MPLX LP Reports Third-Quarter 2022 Financial Results

FINDLAY, Ohio, Nov. 1, 2022 /PRNewswire/ --

• Reported third-quarter net income attributable to MPLX of $1,428 million; includes $509 million non-cash lease reclassification gain
• Reported adjusted EBITDA attributable to MPLX of $1,471 million, up 6% year over year
• Generated $1,039 million in net cash provided by operating activities
• Returned $935 million of capital to unitholders through $755 million of distributions and $180 million of unit repurchases
• Announced distribution increase of 10% to $0.775 per unit, resulting in a coverage ratio of 1.6x

MPLX LP (NYSE: MPLX) today reported third-quarter 2022 net income attributable to MPLX of $1,428 million, compared with $802 million for the third quarter of 2021. Third-quarter 2022 net income includes a $509 million non-cash gain resulting from the accounting for the reclassification of a third-party contract from an operating lease to a sales-type lease.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) attributable to MPLX, which excludes the non-cash lease reclassification gain, was $1,471 million, compared with $1,389 million for the third quarter of 2021. Logistics and Storage (L&S) segment adjusted EBITDA for the third quarter of 2022 was $969 million, compared with $904 million for the third quarter of 2021. Gathering and Processing (G&P) segment adjusted EBITDA for the third quarter of 2022 was $502 million, compared with $485 million for the third quarter of 2021. 

During the quarter, MPLX generated $1,039 million in net cash provided by operating activities, $1,264 million of distributable cash flow, and adjusted free cash flow after distributions of $22 million. MPLX announced a third-quarter 2022 distribution of $0.775 per common unit, resulting in a coverage ratio of 1.6x for the quarter. The leverage ratio was 3.5x at the end of the quarter.

"Our business continues to grow and generate strong cash flow," said Michael J. Hennigan, MPLX chairman, president and chief executive officer. "Today, we announced a 10% increase to our distribution, and through the first nine months of the year we have completed $315 million of unit repurchases."

Financial Highlights (unaudited)

Segment Results

Logistics & Storage

L&S segment income from operations for the third quarter of 2022 increased by $78 million compared to the same period in 2021, while segment adjusted EBITDA for the third quarter of 2022 increased by $65 million compared to the same period in 2021.

Total pipeline throughputs were 5.8 million barrels per day (bpd) in the third quarter, 5% higher than the same quarter of 2021. The average tariff rate was $0.88 per barrel for the quarter, a decrease of 2% versus the same quarter of 2021.  The average tariff rate was lower mainly due to changes in the mix of throughputs on various pipeline systems, which more than offset tariff rate increases in the third quarter of 2022. Terminal throughput was 3.0 million bpd for the quarter, a decrease of 1% versus the same quarter of 2021.

Gathering & Processing

G&P segment income from operations for the third quarter of 2022 increased by $565 million compared to the third quarter of 2021. Third-quarter 2022 G&P segment income from operations includes a $509 million non-cash gain resulting from the accounting for the reclassification of a third-party contract from an operating lease to a sales-type lease. Adjusted EBITDA for the third quarter of 2022, which excludes the non-cash lease reclassification gain, increased by $17 million compared to the same period in 2021.

In the third quarter of 2022:

• Gathered volumes averaged 6.1 billion cubic feet per day (bcf/d), a 12% increase from the third quarter of 2021.
• Processed volumes averaged 8.5 bcf/d, a 2% increase versus the third quarter of 2021.
• Fractionated volumes averaged 562 thousand bpd, a 2% increase versus the third quarter of 2021.

In the Marcellus: 

• Gathered volumes averaged 1.3 bcf/d in the third quarter, a 3% decrease versus the third quarter of 2021.
• Processed volumes averaged 5.5 bcf/d in the third quarter, a 2% decrease versus the third quarter of 2021.
• Fractionated volumes averaged 496 thousand bpd in the third quarter, a 2% increase versus the third quarter of 2021.

Strategic Update

In the L&S segment, MPLX continues to expand natural gas long-haul and crude gathering pipelines supporting the Permian and Bakken basins. Specifically in the Permian, working with its partners, MPLX is progressing its natural gas strategy with the expansion of the Whistler pipeline from 2.0 bcf/d to 2.5 bcf/d, as well as the laterals into the Midland basin and Corpus Christi domestic and export markets.

In the G&P segment, MPLX remains focused on the Permian and Marcellus basins in response to producer demand. In the Permian, the 200 million cubic feet per day (mmcf/d) Torñado ll processing plant is expected to be fully online by year-end. MPLX is progressing its sixth 200 mmcf/d processing plant in the basin, Preakness ll, which is expected online in the first half of 2024. In the Marcellus, the 68,000 bpd Smithburg de-ethanizer was placed in operation in the third quarter. MPLX is progressing Harmon Creek ll, a 200 mmcf/d processing plant expected online in the first half of 2024.

Financial Position and Liquidity

As of September 30, 2022, MPLX had $121 million in cash, $2 billion available on its bank revolving credit facility, and $1.5 billion available through its intercompany loan agreement with Marathon Petroleum Corp. (NYSE: MPC). MPLX's leverage ratio was 3.5x, below its stated target of 4.0x.

On August 11, 2022, MPLX issued $1 billion aggregate principal amount of 4.950% senior notes due September 2032. Subsequently, on August 25, 2022, MPLX redeemed all of the $500 million 3.500% senior notes due December 2022 and on September 15, 2022, MPLX redeemed all of the $500 million 3.375% senior notes due March 2023.

