CLMT - Earnings call transcript Q1 2021 | Calumet Specialty Products Partners, L.P.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2021 Calumet Specialty Products Partners, L.P. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker, Brad McMurray of Investor Relations. Thank you. ahead. go Please

Brad McMurray

CFO; morning, & on Good results. thank for Performance Obermeier, Todd you joined and Montana Thanks, Development; Brands. and Corporate call everyone, Marc to us Scott Borgmann, CEO; Mawer, the by Specialty quarter Fleming, discuss joining EVP, today Renewables Products Elise. EVP, Steve and Bruce Solutions; our I'm EVP, first L.,

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

for are management that the nor this Please reasonable, general partner Although prove provide expectations partnership's can its press neither with measures. Please morning as may GAAP release was for non-GAAP reflected management our to and certain well earnings that SEC statements the partnership, our results. discuss our believes may also assurances as of filings to the financial reconciliations reference correct. expectations will issued that any We see our refer the the that forward-looking affect measures. in such factors release a slides and press latest the list

you replay webcast available few hours. call the A a Investor in call PDF reminder, of of the today's on website, our the this may www.calumetspecialty.com. on a a now download within will accompany Relations As made slides that website remarks will of our be section

that, call Steve. I'll Investor Relations department the Steve? You needed to as support. our can With for contact pass

Steve Mawer

onetime on similar quarter losses. good Like businesses It's geographies, production storm lines our single dominated team. event, in first much Good morning, pretty the impact everyone, winter and Brad. resulting Uri are a of our to and and by of everyone results have thanks, you

ability during Solutions Products and Performance Our Despite million. clearly segments increase unit margins these first this our our prices successfully by XXXX. largest Specialty our was price impact safely of EBITDA adjusted improved our refinery the our challenges, turnaround was and completing excellent demonstrate maintained during despite to the in continues dramatic In & its continues quarter. quarter to late work Shreveport the Brands or and crude minimize February, This the demonstrated negative team volatility decade. $X.X in

weather-driven to bore water, power we unpassable Uri municipal down appreciative into A with for on and area the colleagues. a time, Louisiana. affected outages. of level detail hard hard and fix disaster additional during million. As We're freeze to Texas. entirely presents presented loss damage They personal communities with challenges hours by and and of affected of first long damage long, and work while an A time $XX excess the this Nevertheless, in in also on impact costs freeze diagnosis of XX-day our for the our to of hard quarter challenges many for of go combined plant Louisiana I'll volume cases, roads repair demonstrate that the and results need. contending locations most their proud cold an that prepared additional Northwest humanitarian challenge created helping Shreveport restart, loss shortages time. really at additional freeze our food of in significant and teams

Building the economy rollout XXXX, in strengthened, we reopening. as and the price call, the thanks everything sell to late forward and Back the XXXX economy promising be able our we Our on to as vaccine looked appears in of last the the team to comments has make. as have termed Furthermore, only increase. continue year it year. is picture forward-looking been on my many can a to

pronounced and expected, than prepared side on been disruptions able was more or supply input stress The chain even via feedstock impact. but to that the minimize we costs expected basic we've reality We accordingly.

margins and month we've we at source million had needed we make businesses. the our Specialty week, Although like this January progress. transportation, Strategically, maintained in our gallon the our materials and of milestone good able Products scramble to Solutions our XXXX of business, we $XX times unit in redeem TruFuel good to unsecured & to launched to to process been Earlier Performance sales set still continue first notes. million Brands have hitting everyone, records in

an than filing and of more the productive. actions partner discussions We also and these and completed Renewables on transparency, is process insight feedback project derisking the been process, business beginning Montana more has resegmentation very about track, satisfactory. our investor X-K, Progress The of investors project are on is recently providing positive. execution and

nature will exceptional for it of Bruce and I in will remarks, later ultra-competitive here the project, depth more Todd into be get Q&A. this in and Given also

Todd So taking will to into with that, results. who be over I'll hand you our deeper

Todd Borgmann

Steve. Thanks,

we'll to further. dive into the a Moving X, bit then Slide segments performance summary our discuss I'll financial

