CLMT - Earnings call transcript Q2 2020 | Calumet Specialty Products Partners, L.P.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Calumet Specialty Products Partners Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] I would now like to hand the conference over to your speaker today, Mr. Joseph Caminiti with Investor Relations. sir. ahead, go Please

Joseph Caminiti

Jennings, morning, Commercial. our thank call. second call Scott CEO; on Good Strategy EVP us Growth; and With for today today's and Keith Mawer, Steve for quarter EVP are Bruce everyone, you. Fleming, you of of and Obermeiers, joining us CFO; Thank earnings results

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

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

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

few I'll can IR on Investor our support Steve? Also, XXX-XXXX. You also available call webcast within at this may Steve. call that, for of pass a replay will with Relations section the website access slides to a Group hours, at contact www.calumetspecialty.com. Investor And these Relations in you the the be (XXX) Alpha and website of

Stephen Mawer

thank and us. everyone, joining you for morning, Good

will start on our Slide presentation X. We

our quarters also in economy was The history. toughest second the of market recent quarter for and one broader the

successfully When months, both I've four In we the against driving collectively of strategic and bottom thoughts the navigated Calumet. perceptions very organization for time CEO seat like more our steep And while has a a about elements to time the seems April deliver priorities. top share helps briefly has have on commodity began and teams of results execution unitholders. truly was lot this ever proud very long Calumet, our now progress learning I'm and it event some my to But from some I this very and experience. a specifically, of during I ironically a role cycles, safety partnership’s becoming career, measure our been. of well-prepared. I've needed, I extreme that were that knowing the of capable one I in comfortable been our market they this team as role business, volatility. best time and CEO I record say at new during to managed and knew team is crisis, normal but Having CEO in that so the safety, was in However, accelerate been my execution learning in time number for through assume to wanted well, multiple was in ago extreme when of Most superb as crisis, our a the to times, delivered. important curve of did seen we

second records quarter. We multiple also during the set operational

agile this of a Calumet ensured commercial team team reduction hedging, objective daunting positive pandemic gave the the in XXXX. and XXX-year program, must consistent from accelerating execution, operations, of unfolded, some Through cash our combination flow the our weather that plant cost our we business decisive generating free As storm. achieve very

activity. structure on created In for aligned cost exchange debt of our our business recent runway and level through optionality we've the addition, current

now are of risk a focus management long-term our shifting element strategy. execution our back from large to and We

our actually work end But also remote of another I important the remarks, smoothly. last for execution point year recently their solid I'll shift quarter talk the it's to the specialty focused our we outstanding about recognize a and gone X, prepared the sacrifice snapshot where clear important and business in against the it's out of performance every Slide enough. for dedication, of financial think the more strategy. thank that I the performance out member to I We've well the finally, Please this quarter very completed high-level strategy. continued remains as At to with team improvement can't introduction, observed Calumet over few as as delivered each turn productivity to-date. months. and very of has provide high. team process highlights think for Calumet products

million $X.X Corporate net quarter, $XX million in the were segment. These by offset EBITDA. and $XX.X in prior During of by from segment. of the comprised consolidated earned Fuel the compared $XX Corporate second of Calumet the quarter and million segment step in our year was SG&A. total products EBITDA $XX.X lower million was that company's adjusted result significant from our Specialty a are This core primarily million partially costs to costs down led adjusted

available events. commercial cash liquid company's This ended healthy of enterprise we economic April million withstand on support used $XXX we liquidity planning positive has $XX The during the of million to the step of capacity been from million consciously the events partnership at goal quarter our helps We quarter, credit our a the purpose liquidity the risk flow at express up update position, to the free borrowing our we of approach operating of of quarter-over-quarter roughly consequences on very cash and our available hand model As revolving sides quarter from on of liquidity proven. activities. see business over capital liquidity management $XXX million and focused strategy XX. [Indiscernible] flow. showed remain a has and which we comprised talked generated of less facility. of the this of cash $XXX to operational time, that the achieved managing through our stress the we and about for second generating of Part last provided both severe are stress month buffer downturn the come back create diversified last extreme than sources as a

