CLMT - Earnings call transcript Q2 2019 | Calumet Specialty Products Partners, L.P.

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Operator

Good day, ladies and gentlemen, and welcome to the Q2 2019 Calumet Specialty Products Partners, L.P. 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 for how to participate will follow at that time. [Operator Instructions].

conference being this reminder, a call recorded. is As introduce for today's would now Mr. host to like I conference, your Joseph Caminiti of Investor Relations. Sir, you may begin.

Joseph Caminiti

Good for Growth. earnings and Bruce Jimmy. joining Tim Go, on you, morning, EVP Griffin, thank are and Thank CFO West you today's us call today call. of our results quarter Fleming, CEO; second With us everyone for Strategy and

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

that be Although partner its partnership, expectations assurances that will our neither such these can any reflected general reasonable, are forward-looking provide correct. believes expectations the to management statements the nor management our in prove

partnership's made the a list was filings affect and our them for Commission to to as could issued Exchange and with factors call. statements the differ refer that latest results well as press forward-looking our of may our Please on cause morning this Securities this that actual from release

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

Relations the of www.calumetspecialty.com. in may website Investor section access slides these You our at

XXX-XXX-XXXX. pass to for Investor can within Alpha Group Also will support be Tim? and a at a also site on few available replay hours With Tim. contact the webcast our you call I'll of IR call that, Relations this

Timothy Go

morning. Good

to past progress and transformation years XXXX, to Calumet extremely the second of on proud the line strong of bottom delivered deleveraging Calumet toward I'm that of performance improve continuous cash over profitability. drive our very quarter and together the goals. result team of the culture The free and again we have improvement worked employees growth businesses. our During flow the everyone is the put three assets our success. hard in and higher of levels we've consistent

Slide in delivered was driven our execution feedstock As Cotton quarterly our at EBITDA, that runs businesses again record by as million million $XX across million Cash from and $XX over flow year-to-date. in on X, record evident quarter success production we our adjusted all quarter and the strong this Shreveport shown of was second $XX at Valley facility. and operations facility volumes

cash company's accident. generation is The improved no

to and deleverage agency of upgraded XX% to flow our efforts and are our our Our Moody's brings We $XX maturity. execution. rating X.Xx during and us the the BX bonds through which year-to-date ratio leverage original execution strong recognized strong Self-Help allowing our improved repurchased was quarter, to to our improve ability positive $XX million million credit as total strategies our against generate meaningfully. by the our rating of credit We to free cash metrics XXXX or

position. the Rounding further improvement out quarter highlights liquidity our our was for business in

by from to our another a been increased reduced has million of focus using million businesses A million, working $XX and repurchase key to million. even $XX cash inventory area efficiency also of period to capital position cash commitment $XXX the Our business our steady this $XX our contributions improving bonds. after each and

services impairment to an second see business. our quarter for minority asset divestiture headline our Net X, second the of the retained $XX.X for million to quarter. primarily results Slide stake you of our the due a will related we loss On was income oilfield from

positive non-cash charges, $X.XX income net Excluding $XX.X adjusted or was this impairment million per miscellaneous and other unit.

on Recall it business. report performance improve chart chart increase the up is adjusted up into was at and efforts to million, the we XX% as as to a our a right the structurally which slide. card a nearly as our Our this on basis bottom $XX led can see the use of XX-month our Self-Help year-over-year to quarter EBITDA our year-over-year in profitability second you trailing

to I talk that, will With through results. the turn West? call segment West over to the

David Griffin

before Tim. second our second adjustments. the volume margins, Starting and adjusted crude the our that million X in a quarter, tighter our figure in to the EBITDA fuels see the year's will by $XX.X margin you that fuels adjusting by Thanks, million more comparable last from WCS differentials Slide primarily results results quarter waterfall results our offset $XX.X roughly last shows this our due last year's baseline were to business the reconciling figures quarter quarter. flat to year. WTI for were headwind tailwind Stronger inventory decline than WTI, represented fuels to non-cash was from Midland

to However, attributable million business. you with our will fuels see hedge contains realized $XX waterfall gains our associated

our Midland We WCS, a our hedged low-sulfur swings profitability. and to Unlike But exposure are from crack year of others, over break last serves program relevant market and accounting. hedging the prices margins to margin effectively not accounted diesel our for our portion detrimental utility from we hedging performance. our the WTI protect margin These spreads and in spreads. ultra saw of our protecting

