Analyst Note| Stephen Ellis |
MPLX's first-quarter results continue to reflect the resilient nature of refined product operations. We will maintain our fair value estimate and narrow moat rating while we incorporate the results into our model. As with peer Magellan Midstream, we would expect to see more of a demand rebound across its refined product pipes in the latter stages of 2021 and early 2022 as the U.S. economy begins to reopen. Overall EBITDA improved very slightly to $1.35 billion from $1.3 billion, primarily benefiting from lower operating expenses. Pipeline throughput for the logistics segment was flat with last year, while terminal volumes fell. Most volumes across the gathering and processing segment also declined, but fractionation volumes increased modestly. While MPLX waits for a better environment, it generated $277 million in excess free cash flow after distributions, which it used to buy back $155 million in units and reduced debt by nearly $90 million. MPLX noted that it is now considering opportunities for renewable fuels for its logistics segment, which we think makes sense, given its close connections to Marathon refineries.