Group 1 - Calumet Specialty Products Partners, L.P. will participate in TD Cowen's 2nd Annual Sustainability Week on May 22, 2024 [1] - The company will engage in a fireside chat and hold one-on-one investor meetings during the virtual conference [1] - Calumet manufactures and markets a diversified range of specialty branded products and renewable fuels [2] Group 2 - The company is headquartered in Indianapolis, Indiana, and operates twelve facilities across North America [2] - Calumet serves a broad range of consumer-facing and industrial markets [2]

Part I: Financial Statements [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased, liabilities increased, and partners' capital (deficit) further declined from Q4 2023 to Q1 2024 Condensed Consolidated Balance Sheets | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :------------------------------------ | :-------------------------- | :--------------------------- | | Cash and cash equivalents | $23.9 | $7.9 | | Accounts receivable, net | $339.0 | $286.2 | | Inventories | $403.1 | $439.4 | | Total current assets | $811.7 | $794.7 | | Property, plant and equipment, net | $1,486.0 | $1,506.3 | | Total assets | $2,731.6 | $2,751.3 | | Accounts payable | $321.1 | $322.0 | | Obligations under inventory financing | $55.6 | $190.4 | | Current portion of RINs obligation | $212.7 | $277.3 | | Total current liabilities | $824.4 | $1,112.7 | | Long-term debt, less current portion | $2,055.6 | $1,829.7 | | Total liabilities | $3,015.7 | $2,996.0 | | Partners' capital (deficit) | $(529.7) | $(490.3) | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2024 saw a net loss of $41.6 million, a reversal from Q1 2023 net income, driven by lower sales and derivative losses Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Sales | $1,005.8 | $1,037.3 | | Cost of sales | $927.3 | $940.7 | | Gross profit | $78.5 | $96.6 | | Operating income | $36.3 | $43.0 | | Interest expense | $(60.8) | $(49.2) | | Gain (loss) on derivative instruments | $(16.9) | $25.5 | | Net income (loss) | $(41.6) | $18.6 | | Limited partners' interest basic per unit | $(0.51) | $0.23 | | Limited partners' interest diluted per unit | $(0.51) | $0.23 | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Q1 2024 comprehensive loss of $41.5 million reversed Q1 2023 income, mirroring the net income (loss) trend Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :---------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net income (loss) | $(41.6) | $18.6 | | Defined benefit pension and retiree health benefit plans | $0.1 | $0.0 | | Total other comprehensive income | $0.1 | $0.0 | | Comprehensive income (loss) attributable to partners' capital (deficit) | $(41.5) | $18.6 | [Unaudited Condensed Consolidated Statements of Partners' Capital (Deficit)](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Partners'%20Capital%20(Deficit)) Partners' capital (deficit) declined to $(529.7) million by March 31, 2024, mainly due to the net loss attributable to partners Unaudited Condensed Consolidated Statements of Partners' Capital (Deficit) | Metric | December 31, 2023 (Millions) | March 31, 2024 (Millions) | | :---------------------------------------------------- | :--------------------------- | :------------------------ | | Balance at beginning of period | $(490.3) | $(484.4) | | Other comprehensive income | $0.0 | $0.1 | | Net loss attributable to partners | $18.6 | $(41.6) | | Settlement of tax withholdings on equity-based incentive compensation | $(7.9) | $(3.5) | | Settlement of phantom units | $(1.0) | $5.6 | | Balance at end of period | $(523.3) | $(529.7) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash outflow significantly increased in Q1 2024, while investing and financing activities saw minor changes, leading to a net cash increase Unaudited Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :---------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net cash used in operating activities | $(94.0) | $(26.7) | | Net cash used in investing activities | $(20.0) | $(130.4) |\n| Net cash provided by financing activities | $130.7 | $133.1 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $16.7 | $(24.0) | | Cash, cash equivalents and restricted cash at end of period | $31.4 | $11.2 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of the Business](index=10&type=section&id=1.%20Description%20of%20the%20Business) Calumet Specialty Products Partners, L.P. manufactures and markets specialty products and renewable fuels across North America - Calumet Specialty Products Partners, L.P. is a publicly traded Delaware limited partnership (ticker: CLMT) with its general partner owning **2%** and all incentive distribution rights, and limited partners owning **98%**[217](index=217&type=chunk) - The company manufactures, formulates, and markets specialty branded products and renewable fuels across North America, serving various consumer-facing and industrial markets[244](index=244&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Key accounting policies include GAAP conformity, cash definitions, and RINs obligations, which are subject to litigation and regulatory changes - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP, with certain information condensed or omitted per SEC rules[218](index=218&type=chunk) - Restricted cash, legally restricted under the MRL Term Loan Credit Agreement, is included in prepaid expenses and other current assets[219](index=219&type=chunk) - The company's RINs Obligation is an estimated provision for future purchases of RINs to satisfy EPA requirements, recorded as a current liability and revalued periodically, impacting cost of sales[220](index=220&type=chunk)[222](index=222&type=chunk) - The company has ongoing litigation regarding EPA's denial of Small Refinery Exemptions (SREs) for compliance years 2018-2022, with some appeals granted stays and one denial vacated by the Fifth Circuit[223](index=223&type=chunk)[226](index=226&type=chunk)[253](index=253&type=chunk) RINs Obligation | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :------------------- | :-------------------------- | :--------------------------- | | RINs Obligation | $212.7 | $277.3 | [3. Revenue Recognition](index=14&type=section&id=3.%20Revenue%20Recognition) Revenue is recognized upon transfer of control, with varying payment terms and expensed shipping/handling costs - Revenue is recognized upon transfer of control of promised goods to the customer, with performance obligations identified for distinct products[228](index=228&type=chunk)[257](index=257&type=chunk) - Payment terms vary: **2-30 days** for fuel products, **7-14 days** for renewable fuel products, and **30-90 days** for specialty products[230](index=230&type=chunk) - Shipping and handling costs are expensed, and excise/sales taxes are excluded from the transaction price[231](index=231&type=chunk)[258](index=258&type=chunk)[287](index=287&type=chunk) Accounts Receivable from Customers | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :------------------------------------ | :-------------------------- | :--------------------------- | | Receivables, net of allowance for expected credit losses | $289.4 | $252.4 | [4. Inventories](index=18&type=section&id=4.%20Inventories) Inventories are valued using LIFO, with adjustments impacting cost of sales, and influenced by Supply and Offtake Agreements - Inventories are valued using the LIFO method, with interim calculations based on management estimates[291](index=291&type=chunk) - The company recorded an increase in cost of sales due to LIFO inventory adjustments of **$9.0 million** in Q1 2024 and **$19.7 million** in Q1 2023[263](index=263&type=chunk) Inventory Composition | Category | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :------------------- | :-------------------------- | :--------------------------- | | Raw materials | $108.2 | $89.2 | | Work in process | $95.5 | $109.0 | | Finished goods | $199.4 | $241.2 | | Total | $403.1 | $439.4 | - The replacement cost of inventories was **$75.5 million** higher than carrying value at March 31, 2024, and **$67.8 million** higher at December 31, 2023[234](index=234&type=chunk) [5. Leases](index=18&type=section&id=5.%20Leases) The company utilizes various operating and finance leases, with stable lease costs and weighted-average terms of 2.6-3.0 years - The company has operating and finance leases for land, storage tanks, railcars, equipment, precious metals, and office facilities, with terms up to **16 years**[264](index=264&type=chunk) Total Lease Cost | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------- | :----------------------------------------- | :----------------------------------------- | | Total lease cost | $24.1 | $24.2 | Weighted-Average Lease Terms and Discount Rates | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :---------------- | | Weighted-average remaining lease term (years): | | | | Operating leases | 2.6 | 2.6 | | Finance leases | 3.0 | 3.1 | | Weighted-average discount rate: | | | | Operating leases | 8.6% | 8.6% | | Finance leases | 7.5% | 7.3% | [6. Commitments and Contingencies](index=20&type=section&id=6.