increase SKUs that our a benefit. the lubricants other business until low-margin improvement, businesses. of specialty of function margins, the given portion margins additional reflected accounted our prices In quarter-over-quarter, in which $X products noteworthy from for million ongoing Lower as again our placing was drove that's average greater other on specialty volumes rationalization This our nearly specialty margin in a headwinds, headwinds crude EBITDA well as the specialty rose in exit finished as adjust especially prices. our include million a does segment, $XX $X not was in we capturing million we of which Self-Help

is $X costs, by We headwind planned downtime and maintenance our Self-Help driven volume on we liabilities, a million also on mark-to-market Additionally, certain of in expenses, a the decreases portion balance the on was unit increase carried faced related benefit. at monitoring which mostly Shreveport RINs higher had This conducted by to in million the an the which lubes offset we as sheet. refinery, from contributed a headwind RINs decline. transportation-related $X primarily costs

SG&A supporting Self-Help million we spending as $XX are strategies. higher that our was services increase on

$X.X For million services improvements. in example, consulting we procurement efforts our to in incurred specialty segment rationalization product our and capture

program, We non-recurring quarter. automation These also $X in Phase incurred and in contributed our to chain EBITDA supply which Self-Help approximately investments the better tools capture efficiencies. $X million second to II are million our in

X segment, adjustments. after $XX.X adjusted EBITDA, million details results produced in product our specialty core Slide non-cash which inventory the quarterly of excluding

in oil margins continued as well weakness prices. Our average as WTI sequential increase a X% specialty overcame base segment in results

our includes Self-Help addition, million business In our related execution improvement non-recurring adjusted $X.X EBITDA the to initiatives. of figure expenses of

evidenced to on a both continue the as general adjusted our benefits strategic margins are barrel positive We place our the profit late plans, our efforts improvement profitability put see our These to impact managers EBITDA gross last margin. having from by in year. and per

Cotton solvents as our as our An improvements volumes our at fixed we profitability a strategy to on to the from we how visible early operations structural plan the our production Valley set well Shreveport important facility. runs for manage improvements records assets. at benefits our as the refinery record were centers business aspect of second for The feedstock and quarterly operate in quarter

see, in adjusted most can X. for to You EBITDA margin still sense EBITDA line get But the the as produced our In on with XX-month EBITDA activity. turnaround quarter, segment XX.X%. the them XX%. products over specialty a embedded you margins range time That's Slide our XX% weakness historical historical recent of margins expected in better specialty of from have trailing

turnaround improve. As last margins impacted of quarter's we our our trailing year's expect continue to rollout to financials,

quarterly our was fuels roughly In favorable over result. $XX in product EBITDA. quarter, Slide X LCM after up XX% million this year's last the our non-cash segment. second fuels from adjusted details million $XX This business excluding in the adjustment, year's captured results

Our which and improved in are result San of at refineries, and aided increase increase projects by our results in component Self-Help the were Shreveport This program. debottlenecking our is the volume production operations of key Antonio. particularly a excellence initiatives, throughput across an

per Midland for quarter, crude primarily Our that RINs anticipate of well higher having we fuels' as do adjusted results quarter $X.XX include comparable gross tighter profit driven profit year's and as differentials and meaningfully were exemptions, WTI results coming It's last in down WCS price costs. clarity hardship second not versus barrel worth gross on which EBITDA RINs more the our any noting benefit from by quarter.

capital total to $XX in Turning we $XX bringing our show totaled roughly the second year-to-date million. million we the spending, exercised discipline Slide which to quarter, have X, in

full our the our Shreveport, $XX upcoming We of million year million end range come but that in are guidance our maintaining year towards loaded likely was as capital $XX back-end of at turnaround with anticipate to we spending range. will our that CapEx spending lower full

cash Slide XX bridges position our last for quarter.