Additionally, to we have years on that million of successfully debt to XXXX, $XXX was in two that extended obligation that the mature maturity out additional set XXXX. pushing

is key core want improvement on the margin in products our performance to segment. highlight Specialty Another continued within I touch

prices feedstocks we the the results on basis captured much first touch adjusted have to on versus rallies quarter, reflect Adjusted also particularly margin That the almost the that. is profitability this What end later June, this meaningfully increased XXX first late our Between enhancement, core XX.X%, is in I'll of in up versus two-month during quarter on that's price up X.X% makes by crude place $XX.XX the These and points During XXXX. grew the gross by prices quarter. margins the margin EBITDA per work barrel of of the WTI $XX that focused results of we the the increase the gratifying since of took of fastest with performance our call and April results. business hard record. manage actions improve one largest through a barrel. of undertaken combined specifically pandemic segment to profit

million XXXX. six rally a result. Specialty adjusted specialty through lines our sustain demand a management is flow XXXX, focal EBITDA, by $XXX.X is a in during products, strategy. margins the On and free confluence months This million cash be $XXX.X cumulative such Calumet to Thus has of crisis. able weak So Of performance has outperformance year-to-date has our $XX continued first delivered to being X% our focus of period of some compared segment of our adjusted supported far cash our on the execution of grow to is million and basis, but in up EBITDA. produced year-over-year a in the which point of consumer-facing to a generated pleasing key specialty that, product flow, cost

continued for to review We our also Falls advance Great the process strategic refinery.

that certainly has our process of the forward conclusion look update the more to also We of at made strategic a the maintaining providing solid that we to review not process. of while the considerations logistics easiest, team and to met, had comprehensive global the the a closer facility. need safety While made progress health given as pandemic get an be we

specialty This on seen of year-to-date year we a our first grow core the Specialty operational Finally, for against our grew the versus half margin EBITDA barrel more while strategy. capture through half XXX business versus adjusted specialty the the the adjusted ongoing XXXX, focused up period last is sales execution same associated efforts. have basis, margin basis we year. of the mix XX.X%, with and of was our meaningfully our commercial and driven first our profile margin benefits as results being points XX% enrichment uplift than $XX.XX largely gross expansion profit per of

So that, I'll who results our the for quarter. to detailed call a give will turn over Keith? financial now with Keith, the look at more

Keith Jennings

results the second Steve. Thank our quarter. headline for you, Slide reflects X consolidated

Given environment sequential primarily on focus our will by comparisons. economic the on results pandemic, created nature of the the comments my

it using comparisons the is management and to decisions current are focus environment, sequential because more the We appropriate on actions.

impacts. and These primarily and revenues million respectively. were results quarter. XX%. XX% Specialty major versus reflected quarter, million, the the $XXX.X revenue declined Revenues For $XX and adjusted XX% two prior EBITDA declined fuels

and pandemic-related specialty softening offset for in growth demand industrial than First, specialties. more that products consumer

low prior $X.XX revenues began of adjusted weak quarter-over-quarter our volumes the crack adjusted the versus driver unit to quarter. bridged for net in and a quarter in their prior the Margin business by record earnings through was quarter in $X.XX fuels meaningful through our XX% very the declined per relative quarter. The related net first as consumer over decline down inventory was the a LCM favorable for EBITDA slowing diesel driven million and On impact specialty fell business, customers levels. and reflected adjusted to which where was fuels driven earnings gasoline secularly of to exclusion decrease million a by difficult from late were adjusted persisted $X.XX the cracks in primary Second, the headwind industrial in fuel prior to to XX% second the performance consolidated to of specialty production significantly. compression spreads compared loss inventories. our results, adjusted quarter. quarter The X, Slide earnings our EBITDA in The decline grew results demand quarter consolidated transportation and second adjustments. EBITDA in that managing $X working we net core declined $XX.X Adjusted in margin declining specialties, non-cash our in by the

cost lower expenses Plant across our our reduce environment. by were the with offset align partially higher $XX corporate driven to costs changing We to were operating savings continue by by sites. over cost operating RINs costs. We operating million able mark-to-market

consolidated including tax cost an $X tightening corporate a and efforts savings our savings These quarter for one-time cost reflects in contributed reduction reflected category. focused here management additional Slide lower adjusted yielded million results in $XX in agreement $X various brought the Further transportation $X.X Our mode other corporate Core EBITDA million actions million. segment. X totals million Specialty the expenses, of property SG&A. from our of to the

grew quarter strong EBITDA the businesses second of XX.X% sequential of an down results basis. very margins first on the for results XXX the to margins to EBITDA and reflects prior absolute the X% of $XX.X and second relative In Our of points growth growth quarter. quarter, relative our XX% basis adjusted Specialty-adjusted strong quarter. compared were by versus million, year

