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Section 1: 8-K (8-K)

Document
false0001510295 0001510295 2020-01-29 2020-01-29


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 8-K
_____________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 29, 2020
_____________________________________________
Marathon Petroleum Corporation
(Exact name of registrant as specified in its charter)
_____________________________________________
Delaware
 
001-35054
 
27-1284632
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)

539 South Main Street, Findlay, Ohio 45840
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (419422-2121
_____________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01
MPC
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 





Item 2.02
Results of Operations and Financial Condition
On January 29, 2020, Marathon Petroleum Corporation issued a press release announcing full-year and fourth-quarter 2019 earnings. The press release is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Information in this Item 2.02 and Exhibit 99.1 of Item 9.01 below shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as otherwise expressly stated in such a filing.

Item 9.01
Financial Statements and Exhibits
(d) Exhibits.


Exhibit Number
 
Description
 
 
 
 
 
Press Release issued by Marathon Petroleum Corporation on January 29, 2020
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Marathon Petroleum Corporation
 
 
 
 
 
 
 
 
Date: January 29, 2020
By:
 
/s/ John J. Quaid
 
 
 
Name: John J. Quaid
 
 
 
Title: Vice President and Controller



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


402494667_mpcnewsreleaseletterhead.jpg


Marathon Petroleum Corp. Reports Full-Year and Fourth-Quarter Results

Reported full-year income of $2.6 billion and adjusted income of $3.3 billion
Reported fourth-quarter income of $443 million, or $0.68 per diluted share; adjusted income of $1.0 billion, or $1.56 per diluted share
Generated $2.4 billion of operating cash flow in the fourth quarter
Executed across all business segments in the fourth quarter: $420 million of realized synergies, strong refining margin and utilization, solid retail margin capture, and continued progress across midstream projects

FINDLAY, Ohio, Jan. 29, 2020 – Marathon Petroleum Corp. (NYSE: MPC) today reported net income of $443 million, or $0.68 per diluted share, for the fourth quarter of 2019 compared to $951 million, or $1.35 per diluted share, for the fourth quarter of 2018.

Fourth-quarter 2019 results include a pre-tax charge of $1.2 billion primarily related to a midstream goodwill impairment related to MPLX LP (NYSE: MPLX). Details on this and other adjustments are shown in the accompanying release tables. Adjusted net income was $1.0 billion, or $1.56 per diluted share, for the fourth quarter of 2019, compared to $1.7 billion, or $2.41 per diluted share, for the fourth quarter of 2018.

MPC returned $409 million of capital to shareholders during the fourth quarter and $3.3 billion for the full year 2019, including $2.0 billion of share repurchases. In addition, the company announced a 9.4% increase in its quarterly dividend to $0.58 per share.
 
“This quarter demonstrated our continued ability to execute across all segments and capture incremental synergies at an accelerated pace,” said Gary R. Heminger, chairman and chief executive officer. “In refining, we continued our focus on margin enhancement opportunities and progressed several projects including completion of the first phase of the Garyville coker expansion project. Our commercial team optimized crude sourcing and product placement opportunities across all regions of our business. The team’s commitment to execution enabled us to achieve 94% utilization and strong capture of 105% for the quarter. Across the retail footprint, our team converted over 700 stores since the combination, positioning us to capture merchandise growth and synergy opportunities. And within midstream, we advanced several long-haul pipeline projects that are key to the development of our integrated Permian-to-Gulf Coast logistics system and are expected to generate returns that meaningfully exceed our hurdle rates.

“As we look into 2020, we are optimistic about the prospects for our business,” continued Heminger. “With continuous progress of high-grading our midstream project backlog, MPLX is targeting positive free cash flow, after capital investments and distributions, in 2021. We are progressing the Speedway separation while continuing to identify opportunities to grow merchandise margins through store conversions and remodels. In refining, we have made significant enhancements in the operations and reliability of the assets we acquired. And we continue to believe that the configuration and upgrading capacity at our


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coastal refineries positions us well to capture the market opportunities that are expected to arise from implementation of IMO 2020 regulations.”


Synergies

MPC realized $420 million of synergies in the fourth quarter. The majority of the synergy capture was in the Refining and Marketing segment, including: $62 million from catalyst formulation improvements at multiple refineries, $55 million in crude supply optimization in the Mid-Continent region, and $15 million in marine optimization.

The company realized $1.1 billion of total synergies in 2019, exceeding the targeted $600 million of annual gross run-rate synergies. The majority of the synergy capture for the year related to operational and commercial performance in the Refining and Marketing segment, including: $128 million in catalyst formulation enhancements at seven refineries, $76 million in turnaround execution improvements at the Los Angeles, Martinez, and St. Paul Park refineries, $127 million in crude supply optimization in the Mid-Continent region, and $25 million in improved crude sourcing for the West Coast refineries. The company also realized $121 million of synergies in the Retail segment associated with economies of scale and the application of the Speedway merchandise model at newly converted stores. Lastly, MPC realized $24 million of synergies in the Midstream segment and $109 million of corporate synergies. Corporate synergies were driven by cost eliminations and contract negotiations made possible by the combination.




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Segment Results
Income from operations was $841 million in the fourth quarter of 2019 compared to $2.0 billion for the fourth quarter of 2018. Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was $3.2 billion in the fourth quarter of 2019 compared to $4.1 billion for the fourth quarter of 2018. Adjusted EBITDA excludes refining planned turnaround costs of $153 million for the fourth quarter of 2019 and $232 million for the fourth quarter of 2018.
Full-year income from operations was $5.6 billion in 2019 compared to $5.6 billion in 2018. Adjusted EBITDA was $11.1 billion in 2019 compared to $9.7 billion in 2018. Full-year adjusted EBITDA excludes refining planned turnaround costs of $740 million and $664 million for 2019 and 2018, respectively.

