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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
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35-1811116
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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2780 Waterfront Parkway East Drive, Suite 200
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Indianapolis, Indiana
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46214
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
|
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Trading symbol(s)
|
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Name of each exchange on which registered
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Common units representing limited partner interests
|
|
CLMT
|
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The NASDAQ Stock Market LLC
|
Large accelerated filer
|
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☐
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Accelerated filer
|
|
þ
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Non-accelerated filer
|
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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March 31, 2020
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December 31, 2019
|
||||
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(Unaudited)
|
||||||
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(In millions, except unit data)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
103.7
|
|
|
$
|
19.1
|
|
Accounts receivable, net
|
176.0
|
|
|
175.0
|
|
||
Other
|
11.0
|
|
|
13.5
|
|
||
|
187.0
|
|
|
188.5
|
|
||
Inventories
|
222.6
|
|
|
292.6
|
|
||
Derivative assets
|
22.8
|
|
|
0.9
|
|
||
Prepaid expenses and other current assets
|
8.3
|
|
|
11.0
|
|
||
Total current assets
|
544.4
|
|
|
512.1
|
|
||
Property, plant and equipment, net
|
964.7
|
|
|
973.5
|
|
||
Goodwill
|
172.5
|
|
|
171.4
|
|
||
Other intangible assets, net
|
68.4
|
|
|
71.2
|
|
||
Operating lease right-of-use assets
|
78.5
|
|
|
93.1
|
|
||
Other noncurrent assets, net
|
33.8
|
|
|
36.5
|
|
||
Total assets
|
$
|
1,862.3
|
|
|
$
|
1,857.8
|
|
LIABILITIES AND PARTNERS’ CAPITAL
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
158.5
|
|
|
$
|
230.2
|
|
Accrued interest payable
|
46.8
|
|
|
32.0
|
|
||
Accrued salaries, wages and benefits
|
22.4
|
|
|
35.7
|
|
||
Other taxes payable
|
13.7
|
|
|
11.8
|
|
||
Obligations under inventory financing agreements
|
95.1
|
|
|
134.3
|
|
||
Other current liabilities
|
50.2
|
|
|
58.6
|
|
||
Current portion of operating lease liabilities
|
49.0
|
|
|
60.6
|
|
||
Current portion of long-term debt
|
2.0
|
|
|
1.8
|
|
||
Total current liabilities
|
437.7
|
|
|
565.0
|
|
||
Pension and postretirement benefit obligations
|
7.6
|
|
|
7.9
|
|
||
Other long-term liabilities
|
20.6
|
|
|
20.8
|
|
||
Long-term operating lease liabilities
|
30.7
|
|
|
33.0
|
|
||
Long-term debt, less current portion
|
1,358.7
|
|
|
1,209.5
|
|
||
Total liabilities
|
1,855.3
|
|
|
1,836.2
|
|
||
Commitments and contingencies
|
|
|
|
||||
Partners’ capital:
|
|
|
|
||||
Limited partners’ interest 77,956,842 units and 77,560,355 units issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
6.1
|
|
|
20.2
|
|
||
General partner’s interest
|
11.7
|
|
|
12.0
|
|
||
Accumulated other comprehensive loss
|
(10.8
|
)
|
|
(10.6
|
)
|
||
Total partners’ capital
|
7.0
|
|
|
21.6
|
|
||
Total liabilities and partners’ capital
|
$
|
1,862.3
|
|
|
$
|
1,857.8
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions, except per unit and unit data)
|
||||||
Sales
|
$
|
692.6
|
|
|
$
|
851.3
|
|
Cost of sales
|
638.3
|
|
|
715.3
|
|
||
Gross profit
|
54.3
|
|
|
136.0
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Selling
|
13.3
|
|
|
13.3
|
|
||
General and administrative
|
20.2
|
|
|
34.9
|
|
||
Transportation
|
30.8
|
|
|
35.9
|
|
||
Taxes other than income taxes
|
5.0
|
|
|
5.1
|
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Other operating expense
|
3.0
|
|
|
1.3
|
|
||
Operating income (loss)
|
(24.0
|
)
|
|
33.8
|
|
||
|
|
|
|
||||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(29.3
|
)
|
|
(32.3
|
)
|
||
Gain on debt extinguishment
|
—
|
|
|
0.4
|
|
||
Gain on derivative instruments
|
38.5
|
|
|
9.1
|
|
||
Other
|
0.9
|
|
|
5.3
|
|
||
Total other income (expense)
|
10.1
|
|
|
(17.5
|
)
|
||
Net income (loss) before income taxes
|
(13.9
|
)
|
|
16.3
|
|
||
Income tax (benefit) expense
|
0.5
|
|
|
(0.1
|
)
|
||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
Allocation of net income (loss):
|
|
|
|
||||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
Less:
|
|
|
|
||||
General partner’s interest in net income (loss)
|
(0.3
|
)
|
|
0.3
|
|
||
Non-vested share-based payments
|
—
|
|
|
0.1
|
|
||
Net income (loss) available to limited partners
|
$
|
(14.1
|
)
|
|
$
|
16.0
|
|
Weighted average limited partner units outstanding:
|
|
|
|
||||
Basic
|
78,399,314
|
|
|
78,111,551
|
|
||
Diluted
|
78,399,314
|
|
|
78,175,007
|
|
||
Limited partners’ interest basic and diluted net income (loss) per unit:
|
$
|
(0.18
|
)
|
|
$
|
0.20
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
Other comprehensive loss:
|
|
|
|
||||
Cash flow hedges:
|
|
|
|
||||
Cash flow hedge loss
|
(0.2
|
)
|
|
—
|
|
||
Foreign currency translation adjustment
|
—
|
|
|
1.2
|
|
||
Total other comprehensive loss
|
(0.2
|
)
|
|
1.2
|
|
||
Comprehensive income (loss) attributable to partners’ capital
|
$
|
(14.6
|
)
|
|
$
|
17.6
|
|
|
Accumulated Other
Comprehensive Loss
|
|
Partners’ Capital
|
|
|
||||||||||
|
|
General
Partner
|
|
Limited
Partners
|
|
Total
|
|||||||||
|
(In millions)
|
||||||||||||||
Balance at December 31, 2019
|
$
|
(10.6
|
)
|
|
$
|
12.0
|
|
|
$
|
20.2
|
|
|
$
|
21.6
|
|
Other comprehensive loss
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
||||
Net loss
|
—
|
|
|
(0.3
|
)
|
|
(14.1
|
)
|
|
(14.4
|
)
|
||||
Settlement of tax withholdings on equity-based incentive compensation
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||||
Amortization of phantom units
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
||||
Balance at March 31, 2020
|
$
|
(10.8
|
)
|
|
$
|
11.7
|
|
|
$
|
6.1
|
|
|
$
|
7.0
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
26.4
|
|
|
28.2
|
|
||
Amortization of turnaround costs
|
5.1
|
|
|
4.8
|
|
||
Non-cash interest expense
|
1.5
|
|
|
1.9
|
|
||
Gain on debt extinguishment
|
—
|
|
|
(0.4
|
)
|
||
Unrealized (gain) loss on derivative instruments
|
(31.6
|
)
|
|
2.6
|
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Operating lease expense
|
20.2
|
|
|
20.8
|
|
||
Operating lease payments
|
(20.1
|
)
|
|
(20.6
|
)
|
||
Equity-based compensation
|
(4.5
|
)
|
|
2.2
|
|
||
Lower of cost or market inventory adjustment
|
66.3
|
|
|
(38.9
|
)
|
||
Other non-cash activities
|
2.2
|
|
|
(4.0
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1.1
|
)
|
|
(69.8
|
)
|
||
Inventories
|
3.8
|
|
|
31.9
|
|
||
Prepaid expenses and other current assets
|
1.5
|
|
|
(3.5
|
)
|
||
Derivative activity
|
(1.4
|
)
|
|
(0.1
|
)
|
||
Turnaround costs
|
(9.8
|
)
|
|
(1.7
|
)
|
||
Accounts payable
|
(65.3
|
)
|
|
37.2
|
|
||
Accrued interest payable
|
11.2
|
|
|
14.4
|
|
||
Accrued salaries, wages and benefits
|
(8.5
|
)
|
|