beginning position market. our balance, notes cash to As of We with finished million, the repurchase of you despite the increased see, $XXX on quarter roughly the cash quarter unsecured million. using the million with cash $XXX hand in $XX in can open we

outlined, with by how the continues to adjustments flow years As meaningful cash driven the show general as our Tim from structural execute benefits improvement operations profitability we the and our to business associated manage capture managers. we our versus prior plans,

down X balance driving year X.Xx been of of a over our XXXX. our or priority lot and leverage, the which which are performance has is This our a as credit progress metrics, the a a number in heck is beginning are which reduction improved flow of past of steadily in top dating X.Xx and results X X.X of and quarter period quarter-end X.Xx, continued years, our year a EBITDA strong LCM second LIFO the excluding of last XX outlines improving over Slide back our or time. turn, to Deleveraging was adjustments. sheet from cash

notes of year. notes have continue utilize beginning in our back approximately to liquidity the will XXXX buy as opportunistically since of To the date, this the excess And we we repurchased market. XX% the

and improvement bond to a revolving year, $XXX repurchases. despite hand, Our measured this as cash undrawn increased over first million the was liquidity facility cash million. This on availability quarter on by our for utilizing position, credit $XX

our and have of and the outlook leverage rating improving note Additionally, credit lenders agencies reduction. taken

as Those an as continue sheet. path upgrade the forward to our rating family rating an our we XXXX. to both on company's well maturing positive in BX Calumet to recently delever on as notes unsecured achieved steps balance our to upgrade the are corporate

whom taken corporate family immediately to threshold contacting suppliers, BX of have open credit. trade advantage additional a a provide as by many this We of rating use

feedback already have increase. our trade positive received We from to started credit open has already and suppliers

turn for the discuss the Self-Help program With back call forward our that, our coming the and Tim of Tim? status I'll to outlook to quarter.

Timothy Go

Thanks, West.

this finished lines the year are San and II our in Calumet million year, from million started Self-Help including propane XX. our $XX of to $X we EBITDA new last unit debottlenecking better continuing unit delivered year-to-date. in nearly Slide to crude and projects Antonio projects lubricants Moving unit and Phase drive up chemicals The performance and our business. at de-asphalting the Isom packaging Shreveport, new the program

through hit We are business improvement new value also projects. capturing quick a

projects Valley feedstock led raw crude has runs our to more and For material our Antonio record Permian our plant in plant. example, San Cotton runs at

waxes projects Our have fuel delivered of and optimization of rank, margins higher our more at Shreveport, across operations Antonio. sales yields pools octane excellence higher our Shreveport at which truck San commend base own and oils

in of Finally, the chain slide. initiatives on dollars plants. transportation our driven of quarter second ERP talk lower in larger finished by about the annualized I'll efficiencies our more capabilities lower next efficient, fuels and new several the procurement system. supply captured and more Global X cost to inventories lubricants million business across our be our continues enhanced

goal are these more confidence the our Again, commitment year, on to program. $XX long-lasting able million raised strong Given to in we'll great we've II capture million. the of the XX that and XXXX structural improvements be our to million our business our driving gives $XX that $XX for million historical performance from our the Slide performance. into end a in Self-Help to lower the provides little Self-Help the program half $XX performance the guidance of $XX improvement additional Self-Help first are and million of Phase repeatable our from having us continuous success these to improvements insight

improved our the shows profit left barrel per XX quarters. across the on chart gross the in trend last First,

structural production the has our in of chart shows center our chart basis swings profitability this strong have with a here we as transportation changes well better expenses. managing Self-Help results. Self-Help to The have profit last transportation taken key progress required we hold. a in trend coordination to made our as steady in business. takeaway approach a seen per basis, have that on The While have our impacting shows fluctuate last teams is controlling our our the significant margins and quarter. reduce Through multi-year decline barrel better as are made costs, we run The our especially may upward between on quarterly market asphalt, efforts inventories. These our sales trend how bottom examples shown a a line inventories our are the our few just our to efforts gross

and covers open-market Slide seasonally bonds. third quarter through outlook purchases in part peak the quarter. reduce in look of will burden stronger for of our coming we debt to our the Historically, the cash due represents liquidity opportunistic XX flows the to our year further our

core to our $XX at Self-Help specialty work quarter. we the program for fourth We as our planned we turnaround have goal year. million our of delayed increased business, the expect benefits to from In $XX previously million into activity Shreveport towards continue capturing our

While of In returns at fuel to the we weak, the rail market business, economics. recovery as to WCS/WTI the quarter. some see widen expect the remain margins saw base the oil market crude our differentials end

We XXXX change. IMO IMO the regulatory and expect the of both that our preparing XXXX businesses. will benefit fuels to see something we that's specialties for also begin market Overall,

expect our RINs we more Finally, on of applications. hardship to the have status clarity XXXX

to With for up that, Q&A. the to to call our like open the line the turn I Jimmy? over would to analysts operator