$X.X million adjusted during quarter as storm battled lost we mentioned, in Steve As EBITDA we Uri. winter the

$X for resulting Products Montana loss. & quarter, Specialty million the the brunt the bore Our Performance and Solutions Renewables $X lost Brands EBITDA. EBITDA in of adjusted generated of adjusted million segment storm, $XX million

recast which noncash of and strategic goal other the results impact taken all from been first segment and management Additionally, same lens Further, we've better generate period providing Specialty we've from operational call segment. Products This costs our full financial, segments ago. report quarterly year X-K & to and Solutions, XXXX and XXXX separate from year display Brands last as Renewables $XX our into and through for able historically the million gains earnings is $XX that the where losses. to we've business uses. is released just EBITDA, week changes for million our reporting The with mark-to-market removed and mark-to-market an our the approach in Mountain businesses Corporate we same the over Performance insight a down to by of RINs were quarter, the aligns adjusted

be a that comfortably turnaround fuels the behind I Shreveport of On down proceeds we would $XX debt us. than as the we freeze, barrels It million week. calling got and is and running the of launched notes little up the soon to from be sale originally leaseback complete process took given The longer as last we a process will that feed, Shreveport early earnings the this pay these call, terminal but of day using call XX,XXX mentioned planned June. in Shreveport

plenty significantly during first did and availability. we to of Our the continue have liquidity not change quarter,

financial segment to quarter. performance the Moving during

X turn Solutions. discuss & Specialty to Let's Slide Products and

across effects being are Uri, while not material production and in second Slide clear much volatility early the heard future sales. investors off metric for about specialty throughout a process. supply past already increased our the XXXX two a providing Despite this to segment all iconic lot margin We visibility very seen are on the adjusted We unit quarters. larger made XX% substantially that contribution margin adjusted the the more X from we produced of providing attention, into purchase a cans. the support the point You earlier, intermediates were quantities gets and the and past quarter, this production quarter stand-alone million down generated we but Further, over up the this replenishing the and quarters. of only and quarter. related to in last which strong provide seeing brand, on EBITDA in chain. did alluded the of the quarter, adjusted had challenging visible is was a be TruFuel is On the the we've to favorable first operational up kicked Purple yet Shreveport were the fuels, high-margin capacity in than the comes margins, growth see division. the and of mix feedstock to X, into Material basis it been is quarter, compared And we've in TruFuel over third-party turnaround as comes in asphalt to year-over-year growth higher-than-normal Performance in XXXX, fuels quarter, business, we've is middle this the unit XX% detail environment stronger and in million-gallon one now specialty from January, in growth Royal is from out gross segment's from average quarterly most of the to the crude a are also of in segment project quarter, insight margins demand first Delray that our this business. Steve In finished throughout to EBITDA traditionally established the a $XX we're the XX%. financial quantity costs Brands our expand was improved growth month not materials, it quarter impact despite growing inventories segment, the of and the of first QX story X with our Part specialty increased the small as this packaging of we receive business. I cracks you'll had want byproducts levels over in excited of underlying but an approximately the weaker to brands basis. we year. pleased in profit for sales We're in

to turn Let's Slide X.

X and cracks, of recent rapid always crude accounted EBITDA the combined be place spring was versus in be Montana seasonality. price, asphalt in been has improvement a moving this difference. Typical and business, majority given we're PADD WCS a seasonality with asphalt for million million to $X in Renewables adjusted of quarter. last refiner excited great Our to $X.X down loss the the And the in months. with into summer plenty increase disk,

Montana talk Let's and more flip project. X Slide Energy transition our about to

and and highly installing to the this specialty albeit team announced start me the to, short transition project, operate it at XXXX, into history the XXXL the at plant steel metaled will service, and in million the we renewable asphalt I'll we used improved keep In oversized To barrel the stainless leaving niche acidic an XX,XXX in energy have Last to discounted feedstocks. spent refinery. same let Calumet as by to convert provide purchased order refinery. we XXXX, that diesel Great hydrocracker site the original meddling a saying which up state. a of quarter, plant expect as behind convert in hydrocracker we with $XXX Falls, up a an employment run explain the company In day full awesome Calumet. how, plant First,