 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Income from Operations by Segment
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing
$
912

 
$
923

 
$
2,367

 
$
2,481

Retail
 
477

 
 
613

 
 
1,582

 
 
1,028

Midstream
 
889

 
 
889

 
 
3,594

 
 
2,752

Items not allocated to segments:
 
 
 
 
 
 
 
 
 
 
 
    Corporate and other unallocated items
 
(237
)
 
 
(233
)
 
 
(805
)
 
 
(502
)
    Equity method investment restructuring gains
 
52

 
 

 
 
259

 
 

    Transaction-related costs
 
(13
)
 
 
(183
)
 
 
(160
)
 
 
(197
)
    Litigation
 

 
 

 
 
(22
)
 
 

    Impairments
 
(1,239
)
 
 
8

 
 
(1,239
)
 
 
9

        Income from operations
$
841

 
$
2,017

 
$
5,576

 
$
5,571


Midstream
Midstream segment income from operations, which primarily reflects the results of MPLX, was $889 million in the fourth quarter of 2019 compared with $889 million for the fourth quarter of 2018.
Segment EBITDA was $1.2 billion in the fourth quarter of 2019 versus $1.2 billion for the fourth quarter of 2018. Strong performance across MPLX’s base business included increased terminal throughputs. During the quarter, MPLX brought three natural gas processing plants and a fractionation plant online. Additionally, gathered, processed, and fractionated volumes all increased in the fourth quarter of 2019 compared to the fourth quarter of 2018, primarily due to continued growth in the Northeast region.
Full-year income from operations was $3.6 billion for 2019, compared with $2.8 billion for 2018. Segment EBITDA was $4.9 billion for 2019, versus $3.6 billion for 2018.

Retail
Retail segment income from operations was $477 million in the fourth quarter of 2019 compared with $613 million for the fourth quarter of 2018. Segment EBITDA was $636 million in the fourth quarter of 2019 versus $738 million for the fourth quarter of 2018. The decrease in quarterly results was primarily due to lower fuel margins, partially offset by higher merchandise margin contributions.
Retail fuel margin decreased to 28.65 cents per gallon in the fourth quarter of 2019, from 32.35 cents per gallon in the fourth quarter of 2018. Same-store merchandise sales increased by 4.7% year-over-year and same-store gasoline sales volume decreased by 4.2% year-over-year.


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Full-year income from operations was $1.6 billion in 2019, compared with $1.0 billion in 2018. Segment EBITDA was $2.1 billion in 2019, versus $1.4 billion in 2018.


Refining & Marketing (R&M)
R&M segment income from operations was $912 million in the fourth quarter of 2019 compared to $923 million for the fourth quarter of 2018. Fourth-quarter 2019 results included a benefit of $153 million for the biodiesel blender’s tax credit attributable to volumes blended in 2018 and the first three quarters of 2019. The benefit was recognized in the fourth quarter since the legislation authorizing the credit was enacted in December 2019. Fourth-quarter 2018 results included estimated costs of $759 million due to purchase accounting-related inventory effects.
Segment adjusted EBITDA was $1.5 billion in the fourth quarter of 2019, versus $2.3 billion for the fourth quarter of 2018. Segment adjusted EBITDA excludes refinery planned turnaround costs, which totaled $153 million in the fourth quarter of 2019 and $232 million in the fourth quarter of 2018. The quarter-over-quarter decrease in R&M earnings was primarily due to narrower sweet and sour crude differentials partially offset by higher blended crack spreads.
R&M margin was $15.55 per barrel for the fourth quarter. Crude capacity utilization was 94%, resulting in total throughputs of 3.1 million barrels per day for the fourth quarter of 2019. Fourth-quarter 2019 clean product yield was 87 percent.
Full-year segment income from operations was $2.4 billion for 2019, compared to $2.5 billion in 2018. Segment adjusted EBITDA was $4.8 billion in 2019, versus $5.1 billion in 2018.


Items Not Allocated to Segments and Other
Items not allocated to segments totaled $1.4 billion of expense in the fourth quarter of 2019, compared to $408 million in the fourth quarter of 2018. Fourth-quarter 2019 results include $1.2 billion of impairment charges primarily related to MPLX goodwill and $13 million of costs incurred in connection with the Speedway separation, midstream strategic review, and other related activities. These items were partially offset by an equity method restructuring gain of $52 million. The non-cash impairment charge is primarily related to goodwill associated with gathering and processing businesses acquired as a part of the Andeavor combination. Fourth-quarter 2018 results included $183 million of transaction-related costs associated with the Andeavor combination.
 
Strong Financial Position and Liquidity

As of Dec. 31, 2019, the company had $1.5 billion in cash and cash equivalents (excluding MPLX’s cash and cash equivalents of $15 million), $5 billion available under a five-year bank revolving credit facility, $1 billion available under a 364-day bank revolving credit facility, and $750 million available under its trade receivables securitization facility.


Strategic and Operations Update

As previously announced, MPC is targeting early fourth quarter 2020 for the completion of the separation of Speedway. Additionally, the special committee of the MPC board evaluating alternatives to enhance value across the midstream business continues its work and remains on track to provide an update in the first quarter of 2020.



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Consistent with MPC’s midstream strategy of developing long-haul pipelines and other logistics solutions, the company progressed several projects during the quarter.

