Thank you, Olivia. Good morning, everyone and thank you for joining us today for our fourth quarter earnings results call.

With us on today’s call are Steve Mawer, CEO; Todd Borgmann, CFO; Bruce Fleming, EVP of Montana Renewables and Corporate Development; Scott Obermeier, EVP of Specialty Products and Solutions; and Mark , EVP of Performance Brands.

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

2020 was a year characterized by crisis. It was also a year characterized by how the Calumet team responded to that crisis.

The market challenge handed to us by the pandemic was unprecedented in the combination of both its severity and its length. We’re through the worst for the average crisis last days or weeks, not more than a year.

We used our crisis playbook to effectively manage through all the uncertainty and volatility and succeeded in generating positive cash flow, a significant result given the market conditions. I can’t thank the Calumet team enough for how they rose to the challenge.

At a time when execution and Timok had to be impactable, our employees excel. A particular note is that most of our safety and environmental performance measures improved by an exceptional 30% to 40% year-on-year.

To improve performance in this foundational area, during a crisis is simply fantastic and further shows how committed our team is for driving excellence of all forms. The cards dealt us by the pandemic meant that our financial results inevitably would disappoint compared to a normal year.

And on top of an economic crisis, there was confusion and inaction on renewable policy by the algo administration just to make the challenge even more complicated. If you look back to the price performance of both our debt securities and our common units in the spring of 2020, it’s clear that the opinion of the financial markets was that this storm was going to overwhelm the industry and with that Calumet.

The storm did hit, but it didn’t materialize into the result that the markets broadly assumed. And we thank our unitholders and bondholders who have showed confidence in us.

So far, those who believed in Calumet and our team have been rewarded with outperformance during the recovery.

Thank you, Steve. Let’s turn to Slide 4, where we provide the fourth quarter and full year highlights.

Calumet reported adjusted EBITDA for the quarter of negative $8.6 million. Similar to the rest of 2020, the specialty segment performed exceptionally well, generating $61.4 million of adjusted EBITDA in the quarter, while the field segment lost $57.9 million of adjusted EBITDA.

Of note, the largest driver of this field loss in the fourth quarter was $52.9 million of non-cash rent expense. For the full year, Calumet generated $141.5 million of adjusted EBITDA, including the corporate cost center.

The specialty segment delivered $238 million of adjusted EBITDA, which was up more than 14% from 2019 despite the challenges of the past year. As you know, back in the second quarter, we, at Calumet, shifted our entire focus to avoiding cash burn amidst the pandemic.

In 2020, we generated $62.8 million of cash flow from operations and $18.8 million of free cash flow. We recently completed a $70 million sale-leaseback financing transaction involving our field assets at our Shreveport plant and proceeds will be used to pay down 2022 notes.

Earlier in the year, we extended the maturity date on 200 million of ‘22 notes to 2024. These creative financing solutions allow us to manage our debt maturities comfortably, and we remain focused on our more material strategic priorities as we are well positioned to create value.

To further quantify the key drivers of 2020, let’s turn to Slide 5. I don’t think anyone means reminded of how challenging 2020 was to all fuels producers.

Fuels margins were $93 million worse in 2020 and RINs costs were $117 million higher than in 2019. Remember, RINs have not historically been a cash expense for Calumet.

These two noncontrollable items accounted for $210 million of the decrease in adjusted EBITDA versus the prior year. Helping offset the fuels market was a $23 million improvement in specialty margins and transportation costs as well as a $78 million improvement in our cost structure.

It was these items that allowed us to generate cash this past year. We expect this more efficient cost structure to continue to provide advantage going forward and the proven resilience of our specialty business reinforces our strategy of focusing on specialties growth.

On Slide 6, we detail the fuels product segment. The crack spread and rent headlines we just discussed really sum up the fields here, and we controlled what we could to offset them.

This segment lost $30.3 million of adjusted EBITDA in 2020, down $182.8 million from 2019. I mentioned that RINs expense for the year was $117 million higher than 2019 and the rent impact in the fourth quarter alone was $36 million worse than the third quarter of 2020.

Again, these were non-cash expenses in both the fourth quarter and the full year. More positively, with supply across the country slowing down, our local rack sales reached record levels.

Our strategy in this business has continued to grow in our local markets as spreads return.

Thanks, Todd. Let’s turn to Slide 9.