Operator

Instructions]. [Operator

Our Neil with first Mehta Goldman question Sachs. comes from

Neil Mehta

question this a here. continued Good were and and about a then whether that be questions quarter, would couple about was morning, drove quarter. later should of and I were favorable you unwinds going benefit well on picture in Can what hedges, how a around again EBITDA any think then which housekeeping deleveraging. big on capital team, growth, forward thoughts we the that then The that just as in the questions talk there and housekeeping progress had working year? and on

Timothy Go

rail hedging West the the we WCS/WTI hedge take is way the question to and question. ask working This then is Neil, I'll The term the quarter economics economics hedging, rail we long to second about I'll Tim. we capital fundamentals to quarter. second the spread take -- in that think long-term capture us to allow that supply/demand represents takeaway simply believe hedging point in and the had We that. the

recovery back economics see we So to and fundamentals. the capital? the showing as market back are return hedges rail as to the the do those the strip recovers, off, think anticipating want market West, supply/demand we to and roll working will you talk about

David Griffin

Sure.

any to you Neil, not kind asked give we forward as capital quarter. answer So anticipate back roll to third with is, into the the respect And working about that no. here whether we or of

to fundamental especially some business, to our with respect made have changes We we how asphalt. operate

asphalt that So small builders. one no big have we longer They're really takes very place.

that. may there associated quarter with of this be so barrels change anticipate XXX,XXX a so next And lot be over reduced or or about but inventories don't we so, of will

is, are charge the the putting and inventory side is business, coordination we of general We is products make are a just and in of units. no one place sell that doing production driven excess business of operating can reality through the what our we're of that the as building managers our And to sales of ERP There they demand. says managers. result levels the and that's in in general implementation The coordination want greater sales greater inventory. with that between the each force by force lower longer

inventory. levels So we're to run able of with lower

visibility and respect enabling that's and to available, is of to implemented when is doing planning thing be part to what the available going that customers. what resource or it's business with other done ERP to supply is have promise our material availability The better implementation as we've

So down all that your inventories. drive kind of drives to ability

respect very We trade with something to trade secured obviously start we to disappear the accounts that's Secondly, when from notes. to credit payable, credit is us. issued important saw us

see of incremental things anticipate working to some and terms date get about And there. credit, we'll some BX, on other capital. and a expansion other to with that, credit, we crude to continue latest work various strategy on is notes, a secured doing get our all to $XX credit. benefit to the things retired going of embarked trade -- we back there aggregate plus that upgrade to some a we total trade of additional already more reduction to our have gotten return tweaks suppliers we've that When and our in million of of We which will trade started net this some see but of as whole

working be further that So our in to improvements we some anticipate going capital. there's

Neil Mehta

great. at there if that the at have where things you're is you of to, back clearly tie where the of That's and are leverage. mind And were on level immense absolute capital tracking debt. is that spend, ago, into the XX $X.X then one full Slide of long billion to here, you you a you look Today, progress follow-up billion below of made I $X Is question, around the wasn't that have then -- total debt. question getting guide. in -- an year If kind

stay target do leverage CapEx go-forward your to get think And expect should these till at we to how a level? of so absolute kind rate that about or levels you on you

David Griffin

Yes. No.

leverage right now. the is So highly sort obviously way Neil, too we look that of we're we our at feel leveraged

target of down. based had we'll get have do have sit discussions Xx, that The Xx what appropriate so we're we closer has and set on leverage some a driving the that we we're time. to with as And upon below down is, assets and what target, going somewhere leverage to historical leverage is at board company our the it's the and closer

drive which turnaround our well sales assets, leverage in we'll we Eventually meantime, core further. to Calumet, refocus such non-core in down down that level our can and debt on on our market drive we're responsible to our the basically have our Self-Help will repurchases and leverage we're with that specialty we really at will growing focused some the leverage of going that the below some and say a way. a hope point we're Xx have to done business the business some In

