MPC - Earnings call transcript Q3 2020 | Marathon Petroleum Corporation

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Operator

Welcome to the MPC Third Quarter 2020 Earnings Call. My name is Sheela, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. begin. may you Kristina,

Kristina Kazarian

Petroleum that quarter be accompany at Investors our Marathon call. found earnings The website tab. the under slides this marathonpetroleum.com, Corporation's to XXXX third conference on Welcome call can

today call other to X. and our read the on Safe of me are Hennigan, statements Templin, members invite CEO; We Team. Harbor Mike Executive the CFO; Don you Slide Joining on

as differ that forward-looking as there, We Actual factors over call actual today. filings making our I'll the well differ, statements With could will are results with to be may results cause to that, Mike. included the in SEC. turn

Mike Hennigan

these Kristina, highlights strategic us enable position joining our Thanks, focus pillars our the X, strategic to long-term success company three resiliency. morning. on areas cycle of Slides Building for and three thanks company's near-term. through in will call and the for this executing and

position the and within the our continue we've remained we for commercial lowering On strategic our COVID-XX, As structure. this both on of three cost provide around performance, navigate X, by to the includes, taken our of strengthening quarter. we industry, actions our quick created control. Slide assets, a This challenges aspects our company the priorities and those focused update our business competitive on improving

progress completing close close on transaction. focused the The First, required Speedway business X-Eleven sales XXXX to are transaction. first activities good the very the we're and making the to of Speedway on of continue to quarter target the teams successfully and

have Additionally, our with been constructive. FTC the interactions

to MPLX sale, to the the since have also receive use continued provide in. wanted of Speedway around an color about buy questions from We we more proceeds

the that this review comprehensive a we year, ran review earlier year. we know, that of and midstream began process results last you As announced

Speedway with MPC sale. to intend the sale MPLX return to buy to using Our changed. an conclusion to remained balance our and that not proceeds capital cash and the sheet do shareholders, strengthen process committed We've from has from not

order with As it authorized cash to buybacks proceed to which after position relates however, Board. the by capital, have been distributions towards we continue MPLX unit to MPLX, free in MPLX flow and now

important as of proceeds commitment investment profile. use One grade is we priorities evaluate credit our an defending of most to our the

expect target X of MPC to leverage We times. debt-to-EBITDA alone in to metric X.X

Given MPLX, an the distributions significant balance stable of on than don't a with from true envision $X and less MPC we debt basis. cycle sheet billion

Within based we the offset an increase cash by to expect reminder, a on component our targeted billion cash additional return. also remaining As of loss current expect for to core assessment, the shareholder our and for liquidity this $X framework will from Speedway. we of the flows be position, proceeds that

transaction the and share are our form to closer close. We and plans evaluating we'll timing their

we've despite submitted Martinez feedstock We're In schedule, regulators. into renewable a excellent to on We're ability the Refinery to of engineering starting the expected began convert plans XX,XXX also Since to renewables, our diesel. renewable renewable weather recent North of the to of day process proud advance team's facility, Dakota facility. and fuel ahead the time of we detailed execution, our to Dickinson, challenging with October, reported area. the process we local to permit important produce also advancing Moving barrels in to weeks We're three you conditions. work. this investment continue commitment early diesel full move in on we to particularly at the suppliers, application our last and progress up startup the capacity made up is per our discussions

aspects track structurally of to business. reductions exceed We're our of maintaining earlier Finally, dollars on we in this of we We're strong that to continue expense billion spending targeted year. on all $X.X discipline focus are spent. how announced exercise also capital our capital and the lowering on costs

a result operating to this of reductions million. focus, XXXX to As expect exceed our expense of $XXX forecast we

long-term reduce the people reduce not we more incremental to steps workforce structure, cost than difficult took including to our decision lightly. the implementation was also by reduction made of During X,XXX quarter, our plan. a The workforce

to I treating our with are committed focused as uniquely resiliency we that take my can for respect matter positioned. long-term company position lies steps and we to by No necessary are we're I through started We employees control. things off the on believe integrity comments cycle we enhance what our and ahead, the saying prospects. these financial

to With the the strengthen have our sheet substantial shareholders sale, simultaneously. ability to Speedway our returns we balance make capital will and

sale about our optimistic provides more review long-term. Speedway both it a the to our share from to value dividend. results. support pathway meaningfully clear the At proceeds we challenging over to reducing after-tax where I'd our the environment, and capability we to shareholder see ability point, a which With this count, short in Don to the quarter are like turn deliver third to It's

Don Templin

was quarter EBITDA adjusted XXXX. the third for billion Thanks $X of Mike. MPC's

adjustment the turnaround announced are costs, well on indefinite to in addition costs $XXX million workforce idling our facilities, of X. related of quarter, net EBITDA and Slide recorded In We of the as reduction pre-tax to million Gallup adjusted excludes Martinez third which associated with expense charges recorded as our plan. $XXX summarized for the restructuring

no we associated Due Martinez related longer adjustments inventories, inventory at We expense, $XXX million LIFO $XXX assets crude the primarily liquidation carrying a Refinery. that recorded the to of have a two recorded continuing million lower use recorded also charge. will for We with impairment quarter.