Initial startup of the Gray Oak pipeline began during the fourth quarter, with full service expected in the second quarter of 2020. The pipeline will provide crude oil transportation from the Permian and Eagle Ford Basins to the Texas Gulf Coast region, including Corpus Christi. The Gray Oak pipeline will connect to multiple terminals, including the South Texas Gateway terminal, which is expected to start up in the third quarter of 2020. The terminal is designed to have two deepwater docks, with storage capacity of approximately 8.5 million barrels and up to 800 thousand barrels per day (mbpd) of throughput capacity. MPC owns a 25% interest in both the Gray Oak pipeline and the South Texas Gateway terminal.

The Wink-to-Webster crude oil pipeline, in which MPLX has an equity interest, remains on schedule to be competed in the first half of 2021. The 36-inch diameter pipeline will originate in the Permian Basin and have destination points in the Houston market, including MPC’s Galveston Bay refinery.

Also in the Permian, the Whistler pipeline is being designed to transport approximately 2 billion cubic feet per day of natural gas from Waha, Texas, to the Agua Dulce market in South Texas, ultimately reaching MPC’s Galveston Bay refinery. MPLX has an equity interest in Whistler, which is expected to be placed in service in the second half of 2021.

Reversal of the Capline pipeline continues to progress, with a purge of the mainline completed in the fourth quarter. Once reversed, Capline will be capable of supplying discounted Mid-Continent and Canadian crude to St. James, Louisiana, which has a direct connection to MPC’s Garyville refinery. Capline, which is partially owned by MPC and operated by MPLX, is expected to begin light crude service in mid-2021, with heavy crude service expected in 2022.
In keeping with the company’s retail strategy of driving merchandise growth and operating cost efficiencies, Speedway continues to expand its brand through store conversions of the acquired Andeavor sites. As of December 31, 2019, Speedway had completed 708 store conversions since the combination with Andeavor, putting the company ahead of schedule and on track to complete all planned store conversions in less than two years.
MPC also continues to expand its presence in Mexico. In addition to significant exports from the Gulf Coast and investments in refined product distribution, the company is now supplying over 218 retail sites, including 179 that are branded ARCO as of December 31, 2019. The network of sites in Mexico provides additional product outlets for, and enhanced integration with, the refining business.

In refining, the company is focused on high-return projects that enhance margin, produce higher-value products, and promote resid destruction. At Garyville, the crude revamp project and the first phase of the coker project were commissioned in the fourth quarter of 2019, allowing the company to realize higher coker unit rates from expanded drum sizing. The second phase of the coker project is on schedule to be completed in the first quarter of 2020. Early operating results on the first coker have been very positive and the company has been able to achieve a 17 percent capacity increase, exceeding original project expectations. The company anticipates the second phase to achieve a similar rate increase.

Construction continues on the Dickinson Renewable Diesel project, which remains on schedule for planned completion in late 2020. The project will convert the Dickinson refinery into a 12 mbpd biorefinery that will process corn and soybean oil to produce renewable diesel. MPC intends to sell the renewable diesel into the California market to comply with the California Low Carbon Fuel Standard.

The Los Angeles Refinery Integration and Compliance (LARIC) project to physically connect the adjacent Carson and Wilmington facilities for cleaner and more efficient operations is nearing completion. The last phase, which is the expansion of the Wilmington hydrocracker, is on track to be completed in the first half of 2020.


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First Quarter 2020 Outlook
Refining & Marketing Segment:
 
 
Refining operating costs per barrel(a)
$
6.05

Distribution costs (in millions)
$
1,300

Refining planned turnaround costs (in millions)
$
425

Depreciation and amortization (in millions)
$
440

 
 
 
Refinery throughputs (mbpd):
 
 
    Crude oil refined
 
2,775

    Other charge and blendstocks
 
200

        Total
 
2,975

 
 
 
(a) 
Includes refining major maintenance and operating costs. Excludes turnaround and depreciation and amortization expenses.

Retail Segment:
Range
Fuel sales (millions of gallons)
 
2,325

 
 
2,450

Merchandise sales (in millions)
$
1,450

 
$
1,550

 
 
 
 
 
 
Corporate and unallocated items (in millions)
$
225

 
 
 

2020 Capital Plan ($ millions)
MPC (excluding MPLX)
 
 
Refining & Marketing Segment:
$
1,550

Growth
 
1,100

Maintenance
 
450

Retail
 
550

Midstream Segment (excluding MPLX)
 
300

Corporate and Other
 
200

Total MPC (excluding MPLX)
$
2,600

 
 
 
MPLX
 


Growth
 
1,500

Maintenance
 
250

Total MPLX
$
1,750

 
 
 


Conference Call

At 9:30 a.m. ET today, MPC will hold a conference call and webcast to discuss the reported results and provide an update on company operations. Interested parties may listen by visiting MPC’s website at http://www.marathonpetroleum.com and clicking on the “Join the Webcast” link below the “2019 Fourth-Quarter and Full-Year Financial Results.” A replay of the webcast will be available on the company’s website for two weeks. Financial information, including the earnings release and other investor-related


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material, will also be available online prior to the conference call and webcast at https://www.marathonpetroleum.com.

###

About Marathon Petroleum Corporation

Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation’s largest refining system with more than 3 million barrels per day of crude oil capacity across 16 refineries. MPC’s marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the United States. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company which owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure. More information is available at www.marathonpetroleum.com.


