CLMT - Earnings call transcript Q4 2019 | Calumet Specialty Products Partners, L.P.

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Operator

Ladies and gentlemen, thank you for standing by [Technical Difficulty] Q4 2019 Calumet Specialty Products Partners LP Earnings Conference Call. [Operator Instructions]. I would like now to turn the call to Joseph Caminiti to proceed with today's call.

Joe Caminiti

Thank you, Dimitris. Good morning, everyone, and thank you for joining us today for our fourth quarter earnings results call. Commercial. call EVP Go, and of our EVP today's CFO; Keith Scott on new Fleming, Bruce Strategy of us are CEO; Tim Jennings, Obermeier, With and Growth;

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

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

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

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

pass the call I'll With to Tim. that Tim?

Timothy Go

closing strengthen in of against transformation. effort improved over solid was operations all our by margins This our successful important to across execution the core which quarter and expand an segments business, of another focused sheet. out our produced good years specialty a several past and of our drive initiatives, performance driven financial strategic included our performance, balance Calumet year

Slide review. X, begin the let's highlights the fourth with year-end of to our and Turning quarter performance

Calumet inventory adjustments. million During adjusted fourth $XX.X EBITDA, quarter, of the delivered excluding noncash

result of corporate consolidated segment delivered million costs successfully well, the Our from and offset net in $X.X comprised facility, is $XX.X planned our Both Shreveport the by particularly G&A we specialty fuel operating by during which segments turnaround the $XX.X in million the quarter. segment. segment, given work completed performed our million of

For year, favorable $XXX.X Calumet the full adjustments. of excluding delivered adjusted after million inventory EBITDA noncash

transparent excluding present reminder, LCM a a and of business LIFO give noncash EBITDA performance. more we As view adjusted adjustments to

profitability sales million a XX% key business $XXX.X categories. by our increased specialty driven solid to Our across number volume product growth of

year. EBITDA result prior business operations, last year which full represents contributed net over $XXX.X the reflecting improved weaker adjusted the across market our in by XX% flow was million fundamentals a impact year. fuels versus assets, Our million $XXX which in of offset was increase of XXXX, company cash throughput The from

not divestment portfolio we Antonio This we successfully initiatives lowered lowering In in key our also number San during quarter, fuels leverage, volatility year. executed reduced fourth the our but refinery credit-accretive only a strategic the successfully by commodity our fuels Next, of exposure. a divested transaction.

our reduction XXXX number the $XXX trailing net the S&P million. of upgrades turns to used our reduction to unsecured these improved $XXX of Fitch. which, in flows annual by in beginning refinanced Calumet and interest market, were from $XX XXXX. a in our outstanding profile leverage of XXXX credit The adjusted impact notes total reduction, as expense. X.Xx improvements ratings hand together from cash For debt This EBITDA. the credit each the debt the acknowledged on business and our by of the year, the year with million in reduce improved has major efforts cash the agencies at facilitated to of These debt a We X.X of the we our million end Moody's, was achieved XX-month throughout

drive business. margin meaningful growth our continues our Lastly, specialty core in program self-help to

fourth XX.X%, barrels a comparable versus came was product we for EBITDA to site. XX result specialty margin from very of This the weaker last margins day lower-margin eliminated the basis For grew our improvement seasonally quarter. quarter, fourth solid a which point volumes as period, X,XXX growth per

with capacity structurally a go-forward to our volumes, As margin improving we performance we backfilling that are rationalize basis. continue now low-margin more volumes, production on profitable

to increased fact, In actually rationalization, SKU X% specialty compared XXXX. volumes sales by despite the year, for the

profit annual pace on gross goal X.X% versus barrel. of results meaningful last per also marked per to our near-term and up improvement, Our barrel year $XX

were the full year year, versus XXX results. up EBITDA XX.X%, XXXX margins full points specialty basis For

strategic that on are success Slide The developments this detailed X. underpin further

line has and we've improvement around say excited is top culture. started to define growth. how intently the of of later our build-out philosophy Obermeier, the the business, few role EVP First, we last more spent Commercial. stabilizing we've and now I to of bottom of come years operate on like driving turning competencies took our introduce commercial continuous I'm leaders newly The and the appointment focus within in to and to who includes you This will created firmly Scott recently Scott embedded corporate call. of on the

deleveraging remains further priority. Second, top

our our and corporate our reducing the While few strategy. sheet leverage point balance emphasis last top meaningful in a years, strengthening in headway a we significant remains of made priority over

we from XXXX. continued as operations expect allow in reduction, to We further debt flow cash did