I the periods. Speedway, we about to now $XXX in a inventory to a benefit Due through cost changes charges to We results of summarizing recorded market to also it from or slides, brought operations. the which prices, this present of might walk are lower couple of sale thought commodity taken higher reverses announced financial as million discontinued prior be partially our reporting Speedway's requirement. required useful by

was have being Slide of component rather segment, retail our captured standalone previously which direct component Speedway's for retained are was As illustration recast reporting the historical of by MPC segment. its reporting results a how to X, been period the reflect On of the now is the an periods and changed. segment. refining has on X, other and adjusted in and reported included what provide these Slide retail current will separately, The results marketing in we as historical shown being be EBITDA dealer changes. business, than of Results

to moving differently presentation. addition reporting In separately, previous operations and Speedway presented to their be requires to Speedway's compared direct dealer results to R&M, accounting as discontinued

costs which are First, of allocation longer costs, to Speedway. previously to recast allocated business. periods been Corporate to been any have the MPC no Corporate all allocated Results exclude for had Speedway to MPC

million second XXXX quarter quarter third both XXXX see the on this $X adjustments and can slide. for You

is ceased a recording we beginning Speedway of change Second, of the agreement. XXXX time for from depreciation August of and forward. sale the from the prospective the amortization signing This

You to XXXX. won't put wanted see third metrics. for mention for comparability Slide to impact impact XXXX in million but was $XX that XXXX. month that adjusted averaging sequential To amortization I in since slide the X, in per second quarter about it Speedway on EBITDA other from and perspective, will this it quarter shows it because EBITDA, change financial depreciation shows

million discontinued has As as to increased a operation. $XXX earnings quarter-over-quarter, EBITDA Speedway refining recast up due reminder, adjusted approximately midstream. been second Adjusted to from a and the EBITDA was quarter reflect

approximately as pre-tax Third $XXX discussed million, quarter of results also included previously. net adjustments

segment. provides overview our an Moving our of and Slide results. refining X segment to marketing

improved million. EBITDA quarter Third $XXX adjusted by

million As has of accounted direct a to the for dealer second recast and EBITDA reminder, been include third business. in the XXXX, business EBITDA million $XXX adjusted quarter R&M of segment $XXX This quarter. the the for in

narrowed While compared improved regions quarter. considerably margins differentials remained to all crude the second crack spreads pressure, quarter-over-quarter, as in under

focused Mike earlier, As our structurally we mentioned on costs. are reducing very

the quarter higher the the us resumption were were compared maintenance our EBITDA confidence You'll million structural utilization more more quarter down second change is $XXX than quarter reductions in on quarter third the operating and and quarter that of shows recall quarter. fourth of that were would operating the which of our versus our increased million significantly the costs. XXXX. focus terms, much compared Despite activities, Slide our costs XXXX, such and quarter the actually lower down of than our to XX, first costs gives This In quarter working. than costs XXXX. turnarounds, $XXX absolute the than second ordinarily third second when costs, to have lower first expense when as midstream

demonstrate resiliency stability, continues earnings increasing million with from and to midstream $XX segment quarter. EBITDA by Our last

and quarter help results operating environment. the Our expense would the contracts capital operation. of to stability performance execution be highlights an overview quality our of of challenging and the reductions we during as XX, our a discontinued on Slide provides Speedway knew a businesses, what offset third underlying our

from million EBITDA Third second quarter. quarter $XX adjusted is down

working $X.XX done includes approximately of quarter. was excellent restructuring to Cash continue fuel first While commodity future a in The portion Working are the change increase on well from presents increasing end cash based we Adjusted a the the from of projected here, improve transaction will and for which our recover continued as to than sales quarter. was related per on rising $XX Slide as lower in the elements was regional counts. quarter. the liabilities as an throughput utilization and fourth to reduced at nearly operating quarter, in expenses demand. outlook, accrued our an capital continued Expenses that year. are use working estimated with prices were of Merchandise Capital On $X.X at second million, reflects lower in in source quarter, than the in sequential cash $XX cash quarter third position paid be capital to the team quarter same capital Speedway margins shown XX, Changes million. approximately consolidated provide gallon million and prior Slide $XXX quarter changes approximately has basis environment flat approximately facilities cash also $XXX XX, quarter. periods. control in an also before flow in reverse demand of working expense quarter-over-quarter, as our the the of quarter million impacts fuel last billion year-over-year. cash the job volumes of

approximately throughput fourth down Distribution volumes day, million quarter. third quarter the to from under for be total per of expect We throughput. billion $X.X slightly just X.X are costs expected barrels actual

separately. Plant these El fourth quarter, including be our $X.XX and operating major which some projected costs for facilities. we activity projected of gross While $XXX to maintenance turnaround projects per in are our Total them engineering be costs to margin, barrel called the out the quarter. at Paso million as and have includes peers historically Catlettsburg are part costs, report of

me let expect $X.XX to still billion, of billion the billion approximately reflecting back merchandise in Mike sales from some gallons $X.XX recovery XXXX. remarks. With fuel down we billion that, demand, for range Speedway, and closing X.X volumes some to turn but gallons, X.X of For in call to over a

Mike Hennigan

Thanks, in take highlights We I'd the XX our Don. engaged report, appendix. year to corporate scenarios the we some to comments have recently opportunities responsibilities climate be on our like to perspectives Slide provide published related company work and leadership. is TCFD which on on in the the related a found is published of XXXX can report, which climate highlights planning This compliant around scenarios. our fourth strategic moment

As a mention XXXX greenhouse continued announcement refinements by established, important emissions levels to our XX% to perspectives, year to our result XXXX. and we additional have ESG reduce two of earlier below incremental this initiatives intensity gas to want we of

to from intensity business First, levels. to emissions established methane XXXX we've our natural below gas a goal XX% reduce XXXX

of efforts commitment ESG the journey communities. partners, conserving performances conduct and this we deliver. as continuing Kristina. our XX% our expect how we withdrawal business Second, value the to additional on we're freshwater We and Through with an call have we With back XX% by engagement our people, our process to to by by creation, over view our over and we turn the shared to and our that, customers XXXX. let forward enhances use sustainability in focusing our business stakeholder fundamental me further managing since of water. We reduced look area, and it XXXX, in reduce intensity

Kristina Kazarian

Mike. Thanks,

re As your to question will a we participants, all ask additional courtesy open the you prompt as we yourself to one we that questions. call for If and follow-up. limit time questions, one for permits,

call will open now Operator? We the questions. to

Operator

you. Thank

will Doug come question-and-answer Instructions] session. with question of We Legate [Operator will America. first begin now Our Bank from the

open. is line Your

Doug Legate

comment XX% little if Good I you. I the MPLX, you yield And appreciate Well, And to why bit advantage thank not a as be the and on MPC it remind probably wonder however, obviously this going as on a that sense we want clarity on a to the just statement happens recent well. the question is under you MPLX after are the ask an tax at may MPC justification. everybody. over to little a I'm just I buying morning, something sure Mike, that know, for to X%. election at justification to, what for have relative But awaits versus make could you as point? you does elaborate on

