Calumet Specialty Products Partners, L.P. Reports Third Quarter 2020 Results
INDIANAPOLIS, Nov. 6, 2020 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," "Calumet," "we," "our" or "us"), a leading independent producer of specialty hydrocarbon and fuel products, today reported results for the third quarter ended September 30, 2020, as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(Dollars in millions, except per unit data)
Net loss $
(56.1) $
(4.6) $
(66.9) $
(5.0)
Net loss per unit $
(0.70) $
(0.06) $
(0.83) $
(0.06)
Adjusted net income (loss) $
(38.2) $
8.4 $
(35.4) $
13.9
Adjusted net income (loss) per unit $
(0.49) $
0.11 $
(0.45) $
0.18
Adjusted EBITDA $
25.4 $
76.2 $
150.1 $
212.9
The Partnership's $56.1 million of Net loss and $0.70 Net loss per unit for the third quarter 2020 included a $1.1 million unfavorable net impact related to non-cash lower of cost or market ("LCM") inventory adjustments and a $9.2 million unrealized hedging loss. Excluding these and other non-cash charges, Adjusted net loss and Adjusted net loss per unit were $38.2 million and $0.49, respectively. The Partnership's $25.4 million of Adjusted EBITDA for the third quarter 2020 excluded a $1.1 million unfavorable net impact related to non-cash LCM inventory adjustments.
For detailed information on the non-GAAP measures presented in this release and a reconciliation of such measures to the nearest comparable GAAP measure for the periods presented above, please see the sections of this release entitled "Non-GAAP Financial Measures" and "Non-GAAP Reconciliations."
Management Commentary
"The resilience and diversity of our core Specialty business was again demonstrated with this segment generating both profit and margin growth year-over-year, as Gross profit and Adjusted gross profit per barrel improved 7.2% and 13.3%, respectively versus last year's third quarter. Year to date, Specialty products segment Adjusted EBITDA of $176.6 million is trending 7% ahead of last year's results through the first three quarters. Growth in Specialty profitability was achieved despite the ongoing uncertainty and uneven pace of recovery due to COVID-19. Demand for consumer-facing specialties has held up well throughout the pandemic. However, this quarter was also notable for the material recovery in demand for our industrial specialties, reflected in improved sales volumes versus last quarter. Specialty products segment Adjusted EBITDA margin for the quarter of 19.9% was 540 basis points higher than last year's third quarter due to our commercial excellence and margin management focus. The increase in industrial specialty volumes did result in some quarter-over-quarter mix impact on segment margins; but overall specialty margins and profit levels remain well ahead of last year, and at or above our expectations. We believe this is a notable and impressive result given the macro backdrop."
Mawer continued, "The macro backdrop remains challenging for our Fuels business, but we are cautiously encouraged by the recent signs of recovering demand and falling product inventories. However, despite the external market environment, we remain intent on managing what we can control in that segment, whether that be from maximizing the value of our local niches, tactically accelerating maintenance work, or further enhancing the integration of our facilities in northwest Louisiana. We remain very pleased with how the market around our Great Falls refinery has been relatively insulated from the global fuels malaise."
Mawer concluded, "Earlier this year, we took decisive action in a number of areas, including substantial reductions in both operating costs and SG&A, together with aggressive yield management and an accelerated hedging program. These decisive actions, together with our resilient Specialties business, have allowed us to progress through the pandemic with positive free cash flow. This significant accomplishment allows us to focus on maximizing the opportunity that we expect recovering markets will present and leaves us with even stronger operating leverage looking forward."
