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We are here to analyze Marathon Petroleum’s quarterly earnings report and find account insights that you can use in your sales outreach. You can find Marathon Petroleum’s recent earning reports here. This is for Q2 2022.
What is Marathon petroleum trying to build?
The company has gone through many changes in the recent few months, and they have come out as a very safe and sound stock to be owned according to NASDAQ. So, they must be doing something interesting and right.
Marathon took a lot of hit during COVID, but after that, its CEO put together a very strategic and important plan to turn it around and become more frugal, cost-effective, and valuable to generate better margins and better competitor positioning using the assets they have.
They have let go of some assets, and have converted some to become more sustainable. For example, they have made changes to the Martinez facility to build it as a renewable fuels facility. They have made sure that they’re executing in a low-cost fashion, which means they are always going to be focusing on ways and means by which the cost of operations can be made more efficient.
They even let go of the refinery at Gallup. They have figured out better logistics to make the facility at Dickinson much more accessible to feedstock from a logistic standpoint because for petroleum and other industries in the refining space, transportation costs can be too much. They can pull down the operating efficiency and ultimately end up increasing the cost of the produce. So this is something they have taken a particular effort in. The company also states elsewhere that they rely a lot on technology systems and they’ve made a lot of investments in technology systems.
They want to invest in sustainable fuels and renewable energy. They have set targets around it, so they’re particular about sustainability and ESG. They have to control emissions as they focus on continuing to win or continuing to hold accolades, like the energy star partner of the year.
These are good facts that you (the salesperson) need to be aware of when trying to engage with prospects from Marathon Petroleum. It will make sure that you demonstrate your understanding of their business.
All the companies that are in the energy business are coming under greater scrutiny. Given the tectonic shift that the world is going through to cleaner energy, sustainable energy, renewable energy, etc. So any company that has emissions to its credit and is using up a lot of natural resources is going to be scrutinized very heavily. This means that’s an area, if you can help them, they’re gonna be receptive to you.
Strategic and Operations Update
This is an important section in the report and can be particularly valuable to understand in as much detail as possible. They are talking about specific strategic projects and the state of how those projects are evolving for the company. Let’s begin with the Martinez refinery.
The Martinez Refinery
It is expected to produce renewable fuels very shortly after having been given the necessary certification and having cleared all the necessary paperwork to get moving with it. This means as they produce the fuel and want to distribute it, the company is going to keep an eye on how the distribution network plays out, how the supply chain network plays out, and how the outlets from which this fuel will be consumed are going to manage the inventory, how to manage the amount of fuel available to service the demand as the country goes beyond the summer, and the fuel consumption might increase in winters and change with time. All of that is going to put a lot more focus on how Marathon will manage the fuel supply, distribution, and logistics around what’s coming out of the Martinez refinery. This is a new learning curve and would lead to many optimizations. Any capability that will make this entire supply chain more efficient is something that Marathon is likely to value a lot.
Renewable fuels
The second interesting aspect of marathon’s business strategy is around renewable fuels from the Martinez facility, where they have aligned the supplies, which is, agricultural feedstock, for producing the fuel, and the distribution to the outlets. They have tried to optimize the supply as well as the distribution, in addition, to forming a joint venture with Neste, so that both partners can together figure this out. Ensuring there’s adequate supply and they are marketing the products coming out of the facility.
This puts in focus, one of the aspects that we’ve seen in recent times, which is – even fuel and other utility product providers want to increase customer lifetime value. So they think around it – If I am marketing these fuels, I want to get customers who are consuming my fuel for automobiles in a manner that they stick with the brand. Fuel can be very undated, but based on the kind of experience that you can provide them, it can be sticky too. So this is another aspect that marathon’s likely to look into because overall as consumer loyalty increases operations can start coming down for you.
Standards and compliance
The last bit is marathons focus on making sure their suppliers are sticking to a high bar of home standards and ESG compliance. Marathon has put in place a supplier code of conduct and wants suppliers to be able to perform at a certain level or above so that Marathon’s downstream quality to their consumers can be met.
This is yet another area where the company’s likely to continue the focus because once you let go of the standard, it can become very difficult for you to pull it back. So they will want to maintain it and keep up the bar on that front.
Diversity, Equity, and Inclusion
Marathon is investing a fair bit in making sure that its DEI standards are held quite high. Remember, the company has got over 43,000 people, and they talk about having executed good, strong DEI programs, and bringing diversity across a few thousand of them. This means there’s still a lot more of their overall employee base they are to start thinking about. They have to identify how to build a fairly diverse, inclusive organization that empowers the team.
So there you have it – details from Marathon Petroleum’s Q2 earnings. You want to leverage information and insights from these sections to have a more meaningful conversation around Marathon’s plans and how your product or service can align with them, be it for supply chain, logistics, transportation efficiency, or even things like employee engagement.
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