Marathon Oil Corporation reports 402% Net Income decline in 2020 and 15.2 pp EBITDA Margin decline from 59.1% to 43.9%
02/22/2021 • About Marathon Oil Corporation (
$MRO) • By InTwits
Marathon Oil Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Marathon Oil Corporation is a company in decline: 2020 revenue growth was -39.1%, 5 years revenue CAGR was -7.8%
- Marathon Oil Corporation has high CAPEX intensity: 5 year average CAPEX/Revenue was 43.9%. At the same time it's a lot of higher than industry average of 26.8%.
- CAPEX is quite volatile: $1,343m in 2020, $2,550m in 2019, $2,753m in 2018, $1,974m in 2017, $1,204m in 2016
- The company has unprofitable business model: ROIC is -5.9%
- It operates with high leverage: Net Debt/EBITDA is 3.5x while industry average is 0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Marathon Oil Corporation's Revenue dropped on 39.1%. Annual revenue decline showed slowdown in 20Q4 - revenue dropped on 33.0%. During 2016-2020 Revenue growth topped in 2017 at 39.2% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 15.2 pp from 59.1% to 43.9% in 2020. During the last 5 years EBITDA Margin topped in 2018 at 64.2% and was declining since that time.
Gross Margin dropped on 31.6 pp from 33.3% to 1.6% in 2020. During the last 5 years Gross Margin topped in 2018 at 40.8% and was declining since that time. SG&A as a % of Revenue increased slightly on 1.8 pp from 6.9% to 8.8% in 2020. During the last 5 years SG&A as a % of Revenue bottomed in 2018 at 6.5% and was growing since that time.
Net Income margin dropped on 55.8 pp from 9.4% to -46.5% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 Marathon Oil Corporation had CAPEX/Revenue of 43.0%. The company's CAPEX/Revenue decreased slightly on 0.98 pp from 44.0% in 2017 to 43.0% in 2020. Average CAPEX/Revenue for the last three years was 46.1%. Battling declining revenue the company invested a large share of EBITDA (97.9%) to CAPEX but that didn't help at least in this year. During the last 5 years CAPEX as a % of Revenue topped in 2019 at 49.8%.
Return on investment
The company operates at negative ROIC (-5.9%) and ROE (-12.8%). ROIC decreased on 9.0 pp from 3.1% to -5.9% in 2020. ROE dropped on 16.7 pp from 4.0% to -12.8% in 2020. During 2016-2020 ROIC topped in 2018 at 8.1% and was declining since that time.
Leverage (Debt)
Debt level is 3.5x Net Debt / EBITDA and 4.0x Debt / EBITDA. Net Debt / EBITDA surged on 1.9x from 1.6x to 3.5x in 2020. Debt decreased on 2.9% while cash dropped on 13.5%. During 2016-2020 Net Debt/EBITDA bottomed in 2018 at 1.0x and was growing since that time.
Marathon Oil Corporation has no short term refinancing risk: cash is higher than short term debt (1,060.0%).
Management team
Lee M Tillman is a the company's CEO. Lee M Tillman has spent 7 years with the company. The company's CFO is Dane E Whitehead. Dane E Whitehead has 4 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
Marathon Oil Corporation ($MRO) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 3,223 | 4,487 | 6,052 | 5,125 | 3,122 | -39.1% |
| Gross Profit | 204 | 1,216 | 2,470 | 1,705 | 51 | -97.0% |
| SG&A | 726 | 539 | 394 | 356 | 274 | -23.0% |
| EBITDA | 1,149 | 2,002 | 3,883 | 3,030 | 1,372 | -54.7% |
| Net Income | -2,140 | -5,723 | 1,096 | 480 | -1,451 | -402.3% |
Balance Sheet
|
|---|
| Cash | 2,488 | 563 | 1,462 | 858 | 742 | -13.5% |
| Short Term Debt | 686 | 0 | 0 | 101 | 70 | -30.7% |
| Long Term Debt | 6,581 | 5,494 | 5,499 | 5,608 | 5,471 | -2.4% |
Cash flow
|
|---|
| Capex | 1,204 | 1,974 | 2,753 | 2,550 | 1,343 | -47.3% |
Ratios
|
|---|