Specialty Products Segment | Results Summary
Three Months Ended September 30,
2020 2019
(Dollars in millions, except per barrel
data)
Gross profit $
86.5 $
80.7
Adjusted gross profit $
81.8 $
79.8
Adjusted EBITDA $
56.0 $
51.6
Gross profit per barrel $
40.52 $
34.21
Adjusted gross profit per barrel $
38.32 $
33.83
Adjusted EBITDA Margin 19.9 14.5
% %
During the third quarter, the Specialty products segment gross profit was $86.5 million compared to $80.7 million in the year-ago period. The Specialty products segment Adjusted EBITDA of $56.0 million improved 8.5% versus the prior year period, while adjusted gross profit of $81.8 million, improved 2.5% compared to the third quarter of 2019. Adjusted EBITDA continues to be impacted by softer demand leading to lower sales volumes, although these headwinds were more than offset by stronger sales mix driven by growth in consumer-facing specialties, including Finished Lubricants and Chemicals, Penreco branded products, and waxes. Gross profit per barrel results of $40.52 grew more than 18% versus the prior year quarter, and Adjusted EBITDA margins of 19.9% grew 540 basis points versus 14.5% in last year's third quarter. This margin expansion was driven by profitability plans implemented in the prior year and commercial excellence initiatives that have catalyzed growth in sales volumes for consumer-facing specialties, including Finished Lubricants and Chemicals, Penreco branded products, and waxes.
Fuel Products Segment | Results Summary
Three Months Ended September 30,
2020 2019
(Dollars in millions, except per
barrel data)
Gross profit
(loss) $
(41.9) $
37.1
Adjusted gross
profit (loss) $
(36.1) $
40.7
Adjusted EBITDA $
(13.5) $
47.7
Gross profit
(loss) per barrel $
(7.31) $
4.72
Adjusted gross
profit (loss) per
barrel $
(6.30) $
5.18
During the third quarter, Fuel products segment gross profit (loss) was $(41.9) million, compared to $37.1 million in the year-ago period. Fuels products adjusted gross profit (loss) and Adjusted EBITDA of $(36.1) million and $(13.5) million, respectively, were down significantly compared to the year-ago period driven by the significant decline in crack spreads and tightening crude differentials versus the prior year. In particular, the average WCS/WTI crude differential tightened by $3 per barrel compared to the third quarter of 2019, which was the primary driver of the material declines in gross profit (loss) per barrel and Adjusted gross profit (loss) per barrel performance across the quarter. Additionally, RINs costs increased during the quarter, impacting segment gross profit (loss) and Adjusted EBITDA results. These increased compliance costs were partially offset by the record fuels product rack sales in local markets.
Partnership Liquidity
As of September 30, 2020, the Partnership had total liquidity of $269.3 million, comprised of $109.4 million of cash and $159.9 million of availability under the revolving credit facility. As of September 30, 2020, Calumet had a $289.7 million borrowing base, $29.7 million in outstanding standby letters of credit and $100.1 million of outstanding borrowings under the revolving credit facility. The Partnership believes it will continue to have sufficient liquidity from cash on hand, cash flow from operations, borrowing capacity and other means by which to meet its financial commitments, debt service obligations, contingencies and anticipated capital expenditures.
Full-Year 2020 Capital Spending Forecast
Through the third quarter of 2020, total capital spending, including turnaround investments, was $46.9 million. For the full-year 2020, the Partnership continues to expect to incur capital expenditures of approximately $50.0 million to $60.0 million , which reflects our previously announced reduction in expected capital expenditures for 2020 due to increased volatility with domestic and global demand resulting from the ongoing COVID-19 pandemic.
Operations Summary
The following table sets forth information about the Partnership's combined operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased fuel product blendstocks, such as ethanol and biodiesel, and the resale of crude oil in the Partnership's fuel products segment.