Mike Hennigan

Hey. Good morning, Doug.

you we order continuously to that have the So stated couple goals and back comments. balance I'll been Number in return MPC give put capital shareholders. one, of sheet our

in believe Speedway we So, But is best we at in made at XX% look said, of months, equities as which shareholders be very sale around should both we that where on improve time, our capital are the dovetail X-Eleven. we compared certainly at returning as like a our form that ourselves buying change of continue free we can last so the going flow, mean MPC and same that's MPC MPLX at undervalued into Speedway, after the acknowledge MPLX, the today and capital a people base you couple to we cash of into put think shareholder believe considerably to for think what MPC. units buying and MPLX then plans We in in a back And yield return our to we yield Particularly that about, a view it still we MPLX. to over distributions the of MPC At our with value back with to in a argument that are if we've should the which buybacks. with look cash I proceed cash to we've believe capital the we the both the long-term. view for And we priority equities, position flow ourselves form from shareholders, with here. MPLX, done noted the base first or of have return do spin a to at target start MPLX's at win-win enhanced you a I case units undervalued. is you commitment

end have at, those talk buybacks better of We to is and still something also mentioned of think we're But which still a the said on closing, about. right first we we're form the it's before going to a little continue and bit continuing use call the to believe to we're shareholders, evaluate, But of our that to day, we get value anticipating we look we've proceeds. we Board continuing the time timing at it's of to much proposition for MPC quarter.

Doug Legate

numbers. but on or in the I you on your can I sure starting questions reductions show get headcount it. answer. you up to looks I'm to It probably Okay. portfolio. debate is mentioned least follow-up, the may, the that, appreciate We the if reductions cost are My continue operating like at

can next give to there. any for you what but know is it specifics, the to an you've steps somewhat you you more give on, if the specifics as going leave portfolio? you see wondered, been see us how offer I'll you. wondered I So are and any if process can clarity, I any Thank reluctant just the just update on as

Mike Hennigan

been on important very I win-win. Doug. most of we've comments, we've going things is portfolio, a mentioned been obviously, the A sale Speedway the Thanks, Yes. couple about. public

is space. we're facility important about moving think the fuel a color time, us. retail at margin in and on at chain, We talked so monetizing continuing assets group by think an same plans their X-Eleven give enhance We're more keeping is Dakota. At the I can a into the day, the that well, supply renewable little I end of portfolio. the up We've getting also as team that a quality the of step starting a but for portfolio that's North Martinez. MPC up

have competitive our we our make will continue going time. that to look public you portfolio goal have we discussions we're those through tough the So, assets major that of today. that, environments, any like set that type to in at can this we our portfolio a and about manage sure tell of is are at experiencing I

are thing basis, the of our cost company. cutting to is that structure going a to cost time and you see quarter-to-quarter other hopefully continue the The to on efforts change

areas. One of ahead my continue to styles get is because not to internally it. ourselves in of work we different at ourselves, continuing challenge to We're

look And on And that to is you'll see best see out each our of way area. apprised to as this as quarterly the as restructuring sense concentration So we're what the delivering able results, effort think costs you'll quarter. to we stay to of I really a of company. far continue at be report

Doug Legate

again on and that to been but Mike, I Can of for exit in speculation the leave the There's will directly, market you clarification. Coast. I the appreciate you it full were one answer, looking there? that address just Thanks. assets your Gulf

Mike Hennigan

and the costs, think quarterly a is, specifically. much as get can to you that color then on the that to comment as Don from you on updates as you at give for and good try how let where about get and exit there's we Doug, And basis, the results expecting on we're assessment we'll of to I'll that look at us the of think, are West lot And ways in important all and assets. our the assets our structure Yes. our in Coast, Gulf I the evaluate a the now, We're always midcontinent. of to thing cost to rumors. looking can on But we we we're right that continue a again, Gulf Coast, Coast delivering, try see not reduce expecting occurred.

workforce we business in reduction. of tough things One did is, a the implement our

us, said, decision thought that's viability we the for it my long-term of prepared the very was a for I remarks, necessary Corporation. in difficult but As

Don Templin

Yes. we to our might indicated about we'd of around that call, we reduce you in Doug, that end planning by first talked had reducing reducing the Mike's told add our all quarter, two And comments, our we the billion. expenses. were we I he things about targeting at earnings capital when and were capital $X.X

think respect to targeting. targeting $XXX $XXX we we're we've we're our be some the right $XXX probably the million than is is better part million do side was than business, now. target of to the really that $XXX the $XXX that were R&M million doing that R&M improvement the improvement we'll on was you'll effort cost think but trending of difference MPLX $XXX that and the the of business. Most reductions the for the reductions were seeing would $XXX part I and also and that And With of that rest MPLX business. for billion the for million of to where particularly sort they MPLX, I for million the - around MPC, them business, the MPLX. the refining side MPC. million respect of With on of recall and their excluding seen of well against million evenly $X.X better and split MPLX,

So the a quarter that that's of announcement, been I about since better made XXXX. mentioned first than billion our million operating $XXX that $X.XX costs we have averaging quarter about

million. to and what a $X.XX extrapolated would our quarter, just $XXX that guidance you that of a you range, same billion $XXX get if to against is that So million about in was fourth right of quarter - gets for the target that sort you

ability about that our cost really reduction. deliver feel we to So, good

Doug Legate

Thanks it. the Great. answers, fellows. I for full appreciate

Don Templin

welcome, Doug. You're

Operator

you. Thank

will question from Goldman next Neil Sachs. Our with Mehta come

Your is open. line

Neil Mehta

then about be will to it QX. believe I we program. be just guys of they'll milestones allocation transaction, this, the cash And track the terms the It be guess fill for think the buyback guys. to and that of for in are morning, watching you like seem good should back a extent the doing Speedway Hey, on what does closure going the of transaction? as you And you executing large this morning. thanks hurdles

tactical doing much That's question. as that's to of you about my reduce question. possible? do a efficiently the you're that it think more count share and how Just first as of ensuring able So

Mike Hennigan

Good morning, Neil.

