• Net loss of
  
  $15.3 million
  
  , or
  
  $(0.19)
  
  per unit, for the second quarter 2022
• Second quarter Adjusted EBITDA of
  
  $175.8 million
  
• Completed Montana Renewables financing, highlighting a
  
  $2.25 billion
  
  MRL enterprise value
• Super-cycle margin environment highlights benefits of integrated specialty business

INDIANAPOLIS


,


Aug. 5, 2022


/PRNewswire/ — Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the “Partnership,” “Calumet,” “we,” “our” or “us”), today reported results for the second quarter ended

June 30, 2022

, as follows:

“Today is a special day at Calumet as we announce a record financial quarter and a transformational equity investment that places a

$2.25 billion

enterprise value on Montana Renewables,” said

Todd Borgmann

, CEO. “These achievements are the culmination of the extraordinary effort, commitment, and faith of our employees, customers, and investors, and I thank you for that commitment.  From here, we will continue to focus on our strategic vision of creating and separating two leading businesses and further de-leveraging Calumet’s balance sheet.”

“Our second quarter performance highlights the power of Calumet’s unique, highly integrated specialty business. Calumet has demonstrated the ability to perform across the range of business cycles. We relied on our consumer-facing product lines to weather the depths of Covid, and we now have configured to deliver exceptional results through the commodity super-cycle.”

Calumet announced two capital markets transactions this morning, concluding the capitalization of the Montana Renewables business.  The investments are comprised of a

$250 million

preferred equity investment from Warburg Pincus and a

$350 million

sale leaseback investment from Stonebriar Commercial Finance.  “These transactions highlight the transformative nature of Montana Renewables and bringing them to fruition in the current capital market environment demonstrates that MRL is one of the most highly sought after Renewable Diesel platforms in

North America

. Our continuing equity process has been rewarding and dialogue continues to be highly active,” said Borgmann.  “Warburg Pincus is the perfect partner, not just through their help in fully capitalizing this business, but through their extensive experience in energy, decarbonization, and scaling businesses.”

Specialty Products & Solutions (SPS):

The SPS segment reported Adjusted EBITDA of

$123.5 million

, compared to Adjusted EBITDA of

$31.8 million

for the same quarter a year ago.  Fuels margins during the second quarter were significantly higher than the second quarter of 2021.  Coupled with the dramatic increase in fuels margins, our focus on commercial excellence allowed us to deliver strong specialty margins of

$65.95

per barrel.  This strong margin environment highlights the benefits of our integrated business model.  Production volumes within SPS were 57,689 barrels per day (bpd) versus 49,195bpd in the second quarter of 2021.  This represents a 17.3% increase in production year over year and is primarily due to strong operational performance and the absence of the unplanned downtime we experienced in the second quarter a year ago due to

Winter Storm Uri

.

Montana

/ Renewables (MR):

The MR segment reported

$68.6 million

of Adjusted EBITDA, compared to Adjusted EBITDA of

$12.8 million

for the second quarter of 2021.  The year-over-year improvement is largely attributable to the significantly higher crack spread environment experienced during the second quarter versus the same quarter last year.  Production volumes of 27,242 bpd were slightly above the 26,893 bpd produced in the second quarter of 2021.

Performance Brands (PB):

The PB segment reported Adjusted EBITDA of

$3.7 million

, compared to Adjusted EBITDA of

$7.3 million

for the same quarter a year ago. Second quarter results were primarily impacted by the inflationary pressure on feedstocks, additives and packaging materials.  The underlying market factors that are driving feedstock prices upwards are also a key driver to strong margins elsewhere in the business, once again highlighting the interaction between our integrated business segments.   Higher volumes reflect underlying demand strength across PB product lines, and production increased 24.6% versus the second quarter of 2021.

Corporate:

Total corporate costs are represented as a loss of

$20.0 million

of Adjusted EBITDA, compared to a loss of

$19.6 million

of Adjusted EBITDA in the second quarter of 2021.

Operations Summary

The following table sets forth information about the Partnership’s continuing operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased blendstocks, as well as the resale of crude oil.