Timothy Go

And Neil, the question. take I'll CapEx

about we of Tim. that about really is on journey think I'll back The program pyramid growth been that way that excellence and base X we're this years, lot last our that a operations really and really the about of pyramid X, you talking kind the we and our still the is still talking the growth, capturing, So over point Self-Help of things to had and

point we've to we reasons that That -- no businesses. able our we've a is CapEx of levels been of of compared capture each identifying in our the really is one of X would capture. hanging years and X, to optimization going been after then It's your capital, at low fruit bottom up foundation the and roll to that to sleeves it's is our base in and low that growth pyramid. I low all have sites of still the ago, right of there we're now lot because --

we debottleneck additional the our Falls, product unit Naphtha However, the of that layer middle at Isom the Great finished see projects you're lines de-asphalting projects, enter at to and the about talked into our at project Antonio, was capital which high Shreveport, lubes. to CapEx return San starting at propane the unit the spending starting pyramid,

at those high say which last M&A was growth And more as our continue of small, return, capital top, just to that M&A the the the hit entering pyramid out projects seeing activity was candidates. look start part I good quick well. would of we to going You're then forecast and there into

we [indiscernible] will deleveraging comes, on and well. reopening haven't our looking comfortable We the balance our the time though be in focused delevering, we even and when M&A targets get stopped feel around our we to when sheet, lever as

but our starting R&D should see bit a see you leverage grow it comes So you'll down, CapEx little in levels. as those to

program. light like specialties opposed spending, example that continue Self-Help it investment We operations to West continue capture that hit invest around capital, actually You'll quarter. this of our our case, as its on as segment spending we In for capital to services into $X this about excellence to talked expense spending the see of Self-Help but that our you'll type view to see was that program. million

Operator

Read Thank comes with our Fargo. you. And next question Wells Roger from

Roger Read

it's kind XX thinking roughly the Maybe know to was maybe date should the things spoken debt what go it first hitting it's the that the the the months #X on What all that repayment, be consider there continue before the it's maturity interim as to or to side. any on of well we mature. the to hit along on over about particular down leverage of you've buying pay refinance back The updates was piece, to 'XX want Neil lines on #X some this been been how we also links either next term of largest, piece. of might of some as you in when for we've I as it's that?

David Griffin

Yeah.

in XXXXs Feel that our refinance ability to get want to we good very our about the unsecured done. So market.

about liquidity. would business. million we of think need to of outstanding refinance $XXX right the market, about you We've XXXX's -- million need it in $XXX We maintain we now. million If got to have total run $XXX to much how that

means that So notes. reduce apply and we can that $XXX that to the utilize about million

mean a sort $XXX something So kind our that if June of size, upon of you as minimum do XX results. a were would deal based million today

to knocked at it that kind $XX quarter, was those look million in easily have a low-Xs if or of quarter, take on our million outstanding. et going in see to same it huge performance of just $XXX to That's going the another There million to if of you continue cetera. drive last our last but the to kind have down math able pretty flow, be $XXX easy of this. going Self-Help a basis, quarter. excess if with had we're to a continued said, we do changed million that pretty liquidity through numbers about $XXX excess We're cash so, that continued quarter into amount how on million so that equivalent $XXX did over down we or That and we're progress not it's so we I

stopping the looking to other some if approach the minimize will we We market, of to and be anticipate somewhere we'd range offering deal to We're that the size that and not in there. at $XXX-ish of kind that sizing us with potentially it, market enable million we're of that's to things the perhaps the like approach can.

And the advantage so we're we're working we're to will get take to market. but the tap markets market, of to not ready and ready be and Today it. we're the going watching [indiscernible] is be to there going time the right and market watching

Timothy Go

million just to the just be face chime have And through. Roger, of one million we year I ago we $XXX more at -- no type math would how would $XXX was hill in climb given million ever of I a thinking think value went trouble going the would to $XXX about were having what a the that the say now. thought tackle West Street XXXX just to the It's is, looking in or like bonds, the of

here here. the of over cry teams going business forward. continue And that do to to core to continue been cash all And progress drive we're so kind anticipate we that and growth going the earnings last the flow, our year that of that's has forward rally of to

Roger Read

It's that a to here. front. for while quite that to it, on it's been see it's but good Yes, wait congratulations

are of look it's then Slide making specifically the at much the bridge. that volume in crude the the to, the where were a margin some improvement. at weren't on If it specialty adjusted and might comes X, though, guess, getting that that, just and terms you decreases just margin. we bigger talked is is harder things Tim higher, I a -- quarters? of question, we know focusing If conditions subsequent some bringing I something have negative you've see market of this that in make Self-Help back terms seeing back Second or the down about money impact that prices versus West of actually cut was the inventories than and the EBITDA EBITDA bridge things affected but in then just little products you've of products we something look we mentioned specialty