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In bpd)
Total sales volume (1) 85,529 111,022 88,429 107,670
Total feedstock runs (2) 81,813 110,447 85,282 106,784
Facility production: (3)
Specialty products:
Lubricating oils 10,634 11,937 9,839 11,872
Solvents 6,323 7,493 6,500 7,580
Waxes 1,199 1,440 1,253 1,416
Packaged and synthetic specialty products (4) 1,458 1,384 1,407 1,667
Other 790 2,037 1,747 1,626
Total 20,404 24,291 20,746 24,161
Fuel products:
Gasoline 17,017 23,603 18,181 23,816
Diesel 23,499 30,479 25,161 29,729
Jet fuel 4,301 5,213 3,673 4,462
Asphalt, heavy fuel oils and other 13,540 22,248 14,520 21,031
Total 58,357 81,543 61,535 79,038
Total facility production (3) 78,761 105,834 82,281 103,199
(1) Total sales volume includes sales
from the production at the
Partnership's facilities and
certain third-party facilities
pursuant to supply and/or
processing agreements, sales of
inventories and the resale of crude
oil to third-party customers.
Total sales volume includes the
sale of purchased fuel product
blendstocks, such as ethanol and
biodiesel, as components of
finished fuel products in the
Partnership's fuel products segment
sales.
The decrease in total sales volume
for the three and nine months ended
September 30, 2020, as compared to
the same periods in 2019, is due
primarily to the sale of the San
Antonio refinery, the terminated
third-party naphthenic lubricating
oil production arrangement, and
softened demand due to the COVID-
19 pandemic.
(2) Total feedstock runs represent the
barrels per day ("bpd") of crude
oil and other feedstocks processed
at the Partnership's facilities and
at certain third-party facilities
pursuant to supply and/or
processing agreements.
The decrease in total feedstock runs
for the three and nine months ended
September 30, 2020, as compared to
the same periods in 2019, is due
primarily to the sale of the San
Antonio refinery, the terminated
third-party naphthenic lubricating
oil production arrangement, and
softened demand due to the COVID-
19 pandemic.
(3) Total facility production represents
the barrels per day of specialty
products and fuel products yielded
from processing crude oil and other
feedstocks at our facilities and at
certain third-party facilities
pursuant to supply and/or
processing agreements. The
difference between total facility
production and total feedstock runs
is primarily a result of the time
lag between the input of feedstocks
and production of finished products
and volume loss.
The change in total facility
production for the three and nine
months ended September 30, 2020, as
compared to the same period in
2019, is due primarily to the items
discussed above.
(4) Represents production of finished
lubricants and chemicals specialty
products including the products
from the Royal Purple, Bel-Ray and
Calumet Packaging facilities.
Webcast Information
A conference call is scheduled for 9:00 a.m. ET on November 6, 2020 to discuss the financial and operational results for the third quarter of 2020. 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 http://www.calumetspecialty.com. Interested parties may also participate in the call by dialing (866) 584-9671 and entering the conference ID 8054089. 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) is a master limited partnership and a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customized lubricating oils, solvents and waxes used in consumer, industrial and automotive products; produces fuel products including gasoline, diesel and jet fuel. Calumet is based in Indianapolis, Indiana, and operates nine manufacturing facilities located in northwest Louisiana, northern Montana, western Pennsylvania, Texas, and eastern Missouri.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements and information in this press release may constitute "forward-looking statements." The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" 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 on our business and operations, (ii) the demand for refined petroleum 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, and (v) our ability to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. These forward-looking statements are based on our current expectations, projections and beliefs concerning future developments and their potential effect on our business and industry. 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 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 acquisitions or dispositions. 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 our actual results to differ materially from those in the forward-looking statements are those described in (i) Part I, Item 1A "Risk Factors" and Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and (ii) Part I, Item 3 "Quantitative and Qualitative Disclosures About Market Risk" and Part II, Item 1A "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
For additional information regarding known material 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 other cautionary statements in our latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q.
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 GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include performance and liquidity measures along with certain key operating metrics.
During the first quarter of 2020, we changed how we calculate Adjusted EBITDA, which is used by management for evaluating performance, allocating resources and managing our business. The revised calculation of Adjusted EBITDA now excludes the impact of LCM inventory adjustments and the liquidation of inventory layers calculated using the last-in, first-out ("LIFO") method, which were previously included. This revised calculation better reflects the performance of our business segments including cash flows. Adjusted EBITDA has been revised for all periods presented to consistently reflect this change. We previously also presented Adjusted EBITDA (excluding LCM/LIFO), which is consistent with our revised definition of Adjusted EBITDA.
