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Fourth-Quarter 2017 Earnings Conference Call
and Webcast
February 1, 2018
Forward‐Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws regarding Marathon Petroleum Corporation (“MPC“) and MPLX LP (“MPLX”). These forward-looking statements relate to, among other things, expectations, estimates and projections concerning the business and operations of MPC and MPLX, including strategic initiatives and our value creation plans. You can identify forward-looking statements by words such as “anticipate,” “believe,” “design,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,” “objective,” “opportunity,” “outlook,” “plan,” “position,” “pursue,” “prospective,” “predict,” “project,” “potential,” “seek,” “strategy,” “target,” “could,” “may,” “should,” “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 companies’ 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 ability to consummate the strategic initiatives discussed herein; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein; our ability to manage disruptions in credit markets or changes to our credit rating; adverse changes in laws including with respect to tax and regulatory matters; changes to the expected construction costs and timing of projects; continued/further volatility in and/or degradation of market and industry conditions; the availability and pricing of crude oil and other feedstocks; slower growth in domestic and Canadian crude supply; the effects of the lifting of the U.S. crude oil export ban; completion of pipeline capacity to areas outside the U.S. Midwest; consumer demand for refined products; transportation logistics; the reliability of processing units and other equipment; MPC’s ability to successfully implement growth opportunities; the impact of adverse market conditions affecting MPC’s and MPLX’s midstream businesses; modifications to MPLX earnings and distribution growth objectives, and other risks described below with respect to MPLX; 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; adverse results in litigation; changes to MPC’s capital budget; other risk factors inherent to MPC’s industry; 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, 2016, filed with Securities and Exchange Commission (SEC). Factors that could cause MPLX’s actual results to differ materially from those implied in the forward-looking statements include: negative capital market conditions, including an increase of the current yield on common units, adversely affecting MPLX’s ability to meet its distribution growth guidance; the ability to consummate the strategic initiatives discussed herein; our ability to achieve the strategic and other objectives related to the strategic initiatives discussed herein and other proposed transactions; adverse changes in laws including with respect to tax and regulatory matters; the adequacy of MPLX’s capital resources and liquidity, including, but not limited to, availability of sufficient cash flow to pay distributions and access to debt to fund anticipated dropdowns on commercially reasonable terms, and the ability to successfully execute its business plans and growth strategy; the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products; continued/further volatility in and/or degradation of market and industry conditions; changes to the expected construction costs and timing of projects; completion of midstream infrastructure by competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or termination of MPC’s obligations under MPLX’s commercial agreements; modifications to earnings and distribution growth objectives; our ability to manage disruptions in credit markets or changes to our credit rating; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder; adverse results in litigation; changes to MPLX's capital budget; other risk factors inherent to MPLX’s industry; and the factors set forth under the heading “Risk Factors” in MPLX’s Annual Report on Form 10-K for the year ended Dec. 31, 2016, filed with the SEC. In addition, the forward-looking statements included herein could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed here, in MPC’s Form 10-K or in MPLX’s Form 10-K could also have material adverse effects on forward-looking statements. Copies of MPC’s Form 10-K are available on the SEC website, MPC’s website at http://ir.marathonpetroleum.com or by contacting MPC’s Investor Relations office. Copies of MPLX’s Form 10-K are available on the SEC website, MPLX’s website at http://ir.mplx.com or by contacting MPLX’s Investor Relations office.
Non-GAAP Financial Measures
Adjusted EBITDA, cash provided from operations before changes in working capital, refining marketing margin, Speedway total margin and Speedway segment EBITDA 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. The EBITDA forecasts related to certain projects were determined on an EBITDA-only basis. Accordingly, information related to the elements of net income, including tax and interest, are not available and, therefore, reconciliations of these non-GAAP financial measures to the nearest GAAP financial measures have not been provided.
