A month has gone by since the last earnings report for Marathon Petroleum (MPC) . Shares have added about 8.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Marathon Petroleum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Since Th ...

Group 1 - The article discusses the focus on building a solid dividend portfolio within sectors such as oil and gas, shipping, energy, and minerals [1] - The individual investor is investing personal funds and does not represent any investment firm or company [1] - The investor holds a formal qualification of an MSc in Business with a major in Finance [1] Group 2 - There is a disclosure stating that the analyst has no stock, option, or similar derivative positions in any mentioned companies and no plans to initiate such positions in the near future [2] - The article expresses the author's personal opinions and is not compensated beyond the platform it is published on [2] - The disclosure emphasizes that past performance does not guarantee future results and that no investment recommendations are being made [3]

Core Viewpoint - The Zacks Oil and Gas - Refining & Marketing industry is experiencing a paradox where strong fundamentals coexist with weak refining margins and market sentiment, primarily due to economic slowdown concerns and regulatory uncertainties [1][3][4]. Industry Overview - The industry includes companies that sell refined petroleum products and operate terminals, storage facilities, and transportation services, with refining margins being highly volatile and influenced by various factors such as inventory levels and capacity utilization [2]. Trends Defining the Industry's Future - Despite healthy demand for diesel and gasoline, refining margins have not met expectations, indicating a disconnect likely driven by macroeconomic concerns [3]. - The transition from the Blenders' Tax Credit to the Production Tax Credit has negatively impacted renewable diesel profitability, leading to reduced output and uncertainty regarding future recovery [4]. Long-Term Outlook - The refining industry is positioned for a favorable mid-cycle environment, supported by structural advantages in the U.S. market, including access to domestic crude and low-cost inputs [5]. - Marathon Petroleum anticipates continued global demand growth for refined products, despite upcoming capacity reductions in the U.S. and Europe [5]. Industry Performance - The Zacks Oil and Gas - Refining & Marketing industry ranks 139 out of 245 Zacks industries, placing it in the bottom 43% and indicating dull near-term prospects [6][7]. - The industry's earnings estimates for 2025 and 2026 have decreased by 38.3% and 19.7%, respectively, over the past year, reflecting a negative outlook [9]. Comparative Performance - Over the past year, the industry has underperformed compared to the broader Zacks Oil - Energy Sector and the S&P 500, with a decline of 16.9% versus an 8.2% decrease for the sector and a 12.5% gain for the S&P 500 [10]. Current Valuation - The industry is currently trading at an EV/EBITDA ratio of 3.76X, significantly lower than the S&P 500's 16.65X and the sector's 4.59X, indicating a potentially undervalued position [14]. Stocks in Focus - **Marathon Petroleum**: A leading independent refiner with a market cap of $48.7 billion, known for strong cash flow generation and shareholder returns, though shares have lost 9% in the past year [18][19]. - **Phillips 66**: Operates 13 refineries with a total capacity of 2.2 million barrels per day, shares have decreased by 19% in the past year [21][22]. - **Valero Energy**: The largest independent refiner in the U.S. with a capacity of 3.2 million barrels per day, shares have lost 18% in the past year [25][27]. - **Galp Energia**: A Portuguese firm with a market cap of $11.3 billion, shares have decreased by 25% in the past year [28][29].

Core Viewpoint - Marathon Petroleum (NYSE: MPC) shares have underperformed over the past year due to a weakening refining cycle, but have recently rebounded strongly as crack spreads have improved [1] Company Performance - The shares of Marathon Petroleum have shown a significant recovery from their lows, indicating a potential turnaround in performance [1] Market Conditions - The refining cycle has been weak, impacting the overall performance of companies in this sector, including Marathon Petroleum [1]