Investor Relations Contacts: (419) 421-2071
Kristina Kazarian, Vice President, Investor Relations
Taryn Erie, Manager, Investor Relations
Doug Wendt, Manager, Investor Relations

Media Contacts:
Hamish Banks, Vice President, Communications (419) 421-2521
Jamal Kheiry, Manager, Communications (419) 421-3312


References to Earnings and Defined Terms
References to earnings mean net income attributable to MPC from the statements of income. Unless otherwise indicated, references to earnings and earnings per share are MPC’s share after excluding amounts attributable to noncontrolling interests. Discretionary free cash flow is defined as operating cash flow less maintenance and regulatory capital.

Forward-Looking Statements
This press release 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, 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,” “commitment,” “could,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “may,” “objective,” “opportunity,” “outlook,” “plan,“ “policy,” “position,” “potential,” “predict,” “priority,” “project,” “proposition,” “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 but are not limited to: with respect to the planned Speedway separation, the ability to successfully complete the separation within the expected timeframe or at all, based on numerous factors including the macroeconomic environment, credit markets and equity markets, our ability to satisfy customary conditions, including obtaining regulatory approvals, and the ability to achieve the strategic and other objectives discussed herein; with respect to the Midstream review, our ability to achieve the strategic and other objectives related to the strategic review discussed


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herein; the risk that the cost savings and any other synergies from the Andeavor transaction 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 acquisition of Andeavor Logistics LP by MPLX LP (MPLX), including the risk that anticipated opportunities and any other synergies from or anticipated benefits of the transaction may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all, or disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the risk of further impairments; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income and 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 and 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 such repurchases; the adequacy of capital resources and liquidity, including availability, timing and amounts of free cash flow necessary to execute business plans and to effect any share repurchases or to maintain or increase the dividend; 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; 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, and in Forms 10-Q, filed with the SEC. Copies of MPC's Form 10-K and Forms 10-Q are available on the SEC website, MPC's website at https://www.marathonpetroleum.com/Investors/ or by contacting MPC's Investor Relations office. Copies of MPLX's Form 10-K and Forms 10-Q are available on the SEC website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.

We have based our forward-looking statements on our current expectations, estimates and projections about our business and 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 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.



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Consolidated Statements of Income (Unaudited)

Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions, except per-share data)
 
2019
 
 
2018
 
 
2019
 
 
2018
Revenues and other income:
 
 
 
 
 
 
 
 
 
 
 
    Sales and other operating revenues
$
31,159

 
$
32,333

 
$
124,016

 
$
96,504

    Income from equity method investments
 
64

 
 
111

 
 
394

 
 
373

    Net gain on disposal of assets
 
85

 
 
17

 
 
307

 
 
23

    Other income
 
67

 
 
80

 
 
163

 
 
202

        Total revenues and other income
 
31,375

 
 
32,541

 
 
124,880

 
 
97,102

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
    Cost of revenues (excludes items below)
 
27,301

 
 
28,294

 
 
110,243

 
 
86,066

    Impairment expense
 
1,197

 
 

 
 
1,197

 
 

    Depreciation and amortization
 
978

 
 
874

 
 
3,638

 
 
2,490

    Selling, general and administrative expenses
 
857

 
 
1,147

 
 
3,475

 
 
2,418

    Other taxes
 
201

 
 
209

 
 
751

 
 
557

        Total costs and expenses
 
30,534

 
 
30,524

 
 
119,304

 
 
91,531

Income from operations
 
841

 
 
2,017

 
 
5,576

 
 
5,571

    Net interest and other financial costs
 
302

 
 
385

 
 
1,247

 
 
1,003

Income before income taxes
 
539

 
 
1,632

 
 
4,329

 
 
4,568

    Provision for income taxes
 
277

 
 
437

 
 
1,074

 
 
962

Net income
 
262

 
 
1,195

 
 
3,255

 
 
3,606

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
20

 
 
20

 
 
81

 
 
75

Noncontrolling interests
 
(201
)
 
 
224

 
 
537

 
 
751

Net income attributable to MPC
$
443

 
$
951

 
$
2,637

 
$
2,780

 
 
 
 
 
 
 
 
 
 
 
 
Per-share data
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
    Net income attributable to MPC per share
$
0.68

 
$
1.38

 
$
4.00

 
$
5.36

    Weighted average shares:
 
648

 
 
687

 
 
659

 
 
518

Diluted:
 
 
 
 
 
 
 
 
 
 
 
    Net income attributable to MPC per share
$
0.68

 
$
1.35

 
$
3.97

 
$
5.28

    Weighted average shares:
 
653

 
 
704

 
 
664

 
 
526

 
 
 
 
 
 
 
 
 
 
 
 



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Income Summary (Unaudited)
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018(a)
 
 
2019
 
 
2018(a)
Income from Operations by segment
 
 
 
 
 
 
 
 
 
 
 
  Refining & Marketing(b)
$
912

 
$
923

 
$
2,367

 
$
2,481

  Retail
 
477

 
 
613

 
 
1,582

 
 
1,028

  Midstream
 
889

 
 
889

 
 
3,594

 
 
2,752

  Items not allocated to segments:
 
 
 
 
 
 
 
 
 
 
 
      Corporate and other unallocated items
 
(237
)
 
 
(233
)
 
 
(805
)
 
 
(502
)
      Equity method investment restructuring gains(c)
 
52

 
 

 
 
259

 
 

      Transaction-related costs(d)
 
(13
)
 
 
(183
)
 
 
(160
)
 
 
(197
)
      Litigation
 

 
 

 
 
(22
)
 
 

      Impairments(e)
 
(1,239
)
 
 
8

 
 
(1,239
)
 
 
9

Income from operations
 
841

 
 
2,017

 
 