First improvement of the sequential to per X.X% $XX.XX gross growing by barrel quarter. meaningful a barrel compared results profit quarter per marked

specialty-adjusted specialty a to challenges Turning rising to oils feedstock lubricants business X, our Specialty second costs base in driven expand by oils both margin and and prior quarter. and execution our offsetting continued quarter units, Slide both and EBITDA solvents. waxes the to we bridged finished from focused

candle the Plant The all While growth costs the offset meaningfully across action million decline. and the $X.X units. was continued a combined which the brought by million is this adjusted in $XX from across specialty was is a million, growth decreased our for fuel net operating and of EBITDA business of than volumes primarily stemming the $X attributed fixed operating a true $X.X by recovery first number factors. million. SG&A These our align of EBITDA lower This to million decline taken demand wax more staffing of with expenses to margin totaled performance business contributing business the reduction to other improvement was $XX.X with specialty costs lower by and quarter quarter-over-quarter environment. earnings driven across commendable in

margin While specialties, year-to-date. fuels higher growth in volume our benefited which sales and net from specialty volumes delivered declined particularly sequentially, consumer-facing record strong business, has our engineered we've sales margin in performance

brand customer which both was margin a management, offset New focused base uplift broader Strong growth, new our our to year-over-year was align some was investments merchandising by our margin growing EBITDA by as of In The water been enhanced filling in business catalyzed we awareness. and such has oils number exposure markets decline and which sequentially of down given end order with a as us business, niche industrial markets. actually able treatment. to unit agriculture and end that strategy.

X. Turning Slide to

line approach, through results and volumes work per forma our QX, are XX% specialty and We believe the profit on on this roughly are XX% to on pandemic a context transition. bit margins activity in providing are as of May with index end quarter profit XXXX. our a declined than average gross more economic impact index pro in occasion the our cumulative information in but a a add barrel Year-to-date, adjusted in XXXX bit the higher year-to-date XX% markets. to trough and through when the more our more below and were gross barrel we same to basis. volumes basis, performance now per the XXXX April Applying

the barrels lines U.S. rapid our EBITDA began margins across growth of results our as reopen, Specialty produce therefore, margins as October barrel barrel to Falls made Adjusted the which upheld crude volumes like improve Gross our was further specialty was per divesting to to XXXX. the product negative strong weak June the from San Antonio as across investments Slide volumes refinery, costs. We the the XX% positioning Production believe implemented $X million of improved continue X.X% rise pricing divestment execution crack The offset negative would and sold both adjustments far, utilization Shreveport per the well throughput the at for reflected I of reflected volume reflected both going averaged across began quarter XX to end the a their and recently compared in than assets. price in response the year-over-year in production decrease us off. by decline was volumes is function deliver prior This second and margin profit improving $X.XX adjustments QX, for We reflecting of volumes our economies rebounding and a multiple day on local of business results to results. year the by in significant portfolio quarter. of strategy our greater at quarters braced unit throughput, leveled specialty sequential Great spreads. the when driven commend demand compared X% multi-year segment prior in As our San results of These partially rebound. adjusted sales of unit year. to as to decline highlights XX,XXX prior per of so Antonio a to enhance our segments that employees environment. forward. in which in the will strong decline in product impact EBITDA performance of year-to-date for Fuel margins versus

margin, to values lower offset maintaining in the and than primarily fixed diesel level $XX.X performance and was operating plant bridged for somewhat costs maintaining attractive in WCS crack WCS lower as We quarter. absorb to is our from the WTI. for market. prior million significant $X tightening realized during fixed primarily differentials, differential into RINs the was of key and at placing spot significant total significant to prior levels spreads the more tailwind the offset crude have crude the million value increased sales, with performance quarter-over-quarter fuels activity costs driver a partially by and of the locked combined managed decline our driven This local On niche hedging volume We Slide most differentials specifically by tighter fuels fuels This weak compared we our adjusted fuels continue The product decline EBITDA XX, expenses, quarter. year. in impact to offset markets. market crack for utilization costs, mark-to-market spreads net of of products to reflects appliance higher environment the under captured we partially by which lower gasoline by the

These quarter. million our $X.X improvement million a property Additionally, segment rounds EBITDA adjusted the improvements a and captured for results operational tax cost combined marginal through with almost positive out we to settlement. SG&A for $X total reductions management the

to Antonio Paralogics. at million cash our used the true-up of almost incurred settling second at turnarounds balance $XX.X the leaves are net capital of quarter cash and with Given working end approximately outcome. during $XXX.X of end XX, reporting our divestiture acquiring down San profitability due on gross our This quarter. into $XX Fuels reconciled $XX.X year-to-date. first a circumstances, over of as Great significant changes XXXX to increased capital competitive a and of we the and from sources year. whole, as generated solid its we seasonality segment CapEx debt the negative maintained million working across a Capital earlier our To-date, have opened expenditures, and by million seen the impact On our from due million these payables. fund profit quarter net earnings. hand and volatility operating April refinery markets and in in mostly in this prices net of operating on headwind the we the Slide approximately for we uses $XX cash $XX is the $XX Despite million We our cash crude Falls including the expenses We million million. an we cash saw in and revolver to drew