(6.8
|
)
|
||
Other taxes payable
|
1.9
|
|
|
2.9
|
|
||
Other liabilities
|
(9.1
|
)
|
|
(1.8
|
)
|
||
Pension and postretirement benefit obligations
|
(0.2
|
)
|
|
—
|
|
||
Net cash provided by (used in) operating activities
|
$
|
(19.9
|
)
|
|
$
|
27.4
|
|
Investing activities
|
|
|
|
||||
Additions to property, plant and equipment
|
(14.9
|
)
|
|
(9.5
|
)
|
||
Acquisition of business, net of cash acquired
|
(3.3
|
)
|
|
—
|
|
||
Proceeds from sale of unconsolidated affiliate
|
—
|
|
|
5.0
|
|
||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
3.6
|
|
||
Net cash provided by discontinued operations
|
0.9
|
|
|
2.0
|
|
||
Net cash provided by (used in) investing activities
|
$
|
(17.3
|
)
|
|
$
|
1.1
|
|
Financing activities
|
|
|
|
||||
Proceeds from borrowings — revolving credit facility
|
472.5
|
|
|
—
|
|
||
Repayments of borrowings — revolving credit facility
|
(325.3
|
)
|
|
—
|
|
||
Repayments of borrowings — senior notes
|
—
|
|
|
(23.2
|
)
|
||
Payments on finance lease obligations
|
(0.1
|
)
|
|
(1.0
|
)
|
||
Proceeds from inventory financing
|
245.1
|
|
|
279.2
|
|
||
Payments on inventory financing
|
(269.7
|
)
|
|
(286.1
|
)
|
||
Proceeds from other financing obligations
|
—
|
|
|
0.3
|
|
||
Payments on other financing obligations
|
(0.7
|
)
|
|
(0.6
|
)
|
||
Contributions from Calumet GP, LLC
|
—
|
|
|
0.1
|
|
||
Net cash provided by (used in) in financing activities
|
$
|
121.8
|
|
|
$
|
(31.3
|
)
|
Net increase (decrease) in cash and cash equivalents
|
$
|
84.6
|
|
|
$
|
(2.8
|
)
|
Cash and cash equivalents at beginning of period
|
19.1
|
|
|
155.7
|
|
||
Cash and cash equivalents at end of period
|
$
|
103.7
|
|
|
$
|
152.9
|
|
Supplemental disclosure of non-cash investing activities
|
|
|
|
||||
Non-cash property, plant and equipment additions
|
$
|
10.8
|
|
|
$
|
3.3
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
RINs Obligation
|
$
|
30.6
|
|
|
$
|
13.0
|
|
Transition Services Agreement Payable
|
—
|
|
|
19.8
|
|
||
Net working capital adjustment liabilities
|
—
|
|
|
6.9
|
|
||
Other
|
19.6
|
|
|
18.9
|
|
||
Total other current liabilities
|
$
|
50.2
|
|
|
$
|
58.6
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Sales by major source
|
|
|
|
||||
Standard specialty products
|
$
|
269.2
|
|
|
$
|
292.3
|
|
Packaged and synthetic specialty products
|
57.7
|
|
|
59.9
|
|
||
Total specialty products
|
326.9
|
|
|
352.2
|
|
||
|
|
|
|
||||
Fuel and fuel related products
|
320.0
|
|
|
442.9
|
|
||
Asphalt
|
45.7
|
|
|
56.2
|
|
||
Total fuel products
|
365.7
|
|
|
499.1
|
|
||
|
|
|
|
||||
Total sales
|
$
|
692.6
|
|
|
$
|
851.3
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Titled
Inventory
|
|
Supply and Offtake
Agreements (1)
|
|
Total
|
|
Titled
Inventory
|
|
Supply and Offtake
Agreements (1)
|
|
Total
|
||||||||||||
Raw materials
|
$
|
25.1
|
|
|
$
|
4.8
|
|
|
$
|
29.9
|
|
|
$
|
48.3
|
|
|
$
|
11.6
|
|
|
$
|
59.9
|
|
Work in process
|
29.9
|
|
|
15.5
|
|
|
45.4
|
|
|
35.0
|
|
|
29.1
|
|
|
64.1
|
|
||||||
Finished goods
|
112.9
|
|
|
34.4
|
|
|
147.3
|
|
|
124.8
|
|
|
43.8
|
|
|
168.6
|
|
||||||
|
$
|
167.9
|
|
|
$
|
54.7
|
|
|
$
|
222.6
|
|
|
$
|
208.1
|
|
|
$
|
84.5
|
|
|
$
|
292.6
|
|
|
(1)
|
Amounts represent LIFO value and do not necessarily represent the value of product financing. Please read Note 7 - “Inventory Financing Agreements” for further information.
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets:
|
Classification:
|
|
|
|
||||
Operating lease assets
|
Operating lease right-of-use assets (1)
|
$
|
78.5
|
|
|
$
|
93.1
|
|
Finance lease assets
|
Property, plant and equipment, net (2)
|
4.3
|
|
|
3.2
|
|
||
Total leased assets
|
|
$
|
82.8
|
|
|
$
|
96.3
|
|
Liabilities:
|
|
|
|
|
||||
Current
|
|
|
|
|
||||
Operating
|
Current portion of operating lease liabilities (1)
|
$
|
49.0
|
|
|
$
|
60.6
|
|
Finance
|
Current portion of long-term debt
|
0.5
|
|
|
0.3
|
|
||
Non-current
|
|
|
|
|
||||
Operating
|
Long-term operating lease liabilities (1)
|
30.7
|
|
|
33.0
|
|
||
Finance
|
Long-term debt, less current portion
|
3.4
|
|
|
2.4
|
|
||
Total lease liabilities
|
|
$
|
83.6
|
|
|
$
|
96.3
|
|
|
(1)
|
In the first quarter of 2020, the Company had additions to its operating lease right-of-use assets and operating lease liabilities of approximately $1.4 million.
|
(2)
|
Finance lease assets are recorded net of accumulated amortization of $7.3 million and $7.1 million as of March 31, 2020 and December 31, 2019, respectively.
|
|
|
Three Months Ended
|
||||||
Lease Costs:
|
Classification:
|
2020
|
|
2019
|
||||
Fixed operating lease cost
|
Cost of Sales; SG&A Expenses
|
$
|
16.6
|
|
|
$
|
17.7
|
|
Short-term operating lease cost (1)
|
Cost of Sales; SG&A Expenses
|
2.7
|
|
|
2.0
|
|
||
Variable operating lease cost (2) (3)
|
Cost of Sales; SG&A Expenses
|
0.9
|
|
|
1.1
|
|
||
Finance lease cost:
|
|
|
|
|
||||
Amortization of right-of-use asset
|
Cost of Sales
|
0.1
|
|
|
0.3
|
|
||
Interest on lease liabilities
|
Interest expense
|
0.1
|
|
|
1.0
|
|
||
Total lease cost
|
|
$
|
20.4
|
|
|
$
|
22.1
|
|
|
(1)
|
The Company’s leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets.
|
(2)
|
Approximately $0.8 million of the Company’s variable operating lease cost for the three months ended March 31, 2020 relates to its lease agreement with Phillips 66 associated with the LVT unit at its Lake Charles, Louisiana refinery (the
|
(3)
|
The Company’s railcar leases typically include a mileage limit the railcar can travel over the life of the lease. For any mileage incurred over this limit, the Company is obligated to pay an agreed upon dollar value for each mile that is traveled over the limit.
|
Maturity of Lease Liabilities
|
Operating Leases (1)
|
|
Finance Leases
(2)
|
|
Total
|
||||||
2020
|
$
|
52.5
|
|
|
$
|
0.5
|
|
|
$
|
53.0
|
|
2021
|
12.9
|
|
|
0.8
|
|
|
13.7
|
|
|||
2022
|
9.3
|
|
|
0.8
|
|
|
10.1
|
|
|||
2023
|
6.4
|
|
|
0.8
|
|
|
7.2
|
|
|||
2024
|
3.3
|
|
|
0.8
|
|
|
4.1
|
|
|||
Thereafter
|
3.0
|
|
|
1.2
|
|
|
4.2
|
|
|||
Total
|
$
|
87.4
|
|
|
$
|
4.9
|
|
|
$
|
92.3
|
|
Less: Interest
|
7.7
|
|
|
1.0
|
|
|
8.7
|
|
|||
Present value of lease liabilities
|
$
|
79.7
|
|
|
$
|
3.9
|
|
|
$
|
83.6
|
|
|
(1)
|
As of March 31, 2020, the Company’s operating lease payments included no material options to extend lease terms that are reasonably certain of being exercised. The Company has no legally binding minimum lease payments for leases signed but not yet commenced as of March 31, 2020.
|
(2)
|
As of March 31, 2020, the Company’s finance lease payments included no material options to extend lease terms that are reasonably certain of being exercised. The Company has no legally binding minimum lease payments for leases that have been signed but not yet commenced as of March 31, 2020.
|
Year
|
Commitment
|
||
2020
|
$
|
2.0
|
|
2021
|
3.9
|
|
|
2022
|
3.9
|
|
|
2023
|
3.9
|
|
|
2024
|
4.0
|
|
|
Thereafter
|
10.0
|
|
|
Total (1)
|
$
|
27.7
|
|
|
(1)
|
As of March 31, 2020, the estimated minimum payments for the unconditional purchase commitments have been accrued and are included in other current liabilities and other long-term liabilities in the condensed consolidated balance sheets. This liability was accrued due to the fact that the contract was entered into to supply crude to a divested facility.