2
Opening Comments
3
Reported strong financial and operational performance across the business Announced closing of transactions with MPLX completing planned strategic actions Announced 2018 capital plans including investments to grow Midstream and
Speedway and margin-enhancing investments in Refining and Marketing Expectations for 2018 macro environment Increased quarterly dividend by 15 percent, to $0.46 per share Returned $3.1 billion of capital to shareholders in 2017; with $945 million
returned in the fourth quarter, including $750 million in share repurchases
Fourth-Quarter and Full-Year Highlights
Fourth-quarter earnings of $2.02 billion ($4.09 per diluted share); full-year earnings of $3.43 billion ($6.70 per diluted share)
Fourth-quarter earnings reflect a net benefit of $1.5 billion due to tax reform Midstream reported record segment results, primarily driven by MPLX Speedway achieved record full-year performance Refining and Marketing reported strong full-year segment income largely driven by
favorable crack spreads and high utilization rates
4
Fourth-Quarter and Full-Year 2017 Earnings
5
*Earnings refer to Net Income attributable to MPC. Earnings for the fourth quarter include a tax benefit of approximately $1.5 billion (or $3.04 and $2.93 per diluted share for the fourth quarter and full year, respectively) as a result of re-measuring certain net deferred tax liabilities using the lower corporate tax rate enacted in the fourth quarter. Earnings also include pretax benefits/(charges) of $9 MM, $1 MM, ($68) MM, ($271) MM, ($92) MM and ($130) MM in 4Q 2017, 3Q 2017, 2Q 2017, 3Q 2016, 2Q 2016 and 1Q 2016, respectively, related to items not allocated to segment results including pension, litigation and impairment. In addition, earnings include pretax lower-of-cost or market inventory benefits /(charges) of $385 MM and ($15) MM in 2Q 2016 and 1Q 2016, respectively.
Earnings*
947 1,416
227
2,016
0500
1,0001,5002,0002,5003,0003,500
2016 2017
$MM
3Q YTD 4Q
$1,174
Earnings per Diluted Share*
1.78 2.73 0.43
4.09
01234567
2016 2017
$/S
hare
$6.70
$2.21
$3,432
4Q 2017 4Q 2016 2017 2016
Earnings* $2,016 MM $227 MM $3,432 MM $1,174 MM
Earnings per Diluted Share* $4.09 $0.43 $6.70 $2.21
Earnings*
6
4Q 2017 vs. 4Q 2016 Variance Analysis
227
1,499 2,016
566 (16)
47
(31) (24)
(205) (47)
1
201
401
601
801
1,001
1,201
4Q 2016 Refining &Marketing**
Speedway Midstream** Items notAllocated toSegments**
Interest andOther Financing
Costs
IncomeTaxes
NoncontrollingInterests
TaxLegislation***
4Q 2017
$MM
200
400
600
800
1,800
2,000
2,200
*Earnings refer to Net Income attributable to MPC. **In the first quarter of 2017, segment reporting was revised in connection with the contribution of certain terminal, pipeline and storage assets to MPLX. The results related to these assets are now presented in the Midstream segment. Previously, these results were reported in the Refining & Marketing segment. The results for the pipeline and storage assets were recast effective January 1, 2015, and the results for the terminal assets were recast effective April 1, 2016. Prior to these dates, these assets were not considered businesses and therefore there are no financial results from which to recast segment results. ***Earnings for the fourth quarter include a tax benefit of approximately $1.5 billion (or $3.04 and $2.93 per diluted share for the fourth quarter and full year, respectively) as a result of re-measuring certain net deferred tax liabilities using the lower corporate tax rate enacted in the fourth quarter.
Refining & Marketing Segment Income
7
4Q 2017 vs. 4Q 2016 Variance Analysis
166
732 586
(53) (37)
214 10
(47)
(113) (23)
29
0
250
500
750
1,000
*4Q 2016 **LLS6-3-2-1Crack
**RIN/CBOBAdjustment
**Sweet/Sour Diff.
**LLS/WTIDiff.
**LLSPrompt
vs.Delivered
**MarketStructure
OtherMargin
DirectOperating
Costs
Other 4Q 2017
$MM
*In the first quarter of 2017, segment reporting was revised in connection with the contribution of certain terminal, pipeline and storage assets to MPLX. The results related to these assets are now presented in the Midstream segment. Previously, these results were reported in the Refining & Marketing segment. The results for the pipeline and storage assets were recast effective January 1, 2015, and the results for the terminal assets were recast effective April 1, 2016. Prior to these dates, these assets were not considered businesses and therefore there are no financial results from which to recast segment results. **Based on market indicators using actual volumes.
