Speedway Sees Record Year as Strategic Review Continues

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Speedway Sees Record Year as Strategic Review Continues

By Melissa Kress, Convenience Store News - 02/01/2017

FINDLAY, Ohio — Speedway LLC notched a record year in 2016, as its parent company Marathon Petroleum Corp. (MPC) delivered a solid performance overall.

"We were pleased with the results of the quarter across all areas of the business despite a 2016 that proved to be challenging from a commodity price and margin perspective," Gary R. Heminger, chairman, president and CEO, said during MPC's fourth-quarter earnings call Wednesday morning.

According to Heminger, Speedway set all-time records for the year, while continuing to maintain its disciplined approach to cost control. 

"Speedway surpassed segment all-time highs in income from operations, light product gallons sold, merchandise sales, and merchandise growth margin on both a percentage of sales and absolute dollar basis," he explained. "Speedway continues to exceed expectations by driving marketing enhancement opportunities and continuing to realize acquisition synergies across the network."

Speedway's segment income from operations was $165 million in the fourth quarter of 2016 and $734 million for full-year 2016, compared to $135 million in the fourth quarter of 2015 and $673 million for full-year 2015.

The increase in segment income from operations during the fourth quarter was primarily due to lower operating costs and an increase in merchandise margin, substantially offset by lower light product margin. Speedway's light product margin decreased from 18.23 cents per gallon in the fourth quarter of 2015 to 16.17 cents per gallon in the fourth quarter of 2016, the company reported. 

The increase in segment results for full-year 2016 was primarily due to higher merchandise margin and gains from asset sales, partially offset by lower light product margin, which decreased from 18.23 cents per gallon in full-year 2015 to 16.56 cents per gallon in full-year 2016.

Overall, MPC reported 2016 fourth-quarter earnings of $227 million, compared with earnings of $187 million in the fourth quarter of 2015. For the full-year 2016, earnings were $1.17 billion, vs. $2.85 billion for full-year 2015.


In addition to discussing its earnings on Wednesday's call, MPC also revealed its 2017 capital investment plan, which totals $1.7 billion excluding MPLX, a master limited partnership formed by MPC to own, operate, develop and acquire midstream energy infrastructure assets.

The corporation's planned spending is roughly in line with its 2016 capital spending and investments, and includes nearly $1.2 billion for refining and marketing, $380 million for Speedway, $90 million for midstream investments at MPC, and $100 million to support corporate activities, Heminger detailed.

The $380-million investment in Speedway will be used primarily to build new stores, and remodel and rebuild existing locations in its core markets, "driving continued growth and opportunities in merchandise across the platform," the CEO said.

Additionally, MPC is executing strategic actions to enhance shareholder value that were announced on Jan. 3. As CSNews Online previously reported, a special committee of the company's board of directors is conducting a full and thorough review of Speedway, with the assistance of an independent financial advisor, to ensure optimum value is being delivered to shareholders over the long term.

The company expects to provide an update on the review midyear, Heminger reiterated Wednesday. 

Findlay-based MPC is the nation's third-largest refiner, with a crude oil refining capacity of approximately 1.8 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,500 independently owned retail outlets across 19 states. In addition, Speedway, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,730 convenience stores in 21 states.