Ohio-based independent oil refiner and marketer, Marathon Petroleum Corp. MPC reported better-than-expected fourth-quarter 2015 earnings, owing to higher contribution from the Midstream unit following the completion of the MarkWest acquisition. Higher crack spreads and increased merchandise margin also led to the improvement. The positives were however partially offset by the impact on volumetric gains for weak commodity prices.
The company reported adjusted earnings per share of 79 cents, which surpassed the Zacks Consensus Estimate of 67 cents. The bottom line, however, declined from the year-ago adjusted profit of $2.86.
Quarterly revenues of $15,679 million failed to beat the Zacks Consensus Estimate of $16,542 million. Moreover, the top line declined from $22,343 million a year ago.
Refining & Marketing: The unit earned $207 million in the reported quarter compared with profits of $1,016 million a year ago. Impact on volumetric gains for weak commodity prices led to the underperformance. This was compensated partially by higher crack spreads.
Total refined product sales volumes were 2,257 thousand barrels per day compared with 2,275 thousand barrels per day in the year-ago quarter. Throughput fell from 1,860 thousand barrels per day in the year-ago quarter to 1,839 thousand barrels per day.
Speedway: Income from the Speedway retail stations totaled $135 million, significantly lower than $273 million in the year-ago period. Reduced gross margin for light products affected the results, which was partially helped by a higher merchandise margin.
Midstream: Segment profitability was $71 million, up from $58 million in the fourth quarter of 2014. Earnings were propped up by the completion of the MarkWest acquisition on Dec 4, 2015.
Marathon Petroleum reported expenses of $15.3 billion in fourth-quarter 2015, much lower than $21.1 billion in the year-ago quarter.
Capital Expenditure, Balance Sheet & Share Repurchase
In the reported quarter, Marathon Petroleum spent $14,786 million on capital programs (only 2.8% on Refining & Marketing segment). As of Dec 31, 2015, the company had cash and cash equivalents of $1,127 million and total debt of $11,925 million, with a debt-to-capitalization ratio of 37.7%.
Marathon Petroleum returned $362 million in the fourth quarter and $1.6 billion in full-year 2015 to its shareholders through dividends and share repurchase programs.
Marathon Petroleum currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the same space include Murphy USA Inc. MUSA, Tesoro Corporation TSO and Valero Energy Corporation VLO. Each of these stocks carries a Zacks Rank #2 (Buy).
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