5,576

 
 
5,571

Net interest and other financial costs
 
302

 
 
385

 
 
1,247

 
 
1,003

Income before income taxes
 
539

 
 
1,632

 
 
4,329

 
 
4,568

Provision for income taxes
 
277

 
 
437

 
 
1,074

 
 
962

Net income
 
262

 
 
1,195

 
 
3,255

 
 
3,606

Less net income attributable to:
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
20

 
 
20

 
 
81

 
 
75

Noncontrolling interests
 
(201
)
 
 
224

 
 
537

 
 
751

Net income attributable to MPC
$
443

 
$
951

 
$
2,637

 
$
2,780

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes the results of Andeavor from the October 1, 2018 acquisition date forward.
(b) 
R&M segment results includes a benefit of $153 million and $93 million in the fourth quarter and full year 2019, respectively, for the biodiesel tax credit attributable to volumes blended in prior periods. The benefit was recognized in the fourth quarter because the legislation authorizing the credit was enacted in December 2019. R&M segment results for the 2018 periods included estimated costs of $759 million due to purchase accounting related inventory effects.
(c) 
Includes gains related to the formation of two new joint ventures: The Andersons Marathon Holdings LLC (4Q 2019) and Capline LLC (1Q 2019).
(d) 
The fourth quarter of 2019 includes costs incurred in connection with the Speedway separation, Midstream strategic review and other related efforts. Full year 2019 and both 2018 periods also include employee severance, retention and other costs related to the acquisition of Andeavor. Effective October 1, 2019, we discontinued reporting Andeavor transaction-related costs separately as one year has passed since the acquisition and any remaining costs are not material.
(e) 
2019 primarily reflects an MPLX goodwill impairment.




10




Capital Expenditures and Investments (Unaudited)
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018(a)
 
 
2019
 
 
2018(a)
Refining & Marketing
$
614

 
$
444

 
$
1,999

 
$
1,057

Retail
 
237

 
 
235

 
 
607

 
 
460

Midstream
 
870

 
 
954

 
 
3,290

 
 
2,630

Corporate and Other(b)
 
96

 
 
60

 
 
237

 
 
157

    Total
$
1,817

 
$
1,693

 
$
6,133

 
$
4,304

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes the results of Andeavor from the October 1, 2018 acquisition date forward.
(b) 
Includes capitalized interest of $40 million, $25 million, $137 million and $80 million, respectively.



11




Refining & Marketing Operating Statistics (Unaudited)
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(per barrel)
 
2019
 
 
2018
 
 
2019
 
 
2018
Refining & Marketing margin(a)
$
15.55

 
$
15.70

 
$
14.23

 
$
14.25

Less:
 
 
 
 
 
 
 
 
 
 
 
Refining operating costs(b)
 
6.25

 
 
5.79

 
 
5.66

 
 
4.99

Distribution costs(c)
 
4.60

 
 
4.64

 
 
4.51

 
 
4.23

Refining planned turnaround costs
 
0.54

 
 
0.81

 
 
0.65

 
 
0.80

Depreciation and amortization
 
1.52

 
 
1.44

 
 
1.47

 
 
1.41

Plus:
 
 
 
 
 
 
 
 
 
 
 
Purchase accounting - depreciation and amortization(d)
 

 
 

 
 
0.01

 
 

Biodiesel tax credit(e)
 
0.55

 
 

 
 
0.08

 
 

Other(f)
 
0.04

 
 
0.21

 
 
0.05

 
 
0.17

Refining & Marketing segment income
$
3.23

 
$
3.23

 
$
2.08

 
$
2.99

 
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing refined product sales volume
(mbpd)(g)
 
3,750

 
 
3,764

 
 
3,735

 
 
2,703

Crude oil capacity utilization (percent)(h)
 
94

 
 
94

 
 
96

 
 
96

Refinery throughputs (mbpd):(i)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
2,831

 
 
2,857

 
 
2,902

 
 
2,081

    Other charge and blendstocks
 
238

 
 
254

 
 
210

 
 
193

        Total
 
3,069

 
 
3,111

 
 
3,112

 
 
2,274

Sour crude oil throughput (percent)
 
45

 
 
50

 
 
48

 
 
52

Sweet crude oil throughput (percent)
 
55

 
 
50

 
 
52

 
 
48

Refined product yields (mbpd):(i)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
1,623

 
 
1,593

 
 
1,560

 
 
1,107

    Distillates
 
1,074

 
 
1,111

 
 
1,087

 
 
773

    Propane
 
56

 
 
53

 
 
55

 
 
41

    Feedstocks and special products
 
228

 
 
273

 
 
315

 
 
288

    Heavy fuel oil
 
54

 
 
62

 
 
49

 
 
38

    Asphalt
 
81

 
 
74

 
 
87

 
 
69

        Total
 
3,116

 
 
3,166

 
 
3,153

 
 
2,316

(a) 
Sales revenue less cost of refinery inputs and purchased products, divided by total refinery throughputs. Fourth quarter and full year 2018 are not adjusted for estimated costs of $759 million due to purchase accounting related inventory effects.
(b) 
Includes refining major maintenance and operating costs. Excludes planned turnaround and depreciation and amortization expense.
(c) 
Includes fees paid to MPLX, on a per barrel throughput basis, of $2.99, $2.11, $2.84 and $2.74, respectively. Excludes depreciation and amortization expense.
(d) 
Reflects the cumulative effects related to a measurement period adjustment arising from the finalization of purchase accounting.
(e) 
Reflects a benefit of $153 million and $93 million in the fourth quarter and full year 2019, respectively, for the biodiesel tax credit attributable to volumes blended in prior periods.
(f) 
Includes income from equity method investments, net gain on disposal of assets and other income.
(g) 
Includes intersegment sales.
(h) 
Based on calendar day capacity, which is an annual average that includes downtime for planned maintenance and other normal operating activities.
(i) 
Excludes inter-refinery volumes of 148 mbpd, 85 mbpd, 110 mbpd and 61 mbpd, respectively.


