June 11, 2020
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Energy & Transportation
100 F Street, NE
Washington, D.C. 20549
RE:
Marathon Petroleum Corporation
Form 10-K for the Fiscal Year Ended December 31, 2019
Filed February 28, 2020
File No. 001-35054

Ladies and Gentlemen:
Marathon Petroleum Corporation, a Delaware corporation (the “Company,” “we,” “us,” or “our”), is in receipt of the comment of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) set forth in the Commission’s letter, dated May 28, 2020 (the “Comment Letter”), with respect to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Below is the Company’s response to the Staff’s comment in the Comment Letter. For the convenience of the Staff, we have repeated the Staff’s comment before our response.
Form 10-K for the Fiscal Year Ended December 31, 2019
Non-GAAP Financial Measures, page 69
1. We note your presentation of the non-GAAP measures refining and marketing margin and retail total margin. Please present a reconciliation for these non-GAAP measures in accordance with Item 10(e)(1)(i)(B) of Regulation S-K. In doing so, reconcile these measures to the most directly comparable GAAP measures, i.e. gross margin that includes depreciation, depletion and amortization. If you do not believe gross margin that includes depreciation, depletion and amortization expense is the most directly comparable GAAP measure, please tell us why in your response.
Response:
We have historically considered segment income from operations, our reportable segment performance measure, as the most directly comparable GAAP measure and prepared our reconciliations of the non-GAAP measures of Refining and Marketing margin and Retail total

    


U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Energy & Transportation
June 11, 2020
Page 2
margin to reconcile to segment income from operations. In future filings we will reconcile these non-GAAP measures first to segment gross margin as the most directly comparable GAAP measure and then to segment income from operations beginning with our Form 10-Q for the quarterly period ending June 30, 2020. Illustrations of our revised non-GAAP reconciliations are shown below for the year ended December 31, 2019:
 
Reconciliation of Refining and Marketing income from operations to Refining and Marketing gross margin and Refining and Marketing margin
 
 
(in millions)
 
Year Ended
December 31, 2019
 
Refining and Marketing income from operations
 
$
2,367

 
Plus (less):
 
 
 
   Selling, general and administrative expenses
 
2,202

 
   Income from equity method investments
 
(11
)
 
   Net gain on disposal of assets
 
(6
)
 
   Other income
 
(43
)
 
Refining and Marketing gross margin
 
4,509

 
Plus (Less):
 
 
 
   Operating expenses (excluding depreciation and amortization)
 
10,655

 
   Depreciation and amortization
 
1,665

 
   Gross margin excluded from Refining and Marketing margin (a)
 
(568
)
 
   Other taxes included in Refining and Marketing margin
 
(11
)
 
   Biodiesel tax credit (b)
 
(93
)
 
Refining and Marketing margin
 
$
16,157

 
 
 
 
 
 
(a)
The gross margin, excluding depreciation and amortization, of operations that support Refining and Marketing such as bio-diesel and ethanol ventures, power facilities and processing of credit card transactions.
 
(b)
Reflects a benefit for the biodiesel tax credit attributable to volumes blended in 2018.
Reconciliation of Retail income from operations to Retail gross margin and Retail margin
(in millions)
 
Year Ended
December 31, 2019
Retail income from operations
 
$
1,582

Plus (less):
 
 
   Operating, selling, general and administrative expenses
 
2,456

   Income from equity method investments
 
(82
)
   Net gain on disposal of assets
 
(31
)
   Other income
 
(44
)
Retail gross margin
 
3,881

Plus: Depreciation and amortization
 
528

Retail margin
 
$
4,409

 
 
 
 

    


U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Energy & Transportation
June 11, 2020
Page 3

* * * * *
If you have any questions regarding these matters, please do not hesitate to contact the undersigned at 419.421.2558 or by email at jjquaid@marathonpetroleum.com.
 
 
Sincerely,
 
 
 
 
 
 
 
 
 
 
/s/ John J. Quaid
 
 
Name: John J. Quaid
 
 
Title: Senior Vice President and Controller