Calumet Specialty Products Partners, L.P. Reports Fourth Quarter and Full Year 2023 Results

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Full Year 2023 net income of $48.1 million, or Limited partners’ interest of $0.59 basic net income per unit
Full Year 2023 Adjusted EBITDA of $260.5 million
Announced intent to convert corporate structure to a C-Corp from a Master Limited Partnership
Montana Renewables (“MRL”) returned to normal operations in December; steam drum successfully replaced
Specialties business delivers fifth consecutive year of margin growth
Entered into note purchase agreement to issue $200 million aggregate principal amount of 9.25% Senior Secured First Lien Notes due 2029
Issued conditional notices to redeem all outstanding 9.25% Senior Secured First Lien Notes due 2024 and $50 million aggregate principal amount of our outstanding 11.00% Senior Notes due 2025

INDIANAPOLIS, Feb. 23, 2024 /PRNewswire/ — Calumet Specialty Products Partners, L.P. (NASDAQ:CLMT) (the “Partnership,” “Calumet,” “we,” “our” or “us”), today reported results for the fourth quarter and full year ended December 31, 2023, as follows:

Three Months Ended December 31, 

Year Ended December 31, 

2023

2022

2023

2022

(Dollars in millions, except per unit data)
(Restated)

Net income (loss)

$

(48.0)

$

(77.1)

$

48.1

$

(173.3)

Limited partners’ interest basic net income (loss) per unit

$

(0.59)

$

(0.95)

$

0.59

$

(2.14)

Adjusted EBITDA

$

39.7

$

63.9

$

260.5

$

390.0

 

Specialty Products and Solutions

Performance Brands

Montana/Renewables

Three Months Ended December 31, 

Three Months Ended December 31, 

Three Months Ended December 31, 

2023

2022

2023

2022

2023

2022

(Dollars in millions, except per barrel data)

Gross profit (loss)

$

88.1

$

96.3

$

16.1

$

11.1

$

(82.1)

$

(71.6)

Adjusted gross profit (loss)

$

69.6

$

93.6

$

16.5

$

11.9

$

(19.3)

$

(11.2)

Adjusted EBITDA

$

75.6

$

96.1

$

6.1

$

2.7

$

(25.8)

$

(13.1)

Gross profit (loss) per barrel

$

16.11

$

17.08

$

135.29

$

92.50

$

(45.76)

$

(66.42)

Adjusted gross profit (loss) per barrel

$

12.73

$

16.60

$

138.66

$

99.17

$

(10.76)

$

(10.39)

 

Specialty Products and Solutions

Performance Brands

Montana/Renewables

Year Ended December 31, 

Year Ended December 31, 

Year Ended December 31, 

2023

2022

2023

2022

2023

2022

(Dollars in millions, except per barrel data)

Gross profit (loss)

$

402.2

$

325.5

$

82.1

$

55.6

$

(32.6)

$

(29.4)

Adjusted gross profit

$

291.0

$

422.4

$

78.5

$

57.8

$

59.8

$

86.4

Adjusted EBITDA

$

251.2

$

379.4

$

47.9

$

20.2

$

30.2

$

75.8

Gross profit (loss) per barrel

$

18.73

$

14.49

$

160.35

$

107.54

$

(4.56)

$

(4.03)

Adjusted gross profit per barrel

$

13.56

$

18.81

$

153.32

$

111.80

$

8.36

$

11.84

 

“2023 was a strategically foundational year for Calumet,” said Todd Borgmann, CEO. “At Montana Renewables, we completed the construction and startup of the business, demonstrated our ability to source local advantaged feedstock, optimized product placement between Canada and the West Coast, de-risked our technology, became the largest SAF producer in North America, and progressed plans to expand our first mover advantage through our MaxSAF project.  Further, our Specialties business continued to advance its commercial leadership position with our fifth straight year of margin growth.  The Company also announced a plan to convert our corporate structure from an MLP to a C-Corp by the middle of 2024, which we believe will open up the Calumet investment opportunity to a much broader audience. Our 2023 financial results lagged our strategic progress due to the need to replace a cracked steam drum in Montana that left us operating at significantly reduced rates through the second half of the year and two weather events in Shreveport which resulted in significant lost opportunity.