Several weeks ago, as part of our strategic update, we announced that we were planning to resegment our financials going forward. Since selling the San Antonio refinery in 2019, the reality of Calumet has been that we have operated 3 distinct businesses that we will clearly portray in our financials starting in the first quarter of 2021.

We will also follow-up with an undertaking to make these businesses more understandable and transparent. In our humble opinion, each of these 3 businesses is a competitively advantaged gem with clear growth and development opportunities.

Hi, good morning. This is on for Neil Mehta.

Thanks for taking my question. So you pointed to higher RINs cost wing on refining profitability during the quarter.

Can you just talk a little bit more about how you see RINs costs for Calumet tracking in 2021 and then what’s that range volatility driver in your decision to explore renewable diesel like grace falls as an offset? Thanks you.

Hi, . It’s Bruce.

Good morning. So the EPA is a pretty difficult position to play.

And I think as you look back over a couple of years, they have done a pretty good job picking their way through all of the details of administering under the Clean Air Act. Last year, there were a lot of political influences.

And as Steve mentioned, it costs in action on a couple of key things. So basically, right now, everybody is suing everybody.

We’re tracking 29 lawsuits. And I think until that settles, the picture is going to remain unclear.

As Todd said, historically, this is a non-cash accounting entry for us. And as such, it actually doesn’t drive strategic decision-making.

Okay, thank you. Appreciate that.

Very helpful. And then just as a follow-up, would just be around feedstock availability for renewable diesel and how Calumet thinking about securing that feedstock for great fold?

Yes. That’s an interesting one.

I’ll give you a couple of broad strokes. But I think to start with, the complementary interest of whoever is our final selection as a strategic partner that will be important in the determination there.

So for example, if it’s a partner that brings the strength of gathering the feedstocks themselves, we would want to accommodate that on the project. Broadly speaking – so with the obvious point made.

Broadly speaking, the fork in the road is plants or animal feeds. And the long-term availability of plant-based feed, I don’t think, is in doubt.

There are a lot of tactical folks projecting various assumptions into some kind of a pinch point. That’s really hard to imagine.

The total amount of announced renewable diesel projects is a whopping 5% of the U.S. diesel demand.

So we really don’t see a feedstock problem on the plant side. The animal side is very different.

It’s a lot harder to parse. It would also require investment in treating facilities.

So for all these reasons, the strategic partner that we eventually take on is going to have a strong voice in what’s determined.

Okay, great. Very helpful.

Thank you.

Good morning, guys. Just to maybe stay on the theme of the renewable facility.

Could you talk a little bit about maybe the timing around realizing the third party investment, when you think you’ll have the project online? And then could you talk a little bit about perhaps you gave us some normalized numbers for this project.

Can you give us a sense of what normalized numbers were prior to this? And potentially what normalized numbers are for the rest of the businesses, as you’ve started to break them out?

Yes. Gregg, if I take the last one first, we will.

Produce all of that. And that will include a restatement looking backwards and so you are about to get all of that from Todd in the relatively near future.

So I’m going to wait for the actuals, if you don’t mind. But I will say that a lot of the industry announced projects are finding ways to repurpose refineries that weren’t that good.

Ours isn’t in that condition. Ours is quite a good refinery.

It’s just small, but happens to offer a top decile candidate because of the oversized hydrocrackers. So we’ve had a confluence of unique circumstances.

That I think point to trying to find a way to put the renewables in without taking the crude out, and this is what we’ve come up with. In terms of the timing, again, that’s going to have a lot to do with the appetite of a strategic partner to go in a particular direction, and I’ll use the same example that I just did.

If for some reason, we find ourselves partnering with an entity that is on the animal feedstock side, we’re going to have to design and incorporate some treating facilities that right now are not in the vision. So there is a bit of an interaction there.

I’ll tell you though, our intent is to sort this quickly so that, ultimately, we create a partial deleveraging events in 2021 based on the equity injection from the partner. And then, of course, we’ll have the ongoing participation in cash flow as we build up the value chain.

And the – once you get the investment, how long would it take to convert the facility?

There is a sequence of engineering activities. If I jump over it, we’ll be – we will have feed in by early next year.

We’ll have full capability no worse than 12 months after that.

12 months. Maybe it’s – you touched on partial deleveraging, what are you hoping to achieve here when you say that?

Joint venture.

But the deleveraging is there the capital you’re talking about raising? How much could you deleverage?

Well, you’re basically asking what the plant will sell for? We’ll find out.