12




Refining & Marketing Operating Statistics by Region (Unaudited)
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Gulf Coast
 
 
 
 
 
 
 
 
 
 
 
(per barrel)
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin dollars(a)
$
11.49

 
$
N/A

 
$
9.94

 
$
N/A

Refining operating costs(b)
$
5.00

 
$
3.90

 
$
4.27

 
$
4.09

Refining planned turnaround costs
$
0.65

 
$
0.06

 
$
0.30

 
$
0.44

Refining depreciation and amortization(c)
$
1.16

 
$
1.03

 
$
1.10

 
$
1.03

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(d)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
1,022

 
 
1,177

 
 
1,115

 
 
1,135

    Other charge and blendstocks
 
257

 
 
197

 
 
202

 
 
190

        Total
 
1,279

 
 
1,374

 
 
1,317

 
 
1,325

Sour crude oil throughput (percent)
 
58

 
 
60

 
 
61

 
 
62

Sweet crude oil throughput (percent)
 
42

 
 
40

 
 
39

 
 
38

Refined product yields (mbpd):(d)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
569

 
 
622

 
 
566

 
 
574

    Distillates
 
400

 
 
467

 
 
428

 
 
432

    Propane
 
29

 
 
28

 
 
28

 
 
25

    Feedstocks and special products
 
280

 
 
260

 
 
291

 
 
291

    Heavy fuel oil
 
17

 
 
20

 
 
15

 
 
18

    Asphalt
 
15

 
 
16

 
 
20

 
 
19

        Total
 
1,310

 
 
1,413

 
 
1,348

 
 
1,359

 
 
 
 
 
 
 
 
 
 
 
 
Mid-Continent
 
 
 
 
 
 
 
 
 
 
 
(per barrel)
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin(a)
$
17.30

 
$
N/A

 
$
17.70

 
$
N/A

Refining operating costs(b)
$
5.36

 
$
5.73

 
$
5.16

 
$
5.21

Refining planned turnaround costs
$
0.42

 
$
1.02

 
$
0.66

 
$
1.10

Refining depreciation and amortization(c)
$
1.45

 
$
1.60

 
$
1.51

 
$
1.67

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(e)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
1,189

 
 
1,069

 
 
1,150

 
 
792

    Other charge and blendstocks
 
64

 
 
72

 
 
54

 
 
47

        Total
 
1,253

 
 
1,141

 
 
1,204

 
 
839

Sour crude oil throughput (percent)
 
26

 
 
26

 
 
27

 
 
33

Sweet crude oil throughput (percent)
 
74

 
 
74

 
 
73

 
 
67

Refined product yields (mbpd):(e)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
674

 
 
617

 
 
632

 
 
444

    Distillates
 
434

 
 
398

 
 
413

 
 
279

    Propane
 
17

 
 
18

 
 
18

 
 
14

    Feedstocks and special products
 
44

 
 
36

 
 
60

 
 
43

    Heavy fuel oil
 
20

 
 
19

 
 
16

 
 
14

    Asphalt
 
66

 
 
58

 
 
67

 
 
50

        Total
 
1,255

 
 
1,146

 
 
1,206

 
 
844



13




 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
West Coast
 
 
 
 
 
 
 
 
 
 
 
(per barrel)
 
 
 
 
 
 
 
 
 
 
 
Refining & Marketing margin(a)
$
19.44

 
$
N/A

 
$
16.03

 
$
N/A

Refining operating costs(b)
$
8.84

 
$
9.00

 
$
8.19

 
$
9.00

Refining planned turnaround costs
$
0.46

 
$
1.86

 
$
1.20

 
$
1.86

Refining depreciation and amortization(c)
$
1.26

 
$
1.26

 
$
1.11

 
$
1.26

 
 
 
 
 
 
 
 
 
 
 
 
Refinery throughputs (mbpd):(f)
 
 
 
 
 
 
 
 
 
 
 
    Crude oil refined
 
620

 
 
611

 
 
637

 
 
154

    Other charge and blendstocks
 
65

 
 
70

 
 
64

 
 
17

        Total
 
685

 
 
681

 
 
701

 
 
171

Sour crude oil throughput (percent)
 
61

 
 
72

 
 
63

 
 
72

Sweet crude oil throughput (percent)
 
39

 
 
28

 
 
37

 
 
28

Refined product yields (mbpd):(f)
 
 
 
 
 
 
 
 
 
 
 
    Gasoline
 
380

 
 
354

 
 
362

 
 
89

    Distillates
 
240

 
 
246

 
 
246

 
 
62

    Propane
 
10

 
 
7

 
 
9

 
 
2

    Feedstocks and special products
 
45

 
 
56

 
 
68

 
 
14

    Heavy fuel oil
 
24

 
 
29

 
 
24

 
 
7

    Asphalt
 

 
 

 
 

 
 

        Total
 
699

 
 
692

 
 
709

 
 
174

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Sales revenue less cost of refinery inputs and purchased products, divided by refinery throughputs, excluding inter-refinery transfer volumes. The 2019 margin amounts exclude the biodiesel tax credit related to volumes blended in periods other than the fourth quarter and 2019.
(b)
Includes refining major maintenance and operating costs. Excludes planned turnaround and depreciation and amortization expense.
(c) 
Purchase accounting measurement period adjustments related to prior periods are not allocated to regional depreciation and amortization.
(d) 
Includes inter-refinery transfer volumes of 113 mbpd and 69 mbpd for the three and twelve months ended December 31, 2019, respectively.
(e) 
Includes inter-refinery transfer volumes of 12 mbpd and 10 mbpd for the three and twelve months ended December 31, 2019, respectively.
(f) 
Includes inter-refinery transfer volumes of 23 mbpd and 31 mbpd for the three and twelve months ended December 31, 2019, respectively.