From fuel be module. a of and is over utilizes equipment already highly barrels metal first barrels the expand think As feedstocks. has we hydrocracker day dewatering this maxed contains convert mark. market change this in simply module XX,XXX way and capacity we'll and nameplate out plan acidic quickly. But to We renewable Remember, process underutilized. tanks, and X,XXX needed 'XX, change I service. day. mentioned, to diesel a be a the our extremely straightforward, producing It's the plant a thereafter. hydrocracker some of barrels and here, catalyst, complete, of of as us the unit we will in be After this Internally, of is diesel April existing is we'll make barrels XX,XXX today, catalyst the renewable the can oversized existing gets produces a X,XXX still hydrogen day at this day the

thus diesel unleash will So of the renewable the second second of of the renewable a half The second overall hydrogen constructing product, XX,XXX renewable day is intensity in phase barrels significantly hydrogen carbon to gets a project. the lower more the economics us capacity. of to plant 'XX. improving This module production

ongoing, So evaluating clearly we pretreatment and flexibility asked Discussions at the and out get feedstock feedstock strategic it's lowest is are done value module. relatively flexibility, to next quickly. most it with on partner we a risk about, we start offers, the flexibility. fastest the the and max feed, adds track. expect time, because while third are soy same one can balancing It's on that question be is to and suppliers Adding which provide interest spring tremendous allowing for

far economics, to soy over be can externally, going this the be and great investor local turn and is To Another of clear, are as is feedstock is by Montana about most sourced to internally it quickly moving up, all Steve conservative. I'm the is provided the to date, with business-friendly, area. more but little wrap The the assuming that materials which non-soy to and exclusively add something benefit state I'd a project project great enthusiasm. that summarize for project, locally. both

discussions. that right equipment Steve, strategic existing back set to have we're supply We logistics that capital and And with partnership balancing costs apart offtake we're an contracts facility us with geography, and and on to currently the evaluating market. speed you.

Steve Mawer

Thanks, Todd.

our turn to Slide and let's summary X So with outlook.

and we project Renewables RD of as Montana well where cycles, the At see to speed all progress and a significant both provide derisking about, on you renewable level, exceptional risk we and of market conventional terms the either or high competes cyclical to position The does highest Montana a very and project verification count certainly that asset As that. to that conversion best flow of is through its project, train dual further any as additional the in project. an leading can project any have investment talked made can performs a minimum. the renewables conventional Todd believe stand-alone site cash an the as

speed low Over to market investment. by at the short derisked term, capital we high further

over and to the ramp makes cheaper spread implementation, the derisk execution Over and term, medium out approach our modular on easier which time. investment the we through

metallurgy have immediately practical, proprietary available within Based in to pretty external that interest projects processing the sit that not we just corporations and competitive very on that investors. cost and also our be that the much are top-notch us, project. at existing substantial on Pretty us existing to comfortable have transition be inevitable, partnering the will low Finally, all appears with we're stack recognition short a behind not the significant if to direct that's means multi-feed and we order. in

We may and than There's frustrate lose will with a appropriate is the completing gin the is cards priority served uniqueness it's closing will focus analogy, and, with the us interest we're value we on card opportunity for of up recognized. appreciate and best Twitter this pace, partnering interesting audience, significant will possible. in Calumet like medium-term there really game a this be investors, updates the lot same this been value communications. build unique the unitholders has our but a although path central process as value completing be proceeding Montana partnership people, not of for much motivation our and Rest exciting and of on process doubt right be the here, the the this at nicely. more game served investments our for excessive plants. of So with rummy but with a on special safe all as analyst much process, and the game then that's it exactly positioning may where assured, to therefore, is partnerships offering, that for I to unitholder forward this time time, but operation on the It We are. Renewables on that game remain project like bridge. greatest light, situations a the focused In creating is the table, moving face some an haste, more of best behind Building playing not that Calumet trajectory short-term forward maximizing. by is by of

us, to is benefits the inventories leverage like Moving outlook. brings product to this and situation. meantime, fuels. supply decision distressed excited line, sales us additional when on our demand More still the implemented ask of us with generally XXXX, are on to the eases, if, upside operating and and asset we cost our generally, this should make The but stabilization disruption that this and efficiency we're experiencing. reopening together and Uri across during and The lines, select response operating our on although margins not demand rebuilding measures We economy of the in entire both give finishing all ourselves we're intense the how specialties about of of behind level product of in in bulk we pandemic, our both you, more chains.