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Borrowings under third amended and restated senior secured revolving credit agreement with third-party lenders, interest payments quarterly, borrowings due February 2023, weighted average interest rates of 3.9% and 4.3% for the three months ended March 31, 2020 and year ended December 31, 2019, respectively
|
$
|
147.2
|
|
|
$
|
—
|
|
Borrowings under 2022 Notes, interest at a fixed rate of 7.625%, interest payments semiannually, borrowings due January 2022, effective interest rate of 8.1% and 8.0% for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively. (1)
|
351.0
|
|
|
351.1
|
|
||
Borrowings under 2023 Notes, interest at a fixed rate of 7.75%, interest payments semiannually, borrowings due April 2023, effective interest rate of 8.1% for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively.
|
325.0
|
|
|
325.0
|
|
||
Borrowings under 2025 Notes, interest at a fixed rate of 11.0%, interest payments semiannually, borrowings due April 2025, effective interest rate of 11.3 % and 11.2% for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively.
|
550.0
|
|
|
550.0
|
|
||
Other
|
3.4
|
|
|
3.8
|
|
||
Finance lease obligations, at various interest rates, interest and monthly principal payments
|
3.9
|
|
|
2.7
|
|
||
Less unamortized debt issuance costs (2)
|
(17.2
|
)
|
|
(18.4
|
)
|
||
Less unamortized discounts
|
(2.6
|
)
|
|
(2.9
|
)
|
||
Total debt
|
$
|
1,360.7
|
|
|
$
|
1,211.3
|
|
Less current portion of long-term debt
|
2.0
|
|
|
1.8
|
|
||
Total long-term debt
|
$
|
1,358.7
|
|
|
$
|
1,209.5
|
|
|
(1)
|
The balance includes a fair value interest rate hedge adjustment, which increased the debt balance by $1.0 million and $1.1 million as of March 31, 2020 and December 31, 2019, respectively.
|
(2)
|
Deferred debt issuance costs are being amortized by the effective interest rate method over the lives of the related debt instruments. These amounts are net of accumulated amortization of $16.9 million and $15.7 million at March 31, 2020 and December 31, 2019, respectively.
|
|
Base Loans
|
|
FILO Loans
|
||||
Quarterly Average Availability Percentage
|
Prime Rate Margin
|
|
LIBOR Rate Margin
|
|
Prime Rate Margin
|
|
LIBOR Rate Margin
|
≥ 66%
|
0.50%
|
|
1.50%
|
|
1.50%
|
|
2.50%
|
≥ 33% and < 66%
|
0.75%
|
|
1.75%
|
|
1.75%
|
|
2.75%
|
< 33%
|
1.00%
|
|
2.00%
|
|
2.00%
|
|
3.00%
|
Year
|
Maturity
|
||
2020
|
$
|
1.5
|
|
2021
|
2.8
|
|
|
2022
|
350.6
|
|
|
2023
|
472.9
|
|
|
2024
|
0.7
|
|
|
Thereafter
|
551.0
|
|
|
Total
|
$
|
1,379.5
|
|
•
|
crude oil purchases and sales;
|
•
|
fuel product sales and purchases;
|
•
|
natural gas purchases;
|
•
|
precious metals purchases; and
|
•
|
fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such as New York Mercantile Exchange West Texas Intermediate (“NYMEX WTI”), Light Louisiana Sweet, Western Canadian Select (“WCS”), WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent.
|
Type of Derivative
|
Amount of Realized Gain Recognized in Gain on Derivative Instruments
|
|
Amount of Unrealized Gain (Loss) Recognized in Gain on Derivative Instruments
|
||||||||||||
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
|||||||||||||
2020
|
|
2019
|
|
2020
|
|
2019
|
|||||||||
Specialty products segment:
|
|
|
|
|
|
|
|
||||||||
Natural gas swaps
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
Midland crude oil basis swaps
|
—
|
|
|
1.1
|
|
|
—
|
|
|
(0.5
|
)
|
||||
Fuel products segment:
|
|
|
|
|
|
|
|
||||||||
Inventory financing obligation
|
—
|
|
|
—
|
|
|
11.0
|
|
|
(12.7
|
)
|
||||
WCS crude oil basis swaps
|
—
|
|
|
3.6
|
|
|
(6.2
|
)
|
|
(3.5
|
)
|
||||
WCS crude oil percentage basis swaps
|
—
|
|
|
0.1
|
|
|
—
|
|
|
7.2
|
|
||||
Midland crude oil basis swaps
|
—
|
|
|
7.3
|
|
|
—
|
|
|
(2.1
|
)
|
||||
Gasoline crack spread swaps
|
2.1
|
|
|
—
|
|
|
16.8
|
|
|
—
|
|
||||
2/1/1 crack spread swaps
|
1.8
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
||||
Diesel crack spread swaps
|
3.1
|
|
|
0.7
|
|
|
10.4
|
|
|
(0.8
|
)
|
||||
Diesel percentage basis crack spread swaps
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
9.8
|
|
||||
Total
|
$
|
6.9
|
|
|
$
|
11.7
|
|
|
$
|
31.6
|
|
|
$
|
(2.6
|
)
|
WCS Crude Oil Basis Swap Contracts by Expiration Dates
|
Barrels Purchased
|
|
BPD
|
|
Average Differential to NYMEX WTI ($/Bbl)
|
||||
Second Quarter 2020
|
1,067,500
|
|
|
11,731
|
|
|
$
|
(13.10
|
)
|
Third Quarter 2020
|
1,610,000
|
|
|
17,500
|
|
|
$
|
(13.68
|
)
|
Fourth Quarter 2020
|
1,610,000
|
|
|
17,500
|
|
|
$
|
(15.02
|
)
|
Total
|
4,287,500
|
|
|
|
|
|
|||
Average differential
|
|
|
|
|
$
|
(14.04
|
)
|
WCS Crude Oil Basis Swap Contracts by Expiration Dates
|
Barrels Purchased
|
|
BPD
|
|
Average Differential to NYMEX WTI ($/Bbl)
|
||||
First Quarter 2020
|
544,000
|
|
|
5,978
|
|
|
$
|
(18.92
|
)
|
Total
|
544,000
|
|
|
|
|
|
|||
Average differential
|
|
|
|
|
$
|
(18.92
|
)
|
Diesel Crack Spread Swap Contracts by Expiration Dates
|
Barrels Sold
|
|
BPD
|
|
Average Swap
($/Bbl) |
||||
Second Quarter 2020
|
379,000
|
|
|
4,165
|
|
|
$
|
21.68
|
|
Third Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
22.23
|
|
Fourth Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
21.91
|
|
Total
|
1,115,000
|
|
|
|
|
|
|||
Average price
|
|
|
|
|
$
|
21.93
|
|
Diesel Crack Spread Swap Contracts by Expiration Dates
|
Barrels Sold
|
|
BPD
|
|
Average Swap
($/Bbl) |
||||
First Quarter 2020
|
500,500
|
|
|
5,500
|
|
|
$
|
22.15
|
|
Second Quarter 2020
|
379,000
|
|
|
4,165
|
|
|
$
|
21.68
|
|
Third Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
22.23
|
|
Fourth Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
21.91
|
|
Total
|
1,615,500
|
|
|
|
|
|
|||
Average price
|
|
|
|
|
$
|
22.00
|
|
Gasoline Crack Spread Swap Contracts by Expiration Dates
|
Barrels Sold
|
|
BPD
|
|
Average Swap
($/Bbl) |
||||
Second Quarter 2020
|
379,000
|
|
|
4,165
|
|
|
$
|
16.41
|
|
Third Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
15.24
|
|
Fourth Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
9.77
|
|
Total
|
1,115,000
|
|
|
|
|
|
|||
Average price
|
|
|
|
|
$
|
13.83
|
|
Gasoline Crack Spread Swap Contracts by Expiration Dates
|
Barrels Sold
|
|
BPD
|
|
Average Swap
($/Bbl) |
||||
First Quarter 2020
|
591,500
|
|
|
6,500
|
|
|
$
|
12.54
|
|
Second Quarter 2020
|