The partnership repurchased $180 million of common units held by the public in the third quarter of 2022. As of September 30, 2022, MPLX had approximately $1 billion remaining available under its unit repurchase authorizations.

Conference Call

At 9:30 a.m. ET 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 www.mplx.com. A replay of the webcast will be available on MPLX's website for two weeks. Financial information, including this earnings release and other investor-related materials, will also be available online prior to the conference call and webcast at www.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 Contact: (419) 421-2071
Kristina Kazarian, Vice President
Isaac Feeney, Supervisor
Jessica Stewart, Analyst

Media Contact: (419) 421-3312
Jamal Kheiry, Communications Manager

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; consolidated debt to last twelve months adjusted EBITDA, which we refer to as our leverage ratio; distributable cash flow (DCF); distribution coverage ratio; adjusted distribution coverage ratio; adjusted free cash flow (Adjusted FCF); and adjusted free cash flow after distributions. 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/benefit for income taxes; (iii) interest and other financial costs; (iv) impairment expense; (v) income/loss from equity method investments; (vi) distributions and adjustments related to equity method investments; (vii) gain on sales-type leases; (viii) noncontrolling interests and (ix) other adjustments as deemed necessary. In general, we define DCF as adjusted EBITDA adjusted for (i) deferred revenue impacts; (ii) sales-type lease payments, net of income; (iii) net interest and other financial costs; (iv) net maintenance capital expenditures; (v) equity method investment maintenance capital expenditures paid out; and (vi) other adjustments as deemed necessary.

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

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.

Adjusted FCF and adjusted free cash flow after distributions are financial performance measures used by management in the allocation of capital and to assess financial performance. We believe that unitholders may use this metric to analyze our ability to manage leverage and return capital. We define Adjusted FCF as net cash provided by operating activities adjusted for (i) net cash used in investing activities; (ii) cash contributions from MPC; (iii) cash contributions from noncontrolling interests and (iv) cash distributions to noncontrolling interests. We define adjusted free cash flow after distributions as Adjusted FCF less base distributions to common and preferred 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. The adjusted distribution coverage ratio represents the distribution coverage ratio excluding the effects of any supplemental distribution amounts.

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 regarding MPLX LP (MPLX). These forward-looking statements may relate to, among other things, MPLX's expectations, estimates and projections concerning its business and operations, financial priorities, including with respect to positive free cash flow and distribution coverage, strategic plans, capital return plans, operating cost reduction objectives, and environmental, social and governance ("ESG") plans and goals, including those related to greenhouse gas emissions, diversity and inclusion and ESG reporting. Forward-looking and other statements regarding our ESG plans and goals are not an indication that these statements are material to investors. In addition, historical, current, and forward-looking ESG-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. You can identify forward-looking statements by words such as "anticipate," "believe," "commitment," "could," "design," "estimate," "expect," "forecast," "goal," "guidance," "intend," "may," "objective," "opportunity," "outlook," "plan," "policy," "position," "potential," "predict," "priority," "project," "prospective," "pursue," "seek," "should," "strategy," "target," "will," "would" or other similar expressions that convey the uncertainty of future events or outcomes. MPLX cautions that these statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of MPLX, that could cause actual results and events to differ materially from the statements made herein. Factors that could cause MPLX's actual results to differ materially from those implied in the forward-looking statements include but are not limited to: the continuance or escalation of the military conflict between Russia and Ukraine, and related sanctions and market disruptions; general economic, political or regulatory developments, including inflation, rising interest rates and changes in governmental policies relating to refined petroleum products, crude oil, natural gas or NGLs, or taxation; continued or further volatility in and degradation of general economic, market, industry or business conditions; the magnitude, duration and extent of future resurgences of the COVID-19 pandemic and its effects; the adequacy of capital resources and liquidity, including the availability of sufficient free cash flow from operations to pay distributions and to fund future unit repurchases; the ability to access debt markets on commercially reasonable terms or at all; the timing and extent of changes in commodity prices and demand for crude oil, refined products, feedstocks or other hydrocarbon-based products; changes to the expected construction costs and timing of projects and planned investments, the availability of desirable strategic initiatives to optimize portfolio assets and the ability to obtain regulatory and other approvals with respect thereto; our ability to successfully implement our sustainable energy strategy and principles, achieve our ESG goals and targets and realize the expected benefits thereof; accidents or other unscheduled shutdowns affecting our machinery, pipelines, processing, fractionation and treating facilities or equipment, means of transportation, or those of our suppliers or customers; the suspension, reduction or termination of MPC's obligations under MPLX's commercial agreements; other risk factors inherent to MPLX's industry; the impact of adverse market conditions or other similar risks to those identified herein affecting MPC; and the factors set forth under the heading "Risk Factors" in MPLX's and MPC's Annual Reports on Form 10-K for the year ended Dec. 31, 2021, and in other filings with Securities and Exchange Commission (SEC).

Any forward-looking statement speaks only as of the date of the applicable communication and we undertake no obligation to update any forward-looking statement except to the extent required by applicable law.

Copies of MPLX's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other SEC filings are available on the SEC's website, MPLX's website at https://ir.mplx.com or by contacting MPLX's Investor Relations office. Copies of MPC's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other SEC filings are available on the SEC's website, MPC's website at https://www.marathonpetroleum.com/Investors/ or by contacting MPC's Investor Relations office.