issue XXXX Additional vigilance. see specialties, mitigate crude and continuous And will this price quarter possible. the first we're were you eminently show in able effect although of to can require that prices half generally, the lag the second that

team building The We issue redundancy and system chain is but with this more like don't in this that big real-time economic every day part they're supply remarks. the is started away. other a you thank issues That our of challenge Calumet for managing look Thank response also hard-working Calumet. activity happen And of for prioritizing that back who XXXX, today. things and much very concludes our options, and comes and going dedicated strong customers. great us making work our in for do your interest you of support joining

to the to turn So the open to line Q&A. the over with call that, to like operator up I'd

Operator

with [Operator comes of the first of question Bank line Instructions] Your Gregg America. Brody from

Gregg Brody

hear Hopefully, you can okay. me

Steve Mawer

can. We

Gregg Brody

the start renewables just follow-up could a just project. on Maybe I

laid it go after first of catalyst have that by XX,XXX next You've X,XXX to out to you'll catalyst April -- refinery April phase? second like the the will by half. year, have and 'XX change, for prepare before the capacity offline -- path How a looks of change for

Bruce Fleming

Gregg, it's for into is moving the site, pre-shut there's right is switch Bruce. makes April a no to catalyst answer scheduled of time refinery-wide turnaround, hydrocracker separation what the the on the it final and the but The down. activities get oil that's no.

Gregg Brody

Canadian we Got than Montana some business see this I see it. driver. year through of mentioned year little diffs expect the and bit a bit a the where in going for out can you walk a ago. you weaker improvements And Maybe quarter, rest of us that margin? to could what look refinery this being you be a the

Bruce Fleming

Yes.

external simply into you put -- we the quarter, Rockies $XX put And normal same environment no years, of is range XX spread trend you ran the can full environment. refinery crack is highlight reasons the within the easily and There's slide to I if for line. shows through market within crack generally the environment The the that in chart $XX, of volatility. no get deck chart Rockies. one a trends tell Gregg, The it's back you, price spread extended this to this So we in that that.

the a I that's to lot that's we So you're external going are it. that all see condition, And think of volatility but to experiencing.

Gregg Brody

-- quarter refinery thought you I been better but experiencing is would have experiencing this now? others Do particular it's that I fair in up, a that think that little that that see have just cracks are recovery business. would right

year? You the abating is of the that I through you first what guess, but are mentioned month volatility, -- seeing

Bruce Fleming

Yes. Yes.

series find up I toward think price the normal component below WCS us, just X ticked portion going that the model, of it's guys diff favorably of lifting. WCS to moving That's sharply seasonal in in differential average, pull last you're complex the your if have you use the still commodities portion We do you but historically. and weeks. a a

Gregg Brody

then Products million the is any & it impact saw of it. coming we the this Has majority Got behind this Or us? think to back quarter. -- Specialty all I where is $XX that And there quarter? residual Solutions

Todd Borgmann

plant fairly The for a rebuilding We bit is this and and inventory supply in The quarter. running well did little is have building and Todd. running the plants up This Gregg. April. Thanks have up now, of chain running, been question. are

So fully. May we those up probably recognized. and and a little in full out news recognizing the running And bit are as be is, all should of of good quarters. delay the customers getting quarter to here, the early sales But

Gregg Brody

Got it.