Crude 0 Product (294) Volumetric 181
Refining & Marketing Segment Income
8
2017 vs. 2016 Variance Analysis
1,357
2,271
(153) (188)
250 59
(350)
(345) (505)
(125)
50 2,321
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2016* **LLS6-3-2-1Crack
**RIN/CBOBAdjustment
**Sweet/Sour Diff.
**LLS/WTIDiff.
**LLSPrompt
vs.Delivered
**MarketStructure
OtherMargin
Lower ofCost orMarket
DirectOperating
Costs
Other 2017
$MM
Crude (39) Product (827) Volumetric 361
*We changed our operating segment presentation in the first quarter of 2016 in connection with the contribution of our inland marine business to MPLX; our inland marine business, which was previously included in Refining & Marketing, is now included in Midstream. Comparable prior period information has been recast to reflect our revised segment presentation. **Based on market indicators using actual volumes
Speedway Segment Income
9
Variance Analysis
165 19
(13) (22)
149
0
50
100
150
200
4Q 2016 Light ProductMargin
MerchandiseMargin
Other* 4Q 2017
$MM
734
(1) (33) (25)
57 732
0
200
400
600
800
2016 Light ProductMargin
MerchandiseMargin
Lower ofCost or Market
Other* 2017
$MM
4Q 2017 vs. 4Q 2016
2017 vs. 2016
*Primarily includes income from equity investment and operating expenses.
Midstream Segment Income
10
Variance Analysis
296 88
(26) (15) 343
0100200300400500
4Q 2016 MPLX* MPC Retained Equity andOther Affiliates*
Other** 4Q 2017
$MM
1,048 288
(8) 11 1,339
0
500
1,000
1,500
2016 MPLX* MPC Retained Equity andOther Affiliates*
Other** 2017
$MM
4Q 2017 vs. 4Q 2016
2017 vs. 2016
*In the 4Q and full-year results, MPLX includes approximately $21 million of equity method income that prior to September 1, 2017 would have been included in the MPC Retained Equity and Other Affiliates column. **Primarily reflects results of MPC retained undivided interests in pipeline systems.
Total Consolidated Cash Flow
11
4Q 2017
2,088 (189)
1,425
1,321 73
(879)
(945) 117 3,011
0
1,000
2,000
3,000
4,000
5,000
6,000
9/30/2017Cash
Balance
OperatingCash Flow
beforeWorkingCapital
WorkingCapital
Net Debt Cash CapitalExpenditures and
Investments
Return ofCapital to
Shareholders*
Distributions toNoncontrolling
Interests
Other 12/31/2017Cash
Balance
$MM
*$195 MM dividends plus $750 MM share repurchases
Liquidity and Capitalization/Select Cash-Flow Data
12
($MM) 2017 4Q 3Q 2Q 1Q
For the Quarter:
Cash provided by operations 2,746 1,901 849 1,113
Cash provided by operations before changes in working capital(c) 1,425 1,581 957 703 (a)Adjustments made to exclude MPLX debt (all non-recourse) and the public portion of MPLX equity
(b)Calculated using face value of total debt and adjusted EBITDA. Refer to appendix for reconciliation
(c)Non-GAAP. Refer to appendix for reconciliation
MPC Consolidated
MPLX Adjustments(a)
MPC Excluding
MPLX As of December 31, 2017
($MM except ratio data)
Debt 12,946 6,946 6,000
Mezzanine equity 1,000 1,000 -
Equity 20,828 8,379 12,449
Total capitalization 34,774 16,325 18,449
Debt-to-capital ratio (book) 37% - 33%
Cash and cash equivalents 3,011 5 3,006
Debt to LTM Adjusted EBITDA(b) 2.2x - 1.4x
Debt to LTM Adjusted EBITDA, w/ MPLX LP distributions(b) N/A - 1.3x
13
Illustrative Impact to Refining & Marketing Segment Fuels Distribution and Refinery Logistics Dropdown
“Other” R&M Expenses to include fees paid to MPLX for fuels distribution services and refinery logistics assets; corresponding income to be reflected in Midstream segment
“Direct Operating Costs” to exclude costs related to refining logistics assets