of profile. secured notes the Before recently due in credit mature our $XXX I discussing We the detailed bonds transaction analysts XXXX million completed $XXX and the unsecured improving maturity maturing thereby XX. of exchange over metrics, XXXX, XXXX. want million closed set $XXX to We exchanged of walk partnerships million our debt on of Slide in recently principal notes in new investors through exchange or to to of

consent maturing approximately through exchange the are in of for Our like proceeds asset annual future by end. either quarter highly refinancing. to million. of as a allowed diligence listed our increase details slide. our principal support as to the the position metrics a the Since advice utilizing potential that business partners credit the legal would notes the XXXX effectively. for services bondholders exchange. costs of expects banking from on thank help and repay The improve and the pandemic, external exchange The the of of XXXX, of in debt also partnership unsecured liquidity interest the professional in cash divestitures strategy focused whose start XX $XXX ample a Slide exchange. million and hand maintain we holders to I'd the snapshot $X thank XXXX our our like have notes, of in to provides engaged whose maintain this I'd providers to such or and the ensure remaining successful participated

quarter and July of approximately on the on facility. hand on million $XXX we across of our It settlements which and and payments preannouncement between business softening our the segments the have included liquidity available the second up our crude second $XXX partnership's $XXX of borrowing debt April significant liquidity, significant demand capacity service million in the of in with communicated June. cash million in available despite also that through X, is successfully As ended point XXXX, managed quarter, low noting we seasonal credit worth

free a flow with effectively operating within believe our testing have ample are to manage liquidity we We positive charter. business the stress well We cash limits.

be sheet coverage trailing point adjusted I'll fixed continues from of to that, reduction continuous back Our to improvement leverage by turn charge ratios and focal and With over improvement a months decline call our in the Steve. strategy. in our EBITDA. driven pause balance Leverage the XX

Stephen Mawer

before on Calumet's of then to fuels, Thanks, products. some questions forward. we've rapidly a strategy engineered leading, like growing, fuel about outlook Keith. going make had comments and A I'd lot market briefly true

So that interested a go we strategy. deeper XX thought and overview fuels Slide into growth an you product. to provides market of engineered little long-term the might be

offer we XX% of the As its in continued leader and synonymous has equipment. the complete This long The market become damage first In specially easy-to-use multiple messy, formulated growth to fuels engineered fuels with true recent a life unpleasurable consumer experience for variety true half volume during year-over-year and contrast the in fuel of fuels the fuels, sizes. fuels, the of convenience mixing package engineered expensive of record self the XXXX. category. than brand dangerous greater is high-performance engineered a to potential

who these units, has expand of have base. has brand. experienced of growth use with digital work footprint growing So and awareness media XX% our display have appreciate investment for the marketing key extensive major supported and across category our seen installed rates generated significantly has and This continued will campaigns These rapidly by collaboration other have for and and end those caps. and of further the space own with been shelf our been we incredibly why XX% kinds challenges, retail you customer in loyal by an you working partners. to This driven us

Our penetration. less demand of used consistent in equipment battery market segments the research shows gas Despite that early we're market, still adoption smaller stages of remains sold in most powered. and the

and marine through performance outdoor convenience as some our product we share benefits Additionally, understood, adoption believe market to core benefits Furthermore, discover in applications. respond we're the the product are uses continue seeing as equipment, of will increasingly large the to markets, services, powersports our power accelerate. first including adjacent enthusiasts and of

the the foreseeable dive of acceleration hope future. fuels consumer-facing the market true rates deeper existing for Calumet. commercial potential these and a interesting was and that one products expand our of support into rate to our demonstration We of good growth continue As addressable into a

that rest we've we in of performance where specialty be year. and our the the our business, core for to alignment outlined our will updated expect generally our In outlook markets. turning with end Slide growth So XX,

some face the wide While this mix, as our product the by third we will underlying volumes as well that industrial more mitigated in headwinds to our customer of for diversity end the of and sectors, expect still be array quarter downside in the by markets increases by been And expect In accepted fuels performance to finally, the we consumer-facing of activity we business, specialties. we be in have the price reiterate Recent in supported will market. the our capture continued have by benefits our growth hedging serve. we that our place.