Timothy Go

on also had Yes, to volumes. is basis businesses, business. volumes first turnaround our year it's was Shreveport. we the the second catalyst our no, think the lubricating activity though and same that product bridge about specialty Slide impacted EBITDA are a this I half the some quarter. was volumes activity turnaround the were quarter X impacted as also show point in thing the one of the appendix, turnaround of Roger, you we out year-to-date for as that's that's the We've had and last finished our at see second a specialties overall, Slide on in we good most you'll the in the XX, actually whereas both to units specialty change really up Roger. first just question, had year-over-year because that impact talking year, the for in The quarter, and by biggest The strategy been will I lubes our as one and well low-margin rationalize oils, It

actually you think taking improve picture first as are And a continue basis. I So the at are -- to the on improving of specialty volumes and where quarterly place. better is we strategies and that the assets reliability shows commercial utilization half our as our the look our year, of of instead to

specialties as strategies it at you're seeing you're per again, the in and combine you are with think in business. profit specialties in the the seeing the working gross you're to that as that EBITDA well combine points you when margin barrel that, business, our specialties percent I that looking specialties positive I trend think trend

Roger Read

the then it goes full the Okay, just question. one regulation January coming on sort And side In business, sounds RINs SRE, operational, into positive fuels guess, of the, have to a Tier of in the great. of XXXX. IMO, regulatory And X effect like last addition we I business. type then

the on SREs and So maybe please? Tier can you then X, offer any update on

Timothy Go

in the in weeks, would overdue Yes, certainly the the X exemptions it that terms said to come that's to EPA true. out deadlines program. the that next here and It We to is X weeks. But rulings applications of applications, ready that on X qualify for on out the we has they're Roger, optimistic publish in next RINs we does hope they come the RINs here have. X are if the

be actually all credits position to As in of MOGAS X They're be sulfur all regulations, advantage we're long as will on at shape of the far in that can in sites. Tier our in the compliance good market. fact, we take in and

Operator

question comes from with Sneeden And next Guggenheim. Sean the

Sean Sneeden

West, maybe today. but maybe us the to book in on could quarter. can that? little you a the specifically missed you it's for in but missed you I talk I remind know I [indiscernible] half, for decent where first maybe and benefit hedge stand I and you What slide the deck, you a your guess, the about bit it, is,

David Griffin

Yes.

terms hedges that's have some have relatively we outstanding. diesel in still outstanding basically We it. debt hedges. little But So of

later today our You'll when file Q. get the details we on that

Sean Sneeden

place that was or the that any Got the you like anything the on QX? it. that showed you relatively in that gains of you in quarter And [indiscernible] did you hedges sizable stuff previously had WCS or guys liquidate had for

David Griffin

Yes.

non-cash So and offtake unrealized sort by the total with amounts We benefits it's in the the realized supply a really in out hedge about step quarter, of million value. associated offset $XX mark-to-market of half-in-half. of

when where together effect kind of all so that it that associated is bring our we Montana you And WTI/WCS which all hedges. facility, monetize our were the with

to a the of so that about basically Montana facility brings it, that roughly were upon crude and where which had the realized that day up runs quarter, to XX,XXX barrels $X.XX current based or we this the rail see Our in economics hedges barrel a added market the -- economics. accrued that is rail differential that and we've WTI/WCS we return the should to

diffs. realize why the hedges is would what that's to clearing in the sort had it of And the the effectively quarter, begin associated enabled value in what And place to with. market think with those we so be reason we crude us

Timothy Go

you locked tell The we is about quarter we brought is forward the it both is, way And already second Yes. Tim. that would into the this hedges WCS were the sides. on I Sean, think way

no movement the Regardless occur. changes. So to going there additional of was was that market

pushed kind the to spots the and just is, forward, unrealized RINs about hanging some so Roger way -- but would we applications decided bring But hope, think ahead come to in out talked otherwise would cash. and forward just we there those exemption back should third get the we So it that there. be are about you those it just of that go be quarter, those going trade it because with as

pricing to, the $X And yet other think, million. about RINs to but that, thing then quarter the of in haven't I we alluded by we mark-to-market is, the West in second Q&A hurt a were talked about tune

bit little forward. come Those headwinds, that with again that RINs the the so quarter exemptions just non-cash quarter. pricing a that we was and the places the between down of And [indiscernible] brought that the was we kind that RINs the with third RINs pricing the trade think hedge since mark-to-marketing volumes just has on in second fact