%20Commitments%20and%20Contingencies) The company faces environmental and litigation risks, with ongoing remediation, standby letters of credit, and purchase commitments - The company's operations are subject to stringent federal, regional, state, and local laws and regulations governing worker health and safety, environmental discharges, and protection[300](index=300&type=chunk) - Remediation of subsurface contamination is in process at certain refinery sites, with current belief that costs will not have a material adverse effect[302](index=302&type=chunk) - The company maintains safety and training programs and conducts periodic audits to comply with occupational health and safety laws[303](index=303&type=chunk) Standby Letters of Credit | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :-------------------------- | :-------------------------- | :--------------------------- | | Outstanding standby letters of credit | $43.6 | $29.9 | Unconditional Purchase Commitments (Throughput Contract) | Year | Commitment (Millions) | | :--- | :-------------------- | | 2024 | $3.0 | | 2025 | $4.0 | | 2026 | $4.0 | | 2027 | $2.4 | | Total | $13.4 | [7. Inventory Financing Agreements](index=24&type=section&id=7.%20Inventory%20Financing%20Agreements) Inventory financing agreements, including a new Shreveport deal, led to increased financing costs in Q1 2024 - The Shreveport Supply and Offtake Agreement with J. Aron replaced the previous Macquarie agreement on **January 17, 2024**[92](index=92&type=chunk)[307](index=307&type=chunk) - The MRL Supply and Offtake Agreement with Wells Fargo replaced MRL's previous Macquarie agreement on **October 3, 2023**[309](index=309&type=chunk)[334](index=334&type=chunk) - Inventory financing arrangements are accounted for similar to product financing arrangements, with inventories remaining on the company's balance sheet[282](index=282&type=chunk) Financing Costs for Supply and Offtake Agreements | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------- | :----------------------------------------- | :----------------------------------------- | | Financing costs | $8.4 | $7.0 | [8. Long-Term Debt](index=27&type=section&id=8.%20Long-Term%20Debt) Long-term debt increased to $2,081.9 million due to new 2029 Secured Notes, with all debt covenants in compliance - On **March 7, 2024**, the company issued **$200.0 million** in **9.25%** Senior Secured First Lien Notes due 2029, using proceeds to redeem 2024 Secured Notes and **$50.0 million** of 2025 Notes[170](index=170&type=chunk)[315](index=315&type=chunk) - The company's revolving credit facility was amended on **January 17, 2024**, increasing maximum availability to **$650.0 million**[139](index=139&type=chunk)[346](index=346&type=chunk) - As of **March 31, 2024**, the company was in compliance with all covenants under its debt instruments[90](index=90&type=chunk)[344](index=344&type=chunk)[347](index=347&type=chunk) Long-Term Debt Overview | Debt Instrument | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :------------------------------------ | :-------------------------- | :--------------------------- | | Revolving credit facility | $309.8 | $136.7 | | MRL revolving credit agreement | $22.6 | $13.0 | | 2024 Secured Notes | $0.0 | $179.0 | | 2025 Notes | $413.5 | $413.5 | | 2027 Notes | $325.0 | $325.0 | | 2028 Notes | $325.0 | $325.0 | | 2029 Secured Notes | $200.0 | $0.0 | | MRL Term Loan Credit Agreement | $74.3 | $74.4 | | Shreveport terminal asset financing | $48.9 | $50.8 | | MRL asset financing arrangements | $380.6 | $384.6 | | Finance lease obligations | $2.7 | $3.0 | | Total debt | $2,081.9 | $1,885.4 | | Less current portion of long-term debt | $26.3 | $55.7 | | Total long-term debt | $2,055.6 | $1,829.7 | Maturities of Long-Term Debt and Finance Lease Obligations | Year | Maturity (Millions) | | :--- | :------------------ | | 2024 | $19.9 | | 2025 | $442.4 | | 2026 | $32.0 | | 2027 | $706.9 | | 2028 | $423.3 | | Thereafter | $477.9 | | Total | $2,102.4 | [9. Derivatives](index=33&type=section&id=9.%20Derivatives) Derivatives manage commodity price risks, not for speculation, resulting in a $16.9 million loss from non-hedges in Q1 2024 - The company uses derivative instruments (physical forward contracts, financially settled derivatives like swaps, collars, options, futures) to reduce exposure to commodity price risks, including crude oil, refined products, natural gas, and precious metals[3](index=3&type=chunk)[326](index=326&type=chunk)[352](index=352&type=chunk)[378](index=378&type=chunk) - The company does not speculate with derivative instruments; positions are monitored by a risk management committee[172](index=172&type=chunk)[352](index=352&type=chunk)[378](index=378&type=chunk) - Derivative instruments are recognized at fair value on the balance sheet, with changes in fair value for non-hedges recorded in the statements of operations[6](index=6&type=chunk)[329](index=329&type=chunk)[379](index=379&type=chunk) Gain (Loss) on Derivative Instruments Not Designated as Hedges | Segment | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Specialty Products and Solutions segment: | | | | Inventory financing obligation | $(54.2) | $0.0 | | Crack spread swaps | $(0.8) | $(15.5) | | Montana/Renewables segment: | | | | Inventory financing obligation | $2.4 | $0.0 | | Total realized in Gain (Loss) | $(52.6) | $(15.5) | | Total unrealized in Gain (Loss) | $35.7 | $41.0 | Notional Contract Volumes for Derivative Instruments (March 31, 2024) | Derivative Type | Total Outstanding Notional | Notional Year of 2024 | Unit of Measure | | :------------------------------------ | :------------------------- | :-------------------- | :-------------- | | Crack spread swaps - sales | 2,200,000 | 2,200,000 | Barrels | [10. Fair Value Measurements](index=36&type=section&id=10.%20Fair%20Value%20Measurements) Fair value measurements use a three-tier hierarchy, with most derivatives as Level 3 and pension assets as Level 1/2 - The company uses a three-tier fair value hierarchy (Level 1, 2, 3) for measuring fair value, prioritizing observable inputs[5](index=5&type=chunk)[357](index=357&type=chunk) - Commodity derivative instruments are measured at fair value using a market approach, with most classified as **Level 3** due to unobservable inputs like non-performance risk and creditworthiness[360](index=360&type=chunk)[388](index=388&type=chunk) - Pension plan investments are classified as **Level 1** (quoted prices) and **Level 2** (independent pricing service)[389](index=389&type=chunk) Recurring Assets and Liabilities at Fair Value (March 31, 2024) | Category | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | Total (Millions) | | :------------------------------------ | :----------------- | :----------------- | :----------------- | :--------------- | | **Assets:** | | | | | | Derivative assets: Crack spread swaps | $0.0 | $0.0 | $5.5 | $5.5 | | Pension plan investments | $3.6 | $23.3 | $0.0 | $26.9 | | Total recurring assets | $3.6 | $23.3 | $5.5 | $32.4 | | **Liabilities:** | | | | | | Derivative liabilities: Inventory financing obligation | $0.0 | $0.0 | $(10.9) | $(10.9) | | Precious metals obligations | $(6.3) | $0.0 | $0.0 | $(6.3) | | Liability awards | $(50.4) | $0.0 | $0.0 | $(50.4) | | Total recurring liabilities | $(56.7) | $0.0 | $(10.9) | $(67.6) | Estimated Fair Value of Financial Instruments (March 31, 2024) | Financial Instrument | Level | Fair Value (Millions) | Carrying Value (Millions) | | :------------------------------------ | :---- | :-------------------- | :------------------------ | | 2024 Secured Notes, 2025 Notes, 2027 Notes, 2028 Notes, and 2029 Secured Notes | 2 | $1,259.2 | $1,253.4 | | Revolving credit facility | 3 | $309.8 | $306.1 | | MRL revolving credit agreement | 3 | $22.6 | $22.0 | | MRL term loan credit agreement | 3 | $74.3 | $71.6 | | Shreveport terminal asset financing | 3 | $48.9 | $48.4 | | MRL asset financing arrangements | 3 | $380.6 | $377.7 | | Finance leases and other obligations | 3 | $2.7 | $2.7 | [11. Earnings Per Unit](index=41&type=section&id=11.%20Earnings%20Per%20Unit) Q1 2024 saw a basic and diluted net loss per limited partner unit of $0.51, reflecting the overall net loss Earnings Per Limited Partner Unit | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 (Restated) | | :------------------------------------ | :-------------------------------- | :----------------------------------------- | | Net income (loss) | $(41.6) | $18.6 | | Net income (loss) attributable to partners | $(40.8) | $18.2 | | Basic weighted average limited partner units outstanding | 80,352,403 | 79,830,671 | | Diluted weighted average limited partner units outstanding | 80,352,403 | 79,939,985 | | Limited partners' interest basic per unit | $(0.51) | $0.23 | | Limited partners' interest diluted per unit | $(0.51) | $0.23 | - Total diluted weighted average limited partner units outstanding for Q1 2024 excluded a de-minimis amount of potentially dilutive phantom units that would have been anti-dilutive[13](index=13&type=chunk) [12. Segments and Related Information](index=43&type=section&id=12.%20Segments%20and%20Related%20Information) Four segments reported Q1 2024 Adjusted EBITDA of $21.6 million, a decline from prior year, with minimal international sales - The company's reportable segments are Specialty Products and Solutions, Montana/Renewables, Performance Brands, and Corporate[14](index=14&type=chunk)[25](index=25&type=chunk)[367](index=367&type=chunk) - International sales accounted for less than **ten percent** of consolidated sales in Q1 2024 and Q1 2023[49](index=49&type=chunk) - No single customer represented **10%** or greater of consolidated sales in Q1 2024 or Q1 2023[401](index=401&type=chunk) - Two suppliers provided approximately **88.1%** of crude oil supply in Q1 2024 and **94.4%** in Q1 2023[372](index=372&type=chunk) Segment Adjusted EBITDA | Segment | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Specialty Products and Solutions | $41.8 | $76.0 | | Performance Brands | $13.4 | $16.4 | | Montana/Renewables | $(14.5) | $4.8 | | Corporate | $(19.1) | $(19.9) | | Consolidated Total Adjusted EBITDA | $21.6 | $77.3 | Segment Sales by Product Category | Product Category | March 31, 2024 Sales (Millions) | March 31, 2023 Sales (Millions) | | :------------------------------------ | :------------------------------ | :------------------------------ | | **Specialty Products and Solutions:** | | | | Lubricating oils | $189.7 | $215.2 | | Solvents | $102.4 | $106.6 | | Waxes | $39.0 | $44.2 | | Fuels, asphalt and other by-products | $350.5 | $372.7 | | Total SPS | $681.6 | $738.7 | | **Montana/Renewables:** | | | | Gasoline | $31.6 | $42.9 | | Diesel | $27.9 | $32.9 | | Jet fuel | $4.6 | $4.9 | | Asphalt, heavy fuel oils and other | $30.1 | $20.5 | | Renewable fuels | $150.3 | $118.6 | | Total Montana/Renewables | $244.5 | $219.8 | | **Performance Brands:** | | | | Total Performance Brands | $79.7 | $78.8 | | **Consolidated Sales** | $1,005.8 | $1,037.3 | [13. Unrestricted Subsidiaries](index=49&type=section&id=13.