CLMT - Earnings call transcript Q4 2017 | Calumet Specialty Products Partners, L.P.

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2017 Calumet Specialty Products Partners Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to introduce your host for today's conference, Joe Caminiti, you may begin.

Joe Caminiti

Brenda. you, Thank and our everyone for us joining Good quarter thank and for fourth call. year-end today morning, you earnings results on Fleming, EVP Tim are Strategy and Bill Specialties, today's West of and us Integration Bruce CFO; of Anderson, Go, and Marketing; Growth. Griffin, EVP With CEO; call

during based Exchange on well are Section currently beliefs provide we statements of various Before made that within allow of Act XXE them this as statements XXXX. of the them. each information to the me our management on course proceed, as by of of forward-looking Securities Such the available call, everyone meaning to the remind the we assumptions the case, and, in may based

as in the provide prove reasonable, release statements Although our to such latest and statements could of this to expectations that was affect Please management forward-looking on results factors actual well refer list partnership, management partnership's can issued from our general our differ the as that a believes neither call. the this partner any nor assurance be correct. findings Securities cause will Exchange these for press the made reflected morning, are to that may Commission and forward-looking it's expectations that the with them

you earlier issued on conference we call, today's a reminder, PDF in will made remarks press of may release of a now download that as As the the presentation accompany slides today. the indicated

our I'd few for support section and a our pass replay will Tim the XXX-XXX-XXXX. webcast Investor contact also Go. available call to may call to slides You Group Tim? Investor site With hours at IR at website of access these within Also, that, the calumetspecialty.com. Relations can the on like of you Alpha in this Relations be

Timothy Go

of EBITDA XX-month allowed have Please have and straight the first X; we we generated turn report of performance. notes improve you trailing as at secured the today steps the week, periods That and markets Good which for for closes in high-interest our our reset our pleased bankers early were officially new our successfully a positive Joe. confidence look over door operational of [ph] financial we and one everyone We reflects morning history. we a Company have way. long quarter corporate We back addition at new last which taken and called our a growth. to what Company's of extended our We our I leadership pass organization. senior the on partnership's Slide the challenged. us. the that revolver fifth time adjusted head has the to new toughest am been two we Thanks, joining in last turned reach term, thank the XXXX the our years, to five-year the come vision corner. on extremely executional stronger due focus experienced across a when vision us culture through to to And

of divestiture straight Company sheet delivered available growth outlined has we million the that that first were opened new provide several $XXX As non-core will quarters a We over adjusted of proceeds. XX-months and of up a two we options EBITDA when five not our trailing completed to balance improved had our the strategic significantly result, assets in that vision.

does notes; $XX a specialty best; premium per expense the accomplished, about our we by will quality is call what today this senior take month we our when announced creating interest we've options those secured will annual to million doing it's complete but products. process In to of XXXX, got year. reduce XX.X% of back One Calumet

and earnings specialty year a lubricants several specialty Cotton produces Valley products row. solvents; annual record sales for our including second from finished margin at throughput segment have we product refinery in contributions within volume our a high year, our which fact, In which our records and branded last includes record

strategy next began the products III longer Uninhibited innovation new the and Synthetic Oil, including are of our entered Base of several launch also proprietary and and new in such to technology. executing XXXX We our projects think as which opportunistic term growth Calumet's own Group both by Oil Transformer

to and we specialty continue the As as next to world. This a vision position from options with beyond, position and products us our I'm to strength do XXXX, in back they to look transform towards great the of take for us numerous on new extremely the will executed a steps to how and which premier controlling so and puts provide organization. the drive employees in become business our proud values an in XXXX holder and company

growth. a expenses discuss cover margins ongoing product results favorable LCM minutes hedging self-help losses cost take strong by quarter to increased impact please our program to million. discussion. million new and during quarter was realized Slide to XXX% $X.X turn The special in his let's our So and West X. and A and EBITDA $XX for year-over-year These results reductions, on few fourth include charges LIFO from was adjusted fourth which and ERP focused million of enhancements offset million non-cash $XX.X will $XX.X