Net annual increase in total R&M expenses of ~$1 B expected; corresponding income to be reflected in Midstream segment
No change to “R&M Margin”
First-Quarter 2018 Outlook
14
*Region throughput data includes inter-refinery transfers, but MPC totals exclude transfers **Includes utilities, labor, routine maintenance and other operating costs ***Actuals have been recast in connection with the contribution of certain terminal, pipeline and storage assets to MPLX on March 1, 2017
Crude Throughput*
Other Charge/
Feedstocks Throughput*
Total Throughput*
Percent of WTI-priced
Crude
Sour Crude Oil Throughput Percentage
Turnaround and Major
Maintenance
Depreciation and
Amortization
Other Manufacturing
Cost**
Total Direct
Operating Costs
Corporate and Other
Unallocated Items***
in MBPD Refinery Direct Operating Costs ($/BBL of total throughput)
Proj
ecte
d
1Q 2
018 GC Region 1,025 200 1,225 17% 61% $3.25 $1.10 $3.85 $8.20
MW Region 650 50 700 47% 37% $1.15 $1.85 $4.20 $7.20 MPC Total 1,675 225 1,900 28% 51% $2.50 $1.40 $4.00 $7.90 $90 MM
1Q 2
017 GC Region 850 222 1,072 4% 84% $4.31 $1.35 $4.62 $10.28
MW Region 661 30 691 29% 45% $0.98 $1.93 $4.50 $7.41 MPC Total 1,511 197 1,708 15% 67% $3.10 $1.63 $4.72 $9.45 $82 MM
• 1Q 2018 projections in the table above for Total “Direct Operating Costs” have been adjusted for the February 1 dropdown
• While guidance is not provided for “Other” R&M expenses, for 1Q 2018 we expect a net increase of ~$230 MM resulting from the February 1 dropdown, including fees paid to MPLX
• 1Q 2017 has not been recast for the February 1, 2018 dropdown
15
Appendix
MPC excluding MPLX ~$1.6 B Refining & Marketing (R&M) – $950 MM
– Maintenance – ~$550 MM
Speedway – $530 MM Other – $100 MM
MPLX ~$2.4 B
Growth – ~$2.2 B
Maintenance – $190 MM
MPLX
Other
Refining & Marketing
2018 Capital Outlook Excluding Potential Future Acquisitions
16
24%
3% Speedway 13%
60%
Planned investment of ~$530 MM
17
2018 Speedway Capital Plan
Industry Leader with Significant Growth Opportunities
Build upon competitive position to grow fuel and merchandise sales
Focus on expanding food service sales and margin on remodels and rebuilds
Target growth opportunities in existing and contiguous markets
2018 Refining and Marketing Capital Plan
18
STAR Program – $1.5 B multi-year staged investment – ~$150 MM spent to date with ~$155 MM planned in 2018 – Increase residual oil processing, revamp crude unit, supports
full integration of Galveston Bay and Texas City refineries – Completed in phases between 2016-2022
Garyville coker project – ~$207 MM total investment, ~$55 MM in 2018 – Installing larger drums to increase coking capacity – 2020 est. completion
~$400 MM of growth and margin enhancing investments with estimated returns in excess of 20% Additional $190 MM for growth and margin enhancing
projects with strong returns, such as: – Garyville diesel maximization – Garyville crude processing and optionality – Robinson FCC/Alky optimization
Crude Oil and refined product infrastructure
MPLX 2018 Capital Outlook Forecast organic growth capital of ~$2.2 B*
19
Marcellus
Southwest ~20%
Utica ~5%
~60%
Ozark and Wood River-to-Patoka Pipeline expansions Robinson butane cavern Texas City and Patoka tank farm expansions Marine fleet expansion
*Excludes ~$190 million of maintenance capital and any potential future acquisitions
Natural gas, gas liquids and crude oil infrastructure (Marcellus, Utica and Southwest)
Eleven additional plants expected to complete by end of 2018