We use the following performance and liquidity 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, premiums and penalties; (f) any net loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) LCM inventory adjustments; (h) the impact of liquidation of inventory layers calculated using the LIFO method; and (i) 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), income (loss) from unconsolidated affiliates, net of cash distributions and income tax expense (benefit).
Adjusted EBITDA Margin: We define Adjusted EBITDA Margin for any period as Adjusted EBITDA divided by sales.
Adjusted net income (loss): We define Adjusted net income (loss) for any period as: net income (loss) adjusted for (a) impairment; (b) unrealized losses from mark-to-market accounting for hedging activities; (c) realized gains 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, premiums and penalties; (f) any net loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; (h) LCM inventory adjustments; and (i) the impact of liquidation of inventory layers calculated using the LIFO method.
Adjusted net income (loss) per unit: We define Adjusted net income (loss) per unit for any period as Adjusted net income (loss) divided by average limited partner units basic and diluted.
Specialty products segment Adjusted gross profit: We define Specialty products segment Adjusted gross profit for any period as Specialty products segment gross profit excluding the impact of LCM inventory adjustments and the impact of liquidation of inventory layers calculated using the LIFO method.
Fuel products segment Adjusted gross profit (loss): We define Fuel products segment Adjusted gross profit (loss) for any period as Fuel products segment gross profit (loss) excluding the impact of LCM inventory adjustments and the impact of liquidation of inventory layers calculated using the LIFO method.
Further, management and various investors use the ratio of Net debt (defined as total debt less cash) to Adjusted EBITDA, or "net debt leverage," as a measure of our financial strength and ability to incur incremental indebtedness when making key investment decisions and evaluating us against peers. The metric "total debt less cash" includes borrowed long-term debt, letters of credit, and capital lease obligations, less cash.
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 7.625% senior notes due January 15, 2022, that were issued in November 2013 (the "2022 Notes"). Our 7.75% senior notes due April 15, 2023, that were issued in March 2015 (the "2023 Notes"), our 9.25% senior secured first lien notes due July 15, 2024, that were issued in August 2020 (the "2024 Secured Notes"), and our 11.00% senior notes due April 15, 2025, that were issued in October 2019 (the "2025 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 2022 Notes, 2023 Notes, 2024 Secured Notes, and 2025 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 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.
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 to pay distributions and interest costs. 