the in charges, during of million these impact delivered Excluding special adjusted we period. EBITDA the $XX.X

which results of stronger capital the our capital $XX than our increased million earlier than provided Also incremental of to $XX For ongoing $XXX Since earnings year supporting which XXXX, in adjusted our year. reduced doubled planned. of for commitment million with in to a second started we $XXX EBITDA significantly is of million was discipline in-line as $XXX $XXX the already program, million driven to expectation low we've all XXXX for the of an improved to close EBITDA we target to more $XX fiscal our million. row. was Self-Help expenditures million year of the end Self-Help one a additional adjusted million X-year previously

$XX we to over approach years. will XXXX the next a heavier capital and turnaround that have in $XX guidance incurred of was million. below CapEx million This reduced previously discipline as $XX million X we remain activities complete In fact, schedule to our the critical maintenance to of

We have instituted for growth. we of deploy sacrificing allows process during divestitures our without us Refinery development fourth and which front-end completed loading Also, the efficiently Superior best a Drilling quarter USA. both, capital capital more the to practice Fluids Anchor project

over our quarter I'd of lowest result, like the our a debt had a And to the is segment leverage or we've which is Slide to X specialty talk and before X.Xx number QX net remind seen challenges. to results. years. As ratio is to lower I X at down third outlines results, year-over-year XX% that our level in investors EBITDA

the particular, significantly in First, those disrupted starting with margin products. of the our month hurricane chain the supply September, branded associated in higher

ERP our number challenges our a supply In teams. systems addition, caused for of the chain of other implementation

in of normal So to that several our in fourth increase showed per makes from our rate price of quarter. of the crude accomplished such and by healthier we adjusted during lost branded profit last and as the categories. this strong $XX better fairly EBITDA first at performance XX% XX% the phase was first What versus the increased margin stiff recaptured in performance barrel growth gross in over quarter it year-over-year our in better mix sales dynamics that quarter. run in higher driven getting the even a was year as the This third we're and quarter the some opportunities quarter back the $XX the products that drove came in market of headwinds

supply was the branded was million, For record earlier compared group a volume however which specialty to in X%, chain stronger disruptions. came volumes conditions, EBITDA X% $XXX our adjusted and products up and that production product the result XXXX primarily in year, Cotton by were in Valley. market of roughly driven XXXX total performance down record profit at

forward, still QX run but look we supply business, As is related backlog back division. specialty's chain our for to including nearly been our within products have working the we branded rates normal option

Lastly, our growth. business continue long-term to we position specialties for

Royal margin completed keep products. us which we growing quarter expansion will last customers demand with projects for both facilities and First, TruFuel our Purple high those allow the to up for

six to fourth including higher forward where EBITDA products premium were fuel of we fuel more increased well across throughout our we're our Second, for gasoline product quality initiatives the year-over-year growth period. of Gulf directly completed running in carries upgrading benchmark was This fourth the profit in driven in in that quarter. Gross X-X-X our per $X.XX the a million fuel introduced number in and all crack the to X quarter halfway XXXX looking was during discusses $X.XX we sale Self-Help [indiscernible], of that sales refinery segment of by the delivered despite margins. a as adjusted quarter, $XX continued the fact by of selling spread more over the Superior improvement in XXXX. through fold XXXX, XX% Slide Wisconsin as barrel that new Coast performance compared to which quarter our roughly

to For number decline a record results WCS the that product at did to improved Refinery record highlight Shreveport, record refinery. profitability loss compared of refinery. across also adjusted the in due crude the $XX I'd driver and Louisiana of premium was These during million, but by fiscal the sales, Overall, gasoline $XXX XXXX quarter. year, million records EBITDA of organization to driven in fuels Falls strong a primarily sale results Great a the another of that of strong volumes including throughput were like was Superior had and our XXXX. runs,

products refinery supporting As focused on as a is will have specialty know, it products produces business fuel you our always all primarily component well. that that but

