Calumet, Inc · NASDAQ:CLMT
Calumet — Investor Day (April 2024)
39 slides from Calumet's investor day presentation, Apr 18, 2024
Slide 1: Calumet Analyst Day
click to e Calumet Analyst Day Great Falls, MT April 18, 2024
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements This Presentation has been prepared by Calumet Specialty Products Partners, L.P. (the “Company,” “Calumet,” “we,” “our” or like terms) and Montana Renewables, LLC (“MRL”) as of April 18, 2024. The information in this Presentation includes certain “for
Slide 3: Tax Disclosures
Tax Disclosures No Advice This Presentation has been prepared by Calumet as of April 18, 2024. This Presentation has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Calumet unitholders should consult thei
Slide 4: Today's Agenda
Today’s Agenda Introduction .Todd Borgmann Specialties Update Scott Obermeier Montana Renewables (MRL) Update .. Bruce Fleming Corporate Priorities .David Lunin Closing Remarks Todd Borgmann Q&A Session Site Tour Todd Borgmann Scott Obermeier Bruce Fleming David Lunin CEO EVP, Specialties EVP, Monta
Slide 5: Welcome Introduction
Welcome Introduction 2022 Analyst Site Visit © 2024 Calumet Specialty Products Partners, L.P. 5
Slide 6: Calumet Strategic Progress
Calumet Strategic Progress Key Milestones Strategic Objectives 2024 ï,§ $260.5 million of FY’23 Adjusted EBITDA(1) ï,§ Multiple near-term value-enhancing catalysts in 2024ï,§ Advanced Specialties commercial leadership position ï,§ Demonstrate the competitive advantage of Montana with 5th straight ye
Slide 7: Strategic Milestones Reached: Near-Term Catalysts Remain
Strategic Milestones Reached: 3 Near-Term Catalysts Remain 2020 2021 2022 2023 Near-Term Catalysts ï,§ MRL Vision ï,§ MRL ï,§ Startup of ï,§ Complete startup ï,§ Demonstrate MRL earnings Created financing RDU of Renewable power and competitive and Hydrogen, advantage constructionï,§ Warburg Pretreat
Slide 8: Two Growing, Advantaged Businesses
Two Growing, Advantaged Businesses ï,§ Strong cash flow generation expected from both Specialties and Montana Renewables in Q2 and forward -Successful Shreveport turnaround at end of Q1’24 -Old, expensive feed processed at Montana Renewables in Q1’24ï,§ Specialties multi-year track record of differe
Slide 9: Specialties Overview
click to e Specialties Overview Specialty Products & Solutions Segment / Performance Brands Segment
Slide 10: Best in Class Specialties Business
Best in Class Specialties Business ï,§ Leading specialty products company with demonstrated earnings Specialties Material Margin ($/BBL) power, strong free cash flow, and identified growth opportunities $90 $80 ï,§ Unique, prominent customer base, brands, and assets that perform through all economic
Slide 11: Superior Customer & Market Diversification
Superior Customer & Market Diversification Transportation Diversified customers, end markets, and products provide margin growth and downside stability for Chem Mfg SPS & PB across all business cycles General More than half of Industrial SPS customers Life Sciences Specialty buy across Products & 1,
Slide 12: Industry Leading Integrated Plants at Scale
Industry Leading Integrated Plants at Scale Specialty Product Yield (BPD)(1)(2) 25,000 NW Louisiana complex provides 20,000 unique processing capabilities 15,000 10,000 5,000 0 Calumet Louisiana Competitor facilities Northwest Louisiana Upgrading and Blending Base Production â– Base Oils â– Gels â–
Slide 13: Performance Brands – Positioned to Win
Performance Brands – Positioned to Win ï,§ Leading brands and a loyal customer baseï,§ Location and integration provides significant commercial and raw material flexibilityï,§ Excellent positioning in multiple growth markets aligned to global megatrendsï,§ Early stages of Commercial Excellence progr
