Calumet, Inc

Ladies and gentlemen, thank you for standing by. And welcome to the fourth quarter 2020 Calumet Specialty Products Partners Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press the start and the one key on your touch-tone telephone. Please be advised that today's conference may be recorded. If you require operator assistance, please press start and zero. I would now like to hand the conference over to your speaker host. Joseph Cominiti, please go ahead.

Thank you, Lydia. 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 Moore, CEO, Todd Borgen, CFO, Bruce Fleming, EVP of Montana Renewables and Corporate Development, Scott Overmeyer, EVP of Specialty Products and Solutions, and Mark Lawn, EVP of Performance Brands. Before we proceed, allow me to remind everyone that during the course of this call, we may provide various forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such statements are based on the beliefs of our management, as well as assumptions made by them, and in each case, based on the information currently available to them. Although our management believes that the expectations reflecting such forward-looking statements are reasonable, neither the partnership, its general partner, nor our management can provide any assurances the expectations will prove to be correct. Please refer to the partnership's press release that was issued this morning, as well as our latest filing from the Securities and Exchange Commission, for a list of factors that may affect our actual results and could cause them to differ from our forward-looking statements made in this call. As a reminder, you may now download a PDF of the presentation slides that will accompany the remarks made on today's conference call, as indicated in the press release we issued earlier today. You may access these slides in the investor relations section of the website at countymetspecialty.com. Also, a webcast replay of this call will be available on our site within a few hours, and you can contact Alpha IR Group for investor relations support at 312-445-2870. With that, I'll pass the call to Steve. Steve?

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, but the average crisis lasts 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 teamwork had to be impeccable, our employees excelled. 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 to 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 outgoing 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 unit holders and bondholders who have showed confidence in us. So far, those who believe in Calumet and our team have been rewarded with outperformance during the recovery. Additionally, with our recent strategic update, we believe we have a path forward to further enhancing unit holder value, and that's a sign that we believe we're really just getting started. Coming back to the pandemic and what it asked of our team, slide three details our three most imperative objectives to address the crisis. The first is that we needed to excel in specialties. We've spent the last couple of years turning our specialties business into something we believe we do really well. And we'll go into more detail later on what we truly mean when we say, quote, doing specialties really well, unquote. However, At the most fundamental level, it means delivering earnings and margin growth during a major economic shock. And our results across the year clearly show we succeeded. Some time back, you may recall, we communicated an aspirational goal of $40 a barrel gross profit margins for our specialties business across an entire year. And in 2020, this goal was met and exceeded. And we believe this performance level is sustainable and repeatable. A critical part of our success is our deliberate strategy to operate with a much more diversified customer base than most of our competitors. And the payoff from this strategy was foundational to our 2020 results and shows how actively managed diversification can help weather macroeconomic volatility. Second, in a crisis, we needed to take decisive and successful actions. A step change down in our cost structure is the longest lasting of our decisive actions. Having said that, our decisions to significantly pay back 2020 capital expenditures, diligently manage the volume margin envelopes in all our businesses, and aggressively hedge our Canadian crude supply show how Calumet can be focused and decisive in the pursuit of our objectives. It bears reminding that at the same time that we were able, as doing this, we were able to maintain focus on our key growth objectives, most particularly through investing in and capturing dramatic growth in our engineered fuels business. The third objective was capital discipline. So for 2020, cash flow positive was the rallying call of our team and our team delivered. Responsible business stewardship includes material planning for stress events, And at Calumet, that planning is a core business practice. You can see that first in how fast we've responded with controllable cost reductions, second in our ability to maintain access to ample liquidity through a very extended crisis, and third in how we creatively and effectively addressed our debt maturities. Executing on all these activities has given us the time and optionality to accomplish our strategic objectives without duress or pressure and allows us to remain focused on creating unit holder value. We executed effectively on our tactical 2020 pandemic objectives, but the new circumstances did indeed slow our progress towards our strategic objectives. It's not easy to de-lever into a market which is trading at cycle lows and incorrectly assumes that there may be blood in the water. So our strategic objectives haven't changed. And as we leave 2020, having preserved cash, having dealt with the maturities, and having proposed a best-in-class renewable diesel future in Montana, we are positioned to make value-creating steps for our unit holders as both our businesses and the economy accelerate. I'm going to hand over to Todd to talk about our results, and we'll then circle back to discuss our business segment changes. I'm really excited to present Calumet consistent with how we actually run Calumet. Simplicity, clarity, and focus are essential to winning, And I believe as you get to know these three distinct businesses better, you will see that each has a clear and winning strategy. Todd.