%20Unrestricted%20Subsidiaries) MRHL and MRL are the sole unrestricted subsidiaries, adhering to specific non-recourse debt and affiliate agreement criteria - MRHL and MRL are the company's only unrestricted subsidiaries as of March 31, 2024, and December 31, 2023[20](index=20&type=chunk) - Unrestricted subsidiaries must meet criteria such as having no indebtedness other than non-recourse debt, not entering into unfavorable affiliate agreements, and not guaranteeing company debt[434](index=434&type=chunk) Financial Information of Unrestricted Subsidiaries (March 31, 2024) | Metric | Unrestricted Subsidiaries (Millions) | | :------------------------------------ | :--------------------------------- | | Cash and cash equivalents | $1.6 | | Accounts receivable - trade | $36.0 | | Inventory | $73.2 | | Property, plant and equipment, net | $763.0 | | Accounts payable | $410.8 | | Obligations under inventory financing | $55.6 | | Long-term debt | $554.0 | | Redeemable noncontrolling interest | $245.6 | [14. Redeemable Noncontrolling Interest](index=50&type=section&id=14.%20Redeemable%20Noncontrolling%20Interest) MRHL issued preferred units for $250.0 million, with a preferred return, recorded as temporary equity at $245.6 million - MRHL issued **12,500,000** preferred units to an affiliate of Warburg Pincus LLC for **$250.0 million**, carrying certain minimum return thresholds (Preferred Return)[375](index=375&type=chunk)[405](index=405&type=chunk) - The Preferred Units are entitled to a preferred return equal to the greater of an **8.0% IRR** or a MOIC initially at **1.35**, increasing to **1.40** after five years[405](index=405&type=chunk) - The redeemable noncontrolling interest is reflected as temporary equity at **$245.6 million** as of March 31, 2024, and December 31, 2023[437](index=437&type=chunk) [15. Subsequent Events](index=51&type=section&id=15.%20Subsequent%20Events) Post-Q1 2024, the fair value of derivative instruments increased by approximately $8.6 million - As of **May 7, 2024**, the fair value of the company's derivative instruments increased by approximately **$8.6 million** subsequent to March 31, 2024[406](index=406&type=chunk) Part II: Management's Discussion and Analysis of Financial Condition and Results of Operations [Overview](index=52&type=section&id=Overview) The company manufactures specialty products and renewable fuels, with a Conversion Agreement for transition to New Calumet - The company manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels[439](index=439&type=chunk) - A Conversion Agreement was entered into on **February 9, 2024**, to effectuate a corporate transition to New Calumet, with an amendment made on **April 17, 2024**[57](index=57&type=chunk)[440](index=440&type=chunk) [First Quarter 2024 Update](index=54&type=section&id=First%20Quarter%202024%20Update) Q1 2024 saw a net loss of $41.6 million and lower Adjusted EBITDA, with mixed segment performance - Net loss of **$41.6 million** in Q1 2024 versus net income of **$18.6 million** in Q1 2023[29](index=29&type=chunk) - Adjusted EBITDA of **$21.6 million** in Q1 2024 versus **$77.3 million** in Q1 2023[29](index=29&type=chunk) - Specialty Products and Solutions and Performance Brands segments continued to benefit from above mid-cycle margin environment and strong demand[59](index=59&type=chunk) - Montana/Renewables segment Adjusted EBITDA was a loss of **$14.5 million** in Q1 2024, unfavorably impacted by higher material costs, seasonally weak asphalt and gas markets, and higher operating expenses[62](index=62&type=chunk) - Specialty Products and Solutions segment Adjusted EBITDA was **$41.8 million** in Q1 2024 versus **$76.0 million** in Q1 2023, impacted by lower throughput volumes due to a planned turnaround[61](index=61&type=chunk)[413](index=413&type=chunk) - Performance Brands segment Adjusted EBITDA was **$13.4 million** in Q1 2024 versus **$16.4 million** in Q1 2023, with Q1 2023 including a **$5.0 million** insurance claim benefit[445](index=445&type=chunk) [Outlook and Trends](index=54&type=section&id=Outlook%20and%20Trends) Strong demand for renewable fuels, especially SAF, is expected, with specialty segments maintaining above mid-cycle margins - Strong demand for renewable fuel products, including SAF, is expected to continue due to corporate decarbonization targets, sustainability initiatives, and governmental mandates[442](index=442&type=chunk) - Montana Renewables facility is positioned as a key producer for SAF in North America[442](index=442&type=chunk) - Specialty Products and Solutions and Performance Brands segments are expected to maintain above mid-cycle margins for the remainder of the year, with healthy demand[59](index=59&type=chunk) [Contingencies](index=54&type=section&id=Contingencies) Contingencies are monitored, with no material adverse effects on liquidity or financial condition expected beyond accrued amounts - The company does not believe that any liabilities beyond the amounts already accrued, which may result from contingencies, will have a material adverse effect on liquidity, financial condition or results of operations[60](index=60&type=chunk) [Liquidity Update](index=56&type=section&id=Liquidity%20Update) Total liquidity decreased to $211.8 million, but the company expects sufficient liquidity for the next 12 months - Total liquidity decreased from **$244.9 million** at March 31, 2023, to **$211.8 million** at March 31, 2024[118](index=118&type=chunk) - Liquidity at March 31, 2024, comprised **$23.9 million** of unrestricted cash and **$187.9 million** of availability under credit facilities[63](index=63&type=chunk) - The company believes it has sufficient liquidity to meet financial commitments, debt service, contingencies, and anticipated capital expenditures for at least the next **12 months**[63](index=63&type=chunk) [Renewable Fuel Standard Update](index=56&type=section&id=Renewable%20Fuel%20Standard%20Update) Q1 2024 saw a $64.5 million RINs gain, but RFS compliance costs remain significant with potential regulatory risks - The company recorded a gain of **$64.5 million** for RINs in Q1 2024, compared to a gain of **$32.1 million** in Q1 2023[415](index=415&type=chunk) - Expenses related to RFS compliance have the potential to remain a significant expense for the Specialty Products and Solutions and Montana/Renewables segments[64](index=64&type=chunk)[254](index=254&type=chunk) - Legal or regulatory changes increasing RINs obligations or narrowing small refinery exemptions could materially increase RFS compliance costs and adversely affect results and liquidity[64](index=64&type=chunk)[254](index=254&type=chunk) [Unrestricted Subsidiaries](index=58&type=section&id=Unrestricted%20Subsidiaries) Refer to Note 13 for detailed financial information on the company's unrestricted subsidiaries - Further information regarding certain financial information of unrestricted subsidiaries is available in Note 13[448](index=448&type=chunk) [Key Performance Measures](index=58&type=section&id=Key%20Performance%20Measures) Management analyzes performance using segment Adjusted EBITDA, gross profit, and sales volumes for core operations and asset utilization - Key performance measures include segment Adjusted EBITDA, segment gross profit, and sales volumes[34](index=34&type=chunk)[35](index=35&type=chunk)[67](index=67&type=chunk)[449](index=449&type=chunk) - Sales volumes are important for measuring effective asset utilization and improving profitability through fixed cost spreading and additional gross profit[418](index=418&type=chunk) - Segment Adjusted EBITDA is used to analyze trends and performance of core cash operations and ability to pay interest to noteholders, excluding non-core cash operating activities[37](index=37&type=chunk) Production and Sales Volume Trends | Metric | Three Months Ended March 31, 2024 (bpd) | Three Months Ended March 31, 2023 (bpd) | % Change | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :------- | | Total sales volume | 83,602 | 76,856 | 8.8% | | Total feedstock runs | 71,548 | 71,559 | 0.0% | | Total facility production | 72,266 | 73,222 | (1.3)% | | Specialty Products and Solutions production | 51,688 | 54,466 | (5.1)% | | Montana/Renewables production | 18,995 | 16,825 | 12.9% | | Performance Brands production | 1,583 | 1,931 | (18.0)% | | Renewable fuels production | 8,243 | 5,030 | 63.9% | [Results of Operations for the Three Months Ended March 31, 2024 and 2023](index=60&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202024%20and%202023) Q1 2024 sales decreased by 3.0%, gross profit fell by 18.7%, and a $16.9 million derivative loss reversed prior year gains Consolidated Results of Operations | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Sales | $1,005.8 | $1,037.3 | | Cost of sales | $927.3 | $940.7 | | Gross profit | $78.5 | $96.6 | | Operating income | $36.3 | $43.0 | | Interest expense | $(60.8) | $(49.2) | | Gain (loss) on derivative instruments | $(16.9) | $25.5 | | Net income (loss) | $(41.6) | $18.6 | | Adjusted EBITDA | $21.6 | $77.3 | | Distributable Cash Flow | $(59.6) | $4.8 | - Total sales decreased by **$31.5 million (3.0%)** to **$1,005.8 million** in Q1 2024, primarily due to a lower commodity price environment in the Specialty Products and Solutions segment, partially offset by increased sales volumes[457](index=457&type=chunk)[45](index=45&type=chunk) - Gross profit decreased by **$18.1 million (18.7%)** to **$78.5 million** in Q1 2024, mainly due to the regression of record high specialties and fuels margins in the prior year[77](index=77&type=chunk)[78](index=78&type=chunk) - Montana/Renewables segment gross profit increased due to higher margins from renewable fuel products, despite higher operating costs[79](index=79&type=chunk) - General and administrative expenses decreased by **$13.8 million (37.2%)** to **$23.3 million**, primarily due to a **$16.4 million** decrease in equity-based compensation[107](index=107&type=chunk) - Interest expense increased by **$11.6 million (23.6%)** to **$60.8 million**, mainly due to interest on 2028 Notes and MRL Term Loan Credit Agreement[82](index=82&type=chunk) - A **$16.9 million** loss on derivative instruments was recorded in Q1 2024, compared to a **$25.5 million** gain in Q1 2023, primarily due to a realized loss on the embedded derivative from the termination of the Shreveport inventory financing arrangement[108](index=108&type=chunk) [Non-GAAP Financial Measures](index=62&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like EBITDA, Adjusted EBITDA, and Distributable Cash Flow assess core cash operations, not as GAAP alternatives - EBITDA, Adjusted EBITDA, and Distributable Cash Flow are non-GAAP measures used to assess financial performance, excluding transactions not related to core cash operating activities[40](index=40&type=chunk)[70](index=70&type=chunk)[422](index=422&type=chunk) - EBITDA is defined as net income (loss) plus interest expense, income taxes, and depreciation and amortization[71](index=71&type=chunk) - Adjusted EBITDA is EBITDA adjusted for various non-cash and non-recurring items, similar to 'Consolidated Cash Flow' in senior note indentures and 'Consolidated EBITDA' in the credit agreement[424](index=424&type=chunk)[454](index=454&type=chunk) - Distributable Cash Flow is defined as Adjusted EBITDA less replacement and environmental capital expenditures, turnaround costs, cash interest expense, gain (loss) from unconsolidated affiliates, net of cash distributions and income tax expense (benefit)[41](index=41&type=chunk) - These non-GAAP measures have limitations and should not be considered alternatives to GAAP measures[72](index=72&type=chunk) Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA, and Distributable Cash Flow | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net income (loss) | $(41.6) | $18.6 | | Interest expense | $60.8 | $49.2 | | Depreciation and amortization | $36.0 | $29.5 | | Income tax expense | $0.2 | $0.5 | | **EBITDA** | **$55.4** | **$97.8** | | LCM / LIFO loss | $9.0 | $19.7 | | Unrealized (gain) loss on derivative instruments | $(35.7) | $(41.0) | | RINs mark-to-market gain | $(71.1) | $(46.1) | | Other non-recurring expenses | $60.8 | $29.5 | | **Adjusted EBITDA** | **$21.6** | **$77.3** | | Replacement and environmental capital expenditures | $(16.7) | $(17.2) | | Turnaround costs | $(5.5) | $(7.1) | | Cash interest expense | $(58.8) | $(47.7) | | Income tax expense | $(0.2) | $(0.5) | | **Distributable Cash Flow** | **$(59.6)** | **$4.8** | [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) Sufficient liquidity is expected for 12 months despite increased operating cash use; capital expenditures significantly decreased - The company believes it has sufficient liquid assets, cash flow from operations, borrowing capacity, and access to capital markets to meet financial commitments for at least the next **12 months**[84](index=84&type=chunk) - Operating activities used **$94.0 million** cash in Q1 2024, compared to **$26.7 million** in Q1 2023, primarily due to decreased net unit margins[112](index=112&type=chunk) - Investing activities used **$20.0 million** cash in Q1 2024, a decrease from **$130.4 million** in Q1 2023, mainly due to lower capital expenditures for property, plant, and equipment[85](index=85&type=chunk) - Financing activities provided **$130.7 million** cash in Q1 2024, slightly down from **$133.1 million** in Q1 2023, driven by higher borrowings under revolving credit facilities offset by increased net payments for inventory financing[113](index=113&type=chunk) Capital Expenditures | Category | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Capital improvement expenditures | $3.3 | $113.2 | | Replacement capital expenditures | $15.8 | $13.7 | | Environmental capital expenditures | $0.9 | $3.5 | | Turnaround capital expenditures | $5.5 | $7.1 | | Total | $25.5 | $137.5 | - Total capital expenditures are forecasted to be **$110 million to $140 million** in 2024, primarily for growth and sustainability projects[115](index=115&type=chunk) - Principal sources of short-term liquidity include **$187.9 million** availability under credit facilities, inventory financing agreements, and **$23.9 million** unrestricted cash[120](index=120&type=chunk) Part III: Quantitative and Qualitative Disclosures About Market Risk [Commodity Price Risk](index=79&type=section&id=Commodity%20Price%20Risk) The company mitigates commodity price risks (crude oil, refined products, natural gas, precious metals) using derivatives, not eliminating all risk - The company is exposed to price risks from fluctuations in crude oil, refined products, natural gas, and precious metals[124](index=124&type=chunk)[145](index=145&type=chunk) - Strategies to reduce commodity price risk include physical forward contracts and financially settled derivative instruments (swaps, collars, options, futures)[145](index=145&type=chunk) - Risk management activities are monitored by a risk management committee and reviewed quarterly by the general partner's Board of Directors[147](index=147&type=chunk)[172](index=172&type=chunk) [Compliance Price Risk](index=81&type=section&id=Compliance%20Price%20Risk) RINs price volatility poses market risk, with a $1.00 increase negatively impacting net income by $65.0 million annually - The company is exposed to market risks related to the volatility in the price of credits (RINs) needed to comply with governmental programs like the RFS[183](index=183&type=chunk) - A **$1.00** increase in the price of RINs is expected to have a negative impact on Net income (loss) of approximately **$65.0 million** per year[129](index=129&type=chunk) - The company has not entered into any derivative instruments to manage RINs price risk[183](index=183&type=chunk) [Interest Rate Risk](index=81&type=section&id=Interest%20Rate%20Risk) Interest rate risk on variable debt is limited; a 100 basis point change impacts net income by approximately $3.3 million annually - The company's exposure to interest rate changes on fixed and variable rate debt is limited to the fair value of the debt[130](index=130&type=chunk) - A **100 basis point** change in interest rates on variable rate debt as of March 31, 2024, would impact Net income (loss) by approximately **$3.3 million** per year[150](index=150&type=chunk) Outstanding Variable Rate Debt | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :------------------- | :-------------------------- | :--------------------------- | | Outstanding variable rate debt | $332.4 | $149.7 | [Foreign Currency Risk](index=82&type=section&id=Foreign%20Currency%20Risk) Minimal foreign currency risk exists, with hedging costs exceeding benefits of further exposure reduction - The company has minimal exposure to foreign currency risk[151](index=151&type=chunk) - The cost of hedging foreign currency risk is viewed as exceeding the benefit of further reductions in exposure[151](index=151&type=chunk) Part IV: Controls and Procedures [Evaluation of Disclosure Controls and Procedures](index=83&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2024, ensuring timely information accumulation - The company's disclosure controls and procedures were evaluated and deemed effective as of **March 31, 2024**[152](index=152&type=chunk) - Disclosure controls are designed to provide reasonable assurance that required information is accumulated and communicated timely to management[152](index=152&type=chunk) [Remediation of Previously Reported Material Weakness](index=83&type=section&id=Remediation%20of%20Previously%20Reported%20Material%20Weakness) Material weakness in internal controls for redeemable noncontrolling interests was remediated as of March 31, 2024 - A material weakness in internal controls related to the subsequent accounting for and measurement of redeemable noncontrolling interests was previously identified[153](index=153&type=chunk) - This material weakness led to errors in the attribution of net losses to redeemable noncontrolling interest and partners, resulting in a restatement of prior financial statements[153](index=153&type=chunk) - The material weakness has been remediated as of **March 31, 2024**, through implementing new controls, increased rigor in financial reporting, and engaging third-party technical accounting expertise[174](index=174&type=chunk) [Changes in Internal Control over Financial Reporting](index=83&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred in Q1 2024, beyond remediation efforts - No material changes in internal control over financial reporting occurred during Q1 2024, other than the remediation actions for the previously reported material weakness[154](index=154&type=chunk) Part II: Other Information [Item 1. Legal Proceedings](index=84&type=section&id=Item%201.