We've improving have a into As yields That allowing in in plant the crude. on resulting the new made source efforts been in priced to reliability, a also better our many substantial plant and upgrades. of pipeline result, crude Self-Help that us is product lower our improvements fuels included the focused accepting operating plant. performance

past say trailing that, EBITDA I there initial which seeing contributor five efforts is to the on remarks gasoline over have execution was done stronger premium these measuring as record pleased strong resulted these of Self-Help Company's I'll against in year. our XX% the look of that our to in even to With my For framework over of a forward forward. example; call total, stick move this continue job the strategic growth. X them efforts team has all that to quarters Shreveport West. I'll great In set we a Slide a adjusted XXXX. benefits XX-month turn contributed and end straight to contributors XXXX. we I'm great The sales in become on

West Griffin

Thanks. Tim.

on the across see discussed X. each Slide can segments our You Tim that improving of year-over-year performance

In will we as filings XX. a officially prior Oilfield you within our Anchor November of terms operations the now and or sold segment, find discontinued on financial release it's our Services business our press business

as able margins as forward you shown our a shows consistency well basis company will prices, segment Slide by and range as stable we're specialty specialty specialty overtime in adjusted We cyclical we adjusted less are see there supported talking more quarter winds XX-month X. EBITDA basis, have operating moving margins That exposure fourth these This historical more hardship fairly to EBITDA over that twins to basis the the did three seasonal to growth million in adjust XX-month XX%. variations as the services mentioned, on reduced year, On effectively. a our exemptions this impacts. margins in Those in of margin business. on of contributed the in as across $XX.X favorable in important volatility impact healthier higher net but to going fourth positive a as lower crude is environments repeat positively quarter reminder. environment $X business we Our you will divestitures. our and the and our that include $XX.X fourth oilfield provides us as [ph] we'll LIFO operating we stable XX-months got forward. driven operating Self-Help overall, from $X.X like and move believe pricing trailing that degradation stability a to margins the by from was this start exemptions shown million that provide thus much to costs the XX. LCM Slide not on calendar review in all well offsets year further the Volumes had contributions $XX last to Tim last related to million fact Strong a over fuels of side changes forward have trailing as million quarter-to-quarter related that and reflects and which as for around trailing led stable million XXXX as chemicals That were effects to tend quarter. we Offsets

year performance our Lastly, we of More year the EBITDA walks higher increase ERP XXXX. our Slide adjusted of higher, in biggest a adjusted our the fiscal SG&A the Wall. added primarily fuels costs EBITDA came exercise in versus $X.X incremental this XXX% contribution in for related two which through similar and and XX million drivers strong growth million were to compared bonuses stronger Self-Help broadly, $XX The drivers EBITDA. implementation efforts as in XXXX. for adjusted

You were margins, on Oilfield specialties ERP annual early LIFO caused our adjustment short-term the and the ratios those impact by negative Service fuels driven volume positive can prairie of higher LCM to primarily Offsetting in our costs, total related EBITDA higher the from which effects see that profile hedging. they again, overtime. liquidity and important leverage the driven ERP and the asset the charge volumes and Dakota coverage operating sales were implementation. supply net in our had of North Slide chain XXXX, disruptions favorable implementation. lower lower XX our note review to traditional is lower hurricane fixed provides by primarily and by were It SG&A, that of

good inventories in be expect our consideration. here most great we When $XX adjusted for cash of has in have transactions we to more strong we significant that see, made have purchase net able for this Historically, obligation receive lower but XXXX that Superior and in The agreements. our such the conservative not ratio EBITDA the another we contribution, reflected received we'd this suggested look Almost previous liquidity over corrected our proceeds of Xx X leverage year. is completed debt during be holders should on-sale, capital leverages can unit more is all adjusted will X.Xx, goal news appropriate to from reduce As In in the and fourth progress and approximately Anchor both level million as tax like provided of little a lowest respectively post-closing It's gain now way in of of a services [indiscernible] million $XXX wasn't to coupled net sales our transactions those for calculations our worth structured not noting total, we for a working a number. the despite re-announced is to we with been a but also you we that their have EBITDA this additional to to years. company were quarter had the that the charts. than target quarter.