379,000
|
|
|
4,165
|
|
|
$
|
16.41
|
|
Third Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
15.24
|
|
Fourth Quarter 2020
|
368,000
|
|
|
4,000
|
|
|
$
|
9.77
|
|
Total
|
1,706,500
|
|
|
|
|
|
|||
Average price
|
|
|
|
|
$
|
13.38
|
|
2/1/1 Crack Spread Swap Contracts by Expiration Dates
|
Barrels Sold
|
|
BPD
|
|
Average Swap
($/Bbl) |
||||
Second Quarter 2020
|
30,000
|
|
|
330
|
|
|
$
|
19.50
|
|
Total
|
30,000
|
|
|
|
|
|
|||
Average price
|
|
|
|
|
$
|
19.50
|
|
2/1/1 Crack Spread Swap Contracts by Expiration Dates
|
Barrels Sold
|
|
BPD
|
|
Average Swap
($/Bbl) |
||||
First Quarter 2020
|
364,000
|
|
|
4,000
|
|
|
$
|
17.43
|
|
Second Quarter 2020
|
30,000
|
|
|
330
|
|
|
$
|
19.50
|
|
Total
|
394,000
|
|
|
|
|
|
|||
Average price
|
|
|
|
|
$
|
17.58
|
|
Natural Gas Swap Contracts by Expiration Dates
|
MMBtu
|
|
Average Swap
($/MMBtu) |
|||
Second Quarter 2020
|
1,006,500
|
|
|
$
|
1.97
|
|
Third Quarter 2020
|
1,518,000
|
|
|
$
|
2.08
|
|
Fourth Quarter 2020
|
1,518,000
|
|
|
$
|
2.25
|
|
Total
|
4,042,500
|
|
|
|
||
Average price
|
|
|
$
|
2.11
|
|
•
|
Level 1 — inputs include observable unadjusted quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2 — inputs include other than quoted prices in active markets that are either directly or indirectly observable
|
•
|
Level 3 — inputs include unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Natural gas swaps
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gasoline crack spread swaps
|
—
|
|
|
—
|
|
|
18.1
|
|
|
18.1
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
||||||||
Inventory financing obligation
|
—
|
|
|
—
|
|
|
3.7
|
|
|
3.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Diesel crack spread swaps
|
—
|
|
|
—
|
|
|
10.8
|
|
|
10.8
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
||||||||
2/1/1 crack spread swap
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
||||||||
WCS crude oil basis swaps
|
—
|
|
|
—
|
|
|
(6.2
|
)
|
|
(6.2
|
)
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|
(1.3
|
)
|
||||||||
Total derivative assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26.5
|
|
|
$
|
26.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
0.9
|
|
Pension plan investments
|
29.7
|
|
|
—
|
|
|
—
|
|
|
29.7
|
|
|
32.5
|
|
|
—
|
|
|
—
|
|
|
32.5
|
|
||||||||
Total recurring assets at fair value
|
$
|
29.7
|
|
|
$
|
—
|
|
|
$
|
26.5
|
|
|
$
|
56.2
|
|
|
$
|
32.5
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
33.4
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Inventory financing obligation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(7.2
|
)
|
|
$
|
(7.2
|
)
|
WCS crude oil basis swaps
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total derivative liabilities
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
|
(7.2
|
)
|
|
(7.2
|
)
|
||||||||
RINs Obligation
|
—
|
|
|
(30.6
|
)
|
|
—
|
|
|
(30.6
|
)
|
|
—
|
|
|
(13.0
|
)
|
|
—
|
|
|
(13.0
|
)
|
||||||||
Precious Metals leases
|
(4.3
|
)
|
|
—
|
|
|
—
|
|
|
(4.3
|
)
|
|
(5.8
|
)
|
|
—
|
|
|
—
|
|
|
(5.8
|
)
|
||||||||
Liability Awards
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
(7.4
|
)
|
|
—
|
|
|
—
|
|
|
(7.4
|
)
|
||||||||
Total recurring liabilities at fair value
|
$
|
(7.9
|
)
|
|
$
|
(30.6
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(39.7
|
)
|
|
$
|
(13.2
|
)
|
|
$
|
(13.0
|
)
|
|
$
|
(7.2
|
)
|
|
$
|
(33.4
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Fair value at January 1,
|
$
|
(6.3
|
)
|
|
$
|
19.8
|
|
Realized gain on derivative instruments
|
(6.9
|
)
|
|
(11.7
|
)
|
||
Unrealized gain (loss) on derivative instruments
|
31.6
|
|
|
(2.6
|
)
|
||
Settlements
|
6.9
|
|
|
11.7
|
|
||
Fair value at March 31,
|
$
|
25.3
|
|
|
$
|
17.2
|
|
Total gain (loss) included in net income (loss) attributable to changes in unrealized gain (loss) relating to financial assets and liabilities held as of March 31,
|
$
|
31.6
|
|
|
$
|
(2.6
|
)
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Level
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Financial Instrument:
|
|
|
|
|
|
|
|
|
||||||||
2022 Notes and 2023 Notes
|
1
|
$
|
487.6
|
|
|
$
|
668.7
|
|
|
$
|
676.4
|
|
|
$
|
668.1
|
|
2025 Notes
|
2
|
$
|
398.4
|
|
|
$
|
541.0
|
|
|
$
|
598.8
|
|
|
$
|
540.5
|
|
Revolving credit facility
|
3
|
$
|
147.2
|
|
|
$
|
147.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Finance lease and other obligations
|
3
|
$
|
7.3
|
|
|
$
|
7.3
|
|
|
$
|
6.5
|
|
|
$
|
6.5
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Numerator for basic and diluted earnings per limited partner unit:
|
|
|
|
||||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
Less:
|
|
|
|
||||
General partner’s interest in net income (loss)
|
(0.3
|
)
|
|
0.3
|
|
||
Non-vested share-based payments
|
—
|
|
|
0.1
|
|
||
Net income (loss) available to limited partners
|
$
|
(14.1
|
)
|
|
$
|
16.0
|
|
|
|
|
|
||||
Denominator for earnings per limited partner unit:
|
|
|
|
||||
Basic weighted average limited partner units outstanding
|
78,399,314
|
|
|
78,111,551
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Incremental Units
|
—
|
|
|
63,456
|
|
||
Diluted weighted average limited partner units outstanding (1)
|
78,399,314
|
|
|
78,175,007
|
|
||
Limited partners’ interest basic and diluted net income (loss) per unit:
|
|
|
|
||||
Limited partners’ interest
|
$
|
(0.18
|
)
|
|
$
|
0.20
|
|
|
(1)
|
Total diluted weighted average limited partner units outstanding excludes a de-minimis amount of unvested phantom units for the three months ended March 31, 2020.
|
•
|
Specialty Products. The specialty products segment produces a variety of lubricating oils, solvents, waxes, synthetic lubricants and other products which are sold to customers who purchase these products primarily as raw material components for industrial, consumer and automotive goods. Specialty products also include synthetic lubricants used in manufacturing, mining and automotive applications.
|
•
|
Fuel Products. The fuel products segment produces primarily gasoline, diesel, jet fuel, and asphalt which are primarily sold to customers located in the PADD 3 and PADD 4 areas within the U.S.
|
•
|
Corporate. The corporate segment primarily consists of general and administrative expenses not allocated to the Specialty Products or Fuel Products segments.