%20Legal%20Proceedings) No pending legal proceedings beyond routine litigation; commitments and contingencies are referenced in Note 6 - The company is not a party to any pending legal proceedings other than ordinary routine litigation incidental to its business[155](index=155&type=chunk) - Information provided under Note 6 — 'Commitments and Contingencies' is incorporated by reference[155](index=155&type=chunk) [Item 1A. Risk Factors](index=84&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the 2023 Annual Report - No material changes in the risk factors discussed in Part I, Item 1A 'Risk Factors' in the 2023 Annual Report[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=84&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported - None[156](index=156&type=chunk) [Item 3. Defaults Upon Senior Securities](index=84&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[175](index=175&type=chunk) [Item 4. Mine Safety Disclosures](index=84&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Not applicable[176](index=176&type=chunk) [Item 5. Other Information](index=84&type=section&id=Item%205.%20Other%20Information) A trading plan for up to 82,000 common units was adopted by the Daniel J. Sajkowski 2011 Trust for future sales - The Daniel J. Sajkowski 2011 Trust adopted a trading plan (Rule 10b5-1(c)) for the potential sale of up to **82,000** common units between **March 1, 2025**, and **July 31, 2025**[201](index=201&type=chunk) [Item 6. Exhibits](index=85&type=section&id=Item%206.%20Exhibits) Exhibits include Conversion agreements, partnership amendments, senior note indentures, financing agreements, and certifications - Exhibits include the Conversion Agreement and its First Amendment, amendments to the First Amended and Restated Agreement of Limited Partnership, and the Amended and Restated Limited Liability Company Agreement of Calumet GP, LLC[157](index=157&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[163](index=163&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[188](index=188&type=chunk)[203](index=203&type=chunk) - Key debt-related exhibits include the Indenture for 2029 Secured Notes and the Fourth Amendment to the Third Amended and Restated Credit Agreement[164](index=164&type=chunk)[166](index=166&type=chunk) - Inventory financing agreements, such as the Monetization Master Agreement, Financing Agreement, and Supply and Offtake Agreement with J. Aron & Company LLC, are also listed[166](index=166&type=chunk)[204](index=204&type=chunk) - Sarbanes-Oxley Section 302 and Section 1350 certifications of Todd Borgmann and David Lunin are included[166](index=166&type=chunk) [SIGNATURES](index=88&type=section&id=SIGNATURES) The report was signed by David Lunin, EVP and CFO of Calumet GP, LLC, on May 10, 2024 - The report was signed by David Lunin, Executive Vice President and Chief Financial Officer of Calumet GP, LLC, on **May 10, 2024**[162](index=162&type=chunk)[167](index=167&type=chunk)

Financial Data and Key Metrics Changes - The company generated $21.6 million of adjusted EBITDA in Q1 2024, impacted by a rate ramp-up and inventory drawdown at Montana Renewables, as well as a successful turnaround at Shreveport [14][24][52] - The adjusted EBITDA for the Montana business recorded a loss of $14.5 million, primarily due to the legacy CMR business and seasonal weakness in the asphalt market [24][25] - The company repaid $50 million of its 2025 notes earlier in April, indicating a commitment to reducing debt levels [27] Business Line Data and Key Metrics Changes - The Performance Brands segment generated $13.4 million of adjusted EBITDA, reflecting a year-over-year volume growth of approximately 13% [53] - The SPS business generated $41.8 million of adjusted EBITDA, with successful turnaround operations contributing positively [52] - The Montana Renewables segment is expected to demonstrate a clean financial quarter in Q2, with operations holding strong and a focus on competitive advantages [24][26] Market Data and Key Metrics Changes - The industry capacity for renewable diesel is well above 6 billion gallons per year, while the EPA's Renewable Volume Obligation (RVO) for 2023-2025 is set at 4.5 billion gallons, creating challenges for biomass-based diesel producers [8][17] - The current index margin for renewable diesel is around $1 per gallon, significantly lower than the historical average of approximately $2 per gallon, impacting profitability across the industry [46][54] Company Strategy and Development Direction - The company is focused on completing its C-Corp conversion within the next 60 days, which is expected to attract larger institutional investors and increase trading liquidity [12][13] - The MAX SAF expansion project is in the late stages of the DOE loan process, which is anticipated to unlock significant growth opportunities in the sustainable aviation fuel market [19][26] - The company aims to demonstrate the competitive advantages of its Montana Renewables business, driven by superior logistics and location [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of retail asphalt sales as the paving season begins, indicating a return to normal operations [6] - The management highlighted the need for the EPA to increase the RVO to incentivize renewable fuel production, as current levels are insufficient to meet industry capacity [17][48] - The company expects to see improvements in industry margins as higher-cost producers shut down or reduce operations, which should stabilize the market [54] Other Important Information - The company has made significant progress in reliability investments, which helped mitigate downtime during winter storms [21] - The management noted that the transition to a C-Corp structure is a critical strategic step, as it will allow access to a broader investor base [42][116] Q&A Session Summary Question: Can you provide more detail on the process of transitioning from disadvantaged to advantaged feedstock? - Management explained that the transition involved moving from more expensive vegetable oil to a mix that includes cheaper tallow, which has improved financial performance [30][31] Question: What are the expectations for cash flow generation in the summer months? - Management indicated that they expect to reach normalized cash flow levels in Q2, with a focus on reducing working capital [35][61] Question: Can you provide updates on the MAX SAF expansion project? - Management confirmed that the project is progressing well and that they are comfortable with the previously stated capacity of 18,000 barrels per day [66][67] Question: What is the current status of the EPA's RVO and its impact on the industry? - Management noted that the EPA's recent actions have been challenged in court, and they are awaiting further guidance on how to proceed [68][91] Question: How is the company addressing its debt reduction strategy? - Management reiterated their commitment to reducing debt levels, utilizing cash from operations and potential monetization of Montana Renewables as part of their strategy [27][95][88]

[First Quarter 2024 Financial and Operational Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20and%20Operational%20Highlights) Calumet reported a net loss and reduced Adjusted EBITDA in Q1 2024, while advancing strategic initiatives and improving MRL operations [Overview of Q1 2024 Results](index=1&type=section&id=Overview%20of%20Q1%202024%20Results) Calumet reported a net loss of $41.6 million and an Adjusted EBITDA of $21.6 million for the first quarter of 2024, a significant decrease from the prior year's net income of $18.6 million and Adjusted EBITDA of $77.3 million Q1 2024 Key Financial Metrics (in millions, except per unit data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $(41.6) | $18.6 | | Limited partners' interest basic net income (loss) per unit | $(0.51) | $0.23 | | Adjusted EBITDA | $21.6 | $77.3 | - The plan to convert the company's structure from a Master Limited Partnership (MLP) to a C-Corp is reported to be on track[17](index=17&type=chunk) - The Shreveport facility turnaround was completed successfully during the first quarter[17](index=17&type=chunk) - Montana Renewables (MRL) showed sequential improvement, achieving **positive EBITDA in March 2024** and maintaining planned production levels in April[40](index=40&type=chunk)[41](index=41&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Todd Borgmann highlighted the strategic importance of the upcoming C-Corp conversion and demonstrating the competitive advantages of Montana Renewables - The company anticipates an exciting spring and summer, focusing on the C-Corp conversion and demonstrating Montana Renewables' competitive advantages[41](index=41&type=chunk) - The Department of Energy (DOE) loan process and the MaxSAF project are progressing well[41](index=41&type=chunk) - Q1 financial results were negatively affected by a sharp increase in crude prices, which compressed specialty and wholesale asphalt margins, and the seasonal closure of the Montana retail asphalt rack[41](index=41&type=chunk) [Segment Performance Analysis](index=1&type=section&id=Segment%20Performance%20Analysis) All operating segments reported a year-over-year decline in Adjusted EBITDA for the first quarter of 2024 Segment Adjusted