MPLX LP Reports Second-Quarter 2019 Financial Results

FINDLAY, Ohio, Aug. 1, 2019 /PRNewswire/ --

• Reported second quarter net income of $482 million and adjusted EBITDA of $920 million, both up 6% year-over-year
• Reported net cash provided by operating activities of $834 million, 1.36x adjusted distribution coverage¹, and 3.9x leverage
• Closed acquisition of Andeavor Logistics on July 30
• Announced plans to proceed with Whistler, a Permian natural gas pipeline
• Signed definitive agreements for Wink-to-Webster, a Permian crude oil pipeline
• Continued focus on portfolio optimization, which could include asset divestitures

MPLX LP (NYSE: MPLX) today reported second quarter 2019 net income attributable to MPLX of $482 million compared with $453 million for the second quarter of 2018. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $920 million compared with $867 million in the second quarter of 2018. Logistics and Storage (L&S) reported segment income from operations of $486 million and adjusted EBITDA of $569 million for the quarter, up $52 million and $43 million, respectively, versus the second quarter of last year. Gathering and Processing (G&P) reported segment income from operations of $173 million and adjusted EBITDA of $351 million for the quarter, down $1 million and up $10 million, respectively, on a year-over-year basis.

"MPLX successfully closed its acquisition of Andeavor Logistics on July 30th," said Gary R. Heminger, chairman and chief executive officer. "We plan to focus on three strategic initiatives. First, streamlining our capital expenditures focusing on the most attractive returns. Second, working with MPC on a portfolio optimization initiative, which could include asset divestitures. And third, using proceeds from any divestitures for general purposes, such as investments in high-return projects as well as debt reduction."

During the quarter, MPLX generated $834 million in net cash provided by operating activities and distributable cash flow of $741 million, which provided adjusted distribution coverage¹ of 1.36x and resulted in 3.9x leverage. MPLX also announced its 26th consecutive distribution increase to $0.6675 per common unit, a $0.01 increase over the prior quarter and a 6.4 percent increase over the prior year second quarter.

Financial Highlights

Segment Results

Logistics & Storage

L&S segment income from operations and adjusted EBITDA for the second quarter of 2019 increased by $52 million and $43 million, respectively, compared with the same period in 2018. The increase was primarily due to the continued solid performance of the underlying base business, partially offset by weather-related operational impacts in the Midwest during the quarter.

Total pipeline throughputs were 3.5 million barrels per day in the second quarter, an increase of 3 percent versus the same quarter last year. The average tariff rate was $0.71 per barrel for the quarter. Terminal throughput was 1.5 million barrels per day for the quarter, an increase of 2 percent versus the same quarter last year.

MPLX advanced its strategy of creating integrated crude oil and natural gas logistics systems from the Permian to the U.S. Gulf Coast. During the quarter, the company announced a final investment decision on Whistler, a planned natural gas pipeline, and signed definitive agreements for its participation in Wink-to-Webster, a proposed crude oil pipeline, both in the Permian.

Gathering & Processing

G&P segment income from operations and segment adjusted EBITDA decreased by $1 million and increased by $10 million, respectively, for the second quarter of 2019 compared with the same period in 2018. Year-over-year results were impacted by $30 million due to lower weighted average NGL prices. Additionally, second quarter results were sequentially impacted by approximately $18 million for planned maintenance at the Javelina facility and $5 million associated with roughly one week of precautionary downtime on a Marcellus NGL pipeline.

• Gathered volumes: 4.9 billion cubic feet per day in the second quarter of 2019, a 15 percent increase versus the second quarter of 2018
• Processed volumes: 7.8 billion cubic feet per day in the second quarter of 2019, a 15 percent increase versus the second quarter of 2018
• Fractionated volumes: 495 thousand barrels per day in the second quarter of 2019, a 13 percent increase versus the second quarter of 2018

In the Marcellus and Utica, the company continued to experience significant year-over-year growth. Gathered volumes averaged 3.3 billion cubic feet per day (bcf/d) for the quarter, a 19 percent increase versus the second quarter of 2018. Processed volumes averaged 6.0 bcf/d, a 17 percent increase versus the same quarter last year. Fractionated volumes averaged 480 thousand barrels per day, an 18 percent increase versus the second quarter of 2018. The increase was primarily the result of higher volumes at the recently expanded Hopedale Complex.

In the Southwest, gathered volumes averaged 1.6 bcf/d for the second quarter, an 8 percent increase versus the second quarter of 2018. Processed volumes averaged 1.6 bcf/d for the quarter, an 11 percent increase versus the second quarter of 2018.

To support additional growth, MPLX expects to complete two additional processing plants at Sherwood in late 2019, adding 400 million cubic feet per day of incremental capacity. Additionally, MPLX has three plants under various stages of development in the Permian.