|
Three Months Ended March 31, 2020
|
Specialty
Products
|
|
Fuel
Products
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
Total
|
||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
External customers
|
$
|
326.9
|
|
|
$
|
365.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
692.6
|
|
Inter-segment sales
|
17.4
|
|
|
8.0
|
|
|
—
|
|
|
(25.4
|
)
|
|
—
|
|
|||||
Total sales
|
$
|
344.3
|
|
|
$
|
373.7
|
|
|
$
|
—
|
|
|
$
|
(25.4
|
)
|
|
$
|
692.6
|
|
Income from unconsolidated affiliates
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA
|
$
|
64.5
|
|
|
$
|
39.2
|
|
|
$
|
(20.0
|
)
|
|
$
|
—
|
|
|
$
|
83.7
|
|
Reconciling items to net loss:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
11.8
|
|
|
17.8
|
|
|
1.9
|
|
|
—
|
|
|
31.5
|
|
|||||
LCM / LIFO loss
|
22.2
|
|
|
44.3
|
|
|
—
|
|
|
—
|
|
|
66.5
|
|
|||||
Loss on impairment and disposal of assets
|
1.5
|
|
|
—
|
|
|
4.5
|
|
|
—
|
|
|
6.0
|
|
|||||
Interest expense
|
—
|
|
|
(1.7
|
)
|
|
31.0
|
|
|
—
|
|
|
29.3
|
|
|||||
Unrealized (gain) loss on derivatives
|
0.3
|
|
|
(31.9
|
)
|
|
—
|
|
|
—
|
|
|
(31.6
|
)
|
|||||
Other non-recurring income
|
|
|
|
|
|
|
|
|
(1.2
|
)
|
|||||||||
Equity-based compensation and other items
|
|
|
|
|
|
|
|
|
(2.9
|
)
|
|||||||||
Income tax expense
|
|
|
|
|
|
|
|
|
0.5
|
|
|||||||||
Net loss
|
|
|
|
|
|
|
|
|
$
|
(14.4
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended March 31, 2019
|
Specialty
Products
|
|
Fuel
Products
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
Total
|
||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
External customers
|
$
|
352.2
|
|
|
$
|
499.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
851.3
|
|
Inter-segment sales
|
22.8
|
|
|
11.0
|
|
|
—
|
|
|
(33.8
|
)
|
|
—
|
|
|||||
Total sales
|
$
|
375.0
|
|
|
$
|
510.1
|
|
|
$
|
—
|
|
|
$
|
(33.8
|
)
|
|
$
|
851.3
|
|
Income from unconsolidated affiliates
|
$
|
3.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA
|
$
|
58.4
|
|
|
$
|
25.9
|
|
|
$
|
(24.6
|
)
|
|
|
|
|
$
|
59.7
|
|
|
Reconciling items to net income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
11.5
|
|
|
19.6
|
|
|
1.9
|
|
|
—
|
|
|
33.0
|
|
|||||
LCM / LIFO gain
|
(5.7
|
)
|
|
(32.3
|
)
|
|
—
|
|
|
—
|
|
|
(38.0
|
)
|
|||||
Loss on impairment and disposal of assets
|
—
|
|
|
11.7
|
|
|
—
|
|
|
—
|
|
|
11.7
|
|
|||||
Interest expense
|
—
|
|
|
2.8
|
|
|
29.5
|
|
|
—
|
|
|
32.3
|
|
|||||
Gain on debt extinguishment
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||||
Unrealized loss on derivatives
|
0.5
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||||
Gain on sale of unconsolidated affiliate
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|||||
Equity-based compensation and other items
|
|
|
|
|
|
|
|
|
3.4
|
|
|||||||||
Income tax benefit
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
$
|
16.4
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
2020
|
|
2019
|
||||||||||
Specialty products:
|
|
|
|
|
|
|
|
||||||
Lubricating oils
|
$
|
138.6
|
|
|
20.0
|
%
|
|
$
|
152.1
|
|
|
17.9
|
%
|
Solvents
|
77.1
|
|
|
11.1
|
%
|
|
87.4
|
|
|
10.3
|
%
|
||
Waxes
|
30.5
|
|
|
4.5
|
%
|
|
30.9
|
|
|
3.6
|
%
|
||
Packaged and synthetic specialty products
|
57.7
|
|
|
8.3
|
%
|
|
59.9
|
|
|
7.0
|
%
|
||
Other
|
23.0
|
|
|
3.3
|
%
|
|
21.9
|
|
|
2.6
|
%
|
||
Total
|
$
|
326.9
|
|
|
47.2
|
%
|
|
$
|
352.2
|
|
|
41.4
|
%
|
Fuel products:
|
|
|
|
|
|
|
|
||||||
Gasoline
|
$
|
120.9
|
|
|
17.5
|
%
|
|
$
|
157.6
|
|
|
18.5
|
%
|
Diesel
|
153.8
|
|
|
22.2
|
%
|
|
225.9
|
|
|
26.5
|
%
|
||
Jet fuel
|
25.9
|
|
|
3.7
|
%
|
|
20.6
|
|
|
2.4
|
%
|
||
Asphalt, heavy fuel oils and other
|
65.1
|
|
|
9.4
|
%
|
|
95.0
|
|
|
11.2
|
%
|
||
Total
|
$
|
365.7
|
|
|
52.8
|
%
|
|
$
|
499.1
|
|
|
58.6
|
%
|
Consolidated sales
|
$
|
692.6
|
|
|
100.0
|
%
|
|
$
|
851.3
|
|
|
100.0
|
%
|
|
Employee Termination Benefits
|
|
Exit Costs
|
|
Total
|
||||||
Balance at December 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges to restructuring
|
0.8
|
|
|
1.3
|
|
|
2.1
|
|
|||
Cash Payments and other
|
(0.4
|
)
|
|
(1.1
|
)
|
|
(1.5
|
)
|
|||
Balance at March 31, 2020
|
$
|
0.4
|
|
|
$
|
0.2
|
|
|
$
|
0.6
|
|
•
|
Reduction in demand for our fuels products as the domestic economy is adversely affected by the economic effects of the global pandemic and the significant governmental measures being implemented to control the spread of the virus.
|
•
|
Reduction in demand for certain of our specialty products as a variety of customers and industries are similarly adversely affected by the economic effects of the global pandemic.
|
•
|
Availability and pricing of crude oil and other feedstocks as producers and sellers of those products are adversely affected by the global pandemic and the global oversupply of crude oil from increased international production as a result of the recent dispute over production levels between Russia and members of the Organization of the Petroleum Exporting Countries.
|
•
|
In the second quarter 2020, Canadian heavy sour crude oil discounts are expected to narrow, as a result of the drop in the price per barrel of NYMEX WTI, although we expect sour crude to remain discounted due to pipeline constraints restricting access to markets. The price of domestically produced mid-continent crude is expected to continue to trade at a discount relative to internationally produced crude reflecting increased domestic production combined with transportation constraints. Processing crude oils priced based on Western Canadian Select (“WCS”) and other cost-advantaged crudes will continue to be a focus of ours in 2020.
|
•
|
We continue to focus on improving operations. Our total feedstock runs were 91,302 barrels per day (“bpd”) during the first quarter 2020, compared to 105,434 bpd during the first quarter 2019. This decrease is primarily attributed to the divestment of the San Antonio refinery with a capacity of 21,000 bpd and the termination of third party naphthenic lubricating oils production in the fourth quarter of 2019. Because of the uncertainty in the demand for refined products, as well as uncertainty regarding the financial impact of the current economic situation on the creditworthiness of our customers, these results may not be indicative of our future results. We intend to improve utilization rates by minimizing unplanned downtime at our facilities, while monitoring our level of production commensurate with market demand caused by the global pandemic.
|
•
|
Domestic gasoline margins are expected to remain depressed as domestic demand continues to be affected by the impact of the COVID-19 pandemic. Diesel demand has similarly been depressed by the impact of the COVID-19 pandemic. Resulting product margins are expected to remain weak until global demand begins to recover.
|
•
|
Asphalt demand is expected to increase in the second quarter of 2020 due to the seasonality of the road construction and roofing industries.
|
•
|
Our Specialty product margins, as a percentage of sales, have remained relatively stable but are susceptible to changes in domestic GDP growth in certain of our end markets. Over the long term, we continue to consider our specialty products segment our core business and subject to economic conditions and available liquidity, we plan to seek appropriate ways to further invest in our specialty products segment.
|
•
|
It is not possible to predict what future RINs volumes or costs may be given the volatile price of RINs, but we continue to anticipate that RINs have the potential to remain a significant expense for our fuel products segment (inclusive of the favorable impact of exemptions received), assuming current market prices for RINs continue. The approximate 35% increase in the price of RINs during the first quarter 2020 unfavorably affected our results of operations.
|
•
|
We continue to evaluate opportunities to divest non-core businesses and assets in line with our strategy of preserving liquidity and streamlining our business to better focus on the advancement of our core business. In addition, we may also consider the disposition of certain core assets or businesses, to the extent such a transaction would improve our capital structure or otherwise be accretive to the Company. There can be no assurance as to the timing or success of any such potential transaction, or any other transaction, or that we will be able to sell such assets or businesses on satisfactory terms, if at all. In addition, as economic conditions improve, we may seek acquisitions of assets that management believes will be financially accretive; and consistent with our strategic goals.
|
•
|
sales volumes;
|
•
|
segment gross profit;
|
•
|
segment Adjusted EBITDA; and
|
•
|
selling, general and administrative expenses.
|
|
Three Months Ended March 31,
|
|
|
|||||
|
2020
|
|
2019
|
|
% Change
|
|||
|
(In bpd)
|
|
|
|||||
Total sales volume (1)
|
92,143
|
|
|
109,022
|
|
|
(15.5
|
)%
|
Total feedstock runs (2)
|
91,302
|
|
|
105,434
|
|
|
(13.4
|
)%
|
Facility production: (3)
|
|
|
|
|
|
|
||
Specialty products:
|
|
|
|
|
|
|
||
Lubricating oils
|
10,240
|
|
|
12,357
|
|
|
(17.1
|
)%
|
Solvents
|
6,807
|
|
|
7,935
|
|
|
(14.2
|
)%
|
Waxes
|
1,271
|
|
|
1,379
|
|
|
(7.8
|
)%
|
Packaged and synthetic specialty products (4)
|
1,405
|
|
|
1,874
|
|
|
(25.0
|
)%
|
Other
|
3,480
|
|
|
1,172
|
|
|
196.9
|
%
|
Total
|
23,203
|
|
|
24,717
|
|
|
(6.1
|
)%
|
Fuel products:
|
|
|
|
|
|
|
||
Gasoline
|
19,781
|
|
|
24,610
|
|
|
(19.6
|
)%
|
Diesel
|
25,898
|
|
|
30,477
|
|
|
(15.0
|
)%
|
Jet fuel
|
3,805
|
|
|
2,629
|
|
|
44.7
|
%
|
Asphalt, heavy fuels and other
|
15,211
|
|
|
19,329
|
|
|
(21.3
|
)%
|
Total
|
64,695
|
|
|
77,045
|
|
|
(16.0
|
)%
|
Total facility production (3)
|
87,898
|
|
|
101,762
|
|
|
(13.6
|
)%
|
|
(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 fuel product blendstocks, such as ethanol and biodiesel, as components of finished fuel products in our fuel products segment sales.