~1.5 Bcf/d processing capacity ~100 MBPD fractionation capacity
Northeast and Southwest gathering
~15% Crude oil and refined product infrastructure
Capital Expenditures & Investments
20
($MM) 2017 Revised Plan 4Q 2017 2017 2018 Outlook
Refining & Marketing (R&M) 1,085 262 832 950
Speedway 380 160 381 530
Midstream, including MPLX(a) 2,115 488 1,756 2,405
Corporate and Other 100 30 83 85
Total Capital Expenditures & Investments(b)(c) 3,680 940 3,052 3,970
(a)2017 revised plan reflects the midpoint of the range for organic growth capital for MPLX of $1.8 to $2.0 B. (b)2017 plan and actual excludes $220 MM for the Ozark Pipeline acquisition, and $500 million for the investment in the Bakken Pipeline system. (c)2017 plan, actuals and 2018 outlook excludes capitalized interest.
MPC Annual Price and Margin Sensitivities Refining and Marketing Segment $MM (After Tax)
LLS 6-3-2-1 Crack Spread* Sensitivity ~$590 (per $1.00/barrel change) Sweet/Sour Differential** Sensitivity ~$300 (per $1.00/barrel change) LLS-WTI Spread*** Sensitivity ~$90 (per $1.00/barrel change) Natural Gas Price Sensitivity ~$200 (per $1.00/MMbtu change in Henry Hub)
*Weighted 40% Chicago and 60% USGC LLS 6-3-2-1 crack spreads and assumes all other differentials and pricing relationships remain unchanged **Light Louisiana Sweet (prompt) - [Delivered cost of sour crudes: Arab Light + Kuwait + Maya + Western Canadian Select + Mars] and assumes approximately 58% of crude throughput volumes are sour-based crudes ***Assumes approximately 17% of crude throughput volumes are WTI-based domestic crudes
21
Earnings
22
($MM unless otherwise noted) 2016 2017
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Refining & Marketing segment income(a,b) (86) 1,025 252 166 (70) 562 1,097 732
Speedway segment income(c) 167 193 209 165 135 239 209 149
Midstream segment income(b) 189 253 310 296 309 332 355 343
Corporate and other unallocated items(b) (65) (64) (65) (74) (82) (83) (86) (114)
Pension settlement expenses (1) (2) (4) - - (1) (1) (50)
Litigation - - - - - (86) - 57
Impairments(d) (129) (90) (267) - - 19 2 2 Income from operations 75 1,315 435 553 292 982 1,576 1,119
Net interest and other financing income (costs) (142) (137) (141) (136) (150) (158) (157) (160)
Income (loss) before income taxes (67) 1,178 294 417 142 824 1,419 959
Income tax provision (benefit)(e) 11 395 75 128 41 250 415 (1,166)
Net income (loss) (78) 783 219 289 101 574 1,004 2,125
Less net income (loss) attributable to:
Redeemable noncontrolling interest - 9 16 16 16 17 16 16
Noncontrolling interests (79) (27) 58 46 55 74 85 93
Net income attributable to MPC 1 801 145 227 30 483 903 2,016
Effective tax rate(e) (17%) 33% 26% 31% 29% 30% 29% (122%)
(a)Includes non-cash LCM inventory valuation benefit/(charge) of $360 MM and ($15 MM) in 2Q 2016 and 1Q 2016, respectively
(b)Actuals have been recast in connection with the contribution of certain terminal, pipeline and storage assets to MPLX on March 1, 2017 (c)Includes non-cash LCM inventory valuation benefit of $25 MM in 2Q 2016 (d)Reflects MPC’s share of gains related to the sale of assets remaining from the Sandpiper Pipeline project in 2Q,3Q and 4Q 2017. Also reflects equity method investment impairments recorded in 2Q 2016, 3Q 2016, and a goodwill impairment recorded 1Q 2016
(e)Earnings for the fourth quarter include a tax benefit of approximately $1.5 billion as a result of re-measuring certain net deferred tax liabilities using the lower corporate tax rate enacted in the fourth quarter.