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, Adjusted net income (loss), Adjusted net income (loss) per unit, 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, Adjusted net income (loss), Adjusted net income (loss) per unit, and segment Adjusted gross profit (loss) management recognizes and considers the limitations of these measurements. EBITDA and Adjusted EBITDA do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA, Distributable Cash Flow and Adjusted net income (loss), Adjusted net income (loss) per unit, and segment Adjusted gross profit (loss) are only a few of several measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA, Distributable Cash Flow, Adjusted net income (loss), Adjusted net income (loss) per unit 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, Adjusted net income (loss), Adjusted net income (loss) per unit 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, Distributable Cash Flow and Adjusted net income (loss) to Net income (loss), our most directly comparable GAAP financial performance measure; Distributable Cash Flow to net cash provided by (used in) operating activities, our most directly comparable GAAP liquidity measure, for each of the periods indicated; and segment Adjusted gross profit (loss) to segment gross profit (loss), our most directly comparable GAAP financial performance measure.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except unit and per unit data)
Three Months Ended September 30, Nine Months Ended September 30,
---
2020 2019 2020 2019
---
Sales $
568.0 $
929.6 $
1,714.3 $
2,677.8
Cost of sales 523.4 811.8 1,526.1 2,316.9
Gross profit 44.6 117.8 188.2 360.9
Operating costs and expenses:
Selling 11.2 12.6 37.1 40.2
General and administrative 29.7 32.8 76.7 105.5
Transportation 28.1 28.4 83.7 95.9
Taxes other than income taxes 3.9 5.7 6.2 15.5
Loss on impairment and disposal of assets - 3.2 6.7 31.1
Other operating expense 2.5 1.7 9.7 0.8
Operating income (loss) (30.8) 33.4 (31.9) 71.9
Other income (expense):
Interest expense (33.3) (33.8) (93.2) (99.2)
Gain on debt extinguishment - 0.7
Gain (loss) on derivative instruments 7.9 (5.0) 57.7 14.4
Other 0.2 1.3 1.3 7.9
Total other expense (25.2) (37.5) (34.2) (76.2)
Net loss before income taxes (56.0) (4.1) (66.1) (4.3)
Income tax expense 0.1 0.5 0.8 0.7
Net loss $
(56.1) $
(4.6) $
(66.9) $
(5.0)
Allocation of net loss:
Net loss $
(56.1) $
(4.6) $
(66.9) $
(5.0)
Less:
General partner's interest in net loss (1.1) (0.1) (1.3) (0.1)
Net loss available to limited partners $
(55.0) $
(4.5) $
(65.6) $
(4.9)
Weighted average limited partner units outstanding:
Basic and diluted 78,743,083 78,299,472 78,602,651 78,174,976
Limited partners' interest basic and diluted net loss per unit:
Limited partners' interest $
(0.70) $
(0.06) $
(0.83) $
(0.06)
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
September 30, December 31, 2019
2020
---
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $
109.4 $
19.1
Accounts receivable, net 161.1 175.0
Other 13.9 13.5
175.0 188.5
Inventories 230.8 292.6
Derivative assets 13.0 0.9
Prepaid expenses and other current assets 12.8 11.0
Total current assets 541.0 512.1
Property, plant and equipment, net 932.9 973.5
Goodwill 172.5 171.4
Other intangible assets, net 61.3 71.2
Operating lease right-of-use assets 66.4 93.1
Other noncurrent assets, net 33.4 36.5
Total assets $
1,807.5 $
1,857.8
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable $
158.4 $
230.2
Accrued interest payable 45.5 32.0
Accrued salaries, wages and benefits 31.4 35.7
Other taxes payable 15.7 11.8
Obligations under inventory financing agreements 89.2 134.3
Other current liabilities 103.0 58.6
Current portion of operating lease liabilities 26.4 60.6
Current portion of long-term debt 2.1 1.8
Total current liabilities 471.7 565.0
Pension and postretirement benefit obligations 7.4 7.9
Other long-term liabilities 19.4 20.8
Long-term operating lease liabilities 40.5 33.0
