less the cost of merchandise. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to the most comparable GAAP measures, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies.

Page 25: May 8, 2019 - Marathon Petroleum...presentation. Reconciliations to the nearest GAAP financial measures are included in the Appendix to this presentation. These non-GAAP financial

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