Core Insights - Madison Pacific Properties Inc. reported a net income of $6.2 million for the three months ended March 31, 2025, a decrease from $14.4 million for the same period in the previous year [3] - The company declared a special cash dividend of $0.34 per share, payable on June 4, 2025, to shareholders of record on May 27, 2025 [6][7] Financial Performance - The company generated cash flows from operating activities of $3.3 million, up from $2.7 million in the previous year [3] - Income per share decreased to $0.10 from $0.24 year-over-year [3] - The net gain on fair value adjustments for investment properties was approximately $5.2 million, down from $12.3 million [3] Investment Portfolio - As of March 31, 2025, the company owns approximately $731 million in investment properties, a slight increase from $724 million as of December 31, 2024 [4] - The investment portfolio includes 55 properties with about 1.9 million rentable square feet of industrial and commercial space, and a 50% interest in seven multi-family rental properties totaling 219 units [5] - The leasing rates are high, with 94.49% of industrial and commercial space leased and 97.26% of multi-family residential properties leased [5] Corporate Actions - The company changed its financial year-end from August 31 to December 31, effective for the financial year commencing September 1, 2024 [2] - The special dividend allows the company to pursue real estate opportunities while returning capital to shareholders [7]

Group 1 - The oil market continues its strong performance, with WTI crude oil futures rising 2.8% to $63.67 per barrel and Brent crude oil futures increasing 2.6% to $66.63 per barrel, marking the largest four-day gain since October of the previous year [1] - The positive market sentiment is driven by a breakthrough in US-China trade negotiations, where both parties agreed to suspend new tariffs for 90 days, alleviating concerns over weak energy demand [1] - The US Labor Department reported a narrowing year-on-year increase in the Consumer Price Index (CPI) to 2.3%, the lowest in four years, which has led institutions like JPMorgan and Barclays to lower recession forecasts for the US economy [1] Group 2 - Geopolitical factors are also providing support, with the Trump administration adopting a hardline stance towards Iran, raising concerns about the stability of Middle Eastern supply [2] - Demand signals are turning positive, as a JPMorgan report indicates that despite uncertainties in crude oil demand, the refined oil market remains strong, with gasoline and diesel prices stable [2] - The refining sector is experiencing a bullish response in the secondary market, with companies like PBF Energy rising 10.1% and Delek US increasing by 6.1% [2]

Core Viewpoint - Marathon Petroleum Corporation (MPC) reported a narrower-than-expected adjusted loss per share of 24 cents for Q1 2025, primarily driven by strong performance in its Refining & Marketing segment, despite a significant decline from the previous year's profit of $2.78 per share [1][2]. Financial Performance - Revenues for Q1 2025 were $31.9 billion, exceeding the Zacks Consensus Estimate of $30.1 billion but down 4.1% year-over-year [2]. - Total expenses decreased to $31.2 billion from $31.4 billion in the prior year [6]. - The company repurchased $1.1 billion of shares during the quarter, with a remaining authorization of $6.7 billion [7]. Segment Analysis Refining & Marketing - Adjusted EBITDA for the Refining & Marketing segment was $489 million, a 74% decline from $1.9 billion in the previous year, attributed to lower refining margins [3]. - The refining margin decreased to $13.38 per barrel from $19.35 a year ago, while capacity utilization improved to 89% from 82% [3]. - Total refined product sales volumes increased to 3,446 thousand barrels per day (mbpd) from 3,242 mbpd year-over-year, and throughput rose to 2,849 mbpd, surpassing the consensus estimate of 2,766 mbpd [4]. Midstream - The Midstream segment reported adjusted EBITDA of $1.7 billion, an 8.2% increase from Q1 2024, supported by higher rates and stronger throughput [5]. Capital Expenditures and Debt - Capital expenditures for the quarter totaled $776 million, with 46.6% allocated to Refining & Marketing and 49.7% to the Midstream segment, compared to $636 million in the prior year [6]. - As of March 31, 2025, the company had cash and cash equivalents of $3.8 billion and total debt of $30.9 billion, resulting in a debt-to-capitalization ratio of 57.3% [7].

