Marathon Petroleum Says Its Best Days Are Still Ahead

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Marathon Petroleum Says Its Best Days Are Still Ahead


FINDLAY, Ohio – Marathon Petroleum Corp. is confident and optimistic about 2014 coming off what President and CEO Gary R. Heminger called "a strong finish to an excellent year." During the company's earnings call today for the fourth quarter of 2013, he said this last quarter served as a rebound to some challenging market conditions faced in the third quarter.

Looking back at the year, Heminger noted that Speedway LLC, Marathon's retail subsidiary, expanded its footprint from seven to nine states. Upcoming plans for the convenience store division include leveraging its "strong business model" to pursue organic investments and growth opportunities within the c-store industry.

Speedway's income reached $83 million during Q4 2013, ended Dec. 31, up from $77 million during Q4 2012. For the full year, its 2013 income was $375 million, up from $310 million during full-year 2012. This marked record annual earnings for the business.

The year-over-year difference in Speedway's quarterly income was primarily due to a higher merchandise gross margin, despite being partially offset by a decrease in gasoline and distillate gross margin.

The full-year income increase came mainly from both higher annual gasoline and distillate gross margins and a higher merchandise gross margin. This was partially offset by higher operating expenses related to an increase in the chain’s number of c-stores, the company said. Speedway upped its total store count from 1,464 at the end of 2012 to 1,478 at the end of 2013.

Same-store merchandise sales at Speedway stores (excluding cigarettes) and gasoline sales volume both increased during the fourth quarter compared to one year ago. Both metrics also saw positive growth for the full year.

Speedway's average price for a gallon of regular gasoline during the fourth quarter was $3.14, down from $3.32 a year ago. Extreme weather conditions in the Midwest played a part in reducing demand during the quarter, the company noted.

Companywide, Marathon Petroleum reported adjusted earnings of $633 million for the fourth quarter, down from $760 million during the same timeframe last year. Full-year adjusted earnings were $2.17 billion, compared to $3.35 billion in 2012. The company's February acquisition of the Galveston Bay refinery in Texas contributed to higher direct operating expenses, but the company considers the refinery an "attractive addition" and is pleased with developments there, Heminger explained.

Looking into the future, Marathon Petroleum's capital expenditures will be focused on growing its midstream and retail businesses over the 2014-2016 period. "We believe our best days are still in front of us," Heminger added.