Reconciliation
23
Adjusted EBITDA to Net Income Attributable to MPC
($MM) 2017 LTM
1Q 2Q 3Q 4Q
Net Income attributable to MPC 30 483 903 2,016 3,432
Less: Net interest and other financial income (costs) (150) (158) (157) (160) (625)
Add: Net income (loss) attributable to inco noncontrolling interests 71 91 101 109 372
Provision (benefit) for income taxes 41 250 415 (1,166) (460)
Depreciation and amortization 536 521 517 540 2,114
Litigation - 86 - (57) 29
Impairments - (19) (2) (2) (23)
Adjusted EBITDA 828 1,570 2,091 1,600 6,089
Less: Adjusted EBITDA related to MPLX 1,874
Adjusted EBITDA excluding MPLX 4,215
Add: Distributions from MPLX to MPC 498
Adjusted EBITDA excluding MPLX, including LP distributions to MPC 4,713
Reconciliation
24
Adjusted EBITDA Related to MPLX to MPLX Net Income(a)
($MM) 2017 LTM
1Q 2Q 3Q 4Q
MPLX Net Income 187 191 217 241 836
Less: Net interest and other financial income (costs) (78) (87) (93) (96) (354)
Add: Provision (benefit) for income taxes - 2 1 (2) 1
Depreciation and amortization 187 164 164 168 683
Adjusted EBITDA related to MPLX 452 444 475 503 1,874
(a)Actuals have been recast in connection with the contribution of certain terminal, pipeline and storage assets to MPLX on March 1, 2017.
Cash Provided from Operations Before Changes in Working Capital Reconciliation to Net Cash Provided by Operations
25
($MM) 2017
1Q 2Q 3Q 4Q
Net cash provided by operations 1,113 849 1,901 2,746
Less changes in working capital:
Changes in current receivables 333 11 (640) (797)
Changes in inventories 264 (157) 56 (57)
Changes in current accounts payable and accrued liabilities (215) 7 862 2,160
Changes in the fair value of derivative instruments 28 31 42 15
Total changes in working capital 410 (108) 320 1,321
Cash provided from operations before changes in working capital 703 957 1,581 1,425
Reconciliation of Refining & Marketing Margin to Refining & Marketing Income from Operations
26
($MM) 4Q 2017 3Q 2017 4Q 2016 2017 2016
Refining & Marketing income from operations 732 1,097 166 2,321 1,357
Plus (Less):
Refinery direct operating costs(a) 1,084 933 1,072 4,113 4,007
Refinery depreciation & amortization 258 249 247 1,013 994
Other:
Operating expenses(a)(b) 499 482 494 1,924 1,835
Segment (income) expense, net(a) (149) (154) (111) (499) (360)
Depreciation and amortization 19 17 15 69 69
Inventory market valuation adjustment - - - - (345)
Refining & Marketing margin(c) 2,443 2,624 1,883 8,941 7,557
(a)Excludes depreciation and amortization. (b)Includes fees paid to MPLX for various midstream services, which includes marine and pipeline transportation and terminal and storage services, but excludes costs related to delivery of crude and feedstocks to our refineries. (c)Refining & Marketing margin is defined as sales revenue less cost of refinery inputs and purchased products, excluding any LCM inventory market adjustment. We believe this non-GAAP financial measure is useful to investors and analysts to assess our ongoing financial performance because, when reconciled to its most comparable GAAP measure, it provides improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying business results and trends. This measure should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies.