Group 1 - Marathon Petroleum reported $31.85 billion in revenue for Q1 2025, a year-over-year decline of 4.1%, with an EPS of -$0.24 compared to $2.78 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $30.09 billion by 5.86%, and the EPS surprised positively by 61.90% against a consensus estimate of -$0.63 [1] - The stock has returned +21.9% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change, and currently holds a Zacks Rank 3 (Hold) [3] Group 2 - Net refinery throughput was 2,849 million barrels of oil per day, exceeding the average estimate of 2,765.67 million barrels by four analysts [4] - Crude oil refined was 2,623 million barrels of oil per day, surpassing the average estimate of 2,513.68 million barrels by three analysts [4] - Adjusted EBITDA for Refining & Marketing was $489 million, significantly higher than the average estimate of $286.27 million, while Midstream Adjusted EBITDA was $1.72 billion, slightly above the estimate of $1.68 billion [4]

Financial Performance - Total reportable segments' adjusted EBITDA was $2,167 million in Q1 2025, down from $3,485 million in Q1 2024 [118]. - Net loss attributable to the company was $74 million, or $(0.24) per diluted share, for Q1 2025, compared to net income of $937 million, or $2.58 per diluted share, in Q1 2024 [119]. - Total revenues and other income decreased by $1.36 billion to $31.85 billion in Q1 2025 compared to Q1 2024 [136]. - Net income attributable to MPC decreased by $1.01 billion to a loss of $74 million in Q1 2025, primarily due to lower Refining & Marketing margins [137]. - Refining & Marketing segment revenues decreased by $1.52 billion, driven by a $0.22 per gallon decrease in average refined product sales prices, despite a 204 mbpd increase in sales volumes [149]. - Refining & Marketing segment adjusted EBITDA decreased by $1.50 billion to $1.91 per barrel in Q1 2025, down from $8.22 per barrel in Q1 2024 [150]. - Net cash provided by operating activities decreased by $1.60 billion in Q1 2025 compared to Q1 2024, primarily due to a decrease in operating results and an unfavorable change in working capital of $685 million [177]. Refining & Marketing Segment - Segment adjusted EBITDA for Refining & Marketing decreased to $489 million in Q1 2025 from $1,986 million in Q1 2024, reflecting a lower refining margin environment [118]. - Refining & Marketing margin per barrel decreased to $13.38 in Q1 2025 from $19.35 in Q1 2024 [147]. - Refining & Marketing margin decreased to $13.38 per barrel in Q1 2025 from $19.35 per barrel in Q1 2024, with an estimated net negative impact of approximately $1.7 billion due to lower crack spreads [151]. - Refining operating costs, excluding depreciation and amortization, increased by $7 million primarily due to higher energy costs, while costs decreased by $0.32 per barrel due to higher throughput [152]. - Refining planned turnaround costs decreased by $193 million, or $0.91 per barrel, due to the scope and timing of turnaround activity [154]. Capital Expenditures and Investments - Total capital expenditures in Q1 2025 were $644 million, up from $511 million in Q1 2024, with additions to property, plant, and equipment at $663 million [182]. - MPC's capital investment outlook for 2025 is approximately $1.25 billion, excluding capitalized interest and potential acquisitions [204]. - Capital expenditures for MPC, excluding MPLX, were $377 million in Q1 2025, compared to $299 million in Q1 2024, indicating a 26% increase [206]. - Cash used for common stock repurchases was $1.06 billion in Q1 2025, down from $2.22 billion in Q1 2024, reflecting a decrease in repurchase activity [185]. - Cash used in acquisitions amounted to $237 million in Q1 2025, related to the Midstream segment [184]. MPLX and Midstream Operations - The company owned approximately 647 million MPLX common units valued at $34.65 billion as of March 31, 2025 [121]. - MPLX declared a quarterly cash distribution of $0.9565 per common unit, with the company's portion amounting to approximately $619 million [121]. - MPLX acquired gathering businesses from Whiptail Midstream for $237 million, enhancing its strategic relationship with MPC [114]. - MPLX entered into an agreement to acquire the remaining 55% interest in BANGL, LLC for $715 million, with an additional earnout provision of up to $275 million based on EBITDA growth [113]. - Midstream segment adjusted EBITDA increased by $131 million, mainly due to increased sales and operating revenues of $286 million from fee escalations and higher throughputs [162]. Liquidity and Financial Position - The consolidated cash and cash equivalents balance increased to approximately $3.81 billion at March 31, 2025, compared to $3.21 billion at December 31, 2024 [175]. - Total liquidity for MPC, excluding MPLX, was $6.38 billion as of March 31, 2025, consisting of $4.999 billion available under the bank revolving credit facility and $1.278 billion in cash and cash equivalents [188]. - MPLX's liquidity totaled $6.03 billion at March 31, 2025, including $2.534 billion in cash and cash equivalents [197]. - Long-term debt borrowings and repayments provided a net cash source of $3.41 billion in Q1 2025, compared to a net cash use of $17 million in Q1 2024 [185]. Regulatory and Market Outlook - The company expects to evaluate the impact of California's SB X1-2 and AB X2-1 regulations on its future operations and results [112]. - The refining margin environment is expected to remain lower in the near term, but long-term global demand growth is anticipated to outpace capacity additions through the end of the decade [109].