expect We high our the complex, refinery competitive local Great manage expect will market. in cash front, acting opportunities given capital. sustain identifying focus continue fluctuating through market Furthermore, remainder that outlook, we on and of will strategic to on run that our opportunities needs. long-term And to we to keen the optimize flow well. a on generation to Falls continues in Concluding liabilities with continue our at maintain niche we on utilization optimize to free in our signals we sheet And Shreveport this to rates, more serves a our itself to drive accordance our at the acting the year. strategic continue way our working balance finally, best

comments I'd closing, to forward. add strategy on in Calumet's going like some So

adversity the quarterly well as business from further resilience This highly that First, shown feedstock in extreme has to specialty economic costs. diversified and the core. demonstrated is we as our that in continue increasing the the face headwinds was business believe results of products our

the more come of XXXX our not earnings tracking consumer-facing fact Specialty despite this from does and the in come earnings majority still ahead challenges. this Indeed in one-third reflect of that of area, than the our products. consumer-facing multiple economic from are segment, our earnings have total, year Our

more the reductions enhancements, agile markets grow inventory in element we strategies those will we development, have consumer-facing Commercially, or step this management, really picture periods now business even workings we product clear of in are the better what SKU lot understanding past. also value where knowledge of and change than strategies, more and One that of operating maturation giveaway, a lies demand. the about weaker make our mixed of rationalizations, that a It's all us these in customers' efforts quality our resilient. potential of of at our We leveraging of Calumet is serve. how a growth And of our markets. can now in clearer

setting V-shaped challenge we same ourselves growth working recognized the that much we a is cadence we we made process slowed goals much recovery. there deleveraging credit and or has without given Calumet, on. potential hoping of work, a stretch COVID to At for the did time, As ratings complicated. our in more It's capital our even surprised how just are the access

has Calumet in bondholders. our Our debt exchange of allowing listening was what to step begin debate to this effort the Views leadership just to last noticed presentations, – and and a advice that strategic spent units to dealing to be. can few been willingness are valued. back the owning our and to committed both bonds. as and the appreciate and priorities, final also time COVID created us appreciate our Despite and unitholders providing feedback you, team the We're window execution considerable our are your and Calumet we we important with on a share appreciate immediate shift has us travel limitations COVID, the greatly clearer

our creating like helping vision I contributions a Finally, I family of COVID. other end has and formed excellent pursue call strong Calumet and He job shape that for And of is working to strategic and to thank closer decided through Calumet, being I'd to August. us be Calumet the be enjoyable to Keith and of thought wanted Keith he's in will interest earnings last to leader him this the Texas, made quickly challenges the communicate major in in the will to relationship. despite most doing with an on. a that particularly in optionality his

We due will communicate in course. our transition plan

the transition described Q&A. to in the I'd executive to operator endeavors. was plan you with we your analysts for as to by Keith, "seamless" call future well our senior our And last and turn Operator? wish one line Our over of up the time. that, this like open that's again

Operator

Roger comes Wells Instructions] your with first from of [Operator question Fargo. the line And Read

Roger Read

Hey, you. morning. thank Good

Stephen Mawer

Roger. Hi,

Keith Jennings

Roger. How Good morning, are you?

Roger Read

Well, wasn't an been Keith a you one. run, but can't eventful say might have short it

Keith Jennings

or fun. it is It was fun still

Roger Read

could specialty you towards maybe and into of in we to you XXX% of even should market of get some expect is maybe would restructuring debt move you go presenting the term we If heavily think of dig terms what to bit longer those to balance debt a a more of here little I more what Falls on what we the the goals. more process and did funds talked as EBITDA, that. out sheet, Great the he Obviously, business, too reduction. continue imagine and you But – world probably Xx the environment? in that what high where Tim's when of structure think timeframe should XXXX, levels what's sort original that you he business, in right think when about this for was Just to of the us XXXX, time? right which way over the curious is this little in normalizes? of the the is CEO XXXX sustain a thoughts, of say back debt Going could to way about some business

Keith Jennings

at we're before day then. Well, of terms world do taking the normalizes But a one I Calumet, time. Roger, I in think hope it

greatly what to own. target Falls is execute Xx. we to transaction That's to and a If down maybe at Xx. get can will are it on able below to Great this then we would get to help we our we that first Our on get think even time like operationally

companies I the aspiring market U.S. public the specialty are to look If appreciates amongst. that chemical companies, markets average you products that for debt type think level the of be into the we in

it's Xx. to think I Xx about

the because we're strategy we but running. be get there that market of what will stepwise we and have reality a and business We'll so fashion. support that's the is are our of going with appreciate, the And to where in type

Roger Read

the of Understood. Thanks overall then sales is has on were mentioned actually – Great Falls of is mentioned you process, fairly refining kicking over at so kind know thinking unit and another for this anything but business, running company levels. that. the strange there you as interest X, number And high been maybe the looking any a provide at that process, M&A, can in the are about time was or that PADD There update this I that forth? X companies PADD tires they in