EBITDA (in millions) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Specialty Products and Solutions | $41.8 | $76.0 | | Performance Brands | $13.4 | $16.4 | | Montana/Renewables | $(14.5) | $4.8 | [Specialty Products and Solutions (SPS)](index=2&type=section&id=Specialty%20Products%20and%20Solutions%20%28SPS%29) The SPS segment generated Adjusted EBITDA of $41.8 million, a significant decrease from $76.0 million in the prior-year quarter - SPS segment Adjusted EBITDA was **$41.8 million in Q1 2024**, down from **$76.0 million in Q1 2023**[22](index=22&type=chunk) - The primary reason for the decline was the fuel market returning to near mid-cycle levels[22](index=22&type=chunk) [Performance Brands (PB)](index=2&type=section&id=Performance%20Brands%20%28PB%29) The PB segment reported Adjusted EBITDA of $13.4 million, compared to $16.4 million in the first quarter of 2023 - PB segment Adjusted EBITDA was **$13.4 million in Q1 2024**, compared to **$16.4 million in Q1 2023**[42](index=42&type=chunk) - The Q1 2023 result included a **$5.0 million insurance claim**, making the year-over-year comparison less direct[42](index=42&type=chunk) [Montana/Renewables (MR)](index=2&type=section&id=Montana%2FRenewables%20%28MR%29) The MR segment reported an Adjusted EBITDA loss of $14.5 million, a sharp reversal from the $4.8 million in Adjusted EBITDA in the prior year - MR segment reported an Adjusted EBITDA loss of **$(14.5) million in Q1 2024**, versus a gain of **$4.8 million in Q1 2023**[19](index=19&type=chunk) - The loss was attributed to high-priced inventory at Montana Renewables and seasonal weakness in the specialty asphalt refinery, where margins were compressed by rising crude costs[19](index=19&type=chunk) [Corporate](index=2&type=section&id=Corporate) Corporate costs, represented as a negative contribution to Adjusted EBITDA, were $19.1 million for the first quarter of 2024 - Corporate costs were **$(19.1) million of Adjusted EBITDA in Q1 2024**, slightly lower than the **$(19.9) million in Q1 2023**[23](index=23&type=chunk) [Financing Activities](index=2&type=section&id=Financing%20Activities) In March 2024, the company executed a significant financing transaction by issuing $200.0 million of new 9.25% Senior Secured First Lien Notes due 2029 - On March 7, 2024, the company issued **$200.0 million of 9.25% Senior Secured First Lien Notes due 2029**[43](index=43&type=chunk) - Net proceeds were used to redeem all outstanding 9.25% notes due 2024 and **$50.0 million of the 11.00% notes due 2025**[43](index=43&type=chunk) [Operations Summary](index=3&type=section&id=Operations%20Summary) Total sales volume increased to 83,602 barrels per day (bpd) in Q1 2024 from 76,856 bpd in the prior year Key Operational Volumes (in bpd) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total sales volume | 83,602 | 76,856 | | Total feedstock runs | 71,548 | 71,559 | | Total facility production | 72,266 | 73,222 | | - Specialty Products and Solutions | 51,688 | 54,466 | | - Montana/Renewables | 18,995 | 16,825 | | - Performance Brands | 1,583 | 1,931 | - The increase in Montana/Renewables production was driven by a significant rise in renewable fuels output, which grew to **8,243 bpd from 5,030 bpd** year-over-year[44](index=44&type=chunk) [Financial Statements](index=10&type=section&id=Financial%20Statements) The financial statements reflect a Q1 2024 net loss, a slight asset decrease, and increased cash usage from operations [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $41.6 million for Q1 2024, a stark contrast to the $18.6 million net income in Q1 2023 Q1 2024 vs Q1 2023 Statement of Operations (in millions) | Line Item | Q1 2024 | Q1 2023 (Restated) | | :--- | :--- | :--- | | Sales | $1,005.8 | $1,037.3 | | Gross profit | $78.5 | $96.6 | | Operating income | $36.3 | $43.0 | | Total other expense | $(77.7) | $(23.9) | | Net income (loss) | $(41.6) | $18.6 | | Limited partners' interest basic net loss per unit | $(0.51) | $0.23 | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets were $2,731.6 million, a slight decrease from $2,751.3 million at year-end 2023 Balance Sheet Summary (in millions) | Account | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $811.7 | $794.7 | | Total assets | $2,731.6 | $2,751.3 | | Total current liabilities | $824.4 | $1,112.7 | | Long-term debt, less current portion | $2,055.6 | $1,829.7 | | Total liabilities | $3,015.7 | $2,996.0 | | Total partners' capital (deficit) | $(529.7) | $(490.3) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended March 31, 2024, net cash used in operating activities was $94.0 million, a significant increase from $26.7 million in the prior year Cash Flow Summary (in millions) | Activity | Q1 2024 | Q1 2023 (Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | $(94.0) | $(26.7) | | Net cash used in investing activities | $(20.0) | $(130.4) | | Net cash provided by financing activities | $130.7 | $133.1 | | Net increase (decrease) in cash | $16.7 | $(24.0) | | Cash and cash equivalents at end of period | $23.9 | $11.2 | [Non-GAAP Financial Measures and Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP measures like Adjusted EBITDA and provides their reconciliation to GAAP net income [Definition of Non-GAAP Measures](index=8&type=section&id=Definition%20of%20Non-GAAP%20Measures) The company uses non-GAAP measures such as EBITDA, Adjusted EBITDA, and Distributable Cash Flow to supplement its GAAP financial information - EBITDA is defined as net income (loss) plus interest expense, income taxes, and depreciation and amortization[53](index=53&type=chunk) - Adjusted EBITDA further adjusts EBITDA for items like impairment, hedging gains/losses, non-cash compensation, inventory adjustments (LCM, LIFO, RINs), and other non-recurring expenses[2](index=2&type=chunk) - Distributable Cash Flow is defined as Adjusted EBITDA less replacement/environmental capital expenditures, turnaround costs, cash interest expense, and income tax expense[36](index=36&type=chunk) - Management uses these non-GAAP measures to analyze segment performance, evaluate past performance, and assess future prospects[35](index=35&type=chunk)[37](index=37&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20EBITDA) The company reconciled its Q1 2024 GAAP net loss of $41.6 million to a non-GAAP Adjusted EBITDA of $21.6 million Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $(41.6) | $18.6 | | Interest expense | $60.8 | $49.2 | | Depreciation and amortization | $36.0 | $29.5 | | **EBITDA** | **$55.4** | **$97.8** | | Adjustments (net) | $(33.8) | $(20.5) | | **Adjusted EBITDA** | **$21.6** | **$77.3** | | **Distributable Cash Flow** | **$(59.6)** | **$4.8** | - Significant adjustments in Q1 2024 included a **$71.1 million gain from RINs mark-to-market** and **$60.8 million in other non-recurring expenses**, which included a **$51.9 million realized loss on derivatives for inventory financing**[58](index=58&type=chunk)[7](index=7&type=chunk) [Other Information](index=4&type=section&id=Other%20Information) This section details Calumet's business, corporate conversion, and important forward-looking statement disclaimers [About the Partnership & Corporate Conversion](index=4&type=section&id=About%20the%20Partnership%20%26%20Corporate%20Conversion) Calumet Specialty Products Partners, L.P. manufactures and markets specialty branded products and renewable fuels, operating twelve facilities in North America - Calumet manufactures, formulates, and markets specialty branded products and renewable fuels, with headquarters in Indianapolis and twelve facilities across North America[47](index=47&type=chunk) - The company is pursuing a corporate reorganization to convert from an MLP to a new C-Corporation named Calumet, Inc. ("New Calumet")[48](index=48&type=chunk) - The proposed conversion requires unitholder approval, and the company has filed a registration statement (Form S-4) and a proxy statement/prospectus with the SEC[48](index=48&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements regarding business outlook, cash flows, capital expenditures, and the anticipated completion and benefits of the C-Corp conversion - The report includes forward-looking statements concerning demand, business outlook, capital expenditures, and the expected benefits and timing of the C-Corp Conversion[51](index=51&type=chunk) - These statements are based on current assumptions that are subject to significant business, economic, and competitive risks[34](index=34&type=chunk) - Material factors that could cause different results include crude oil price volatility, demand for refined products, ability to comply with debt covenants, and the costs of complying with the Renewable Fuel Standard (RFS)[51](index=51&type=chunk)

INDIANAPOLIS, April 26, 2024 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," "Calumet," "we," "our" or "us"), announced today that it plans to report results for the first quarter 2024 on May 10, 2024. A conference call to discuss the financial and operational results is scheduled for May 10 2024, at 9:00 AM ET.Investors, analysts and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call with accompanyi ...

INDIANAPOLIS, April 16, 2024 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," "Calumet," "we," "our" or "us"), today provided an operational update for the first quarter of 2024. As previously reported, Montana Renewables (MRL) resumed production at its Great Falls, MT, site in December 2023.  The site operated well throughout the first quarter of 2024 as volumes sequentially improved each month.  First quarter results for the MRL business are expected to reflect ...