Sean Sneeden

guys and you pretty on basis. million job so trailing just this a I the highlighted a certainly good growth $XXX EBITDA done or of have in year guess shy

kind like way includes ultimately growth at, kind robust you balance and looking that of of you're that about it? comments some and of offsets right some think roll think through sounds other that Self-Help I WCS QX, the margin when from that the of to of year, it from earlier of it think spread the we kind your is relatively

Timothy Go

think right half think the of I Sean, the it. about the Yes, that seeing in year. to way We're first already that is

basis, this roughly produce. the that despite on been If of business Crude at on would over to facing prices which year, the roughly the we specialties just half tracking million $XXX look we're the for the were first expect versus a up prices second crude be pace headwinds previous up year-to-date our you in business what even with would And quarter. we've that going is with X% quarter.

strategic that as our part the offset Some of part the Self-Help, of that we're now are to cause implementation having process. implementing we of as

the the specialties course, market which that progress the here making even the continues be side, business. weak of headwinds, oil And to in we're base despite is on

drive is the businesses that where have, especially focused So yes, just majority point I core at again that businesses. in we our out improvements to core Shreveport, continuing Self-Help at the think we our will of program is

to fourth to are in on example, for not targets. the in so And WCS/WTI we order quarter spread, long-term growth dependent the blow out hit our

Sean Sneeden

of longer, guess obviously, and And Macquarie, versus guess think at now bigger last you Can then bonds is focused have much looking remind the quarter then any you I us maybe on do I I -- on how upfront the just you tenure ultimately discount? but you're guess, with some about how two financing at the quick X.X West. a your and ones around, inventory thoughts for

David Griffin

Right.

our and of what buyback back, they're are thinking look all we for of at obviously gone all about on But a the to from sheet taking so bonds simply of they possibility XXXXs little more $XXX June. trading in we So at roughly a bonds but not et advantage bit a up and cetera. and then potentially time bonds, at And the it's balance $XX spend to but much. from up bonds that that's December at million. change majority. look million the buy commodity the at too our is look because our bit, currently price December with and respect where to the We And reflective is discount. inventory of that, financing looking a taking narrow the And of

at or 'XXs then to structure the over address of X here the out more going is And that we'll then, have cap very and XXXXs focus to X of it 'XXs. right on the X the I probable look think asset way our getting years today, Sitting that now, the I sales. next the we're kind is real non-core

get making take we amount the asset out do with even more Self-Help, we from 'XXs X had wood if our and of have sales, the and proceeds. or not Between sure and that rid 'XXs to 'XXs chopping good we of So we're anything just the 'XXs. I'm 'XXs. we may

Operator

our with And comes Jason Gabelman from Cowen. next question

Jason Gabelman

You debt agency would make refinance the favorable -- could refinance it sorry make Does to that versus there family Moody's the wait that term? upgrade XXXX it thought doing your more rating. that the to the Is notes upgrade to to or it wait another upgrade mentioned the does near even easier on to process notes? change in it

David Griffin

the a B-. a of perceptive corporate great ago. unsecured obviously and And little notes that's our about talked notes. appreciative Moody's all that was Both rated they fact very move were no, senior while, the took our and they rating but question. Yes, to rating S&P to the year family Fitch first have one agencies. We upgraded our S&P

yet And the so not continue time of in we'll terms or obviously past spending in with deleveraging. indicated continued performance some seeing there continuing, to further improvement know but our the be you show upgrade there, out whether we they've them possibility need and of and to that might be a we're

going there. upgrade to obviously time. But so that not We're And we if of the agencies. ready we're for are to market don't an to to -- would going be from It's when we an be markets wait very the really the beneficial, to said, any to right from, doing look just got that that the not at wait. that the we're upgrade market. I tap and We're going think going but incremental

Jason Gabelman

Got Understood. it.

the if has stance are the is or be net to looking It EBITDA on X an look of bit pro Moving sale active seems kind in you and I do of to, to kind on relevant company guess, the particular on after selling metric is a metrics have firmed a accretive and the basis metric? that non-core that how something forma if in you're most year your guys. Is asset guess like debt-to-trailing asset discussions, at up sale? you I'm for that sales. there I have wondering -- does

