FINDLAY, Ohio -- Saying he is “very encouraged by the environment for U.S. refiners” and that he believes“lower prices at the pump will remain constructive for retail demand as we move through 2016,” Marathon Petroleum Corp. (MPC) president and CEO Gary R. Heminger said he was “pleased” with MPC’s fourth-quarter and full-year earnings.
MPC saw fourth-quarter 2015 earnings of $187 million, compared with $798 million in fourth-quarter 2014. Earnings were $2.85 billion for the full-year 2015, compared with $2.52 billion in 2014.
"In addition to our strong financial and operational results, we also made tremendous progress on our strategic objectives of growing the more stable cash-flow segments of our business and enhancing our refining margins," said Heminger.
“Speedway continued its solid performance during the fourth quarter, finishing the year with nearly $1 billion of EBITDA,” he said during the company’s earnings call on Feb. 3.
Results for 2015 include a full year of income from the retail operations acquired from Hess, whereas 2014 results only include income from those locations in the fourth quarter.
- Click here for more on Speedway’s acquisition and assimilation of Hess.
Speedway segment income from operations was $135 million in fourth-quarter 2015 and $673 million for full-year 2015, compared with $273 million in fourth-quarter 2014 and $544 million for full-year 2014.
The decrease in segment income for the fourth quarter is primarily due to a lower light-product gross margin, an increase in operating expenses and other factors, partially offset by an increase in merchandise margin. Speedway's light-product margin decreased to 18.23 cents per gallon in fourth-quarter 2015 from 24.51 cents per gallon in fourth-quarter 2014, which was a record quarter.
The increase for the full-year 2015 was primarily due to the full-year benefit from the Hess gas stations, as well as higher light-product margins. Speedway's light-product margin increased to 18.23 cents per gallon in 2015 from 17.75 cents per gallon in 2014.
Higher operating expenses and other factors had a negative effect on segment income compared to fourth-quarter 2014, Tim Griffith, senior vice president and CFO, said on the call. These unfavorable effects on income were partially offset by higher merchandise margin, which increased from $324 million in fourth-quarter 2014 to $340 million in fourth-quarter 2015. The $16 million increase is a result of higher overall merchandise sales in addition to higher margins on those sales.
On a same-store basis, gasoline sales volumes were essentially flat, decreasing three-tenths of a percent and merchandise sales, excluding cigarettes decreased 2.7% in fourth-quarter 2015 compared with 2014.
Speedway's same-store gasoline sales growth was lower than estimated U.S. demand growth; however, “we still continue to be very bullish on gasoline demand going into the second part of the year,” Speedway president Tony Kenney said on the call.
Speedway's merchandise margin increased $393 million to $1.4 billion in 2015, primarily due to the increase in a number of locations as well as higher margins on the merchandise sold. Partially offsetting increases in Speedway income from operations for the year were higher operating expenses, primarily attributed to increase in the number of stores.
Findlay, Ohio-based MPC is the nation's fourth-largest refiner, with a crude oil refining capacity of approximately 1.8 million barrels per day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,600 independently owned gas stations across 19 states. Enon, Ohio-based Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest convenience-store chain, with approximately 2,770 c-stores in 22 states. MPC owns, leases or has ownership interests in approximately 8,300 miles of crude and light product pipelines and 5,000 miles of natural gas liquids (NGL) pipelines. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership (MLP). MPC's fully integrated system provides operational flexibility to move crude oil, NGLs, feedstocks and petroleum-related products through the company's distribution network and midstream service businesses in the Midwest, Northeast, Southeast and Gulf Coast regions.
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