I did we the expected. as expecting a request We was part, mean, second were process the on So your X-Eleven is going that. first along receive expecting FTC. And from that,

result that. the this of that, timing. that have Overall, through takes And process. time working that going seen that moment don't We is general, are why would teams not just see any the out did, at targeted that to questions of quarter off I in we've say But through surprises. that if is communicate come as Obviously, the say, timing. takes as this that's that now anything us we get expected such first we of it So review. a situation we have the and I'd right would process

is Our thinking what as would FTC the X-Eleven with anticipation ask of very what consistent well. was

process target. is the on our what overall, forget. for So forgot still second - quarter I'd the first I a question, And expectation say was just close. is I

Don Templin

around was or returning shares, process for the capital return, It share a will. you if or repurchase

Mike Hennigan

proceeds. on prepared I put of to mentioned Okay. on Neil, in that, we've Yes. use the some remarks clarity And that, tried

at to we'd bit more $X going at more give sheet we we But basically debt a we want MPC. clarity scenario appropriate it's mentioned, be. mean, on said our below the DNA of order. clarity cash, planning. Doug state planning, MPC return to little ones, as to was some not that to amount sheet not in. billion. scenario the wanted our that going is have get with We an buy the that in balance an As to And of goal We're by MPLX gives well which cycle I do thought, of hopefully, balance the not mid see questions our a MPLX in shareholders, as this buy to there predict around to as but definitively lot a leverage our don't we what's little

a that to we it. how good market thought thinking disclosure we're And about was for understand so the that

we're still as far that the return, process. As in

return you is the it been head, closure I Don, We most advisors. point. And whole have us efficient hit think to the several the a evaluating little there's team as that you bit on we more And ways lot get reach close, more Board, of that way what's months there. But to debating. And we we we we'll And to each Myself, cons for point. exactly in it's of know, the our before and expectation what return that the that's you are process have this that's can the closer to there with clarity capital, a capital? those. where that the go as our are pros give different at

Neil Mehta

efficiency clear, and on No, for Don. been a your just that's happening you as diesel, side, very changes Mike And positive to renewable do the out about long-term you but Coast? want follow-up the couple on is, there, Coast. of the on lots on market medium the West different perspective weigh asset I the West different think standards, the there's outlook pieces the refining a factors, How moving closures. in

Mike Hennigan

Hey, can Neil, likes I'll start he jump Ray. and Don or if in

it's is I One rationalization in that you COVID a with is and a cycle. industry, occurring would pace this downward don't occurring things be think that of forcing faster normally the want in

So, Gallup the at result move think it certainly And point a mode. that things Martinez, one this structure. renewable also that's diesel announced of for cost we've are changing that shutdown board, we've configuration the our we're to a of put goal Marathon, its across in seeing I to the at as we

industry more. the that things accelerating is of control. would rationalization. moving going the So, things survive believe on things control that's we're asset that. of hydrocarbons diesel. now. the Neil we And my And Coast Ray expectation prepared we have our and The Coast, what little the way can a long-term, is, get was cost keep industries to don't into But whether control. and in do specifically challenge, out the in that is processing the like cyclical that stress is an is not stress is COVID we or a it's worldwide, moving is on West tough something about high go can I that the a our just to lot update bit eye worry the an we global that under motto Overall, control we said, that the remarks, our change, And it's or out right that view West on renewable whether expeditiously we do

study. Coast, forward At with the same hopefully, on So, evaluate back costs what we're that gave in as just you, we're Don continuing moving color of with a rest just then to well And lot company. the on as we West reiterate again, that I'll time, more are doing the the area. tell we'll that update we'll style our will to how to goes time you as and initiatives, you by. any major give update changes that initiative, an such and these how we're on every cost tell happy be portfolio progressing quarter our and try progressing Martinez, be you we're with the

Neil Mehta

guys. Thanks,

Mike Hennigan

welcome, You're Neil.

Operator

Our next question will come from Roger Read with Wells Fargo.

line open. is Your

Roger Read

of kind everybody. to dive last of question. your answer into to I Neil's parts morning, guess thanks. Good really Yes,

what as step first here. well? expectations most rationalization are industry, own about between and the occur of Marathon I in and if I a here? yearend QX - your do on for it's the may of it's the look as decisions what taking else I think an know, obviously big for next absolutely of combination of we magnitude, you What do that's the we if mean, it's As have QX guess, timing, a industry kind industry of the is year struggling thoughts don't big now two for into, to

Mike Hennigan

a expectation of the of the little and the on day, things into demand back think, loss occurs, the and that have day, demand progressing, And I'm occurred to about, margin bit, a at of I vaccines it's demand twofold, better it's is previous business, been doing is, we help to question marginal are is industry we'll demand this that assets, you that's supply the good the we've we've COVID. the one But on so end seen itself matter said occur accelerated about. on one way Overall, like rationalize. and And whenever the point that'll have side, the the recovered reading at point, bit you quite to sure with been jet gets a gasoline addressed been a a your the levels then to much to fuel. commodity that diesel has a for the of back That the reading result Neil's a hopefully very the purely pointed Roger, that of are And obviously post-Coronavirus, the it's but is is that that is, great of recovers math side. business. and virus. position is you guys news. of sooner as out end to is than struggling not And industry as

look cost at data, will reason main in line that marginal not the of some markets. our be, is And wherever a be that commodity a dips world, able that the to of even sustain occurring key of themselves and you types in that bottom our rationalization structure from assets is whatever, outside one a may short-term get long-term. initiatives manage new position or these in can standpoint, demand U.S. If the is the

so as hopefully, see changes, will continue sure So, important that and whether goals occur industry occurring, will to day or our to globally-related, one we're comes Neil's that a initiatives, work structure quarter on marginal the of end you'll rationalization the quarter assets. at cost we footing. demand better ourselves is U.S.-related gets back make on or I Coast-related of not think progress, after these continue position is point, and and itself back continue the to To we and our occur, to the that it's West