Got it. So the JV is ideally a 50-50 JV, I guess it depends on what it comes down to?

Yes. I think, again, we’re fairly flexible on structuring.

There are – I’m hoping to convey the idea that there are a lot of different ways to put all the Lego blocks together. If we do or don’t have feedstock retreatment for some reason, the hydrocracker itself is capable of a series of pipe stretching expansions to a higher capability.

On the product side, whether we go to Canada and therefore, tune the operation for more arctic spec diesel or whether we’re sending it all down to L.A., where it’s nice and warm, are all material considerations. And so the partner is going to have a point of view and a voice on these things.

And then financially, we’re certainly open to an appropriate sharing of the new created revenue.

Yes, Gregg, this is Steve. I mean I would just add as we look through this process, and it’s an exciting process.

And it’s all about creating unitholder value. And so I think just kind of starting by the management team at Calumet, gee, we’d like to be in a 50-50 JV or 49-51 or 51-49 or whatever.

And then back engineering isn’t the right way to create unitholder value. We need to be aligned with the right partner and create the right deal for our unitholders.

Is it conceivable that you would still consider selling the facility?

All facilities – everything we have, we have whole values on. It’s – I think that’s prudent management.

Got it. And one more here for you, and I’ll jump back in the queue.

How does this facility address the RINs headwind that you have? And maybe you could talk a little bit about just some general RINs – your RINs this year?

It’s a – we – so compliance is accomplished by giving the EPA a quantity of RINs. Everybody loves to price that as if it was a financial instrument, but it’s not.

This is an opaque market. This is a complicated market.

And all I can tell you is we have not had to settle by sending anybody any cash historically.

Does this facility, I presume relate this facility helps you in the biodiesel facility would help you address any rent issues. Can you quantify how much of that would reduce your obligation?

So the production of D4 or D5 RINs, depending on how we settle the technology, is a RIN per gallon, and this is a lot of gallons. It’s way more than what Calumet requires.

So it makes us RIN long.

That’s helpful. I will jump back in the queue.

I tell you that.

Alright. I have got few more here.

So on the you…

Did we lose, Gregg?

We may have lost the .

Yes. Gregg, we can hear you, and you’ve been near us.

Gregg, I just want to reiterate we didn’t hang up on you, Gregg. Just want to say that.

I can hear you all along. I was talking to a phone.

You got sound great. Maybe just coming back to some of the things I noticed.

So your SG&A went down fourth quarter quite a bit. Is that a run rate number we should think about?

Or is it – or how should we think about that in 2021?

Yes. For the year, Gregg, like you said, the corporate SG&A was around $65 million for the year.

We’d expect about $20 million of that to come back, so kind of as it stands today, I’d look – think about kind of an $85 million type run rate. So in other words, about $30 million of the savings will stick.

Got it. And then you – are there any other cost increases we should think about?

No, I don’t think so. We can see some variable cost increases come back obviously as refinery throughput increases, but I think that would already be built into your normal variable cost model.

And I noticed the – I don’t know if I missed it, but did you provide a capital number for this year, CapEx number?

We did today, $65 million as it stands today. And that’s the sustaining environmental CapEx with a small amount of growth.

We do have some kind of a less of exciting smaller strategic growth projects that we’d love to get to. But we’re going to stay conservative, make sure that things out the economy really have recovered and that we’re comfortable before we approach those.

Now do you expect to be free cash flow positive this year? How are you – what’s your expectations?

Yes, I would think so. I mean, we were free cash flow positive in 2020.

And the outlook for 2021 is clearly better. So I take it from there.

And then you mentioned the impact from the storm – or the freeze. Is – you mentioned a lot of some negative impact and then specialty potentially offsetting that.

As of right now, you – it sounds like you’re not expecting a significant impact from the storm. Is that – did I hear that right?

I think we lost about a week in Northwest Louisiana from the storm is the way we think about it. Remember, we also had the Shreveport plan turnaround.

So we did lose a month at Shreveport, but that was already in your model, I’m assuming. So the incremental loss from the storm would be about a week of production in Northwest Louisiana.

Got it.

And I think, I was just – go.

No, more to add.

I was just going to add to Todd. I mean we’re still triangulating that right now across multiple of our businesses.

Now the roads are viable and everything. We’ve been saying shipping records in the last day or 2.