14




Retail Operating Statistics (Unaudited)
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Speedway fuel sales (millions of gallons)
 
1,838

 
 
1,976

 
 
7,658

 
 
6,293

Direct dealer fuel sales (millions of gallons)
 
625

 
 
644
 
 
2,554

 
 
644
Retail fuel margin (dollars per gallon)(a)
$
0.2865

 
$
0.3235

 
$
0.2426

 
$
0.2230

Merchandise sales (in millions)
$
1,569

 
$
1,479

 
$
6,305

 
$
5,232

Merchandise margin (in millions)
$
451

 
$
417

 
$
1,827

 
$
1,486

Merchandise margin percent
 
28.7
 %
 
 
28.2
 %
 
 
29.0
 %
 
 
28.4
 %
Same store gasoline sales volume (period over period)(b)
 
(4.2
)%
 
 
(0.7
)%
 
 
(3.3
)%
 
 
(1.5
)%
Same store merchandise sales (period over period)(b)(c)
 
4.7
 %
 
 
6.5
 %
 
 
5.4
 %
 
 
4.2
 %
Total convenience stores at period-end
 
3,898

 
 
3,923

 
 
 
 
 
 
Direct dealer locations at period-end
 
1,068

 
 
1,065
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes bankcard processing fees (as applicable).
(b) 
Same store comparison includes only locations owned at least 13 months.
(c) 
Excludes cigarettes.


Midstream Operating Statistics (Unaudited)
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Pipeline throughputs (mbpd)(a)
 
5,231

 
 
5,612

 
 
5,245

 
 
4,177

Terminal throughput (mbpd)
 
3,313

 
 
3,188

 
 
3,279

 
 
1,901

Gathering system throughput (million cubic feet per day)(b)
 
6,192

 
 
5,893

 
 
6,094

 
 
4,779

Natural gas processed (million cubic feet per day)(b)
 
8,759

 
 
8,161

 
 
8,661

 
 
7,199

C2 (ethane) + NGLs fractionated (mbpd)(b)
 
557

 
 
501

 
 
534

 
 
464

 
 
 
 
 
 
 
 
 
 
 
 
(a) 
Includes common-carrier pipelines and private pipelines contributed to MPLX. Excludes equity method affiliate pipeline volumes.
(b) 
Includes amounts related to unconsolidated equity method investments on a 100% basis.


Select Financial Data (Unaudited)
(In millions)
December 31 
2019
 
September 30 
2019
Cash and cash equivalents
$
1,527

 
$
1,525

MPC debt
 
9,125

 
 
9,139

MPLX debt
 
19,713

 
 
19,700

Total consolidated debt
 
28,838

 
 
28,839

Redeemable noncontrolling interest
 
968

 
 
968

Equity
 
42,139

 
 
42,656

Shares outstanding
 
649

 
 
650

 
 
 
 
 
 



15




 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
Cash provided by operations
$
2,409

 
$
2,727

 
$
9,441

 
$
6,158

Dividends paid per share
$
0.53

 
$
0.46

 
$
2.12

 
$
1.84

 
 
 
 
 
 
 
 
 
 
 
 


Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP. We believe these non-GAAP financial measures are useful to investors and analysts to assess our ongoing financial performance because, when reconciled to their most comparable GAAP financial 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. The non-GAAP financial measures we use are as follows:
Adjusted Net Income Attributable to MPC
Adjusted net income attributable to MPC is defined as net income attributable to MPC excluding the items in the table below, along with their related income tax effect. We have excluded these items because we believe that they are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends.

Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is defined as adjusted net income attributable to MPC divided by the number of weighted-average shares outstanding in the applicable period, assuming dilution.


16






Reconciliation of Net Income Attributable to MPC to Adjusted Net Income Attributable to MPC
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Net income attributable to MPC
$
443

 
$
951

 
$
2,637

 
$
2,780

Pre-tax adjustments:
 
 
 
 
 
 
 
 
 
 
 
Purchase accounting related inventory effects
 

 
 
759

 
 

 
 
759

MPLX debt extinguishment costs
 

 
 
60

 
 

 
 
60

Equity method investment restructuring gains
 
(52
)
 
 

 
 
(259
)
 
 

Transaction-related costs
 
13

 
 
183

 
 
160

 
 
197

Litigation
 

 
 

 
 
22

 
 

Impairments
 
1,239

 
 

 
 
1,239

 
 

Pension settlement
 

 
 

 
 

 
 
45

Purchase accounting - depreciation and amortization
 

 
 

 
 
(17
)
 
 

Biodiesel tax credit
 
(175
)
 
 

 
 
(104
)
 
 

Out of period tax adjustment
 

 
 

 
 
36

 
 

Tax impact of adjustments(a)
 
9

 
 
(236
)
 
 
22

 
 
(250
)
NCI impact of adjustments
 
(459
)
 
 
(22
)
 
 
(457
)
 
 
(22
)
Adjusted net income attributable to MPC
$
1,018

 
$
1,695

 
$
3,279

 
$
3,569

 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.68

 
$
1.35

 
$
3.97

 
$
5.28

Adjusted diluted earnings per share(b)
$
1.56

 
$
2.41

 
$
4.94

 
$
6.78

(a) 
We generally tax effect pre-tax earnings adjustments to reported earnings using a combined federal and state statutory rate of approximately 24 percent. However, since the Midstream impairments, net of the portion attributable to NCI, and the biodiesel tax credit are largely non-taxable items, these adjustments are not tax affected for adjusted earnings purposes.
(b) 
Weighted-average diluted shares outstanding and income allocated to participating securities, if applicable, in the adjusted earnings per share calculation are the same as those used in the GAAP diluted earnings per share calculation.