As to partnership the fit balance progresses, expect position capital growth. reduced in year we our and requirements further rightsize our to for unsecured address we notes our maturing the XXXX sheet as

core on our specialty Our priority focuses strategic business. third

success our performance. excess tactical products product acquisitions. stronger and to XX% adjusted This through and We've on barrel drive specialty of annual set expand goals bolt-on and our maintain in will per rationalization margin above be lines achieved of in platform Our an near-term additional an basis. $XX continued will on to EBITDA of even profit margin XXXX our build gross debottlenecking operations, lower-margin

announced Paralogics we the of blending Paralogics, LLC. presence in week, wax this the and Calumet's acquisition market. packaging expands Earlier

to today With time that this we flows. of refinery. Great Falls, alternatives Great we are acquisition the This Montana business, has fit year Paralogics leverage is has remains the it for about on our we're call. a Great walk Calumet. and existing and strong talent through is very and excited coming wax Falls. later our will asset this the We small We reviewing but to the with very strategic platform to brought you and new believe our to been that options valuable cash Falls review strategic earlier more a closer right in complementary capabilities rightsized, details announced our a

they the Turning to want performance of significant improved from few a of our the some Slide operations to portion underpin the X. results to I business. take share moments commitment across excellence as our to

was a growth As its for in years reminder, foundation road we map several when set turnaround on excellence. strategy motion ago, our operations built and

cover say First, our company personal #X in for The our people, that proud XXXX, and priority. assets very of Calumet let me safety. set our next, to safety; safety I'm community and utilization. is records process both

cost business as strong resulted shown reliable portfolio, on slide; management. focus better utilization our and Our our more numerous records set across in annual operations this on

efforts Our costs year. improve to this structurally our continued

deliver system; million out program. our we transportation able self-help were continued costs In to our year, to in on XXXX, part last versus in delivery. attributable $XX drive For self-help we ERP example, to

operate our more prior in us demand $XX fashion focus production in reduction our with For example, to the our a a volumes by inventories to year. allowed streamlined better drive aligning million versus

growth our strong production on and also of net support at further performance of efforts the Shreveport goals our cash expand the results facilities, towards Lubricants strong delivered these for debottlenecking flow We flows. year. XXXX; all to in of cash contribute finally, to allowing us production and combined The Finished

results Even past. fact, strongest XXXX, flow XXXX Calumet asset and operations delivered performance cash these from more, significantly results since flow were for the the were from the of In cash since free a XXXX. base compared cash smaller marked strongest to Calumet flow the

us full turn in fourth year will our our call to detail. financial XXXX I Jennings, results further CFO, over the who Keith the Now and quarter will for walk through

Keith Jennings

Tim, commentary adjusted EBITDA to align everyone. and LCM, and as consolidated X except reported, the shows and Slide be fourth results cost impacts, calculations. quarter Slide EBITDA you, my to market, excluding lower with Thank adjusted LIFO our full XX, adjusted which covenant for references for All of good EBITDA, in will our morning, headline year. uses

WTI absence compression. from was The divestiture. fuel prior offset year and and the segment. average million of fuel million respectively. $XXX.X year-over-year, $XX.X XXXX higher on and This full that record quarter, annual of more million from than for price of Antonio differentials in XXXX and results the For year's and incremental lower XX.X% results Full the revenue both $XXX.X driven partially year-over-year earnings was the decline fourth were lower fourth for business. of revenue both million, and by growth from revenues primarily declined the of prior EBITDA revenues wide million, specialty reduced year drove billion year-over-year versus record $XX respectively, the San from the offset by quarter which performance solid for adjusted $XXX X.X% crude volumes were and declined were year's XX% drove the performance. quarter the versus XXXX, $X.X segment EBITDA adjusted which contribution were million both price $XXX our by core

gains, bridge lower in million. consolidated in hedge $XX of full consolidated price improvement, in seen year-over-year consolidated was driver which offset On decline and $XXX.X a the of the X, to $XX have $XX resulting our was in relative year XXXX. local business fuels in was in fuels across year, full Slide margins of partially which in volume improvements EBITDA, detailed the adjusted million $XX headwind than XXXX segments, million with million approximately year-over-year offset from year million of the provided meaningful a results earnings fuels the Starting of of rack $XX the million contract more by headwind fuel last primary specialty. This year's results we the annual EBITDA margin adjusted and

despite captured a improvements. XXXX. is more the in margin The XXXX offset receiving our impact the Additionally, business market million lower $XX.X cost RINs of across year, and of the This operating of $XX.X quarter the operating than specialty primarily headwind costs year-over-year fourth challenges. other million of the transportation higher improvement function

in were is to more of This million half related and in invested SAP implementation. support rate. including our are These onetime current strategy. the $X.X our specialty optimizing also costs our to SG&A the some in year we onetime first run not Finally, investments

full total adjusted XXXX million a of Our reflection for of people. EBITDA our our businesses the is $XXX.X quality year and the of solid

results and segment. year the specialty our quarter Slide X reviews full of of highlights the