Financial Data and Key Metrics Changes - The company reported a first quarter net loss of $0.24 per share and returned over $1,300,000,000 to shareholders through dividends and repurchases [18][19] - Adjusted EBITDA for the quarter was approximately $2,000,000,000, lower sequentially by $145,000,000 due to decreased results in refining and marketing and renewable diesel segments [19][21] - Operating cash flow excluding changes in working capital was $1,000,000,000 for the quarter, driven by the strength and growth of the midstream business [23] Business Line Data and Key Metrics Changes - Refining utilization was 89%, processing 2,600,000 barrels of crude per day, with significant planned turnaround activity particularly in the Gulf Coast region [5][19] - The Midstream segment adjusted EBITDA grew 8% year over year, with MPC receiving $619,000,000 in distributions from MPLX, a 12.5% increase compared to the previous year [6][20] - The renewable diesel segment faced challenges with a 70% utilization rate due to unplanned downtime, and changes in regulatory credits reduced margins across the industry [21][22] Market Data and Key Metrics Changes - Refined product inventories have drawn for the ninth straight week and are below the five-year average, which, along with lower retail prices, is expected to support demand during the summer driving season [7][8] - The company anticipates around 800,000 barrels per day coming offline across several refineries in the U.S. and Europe this year, which could strengthen margins [8][10] Company Strategy and Development Direction - The company is progressing a $1,250,000,000 standalone capital plan for 2025, with 70% targeted on high return projects [13] - Investments in the West Coast value chain are aimed at enhancing competitiveness and compliance with tighter emission regulations [9][10] - The company aims to leverage its fully integrated refining system and geographic diversification to deliver peer-leading cash generation [14] Management's Comments on Operating Environment and Future Outlook - Management noted improved refined cracks and strong demand signals, with expectations of 94% utilization in the second quarter [33][34] - The company remains optimistic about demand growth across its domestic and export businesses, with steady year-over-year demand for gasoline and growth in diesel and jet fuel [35][36] - Management emphasized the importance of operational excellence and commercial execution to deliver sustainable financial performance [28][29] Other Important Information - The company is focused on optimizing its portfolio to deliver outperformance and is committed to capital allocation that enhances competitiveness [29] - The company has a minimum cash target of $1,000,000,000 on the balance sheet to ensure sufficient liquidity [63][64] Q&A Session Summary Question: What is the current demand perspective as the company enters the second quarter? - Management observed improved refined cracks and strong demand signals, indicating readiness to meet seasonal demand [33][34] Question: How does the company view the long-term outlook for the West Coast? - Management believes investments in the LA asset provide a competitive advantage, and they are closely monitoring the regulatory environment [39][41] Question: What is the company's strategy regarding capture rates? - Management highlighted the importance of commercial performance and aims for capture rates approaching 100% through sustainable advantages [52][56] Question: What is the outlook for crude quality discounts? - The company expects to benefit from heavy crude runs and sees upside in Canadian crude pricing due to OPEC's increased volumes [71][72] Question: How sustainable is the 12.5% distribution growth from MPLX? - Management indicated that the 12.5% distribution increase is expected to be durable for multiple years, supported by growth opportunities and capital discipline [75][78] Question: What initiatives are being taken to improve the renewable diesel business? - Management is focused on optimizing operations and addressing unplanned downtime to enhance profitability [90][92]