|
(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)
|
Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks at our facilities and at certain third-party facilities pursuant to supply and/or processing agreements. 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.
|
(4)
|
Represents production of finished lubricants and chemicals specialty products including the products from the Royal Purple, Bel-Ray and Calumet Packaging facilities.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Sales
|
$
|
692.6
|
|
|
$
|
851.3
|
|
Cost of sales
|
638.3
|
|
|
715.3
|
|
||
Gross profit
|
54.3
|
|
|
136.0
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Selling
|
13.3
|
|
|
13.3
|
|
||
General and administrative
|
20.2
|
|
|
34.9
|
|
||
Transportation
|
30.8
|
|
|
35.9
|
|
||
Taxes other than income taxes
|
5.0
|
|
|
5.1
|
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Other operating expense
|
3.0
|
|
|
1.3
|
|
||
Operating income (loss)
|
(24.0
|
)
|
|
33.8
|
|
||
|
|
|
|
||||
Other income (expense):
|
|
|
|
||||
Interest expense
|
(29.3
|
)
|
|
(32.3
|
)
|
||
Gain on debt extinguishment
|
—
|
|
|
0.4
|
|
||
Gain on derivative instruments
|
38.5
|
|
|
9.1
|
|
||
Other
|
0.9
|
|
|
5.3
|
|
||
Total other income (expense)
|
10.1
|
|
|
(17.5
|
)
|
||
Net income (loss) before income taxes
|
(13.9
|
)
|
|
16.3
|
|
||
Income tax (benefit) expense
|
0.5
|
|
|
(0.1
|
)
|
||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
EBITDA
|
$
|
41.8
|
|
|
$
|
76.8
|
|
Adjusted EBITDA
|
$
|
83.7
|
|
|
$
|
59.7
|
|
Distributable Cash Flow
|
$
|
38.4
|
|
|
$
|
17.7
|
|
•
|
the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
|
•
|
the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
|
•
|
our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
|
•
|
the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA and Distributable Cash Flow:
|
|
||||||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
Add:
|
|
|
|
||||
Interest expense
|
29.3
|
|
|
32.3
|
|
||
Depreciation and amortization
|
26.4
|
|
|
28.2
|
|
||
Income tax (benefit) expense
|
0.5
|
|
|
(0.1
|
)
|
||
EBITDA
|
$
|
41.8
|
|
|
$
|
76.8
|
|
Add:
|
|
|
|
||||
LCM / LIFO (gain) loss
|
$
|
66.5
|
|
|
$
|
(38.0
|
)
|
Unrealized (gain) loss on derivative instruments
|
(31.6
|
)
|
|
2.6
|
|
||
Gain on debt extinguishment
|
—
|
|
|
(0.4
|
)
|
||
Amortization of turnaround costs
|
5.1
|
|
|
4.8
|
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Gain on sale of unconsolidated affiliate
|
—
|
|
|
(1.2
|
)
|
||
Other non-recurring income
|
(1.2
|
)
|
|
—
|
|
||
Equity-based compensation and other items
|
(2.9
|
)
|
|
3.4
|
|
||
Adjusted EBITDA
|
$
|
83.7
|
|
|
$
|
59.7
|
|
Less:
|
|
|
|
||||
Replacement and environmental capital expenditures (1)
|
$
|
7.2
|
|
|
$
|
6.2
|
|
Cash interest expense (2)
|
27.8
|
|
|
30.4
|
|
||
Turnaround costs
|
9.8
|
|
|
1.7
|
|
||
Income from unconsolidated affiliates
|
—
|
|
|
3.8
|
|
||
Income tax (benefit) expense
|
0.5
|
|
|
(0.1
|
)
|
||
Distributable Cash Flow
|
$
|
38.4
|
|
|
$
|
17.7
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to Net cash provided by (used in) operating activities:
|
|
|
|
||||
Distributable Cash Flow
|
$
|
38.4
|
|
|
$
|
17.7
|
|
Add:
|
|
|
|
||||
Replacement and environmental capital expenditures (1)
|
7.2
|
|
|
6.2
|
|
||
Cash interest expense (2)
|
27.8
|
|
|
30.4
|
|
||
Turnaround costs
|
9.8
|
|
|
1.7
|
|
||
Income from unconsolidated affiliates
|
—
|
|
|
3.8
|
|
||
Income tax (benefit) expense
|
0.5
|
|
|
(0.1
|
)
|
||
Adjusted EBITDA
|
$
|
83.7
|
|
|
$
|
59.7
|
|
Less:
|
|
|
|
||||
LCM / LIFO (gain) loss
|
$
|
66.5
|
|
|
$
|
(38.0
|
)
|
Unrealized (gain) loss on derivative instruments
|
(31.6
|
)
|
|
2.6
|
|
||
Amortization of turnaround costs
|
5.1
|
|
|
4.8
|
|
||
Gain on debt extinguishment
|
—
|
|
|
(0.4
|
)
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Gain on sale of unconsolidated affiliate
|
—
|
|
|
(1.2
|
)
|
||
Other non-recurring income
|
(1.2
|
)
|
|
—
|
|
||
Equity-based compensation and other items
|
(2.9
|
)
|
|
3.4
|
|
||
EBITDA
|
$
|
41.8
|
|
|
$
|
76.8
|
|
Add:
|
|
|
|
||||
Unrealized (gain) loss on derivative instruments
|
$
|
(31.6
|
)
|
|
$
|
2.6
|
|
Cash interest expense (2)
|
(27.8
|
)
|
|
(30.4
|
)
|
||
Equity-based compensation
|
(4.5
|
)
|
|
2.2
|
|
||
Lower of cost or market inventory adjustment
|
66.3
|
|
|
(38.9
|
)
|
||
Income from unconsolidated affiliates
|
—
|
|
|
(3.8
|
)
|
||
Gain on sale of unconsolidated affiliate
|
—
|
|
|
(1.2
|
)
|
||
Amortization of turnaround costs
|
5.1
|
|
|
4.8
|
|
||
Gain on debt extinguishment
|
—
|
|
|
(0.4
|
)
|
||
Operating lease expense
|
20.2
|
|
|
20.8
|
|
||
Operating lease payments
|
(20.1
|
)
|
|
(20.6
|
)
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Income tax benefit (expense)
|
(0.5
|
)
|
|
0.1
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1.1
|
)
|
|
(69.8
|
)
|
||
Inventories
|
3.8
|
|
|
31.9
|
|
||
Other current assets
|
1.5
|
|
|
(3.5
|
)
|
||
Derivative activity
|
(1.4
|
)
|
|
(0.1
|
)
|
||
Turnaround costs
|
(9.8
|
)
|
|
(1.7
|
)
|
||
Accounts payable
|
(65.3
|
)
|
|
37.2
|
|
||
Accrued interest payable
|
11.2
|
|
|
14.4
|
|
||
Other liabilities
|
(15.7
|
)
|
|
(5.7
|
)
|
||
Other
|
2.0
|
|
|
1.0
|
|
||
Net cash provided by (used in) operating activities
|
$
|
(19.9
|
)
|
|
$
|
27.4
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Reconciliation of Adjusted EBITDA to EBITDA and Net income (loss):
|
|
||||||
Segment Adjusted EBITDA
|
|
|
|
||||
Specialty products Adjusted EBITDA
|
$
|
64.5
|
|
|
$
|
58.4
|
|
Fuel products Adjusted EBITDA
|
39.2
|
|
|
25.9
|
|
||
Corporate Adjusted EBITDA
|
(20.0
|
)
|
|
(24.6
|
)
|
||
Total Adjusted EBITDA
|
$
|
83.7
|
|
|
$
|
59.7
|
|
Less:
|
|
|
|
||||
LCM / LIFO (gain) loss
|
$
|
66.5
|
|
|
$
|
(38.0
|
)
|
Unrealized (gain) loss on derivative instruments
|
(31.6
|
)
|
|
2.6
|
|
||
Amortization of turnaround costs
|
5.1
|
|
|
4.8
|
|
||
Gain on debt extinguishment
|
—
|
|
|
(0.4
|
)
|
||
Gain on sale of unconsolidated affiliate
|
—
|
|
|
(1.2
|
)
|
||
Loss on impairment and disposal of assets
|
6.0
|
|
|
11.7
|
|
||
Other non-recurring income
|
(1.2
|
)
|
|
—
|
|
||
Equity-based compensation and other items
|
(2.9
|
)
|
|
3.4
|
|
||
EBITDA
|
$
|
41.8
|
|
|
$
|
76.8
|
|
Less:
|
|
|
|
||||
Interest expense
|
$
|
29.3
|
|
|
$
|
32.3
|
|
Depreciation and amortization
|
26.4
|
|
|
28.2
|
|
||
Income tax (benefit) expense
|
0.5
|
|
|
(0.1
|
)
|
||
Net income (loss)
|
$
|
(14.4
|
)
|
|
$
|
16.4
|
|
|
(1)
|
Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs. Environmental capital expenditures include asset additions to meet or exceed environmental and operating regulations.