EBITDA adjusted fourth year's declined of $XX.X quarter quarter. last million fourth to Our result compared X.X%

within and time While the this on scheduled, volumes. on turnaround weigh cost activities hit expectations, Shreveport the our executed was did

continued Lubricants oil Additionally, paraffinic headwinds fourth were the strong by quarter business. the margin partially our saw performance in offset base Finished market, across which

the driven These For the specialty sales in specialty adjusted performance year, segment oils by volumes strong volumes prior results, and the delivered versus specifically, specialty which were XX% key naphthenic base of growth solvents, $XXX.X of growth million. Lubricants. represent product across EBITDA improved categories, The approximately year. solid full was our -- several Finished

the both year. earlier, mentioned apparent and our the focus margin performance and core full in growth both our in improving specialty point been business key Tim quarter strategies. a As has That transformation fourth focal of was

These of the was still were that For given basis margins EBITDA an fourth made the compared typical has were as EBITDA improvement of which of ongoing our we XX objective fourth which rationalization drove lower-margin points of mix improvement to points production of the performance Notably, X,XXX XX.X%, year. mix, of quarter, across in successfully in full of This quarter. capture This by our than XXXX. demand supported to effort is a profitable of business. of for margins XX.X%, strong improvement product improved offerings. from products result and volume cost a impact per also slowdown near-term the leverage. versus were significant strong barrels fixed as came year the seasonal our more threshold been excess results Ongoing able prior improvement more we a crossed day low-margin margins sales sales the towards near-term upgrade to rationalizing XXXX this reflects focus an business. our EBITDA the year basis XXX XX%, production This

year tighter barrel results by gross $XX.XX also was lower per to Our crude fourth is the X.X% profit point gross and differentials. quarter profit seasonally declined as of compared prior impacted

mainly same full the of grew mix. improved EBITDA the Our gross of XXXX. per of drivers year to profit much reflects full and compared by results This the goal $XX.XX our barrel improving volume of margins, benefits year X.X% sales an performance

higher with $XXX.X of XXXX X, adjusted largest specialty of bridge the to respectively. resegmentation, improvement, contributed of and EBITDA EBITDA. expanding Starting $XX.X year full [indiscernible] the after products million adjusted $XX and specialty volumes we Turning Slide million margins million

across Our business $X.X operating the our contributing to declined improved million costs slightly, results.

Our across the transportation-related which self-help certain reductions targeted which year offset partially prior year. gains million. the $XXX.X to were $X.X These SG&A $X.X total year, costs, versus million year-over-year expenses, to in EBITDA contributed significantly adjusted programs full million in contributed bringing investments by our increased

On WTI highlights differentials Slide the and the both significantly were and XX, and crude fourth across full million, that $XXX.X sources of tighter the quarter we Fourth quarter benchmark $XX.X This wide both full the repeat WCS million price our quarter segment's year. year quarter adjusted and the year year did results versus declined Midland review EBITDA XXXX. full respectively, the sustainably fuel our and the year. fourth prior for not results the that by was benefited of nor the decline crude differentials driven as XXXX as

Fuel for quarter. X.X% production declined the volumes

San quarter, volume production The facility. Despite the this headway primarily meaningful which in up of production fourth turnaround decline after at the marginal made marginal full and the However, improving decline mentioned the across that growth impact Tim Shreveport Refinery top stronger activity volumes, Antonio our reduced X.X%. we utilization assets our in call. reflected our improvement year, the throughput were this of at in and divesting volumes the reflects for the the

respectively, the profit barrel per from $X.XX the XXXX performance crude differentials down full gross to and tighter in results by was significant that primarily Again, year, both the quarter $X.XX of were drove year. and compared Our prior results. this driven

mainly the the contributed $XX which and the headwinds crude by performance differential year. after was On XX, EBITDA, utilization throughput, refinery additional record Higher miscellaneous of through divested compared improved bridge Great $XX exemptions million were Slide to the the that -- offset net particularly Starting margins and prior small reflecting which Superior absence with million reflect persisted costs as negatively RINs XXXX prior through fuels fuels other were adjusted operating and the absent exemptions headwind decline asset $XXX at were largely impacted we we wide in from the previously volumes, million the Falls. in in versus This annual resegmentation, was EBITDA by XXXX. partially the value adjusted of expenses year improved the decline Refinery.

full benefited Lastly, our seen given $X.X most the SG&A, the for market million business, fuels from our annual a challenging to results year. improvement in $XXX.X of adjusted across EBITDA is result the year This environment million. strong bringing a

and On cash of Slide XX, year. we uses across reconcile sources the more

$XXX.X improvements capital approximately deliver our returns to associated in as was our management inventory For in from we operations cash million cash other debt. emphasized received XXXX. progression, $XXX used $XX and our helped on across results activities, flow Antonio in refinery generated XXXX the most in net million additional fuels which with investing initiatives from primarily working who We to focus enhanced been divestiture flow We repay with of $XXX.X proceeds and have driving you the following $XX.X cash was our improved business. cash well of We since have San as cash XXXX, An million. results. of million million strategic performance started financing. November measure of cash improved

of at million. the our year the the guidance $XX about on Additionally, with hand We came year. cash million expenditures $XX.X in of lower capital year the end for at for range closed

improvement to make transformation. meaningful our XX a of our credit Slide we execute metrics, which synopsis as continue provides

the these This adjusted LCM As my start of noted and at include EBITDA calculations and with are for as reported. covenants comments, aligns our LIFO.