INDIANAPOLIS, March 12, 2024 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) ("Calumet", "our", "we"), announced today plans to attend the Barclays Emerging Growth, Climate Technology Company and Investor Meetings on Thursday March 21, 2024, in New York City, NY. Calumet will be holding one-on-one investor meetings throughout the day at the conference. About Calumet Specialty Products Partners, L.P. Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) manufactures, formulates an ...

INDIANAPOLIS, Feb. 29, 2024 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) has been recognized by EcoVadis for its Corporate Social Responsibility (CSR) commitment. The company received the Committed to Sustainability Badge, while its facilities in Louisiana, Pennsylvania and Texas received EcoVadis silver medal awards. The award showcases Calumet's commitment to improved quality and sustainability, business ethics, respect for environment, human rights and purchasing practices. "C ...

[PART I](index=10&type=section&id=PART%20I) This section provides an overview of the company's business, operational strategies, risk factors, and legal proceedings [Business and Properties](index=10&type=section&id=Items%201%20and%202.%20Business%20and%20Properties) Calumet Specialty Products Partners manufactures and markets specialty products and renewable fuels from twelve North American facilities [Overview](index=10&type=section&id=Overview) The company manufactures specialty products and renewable fuels, operating twelve North American facilities across four reportable segments - The company's business is organized into four reportable segments: Specialty Products and Solutions, Montana/Renewables, Performance Brands, and Corporate[213](index=213&type=chunk) - In the Specialty Products and Solutions segment, the company manufactures and markets products like solvents, waxes, and customized lubricating oils[213](index=213&type=chunk) - The Performance Brands segment focuses on blending, packaging, and marketing high-performance products under the Royal Purple, Bel-Ray, and TruFuel brands[213](index=213&type=chunk) - The Montana/Renewables segment consists of two facilities: one for renewable fuels (renewable diesel, SAF) and another for specialty asphalt, serving local and regional markets[213](index=213&type=chunk) [Business Strategies and Competitive Strengths](index=13&type=section&id=Business%20Strategies%20and%20Competitive%20Strengths) Strategies prioritize asset profitability and liquidity, leveraging diverse products, flexible facilities, and renewable fuel leadership - Key business strategies include enhancing profitability, maintaining liquidity, expanding customer relationships, and considering disciplined acquisitions[243](index=243&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - Competitive strengths are identified as diverse specialty products, flexible and scalable facilities, strong customer relationships, leadership in energy transition via the MRL facility, and an experienced management team[221](index=221&type=chunk)[222](index=222&type=chunk)[247](index=247&type=chunk) [Our Operating Assets and Contractual Arrangements](index=11&type=section&id=Our%20Operating%20Assets%20and%20Contractual%20Arrangements) Operations involve twelve facilities with significant storage, showing shifts in sales volume and feedstock runs Key Operating Facilities and Products (2023 Sales Volume) | Facility | Location | Sales Volume (bpd) | Key Products | | :--- | :--- | :--- | :--- | | Shreveport | Louisiana | 42,400 | Specialty lubricating oils, waxes, gasoline, diesel, jet fuel, asphalt | | Montana Refining | Montana | 13,399 | Specialty asphalt, gasoline, diesel, jet fuel | | Montana Renewables | Montana | 6,188 | Renewable diesel, SAF, renewable hydrogen, etc. | | Princeton | Louisiana | 4,896 | Specialty lubricating oils, asphalt | | Cotton Valley | Louisiana | 4,743 | Specialty solvents | | Karns City | Pennsylvania | 1,486 | White mineral oils, solvents, petrolatums | | Calumet Packaging | Louisiana | 1,068 | Premium synthetic lubricants, fuels, solvents | | Dickinson | Texas | 562 | White mineral oils, compressor lubricants | | Royal Purple | Texas | 335 | Premium synthetic lubricants | | Missouri | Missouri | 212 | Polyol ester-based synthetic lubricants | Production and Feedstock Volumes (in bpd) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total sales volume | 79,805 | 82,946 | (3.8)% | | Total feedstock runs | 77,200 | 80,447 | (4.0)% | | Total facility production | 77,296 | 79,402 | (2.7)% | Sales by Segment (in $ millions) | Segment | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Specialty Products and Solutions | $2,876.9 | $3,508.0 | (18.0)% | | Montana/Renewables | $993.8 | $874.9 | 13.6% | | Performance Brands | $310.3 | $303.4 | 2.3% | | **Consolidated Sales** | **$4,181.0** | **$4,686.3** | **(10.8)%** | [Facilities](index=19&type=section&id=Facilities) Key manufacturing facilities, including Louisiana and Montana sites, support specialty and renewable fuel production Shreveport Facility Production (in bpd) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Crude oil throughput capacity | 60,000 | 60,000 | 60,000 | | Total feedstock runs | 38,248 | 42,453 | 29,971 | | Total facility production | 40,677 | 45,525 | 31,835 | Cotton Valley Facility Production (in bpd) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Crude oil throughput capacity | 13,600 | 13,600 | 13,600 | | Total feedstock runs | 9,125 | 8,975 | 8,349 | | Total facility production | 5,520 | 5,317 | 4,698 | Great Falls Specialty Asphalt Facility Production (in bpd) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Crude oil throughput capacity | 15,000 | 15,000 | 30,000 | | Total feedstock runs | 11,982 | 17,599 | 25,614 | | Total facility production | 11,772 | 17,619 | 25,897 | - The Montana Renewables Facility, converted from a portion of the Great Falls site, has a permitted throughput capacity of **15,000 bpd** to produce renewable fuels, including SAF and renewable diesel[180](index=180&type=chunk) Karns City, Dickinson & Other Facilities Production (in bpd) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Feedstock throughput capacity | 11,300 | 11,300 | 11,300 | | Total feedstock runs | 3,396 | 3,482 | 4,368 | | Total production | 3,419 | 3,582 | 4,269 | [Our Crude Oil and Feedstock Supply](index=30&type=section&id=Our%20Crude%20Oil%20and%20Feedstock%20Supply) The company heavily relies on a few key crude oil and feedstock suppliers, secured via term and evergreen contracts - In 2023, the company had a high concentration of crude oil suppliers[31](index=31&type=chunk) - **BP Products North America Inc. (BP)** supplied approximately **71.7%** of total crude oil[31](index=31&type=chunk) - **Macquarie Energy Canada LTD. (Macquarie)** supplied approximately **18.5%** of total crude oil[31](index=31&type=chunk) - The company utilizes a mix of short-term and long-term contracts, including month-to-month evergreen agreements with Plains and a renewing one-year term agreement with BP[181](index=181&type=chunk) - The Montana Renewables (MRL) facility has entered into various term supply agreements for its renewable feedstocks[34](index=34&type=chunk) [Our Products, Markets, and Customers](index=32&type=section&id=Our%20Products%2C%20Markets%2C%20and%20Customers) The company offers a diverse product portfolio, primarily fuels and lubricating oils, serving a broad North American customer base Product Sales Breakdown (Year Ended Dec 31, 2023) | Product Category | % of Total Sales | | :--- | :--- | | Fuels & Fuel Related Products | 47% | | Lubricating Oils | 19% | | Renewable Products | 12% | | Solvents | 10% | | Packaged and Synthetic Specialty Products | 8% | | Waxes | 4% | - The company has a diverse customer base with no significant concentration[67](index=67&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - Products from the Shreveport facility are sold into Louisiana, Texas, and Arkansas, with excess volumes shipped to the Midwest via the TEPPCO pipeline[63](index=63&type=chunk)[38](index=38&type=chunk) - Renewable fuels from the Montana Renewables facility are distributed into markets in the western half of North America[66](index=66&type=chunk)[43](index=43&type=chunk) [Competition](index=35&type=section&id=Competition) The company faces intense competition from larger integrated petroleum companies, differentiating through flexibility and customer responsiveness - The company competes with large, integrated petroleum companies and independent refiners who may have greater resources and flexibility[45](index=45&type=chunk) - Primary competitors by product category include Exxon Mobil, Motiva, Phillips 66, HF Sinclair, Chevron, Ergon Refining, Cross Oil, San Joaquin Refining, CITGO, Total S.A., The International Group, Valvoline, Royal Dutch Shell, Delek US, and Cenex[46](index=46&type=chunk)[70](index=70&type=chunk)[47](index=47&type=chunk) - The company believes its flexibility and customer responsiveness differentiate it from larger competitors[75](index=75&type=chunk) [Governmental Regulation](index=37&type=section&id=Governmental%20Regulation) Operations are subject to stringent environmental, health, and safety regulations, imposing significant compliance costs and liabilities - Operations are subject to stringent environmental, health, and safety laws which can result in significant sanctions, remedial obligations, and capital expenditures for non-compliance[50](index=50&type=chunk)[78](index=78&type=chunk) - **Air Emissions:** The company must comply with the Clean Air Act (CAA), including National Ambient Air Quality Standards (NAAQS) for ozone and stringent fuel formulation standards like Tier 3 for gasoline sulfur content[82](index=82&type=chunk)[56](index=56&type=chunk)[84](index=84&type=chunk) - **Climate