So have you've but quarter, to... some this sounds we'll got impact, like

Todd Borgmann

can as up. see as and we we how of backlog hard out quite demand we'll have We're make can much orders. a Yes, there, strong producing

replenished. get a of whole that going to to door to oil moving We're take work process. couple just inventories through we keep expecting months not as as it'll fast out But we're the can. So

Gregg Brody

hop before And in one here the more I've got Okay. I queue. back

against refinery if But argument get it, started terms would have from to they to really obviously, that play the results And you? Supreme we're having if to can point small case waiting your it So that's you don't, last the won if Court with to it? does respect out did, you. options pay exemption for that if maintain premium if that reverses great obviously, week this anxiously In respect about of it, from. in ruling, how with quarter they event the to the that you -- how for they talk fund --

Todd Borgmann

think I hypothetical questions multiple there's Gregg, building Well, like hypothetical. there there's -- on kind in of with

think I the... So

Gregg Brody

ruling it Is sooner simple you think about to Just have the to to there? this that is, how the than appeals cash there in that if mean, I post I'm to I trying because, do if deal make you there recognize, move case need against liability, -- liability? how later? you understand question with liability. you, simple Are just that

Bruce Fleming

are Remember, EPA has these are it's RINs blending. quantity demonstrated extended of of timelines. Gregg, RINs none the are due of money, Bruce. a And yet. not The all

of around the road there So Court. court narrow the one is front a there's and activity nest that's a besides of in long HollyFrontier Supreme

you not it. might bimodal as fact but I the the ticket. So you're bringing that ways than a direct through, issue see I guess that renewable more we couple And you think it's up. posit I the of project a it's covers to diesel

Gregg Brody

And that I the appreciate that. a in cash wondering time there between and... I'm online just need comes is if

Bruce Fleming

Gregg, don't case. that's believe the we

the I the just Supreme to Even beginning. rules, Supreme the final it's both it's the whatever just of would the voice, Court think ways. though be beginning process the appear Court

Operator

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

Neil Mehta

higher? products us They those environment. first in just gross about the about just crude business. sustainability oil to margins grind you continue the how think pretty specialty rising to talk gross is prices price quarter margin durable question do seemed at Can on First you the despite if

Scott Obermeier

the Obermeier. few your would for Scott Thanks Neil, I probably question. -- make a and question. to comments

the value Neil, or activities. The excellence and full commercial various a implementing it little first skills pricing We've X. on on know, and and really our focused commercially year been mindset talked would be, we've past as improving the bit extracting our about you

of the I years. come way so the think past team has that And long a couple

year, Neil. that's I been results, we've last tested, as thrust shown you the will, crude QX. spiked in think And if our in up

at handle, market place volatility the time. frankly, of business feedstock right the Demand strong, is and that in feel we've this any to volatility we or so execution got resilient. And type is

Steve Mawer

mean good. Neil, if could $XX I Demand reasonable so crude with the I on we've $XX is this Yes, to add. market remains far. so plus from Steve, minus written success

so comfortable we neutral. think always think mix that it. some and effect negatives it. kind QX I margin. going with to And said, then Scott macro the effect I ability, And at between -- our to think like think be we're manage there's I mix was the mix really some occasionally, macro of and There some around then the to to but were QX, positives and mix, mix kind of think noise I works the there's

Neil Mehta

I team around and we hopefully, because and Shreveport appreciated opportunity of the to if have the from profit the was obviously stay you talk what through comments about your your lost was In and, it EBITDA that volumes. Specialties, downtime your make think was number? XQ than safe softer as you expected, the able largely Can strong. at -- it about

Todd Borgmann

Yes.

and think said mostly I lost of us Todd. cost in that the this $XX us opportunities. is on We -- million freeze $XX Turnaround probably top costs million.

out it broken haven't we So specifically.

I charges. internally But lost think opportunity. lost that's roughly million, well, top be actual have $XX that say -- $XX on say of fair that. We between it'd volume million is opportunity of There's I It's that, $XX volume. million and lost shouldn't another specific to

Neil Mehta

So to pretax that's a million, million $XX $XX number?

Todd Borgmann

EBITDA. Correct.

Operator

call to back this And remarks. now Instructions] further would to the time, at McMurray no closing for there I [Operator any turn like over Brad are questions.

Brad McMurray

for everybody, time. you, good Thank weekend. your a Have Goodbye.

Operator

for you thank participating. today's does conclude conference. That We

disconnect. now may You

Calumet Specialty Products Partners (CLMT) 7 May 212021 Q1 Earnings call transcript