Roger Read

cash for we QX, look the question on But on QX Great, And Okay. here recovery, tax big then are side, call thanks. as discussed move number somewhat then receivable cash your the that income And the of change was expectation thoughts a flow the call. was guess any front? questions. Don, I capital shakes where non-operating a working of just kind quarter? them you, year what last kind had if we curious of, next And into that on of in there's I that out? next in

Don Templin

Yes.

refund. tax in question Roger, second your of terms sort a take me let first, of So

anticipate a to prior significant have So, into will that that years. carry and we this the we NOL ability relatively have we back will year,

in our not increase a XX-Q, you there's flow tax a cash sort in $X about statement preview receivables have XX-Q, in give of We but billion. kind I'll an see of published the yet you'll the that of

to a and optimizing So of be year, on the sure Obviously, sort and - of that we end right the there's that probably that will make would that or manage as of now to change want XXXX. change right that now, But knobs If balance the may end having tax things between that billion-ish or the of forecast a XXXX, the in law, be levers can refund. a at of the say between now in our in sort be I will third lots see we're the what year. we right numbers will tax now, to balance we quarter. sheet may in some and of sheet in related range end that on the now our $X receivable the to we want situation there's our of sitting happen administration

that how will of take it'll all in that that the for wait thing tax the that think into we'll I happen. time third things just But I quarter, we of have I everything quarter. closed, is get get filed, and And fast some our then tax say return to timing, timing completed, do. other the refund, think need reason is, I terms to XXXX don't period the to The returns know realistically, the and not second probably

helpful the recall we charge accruals restructurings the to impact. one adjustment, had liquidations. LIFO of working other we you're a to large so working we capital that guess, right, the And piece piece million were I that's in for that's made cash of with million, from quarter, the working you'll in respect that capital doing. $XXX for the a capital that the we had I perspective. think terms fairly flow And that hopefully highlighted statement that impact we then that in related So, $XXX

as is flow in And cash flow cash in the you a will, as from inventory showing So then in working flow negative, of that the source cash showing a cash from the is statement charge up $XXX million capital. up - if reduction operations.

some is quarter we've statement probably little charges has the of of a there's So, unusual because cash - flow in our it of some a bit recorded. that bit this items

$XXX ended the change at down from because that I end $XXX we change the we where forward, was you about we as cash, quarter think we pleased really As some was quarter MPLX. million at with think debt of second And if mean, of million were up change, with paid $XXX million. the and about sort

for pretty operating. I we're and which strong environment the a situation in think quarter So us, the cash given

Roger Read

Definitely. Thanks.

was comment tax will we Just Q but change, should to receivable. it is And later, billion the just… out on clarify appreciate about? QX I'd think $X to year-to-date? that QX like come I the Or The the your

Don Templin

year-to-date, That's Roger.

will done cash cash the that for a the statement year-to-date cash be period. for in flow done statement. flow a The has So not flow has statement quarter,

$X that is billion So the number. in year-to-date

Roger Read

you. Thank great. Okay,

Operator

Manav Gupta question with Credit will from next Our come Suisse.

Your line is open.

Manav Gupta

trying be on converted. program just help all can would in some this get market right Dakota in now, logistics day Dickinson the closer case a the marketing we get and product to similar which California. the value, end to the way guys. puts the barrels can moves and involved us understand, you where Canada you North trying understand, North But At point, XX,XXX getting your move from the you. so Hey, hope you Refinery create to highest the the would Dakota, Congrats now market right when California? it you to to how I'm a

Brian Partee

for the question. Good Brian Yes, Partee. Thanks Manav, is morning. this

all you'd working distribution startup. is the as network set production We're got distribution it's through expect, a So It and we've the up. complex new too. channel and

so got loading rail. transit we've So be the time, [ph] out we'll

hit from a Pacific of where the to rail to Northwest, be we get and there. as lot flexibility Dakota, the to we'll able moving So we'll be the in then water North it

demand. we contract the sales on then be and typical, flexibility hit rail we'll of the into to move, well sell see we a as got from portfolio From to frankly, got as full as wherever standpoint, Coast and the California, open we Canada, we've marketing optimize noted, you We've rack is into committed a sales. West as bulk as lot market, have both So, domestically, both well how the as water in to else sales. a out

see come been So not we're has to into the the on. production market problem. a excited We're very optimistic placing

we've in. late obviously and Cash so lined thing. really important, in we've So to got ready up the mid on got though, of end to probably other go. In things oil is December, we think startup,

production distribution. So late probably for then with we'll on full December be mid to that, well really to QX and rolling the XXXX and full set of up be

Manav Gupta

And Thanks. quick a I follow-up. have

filed permit the I October X. conversion, think your You Martinez for

there. higher You understand to feedstocks? help you intensity work lower the breakup carbon Thank carbon Refinery? the have listed us plan in lower And between way would the carbon feedstocks feedstocks do various Can to you intensity get Martinez how the feedstocks intensity versus you.

Ray Brooks

this the is Brooks. question. Hey, Ray Manav, Thanks for

optimize, optimize the the when say Our optimize first then the of slate. to then has also and the facility I refinery. complete operation, always been And intensity construction of up, carbon and the feedstock the goal started

happy United renewable day that feed on of really construction any plant I'm sure just site, an under the I largest barrel start the so facility, currently three And Doing of happy years. out to that shovel to for pandemic, to might really this that diesel in to within accomplished. that of everything a but capabilities renewable feed I'm make day question just X,XXX early, to a go slate, we is while in earlier. barrels that it's early mover Mike were we're that from States. impressive they've think navigating excited you at completed being second to weeks I And day proud And barrels was really corn to two through Dickinson the two the up just North want initial we also oil, said small, really XX,XXX space. as to now and XX,XXX Dakota state getting we'll startup I winters the slate plant the work and in and about is the that I'm that really, But report want plant team and is say able oil. about the diesel that we diligently your optimize a the it's plant soybean in have. a

Manav Gupta

feedstocks are to Martinez was side. feedstock that Sorry, But run plan on far lower versus concerned? CI do you more as Martinez wasn't my CI question the as clear. How higher