|
(2)
|
Represents consolidated interest expense less non-cash interest expense.
|
|
Three Months Ended March 31,
|
|||||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(Dollars in millions, except barrel and per barrel data)
|
|||||||||
Sales by segment:
|
|
|
|
|
|
|||||
Specialty products:
|
|
|
|
|
|
|||||
Lubricating oils
|
$
|
138.6
|
|
|
$
|
152.1
|
|
|
(8.9
|
)%
|
Solvents
|
77.1
|
|
|
87.4
|
|
|
(11.8
|
)%
|
||
Waxes
|
30.5
|
|
|
30.9
|
|
|
(1.3
|
)%
|
||
Packaged and synthetic specialty products (1)
|
57.7
|
|
|
59.9
|
|
|
(3.7
|
)%
|
||
Other (2)
|
23.0
|
|
|
21.9
|
|
|
5.0
|
%
|
||
Total specialty products
|
$
|
326.9
|
|
|
$
|
352.2
|
|
|
(7.2
|
)%
|
Total specialty products sales volume (in barrels)
|
2,230,000
|
|
|
2,440,000
|
|
|
(8.6
|
)%
|
||
Average specialty products sales price per barrel
|
$
|
146.59
|
|
|
$
|
144.34
|
|
|
1.6
|
%
|
|
|
|
|
|
|
|||||
Fuel products:
|
|
|
|
|
|
|||||
Gasoline
|
$
|
120.9
|
|
|
$
|
157.6
|
|
|
(23.3
|
)%
|
Diesel
|
153.8
|
|
|
225.9
|
|
|
(31.9
|
)%
|
||
Jet fuel
|
25.9
|
|
|
20.6
|
|
|
25.7
|
%
|
||
Asphalt, heavy fuel oils and other (3)
|
65.1
|
|
|
95.0
|
|
|
(31.5
|
)%
|
||
Total fuel products
|
$
|
365.7
|
|
|
$
|
499.1
|
|
|
(26.7
|
)%
|
Total fuel products sales volume (in barrels)
|
6,155,000
|
|
|
7,372,000
|
|
|
(16.5
|
)%
|
||
Average fuel products sales price per barrel
|
$
|
59.42
|
|
|
$
|
67.70
|
|
|
(12.2
|
)%
|
|
|
|
|
|
|
|||||
Total sales
|
$
|
692.6
|
|
|
$
|
851.3
|
|
|
(18.6
|
)%
|
Total specialty and fuel products sales volume (in barrels)
|
8,385,000
|
|
|
9,812,000
|
|
|
(14.5
|
)%
|
|
(1)
|
Represents packaged and synthetic specialty products at the Royal Purple, Bel-Ray and Calumet Packaging facilities.
|
(2)
|
Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty products at the Princeton and Cotton Valley refineries and Dickinson and Karns City facilities and (b) polyolester synthetic lubricants produced at the Missouri facility.
|
(3)
|
Represents asphalt, heavy fuel oils and other products produced in connection with the production of fuels at the Shreveport, San Antonio and Great Falls refineries and crude oil sales from the San Antonio refinery to third-party customers.
|
|
Dollar Change
|
||
|
(In millions)
|
||
Volume
|
(30.4
|
)
|
|
Sales price
|
5.1
|
|
|
Total specialty products segment sales decrease
|
$
|
(25.3
|
)
|
|
Dollar Change
|
||
|
(In millions)
|
||
Divestiture Impact
|
(113.4
|
)
|
|
Volume
|
28.4
|
|
|
Sales price
|
(48.4
|
)
|
|
Total fuel products segment sales decrease
|
$
|
(133.4
|
)
|
|
Three Months Ended March 31,
|
|||||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(Dollars in millions, except per barrel data)
|
|||||||||
Gross profit by segment:
|
|
|
|
|
|
|||||
Specialty products:
|
|
|
|
|
|
|||||
Gross profit
|
$
|
70.1
|
|
|
$
|
92.9
|
|
|
(24.5
|
)%
|
Gross profit, excluding hedging activities
|
69.9
|
|
|
92.9
|
|
|
(24.8
|
)%
|
||
Percentage of sales
|
21.4
|
%
|
|
26.4
|
%
|
|
|
|||
Specialty products gross profit per barrel
|
$
|
31.45
|
|
|
$
|
38.07
|
|
|
(17.4
|
)%
|
Specialty products gross profit per barrel, excluding hedging
|
$
|
31.35
|
|
|
$
|
38.07
|
|
|
(17.7
|
)%
|
Fuel products:
|
|
|
|
|
|
|||||
Gross profit
|
$
|
(15.8
|
)
|
|
$
|
43.1
|
|
|
(136.7
|
)%
|
Gross profit, excluding hedging activities
|
$
|
(15.8
|
)
|
|
$
|
43.1
|
|
|
(136.7
|
)%
|
Percentage of sales
|
(4.3
|
)%
|
|
8.6
|
%
|
|
|
|||
Fuel products gross profit per barrel
|
$
|
(2.57
|
)
|
|
$
|
5.85
|
|
|
(143.9
|
)%
|
Total gross profit
|
$
|
54.3
|
|
|
$
|
136.0
|
|
|
(60.1
|
)%
|
Percentage of sales
|
7.8
|
%
|
|
16.0
|
%
|
|
|
|
Dollar Change
|
||
|
(In millions)
|
||
Three months ended March 31, 2019 reported gross profit
|
$
|
92.9
|
|
Sales price
|
5.1
|
|
|
Operating costs
|
(2.2
|
)
|
|
LIFO inventory layer adjustment
|
0.9
|
|
|
LCM inventory adjustment
|
(28.8
|
)
|
|
Volume
|
(12.5
|
)
|
|
Cost of materials
|
14.7
|
|
|
Three months ended March 31, 2020 reported gross profit
|
$
|
70.1
|
|
|
Dollar Change
|
||
|
(In millions)
|
||
Three months ended March 31, 2019 reported gross profit
|
$
|
43.1
|
|
Divestitures
|
(2.1
|
)
|
|
Sales Price
|
(48.4
|
)
|
|
Operating costs
|
(1.4
|
)
|
|
LCM inventory adjustment
|
(76.6
|
)
|
|
Volume
|
7.3
|
|
|
RINs expense
|
(14.3
|
)
|
|
Cost of materials
|
76.6
|
|
|
Three months ended March 31, 2020 reported gross profit
|
$
|
(15.8
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Net cash provided by (used in) operating activities
|
$
|
(19.9
|
)
|
|
$
|
27.4
|
|
Net cash provided by (used in) investing activities
|
(17.3
|
)
|
|
1.1
|
|
||
Net cash provided by (used in) financing activities
|
121.8
|
|
|
(31.3
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
84.6
|
|
|
$
|
(2.8
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Capital improvement expenditures
|
$
|
6.3
|
|
|
$
|
4.0
|
|
Replacement capital expenditures
|
6.2
|
|
|
3.7
|
|
||
Environmental capital expenditures
|
1.0
|
|
|
2.5
|
|
||
Turnaround capital expenditures
|
9.8
|
|
|
1.0
|
|
||
Total
|
$
|
23.3
|
|
|
$
|
11.2
|
|
•
|
$600.0 million senior secured revolving credit facility maturing in February 2023 (“revolving credit facility”);
|
•
|
$350.0 million of 7.625% senior notes due 2022 (“2022 Notes”)
|
•
|
$325.0 million of 7.75% senior notes due 2023 (“2023 Notes”); and
|
•
|
$550.0 million of 11.00% senior notes due 2025 (“2025 Notes”).
