Completion of Speedway Sale Just Weeks Away

FINDLAY, Ohio — Marathon Petroleum Corp. (MPC) is getting closer to shedding its retail arm, Speedway LLC.

During the company's first-quarter 2021 earnings call on May 4, MPC President and CEO Michael Hennigan reported that the company is nearing completion of its $21-billion sale of Speedway to Irving, Texas-based 7-Eleven Inc.

The two sides originally expected the transaction to close in the first quarter of 2021; however, in March, MPC announced that the closing needed to be pushed back to the second quarter as the Federal Trade Commission (FTC) continued its review, as Convenience Store News previously reported.

"We believe at this point … that we’re in weeks, not months. We’re not days — it’s not going to be tomorrow, the next day — but we think we are down to weeks," Hennigan said during the May 4 call, noting that MPC is acting as an intermediary communication vehicle between 7-Eleven and the FTC.

"Obviously, we're at the table trying to understand if we can help the process at all," he said. "The best way to describe it is the FTC communicated to us that we’re in the final stage of the process. With that in mind, we think we’re within weeks."

The $2.1-billion price tag breaks out to approximately $4.5 billion in taxes and $16.5 billion in net proceeds. MPC plans to use the proceeds to enhance its core liquidity, reduce its standalone debt, and return capital to shareholders.

"We remain committed to using the Speedway sale proceeds to strengthen our balance sheet and return capital to MPC shareholders," Hennigan said.

For its part, 7-Eleven is preparing for the FTC's ruling on any anticompetitive concerns. In late April, the convenience store chain reached an agreement to divest 106 stores to CrossAmerica Partners LP for $263 million. The vast majority of these sites are currently operating under the Speedway brand. 

Q1 Financials

For the first quarter of 2021, MPC reported a net loss of $242 million, compared to a net loss of $9.2 billion for the first quarter of 2020. Adjusted net loss was $132 million, compared to $106 million for the same quarter in 2020.

Reported adjusted EBITDA for the quarter was $1.6 billion, driven by refining margin recovery, stability of its midstream business, and continued focus on lowering its overall cost structure, according to the company. First-quarter 2021 and first-quarter 2020 results included pretax charges of $70 million and $12.4 billion, respectively.

Speedway's income from operations was $330 million in Q1, compared to $400 million in the same quarter last year. Speedway's adjusted EBITDA was $332 million in the quarter vs. $499 million during the first quarter of 2020. MPC is required to report Speedway's results separately as discontinued operations.

Speedway's fuel margin was 25.67 cents per gallon in Q1 vs. 35.40 cents per gallon in the same three-month period a year ago. The chain's same-store gasoline sales volume decreased by 12.3 percent year over year, while same-store merchandise sales increased by 7 percent, reflecting impacts of the pandemic.

"Speedway fuel and merchandise volumes were impacted by usual seasonality in the first quarter. Fuel margins decreased and merchandise revenues were lower due to rising crude and product costs," said Chief Financial Officer Maryann Mannen. "Overall, we continue to see lower foot traffic and transaction counts than pre-COVID level."

Based in Findlay, Marathon Petroleum Corp. is an integrated downstream energy company that operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the U.S. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company.