by Our own to the credit ago. a significantly improved compared of end XXXX year metrics

level the Our declined we to reported a to the X.Xx debt at XXXX. improvement XX-month Xx trailing X.X leverage EBITDA, of from adjusted end turn

$XXX our liquidity In XXXX. At we XXXX, year-end ample This year-over-year after Refinery, cash particularly despite on outstanding. this consumed debt between our noting decline, turns facility, itself, to closing and manage actions coverage credit was million the X.Xx It largely business, that liquidity of up availability $XX improved on of a end X.X down is million Antonio X.Xx, the XXXX. addition, to undrawn from our result our reduce our the sale San revolving at the of to from close charge our totaled worth have hand which, by fixed of liquidity. effectively ratio our disproportionately

progress expect transformation. leverage to charge We strategic fixed continue our our our as driving coverage continue against higher lower and we to

With over will back call Tim. that, I turn the to

Timothy Go

Keith. Thanks,

you Scott years Executive was recently the like to in take Obermeier I'd XX, over roles has specialty commercial-facing XX President named market, Vice chemicals of introduce turn Slide to Scott to a As in moment Commercial. who space.

served Before joining General of their business. and Calumet Base joined the Excellence, chemicals business. global a Vice most as in President for Scott Manager chemical Scott Commercial recently, as Calumet's XXXX, the Calumet, company a serving organic our President managing Vice Oil of as

will EVP the oils, responsible managing wax as of and Now be businesses. Scott for our Commercial, solvents lubricating

for transformation aligned service. our initiatives. in development Additionally, and marketing, extensive be core in for responsible our is our Scott corporate experience a appointment ongoing significant and pivot driving growth in specialty Scott's our towards specialty business. will customer growth asset with and chemicals delivering Scott's is commercial strategic businesses success research

recent Scott? him words talk I'm Scott ask of to about ask going a and to introduction, our Paralogics. acquisition I'd to few also say of

Scott Obermeier

keep express but to wanted unitholders specialty leading to am I excited I brief, Thanks, tasked my be remarks to business. how Tim. our Calumet's I'll with

has that which team foundations strong growth already efforts. a by supported am I launched our new, built we've is role from my solid While

of valued our building customized upon our portfolio We highly are solutions. further legacy we strong to develop while our looking forward

and XX, the our in to The bolt-on to strategic for markets transition Slide niche footprint. acquisition order specialty XX expand was the of I'd value our completed hub us Paralogics formulating Today, value million enhance packaging acquisition It's over over of end and I'll pounds We profiles see blending, million like wax business our existing of wax allowing capability. briefly The where will add capabilities has and and additional waxes. Paralogics into and to chain and blending, of portfolio. in in XXX discuss down formulations. higher-margin into existing our natural additional our acquisition. Calumet and waxes, and very business and markets, its produces geographic this logistics one our an sells integration adds a our chain our add pounds higher-margin synergistic and fit and with packaging technical the powerful, combination extend as end access more to high-margin efficiently to presence expertise

now customers offer We solution. integrated will wax a fully

turn that, to call I'll Tim. back With the over Tim?

Timothy Go

recaps program. multiyear our XX Slide self-help

with In at we incremental last terms the our delivered EBITDA, is expectations, of our of the year. beginning million performance year-end that outlined in XXXX, million $XX was to and which line deliver on the in by program in on $XXX track we XXXX, goal

Princeton further projects Finished through expansion rationalization at two the the we of in in of improved million management. completion of goal completion Looking Lubricants is deliver $XX efforts EBITDA adjusted adding that specialty-focused from our recently and cost of business. growth About $XX of XXXX, to our a operations capacity come forward debottlenecking announced high-margin initiatives through to from million expected and profitability our facilities, Shreveport to low-margin expect on products our goal of and due number to

costs include elimination The efforts and facility-level other million that in fixed the reduction roughly from come system. outside certain services cost in $XX of our will reduction a

plans month, and our Lubricants For Jersey New within to production example, facility Finished close consolidate we portfolio. that announced Farmingdale, packaging last our in

around Additionally, as assets. specialty core focus consolidates our our

to staffing our our that needs on portfolio. have the today, I rightsize report we of can Through reductions asset will smaller basis. on already G&A million rate X/X a of delivered We fit $XX run