Slide 14: Calumet Specialties – Durable Cash Generation
Calumet Specialties – Durable Cash Generation Strong cash flow generation provides cash for deleveraging Innovation & Sustainability Continue to aggressively drive integration opportunities Ongoing progress implementing proven Commercial Excellence strategy Focused on accelerating product innovation
Slide 15: Montana Renewables Overview
click to e Montana Renewables Overview
Slide 16: MRL Key Highlights
MRL Key Highlights Strategically Differentiated North American RD / SAF Producer 1 State-of-the-Art Facility In Service — Competitive Advantage in Renewable Diesel 2 Strategic Proximity to Advantaged Low-C.I. Feedstocks 3 Logistics reach all Low Carbon Markets in the Canada, Pacific Northwest, and M
Slide 17: Competitive Advantages in Renewable Diesel
1 Competitive Advantages in Renewable Diesel ï,§ Feedstock flexibility and access—Pretreatment capability—Location ï,§ Proximity to end marketsï,§ SAF yieldï,§ Scale and operating efficiencies—Size—Experienced operations & commercial—Technology (pretreatment and catalyst) © 2024 Calumet Specialty Pr
Slide 18: Competitive Advantage
1 Competitive Advantage ï,§ Low score wins—MRL expected to be Historical soybean index competitively advantaged, beginning with lower cost logistics ï,§ SAF provides additional advantage ï,§ MRL breakeven industry index currently at ~$0.85/gal and progressing to $0.70/gal MRL by year end through ope
Slide 19: Competitive Advantage
1 Competitive Advantage ï,§ Is EPA using their low 2023-25 RVO target to shut down small farmers’ biodiesel? ï,§ The 2007 EISA mandated 20 billion gallons of advanced (non-ethanol) renewables, vs ~ 6 billion current supplyï,§ 2 billion gallons per year of existing biodiesel is at risk, which hurts f
Slide 20: MRL Proximity to Feedstocks
2 MRL Proximity to Feedstocks Current Access is to >10x Required Feedstock Results in Pricing Advantages and Supply Visibility MRL’s Feedstock and Heavy Rail Adjacencies Offer Short Supply Chains and Significant Competitive Advantages Distiller’s Distillers’ Corn Oil (DCO) is a byproduct of the prod
Slide 21: Long-Term Expectation of Stable Margins with Pretreater
2 Long-Term Expectation of Stable Margins w Pretreater Renewable Diesel Industry Index Margin, $/gal $9.00 $9.00 $8.00 $8.00 $7.00 $7.00 $6.00 $6.00 $5.00 $5.00 $4.00 $4.00 $3.00 $3.00 $2.00 $2.00 $1.00 $1.00 $- $- $(1.00) $(1.00) $(2.00) $(2.00) $(3.00) $(3.00) $(4.00) $(4.00) $(5.00) $(5.00) $(6.0
Slide 22: Individual Feed Classes Currently Better Than Soy
2 Individual Feed Classes Currently Better Than Soy Soy oil is ~half the feed supply to BD plus RD capacity and makes a widely used benchmark Corn oil (DCO) and tallow (TAL) are normally, but not always, preferred to soybean and canola oil (SBO, CAN) Volatility and rotation among feed classes can he
Slide 23: Dynamic Product Placement into Multiple LCFS Geographies
Dynamic Product Placement into Multiple LCFS Geographies 3 with Discrete Pricing Dynamics Low Carbon Fuel Standards (LCFS) Expanding LCFS Markets California, Oregon, Washington, British Columbia and (separately) Canada have existing LCFS State programs assign a Carbon Intensity (“CI”) score to each
Slide 24: SAF
3 SAF ï,§ Montana Renewables is the larger of only two SAF producers in the western hemisphereï,§ North American air carriers are generally aligning on “10% SAF by 2030”ï,§ Sourcing SAF volumes is a global challenge—Near term increases can only come from retrofitting distillation recovery of SAF out
Slide 25: Agility
4 Agility ï,§ MRL went from ideation to execution in 3 yearsï,§ De-risked supply chain – proven ability to source advantaged feedï,§ De-risked technology – proven the IP and technology ï,§ Partially proven economics prior to steam leak—July 2023 achieved $15 million in Adj. EBITDA ï,§ Next step: dem