Adjusted EBITDA & Segment Adjusted EBITDA
Adjusted EBITDA and Segment Adjusted EBITDA represent earnings before net interest and other financial costs, income taxes, depreciation and amortization expense as well as adjustments to exclude refining turnaround costs, items not allocated to segment results and other items shown in the table below. We believe these non-GAAP financial measures are useful to investors and analysts to analyze and compare our operating performance between periods by excluding items that do not reflect the core operating results of our business or in the case of turnarounds, which provide benefits over multiple years. We also believe that excluding turnaround costs from this metric is useful for comparability to other companies as certain of our competitors defer these costs and amortize them between turnarounds. Adjusted EBITDA and Segment Adjusted EBITDA should not be considered as a substitute for, or superior to segment income (loss) from operations, net income attributable to MPC, income before income taxes, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA and Segment Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.


17





Reconciliation of Net Income Attributable to MPC to Adjusted EBITDA
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Net income attributable to MPC
$
443

 
$
951

 
$
2,637

 
$
2,780

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Net interest and other financial costs
 
302

 
 
385

 
 
1,247

 
 
1,003

Net income attributable to noncontrolling interests
 
(181
)
 
 
244

 
 
618

 
 
826

Provision for income taxes
 
277

 
 
437

 
 
1,074

 
 
962

Depreciation and amortization
 
978

 
 
874

 
 
3,638

 
 
2,490

Refining planned turnaround costs
 
153

 
 
232

 
 
740

 
 
664

Equity method investment restructuring gains
 
(52
)
 
 

 
 
(259
)
 
 

Purchase accounting inventory related effects
 

 
 
759

 
 

 
 
759

Transaction-related costs
 
13

 
 
183

 
 
160

 
 
197

Litigation
 

 
 

 
 
22

 
 

Impairments
 
1,239

 
 
(8
)
 
 
1,239

 
 
(9
)
Adjusted EBITDA
$
3,172

 
$
4,057

 
$
11,116

 
$
9,672



Reconciliation of Segment Income From Operations to Segment Adjusted EBITDA and Adjusted EBITDA
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Refining & Marketing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment income from operations
$
912

 
$
923

 
$
2,367

 
$
2,481

Add: Depreciation and amortization
 
430

 
 
413

 
 
1,665

 
 
1,174

        Refining planned turnaround costs
 
153

 
 
232

 
 
740

 
 
664

        Purchase accounting inventory effect, net of LIFO
 

 
 
759

 
 

 
 
759

Segment Adjusted EBITDA
$
1,495

 
$
2,327

 
$
4,772

 
$
5,078

Retail Segment
 
 
 
 
 
 
 
 
 
 
 
Segment income from operations
$
477

 
$
613

 
$
1,582

 
$
1,028

Add: Depreciation and amortization
 
159

 
 
125

 
 
528

 
 
353

Segment EBITDA
$
636

 
$
738

 
$
2,110

 
$
1,381

Midstream Segment
 
 
 
 
 
 
 
 
 
 
 
Segment income from operations
$
889

 
$
889

 
$
3,594

 
$
2,752

Add: Depreciation and amortization
 
342

 
 
308

 
 
1,267

 
 
885

Segment EBITDA
$
1,231

 
$
1,197

 
$
4,861

 
$
3,637

 
 
 
 
 
 
 
 
 
 
 
 
Segment Adjusted EBITDA
$
3,362

 
$
4,262

 
$
11,743

 
$
10,096

Corporate and other unallocated items
 
(237
)
 
 
(233
)
 
 
(805
)
 
 
(502
)
Add: Depreciation and amortization
 
47

 
 
28

 
 
178

 
 
78

Adjusted EBITDA
$
3,172

 
$
4,057

 
$
11,116

 
$
9,672





18




Refining & Marketing Margin
Refining margin is defined as sales revenue less the cost of refinery inputs and purchased products and excludes any LCM inventory market adjustment and other items reflected in the table below.
Reconciliation of Refining & Marketing Income from Operations to Refining & Marketing Margin
 
Three Months Ended 
December 31,
 
Twelve Months Ended 
December 31,
(In millions)
 
2019
 
 
2018
 
 
2019
 
 
2018
Refining & Marketing income from operations
$
912

 
$
923

 
$
2,367

 
$
2,481

Plus (Less):
 
 
 
 
 
 
 
 
 
 
 
Refining operating costs(a)
 
1,765

 
 
1,657

 
 
6,421

 
 
4,137

Refining depreciation and amortization
 
382

 
 
377

 
 
1,465

 
 
1,089

Refining planned turnaround costs
 
153

 
 
232

 
 
740

 
 
664

Distribution costs(b)
 
1,299

 
 
1,329

 
 
5,117

 
 
3,512

Distribution depreciation and amortization
 
48

 
 
36

 
 
200