barrel business, we've performance barrel profit margin driving expect annually. the goal expansion, core where XX, of EBITDA per gross outlook to continue $XX we for year. in our Slide per In improving near-term on close profit I'll gross towards coming our specialty our our outlined

in In we impacted will commercial the although be to execute WCS/WTI the story initiatives, successfully signs growth. utilization in differential. our of earlier Additionally, have performance fuels the favorable showed several and significant recent introduced our driving Both global the GDP business, year, uncertainty events expect industry outlook. year-over-year by crude

level, $XX process we wax the our annual At existing strategic the strategic capabilities, million expect integrate refinery, $XX and the review efforts complete into self-help corporate drive $XX profitability we through Great to million our successfully fall our finally, expenditures Falls to within our for of of range capital incremental million. and to expect Paralogics

family. pursue Q&A, go on we am resigning an I before notified have they to regarding X around. to I interests I years. privilege has this in been achieved I have employees of into Directors proud CEO Board as closer nearly XXXX, myself. am Calumet of Finally, X, June announcement what the to turning and our It have that a other lead company for

to pursue its we this sheet fruition. coming business options Great Falls, its to strategic of my company is restoring returning As core and vision for balance specialty

transition We the this strategic our the has are CEO orderly out appointing an next one to as CEO. that the I Mawer, be driving members, of board and will Great press approved, Thus, activity morning transition over focused Steve Steve putting a ensuring the regarding several current Board on Falls new release plan months.

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

Operator

[Operator Instructions]. America. from And Gregg Brody of with comes first our Bank question

Gregg Brody

Tim, good luck with the next steps.

Timothy Go

Thanks, Gregg.

Gregg Brody

a end, to was commented -- of on a there the wasn't I it the You've that little bit call. hear at expecting

decision bit on, a your maybe it's move So as little said. you to actually more about

I how a one, that to potentially? play that -- process is Or going transition and does Steve strategic CEO Steve you to -- come in Can options XX, you you're transition specifically Great process? to more out? bit CEO. as And going the will by got right, focus like to you're was if the going on the Mawer to So June then number little if in process be going talk right, Falls resign, the sounds get this about permanent

Timothy Go

explain you permanent more. cold there know be end, effective happy CEO the some to Steve Mawer I is Gregg, to at I'm the so X. I so going Yes, caught Yes, June

be Over an focused the orderly the seamless. is transition on smooth months, that will X make to transition and we sure next

driving when X.X let I to for going step reset you here asking -- were ago, for operational But we on and growth were you about to this. two excellence. of business, I asked were years got And me kind our talked specialty our a foundation refocus build I And back, Calumet vision. on things: going what's core we vision on self-help and

you divested Services the on focus our Dakota year, We our to If very as and specialties back that's Antonio Superior look we going the our those were grow Anchor business, a years, the and business going last general teams Refinery, the how on managers well. Prairie X.X we Refinery, and established specialty Oilfield San Refinery.

of. of in done never company some the the operations this in better to get a earlier small is of culture, focused ingrained this this is that is Paralogics. the I -- ready their it's terms to feel becoming in very better And acquisition and while that the grow small, our specialties earlier continues growth. again year business. it's is a on And we're the bolt-on to the call results talked We on sign it's a see. operational into business. doing our about announced way on excellence, that of about that While producing XXXX proud excellence as results Self-help want We way we we're on company

we're asset reviewing that strategic options about for this Finally, year. Great Falls Great we the and Falls talked

out. of a new that chapter chapter, Gregg, was I resignation the to that are step the Board, that all in as as the entering good an in that accepted of asked Mawer the the opening we're and has I've on discussion transition to into time for As one. with And new fruition, closing me we And and new Calumet's comes up and has it's old believe had Steve CEO. to reluctantly history a Board my cusp

Gregg Brody

to could the bit, little a a quite just I Obviously, congratulations. Maybe business today. have on going you bit. And world turn in accomplished so the lot a

today products. downside of headwinds could might than talk a because seeing bit expect? side, You be mentioned think? are help -- just -- stability potential the think more fuel anything we would could the there what specialty type in coronavirus, the you you on And little what us we through, that's or to of you Maybe if you -- is can if

Timothy Go

of market, Yes, along as of everyone and the you else. that stock see we're demand the and from it but some you obviously you will Calumet, impacts just closely a in the macroeconomic how is predict as with to with impacts impact world impossible lot can the carefully. There's Gregg, And impact. focused certainly coronavirus long that that a I about GDP, this overall that on global and It's associated impacts uncertainty on markets. launching last, ways. will watching we're think of it the in tell concern, there's lot What X that has we a and the see