Ray Brooks

feedstocks, will very efficient us extensive corn, from facility infrastructure just more a it's about plants project. And we little oil. a run looking capital it capital with soy, give and be a whether cooking little Pivoting project that information hydro able to we're the gives a to that tallow, excited bit it's an Martinez from for. hydrogen it's use and multitude whether a standpoint processing whether you're that efficient three us two you But about I'll the it's gives have Martinez a standpoint to talk bit Martinez units, of we whether

to get into working from detailed last hard The with done we've what on to met engineering Dickinson farther feedstock out program, submitted there, far is feasibility for moved potential with governmental to the now initial impact project, submitted right talking in We've us applications the we've regulatory, also flexibility the our also suppliers are But that environmental in designing we've completed point. that our study And and the we're for that. partners air quarter, key We've bit the stakeholders. NGO the and We as report. Martinez, a into engineering. Martinez operation. feedstock permit. into currently we're diligently standpoint now project. And working as while little

that on along part along. that then we're And So, moving move of the will be continuing feedstock supply. also to

ready what you to going So, that, on on working you tell it. we're we're exactly do to that not tell we're just

Manav Gupta

so Thank guys. is much, you this helpful. very No,

Don Templin

to of point of Hey, asked Dickinson the to about Manav, raise, this other sort you'd product is to just sort Don. move Coast. One West cost the

in to sort So, our change that Dickinson up slightly. slight related of costs costs of And to distribution that distribution Coast. is saw West you outlook getting reflective the probably the product in went the distribution costs information

Manav Gupta

guys. Thank you, Thank you.

Don Templin

Manav. welcome, You're

Operator

Thank you.

Stanley. with Wong will question Benny Morgan from next come Our

open. is line Your

Benny Wong

expectations one lower guys you, going approach domestically. My around see more good business? and I for And how volumes think, into how my morning, think environment does midstream for of business? activity the do taking Thanks guys. upstream Hey, really is forward, an question. the that see you changing? part about translate first the that How there's moderated you E&P potentially how

Mike Hennigan

is Mike. Benny, this Hey,

changed. in portion things. we're pretty couple front we the have I that And since to midstream natural things So, of of now at MPLX was say mean, tough COVID, has question strip Number And gas gas were looking compared prices. it some getting prior three lot one to a the obviously, one, of in number what the was, a COVID, asked a gas I'll business.

grow. a to same going view goes normal believe we time, to that a point, the you believe as comes gas to a in business at continue part pace, back the of the important if is vaccine right we in rely mode. back longer-term, we'll business be important At going an through to so market LMS going we've landscape, time, our we gas view demand really once an get our and I out our we the as E&P evolve to our get slower do out But little is, virus of do is dividend It's energy structure. stable think repeat in important is kind earlier, to natural have part or growth. continues now, well. thing get that of to different the important same is an albeit and MPLX of So, At I'm business little mentioned as and an being and the MPLX. natural of bit structure. the that on just this, stated a comes MPCs distribution part To continue We midstream myself to a maybe

will We couple a play right have now additional projects in that earnings. bring

the and add you that earnings stability MPLX. than at of increase one E&P be contributor as will be there which I a structure a And MPC. At of as the been the day, anticipated, I'd of originally result has little the the continue So, earnings, of at bit continues end of little the MPLX, have is, even going end that tell day, think misunderstood things think as earnings far may to growth hopefully, how supplemented this that talked is, well. slower growth think profile quarter at by a reductions continue we the it that both as MPLX strong about well to it gets forward how it's strong the change. But to as as the to to value much a we've show for and very being we cost

Benny Wong

Thanks, I Mike. be That's the appreciate for but follow-up might anybody. open very information and in changes be clear reporting. Don, helpful. could obviously, My around for the recent

essentially, out you you so eventually investors business you think curious be benchmark going for refining how peers? or direct could just of make business grows the broken your your marketing marketing your of can refining, breaking you the present like about you disclosures, as forward, Just company, business how renewable some dealer And comparable can your make business how how some think it present to at it about out, performance diesel your easier that your guys? just and point doesn't So, peers? sense some for to curious and more Thanks. can

Don Templin

Benny, that this for question. is Don. Thanks

a was could helpful, one that our sort is the on be feedback investors, of there So, request we've over focused think will a quarters I with or you from the say so could that your lot or is. from let's we things right you so, of last been whatever four suggestion where to very that all to and of that get that a models we the tightened refined, changes, the you quarter-to-quarter terminology reporting all, point information if get was the up it way were without so consistent stabilized a

we've point. So, I that think gotten to

way would thinking when of view other new a of how our view, one be that operates presents out with of we can company through can or And and that of it quarter a Mike's transition, is We a periods. the including recast you discontinued we so and get the at appropriate This the obviously how lots And changes. your all that whole about was the we its still time. it information that introduce some the restructuring of roll need how there's do to as that the sort of operations. where a quarter clear. confusion timely, any can we're occurring. to it, sort the are prior you lot isn't that models avoid data provide situations information pieces, think We all optimizing update about talked guess moving quarter an time didn't company, was to best changes I of we're my bunch

should So looking time the do yes, all be will we presenting thinking This you that the to look are think that. time But we you to what's understand just present about the on to how of we how about wasn't the information the and be information. investors to in company that allows for helpful from right welcome right information. And our should we how we and right or that feedback way can provide business terms what's do from that better. we

Benny Wong

Great. Thanks, Don.

Operator

you. Thank

question next with Cheng from Scotiabank. Our Paul will come

is line open. Your

Paul Cheng

questions. Thank Good morning, Couple everyone. you. of

and better have the The first actually one on have you is the probably refining, performance in guidance. a In actually term you very your third you and higher than for the much is throughput. absolute dollar quarter, good And cost Don.

costs. just have those that first the on question. McKinsey per or also If California, [ph] those And or driving unit [indiscernible]? that up Xis still what the what's already your that the ended performance the one-off, better That's if case, So And being than some in better it you Don, is the think? the Is or question is, that just that's guidance has in out? that $XX.XX cost on operating performance? personnel you're conservative

question going be lot sufficient? think the that zero in group second XXXX reduction intensity at and A is are to XXXX, to The emission GHG targeting two. going for they by carbon XX% least larger your net is for customers, I be Mike, of one by

think to And you? not, that So, if why is not? that Thank is something applicable you you.