Webcast Information

A conference call is scheduled for

9:00 a.m. ET

on August 5, 2022 to discuss the financial and operational results for the second quarter of 2022. Investors, analysts and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call with accompanying presentation slides, available on the Partnership’s website at

www.calumetspecialty.investorroom.com/events

. Interested parties may also participate in the call by registering at the following link

https://register.vevent.com/register/BIf8770ef9380a4e13a5d61119e9763d3b

. A replay of the conference call will be available a few hours after the event on the investor relations section of the Partnership’s website, under the events and presentations section and will remain available for at least 90 days.

About the Partnership

Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) manufactures, formulates, and markets a diversified slate of specialty products to customers in a broad range of consumer-facing and industrial markets. Calumet is headquartered in

Indianapolis, Indiana

and operates twelve facilities throughout

North America

.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release may constitute “forward-looking statements.” The words “will,” “may,” “intend,” “believe,” “expect,” “outlook,” “forecast,” “anticipate,” “estimate,” “continue,” “plan,” “should,” “could,” “would,” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. The statements discussed in this press release that are not purely historical data are forward-looking statements, including, but not limited to, the statements regarding (i) the effect, impact, potential duration or other implications of the ongoing novel coronavirus (“COVID-19”) pandemic, supply chain disruptions and global crude oil production levels on our business and operations, (ii) demand for finished products in markets we serve, (iii) our expectation regarding our business outlook and cash flows, (iv) our expectation regarding anticipated capital expenditures and strategic initiatives, (v) our ability to meet our financial commitments, debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditures and (vi) our ability to convert a significant portion of our

Great Falls

refinery into a renewable diesel manufacturing facility. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our current expectations for future sales and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisition or disposition transactions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause our actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include: the overall demand for specialty products, fuels and other refined products; the level of foreign and domestic production of crude oil and refined products; our ability to produce specialty products and fuel products that meet our customers’ unique and precise specifications; the marketing of alternative and competing products; the impact of fluctuations and rapid increases or decreases in crude oil and crack spread prices, including the resulting impact on our liquidity; the results of our hedging and other risk management activities; our ability to comply with financial covenants contained in our debt instruments; the availability of, and our ability to consummate, acquisition or combination opportunities and the impact of any completed acquisitions; labor relations; our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets, businesses or third-party product supply and processing relationships; our ability to timely and effectively integrate the operations of acquired businesses or assets, particularly those in new geographic areas or in new lines of business; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of our credit ratings and ability to receive open credit lines from our suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; our ability to access sufficient crude oil supply through long-term or month-to-month evergreen contracts and on the spot market; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations, including guidance related to the Dodd-Frank Wall Street Reform and Consumer Protection Act; the costs of complying with the Renewable Fuel Standard, including the prices paid for renewable identification numbers (“RINs”); shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; our ability to access the debt and equity markets; accidents or other unscheduled shutdowns; and general economic, market, business or political conditions (including political tensions, conflicts and war).

For additional information regarding factors that could cause our actual results to differ from our projected results, please see our filings with the Securities and Exchange Commission (“SEC”), including the risk factors and other cautionary statements in our latest Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other filings with the SEC.

We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties, and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.

Non-GAAP Financial Measures

Our management uses certain non-GAAP performance measures to analyze operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our financial information presented in accordance with generally accepted accounting principles (“GAAP”). These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include performance measures along with certain key operating metrics.

We use the following financial performance measures:

EBITDA: We define EBITDA for any period as net income (loss) plus interest expense (including amortization of debt issuance costs), income taxes and depreciation and amortization.

Adjusted EBITDA: We define Adjusted EBITDA for any period as: EBITDA adjusted for (a) impairment; (b) unrealized gains and losses from mark to market accounting for hedging activities; (c) realized gains and losses under derivative instruments excluded from the determination of net income (loss); (d) non-cash equity-based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income (loss); (e) debt refinancing fees, extinguishment costs, premiums and penalties; (f) any net gain or loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) amortization of turnaround costs; (h) LCM inventory adjustments; (i) the impact of liquidation of inventory layers calculated using the LIFO method; (j) RINs mark-to-market adjustments; and (k) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense.