Keith Jennings

continued well. So the process as

list. are and We so short with able had get visit in The half so the to and I interested been the consider round parties to site. our are And say would travel parties. those given restrictions still have COVID parties not two site our what far international domestic forth. we We've the

interest, of high one have the still process. dropped we So no has out

PADD way maintain We do not that put still trying because running part a risk the remains that it's we at refineries. in the are for a business attractive X ensure of such to market the process well. we very be to

believe to Steve? unitholders. our great be future, still not we So of to we it's a but may have It asset that that a nonetheless. part value continue asset a delivering is strategic great our

Stephen Mawer

I have add much to didn't that to minute. really a

the X,XXX first second in the quarter. a laid rate. not second quarter than barrels run You That's four Actually less day continued barrels out day. ran run in and a four we quarter we situation to barrels day. It's hard well, the

Bruce, you high So to want do levels. add we maintain anything?

Bruce Fleming

Yes.

the I [indiscernible]. where proven that for a think thoughts fact industry the do that is been or to the super is we in region full X And the pandemic trending, run Rockies the long through time business. aware could place Roger's given are the a PADD has

in can use that You else in in-place spread terms you'd of place like head for anywhere whatever to the see shoulders refiner. and pull crack and you is indicators this country can above attractiveness

Roger Read

because more true I and fuels If great. side. your of one Okay, consumer-facing the side just question discussion the on could get

day So generate a Specialty barrels the segment. world going within to normal you're XX,XXX maybe is

it's how a volume you think a fuels? much true better what Do making lower really assuming go product to over within or product that, understanding my in mix we the mean, that's can fair you you kind have I we fuels you're use? about small a in true at products think we other is margin grow about XX,XXX, plus XX Do this the relatively margin favorable of as As part. to growth look shift? and moving shift flexibility

Stephen Mawer

but rest Well, integrated stopped business, saying is that I not was hyper with integrated. true our it's of guess, fuels specialties I by the

rate a And gets left, of see rate to very industrial the XX% market we at most incremental. anything specialty it bulk for sustainable true all biggest areas are as our growth way the to diversion that years. another, mean I So one from number compared clearly that's quickly. the know, fuels Roger, don't XX% why volumes grows, is not it's it's as look is I you although growth not And got a

market we what slide, the the the gasoline at if we're on powered you look people touch you still [indiscernible] is market X% below there share. If equipment, as define using

if know don't you Would to helpful Scott. like add? I So that's

Scott Obermeier

Obermeier care, now Lighter the year talk on looked had Yes. me years consumer the fuels down but has space, certainly performance story into add. we've Charcoal food, to let for even I for our Scott on Roger, go just into specialties true a as in business, Calumet to just been of consumer-facing the when to a good mean, right, piece, multiple on row, Roger, this a Fluid just here, we've Steve's point. growth the build into specialties, personal very we path et pharmaceuticals, cetera. we tack can

the really in year something that consumer for been specialties focus a us years broader this to segment and area. pivoted has we've whole success story is couple Calumet have intentionally this the that over past real of more So for that

Roger Read

great. Okay, you. Thank

Operator

comes Sachs. question of line Mehta from Goldman Neil next Your with the

Neil Mehta

a wish with your Hey. pleasure endeavors. working in team, and been it's Good Keith you and well morning, future you

Keith Jennings

Neil. you, Thank

Neil Mehta

range couple of able was on of you first been tick I We've seen margins. about have sustain the up per pretty The side? you radically that the tracking the last just your to over had on real How months. And any margins a or you've how for a question here barrel specialty course guys crude on on relative range Historically, are basis. dollar a talked to you basis? quantification time

Scott Obermeier

Obermeier. Scott its Neil,

So a tiny. just and back bit maybe little step to

look XXs we Calumet continue the specialties the per look Neil in value within the years past really ago the volume over and mid-XXs. driving If back the started in and through up number, we climb our of to as a couple seen really you've on that, performance you and focused you go as through years, our really a of XXs, low couple And upper barrel. business then that and from you predictability the

we this on and received the first – half the As far point, we impact business some crude have the consumer any we've Neil, at tailwind look of year, also XXXX our with to strength our have margins. year, so your the in in of drop

still the look a – expect have year, for this we of continue to generate to rest if think profit. good we predictable I good

And we for doubled As business it the start start Neil, we look for going half to second industrial though, our QX. forward as our margins year, ramp the crude of to up, expect as to expect start rest we normalize the we start to the see year. in back of do to do moving normalize forward

Neil Mehta

where In versus basis any on the talked quantification you've right or now a Scott, you barrel dollar are range historical per about?