“Advancements over the past few years set the stage for a series of value-creating catalysts to be realized in 2024. First, we are excited for our first full year of operations at Montana Renewables, and after we work through old, expensive feedstock in the first quarter we expect to demonstrate the business’ financial promise. Next, we continue to be optimistic about the prospects of our DOE loan process, which could provide the ability to fund our MaxSAF expansion. With the above two items, a potential monetization later in the year remains a strategic deleveraging opportunity.”

Specialty Products and Solutions (SPS): The SPS segment reported Adjusted EBITDA of $75.6 million for the fourth quarter 2023 and $251.2 million for the full year 2023.  This compares to Adjusted EBITDA of $96.1 million and $379.4 million for the same periods a year ago. Margins remain above mid-cycle levels for Specialties and Fuels.

Performance Brands (PB):  The PB segment reported Adjusted EBITDA of $6.1 million during the fourth quarter 2023 and $47.9 million for the full year 2023. This compares to Adjusted EBITDA of $2.7 million and $20.2 million for the same periods of 2022. Year-over-year margin growth has largely been driven by improved industrial volumes and increased unit margins across the board as input costs have stabilized.

Montana/Renewables (MR): The MR segment reported a loss of $(25.8) million of Adjusted EBITDA during the fourth quarter 2023 and $30.2 million for the full year 2023.  This compares to Adjusted EBITDA of $(13.1) million and $75.8 million during the same periods a year ago. The lower fourth quarter results are primarily a result of reduced throughput and downtime at MRL due to the previously disclosed steam drum replacement that was completed during the period.  Additionally, margins decreased seasonally in our specialty asphalt business.

Corporate: Total corporate costs represent a loss of $(16.2) million of Adjusted EBITDA for the fourth quarter 2023 and a loss of $(68.8) million for the full year 2023.  This compares to a loss of $(21.8) million of Adjusted EBITDA and a loss of $(85.4) million of Adjusted EBITDA for the same periods during 2022.

2029 Secured Notes: Calumet also announced that we have entered into a note purchase agreement to sell $200.0 million aggregate principal amount of a new series of our 9.25% Senior Secured First Lien Notes due 2029 (the “2029 Secured Notes”) in a private placement transaction. The closing of the issuance of the 2029 Secured Notes is expected to occur on March 7, 2024, subject to customary closing conditions. We intend to use the net proceeds from the private placement of the 2029 Secured Notes, together with cash on hand, to redeem all of our outstanding 9.25% Senior Secured First Lien Notes due 2024 (the “2024 Secured Notes”) and $50.0 million aggregate principal amount of our outstanding 11.00% Senior Notes due 2025 (the “2025 Notes”).

Restatement of Financial Results: Calumet also announced today our decision to restate the audited financial statements for the year ended December 31, 2022 and the unaudited interim consolidated financial statements for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023 as a result of the attribution of net loss from Montana Renewables Holdings LLC (“MRHL”) to noncontrolling interest. The impact on Adjusted EBITDA for all periods described in this paragraph was de minimis. Additional details regarding the restatement have been provided in our related Current Report on Form 8-K that was filed today with the Securities and Exchange Commission (“SEC”).

Operations Summary

The following table sets forth information about the Partnership’s continuing operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased blendstocks such as ethanol and specialty blendstocks, as well as the resale of crude oil. 

Three Months Ended December 31, 

Year Ended December 31, 

2023

2022

2023

2022

(In bpd)

(In bpd)

Total sales volume (1)

80,234

74,302

79,805

82,946

Total feedstock runs (2)

80,295

69,509

77,200

80,447

Facility production: (3)

Specialty Products and Solutions:

Lubricating oils

11,381

10,689

10,358

10,951

Solvents

7,303

7,505

7,208

7,100

Waxes

1,200

1,473

1,326

1,452

Fuels, asphalt and other by-products

42,449

40,260

38,845

40,845

Total Specialty Products and Solutions

62,333

59,927

57,737

60,348

Montana/Renewables:

Gasoline

3,919

2,631

3,898

3,409

Diesel

2,862

1,856

2,941

6,449

Jet fuel

370

643

449

820

Asphalt, heavy fuel oils and other

4,512

3,310

4,483

6,942

Renewable fuels

5,442

6,314

Total Montana/Renewables

17,105

8,440

18,085

17,620

Performance Brands

1,347

1,210

1,474

1,434

Total facility production (3)

80,785

69,577

77,296

79,402

(1)

Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to supply and/or processing agreements, sales of inventories and the resale of crude oil to third-party customers. Total sales volume includes the sale of purchased blendstocks.