Distributable Cash Flow: We define Distributable Cash Flow for any period as Adjusted EBITDA less replacement and environmental capital expenditures, turnaround costs, cash interest expense (consolidated interest expense less non-cash interest expense), gain (loss) from unconsolidated affiliates, net of cash distributions and income tax expense (benefit).

Specialty Products and Solutions segment Adjusted EBITDA Margin: We define Specialty Products and Solutions segment Adjusted EBITDA Margin for any period as Specialty Products and Solutions segment Adjusted EBITDA divided by Specialty Products and Solutions segment sales.

Specialty Products and Solutions segment Adjusted gross profit (loss): We define Specialty Products and Solutions segment Adjusted gross profit (loss) for any period as Specialty Products and Solutions segment gross profit (loss) excluding the impact of (a) LCM inventory adjustments; (b) the impact of liquidation of inventory layers calculated using the LIFO method; (c) RINs mark-to-market adjustments; and (d) depreciation and amortization.

Performance Brands segment Adjusted gross profit (loss): We define Performance Brands segment Adjusted gross profit (loss) for any period as Performance Brands segment gross profit (loss) excluding the impact of (a) LCM inventory adjustments; (b) the impact of liquidation of inventory layers calculated using the LIFO method; (c) RINs mark-to-market adjustments; and (d) depreciation and amortization.

Montana

/Renewables segment Adjusted gross profit (loss): We define

Montana

/Renewables segment Adjusted gross profit (loss) for any period as

Montana

/Renewables segment gross profit (loss) excluding the impact of (a) LCM inventory adjustments; (b) the impact of liquidation of inventory layers calculated using the LIFO method; (c) RINs mark-to-market adjustments; and (d) depreciation and amortization.

The definition of Adjusted EBITDA that is presented in this press release is similar to the calculation of (i) “Consolidated Cash Flow” contained in the indentures governing our 9.25% senior secured first lien notes due

July 15, 2024

, that were issued in

August 2020

(the “2024 Secured Notes”), our 11.00% senior notes due

April 15, 2025

, that were issued in

October 2019

(the “2025 Notes”), and our 8.125% senior notes due

January 15, 2027

, that were issued in

January 2022

(the “2027 Notes”) and (ii) “Consolidated EBITDA” contained in the credit agreement governing our revolving credit facility. We are required to report Consolidated Cash Flow to the holders of our 2024 Secured Notes, 2025 Notes, and 2027 Notes and Consolidated EBITDA to the lenders under our revolving credit facility, and these measures are used by them to determine our compliance with certain covenants governing those debt instruments. Please see our filings with the SEC, including our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for additional details regarding the covenants governing our debt instruments.

These non-GAAP measures are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

• the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
• the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
• our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure;
• the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities; and
• our operating performance excluding the non-cash impact of LCM and LIFO inventory adjustments, RINs mark-to-market adjustments, and depreciation and amortization.

We believe that these non-GAAP measures are useful to analysts and investors, as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability fund our capital requirements and to pay interest on our debt obligations. We believe that excluding these transactions allows investors to meaningfully analyze trends and performance of our core cash operations.

EBITDA, Adjusted EBITDA, Distributable Cash Flow, and segment Adjusted gross profit (loss) should not be considered alternatives to Net income (loss), Operating income (loss), Net cash provided by (used in) operating activities, gross profit (loss) or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA, Distributable Cash Flow, and segment Adjusted gross profit (loss) management recognizes and considers the limitations of these measurements. EBITDA and Adjusted EBITDA do not reflect our liabilities for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA, Distributable Cash Flow, and segment Adjusted gross profit (loss) are only a few of several measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA, Distributable Cash Flow, and segment Adjusted gross profit (loss) may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA, Distributable Cash Flow, and segment Adjusted gross profit (loss) in the same manner. Please see the section of this release entitled “Non-GAAP Reconciliations” for tables that present reconciliations of EBITDA, Adjusted EBITDA, and Distributable Cash Flow to Net income (loss), our most directly comparable GAAP financial performance measure; and segment Adjusted gross profit (loss) to segment gross profit (loss), our most directly comparable GAAP financial performance measure.

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SOURCE Calumet Specialty Products Partners, L.P.