Marathon (MPC) Q1 Loss Narrower Than Expected, Sales Beat

Independent oil refiner and marketer Marathon Petroleum Corporation MPC reported adjusted loss of 20 cents per share, narrower than the Zacks Consensus Estimate of a loss of 72 cents. The company’s bottom line was favourably impacted by cost savings and stronger-than-expected performance from the Midstream segment. Precisely, operating income from the unit totaled $972 million, ahead of the Zacks Consensus Estimates of $929 million.

However, the bottom line compared unfavorably the year-earlier quarter's loss of 16 cents due to sharply lower refining margins.

Marathon Petroleum reported revenues of $22.9 billion that beat the Zacks Consensus Estimate of $15.8 billion and improved 9% year over year.

In an important quarterly development, Marathon Petroleum obtained approval from the Board of Directors to convert its Martinez petroleum refinery into a renewable diesel facility in response to the collapsing product demand. Further, the company notified that it expects the $21 billion-sale of its Speedway business to Japanese retail group Seven & i Holdings to conclude shortly.

Marathon Petroleum Corporation Price, Consensus and EPS Surprise

Marathon Petroleum Corporation Price, Consensus and EPS Surprise
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 $598 million, wider than the year-ago loss of $497 million. The deterioration reflects lower y/y margins.

Specifically, refining margin of $10.16 per barrel decreased from $11.86 a year ago. Total refined product sales volumes were 3,067 thousand barrels per day (mbpd), down from the 3,588 mbpd in the year-ago quarter. Moreover, throughput fell from 2,994 mbpd in the year-ago quarter to 2,565 mbpd though it beat the Zacks Consensus Estimate of 2,509 mbpd. Capacity utilization during the quarter was down from last year’s 91% to 83%.

Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP MPLX – a publicly traded master limited partnerships that own, operate, develop and acquire pipelines and other midstream assets.

Segment profitability was $972 million, 7.4% higher than the first quarter of 2020 and ahead of the Zacks Consensus Estimate of $929 million. Earnings were supported by stable, fee-based revenues and lower operating expenses.

Costs, Capex & Balance Sheet

Marathon Petroleum reported expenses of $22.7 billion in first-quarter 2021, down 31.6% from the year-ago quarter.

In the reported quarter, Marathon Petroleum spent $410 million on capital programs (33% on Refining & Marketing and 34% on the Midstream segment) compared to $1.1 billion in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $758 million and a total debt, including that of MPLX, of $32.6 billion, with a debt-to-capitalization ratio of 53.4%.

Zacks Rank & Stock Picks

Marathon Petroleum carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Exxon Mobil Corporation XOM and Suncor Energy SU. Both the companies sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil has an expected earnings growth rate of 1,087.88% for the current year.

Suncor Energy has an expected earnings growth rate of 223.64% for the current year.

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