(2)

Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our facilities and at certain third-party facilities pursuant to supply and/or processing agreements.

(3)

The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstocks and production of finished products and volume loss.

Webcast Information

A conference call is scheduled for 9:00 a.m. ET on February 23, 2024 to discuss the financial and operational results for the fourth quarter of 2023. Investors, analysts and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call with accompanying presentation slides, available on the Partnership’s website at www.calumetspecialty.investorroom.com/events. Interested parties may also participate in the call by dialing (844) 695-5524. A replay of the conference call will be available a few hours after the event on the investor relations section of the Partnership’s website, under the events and presentations section and will remain available for at least 90 days.

About the Partnership

Calumet Specialty Products Partners, L.P. (NASDAQ:CLMT) manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. Calumet is headquartered in Indianapolis, Indiana and operates twelve facilities throughout North America.

Additional Information and Where to Find It

This communication relates to the proposed corporate reorganization between the Partnership and Calumet, Inc. (“New Calumet”). This communication may be deemed to be solicitation material in respect of the proposed corporate transition of the Partnership to New Calumet, a newly formed Delaware corporation (the “Conversion”). The proposed Conversion will be submitted to the Partnership’s unitholders for their consideration. In connection with the proposed Conversion, New Calumet is expected to file with the SEC a registration statement on Form S-4 (the “Form S-4”) containing a proxy statement/prospectus (the “Proxy Statement/Prospectus”) to be distributed to the Partnership’s unitholders in connection with the Partnership’s solicitation of proxies for the vote of the Partnership’s unitholders in connection with the proposed Conversion and other matters as described in such Proxy Statement/Prospectus. The Proxy Statement/Prospectus will also serve as the prospectus relating to the offer of the securities to be issued to the Partnership’s equityholders in connection with the completion of the proposed Conversion. The Partnership and New Calumet may file other relevant documents with the SEC regarding the proposed Conversion. The definitive Proxy Statement/Prospectus will be mailed to the Partnership’s unitholders when available. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED CONVERSION, INVESTORS AND UNITHOLDERS AND OTHER INTERESTED PERSONS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED CONVERSION (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION.

The Proxy Statement/Prospectus, any amendments or supplements thereto and other relevant materials, and any other documents filed by the Partnership or New Calumet with the SEC, may be obtained once such documents are filed with the SEC free of charge at the SEC’s website at www.sec.gov or free of charge from the Partnership at www.calumet.com or by directing a written request to the Partnership at 2780 Waterfront Parkway East Drive, Indianapolis, Indiana 46214.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

The Partnership, the Calumet GP, LLC (the “General Partner”) and certain of the General Partner’s executive officers, directors, other members of management and employees may, under the rules of the SEC, be deemed to be “participants” in the solicitation of proxies in connection with the proposed Conversion. Information regarding the General Partner’s directors and executive officers is available in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 15, 2023 (the “Annual Report”). To the extent that holdings of the Partnership’s securities have changed from the amounts reported in the Annual Report, such changes have been or will be reflected on Statements of Changes in Beneficial Ownership on Form 4 filed with the SEC. These documents may be obtained free of charge from the sources indicated above. Information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4, the Proxy Statement/Prospectus and other relevant materials relating to the proposed Conversion to be filed with the SEC when they become available. Unitholders and other investors should read the Proxy Statement/Prospectus carefully when it becomes available before making any voting or investment decisions.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release may constitute “forward-looking statements.” The words “will,” “may,” “intend,” “believe,” “expect,” “outlook,” “forecast,” “anticipate,” “estimate,” “continue,” “plan,” “should,” “could,” “would,” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. The statements discussed in this press release that are not purely historical data are forward-looking statements, including, but not limited to, the statements regarding (i) demand for finished products in markets we serve, (ii) our expectation regarding our business outlook and cash flows, including with respect to the Montana Renewables business and our plans to de-leverage our balance sheet, (iii) our expectation regarding anticipated capital expenditures and strategic initiatives, (iv) our ability to meet our financial commitments, debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditures, (v) our expectation regarding the private placement of the 2029 Secured Notes and the use of proceeds therefrom, and (vi) the conditional full redemptions of the 2024 Secured Notes and the conditional partial redemption of the 2025 Notes. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are …

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