And can And U.S., United I our have how been facilities its precautionary of and it whether you pandemics disruptions. supply into specialty is our through does directly you it's ways can flu it through customers and are The in by measures business the all our our what other procurement I that implemented the business two tell domestic at that chain, our supply epidemic or case here on way the then whether States we none employees. impacts throughout not or is, the coronavirus. the at here is, it's this has in that one, business believe plans our supply and United continuity chain. And the factor and in our pandemic facilities, impacted facilities primarily point we we impacts is impacted U.S. there significantly our tell in our if of third States. even around have good at look make a been in business is here a an that And shape

Gregg Brody

do normally you And is your when can expectation plants? run is it without appreciate assume some you would business part interruption planning activity scenarios, impact would there continue at that, in it those be your you've reduce the actually business. and continuity the Or or say the that through the I scenarios? of And when

Timothy Go

Yes, continue we set type things business hand be sending are no worst-case this work plans hands, good from to around. able of through no, the plenty with to making home preparedness nonessential to -- yes. from think activities of be up our are sanitizer There'll continue our anything have -- contact, any through. their for. and scenario to those as limited Gregg, people that usual we are antibacterial keep on already All from personnel having as drill and of everything through washing things are part to and hygiene, moving taken practicing planning

Gregg Brody

very and want -- I'll sorry, That's do you say ask to something else? helpful, I'm

Timothy Go

Yes.

just more me finish few a ask let getting are is me your say words thinking second we kind about which Let And on around our maybe XXXX. what up on for question, of specialties that. of and Gregg, Scott business though, to

Scott Obermeier

Great. Thanks, Gregg, for Tim, the question. and thanks,

a touch things me So let few on here, Gregg.

in we're The as deliver XXXX, well earlier, growth look EBITDA. million X% as is, first specialties at $XXX did as heard volume of as pleased our we to that announce, we over you

oils that. little we've me of customer growth for on continue be solvents, those of as segments to color markets couple a quick a engineered on on, waxes, our we key deliver you, going for that So base touched on such forward, let fuels. we're more intentional examples Gregg, products as targeted naphthenic and some going provide to products, And just and

fuels wax to our grow Shreveport also we'll process capacity base our side, the naphthenic continue Cotton debottlenecking. supply to capacity some solvents invest Princeton in engineered chain through acquisition and and we've the plant in by on production be our our And at Paralogics addition going our network increased overall enhancing Valley. In more on to unlocking some We're oils. wax

foundation specialty we've looking exciting So that the an about we're forward and in excited we're for laid to growth XXXX. year

Operator

[Operator Instructions].

Timothy Go

the follow-up Gregg, will now Hey, some say, have told would us going I is events competing us they Tim, on there's other what -- with and they've I people that on this questions. many know right

have if time. the know, let this any be us So you Gregg, questions, would other

Gregg Brody

any And And there way announced, funded is you to acquisition think the -- on that? from purchase incremental a about there the EBITDA assuming So price? is you that revolver? I'm

Keith Jennings

this very Gregg, a small Keith. was It is acquisition,

the than so don't purchase was focus price. us want on I And size, million less $X it to

we're that we've the platform on what focusing acquired. So here is

positive me to just bit. flow, a back small a question It our will and for little has second XXXX. answer be accretive it's to let and alleviate income by and business. end of to it EBITDA So to It's going to be so immediately, accretive cash a the up your EBITDA

It brings growth. do X why of Scott party to to packaging it? it for and and will his distribution technical we the things brings It higher-margin the team and end We us: it platform Now really and lending because some access expertise. it formulating did markets. for allow did brings assets,

of front a on open future growth I our end space. that production of we're for platform up putting so in And this the waxes, we'll think and

Timothy Go

that best how have put doing we of And of The platform going done we practices those other example, synergies trying for thing inorganic mentioned. around for not forward. that we opportunity that this organically. get one I Gregg, back -- to in to back growth those would this full-time into is driving it just activities, going acquire this to is start mention, it's for get it's we muscles, the a do of to and as acquisition, trying are business. the but great something what to a means capturing charge do serves to organization brings things integration that past a in manager this great only in capabilities way Paralogics put but manager It's good we we of of not do the of Calumet, grow that in make this mode exercising integrating also be it in of a a our And sure have that Keith to full-time kind job terms growth charge a that

Gregg Brody

Got quarter contribution how we quarter it. was think EBITDA that as the And about this we of could when normalized sort you was then EBITDA fourth And remind taking us of from LTM, San there what just numbers? with the dig Antonio, much out -- our is in now that?

Bruce Fleming

$XX million rate Gregg, a The run is this Bruce. was year.