| Revenue growth | -31.3% | 39.2% | 34.9% | -15.3% | -39.1% | |
| EBITDA growth | 171.6% | 74.2% | 94.0% | -22.0% | -54.7% | |
|
|---|
| Gross Margin | 6.3% | 27.1% | 40.8% | 33.3% | 1.6% | -31.6% |
| EBITDA Margin | 35.7% | 44.6% | 64.2% | 59.1% | 43.9% | -15.2% |
| SG&A, % of revenue | 22.5% | 12.0% | 6.5% | 6.9% | 8.8% | 1.8% |
| Net Income Margin | -66.4% | -127.5% | 18.1% | 9.4% | -46.5% | -55.8% |
| CAPEX, % of revenue | 37.4% | 44.0% | 45.5% | 49.8% | 43.0% | -6.7% |
|
|---|
| ROIC | -3.7% | -1.7% | 8.1% | 3.1% | -5.9% | -9.0% |
| ROE | -11.9% | -39.1% | 9.2% | 4.0% | -12.8% | -16.7% |
| Net Debt/EBITDA | 4.2x | 2.5x | 1.0x | 1.6x | 3.5x | 1.9x |
Marathon Oil Corporation ($MRO) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,031 | 496 | 764 | 831 | | -16.5% | -64.4% | -39.1% | -33.0% |
| EBITDA | 671 | 46 | 322 | 258 | | 5.7% | -94.6% | -62.5% | -62.5% |
| Net Income | -46 | -750 | -317 | -338 | | -126.4% | -565.8% | -292.1% | - |
Balance Sheet
|
|---|
| Cash | 817 | 522 | 1,119 | 742 | | -19.8% | -45.7% | -3.9% | -13.5% |
| Short Term Debt | 83 | 83 | 579 | 70 | | -9.8% | -88.2% | -17.8% | -30.7% |
| Long Term Debt | 5,588 | 5,577 | 5,466 | 5,471 | | -1.3% | 10.4% | 8.7% | -2.4% |
Ratios
|
|---|
| Gross Margin | 15.6% | -52.4% | 4.2% | 14.2% | | -18.6% | -89.5% | -26.8% | -16.2% |
| EBITDA Margin | 65.1% | 9.3% | 42.1% | 31.0% | | 13.7% | -51.6% | -26.3% | -24.4% |
| Net Income Margin | -4.5% | -151.2% | -41.5% | -40.7% | | -18.6% | -162.8% | -54.6% | -39.1% |
Peers in Oil & Gas Exploration & Production
Below we provide Marathon Oil Corporation benchmarking against other companies in Oil & Gas Exploration & Production industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | - | 30.9% | 18.2% | 6.0% | -31.5% |
| Camber Energy, Inc. ($CEI) | - | 447.6% | 29.4% | -60.0% | -85.5% |
| |
|---|
| Median (2 companies) | - | 239.3% | 23.8% | -27.0% | -58.5% |
|---|
| Marathon Oil Corporation ($MRO) | - | 39.2% | 34.9% | -15.3% | -39.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 45.6% | 51.8% | 56.4% | 52.3% | 34.4% |
| Camber Energy, Inc. ($CEI) | -80.1% | -17.2% | 3.0% | -27.0% | -29.6% |
| |
|---|
| Median (2 companies) | -17.3% | 17.3% | 29.7% | 12.6% | 2.4% |
|---|
| Marathon Oil Corporation ($MRO) | 6.3% | 27.1% | 40.8% | 33.3% | 1.6% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 26.1% | 54.1% | 54.9% | 55.3% | 32.1% |
| Camber Energy, Inc. ($CEI) | -2,457.0% | -1,535.3% | -250.5% | 696.1% | -1,260.8% |
| |
|---|
| Median (2 companies) | -1,215.5% | -740.6% | -97.8% | 375.7% | -614.3% |
|---|
| Marathon Oil Corporation ($MRO) | 35.7% | 44.6% | 64.2% | 59.1% | 43.9% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 80.1% | 29.6% | 9.1% | 15.6% | 37.4% |
| Camber Energy, Inc. ($CEI) | 22.9% | 71.5% | 29.8% | 76.4% | 0.0% |
| |
|---|
| Median (2 companies) | 51.5% | 50.5% | 19.5% | 46.0% | 18.7% |
|---|
| Marathon Oil Corporation ($MRO) | 37.4% | 44.0% | 45.5% | 49.8% | 43.0% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 2.2% | 14.9% | 18.8% | 19.6% | 4.2% |
| Camber Energy, Inc. ($CEI) | -110.4% | -372.7% | -83.6% | 227.2% | -71.8% |
| |
|---|
| Median (2 companies) | -54.1% | -178.9% | -32.4% | 123.4% | -33.8% |
|---|
| Marathon Oil Corporation ($MRO) | -3.7% | -1.7% | 8.1% | 3.1% | -5.9% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Camber Energy, Inc. ($CEI) | - | - | - | -0.4x | - |
| Evolution Petroleum Corporation, Inc. ($EPM) | -5.0x | -1.2x | -1.1x | -1.3x | -2.1x |
| |
|---|
| Median (2 companies) | -5.0x | -1.2x | -1.1x | -0.9x | -2.1x |
|---|
| Marathon Oil Corporation ($MRO) | 4.2x | 2.5x | 1.0x | 1.6x | 3.5x |