Reconciliation of Speedway Total Margin to Speedway Income from Operations
27
($MM) 4Q 2017 4Q 2016 2017 2016 Speedway income from operations 149 165 732 734
Plus (Less):
Operating, selling, general and administrative expenses(a) 399 383 1,530 1,554
Depreciation and amortization(a) 78 70 275 273
Income from equity method investments (15) (5) (69) (5)
Net gain on disposal of assets (2) (5) (14) (30)
Other income(a) (5) (10) (14) (18)
Inventory market valuation adjustment - - - (25)
Speedway total margin 604 598 2,440 2,483
Speedway total margin:(a)(b)
Gasoline and distillate margin 260 241 1,008 1,009
Merchandise margin 337 350 1,402 1,435
Other margin 7 7 30 39
Speedway total margin 604 598 2,440 2,483
(a) Fourth-quarter and year-to-date 2017 margin and expenses do not reflect any results from the 41 travel centers contributed to PFJ Southeast, whereas they are reflected in the fourth-quarter and year-to-date 2016 information. Our share of the net results from the joint venture is reflected in income from equity method investments. (b) Speedway gasoline and distillate margin is defined as the price paid by consumers less the cost of refined products, including transportation, consumer excise taxes and bankcard processing fees and excluding any LCM inventory market adjustment. Speedway 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.
Speedway Reconciliation
28
Segment EBITDA to Segment Income from Operations
($MM) 2016 2017
Speedway Income from Operations 734 732 Plus: Depreciation and Amortization 273 275 Speedway Segment EBITDA 1,007 1,007
Refining & Marketing Segment Income
29
4Q 2017 vs. 3Q 2017 Variance Analysis
1,097
732
(538)
39 23 114
(35)
12
204
(161) (23)
0
500
1,000
1,500
3Q 2017 *LLS6-3-2-1Crack
*RIN/CBOBAdjustment
*Sweet/Sour Diff.
*LLS/WTIDiff.
*LLSPrompt
vs.Delivered
*MarketStructure
OtherMargin
DirectOperating
Costs
Other 4Q 2017
$MM
*Based on market indicators using actual volumes.
Crude 88 Product 48 Volumetric 68
Refining & Marketing Indicative Margin 4Q 2017
30
1,816
2,443
(704)
544 250 6 40
491
(1,342)
(369) 732
0
500
1,000
1,500
2,000
2,500
3,000
*LLS6-3-2-1Crack
*RIN/CBOBAdjustment
*Sweet/Sour Diff.
*LLS/WTIDiff.
*LLSPrompt vs.Delivered
*MarketStructure
OtherMargin
R&MMargin
DirectOperating
Costs
Other R&MSegmentIncome
$MM
*Based on market indicators using actual volumes
Crude (294) Product 464 Volumetric 321
MPLX Distributions and Sales Proceeds to MPC*
31
$10 $15 $16 $16 $18 $18 $20 $20 $24 $27 $32 $35 $69 $73
$91 $99 $102 $114 $132 $150
0
50
100
150
200
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
$MM
LP Distributions GP Distributions, including IDRsCash Distribution and Asset Sales Proceeds from MPLX ($MM)
2013 2014 2015 2016 2017
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
GP Distributions, including IDRs - 1 - - 1 - 2 1 2 4 7 8 40 44 50 56 57 67 81 96
LP Distributions 10 14 16 16 17 18 18 19 22 23 25 27 29 29 41 43 45 47 51 54
Total Cash Distributions Received 10 15 16 16 18 18 20 20 24 27 32 35 69 73 91 99 102 114 132 150
Cash Sales Proceeds - 100 - 310 - - 600 - - - - - - - - 1,511 - 420 -
Equity Value from MPLX - - - - - - - 200 - - - - 600 - - - 504 - 630 -
Total Asset Sales Proceeds** - 100 - - 310 - - 800 - - - - 600 - - - 2,015 - 1,050 -
*Based on quarter in which distributions were received **$630 MM, $504 MM and $600 MM in 3Q 2017, 1Q 2017 and 1Q 2016 were based on the number of units received valued at the volume weighted average price for MPLX units for the 10 trading days preceding the closing dates.
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