Financial Position and Liquidity

As of June 30, 2019, MPLX had $7 million in cash, $1.6 billion available through its bank revolving credit facility expiring in July 2022, and $956 million available through its credit facility with MPC. The company's leverage ratio was 3.9x at June 30, 2019.

In connection with the July 30 closing of the Andeavor Logistics acquisition, MPLX amended and restated its existing $2.25 billion revolving credit facility to increase borrowing capacity to up to $3.5 billion and extend the term to July 30, 2024.  ANDX's revolving credit facilities totaling $2.1 billion in borrowing capacity were terminated upon the closing and repaid with borrowings under the MPLX revolving credit facility.  Additionally, MPLX upsized its existing $1.0 billion intercompany loan agreement with MPC to $1.5 billion. MPLX believes that the combined company's available liquidity, its distribution coverage, and its access to the capital markets will provide it with sufficient liquidity to meet its day-to-day operational needs and continue investing in organic growth opportunities. MPLX remains committed to maintaining an investment-grade credit profile and a strategy of self-funding the equity portion of its organic growth capital needs.

Conference Call

At 11 a.m. EDT today, MPLX will hold a conference call and webcast to discuss the reported results and provide an update on operations. Interested parties may listen by visiting MPLX's website at http://www.mplx.com and clicking on the "2019 Second-Quarter Financial Results" link in the "News & Headlines" section. A replay of the webcast will be available on MPLX's website for two weeks. Financial information, including earnings release and other investor-related material, will also be available online prior to the conference call and webcast at http://ir.mplx.com.

About MPLX LP

MPLX is a diversified, large-cap master limited partnership that owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services. MPLX's assets include a network of crude oil and refined product pipelines; an inland marine business; light-product terminals; storage caverns; refinery tanks, docks, loading racks, and associated piping; and crude and light-product marine terminals. The company also owns crude oil and natural gas gathering systems and pipelines as well as natural gas and NGL processing and fractionation facilities in key U.S. supply basins. More information is available at www.MPLX.com

Investor Relations Contacts: (419) 421-2071
Kristina Kazarian, Vice President, Investor Relations
Jim Mallamaci, Manager, Investor Relations
Evan Barbosa, Manager, Investor Relations

Media Contacts:
Hamish Banks, Vice President, Communications (419) 421-2521
Jamal Kheiry, Manager, Communications (419) 421-3312

Non-GAAP references

In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes additional non-GAAP measures to facilitate comparisons of past performance and future periods. This press release and supporting schedules include the non-GAAP measures adjusted EBITDA and consolidated debt to last twelve months pro forma adjusted EBITDA, which we refer to as our leverage ratio, distributable cash flow (DCF) and distribution coverage ratio. The amount of adjusted EBITDA and DCF generated is considered by the board of directors of our general partner in approving the Partnership's cash distribution. Adjusted EBITDA and DCF should not be considered separately from or as a substitute for net income, income from operations, or cash flow as reflected in our financial statements. The GAAP measures most directly comparable to adjusted EBITDA and DCF are net income and net cash provided by operating activities. We define Adjusted EBITDA as net income adjusted for (i) depreciation and amortization; (ii) provision for income taxes; (iii) amortization of deferred financing costs; (iv) non-cash equity-based compensation; (v) net interest and other financial costs; (vi) income from equity method investments; (vii) distributions and adjustments related to equity method investments; (viii) unrealized derivative gains and losses; (ix) acquisition costs; (x) noncontrolling interest and (xi) other adjustments as deemed necessary. In general, we define DCF as adjusted EBITDA adjusted for (i) deferred revenue impacts; (ii) net interest and other financial costs; (iii) maintenance capital expenditures; (iv) equity method investment capital expenditures paid out; and (v) other non-cash items.

The Partnership makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record the realized gain or loss of the contract.

Adjusted EBITDA is a financial performance measure used by management, industry analysts, investors, lenders, and rating agencies to assess the financial performance and operating results of our ongoing business operations. Additionally, we believe adjusted EBITDA provides useful information to investors for trending, analyzing and benchmarking our operating results from period to period as compared to other companies that may have different financing and capital structures.

DCF is a financial performance measure used by management as a key component in the determination of cash distributions paid to unitholders. We believe DCF is an important financial measure for unitholders as an indicator of cash return on investment and to evaluate whether the partnership is generating sufficient cash flow to support quarterly distributions. In addition, DCF is commonly used by the investment community because the market value of publicly traded partnerships is based, in part, on DCF and cash distributions paid to unitholders.

Distribution coverage ratio is a financial performance measure used by management to reflect the relationship between the partnership's financial operating performance and cash distribution capability. We define the distribution coverage ratio as the ratio of DCF attributable to GP and LP unitholders to total GP and LP distributions declared.