Don Templin

think you our the question me asked try to, So I around Paul, dissect or let questions that performance.

for well, we're there. a very first us. much pleased area has team I the - our making And been operating the with So, focus of that very mean, progress the have performing was, we're very one costs

provided probably barrel and that I lot we in the not a stabilized at absolute the think was higher. rates. and there would throughputs lower of projecting But a than of second terms of on COVID slightly per were still we only the to And was you remember, the end basis, a think, guidance costs, So, our were have be. to We've little quarter, were that the be. what I uncertainty happening what utilization with around them was bit numbers

we pretty our incurred in And we're the giving sort the have the of so lot guidance that confidence actual a in of quarter, information. And providing that third fourth consistent quarter. we for is that with

I and Coast the think Coast. the West about West on asked costs the you

and some West related idling So, Refinery the in the are our Coast, Martinez operating costs costs there still for continuing to the there.

of And Martinez. no if you and so, at the putting pressure, barrel, are those operations obviously sort there's will, on equivalent per

interested I significantly think you were to. then cost. historically rate have capture would how than we've guided maybe in on And that pressure So some per upward the and of capture barrel higher was the rate sort

So, I XX% a to think most people model rate. capture

very variations happens I can when rate high of either think are to or be small things the is very thin, cause the capture that your one margins low.

other in the a XX% of forward, say, for that just million I a would move would or the quarter, quarter-to-quarter. that to want world, of I I modeling a in let's dealers, I $XXX So this focused a then think, couple quarter that purposes rate, of so normal rate, range. And think things, something sort would factors for impacted capture still I on the think, be direct going add then about capture

helpful. were that's made the as strong as thin. it was capture So, part very look hopefully, margins this what of quarter, think was I rate But the

Paul Cheng

the West for or XXXX or in Can just once that you're and target say restructuring in? on will reasonable is Don. I your XXXX everything What OpEx, maybe on Coast? is follow-up be this a Ray,

Ray Brooks

Yes.

of West a incurring We what that Paul, the we that expect costs that incurring we're I at wants premature. everybody start into you of any can do. obviously, facility, renewable we're what the quarter And delivering But as costs that costs, incurring some diesel but not give trend period be there's to we see know around a think not to Coast would we're that. it's where basis, gave sort or we're time of will I outlook say to incremental on XXXX. information to going on and to fourth refinery. color guidance, and guidance. we little you throughput tracking going as we basis of we that or quarterly a that guidance of a want providing move run kind the through so But be Martinez, that is providing doing to that quarterly We sort

Mike Hennigan

And, is couple on greenhouse gas I your enough, whether I and think Paul, the Mike. this intensity points out. wanted a On emissions question point target, to it's

in important we to a note mid-range a goal goal goal. our background of think it's for more have off, is, XXXX by per XXXX Paris the so First of our from meet instead carbon or goal reduction there just it's XX% the the intensity, that important kind But to reduction is agreement slope reductions, necessary a levels aspirations XXXX. desired the year by XXXX of to X% of which about represents

of so XXXX in, target important more remain that, that believe a - we a out, But we of gets stay discounted. was that with rather target far the more a achievable aspirations. it amend put line will on it kind set aligns was it slope of to we doesn't to order that in it So, in longer-term track And there goal XXXX on to near was gets those XXXX progresses, than goal. a basis bit so out we thought show the longer-term that a with we time and more periodic ensure as kind to little of kind to

two commitment from greenhouse Those part, aside in I I on on we reiterate, intensity, ESG prepared other setting ESG reduce intensity. XXXX in our area to the The a emissions we is goal think stated, that's and are a want methane significant I in areas, we gas goal our remarks believe do mention, other the make And important intensity. said that move have that to Paul, our area. withdrawal want continue freshwater to emissions thing something as well progress this as we can where do

Paul Cheng

Thank you.

Mike Hennigan

welcome. You're

Operator

Thank you.

Rao Prashant from question with Our next Group. comes Citi

Your is open. line

Prashant Rao

taking and now continued first thanks talking that good questions. Hi, morning, savings. really exceeding million progress the for one on you're costs about operating in My there, the reduction the is OpEx $XXX

clarity. cost wanted is about some to we kind should carry I is related flat a some years. reduction get bit this of How of forward circle into the of think sort of this basis? just discussed and that a forward little of on spring, this future back had volume of to know, to Mike, the in So, just that we sort carries

targeting? workforce think flat you know sort that So, I should of and the million wanted we from of now? initiative, talking were of that's but reduction about sounds we to the question plus is get that and a year. sort plus Thanks. $XXX also just to kind maybe conceptually, the that apart I wanted I update And were six earlier the months that restructuring, the wanted on about of how on an like It get first of my targeting that to the the numbers excess sort commercial sense ago? I that it we then gap were $XXX in is over was million the that, just confirm So, follow-up ops. really that

Don Templin

is This Prashant. Don. Yes,

we that just initiated embarked the not the guidance at time that the to envision, guess million, upon at the the and with - first quarter, implemented. the So, that reduction not plan that we respect of I end $XXX did we'd would workforce gave we

we to whole maybe historical. XXXX. onsite was things probably the What $X.XX we've can excluding of one that an MPLX MPLX able basis. guiding, the I where higher what be for slightly in those MPC, utilization or than than R&M $XXX costs side, that excluding achieved environment And I for been from year say would anticipated the been we're of reduction or variable costs we and some billion mentioned lower million that closer to based we're upon operating an for what MPC, rates on refining have So, and on would have the deliver,

as So, operations change fixed far there's is costs that costs. might up been, ramp would go XXXX. what of yes, we into that around means so we've the that, variable lot that up is still some have seen But a

great us that gives that those actions. forward. so our to of going the impacted was And With so employees confidence were respect workforce reduction, more by X,XXX than