million ratio a and improved December of XX. $XXX liquidity stepped to coverage Our our fixed up as also X.Xx to charge comfortable

in noted, interest notes our $XXX eliminated. notes. that XX% those Tim secured had called and will when high XXXX, be interest In we've by are reduced As million cash senior we roughly charges

per interest life to as year. million be notes, forward the annual obligation our look we approximately $XXX As after secured cash expected to

provides sum to negative validated that us run hard our this outlook placed agency our to We facility which And notes senior terms positive last and the the the week successful and of greater years our also ratings was outlook. work with all lastly, fact improved our business. extended by raised the and on other ABL stable of unsecured S&P five from flexibility

In it's which XXXX, Slide million $XX that we've spending. exercised million shows target declined capital $XX our recognizing $XX compared set range So position. came in below capital we parties XX the previously multiple to our in XXXX, capital see our good million. to improving of outside are cost had spending discipline in and to financial XX%

forward to complete the spread optimize turnaround have to total activities to maintenance the activity business. minimize that next the of and fair impact on overtime do the we'll few look we work and a As and we years, amount

also million a downtime turnaround excluding We some total XX our capital XXXX. pro forma related the to some keep both divestitures of on spending Falls expect range we're additional flat forecasting in small had perspective thus the $XX have Both, year. later million for to QX. the we Great and and of that Despite Great $XX maintenance figures. Princeton offers at activity, from to Falls fairly SG&A Slide have in still our activity will

First, of our the has years remove discipline two that I'd roughly out level. the at total, our point our X% last that like to to cost SG&A comps base us over allowed

we limited course, Of XXXX. paid bonuses in

broken faced the year tough ERP the at market base much touch and conditions cost also we is I'd them Given on year. like that the a was million why we've that's to average as our an over implementation quarter the lower you. peak out a terms that system we in spend just we The of for the over month $X fourth of slide quarter. spending clearly and as stabilize on

to system, To those Slide business, expect and from substantially these key costs come stabilization of to sales total Again, Refinery start items. divestment we adjusted pro from a Overall, cost year. our in both this impacts ERP model XXXX the I'd Anchor we decline forma help should the as below progress the ERP we shift the and of the optimization As to of you seeking levels. through EBITDA out XX few removes to see breaks Drilling. Superior

With our approximately number increases from that the adjusted the of end X.Xx X.Xx net of and debt we our the reported the X.Xx. reported Still, Anchor sales at third to to below quarter. of Superior, EBITDA

we carried we will shows obligation approximately obligations potential historically, also make further of volume expect leverage you ratio to million RVOs. renewable south. As progress $XX drive the or RIN our initiatives, our how in change Self-Help further This this superior

And half. advantage Moving approximately the but and forward, XX,XXX barrels system-wide the cost heavy of a of our about also is a level obligation to by roughly our that that plate million of use to XX,XXX Falls Canadian of roughly of mitigation RIN should XX,XXX we $XX maintain capacity through reduced refinery. lastly, ability barrels blending day see which RINs sale in full the terms company superior carry a of potential obligation total is can a day to you from the main by crude, reduce Great

Now with turn to Tim. that, back it I'll

Timothy Go

for And our program. a to minutes I'd I to West. talk Self-Help priorities to XXXX. Thanks, commitment it's our few like in through our to ongoing take think important start

of our a and to Shreveport of we by completed saw achieved $XXX contributions that set that already we've plant. $XXX million a at Turning $XXX goal XXXX work that. XX, to nice Slide at improve million XXXX program to was originally from profitability capture million

look quality a which opportunistic $XX are drive and us improvement the summer our discipline, to growth UI in fares culture. to and that and facility plant market the price takeaway Antonio million our two our drive project for Falls This we will setting gasoline goal top results our XXXX our $XX improve margins increase and San to enhancements to is the we X-year naphtha includes As the of continue will million of octane projects a part will towards high of by goal. a for unit will XXXX, new remain This cost main investors at Great be as driven naphtha. The year projects. will of the end that continuous

to performing We with a to beyond goal high can become expect XXXX organization. long-term as down there road a lot more we new is truly we believe provide a you the do