Leverage ratio is a liquidity measure used by management, industry analysts, investors, lenders and rating agencies to analyze our ability to incur and service debt and fund capital expenditures.

Forward-Looking statements

This press release contains forward-looking statements within the meaning of federal securities laws regarding MPLX LP (MPLX). These forward-looking statements relate to, among other things, MPLX's acquisition of Andeavor Logistics LP and include expectations, estimates and projections concerning the business and operations, financial priorities and strategic plans of the combined entity. These statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. You can identify forward-looking statements by words such as "anticipate," "believe," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "imply," "intend," "may," "objective," "opportunity," "outlook," "plan," "position," "potential," "predict," "project," "prospective," "pursue," "seek," "should," "strategy," "target," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Factors that could cause MPLX's actual results to differ materially from those implied in the forward-looking statements include: the risk that anticipated opportunities and any other synergies from or anticipated benefits of the Andeavor Logistics acquisition may not be fully realized or may take longer to realize than expected, including whether the transaction will be accretive within the expected timeframe or at all; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of ANDX; the amount and timing of future distributions; negative capital market conditions, including an increase of the current yield on common units; the ability to achieve strategic and financial objectives, including with respect to distribution coverage, future distribution levels, proposed projects and completed transactions; the success of Marathon Petroleum Corporation's (MPC) portfolio optimization, including the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; adverse changes in laws including with respect to tax and regulatory matters; the adequacy of capital resources and liquidity, including, but not limited to, availability of sufficient cash flow to pay distributions and access to debt on commercially reasonable terms, and the ability to successfully execute business plans, growth strategies and self-funding models; the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products; continued/further volatility in and/or degradation of market and industry conditions; changes to the expected construction costs and timing of projects and planned investments, and the ability to obtain regulatory and other approvals with respect thereto; completion of midstream infrastructure by competitors; disruptions due to equipment interruption or failure, including electrical shortages and power grid failures; the suspension, reduction or termination of MPC's obligations under MPLX's commercial agreements; modifications to financial policies, capital budgets, and earnings and distributions; the ability to manage disruptions in credit markets or changes to credit ratings; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations and/or enforcement actions initiated thereunder; adverse results in litigation; other risk factors inherent to MPLX's industry; risks related to MPC; and the factors set forth under the heading "Risk Factors" in MPLX's Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed with Securities and Exchange Commission (SEC).

Factors that could cause MPC's actual results to differ materially from those implied in the forward-looking statements include: the risk that the cost savings and any other synergies from the Andeavor transaction may not be fully realized or may take longer to realize than expected; disruption from the Andeavor transaction making it more difficult to maintain relationships with customers, employees or suppliers; risks relating to any unforeseen liabilities of Andeavor; risks as set forth above related to the acquisition of Andeavor Logistics LP by MPLX; future levels of revenues, refining and marketing margins, operating costs, retail gasoline and distillate margins, merchandise margins, income from operations, net income or earnings per share; the regional, national and worldwide availability and pricing of refined products, crude oil, natural gas, NGLs and other feedstocks; consumer demand for refined products; the ability to manage disruptions in credit markets or changes to credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; the reliability of processing units and other equipment; business strategies, growth opportunities and expected investment; share repurchase authorizations, including the timing and amounts of any common stock repurchases; the adequacy of capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute business plans and to effect any share repurchases or dividend increases, including within the expected timeframe; the ability to complete any divestitures on commercially reasonable terms and/or within the expected timeframe, and the effects of any such divestitures on the business, financial condition, results of operations and cash flows; the effect of restructuring or reorganization of business components; the potential effects of judicial or other proceedings on the business, financial condition, results of operations and cash flows; continued or further volatility in and/or degradation of general economic, market, industry or business conditions; compliance with federal and state environmental, economic, health and safety, energy and other policies and regulations, including the cost of compliance with the Renewable Fuel Standard, and/or enforcement actions initiated thereunder; the anticipated effects of actions of third parties such as competitors, activist investors or federal, foreign, state or local regulatory authorities or plaintiffs in litigation; the impact of adverse market conditions or other similar risks to those identified herein affecting MPLX; and the factors set forth under the heading "Risk Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed with the SEC.

We have based our forward-looking statements on our current expectations, estimates and projections about our industry. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. We undertake no obligation to update any forward-looking statements except to the extent required by applicable law. Copies of MPLX's Form 10-K are available on the SEC website, MPLX's website at http://ir.mplx.com or by contacting MPLX's Investor Relations office. Copies of MPC's Form 10-K are available on the SEC website, MPC's website at https://www.marathonpetroleum.com/Investors/  or by contacting MPC's Investor Relations office.

SOURCE MPLX LP

Related Links

http://www.mplx.com