Scott Obermeier

again, current XXXX. where you'll without I per But barrel, was feeling numbers above to about $XX. see would say comfortable I I I you'll, GP in QX Neil, the would finished far start in think think say we future, predicting see just too the I think near-term, to the

number. come down of think see I little to a bit more normalized that a you'll

Stephen Mawer

of Neil, that If I comments. couple seems I and mean, comments, I couple two a could of things. just add – had a

were expired, barrel we barrel After of all, last the consistently as we $XX three say, if the I'd was now that acceleration. quarter about as But event it are rallied were with of that right feeling ago. days if you you forget less rally, April, which quarter, as in XX whatever years – and had that. at been only comes ago, Gulf the a aberration market crude just that second the $XX reiterate said, in margin that we XX market since they've the we've for this price things it went price day to Scott years day First really that, where – they – XX every better. look was. contract take I an XX just it's back contract, a negative the war, kind events pleased of But May although, in every

two a in rally of amount month period. that So

we feedstock cost pressure pleased So we're managed to was from margin, this arguably a a maintain so case standpoint, that. scenario, worst with and

those commercial. Just Scott's to adding back, as we than increase that on the margin products of think I more some expect comment, the comes industrial demand industrial volumes and lower to is

result total to that, So I would but that expect of go I up, do a say we think profitability as margin come down right.

on a times curve. move point just to volume we're going the to different So margin

Keith Jennings

think Neil, the we per say of is COVID. changing gross Yes. for hard barrels to profit us It's from what because this would about effects Keith. about mix

the to industrial compression has We has So – something crude given to up that we specialties the consumer better and know that. know on specialties holding has that effect that math contributed their the expanded continuing the it. grow us versus mix of also

right absolute said, recovers industrial But will now are though don't want that that will grow. $XX $XX, dollars a from – say we we that is sustainable to we're once at where compress where we the going looking barrel at are even here. as So know we really Steve because

Neil Mehta

about improve and know to Yes. stock organization the your I is with institutional liquidity No, investor, your to things MLP the course, trading a that's the great. of more of through And finding the has we've as And one ways result of constraints, a talked one attract years investor. been generalist structure. of the

there's can tax your an also C of, Corp of where it, election So I'd up be a change. whether in on the context we And about be curious thoughts to then that? coming have implications lot the guys' could put what conversion, merit that

to I lot of more get your to moving in it, earlier the would story? the a objective to think inviting multiple be participate but point through pieces So shareholders would expansion overarching to

Stephen Mawer

a that so COVID we're has that changes continuous Yes. markets that Board, thing of Neil, so on sort some review this to is management say What as is and say created would I Steve. I and totally dialogue, and would Yes, in and agree. team forth. capital and a

move as and storm the of have very management we on make the weather So from been effectively. nature. sure to strategic think role over you we team That last becomes focused But was away months. few weather the execution, storm execution most the in we we essential would

world, you're And pre-COVID. so we We're debate world. probably and raising, continue how the to a more we need different questions think this than we're I to going so debate a lot in configured understand kind of to different

Neil Mehta

Thank so much guys. you

Operator

line your from question And Gregg Brody of the Bank next comes America. with of Instructions] [Operator

Gregg Brody

afternoon Good guys. morning, good Hey. or

Stephen Mawer

Gregg. Hey,

Gregg Brody

do [indiscernible] Keith, Hi to back you move you're to know it decided going is or Texas? just where

Keith Jennings

everyone, in dynamics So for changed life. And COVID also the personal some lot my dynamics changed I of think life it has of a family has globally. and

me and us given and back And into of and to one on balance, I change all happen so COVID Texas. we need have for happen that dynamics that one wife of agreed the that be need this things home to the needs kids get my the in is back to things in that around to is

and I in and I exchange CEO, done the given he And the few months on so has profile. board have also Steve our It and I've seat and us true what was past rate. that with think worked has lowered think I timetable has run over him, refinancing and my while here the risk partner the

that our team with so weaknesses into we've deal material put and We forth. have a strong finance

And good allow to little personal time a an my and the take solve a and Steve breather things opportunity to it's continue so journey.

change the my just in my that upon was and decision based family. it So my decision affected dynamics

Gregg Brody

of you less what's and appreciate ask times, side but care around to we're does hear been feel in could able I the just personnel other unusual completely to appreciate the has couple and worth I a to that this. of that. this Maybe but conversation questions. – this as a good it like take a My wife listening been I well, little it's

us through, business, timing the maybe refining that the but a this you appreciate you sense as remaining how been about then next some of you're – through piece of give questions us the about that and are addressing steps? could that? just there's if reduction. Maybe obviously, assets think And quarter, on go XXXXs, walk what debt I’ve on doesn't that marketing So the your on

Keith Jennings

Sure.