So it’s difficult to triangulate kind of how it will come through, how we catch up. We feel really good that we didn’t have to force a majority of our customers, which some of our competitors did and some of our suppliers did to us.

So we – it’s still a little early to see if we’re going to kind of catch that order book back up or not. And then there is that extra dimension of the fact that margins for all these businesses are pretty good right now.

So, how you put all that together, it’s difficult to say.

Got it. And you mentioned the margins have been good.

Is there – it’s – you’ve been able to pass-through the increase in crude oil prices pretty seamlessly?

Greg, Scott here. I think it is reflected in the numbers, in a highly volatile year last year and really the final three quarters of the year with crude continuing to march up.

I think you could see that Steve mentioned on the cruise profit per barrel, well above $40. You can see the continued march up, and that’s been really a pattern in the past couple of years as we’ve really driven a lot of our pricing programs and overall commercial excellence programs within Calumet specialties.

And you think – so it’s so that you can keep your margin. Is it – we should think about you growing with GDP?

Is that a good number? To focus on, plus or minus some since fallen out ?

Well, of course, the GDP number is going to be pretty weird. So in a normal year, we’d probably say, yes, but I don’t know what we could debate the accuracy of the GDP print currently.

Got it. I think I can give you a GDP number.

But the general idea is that we’re expecting a lot of growth, I think Bank of America, I think 6.5% this year. They seem to be.

I mean at the highest level, Gregg, we can sell everything we can make right now.

Got it. And just my last question for you.

You said you’re going to use the proceeds from the from those sales leaseback to pay down ‘22 notes. Is there a reason why you’re waiting to do that?

I think it’s closed, so is – or should we expect to pay it down any day?

No, we’d expect to pay it down here very shortly. We just got the proceeds in last week, making our way through the store but start-ups, and we’d expect to be moving forward on that shortly.

Does it make sense to use your excess cash to pay down the rest of the 22s or is that – or you’ll wait until potentially you perform this JV?

We probably wait. We could.

We could. So the most important thing to us is that we have the ability to do so.

As long as we have the ability to do so, and we’re very comfortable with that position going forward. Than when we do it is just a tactic that will optimize kind of, like you said, as we get more certainty and clarity around timing on the JV.

Got it. And I’ll just go with one last one here.

Just – definitely last one. So RINs, if I look, I’m guessing you – what is the liability that you’re showing right now on the balance sheet?

I know that will come out today. And just what is – what’s the time that you use?

What point in time are you using prices to estimate that?

The quantity – the run rate quantity of a gross obligation is about $80 million across all the classes annually. Where the EPA is backed up on compliance, includes the 2019 and 2020 deadlines have not yet occurred.

They pushed them back or propose to push them back. So basically, we have a gross obligation of 2 years’ worth.

That’s offset by a lot of ethanol blending that we’ve done. We like ethanol blending.

We’d like to be able to do more of it, especially at great falls. So there is a net on the balance sheet that we price we mark-to-market at the end of each quarter.

And Todd may have a financial figure for that, but I think the key is that’s a placeholder that’s reversed upon small refinery exemption.

Yes, I think that’s right. And the financial placeholder.

So we said a $53 million of RINs expense in the fourth quarter, which would be the obligation we generated plus just the mark-to-market of the obligation. So the numbers that make that up would be the year-end, the 12/31 RIN price, which was $0.70 something around?

And just a follow-up, I guess, you – the small refinery exception. Where does the process can an efforts in your – from your perspective?

It’s in half a dozen different courts in various manifestations. We – our crystal ball is not good enough to know if we’re going to relegislate this through a series of court actions or whether Congress will deal with it or in a preferred mode, whether the EPA will simply use some administrative tools that are available to them now.

I wouldn’t care to speculate.

Do you have any indications from the EPA that they would use their tools now?

I think that the conventional – the center of massive, the conventional wisdom is everybody is waiting for the Supreme Court to have an opinion expected sometime this summer on one particular matter and that, that may be foundational. We’ll see.

Got it. Okay, thank you again for the time.

Much appreciate it.

Thanks, Gregg.

Thanks, Gregg.

Well, again, thanks, everybody, for your interest in Calumet. The team really executed at a high level in 2020, even if the fact we had a lot on their plate, but they did a super job.

I’m really appreciative. We’ve taken proactive actions to both protect the business and to reposition it for long-term success, so looking forward to 2021.

Thanks for your time today. Have a great day.

Bye now.