Slide 26: 2023 Expansion and Commissioning Experience
4 2023 Expansion and Commissioning Experience ï,§ First half 2023: Sequential commissioning and shake down of new MRL assetsï,§ July 2023: Demonstrated normal operations and strong earnings capabilities of MRLï,§ August to November 2023: Half rate while undertaking steam drum replacementï,§ December
Slide 27: MaxSAF Update
5 MaxSAF Update ï,§ DOE engagement proceeding as likely source of financingï,§ Engineering proceeding—Capacity increase—SAF yield flexibility to optimize between SAF and RD ï,§ Key long lead item (new second reactor) receivedï,§ MRL’s location advantages for RD are true for SAF—Feedstock advantage,
Slide 28: Corporate Priorities
click to e Corporate Priorities
Slide 29: Corporate Financial Priorities
Corporate Financial Priorities 11. Reduce leverage and strengthen balance sheet ï,§ Senior Notes due 2025 with no call protection represent efficient path for deleveraging ï,§ Multiple levers to pay down debt 22. Continue to execute on Specialties cash flow generation strategyï,§ Highly generative s
Slide 30: C-Corp Conversion Remains on Track for Mid-Year 2024
C-Corp Conversion Remains on Track for Mid-Year 2024 Actions Status/Expected Timing ï,§ In November 2023, conversion agreement with our General Partner following the â^š recommendation and special approval of the Conflicts Committee of the Board of Directors ï,§ In February 2024, entered into an agr
Slide 31: Focused on Debt Reduction
Focused on Debt Reduction Cash Flow Considerations ï,§ Entering Q2’24 with strong operations across the board ï,§ ~ $40mm—$70mm RINs non-cash ï,§ MRL expected to be cash flow positive at Deleveraging Path today’s trough industry conditions Restricted Unrestricted Group Group ï,§ Significant capital
Slide 32: Closing Remarks
es) CALUMET SPECIALTY PRODUCTS PARTNERS, LP Closing Remarks
Slide 33: Specialties Advantage
Specialties Advantage Unrivaled passion for customers Best-in-class breadth and depth of product slate Decades of innovation, approvals, and know-how Irreplicable asset base built on unique combination of scale, integration, and flexibility All underpin consistent margin growth and strong cash flows
Slide 34: MRL – An Advantaged SAF & RD Business
MRL – An Advantaged SAF & RD Business “Normal” Regime Current End of Year (MRL Guidance) Industry Soy Industry Industry $2.00 / Gal Index Margin Index Index Op Costs, SGA, Logistics, Feedstock Diff to Soy, Supply Chain Lag, & Co- $.65 / Gal ~ $.85 / Gal ~$.70 / Gal Product Credits EBITDA Industry In
Slide 35: Near-Term Strategy & Events
Near-Term Strategy & Events ï,§ Demonstrate Montana Renewables competitive advantage through a clean Q2’24 ï,§ Capture DOE loan and launch MaxSAF expansion projectï,§ Execute conversion of Calumet to C-Corp and broaden Calumet’s investor base ï,§ Deleverage through cash flow generation and potential
Slide 36: Appendix
es) CALUMET SPECIALTY PRODUCTS PARTNERS, LP Appendix
Slide 37: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA ($ in millions) 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 Net income (loss) $(95.5) $(15.3) $14.6 $(77.1) $18.6 $(22.3) $99.8 $(48.0) Add: Depreciation and amortization 30.2 30.3 30.2 30.7 37.2 42.9 43.6 59.3 LCM / LIFO (ga
Slide 38: Capital Structure Overview
Capital Structure Overview Actual Actual Actual Actual Actual Actual Actual Actual ($ in millions) 03/31/22 06/30/22 09/30/22 12/31/22 03/31/23 06/30/23 09/30/23 12/31/23 Unrestricted Cash $ 10.7 $ 27.5 $ 50.5 $ 35.2 $ 11.2 $ 36.0 $ 13.7 $ 7.9 ABL Revolver Borrowings $ 11.0 $ — $ 87.0 $ 104.0 $ 226.
Slide 39: Calumet
CALUMET