Change:** The company faces regulatory, political, litigation, and financial risks associated with greenhouse gas (GHG) emissions, including potential legislation and shifts in investor sentiment[114](index=114&type=chunk)[60](index=60&type=chunk)[115](index=115&type=chunk) - **Hazardous Substances:** The company is subject to liability under CERCLA ("Superfund") and RCRA for the cleanup of hazardous substance releases, potentially including contamination from prior owners[116](index=116&type=chunk)[118](index=118&type=chunk)[90](index=90&type=chunk) - **Water Discharges:** Compliance with the Clean Water Act and the Oil Pollution Act of 1990 (OPA) is required, imposing strict controls on pollutant discharges and liability for oil spills[120](index=120&type=chunk)[92](index=92&type=chunk) - **Great Falls Refinery:** The company is involved in an ongoing legal process regarding indemnification from HF Sinclair Corporation for pre-closing environmental contamination at the Great Falls refinery[54](index=54&type=chunk)[172](index=172&type=chunk) [Human Capital Management](index=50&type=section&id=Human%20Capital%20Management) The company employs approximately 1,580 people, with many under collective bargaining, emphasizing safety and competitive benefits - As of February 28, 2024, the company employed approximately **1,580** people, with around **600** covered by collective bargaining agreements[131](index=131&type=chunk) Collective Bargaining Agreements | Facility | Union | Expiration Date | | :--- | :--- | :--- | | Cotton Valley | International Union of Operating Engineers | Nov 19, 2026 | | Princeton | International Union of Operating Engineers | Aug 20, 2024 | | Dickinson | International Union of Operating Engineers | Dec 12, 2024 | | Shreveport | United Steelworkers | Apr 30, 2026 | | Missouri | United Steelworkers | Apr 30, 2025 | | Karns City | United Steelworkers | Jan 31, 2027 | | Great Falls | United Steelworkers | Jul 31, 2026 | - The company offers competitive salaries, comprehensive benefits (health, disability, 401(k)), and short- and long-term incentive programs to foster ownership and align employee interests with unitholders[105](index=105&type=chunk) - A core tenet is employee safety, with a goal of zero incidents and a culture that empowers employees to stop unsafe work[133](index=133&type=chunk)[106](index=106&type=chunk) - The company is committed to a culture of diversity and inclusion in its hiring and advancement practices[157](index=157&type=chunk)[108](index=108&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from macroeconomic volatility, commodity prices, operational hazards, partnership structure, and tax implications [Risks Related to our Business](index=53&type=section&id=Risks%20Related%20to%20our%20Business) Business risks include macroeconomic volatility, commodity price fluctuations, operational dependencies, and regulatory compliance, especially RFS - Business performance is dependent on supply and demand fundamentals, which are affected by macroeconomic factors outside of the company's control[139](index=139&type=chunk)[160](index=160&type=chunk) - Exposure to volatile commodity prices can negatively impact margins, profitability, and cash flows; the Gulf Coast 2/1/1 crack spread ranged from a high of **$50.05** to a low of **$13.98 per barrel** in 2023[160](index=160&type=chunk)[161](index=161&type=chunk)[143](index=143&type=chunk) - Hedging activities may not be effective and could reduce earnings, as the company only hedges a portion of its expected requirements[163](index=163&type=chunk)[146](index=146&type=chunk)[164](index=164&type=chunk) - The company depends on third-party pipelines (e.g., Plains, Enterprise) for feedstock supply and product transportation, and their unavailability could significantly harm revenues[149](index=149&type=chunk)[168](index=168&type=chunk) - The availability and cost of Renewable Identification Numbers (RINs) for RFS compliance, along with litigation over Small Refinery Exemption (SRE) petitions, could materially affect financial results[210](index=210&type=chunk)[623](index=623&type=chunk)[351](index=351&type=chunk) - A material weakness was identified in internal control over financial reporting related to the accounting for redeemable noncontrolling interests, which could affect the accuracy and timeliness of financial reporting[582](index=582&type=chunk)[608](index=608&type=chunk)[318](index=318&type=chunk) [Risks Related to Our Partnership Structure](index=90&type=section&id=Risks%20Related%20to%20Our%20Partnership%20Structure) The partnership structure presents risks from general partner conflicts, limited unitholder rights, and potential unit dilution - The general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests over those of unitholders[237](index=237&type=chunk)[336](index=336&type=chunk)[373](index=373&type=chunk) - The partnership agreement reduces the standards to which the general partner is held by state fiduciary duty law and restricts remedies available to unitholders[339](index=339&type=chunk)[424](index=424&type=chunk) - Unitholders have limited voting rights, are not entitled to elect the general partner or its directors, and require a **66 2/3%** vote of all outstanding units to remove the general partner[341](index=341&type=chunk)[342](index=342&type=chunk)[473](index=473&type=chunk) - The company may issue an unlimited number of additional limited partner interests without unitholder approval, which would dilute current unitholders' ownership interests[478](index=478&type=chunk)[398](index=398&type=chunk) [Risks Related to the Corporate Conversion](index=8&type=section&id=Risks%20Related%20to%20the%20Corporate%20Conversion) The proposed corporate conversion is subject to unitholder approval and conditions, with potential negative impacts if delayed - The Corporate Conversion is subject to conditions, including unitholder approval, and there is no guarantee it will be completed[236](index=236&type=chunk)[393](index=393&type=chunk)[88](index=88&type=chunk) - Failure to complete the conversion, or significant delays, could negatively affect the company's business, financial results, and the price of its common units[236](index=236&type=chunk)[417](index=417&type=chunk) [Tax Risks to Common Unitholders](index=8&type=section&id=Tax%20Risks%20to%20Common%20Unitholders) Unitholders face tax risks including potential entity-level taxation, tax obligations without cash distributions, and complex filing - The company's tax treatment depends on its status as a partnership for federal income tax purposes; if treated as a corporation, cash available for debt payments and distributions would be substantially reduced[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - Unitholders may be required to pay taxes on their share of the company's income even if they do not receive any cash distributions[212](index=212&type=chunk)[405](index=405&type=chunk)[681](index=681&type=chunk) - Tax gain or loss on the disposition of common units could be more or less than expected, and a substantial portion of the amount realized may be taxed as ordinary income[406](index=406&type=chunk)[682](index=682&type=chunk) - Tax-exempt entities and foreign persons face unique tax issues, including potential unrelated business taxable income and withholding taxes[212](index=212&type=chunk)[408](index=408&type=chunk)[432](index=432&type=chunk) - If the IRS makes audit adjustments, it may assess and collect taxes directly from the partnership, reducing cash available for distributions[409](index=409&type=chunk)[452](index=452&type=chunk) [Cybersecurity](index=58&type=section&id=Item%201C.%20Cybersecurity) The company maintains a cyber risk management program and Incident Response Plan to mitigate threats, which have not materially impacted operations - The company maintains a cyber risk management program aligned with its enterprise risk management process, overseen by the Director of Information Technology and the Board's Risk Committee[454](index=454&type=chunk)[412](index=412&type=chunk)[456](index=456&type=chunk) - An Incident Response Plan (IRP) is in place to manage cybersecurity incidents, aligning with the NIST framework and covering preparation, detection, containment, and recovery[436](index=436&type=chunk) - The company has policies to oversee and mitigate cybersecurity risks associated with third-party service providers, requiring a formal IT Security Governance review[687](index=687&type=chunk) - To date, cybersecurity threats have not materially affected the company's business strategy, results of operations, or financial condition[689](index=689&type=chunk) [Legal Proceedings](index=59&type=section&id=Item%203.%20Legal%20Proceedings) The company is not involved in any material pending legal proceedings beyond routine litigation incidental to its business - The company is not a party to, and its property is not the subject of, any pending legal proceedings other than ordinary routine litigation incidental to its business[414](index=414&type=chunk) - The company does not expect the outcomes of current litigation, individually or in the aggregate, to have a material adverse effect on its financial position, results of operations, or cash flows[790](index=790&type=chunk)

Brad McMurray - Investor Relations Todd Borgmann - Chief Executive Officer Company Participants Neil Mehta - Goldman Sachs Manav Gupta - UBS Sameer Joshi - H.C. Wainwright Gregg Brody - Bank of America Jason Gabelman - TD Cowen Operator Brad McMurray Good morning. Thank you for joining us today for our fourth quarter and full-year 2023 earnings call. With me on today's call are Todd Borgmann, CEO; David Lunin, CFO; Bruce Fleming, EVP, Montana/Renewables and Corporate Development; and Scott Obermeier, EVP, S ...