Long-term debt, less current portion 1,313.3 1,209.5
Total liabilities 1,852.3 1,836.2
Commitments and contingencies
Partners' capital (deficit):
Limited partners' interest (44.9) 20.2
General partner's interest 10.7 12.0
Accumulated other comprehensive loss (10.6) (10.6)
Total partners' capital (deficit) (44.8) 21.6
Total liabilities and partners' capital (deficit) $
1,807.5 $
1,857.8
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Nine Months Ended September 30,
2020 2019
---
Operating activities
Net loss $
(66.9) $
(5.0)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 78.8 82.6
Amortization of turnaround costs 12.7 16.5
Non-cash interest expense 4.8 4.9
Gain on debt extinguishments - (0.7)
Unrealized (gain) loss on derivative instruments (21.2) 20.2
Loss on impairment and disposal of assets 6.7 31.1
Operating lease expense 45.0 57.1
Operating lease payments (45.0) (57.1)
Equity-based compensation 2.5 4.9
Lower of cost or market inventory adjustment 35.3 (38.8)
Other non-cash activities 0.8 (7.0)
Changes in assets and liabilities:
Accounts receivable 10.7 (49.8)
Inventories 26.6 29.6
Prepaid expenses and other current assets 1.3 4.6
Derivative activity (0.3) (0.4)
Turnaround costs (19.7) (16.8)
Accounts payable (55.5) 61.7
Accrued interest payable 12.7 10.8
Accrued salaries, wages and benefits (5.7) 2.6
Other taxes payable 3.9 6.0
Other liabilities 38.1 (3.1)
Net cash provided by operating activities $
65.6 $
153.9
Investing activities
Additions to property, plant and equipment (35.5) (27.4)
Acquisition of business, net of cash acquired (3.3)
Proceeds from sale of unconsolidated affiliate - 5.0
Proceeds from sale of property, plant and equipment - 3.7
Net cash provided by discontinued investing activities 0.9 5.0
Net cash used in investing activities $
(37.9) $
(13.7)
Financing activities
Proceeds from borrowings - revolving credit facility 895.9
Repayments of borrowings - revolving credit facility (795.8)
Repayments of borrowings - senior notes - (137.3)
Payments on finance lease obligations (0.4) (0.9)
Proceeds from inventory financing 584.8 848.7
Payments on inventory financing (620.1) (840.7)
Proceeds from other financing obligations 31.4
Payments on other financing obligations (33.2) (1.6)
Contributions from Calumet GP, LLC - 0.1
Net cash provided by (used in) financing activities $
62.6 $
(131.7)
Net increase in cash and cash equivalents $
90.3 $
8.5
Cash and cash equivalents at beginning of period 19.1 155.7
Cash and cash equivalents at end of period $
109.4 $
164.2
Supplemental disclosure of non-cash investing activities
Non-cash property, plant and equipment additions $
3.8 $
12.3
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
NON-GAAP RECONCILIATIONS
RECONCILIATION OF NET LOSS
TO EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
(In millions)
Three Months Ended September 30, Nine Months Ended September 30,
---
2020 2019 2020 2019
---
Reconciliation of Net loss to EBITDA, Adjusted
(Unaudited)
EBITDA and Distributable Cash Flow:
Net loss $
(56.1) $
(4.6) $
(66.9) $
(5.0)
Add:
Interest expense 33.3 33.8 93.2 99.2
Depreciation and amortization 26.2 27.4 78.8 82.6
Income tax expense 0.1 0.5 0.8 0.7
EBITDA $
3.5 $
57.1 $
105.9 $
177.5
Add:
LCM / LIFO (gain) loss $
1.1 $
2.7 $
35.5 $
(37.9)
Unrealized (gain) loss on derivative instruments 9.2 5.4 (21.2) 20.2
Amortization of turnaround costs 4.0 6.1 12.7 16.5
Gain from debt extinguishment - (0.7)
Loss on impairment and disposal of assets - 3.2 6.7 31.1
Gain on sale of unconsolidated affiliate - (1.2)