Timothy Go

Jason, to continue and to this you would all to you that. on been look generating about mean, quarters But our off at talk assets always now tell all portfolio mindset improve hasn't a several the generating talk let good asset sales. second of with position last the flow here view changed. about -- cash view. we to Bruce in they've a of We asset our Bruce Tim. perspective and But at, is I'll I been have on a a hand how I and look in sales in sales look the do have assets here asset of we we that I'll long-term our

Bruce Fleming

on motivated little is think West not reduce assets And for sell Let I a We're portfolio are probably a that. leverage. got me whose nuance holdings, collecting clear balanced business. it flow The you that. leverage Xx earnings -- though. was a about to couple more for stable differently bit The to cash We've rent instead. hope than uses okay of a volatile from

assets been the an And performance as so improvement the that of any makes has to kind said from our appropriate having of given percentage calculus what's our spectacularly more earnings And is really opposed that, successful growing volatility leverage lens. marketable. the business strategy more delevering, but

So at to will somebody to us, conversations. the end those move else value entertain of the torque day, and we're the we If creators. shareholder

we way as Prairie, plays buyer the value good capital for right think about buyer of and Those to to the finding right like shareholder finding part one one for it were Superior Refinery. and reasonably right the finding and good Dakota did all it in a one buyer I as Anchor Drilling opposed thinking job the structure. keep we'd that for

Jason Gabelman

a wondering, general could just third If I are. sneak one, thoughts what I was in your

and year your into in the the Thanks. of kind impact it. half of certainly year. oil base On XXXX of that how been weaker market just wondering first the you The outlook your half market, could the margins? I'm and the second on touched specialty has in

Timothy Go

that. is Yes. Tim. Jason, this take I'll

June, quarter. recovery So second that of see some did improvement some July. margins saw continued in of the at we we Basically the into the has tail oil end base month the industry and in recovery

by encouraged we're that. So

course the of around risk crude think there I out volatility is biggest pricing. the

well. crude, as we base we we understand -- the to watch of so, And will volatility the oil impact just that just ultimately margins got as

the which oil believe at trend per able despite the barrel and to to the specialties and in that our margins, profit margin, headwinds continue. the themselves again despite markets gross has group base we our Despite -- all you EBITDA been I'll of improve will industry point to that

off also business, solvents business crack businesses the fuels not get as XXXX IMO believe, priced think specialties base ULSD going is we'll also the to we and there. our of benefit so but are oil We of the benefit and just additional some much

improving So Calumet we will specialties continue and for margins the to that to be to grow. that continue base are oil optimistic our are going business

Jason Gabelman

Got it.

that part answer. first the to Just clarify, of

of So June the has improvement crude reduction prices? in margins oil in the result just base a been

Timothy Go

margins, out Self-Help there so I the it's Certainly going higher costs program prices for the industry things go in think impacts transportation of unit propane volumes down, think example looked are again Jason. -- crude you coming I our at de-asphasting saw you that's costs, Well, on -- but you are at Shreveport. reduction several there the driving saw inventory

not crude know, it's don't I just So prices.

able we're take that improvements that it in be making we're prices of I is are think a advantage structural there to crude of of specialty lot our going. business where to going regardless

David Griffin

base margins, has What oils good business work ratable in sales. of the improvement the been a to portion done, has say what would good on our on I

you're ratable hurting important cetera at overflowing right discount, end and Our having to reason you better your they're are when discount. good margins. base if production. of combined exactly And your that's is, critically you the up tanks, you you et are with producing And customers, the risk oils

real been ratable and so we do. have minimize focus the discounting we products sure so And that to that we discounts has on need sales, making ratable any the production we

the margins making potential there. of And absolute are so that are out best we the

average realizing margins. make by to so -- And we're our improve on able that, actually on

Operator

at I call this CEO, queue further the no for any questions like Go, to Tim showing the turn Thank in to back you. remarks. time. am And closing I'd

Timothy Go

in and your consistent delivering on focused intently interest you Jimmy. remain We profitability again Calumet. today Thanks, your free our driving And and improved thank flow, deleveraging for performance, cash time business. and

Our on our working transformational the forward second to the and building and in we of year. updating you efforts look progress are half momentum,

Operator

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

Calumet Specialty Products Partners (CLMT) 8 Aug 192019 Q2 Earnings call transcript