Some were lot of and those a focused rest Gallup those the across the Martinez of at refinery, of were Refinery but the operation. the focused also

give in our think, of you'll those that be several our costs, that not projections. So, some XXXX start guidance, in forward those we've moved guidance far you first we in but you'll XXXX, we seeing think, meaningful the should being see, to And when see piece give of costs I a I of quarter that yet. embedded future able

Prashant Rao

or Okay. That's And wondering especially maybe us results on about might that of that and numbers, peers? up, as held for or if in than initiatives follow-up environment like could where not a the about point curious in whether the purchasing this Don you be those looks very some to quick side seeing commercial So so of it's was color. the like maybe And the on your as bully perhaps product or I'll just improvement crude macro, Q-on-Q Mike then placement side? helpful helping some and if in see that leave just talk basis, to better to there your well talk be on a you're Thanks, you an this on there. results to the it And are tough hard it Don. improvement and logistics could this operations it qualitatively, there. Thanks. I

Mike Hennigan

give turn I'll Mike. and over This comment. Brian to to Rick Prashant. Hey, a it is

they Although, guys disclosures, to let it, if nature us the that's want for comment competitive remind a I just probably area, area that the you to in of I'll like. the commercial the just toughest give to because give but

Brian Partee

Partee. good Mike. thanks Brian Yes, This Prashant, morning. is

and a really question, first kind and great is people. where that with mean, So that about I But alignment, alignment to focused. think unique around the to and just high-level I appreciate things the of we're in recognition optimize one couple here of commercially. environment comments being we're

did a value pretty for we So I all chain. clean responsibility heavy the restructuring, products have

more the So that aligning our the training operate one folks, unified in folks a we our our step, allow right and with space. people frankly, will to positive going is think marketing efficiently right team geographically, And forward. us and are effectively very supply folks focused into

levels. in focus The inventory short-term really part the second here of around is

we're in operating demand So a environment. different

there. So distribution related inventory looking opportunities around One at then is, two reductions, costs. and and things we're levels inventory

are in focused things last to can I'll side. things to control. are So the back feel Rick mention we we as the And control. those part export on stated really really handing is two before it we're the our that And under short medium-term Mike on over

production So logistical around exports, in fundamental helping and but we business outside the North America Gulf clear, and well. capacity, as of are as our believe utilize U.S., to the Coast, foundational markets our also broader long-term the Coast on and we're capacity strategy the a primarily there, both how hit focused full to really developing well as along West

Rick Hessling

Yes, going suite. we've addition Also, is we're crude Prashant. reducing in a distribution model, readily distribution to just-in towards the time asset from And more standpoint, that's at costs, that, apparent for certainly thank in crude you our the avails, of on when our look a results. side becoming light significantly you This question. to Rick, shifted

pool. we're And blending Canadian very, runs that We're bit see little we're mandate has signs adaptability area off season, You'll that's in swell very to And which to season. will side, operating a And the in some the the here sours. at then lifted. back looking our seeing as optionality look of medium a forward, quarter, from the entering storm see been our We've the when sours to significantly throughout the run disruptive switch rate third getting normal. we're medium you look of a glimmer we at the been starting of hope come diluent so then light the suit significant.

our in So that on of the we're a optimistic grades, few we system. midcontinent especially run alternative

Operator

you. Thank

Kristina Kazarian

I for have one we time Operator, last question. think

Operator

Excellent. you. Thank

will Morgan. Our last Gresh then JP with question Phil come from

open. is line Your

Phil Gresh

a you on reductions of on just or of there. how or around that capital both question business at, good total just well some about company lines? My different first But morning. doing the would capital breakdown say, more spending, be kind the for XXXX, on or amongst track as you Hey, look view think curious obviously, longer-term spending,

Don Templin

Yes, as managing the in on early focused capital we're comments, I mentioned, Phil, now. Mike I mean, very very, right mentioned and

discretionary R&M the investment are the business, side sort get that, we're in from to our of it And or ongoing when the approved We'll can that I'll call. But position to that is later that not yearend earnings As initiatives. the call to year projects are that we provide we're what particularly investing the it guidance. gotten where eliminating, or providing guidance relates in very our we'll spending get XXXX, budget we've is of I our focused say in and of continuing are we on reduction sort completing. it unless cost we promoting

So, our there we're of, was was and spending producing take to on what side the a management, we're molecule R&M more producing. what about, I'll and sort probably time take trying call the growth upgrade where of it world

lot given a able to low focused we're now, allowing the environment the to what in, on us environment. we're spending is be on, discretionary I a think in right on of very competitive, margin manage

parameters, that's MPC we're doing those with So, I the on what think side.

very about where then MPLX side, cash the to a cash kind mean, have discipline there. that availability we MPLX but talked positioned of repurchasing place to fact and distributions from feel will have only good about the On to in excess deploy being that CapEx, I units. not same flow will the the Mike cover

hurdle, capital which really needs is, be very competitive Mike focused. meet the laid needs that, on our has reducing focused very cost high very, performance, a our very, initiatives it and Discretionary structure. to So to improving or out,

Mike Hennigan

add couple in on on quarters discipline last Mike. mentioned, next as our hurdle thing I an Don areas. on to we as only want it's ourselves work the couple I quarters, both putting putting Don's continue to CapEx to And the those in you keep through then hopefully The is to a the high to able and be should discipline over and seen are comments ask eye that you OpEx that areas. the Phil, see we putting the ourselves that strict just only the initiatives, you've we're a

Operator

Go you. Thank ahead.

Kristina Kazarian

Sheela. perfect, Oh,

Operator

time turn That questions is closing will remarks. the we you. for that Kristina Thank for Kazarian I back call now all to have today. over the

Kristina Kazarian

Thank or interest Marathon additional questions Petroleum discussed take us. morning, you to will for clarifications joining on for thanks in topics that, with you have available team your And call. Corporation. this your our Should be

Operator

participating. today's you Thank for conference. does That conclude

disconnect may time. You at this

Marathon Petroleum (MPC) 2 Nov 202020 Q3 Earnings call transcript