Equity-based compensation and other items 2.1 0.4 6.2 6.1
Other non-recurring expenses 5.5 1.3 4.3 1.3
Adjusted EBITDA $
25.4 $
76.2 $
150.1 $
212.9
Less:
Replacement and environmental capital $
5.3 $
13.4 $
17.6 $
27.0
expenditures (1)
Cash interest expense (2) 31.6 32.4 88.4 94.3
Turnaround costs 3.6 10.4 19.7 16.8
Gain from unconsolidated affiliates - 3.8
Income tax expense 0.1 0.5 0.8 0.7
Distributable Cash Flow $
(15.2) $
19.5 $
23.6 $
70.3
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF DISTRIBUTABLE CASH FLOW, ADJUSTED EBITDA AND EBITDA TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In millions)
Nine Months Ended September 30,
2020 2019
---
Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to Net cash
(Unaudited)
provided by operating activities:
Distributable Cash Flow $
23.6 $
70.3
Add:
Replacement and environmental capital expenditures (1) 17.6 27.0
Cash interest expense (2) 88.4 94.3
Turnaround costs 19.7 16.8
Gain from unconsolidated affiliates - 3.8
Income tax expense 0.8 0.7
Adjusted EBITDA $
150.1 $
212.9
Less:
LCM / LIFO (gain) loss $
35.5 $
(37.9)
Unrealized (gain) loss on derivative instruments (21.2) 20.2
Amortization of turnaround costs 12.7 16.5
Gain on debt extinguishment - (0.7)
Loss on impairment and disposal of assets 6.7 31.1
Gain on sale of unconsolidated affiliate - (1.2)
Equity-based compensation and other items 6.2 6.1
Other non-recurring expenses 4.3 1.3
EBITDA $
105.9 $
177.5
Add:
Unrealized (gain) loss on derivative instruments $
(21.2) $
20.2
Cash interest expense (2) (88.4) (94.3)
Other non-recurring expenses 4.3
Equity-based compensation 2.5 4.9
Lower of cost or market inventory adjustment 35.3 (38.8)
Gain from unconsolidated affiliates - (3.8)
Gain on sale of unconsolidated affiliate - (1.2)
Amortization of turnaround costs 12.7 16.5
Gain on debt extinguishment - (0.7)
Operating lease expense 45.0 57.1
Operating lease payments (45.0) (57.1)
Loss on impairment and disposal of assets 6.7 31.1
Income tax expense (0.8) (0.7)
Changes in assets and liabilities:
Accounts receivable 10.7 (49.8)
Inventories 26.6 29.6
Other current assets 1.3 4.6
Derivative activity (0.3) (0.4)
Turnaround costs (19.7) (16.8)
Accounts payable (55.5) 61.7
Accrued interest payable 12.7 10.8
Other liabilities 36.3 5.5
Other (3.5) (2.0)
Net cash provided by operating activities $
65.6 $
153.9
(1) Replacement capital expenditures
are defined as those capital
expenditures which do not increase
operating capacity or reduce
operating costs and exclude
environment capital expenditures
and turnaround costs.
Environmental capital expenditures
include asset additions to meet or
exceed environmental and operating
regulations.
(2) Represents consolidated interest
expense less non-cash interest
expense.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO NET LOSS
(In millions)
Three Months Ended September 30, Nine Months Ended September 30,
---
2020 2019 2020 2019
---
(In millions)
Reconciliation of Adjusted EBITDA to EBITDA
and Net loss:
Segment Adjusted EBITDA
Specialty products Adjusted EBITDA $
56.0 $
51.6 $
176.6 $
165.1
Fuel products Adjusted EBITDA (13.5) 47.7 27.6 123.8
Corporate Adjusted EBITDA (17.1) (23.1) (54.1) $
(76.0)
Total Adjusted EBITDA $
25.4 $
76.2 $
150.1 $
212.9
Less:
LCM / LIFO (gain) loss $
1.1 $
2.7 $
35.5 $
(37.9)
Unrealized (gain) loss on derivative instruments 9.2 5.4 (21.2) 20.2
Amortization of turnaround costs 4.0 6.1 12.7 16.5
Gain on debt extinguishment - (0.7)
Gain on sale of unconsolidated affiliate - (1.2)