Gregg Brody

fourth million or bad just particularly was or... quarter the -- particularly was And good or $X.X

Bruce Fleming

and our October course, was are, October was financial on books. December XX, The not good. November of so transition

Gregg Brody

got That's maybe it. and things. it, to And just then helpful. December, that's side so cash November of flow moving

more cash use how [indiscernible] going produce to and should take lockdown. that improvement the Also, capital your -- facilities Is working the year? we of there about intermediation sort to this opportunity from Just -- more think in that? forward of

Keith Jennings

Okay.

that invested So working by Trade improved million. say $XX million, XXXX I years. towards capital to for our squeezing in keep we $XX XXXX million. as had growth, objective $XX it We on revenues. working capital last We've about about AR a net turn been and basis, the our helped that us in few is by because And growing our flat. we by would reduced we credit inventory in

expecting we're say out of So working get I more wouldn't to capital. that

capital towards of discipline as But the focus moving around rationalizations on our the things. we the in working are business, higher-margin inventory management and focus I XXXX our of is profile say CapEx. would earnings that We some structural

and is our agreements ample offtake In of our and has us supply financing our so... of front side, accrued facility have finished some inventory are that with and revolving our terms on we access facilities, still still the available or And goods credit banking to the liquidity. partners

Gregg Brody

Anything did you at the of people credit work at this or then potentially that see ratings on some more there letters upgrade. in year? we least And

Keith Jennings

metrics a of stronger our it's to drive repeat -- getting continue at strong year, this think that I the XXXX, earnings will function leverage down. to or the than

a understand that fixed to like has always we and our constant to agency ratio in code partners to our facilities And We with in would charge impact and zip get back the to improving we business because that coverage on better are are focused rating covenants future. a higher upgrade ratings our significant regard. very our our as in dialogue

Gregg Brody

And since likely you the year, mind. take And mentioned it Falls, think you done is one, like help do is? you this you guys some two San there's divesting don't Obviously, to if or before Great -- more, like sounds incentive you I'm that you Montana only the leave. the for get Tim, it sounds I'll that how -- that --

Timothy Go

the mean as have of Calumet. part the completion for of done we review incentive mean have our Gregg, I'd these get the like we're Great here part desire Yes. anything I for for my chapter in is There's -- to that will I options, that because to shareholders what of not do -- best and own it's kind Falls. for because the do, to benefit. of vision we as going do it that company is to set of me I the my the for

on a options shareholders. to as benefit focus these We will strategic Calumet

mentioned I've included. look before, we'll options, As at sale all

on and We again, transaction our a have retained objectives us focus efforts do our an capital And adviser. credit-accretive our to, are specialties business. our simply that helps

Gregg Brody

remarks, Is Falls those? 'XXs else anything Got then would addressing is and other that in consider you're 'XXs. divesting talking -- Presumably, -- proceeds potentially those? prepared about One, during mentioned divesting? there you're anything Great address address help to there -- the two, that's at else that correct? it. Falls the is And looking you than about And you've if -- the and using Great to

Timothy Go

of to of that one second question, Well, let ask about part me talk I'll part that. the take Keith then and

at our value strategic is, always our and we with or decide expand plans our this many it's assets, said Any people at of we to we've that they're we we those well know our believes said portfolio of the activity any In with of conversations to to growth of for initiatives fuels, what type offers in their at will look certainly, more try of portfolio. around continue assets, of lines. is we in said those than our assets, What assets we has any valuable situations want someone sense have will times, value all whether that And the look if Bruce this asset all engage ours, that in pretty whether any of to they're of our have, where and these before our look portfolio. to at those assets specialties. terms it before, to makes

So we're because interest. But sure, look now right all of opportunity talking Falls we'll specialty to that gives we about focus know is us assets Great an business. our on strategically our there core if that, at

Keith Jennings

question. refinancing me take the let Gregg, So

until 'XXs the January go do First, current not XXXX.

So a of we think through have a bit it. to window

we're the That's refinancing, of options capital market. we structure think our stay terms where as and focused on In have. we about we like would what to unsecured

review environment we're ahead doing happening us. we're what's the the for options in is as our looking Great at macro we Given what of landscape Falls,

the to transaction strong hoping We are and flow. evaluating the options against capital cash generate markets. We're

cost assess done, -- markets going of we've or is always risks So options forward. it's what our than our against more which capital nothing capital and

right manage right opportunity we we'll proceeds if take the after. time, it choice proceeds the to So get tranches, the be one if the transaction at then occurs might accordingly of or an refinance from repay to it, the those we'll and

Operator

McLellan Andrew And our next question Wasserstein. from comes with

Andrew McLellan

Good Tim, next your luck sorry you to see with leave. steps.

Timothy Go

Thank you, Andrew.

