0001552000-26-000025
SEC filingMixed quarter: revenue and earnings declined on lower NGL prices and Rockies divestiture, but operating cash flow improved and strategic growth capex surged.
Operating income decreased 11.1% to $1.2 billion from $1.4 billion, as higher purchased product costs and operating expenses outpaced rate and fee increases. Net income fell 18.8% to $922 million from $1.1 billion, reflecting lower operating income and higher interest expense. Operating margin remained healthy at 40.0%, though down from the prior year.
Net cash provided by operating activities increased to $1.35 billion from $1.25 billion, driven by lower working capital build and higher equity method distributions. Capital expenditures more than doubled to $575 million from $267 million, reflecting accelerated investment in growth projects. Free cash flow was $772 million, which funded distributions and unit repurchases. The timing and amount of future repurchases will depend on market and business conditions.
Growth capital expenditures are those incurred for acquisitions or capital improvements that are expected to increase operating capacity for volumes gathered, processed, transported or fractionated, decrease operating expenses, or increase income from operations over the long term. As demand rises, MPLX is well-positioned to support the development plans of its producer-customers. The volume of refined products transported, stored, distributed and marketed is directly affected by production levels and user demand in the markets served.
Key factors in the supply and demand balance include crude oil production levels, availability and cost of alternative transportation, refinery processing volumes, and maintenance levels. Adjusted FCF and Adjusted FCF after distributions are liquidity measures used by management in capital allocation and financial performance assessment. The company continues to focus on strategic investments that generate additional or new cash flow.