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Marathon Petroleum (NYSE:MPC) -8.9% in Tuesday's trading, giving up more than six weeks of gains, despite beating Q1 adjusted earnings and revenue estimates, as investors appear to view the results as underwhelming by the company's recent high standards.
Refining peers Valero Energy (VLO) and Phillips 66 (PSX) also trade lower, -4% and -5.3% respectively.
Q1 net income fell by two thirds to $937M, or $2.58/share, from $2.72B, or $6.09/share, in the year-earlier quarter, and revenues slid 8.2% to $32.21B from $35.08B in the same period last year.
Marathon (MPC) also said its board approved an incremental $5B stock buyback authorization, after returning ~$2.5B of capital to shareholders during Q1 through $2.2B of share repurchases and $299M of dividends.
Q1 refining and marketing margin fell to $18.99/bbl from $26.15/bbl for the year-ago quarter, and crude capacity utilization dropped to 82%, resulting in a total throughput of 2.7M bbl/day, as $648M of planned maintenance and turnaround activity was the highest level in the company's history and as global refining margins eased from the highs seen in 2022-23.
"Turnaround expense came in higher than guidance, suggesting the turnaround did not proceed as smoothly as hoped," Scotiabank analysts said following the results.
The Q1 report was "underwhelming" by Marathon's (MPC) recent standards, Piper Sandler's Ryan Todd says, but Q2 guidance "suggests a strong rebound in refining operations… with excess cash on the balance sheet (~$6B) still supporting peer-leading shareholder returns in the near-term."
Marathon's (MPC) Q2 guidance "shows much improved utilization and lower than expected operating costs, with half of full-year turnaround falling in Q1," according to BMO Capital's Phillip Jungwirth.
Marathon (MPC) is positioned to run near full utilization through the summer driving season, executives said on the company's earnings conference call.
The company continues to see steady Y/Y demand for gasoline and growth in demand for diesel and jet fuel, and believes 2024 will be "another year of record refined product consumption," with the U.S. refining industry remaining structurally advantaged over the rest of the world, CEO Michael Hennigan.