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less Than
1 Year |
|
1–3
Years |
|
3–5
Years |
|
More
Than 5 Years |
||||||||||
|
(In millions)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on long-term debt at contractual rates and maturities (1)
|
$
|
493.1
|
|
|
$
|
119.6
|
|
|
$
|
209.4
|
|
|
$
|
133.8
|
|
|
$
|
30.3
|
|
Operating lease obligations (2)
|
87.4
|
|
|
48.5
|
|
|
24.3
|
|
|
11.2
|
|
|
3.4
|
|
|||||
Letters of credit (3)
|
31.9
|
|
|
31.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments (4)
|
243.0
|
|
|
106.2
|
|
|
57.9
|
|
|
42.1
|
|
|
36.8
|
|
|||||
Throughput contract (5)
|
27.7
|
|
|
2.6
|
|
|
7.8
|
|
|
7.9
|
|
|
9.4
|
|
|||||
Employment agreements (6)
|
1.0
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Obligations under inventory financing agreements
|
95.1
|
|
|
95.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Finance lease obligations
|
3.9
|
|
|
0.5
|
|
|
1.2
|
|
|
1.3
|
|
|
0.9
|
|
|||||
Long-term debt obligations, excluding finance lease obligations
|
1,375.6
|
|
|
1.5
|
|
|
824.1
|
|
|
—
|
|
|
550.0
|
|
|||||
Total obligations
|
$
|
2,358.7
|
|
|
$
|
406.9
|
|
|
$
|
1,124.7
|
|
|
$
|
196.3
|
|
|
$
|
630.8
|
|
|
(1)
|
Interest on long-term debt at contractual rates and maturities relates primarily to interest on our senior notes, revolving credit facility interest and fees and interest on our finance lease obligations, which excludes the adjustment for the interest rate swap agreement.
|
(2)
|
We have various operating leases primarily for railcars, the use of land, storage tanks, compressor stations, equipment, precious metals and office facilities that extend through September 2035.
|
(3)
|
Letters of credit primarily supporting crude oil and other feedstock purchases.
|
(4)
|
Purchase commitments consist primarily of obligations to purchase fixed volumes of crude oil, other feedstocks and finished products for resale from various suppliers based on current market prices at the time of delivery.
|
(5)
|
Throughput commitments consist primarily of obligations to transport a minimum volume of crude oil through a pipeline.
|
(6)
|
Certain employment agreements may be terminated under certain circumstances or at certain dates prior to expiration. We expect our contracts will be renewed or replaced with similar agreements upon their expiration. Amounts due under the contracts assume the contracts are not terminated prior to their expiration.
|
•
|
crude oil purchases and sales;
|
•
|
refined product sales and purchases;
|
•
|
natural gas purchases;
|
•
|
precious metals; and
|
•
|
fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such as NYMEX WTI, Light Louisiana Sweet, WCS, WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent.
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
|
(In millions)
|
||||||||||||||
Financial Instrument:
|
|
|
|
|
|
|
|
||||||||
2022 Notes
|
$
|
262.2
|
|
|
$
|
346.4
|
|
|
$
|
351.2
|
|
|
$
|
347.1
|
|
2023 Notes
|
$
|
225.4
|
|
|
$
|
321.3
|
|
|
$
|
325.2
|
|
|
$
|
321.0
|
|
2025 Notes
|
$
|
398.4
|
|
|
$
|
541.0
|
|
|
$
|
598.8
|
|
|
$
|
540.5
|
|
Revolving credit facility
|
$
|
147.2
|
|
|
$
|
147.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
The untimely and insufficient operation of controls in the financial statement close process, including lack of timely account reconciliation, analysis and review related to all financial statement accounts.
|
•
|
Reviewing, analyzing and properly documenting account reconciliations and our processes related to internal controls over financial reporting.
|
•
|
Continuing to design and implement effective review and approval controls. These controls will address the accuracy and completeness of the data used in the performance of the respective controls.
|
•
|
the demand for, and the marketability of, our specialty hydrocarbon products, fuel and other refined products due to governmental regulations, including travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, which could result in a full or partial shutdown of our facilities;
|
•
|
increased volatility in refining margins;
|
•
|
the health of our workforce and their access to our facilities, which could result in a full or partial shutdown of our facilities if a significant portion of the workforce at a facility is impacted;
|
•
|
the ability or willingness of our crude oil and feedstock suppliers, as well as our vendors, to provide crude oil or other raw materials, equipment or supplies for our operations or otherwise fulfill their contractual obligations, which could reduce our production levels or otherwise cause our delay or failure to deliver refined or finished lubricant products timely or at all;
|
•
|
the ability or willingness of our customers to fulfill their contractual obligations or any material reduction in, or loss of, orders or revenue from our customers;
|
•
|
increased potential for the occurrence of operational hazards, including terrorism, cyberattacks or domestic vandalism, as well as information system failures or communication network disruptions;
|
•
|
increased cost and reduced availability of capital for growth or capital expenditures;
|
•
|
availability and operability of terminals, tankage and pipelines that store and transport crude oil and refined and specialty hydrocarbon products;
|
•
|
reduction in the market value of our inventory, which is valued at the lower of cost or market value, which may result in a reduction in our net income;
|
•
|
the amount of our borrowing base under our revolving credit facility and our ability to issue letters of credit or the requirement that we post substantial amounts of credit support;
|
•
|
the impairment of our equity method investments, our long-lived assets or goodwill, which could reduce our earnings;
|
•
|
increased costs of operation in relation to the COVID-19 outbreak, which costs may not be recoverable or adequately covered by insurance; and
|
•
|
the impact of any economic downturn, recession or other disruption of the U.S. and global economies and financial and commodity markets.
|
|
|
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
|
|
|
|
|
|
|
|
By:
|
Calumet GP, LLC, its general partner
|
|
|
|
|
Date:
|
May 7, 2020
|
By:
|
/s/ H. Keith Jennings
|
|
|
|
H. Keith Jennings
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Authorized Person and Principal Accounting Officer)
|
|
|
|
|
1.
|
Your sign-on bonus is amended so that for purchases of Calumet units on and after March 31, 2020, you will not receive a company match. You will receive all matching units you are entitled to receive in accordance with the offer letter for your purchases of units prior to March 31, 2020 within 15 days of the full execution of this addendum.
|
2.
|
You will receive a grant of $301,145.46 of phantom units according to the following terms:
|
a)
|
The units will be subject to 3-year cliff vesting. Vesting of such units will occur on March 31, 2023.
|
b)
|
The full year 2020, Volume Weighted Average Price (VWAP) will be utilized as the basis for determining the unit price and calculating the number of units granted. In the event you are terminated without cause prior to the end of 2020, the period for the VWAP will be from January 1, 2020 through (and including) your termination date.
|
c)
|
The units granted will grossed up for taxes by Calumet.
|
d)
|
The total number of units granted under this paragraph will not exceed 500,000 units.
|
e)
|
In the event you are terminated without cause, the units will vest immediately and will be delivered to you within ten (10) days after your termination date. At Calumet’s election, we may deliver cash in lieu of units.
|
f)
|
The grant shall otherwise be subject to the terms of the Phantom Unit Grant Agreement.
|
3.
|
Your relocation benefits shall be amended to provide for company-paid temporary housing through October 31, 2020. In exchange, you agree to that if you leave Calumet other than due to a termination without cause before March 31, 2023, you will repay 100% of the relocation benefits provided to you.
|
4.
|
All other terms and provisions of your original employment offer letter not specifically modified or altered, or not specifically deleted in this Amendment, are hereby ratified and confirmed and shall remain in full force and effect.
|
|
|
|
/s/ H. Keith Jennings
|
|
May 2, 2020
|
H. Keith Jennings
|
|
Date
|
|
|
|
|
|
|
|
|
|
Timothy Go
|
|
Date
|
|
|
|
1.
|
I have reviewed this Quarterly Report of Calumet Specialty Products Partners, L.P. (the “registrant”) on Form 10-Q for the quarter ended March 31, 2020;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
Date: May 7, 2020
|
|
/s/ Stephen P. Mawer
|
|
|
Stephen P. Mawer
|
|
|
Chief Executive Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P.
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report of Calumet Specialty Products Partners, L.P. (the “registrant”) on Form 10-Q for the quarter ended March 31, 2020;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
Date: May 7, 2020
|
|
/s/ H. Keith Jennings
|
|
|
H. Keith Jennings
|
|
|
Executive Vice President and Chief Financial Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P.
|
|
|
(Principal Financial Officer)
|
(a)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(b)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
|
|
|
May 7, 2020
|
|
/s/ Stephen P. Mawer
|
|
|
Stephen P. Mawer
|
|
|
Chief Executive Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P.
|
|
|
(Principal Executive Officer)
|
|
|
|
May 7, 2020
|
|
/s/ H. Keith Jennings
|
|
|
H. Keith Jennings
|
|
|
Executive Vice President and Chief Financial Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P.
|
|
|
(Principal Financial Officer)
|