R&D and the we Group to like October new and products helped in for Transformer facility has the have Oil Base opening us already I'd develop grand to Center state-of-the-art a of Indianapolis. Finally, highly center Slide our in III advanced XX; Product which Turn it's our Innovation Synthetic Oil. launch announce like new our our here

niche specific and to has can critical their customers for be the success our to products the be ability develop keys our to been These the of but success. products our needs. can client they very formulations solve to One

some build provide as meeting help as clients This innovative to efficiently and some product a new our support be client's the our brand great customers superior solutions. formulations another like damp line, proprietary a extensions ensure moisturizing of in facility our expect new in now who partner client, the high. again in outlook have products help of from leave center already customers, develop and the for year. all us lubrication on a one properties of our chance first for line product testing right had equipment them the tour he example; you phase engineered kind how additional I'd complex products for work of sticky various quarter and provide cost the For new center had this currently That's environment. products We've what and makes solution those Slide cosmetic may or can with we that later our stages launch the to very XX. and in will can our feedback critical to industrial

the will First, Shreveport. turnaround of volumes we've Offsetting impacted be to the some completed things. based we in expect be specialty at on that three segment just lose pressure

First, we've crude align recently price adjustments with rising to implemented prices.

backlog expansion we also see should continue line in as last, we third and portfolio the to our Second, those related new reduce quarter continued products started branded to growth work. some

slightly term. longer wide and business. but we'll side, the focused On the in we of will refinery, And be not our remain patterns had much widening be continuing execution we the senior the was look on improve of transform will our differential the with retiring seasonal have winter. that million of expect we can and Superior $XX and in focus liquidity volume Sales for business the require our a on year XXXX to over freights historically on capturing Falls initiatives that and continuing asphalt as will to standing our avenues about kind XXXX corporate to and million our to all level, to Great other Self-Help benefit for and notes inventory will down much the Shreveport. de-risk net sale our lastly, from delivering Great business note in the simpler $XX WTI a markets additionally, On [ph], focused we've turnaround under to activity Falls. WCS in fuel at with XXXX we within continue the typical now be

still quarter, performance our do While we That a a are that now company right and and build expect of deserve. in we we the turn lot direction, high holders remarks. heading unit the employees concludes have prepared to work our clearly to our

operator, this at and open the can we time. So questions go line ahead of

Operator

[Operator the line question Instructions] from first our And of Mike from comes Gyure Janney.

Your open. line is now

Michael Gyure

was a specifically bit fourth of was about significantly I due from the quarter, lot of some that per the Can quarter sort specialty volumes there? I think on some fourth year-over-year. of rolled lubes that probably a of sort volumes of the little went in and quarter, maybe hurricane related quarter you talk of such of that of guess the e-impacts; about, barrels the coming the third think day to kind in down out stuff fourth I some the you throughput Can talk the

Timothy Go

in specialty showed associated supply [ph] that. was of resulted lower really talked Shreveport the hydro volumes, about the of chain quarter but with for fourth some that that that main sales, finder disruptions at that the Yes, we was we downtime had lower some driver primarily loops

But that in spread our about unit products in had that last the [ph] that the back we business as see press last division said our our disruptions books to levels we business. we've will the really to volumes -- to first particular on years, through be hit chain quarter good this to be first quarter been a we pretty particular and don't recovering out we continued over year, also job the to quarter in business. that few turnarounds prepared and doing the Shreveport make don't our a so XXXX try also mentioning trying specialized sure the our remarks, We're view specialties in which will had in concentrate all quarter. over the see we've a strength and year of we they talked You unpack so down also and continuing as in that here one the strong, were our to we actually supply we've for branded normal further release done numbers

will feel give hopefully going that better little you on. Mike, what's So a for

Michael Gyure

business. And guess one you was impairment then I specific or that charge, part $XX specialty the one specialty there Just what about on of products maybe like products -- it's looks million color specific would the the more assets? in more talk if you about facilities the there impaired of appreciated. be Can

