Marathon Petroleum Corp Reports Adjusted Net Income of $1.5 Billion for Q4 2023
Q4 Net Income: $1.5 billion, or $3.84 per diluted share; adjusted net income also at $1.5 billion, or $3.98 per adjusted diluted share.
Full-Year Net Income: $9.7 billion, or $23.63 per diluted share; adjusted net income mirrors reported net income.
Operating Cash Flow: Full-year net cash provided by operating activities stood at $14.1 billion.
Capital Return: $12.8 billion returned to shareholders in 2023 through share repurchases and dividends.
2024 Capital Spending Outlook: MPC standalone capital spending projected at $1.25 billion, focusing on growth and sustainability.
Refining & Marketing Segment: Adjusted EBITDA of $2.2 billion in Q4, with a margin of $17.79 per barrel.
Midstream Segment: Adjusted EBITDA increased to $1.6 billion in Q4, driven by higher throughputs and rates.
On January 30, 2024, Marathon Petroleum Corp (NYSE:MPC) released its 8-K filing, announcing its financial results for the fourth quarter and full year of 2023. MPC, a leading independent refiner with a vast network of refineries and midstream assets, reported a net income of $1.5 billion for the fourth quarter, equating to $3.84 per diluted share. Adjusted for special items, the net income remained consistent at $1.5 billion, or $3.98 per adjusted diluted share. Despite a decrease from the previous year's fourth quarter, the company's full-year net income reached $9.7 billion, or $23.63 per diluted share, both on a reported and adjusted basis.
Performance Highlights and Challenges
The company's performance in the fourth quarter was marked by a decrease in adjusted EBITDA to $3.5 billion from $5.8 billion in the same period last year. The full-year adjusted EBITDA also saw a decline, coming in at $18.9 billion compared to $24.3 billion in the previous year. The Refining & Marketing (R&M) segment adjusted EBITDA was $2.2 billion for the quarter, down from $4.6 billion in Q4 2022, primarily due to lower market crack spreads. The R&M margin per barrel decreased to $17.79 from $28.82 year-over-year, with crude capacity utilization at approximately 91%. The Midstream segment, however, showed an increase in adjusted EBITDA to $1.6 billion, up from $1.4 billion in the prior year's quarter.
These financial metrics are crucial as they reflect the company's ability to generate profit from its core operations. The decrease in R&M segment adjusted EBITDA is significant as it indicates the impact of market conditions on refining margins, a key driver of profitability for MPC. Conversely, the Midstream segment's performance underscores the resilience and growth potential of MPC's diversified asset base.
Financial Achievements and Industry Significance
MPC's financial achievements in 2023, particularly the robust cash flow generation and substantial capital return to shareholders, underscore the company's financial health and commitment to shareholder value. The $14.1 billion in net cash provided by operating activities and the return of $12.8 billion to shareholders through repurchases and dividends are testaments to MPC's operational efficiency and strategic capital allocation. In the Oil & Gas industry, where capital discipline and shareholder returns are paramount, these achievements highlight MPC's competitive positioning and financial prudence.
Strategic and Operations Update
Looking ahead, MPC has outlined a capital spending outlook for 2024 of $1.25 billion, with a focus on growth and sustainability. Approximately 65% of this spending is earmarked for growth capital, targeting opportunities to enhance margins and reduce costs. Notable projects include improvements at the Los Angeles refinery and the construction of a high-pressure distillate hydrotreater at the Galveston Bay refinery. These investments are expected to bolster MPC's competitive edge and contribute to its long-term strategic objectives.
In conclusion, while MPC faced challenges in the form of lower market crack spreads impacting its R&M segment, the company's overall financial strength remains solid. The Midstream segment's growth and the company's ability to generate significant cash flow and return capital to shareholders are indicative of its resilience and strategic focus. MPC's investments in growth and sustainability are poised to further strengthen its market position and deliver value to shareholders.
"In 2023, the business generated $14.1 billion of net cash from operations, driven by strong operational performance and commercial execution," said Chief Executive Officer Michael J. Hennigan. "This enabled the return of $12.8 billion of capital to shareholders. We believe MPC is positioned to generate strong through-cycle cash flow with the ability to deliver superior returns to our shareholders."
For a detailed breakdown of Marathon Petroleum Corp's financials and further insights into the company's performance, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Marathon Petroleum Corp for further details.
This article first appeared on GuruFocus.
