MPC’s Q1 Earnings Fall Short of Analysts’ Expectations

MPC’s first-quarter top and bottom lines

Marathon Petroleum (MPC) posted its first-quarter earnings results on May 8. In the first quarter, Marathon Petroleum posted revenue of $28.6 billion, which surpassed Wall Street analysts’ estimates.

In the quarter, the company reported EPS of -$0.01. However, adjusting for special items related to gains, tax adjustments, and transaction-related costs, MPC’s EPS stood at -$0.09 compared to analysts’ estimate of $0.05.

MPC’s Q1 Earnings Fall Short of Analysts’ Expectations

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First-quarter earnings review

MPC’s reported net income attributable to its shareholders fell from $37 million in the first quarter of 2018 to -$7 million in the first quarter of 2019 due to its higher contribution to noncontrolling interests. However, MPC’s net income rose from $235 million in the first quarter of 2018 to $259 million in the first quarter of 2019 led by a 52% YoY (year-over-year) rise in its operating earnings to $669 million in the first quarter of 2019.

MPC’s operating earnings rose due to a rise in its Retail and Midstream earnings as a result of its integration of Andeavor’s assets. The integration led to higher capacities, a vast network, and larger synergies from operations. It realized ~$133 million worth of synergies in the first quarter.

MPC’s Refining and Marketing operating loss stood at $334 million due to narrow oil spreads on medium and heavy crude oils. However, its throughputs rose as a result of the addition of Andeavor’s refining assets. The Retail segment’s operating income rose 79% YoY in the first quarter driven by better retail fuel margins and the addition of Andeavor’s retail assets. The Midstream segment’s earnings also rose 60% YoY in the first quarter of 2019 boosted by the contribution of earnings from Andeavor Logistics.

Peers’ performances

Valero Energy’s (VLO) and Phillips 66’s (PSX) first-quarter adjusted EPS fell 66% YoY and 62% YoY, respectively. Valero’s earnings fell due to lower Refining, Ethanol, and Renewable Diesel earnings. Phillips 66’s adjusted pretax earnings fell due to a YoY fall in its Refining, Chemicals, and Marketing earnings partially offset by a rise in its Midstream earnings.

HollyFrontier’s (HFC) adjusted EPS fell 30% YoY in the first quarter due to lower Refining and Lubricants & Specialty Products earnings partly offset by higher Midstream earnings.