Andrew McLellan

growth and As a we're point the the the on specialty acquisition focus recent business. being specialty, to on starting core encouraged see

$X of you XXXX. million imply point, growth starting gross segment a EBITDA if XXXX, in of from Do would this that from from $XXX significant As that $XXX specialty in in EBITDA achievable million think improvement the specialty there's assume we near-term profit is XXXX? year, the per in unit the

Timothy Go

gross you necessarily that. we barrel shot per $XX -- me Yes, that per is is out take target. XXXX don't profit put a at The it away target. to had But take Andrew, there near-term a barrel let want that target a I

However, we to is grow. do opportunity think there

waterfall greater million you XXX specialty specialty Slide our the I prepared think business, significantly we a for and as slide on million about think is business, told we I you're on we year, and we a have we $XXX others It And talked we've as your are have say, the ready improved shows across have think, business a specialties right, at great we starting X, remarks. this the well, specialty for our point question. the chart than specialty has that business, no, business. look to

$XXX million efforts, look say million Absolutely. our get we at. say, the million probably $XXX our probably million now be Could $XXX Andrew, to characterize a our to it. would is probably we $XXX basis, and As we plans to probably we way what more business conservative would specialty we at would $XXX bracket would million? But from maybe we would

Andrew McLellan

out million to target a couple aspirational the what kind when million, near-term And you $XXX of look And target? that $XXX years? secondly, a that we say is is if of

Timothy Go

Yes, you million, target. of north $XXX our is to like mentioned. a near-term aspirational Andrew, that is had of And go course, target

certainly, of The Paralogics and for thing, continue is other a earlier, bolt-on is acquisitions. as to we'll the acquisition growth, for platform -- course, Steve look mentioned

just about, bolt-on assume we talked any course, numbers acquisitions. the don't of So additional

Andrew McLellan

divesting or strategic unit That you look be to you ascribe for specialty -- to makes would if were unit if considering that -- alternatives segment business And divested? that sense. that at how noncore as the much Falls, Great G&A

Timothy Go

say I'll say million else, last segment, unallocated. quarter, last -- something there too. I'll that was about told that G&A corporate resegmented we Keith let something, you $XXX quarter then we remember, and our for Well, But is into a the when guidance

assume that here Given probably of million would in I you tell our corporate announcement G&A XXXX, program we the $XX on million our signal self-help and you that or capturing be that million are million improvements G&A $XX can target can either be it is get directly is fuels will other businesses, be to those kind which and the $XX specialties to or us to attributable of of part looking the would so how for, $XX down. breaks and we the

of none of Falls. mention strategic I Great other would this is options any The assumes around thing type

course, on take we Great G&A from action costs significantly So portfolio, Falls, asset example, down to that. was if the go Falls would removed from if our Great for we our decide would of believe

Andrew McLellan

to way modify cost decide that there any on to Great get just Falls, Is if G&A down latter you path? the point that from

Keith Jennings

we But our leverage. how think as at look it know be years, take step you going discuss don't I the past few with We we're to step if that prepared down. But down. options. and will ready the leaner the Andrew. through we've leaner a business corporate run gotten we're I'll there level from struggle here, this over or strategic we've at So

And things so right. company a to do this and base is remain a natural cost public

to stranded are about costs acquisition the Great Great what to go be that with the us will go presented we buyer. thinking And through that have we and we the so will are true what costs Falls, as then shed Falls are true after with options the the to that have

in haven't So because all we homework we that seen options. the haven't yet detail done

and update and And on a so more be we'll let's way is table, wait up catch to you until we'll happy those the thoughtful. are in that

Andrew McLellan

Tim, rate, term, from longer do specialty, at perspective, should growth think be it And the what looking Great. on bottom segment? you a line the organic for specialty

Keith Jennings

business, specialty Tim. step U.S. Yes, GDP. our around to I'll here what align organic The given growth Andrew, for you rate in we have I for do, think to

think goods a it wave standpoint about are that and refinery, -- we think so make and of products and anything from if I you services a the are specialty of else, number things. into going we of

So on with average, we should GDP. be stepping

others the our base we be GDP. are But and GDP, extent are in U.S. around growth platforms businesses to your I business, that U.S. we delivering We have the that ahead model will where of U.S. should think step things where niche doing can't.

Timothy Go

And business, and of our and are GDP our growing say have look what XXXX, I naphthenic business, Andrew, if in Keith been after our But time we're is solvents some was XXXX, and at businesses that referring I'll business wax business, out I of I to. field you think in just of faster would think, this, true our than those kind just the our this. businesses say

growth use Keith says look growth to continue and when as right I what we so is GDP your that accomplish. And see But general he can think rate. to on we drive

Operator

would call. call remarks. Tim Ladies our back now Q&A concludes closing to and for portion gentlemen, Go today's over the turn I to like of this

Timothy Go

Dimitris. Thank on and our their Board the by close and we've growth. thanking long-term work I'd for for and like all a hard it years. of partnership you, transformed to over in few all our last XXXX this employees Collectively, path of put

work our throughout success not the and continue have aggressive done, goals we We our lot look sharing unitholders our but Thank with have our to proud you. to XXXX. results We transformation. to of a be forward of, is

Operator

call. you gentlemen, concludes today's Ladies Thank conference and this for participating.

have You day. great may now disconnect. Everyone, a

Calumet Specialty Products Partners (CLMT) 5 Mar 202019 Q4 Earnings call transcript