Marathon Petroleum Corp Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Safety and Environmental: Achieved lowest company-wide OSHA recordable injury rate and strongest environmental performance in the last five years.
• Refining and Marketing: Delivered adjusted EBITDA per barrel of $5.33 in 2024, with refining utilization at 92% and commercial capture at 99%.
• Midstream (MPLX): Grew adjusted EBITDA 6% YOY in 2024, with a $2.5 billion annualized cash distribution to MPC. MPLX has a 2025 capital outlook of $2 billion, with 85% of growth capital allocated to growing natural gas and NGL businesses.
• Capital Investments: MPC's 2025 capital outlook excluding MPLX is $1.25 billion, with investments in refining and marketing projects like the distillate hydrotreater at Galveston Bay, Los Angeles Refinery improvements, and Robinson Product Flexibility Project. MPLX's 2025 capital outlook is $2 billion, focusing on expanding NGL value chain.
• Global Demand: Expect 2025 to be another year of record refined product demand, with steady demand for gasoline and diesel and growth in jet fuel.

Segment Performance

• Refining and Marketing Segment: In 2024, delivered adjusted EBITDA per barrel of $5.33. Refining utilization was 92% and commercial capture was 99%. Fourth quarter refining margins were seasonally weak but expected to improve in the second half of 2025 as refinery closures offset recent capacity additions.
• Midstream Segment (MPLX): Adjusted EBITDA grew 6% year-over-year in 2024. MPLX increased its quarterly distribution by 12.5% in 2024, resulting in an annualized cash distribution to MPC of $2.5 billion. This was the third consecutive year of distribution growth of 10% or greater, and MPLX has seen mid-single-digit adjusted EBITDA growth for four consecutive years. Since 2021, adjusted EBITDA has grown at a compound annual rate of 7%.

Guidance

• First-quarter 2025: Projected crude throughput volumes of just over 2.5 million barrels per day (85% utilization), turnaround expense ~$450 million.
• Full-year 2025: Turnaround expenses expected to be similar to last year at around $1.4 billion. Operating costs projected at $5.70 per barrel, distribution costs ~$1.5 billion, corporate costs ~$220 million.

Risks

• Tariffs: Potential impact on crude costs, with possible cost increases borne by producers and consumers, and MPC aiming to minimize margin impact via integrated system and commercial excellence.
• Regulatory Environment: Challenges on the West Coast with regulatory requirements and potential unplanned refinery downtime, as well as uncertainty in renewable diesel regulatory environment affecting margins and feedstock decisions.

Question and Answer

• Q: Neil Mehta on refining capture in 4Q, asking about seasonal drivers and regional breakdown. A: Maryann and Rick discussed strong export execution and asphalt performance contributing to 119% capture.
• Q: Douglas Leggate on tariffs and West Coast refinery dynamics. A: Maryann and Rick discussed scenario planning, integrated system flexibility, and regulatory compliance investments.
• Q: Manav Gupta on MPLX distribution funding buybacks. A: Maryann discussed MPLX's durable cash flows and potential for increased share repurchases with growing distributions.
• Q: Paul Cheng on turnaround costs. A: John Quaid discussed factors like COVID impact, asset portfolio changes, and scheduled outages affecting turnaround costs.
• Q: Roger Read on macro demand and sustainability. A: Maryann discussed expected demand growth, China dynamics, and commitment to sustainability initiatives.
• Q: Jason Gabelman on buybacks and debt refinancing. A: John Quaid and Maryann discussed cash availability for buybacks and potential asset drops, noting transparency in future drops.
• Q: John Royall on renewable diesel margins. A: Rick Hessling discussed Martinez's full operation and uncertainty in renewable diesel regulations, focusing on feedstock optimization.
• Q: Theresa Chen on LPG export and MPC's role. A: Rick Hessling discussed significant LPG export potential and MPC's marketing of 50% of the terminal facility.
• Q: Matthew Blair on renewable diesel feedstocks. A: Rick Hessling and Maryann discussed maximizing low-CI feedstocks and optimizing for 45Z regulations, with Martinez at full nameplate capacity.