Timothy Go

spree was respect price so elsewhere. this ago and impairments, so with it's as of it on review CapEx environment every our a to a Calumet so of assets during do a years acquisition that of of the we and relatively time really high impairments and we margin where spree that several -- and of specialties, some all the and went Yes, an them in it, a number were there of regular the in year was so fourth and it's we do that took quarter kind consequence that were time facilities year some -- of

Operator

of David question the [ph] next from our line Seaport. comes And from

is open. now line Your

Unidentified Analyst

questions. of couple A

is, can had with -- between there segments, I've two I'm two only ERP cost of you having me a discontinued operations, the the the a hard excluding First $XX.X allocating segments help please? million time

Timothy Go

ball so an system all system -- Yes, to and really trying ERP accrually it's because wax of one big it is I sort of wouldn't in bother integrated is there.

Unidentified Analyst

is Is availability of that talk new the or you million liquidity, forward. $XXX significant a $XXX to same get trying on the I'm I the to if focus segments I at does for you million mean, to really revolver? to should that's million or since million the -- on of see On it it about specialty going can $XXX revolver million, reported going the what I'm if materially? closer the trying Company $XXX $XXX or $XXX portion number the product that and provide basis do change a be million pro million $XXX if forma or just

Timothy Go

or of of and Superior the so there is at or end December fourth was it have have the what with you the it At what we Anchor quarter, didn't end is. so

is that So as -- pro that's forma. the actual

Unidentified Analyst

and on whether financing the $XXX of or million Can statement, somewhere I you about $XXX.X the sheet? else agreements. proceeds from that that liability then million balance in And cash talk is flow the inventory see what created

Timothy Go

was finance, so second -- inventory that think I third we in and year. it Yes, the did the the at quarters

at finance own We both this a inventory that's that of what have barrels we ownership title actually with it's well technically attractive is they balance and but refinery, sheet as an as the on take financing. piece Macquarie treat an arrangement to it of obligation they but where relatively refined crude product; as

Unidentified Analyst

thought it have I my then quarter, is, Then apologize. must pertains I previously. was it I question that fourth to structure. final capital a missed the

any ability you you or So of the material because will will the unsecured because of won't or -- secured drawn revolver have have any you revolver. obviously drawn the after call the capacity debt,

have of with Is bonds, or there pre-debt -- penalty. which capital coupons. easily the months callable have and any won't thoughts structure there about the will any thought in is currently or handle X coupons, Is unsecured debt during further prepayable X you some You are pre-payable any optimizations further of some XXXX? and say handle about X next X without

Timothy Go

things. always we're mean, to I working optimize

million to of recall after We notes, there. did tranche hurry of liquidity because continue unsecured right it's at it to the small terms kind and things more there, the a right refinance information requires in well and and right benefits the so also that are we've look there and bringing we associated things looked capital we $XX an and that. relater our issue to more coupon debts direction nothing we're structure our revolver out But it, corporate huge -- but interest million one about $XXX time we portion the little looking that the anything extended that's this issuance. reduction us mentioned XXXX. with to in we'll at stage attractive, and and at things we're is very anything but a time position as out that is got liquidity, of piece progress making going that what of do morning of structure, We associated of think we associated to have as to in due our a we secured improving like and released some additional there the have with figuring other what's the was not that optimization the with again, it's in we're potentially debt the at we One $XXX the that some had do new million necessarily always of debt do simply through metrics, of

Operator

And the call you. turn back remarks. Thank session that our to concludes Tim for over for I'd closing today. Go to like question-and-answer

Timothy Go

for coming up support. of I to Thank critical our for the to our last you you, few we the your our is and your next like the many of We and investor Thank time as Brenda. years look for and over two over today work months. Board, also us. have seeing employees team management everyone hard all continued you forward at thank their conferences support

Operator

gentlemen, thank you the have in disconnect. great today's conference. now and day. Everyone Ladies and This may a concludes for your participation you program

Calumet Specialty Products Partners (CLMT) 9 Mar 182017 Q4 Earnings call transcript