So think manageable. I viewing XXX we're as the that

yield the can it the is that in scenario, and worst our markets as profile say to credit again. per case high going a so markets low to be the be manageable serviceable. XXX the XXXX out We if were we where access and it the that and let's to it's debt afforded staying think So capital It's don't to normalize to market even very goes in what relative it, coupon could refinance current. able

process with We the and is sale. On out the right. other – hand, Falls never said it if Great one continue of options, the option the we play strategic options because

could that be possibility option a it's so a outright, So or option. different

sense. So new Great options, whatever when we delever agreement supporting options the advance to not include the also Falls getting secured an do It's allows into brings look that in Great actually rate. There other is ABL. us, Falls trust that bonds. Falls. at Great us They our collateral the has pledged

type amortizing a $XX that for the down started that type because stepping just and asset structure. of million think not I it's of about at

it's in So under appreciated terms. those

So pick We based could out be take a structurally there a term flow we up case level cash Falls, loan loan at and a it is put it portable or that a and off. of move take Falls buyer which secured higher would make ABL. could it lift on the in potential Great Great could it to

So it gives us a lot of options.

fuels, to activity to again. could to of second year, starts the vaccine, and The widening see a economy and roll flow this could improvement through return spreads, U.S. cash manage fuels an half the if that way then finds then activity, economic in transportation

to of to have think put options. see doing the right can with it, strategically we something move are move this – So mind now, you the of back – the back as We what if as lots we we portfolio. Steve we

Gregg Brody

In you the from second cash you of terms of think generate that underlying business, your this much do can flow flow half year? cash in

Keith Jennings

our That charter. is

not is charter Our to add leverage.

that. done not have we year this far so And

We are is positive our to running cash this breakeven thought free flow. process business, whereby

we're year-to-date, free flow. far And positive million $XX cash so at

Gregg Brody

Got it.

expecting at So would cash year, significant half in second expect you're I the point? flow the this of not

Keith Jennings

the quarters. look you have QX QX been of seasonal – and our this best at expect if business, history We

we've portfolio. it's for QX done the always rebound in as And our slightly as but environment, looking stronger then we're could then a been that has things to QX the good think we So our be seasonal QX even strong or if low, point. that manage given be a should

We're our going means, by get to year it's So be second XXXX about we think to any optimistic we're to but half. how going saying of not robust plan the impact. a to is

Gregg Brody

in you are When and to earliest, – your guess then interested do see parties today? the if the is refinery get come that were international to asset. at you So a you take think can that

Bruce Fleming

Hi, is This Bruce. Gregg.

timeline. to me that Let question. going separate hazard on not guess a We're the

Gregg Brody

Okay.

if Let my there in refining me business. on you to move hear kids the the sorry, just I'm background.

do normalized RINs fuel just a happening that given is cracks you about and the with talked the You've for business, today? products movement What think in and what's differentials. number

Bruce Fleming

normalized say number, full-year you talking fuel you about a segment? When our for run rate are EBITDA

Gregg Brody

Yes.

think – XXX our XXX like you I gave a number I in for conference, to think you fuel products.

Bruce Fleming

was I That pre-COVID, think.

Gregg Brody

That’s why I’m asking.

Stephen Mawer

Gregg, it a give but still – sounds the a mean glib, not I normalized world. abnormal. normalized if number world in Yes. I really to is We're apologize so struggling

Gregg Brody

Yes.

You it. can't blame [indiscernible]. appreciate I

Stephen Mawer

guys blame I can't no. for hope you saying

Gregg Brody

know I this appreciate up me a shot. question. don't. it hitting with I someone's that. I I give

gain So behalf. segment? quarter, on split just this hedge have understand a you do the it specialty products ask that fuel trying I'll between They're to their and

Stephen Mawer

are I business. fuels XX% gains, hedge the of XX% say Most in our to would

Gregg Brody

care to of good We Got that. you're take it. Keith, luck. there. it. I'll leave appreciate able I'm glad all it

Keith Jennings

Steve? you. Thank

Stephen Mawer

Okay.

more out think questions. we any Operator, have I there have don’t questions we do or… any

Operator

questions. to other Mawer, the CEO over remarks. would closing I for any back Steve have like to turn call Mr. not do We

Stephen Mawer

everybody to again, appreciation the second good I'm again, quarter. stay wish expressing my challenge team the going everybody the for you Well, very Have accomplished We just whole met I'd participating. a thank the And and like call the of Calumet safe thank close you. to much. in what by to thanking And pandemic. for day.

Operator

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

disconnect. You may now

Calumet Specialty Products Partners (CLMT) 6 Aug 202020 Q2 Earnings call transcript