Calumet, Inc

Today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Thank you. Thank you. Good day and thank you for standing by. Welcome to the Calumet Specialty Products Partners Third Quarter 2021 Earnings Conference Call. At this time, all participants are in 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 star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Brad Murray, Investor Relations. Please go ahead.

Good morning. And thank you for joining us today on Calumet's third quarter 2021 earnings conference call. With me are Steve Moore, CEO, Todd Borgman, CFO, Bruce Fleming, EVP, Montana Renewables and Corporate Development, Scott Overmeyer, EVP Specialty Products and Solutions, and Mark Lon, EVP Performance Brands. Before we proceed, I'll remind everyone that during this call, we may provide various forward-looking statements. please refer to the partnerships press release that was issued this morning, as well as our latest filings with the Securities and Exchange Commission for a list of factors that may affect our actual results and cause them to differ from our expectations. You may now download the slides that accompany the remarks on today's call, which can be accessed in the investor relations section of our website, www.calumetspecialty.com. A replay of this call will be available on the website later today. With that, I'll pass the call to Steve.

Steve? Thank you, Brad. And everyone, welcome to Calumet's third quarter earnings call. I'd like to start off with a few words about the business backdrop. We all remain hopeful that we're in one of the later innings of the pandemic. And you can see that in the strong earnings we are reporting for Q3. As the pandemic has played out, an economic wave has flowed through the different segments of our business. First, During the maximum lockdown, maximum uncertainty phase, our performance brands business was able to capture the tailwinds of low input costs, nesting phenomena, and consumer resilience. As the vaccine became available, what has become known as a bullwhip recovery manifested, creating exceptional demand and margins for our specialty products and solutions segments. Demand was indeed so good that we were able to expand margins in that segment through one of the sharpest rallies and input costs that any of us have seen in our careers. And now, it looks like we're onto the third wave of the recovery. The tremendous and unprecedented shock of the collapse in transportation fuel demand during lockdown has taken almost a year and a half to rebalance. But with inventories now below average levels, and Europe and Asia experiencing severe energy deliverability issues Fuels margins have got off their low-cycle knees and reverted back to mid-cycle, if not better. This should be quite a favorable environment for Calumet. Specialties margins have likely peaked, but as much as anything, that is because the input costs for specialties are diesel, naphtha, and VGO. And at this moment, we're back in the roughly 80% or so of the time when making your own inputs, as we do at our Northwest Louisiana Specialties Complex, is highly beneficial to Calumet. While on the topic of COVID, it would be remiss not to recognize the efforts and commitment of our team. This has been an extremely difficult 18 months for the world and for Calumet. Through all of this, with the added challenges of Winter Storm Uri, our team has stayed focused, managing through what fate has thrown at us. Their resilience is greatly appreciated. Among the many things that the pandemic forced on us was a rethink of our corporate strategy and vision. I believe that this hardship, coupled with our strategic review, clarified our path forward and created the opportunity to articulate a tremendously better vision. In that light, although many of you understand much of what we're trying to do, we would like to spend a minute or two being more explicit about what our vision is for Calumet and why it can, in our opinion, create significant unit holder value. But first, let's briefly recap the quarter, and we do that on slide three. Earnings for the quarter show the improving trend led by specialties, as I mentioned just now. Adjusted EBITDA for the quarter was $58.8 million. Liquidity remained strong, and our specialty products and solutions segment reported record specialty unit margins. As mentioned earlier, we appear to be back in that roughly 80% or so of the time where our integrated specialty complex in northwest Louisiana will outperform non-integrated specialties production. Furthermore, Asian and European producers are carrying a very significant burden from the tremendous increase in energy costs there, which should further amplify our competitive position here in North America. Our two specialty businesses, Performance Brands and Specialty Products and Solutions, continue to experience very robust demand. The challenge is satisfying that demand due to supply chain disruptions. In Specialty Products and Solutions, We have been able to navigate that effectively so far, and our main supply chain focus is the day-in, day-out challenge of a national trucking shortage. Performance brand's results continue to be affected by supply chain issues, limiting our ability to produce the volumes of packaged and bulk lubricants that our customers eagerly demand. In this business alone, we have received 38 force majeure or force majeure extension notices this year. I would stress that the supply chain issues are materially less in our true fuel engineered fuels business than in our lubricants and greases business. But we will go into a little bit more detail on the supply chain story later. Finally, on this slide, we continue to be more than happy with our progress on standing up an exceptionally competitive renewable diesel business in Montana. Be that our partnering discussions, which are well advanced, or the technical permitting and construction side of the project. Our unique feedstock access, given our location, has become much more apparent and understood outside of Calumet. The concept that our business sits in the heart of the temperate oil seed belt, unlocking a new and huge supply of feedstock has resonated well, and it's gratifying that this important component of our vision is becoming well understood and supported. Speaking of vision, let's move to slide four. All of us here spend a lot of time with our heads down in the weeds planning and executing. We may not lose track of the big picture, but we risk losing track of communicating the big picture. We have a clear vision for Calumet, and we have been implementing it, be it through the resegmentation of our businesses at the beginning of the year or the standing up of arguably the best renewable diesel conversion project in North America. We would contend that the creation and implementation of this vision can and should create significant unit holder value above and beyond the roughly 1,000% appreciation in the units since April 2020. At its heart, our vision is simple. Calumet currently consists of a highly leveraged hybrid business, and our vision is to both de-hybrid and de-lever. The two businesses we end up with as the vision plays out are a specialty business consisting of two segments, Fast-growing performance brands delivering exceptional quality premium products, often direct to consumers, and the specialty products and solutions segment, which we believe has material investment and growth potential. Specialty products and solutions is further distinguished by the tremendously diversified array of customers and products in the portfolio. And then we have renewable diesel. As I believe I've told you on more than one occasion, we and many others believe that this is an exceptional asset in the renewable diesel space. Definitely first quartile, arguably first decile. Evolving this into a separate business can create significant unit holder value, and that is our plan. Other than niche projects, access to renewable diesel companies is not pure play. You have to bring along some fossil exposure or some biodiesel exposure. or some other exposures. It seems to us and many other interested parties that there is investment demand for pure play renewable diesel. Within the energy transition space, it's much more tangible, more immediate, and lower risk than most other energy transition investments. Furthermore, the fact that Montana sits right at the top of the competitive stack Generating strong cash flows in almost all imaginable scenarios also makes this a tremendous growth platform, be it to build a broader pure play RD business or backwards integration into that now well-known temperate oil seed belt, providing low carbon intensity feedstocks right in our backyard. Additionally, our green renewable hydrogen plant will further lower the CI value of our products. Montana is a dream location from a product marketing standpoint. and not just for all the core and soon-to-be-added RD markets, but also sustainable aviation fuel. The Vancouver-Seattle-Portland Trans-Pacific Flight Corridor has the second biggest burn demand on the West Coast after LAX. We can serve that market at low additional capex and with logistical superiority as and when the interest that we are experiencing turns into actual demand. So that's our vision. Separate these businesses into two best of breeds, both with appropriate leverage. Simple, but worth stating more clearly. With that, I will hand over to Todd, who will take you deeper into the quarter's results.