Loss on impairment and disposal of assets - 3.2 6.7 31.1
Equity-based compensation and other items 2.1 0.4 6.2 6.1
Other non-recurring expenses 5.5 1.3 4.3 1.3
EBITDA $
3.5 $
57.1 $
105.9 $
177.5
Less:
Interest expense $
33.3 $
33.8 $
93.2 $
99.2
Depreciation and amortization 26.2 27.4 78.8 82.6
Income tax expense 0.1 0.5 0.8 0.7
Net loss $
(56.1) $
(4.6) $
(66.9) $
(5.0)
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF SEGMENT METRICS EXCLUDING LCM/LIFO
(In millions, except per barrel data)
Three Months Ended September 30, Nine Months Ended September 30,
---
2020 2019 2020 2019
---
Reconciliation of Segment Metrics Excluding
(Unaudited)
LCM/LIFO:
Specialty products segment gross profit $
86.5 $
80.7 $
240.9 $
255.6
LCM inventory adjustments (4.7) (0.9) 13.3 (7.1)
LIFO inventory layer adjustments - 0.9
Specialty products segment Adjusted gross profit $
81.8 $
79.8 $
254.2 $
249.4
Fuel products segment gross profit (loss) $
(41.9) $
37.1 $
(52.7) $
105.3
LCM inventory adjustments 5.8 3.6 22.2 (31.7)
Fuel products segment Adjusted gross profit (loss) $
(36.1) $
40.7 $
(30.5) $
73.6
Reported Specialty products segment gross profit per $
40.52 $
34.21 $
39.09 $
36.30
barrel
LCM/LIFO inventory adjustments per barrel (2.20) (0.38) 2.16 (0.88)
Specialty products segment Adjusted gross profit per $
38.32 $
33.83 $
41.25 $
35.42
barrel
Reported Fuel products segment gross profit (loss) per $
(7.31) $
4.72 $
(2.92) $
4.71
barrel
LCM/LIFO inventory adjustments per barrel 1.01 0.46 1.23 (1.42)
Fuel products segment Adjusted gross profit (loss) per $
(6.30) $
5.18 $
(1.69) $
3.29
barrel
Specialty products Adjusted EBITDA $
56.0 $
51.6 $
176.6 $
165.1
Specialty products sales 281.3 355.8 840.9 1,052.4
Specialty products Adjusted EBITDA margin 19.9 14.5 21.0 15.7
% % % %
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF NET LOSS TO ADJUSTED NET INCOME (LOSS)
(In millions, except per unit data)
Three Months Ended September 30, Nine Months Ended September 30,
---
2020 2019 2020 2019
---
Reconciliation of Net Loss to Adjusted Net Income
(Unaudited)
(Loss)
Net loss $
(56.1) $
(4.6) $
(66.9) $
(5.0)
Add:
LCM inventory adjustments 1.1 2.7 35.5 (38.8)
LIFO inventory layer adjustments - 0.9
Unrealized (gain) loss on derivative instruments 9.2 5.4 (21.2) 20.2
Gain from debt extinguishment - (0.7)
Gain on sale of unconsolidated affiliate - (1.2)
Loss on impairment and disposal of assets - 3.2 6.7 31.1
Other non-recurring expenses 5.5 1.3 4.3 1.3
Equity based compensation and other non-cash items 2.1 0.4 6.2 6.1
Adjusted net income (loss) $
(38.2) $
8.4 $
(35.4) $
13.9
Adjusted net income (loss) per unit $
(0.49) $
0.11 $
(0.45) $
0.18
Average limited partner units - basic and diluted 78,743,083 78,299,472 78,602,651 78,174,976
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF NET DEBT / LTM ADJUSTED EBITDA
(Dollars in millions)
September 30,
2020 2019
---
Reconciliation of Net Debt / LTM Adjusted EBITDA
(Unaudited)
Revolving Credit Facility $
100.1
$
6.50% Senior Notes due 2021 - 761.2
7.625% Senior Notes due 2022 150.0 350.0
7.75% Senior Notes due 2023 325.0 325.0
9.25% Senior Secured First Lien Notes due 2024 200.0
11.00% Senior Notes due 2025 550.0
Finance Leases 3.9 2.8
Other 2.7 4.1
Total Debt $
1,331.7 $
1,443.1
Less Cash $
109.4 $
164.2
Net Debt $
1,222.3 $
1,278.9
LTM Adjusted EBITDA $
200.0 $
319.9
Net Debt / LTM Adjusted EBITDA 6.1 x 4.0 x
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SOURCE Calumet Specialty Products Partners, L.P.
