Second Quarter 2018 Financial Results Conference Call August 9, 2018 - - PowerPoint PPT Presentation

Second Quarter 2018

Financial Results Conference Call August 9, 2018

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Forward-Looking Statements

This Presentation has been prepared by Calumet Specialty Products Partners, L.P. (the “Company” or “Calumet”) as of August 9, 2018. The information in this Presentation includes certain “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “may,” “intend,” “believe,” “expect,” “anticipate,” “estimate,” “forecast,” “continue” or other similar words. The statements discussed in this Presentation that are not purely historical data are forward-looking statements. These forward-looking statements discuss future expectations or state other “forward- looking” information and involved risks and uncertainties. When considering forward-looking statements, you should keep in mind the risk factors and

• ther cautionary statements included in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The risk factors and other

factors noted in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q could cause our actual results to differ materially from those contained in any forward-looking statement. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statement. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. Existing and prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Presentation. We undertake no obligation to publicly release the results of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this Presentation or to reflect the occurrence

• f unanticipated events.

The information contained herein has been prepared to assist interested parties in making their own evaluation of the Company and does not purport to contain all of the information that an interested party may desire. In all cases, interested parties should conduct their own investigation and analysis of the Company, its assets, financial condition and prospects and of the data set forth in this Presentation. This Presentation shall not be deemed an indication

• f the state of affairs of the Company, or its businesses described herein, at any time after the date of this Presentation nor an indication that there has

been no change in such matters since the date of this Presentation. This Presentation and any other information which you may be given at the time of presentation, in whatever form, do not constitute or form part of any

• ffer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities of the Company, nor shall it or any part of it

form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. Neither this Presentation nor any information included herein should be construed as or constitute a part of a recommendation regarding the securities of the Company. Furthermore, no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein. Neither the Company nor any

• f its officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this Presentation.

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2Q18 Financial Results Highlights

▪ 2Q18 total company Adjusted EBITDA of $78.9 million – Reflects over a 7% improvement to 2Q17 underlying performance, excluding Superior and Anchor divestitures – Net Income was $6.3 million or $0.08 per unit, excluding $58.2 million

• f debt extinguishment costs

▪ Self-Help capture of $7.8 million in 2Q18 – Initiatives put in place to increase advantaged crude opportunities at San Antonio, Shreveport and Great Falls – Capital Projects: New Isomerate unit at San Antonio and Naphtha project at Great Falls started up in the quarter ▪ ERP implementation continues to improve – Incurred $2.4 million in expense in 2Q18 and $6.1 million YTD ▪ Strategic focus and Self-Help commitment have driven year-over-year TTM Adjusted EBITDA improvement for seven consecutive quarters(1)

(1) Last two quarters ex-divestments, previous five quarters as reported.

2Q18 Specialty Products Segment Highlights

▪ Adjusted EBITDA of $53.7 million down versus $67.1 million in 2Q17 and up sequentially versus $37.7 million in 1Q18 –

Rising crude prices continue to negatively impact margins; average 2Q18 WTI spot price up 41% year-over-year – Continued strong performance from Finished Lubricants(1), somewhat

• ffset by unplanned maintenance in base oils & white oils

▪ Gross Profit per barrel of $37.12, down versus $41.87 in 2Q17 and up sequentially vs. $33.11 in 1Q18 –

Rebound in lower-margin solvents sales volumes influenced sales mix relative to 2Q17

▪ Adjusted EBITDA margin of 14.0% compared to 19.6% in 2Q17 and 11.7% in 1Q18, driven by steadily rising crude prices – Pricing adjustments taken during quarter, full effect in 3Q18

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(1) Finished Lubricants and Chemicals previously referred to as "Branded & Packaged" division in prior presentations and releases

Quarterly Margin % TTM Margin %

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Stable Specialty Product Margins

25% 20% 15% 10% 5% 0%

Adjusted EBITDA

4 Q 1 5 1 Q 1 6 2 Q 1 6 3 Q 1 6 4 Q 1 6 1 Q 1 7 2 Q 1 7 3 Q 1 7 4 Q 1 7 1 Q 1 8 2 Q 1 8

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2Q18 Fuel Products Segment Highlights

▪ Adjusted EBITDA of $25.6 million, down compared to as reported $34.0 million in 2Q17 – Results improved by 320% to 2Q17 underlying performance, excluding Superior divestiture – Record quarterly throughput volume at Great Falls ▪ Gross Profit per barrel of $5.09, up 29.8% year-over-year versus $3.92 in 2Q17, but down sequentially compared to $7.49 in 1Q18 – Benchmark GC 2/1/1 crack spread up +28% year-over-year, offset by sequentially declining crude differentials:

• WCS/WTI discount narrowed by ~$8/bbl, negatively impacting Great Falls
• LLS/WTI premium increased by ~$2/bbl, negatively impacting San Antonio

– Additional sourcing of Midland-priced crudes did not take effect until June ▪ Segment continues to benefit from processing discounted crudes: processed ~25,000 bpd of WCS, and ~10,500 of Midland-WTI crude

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Adjusted EBITDA Bridge – 2Q17 vs. 2Q18 ($MM)

(1) Includes RINs mark-to-market, LCM, acquisition costs, hedging activities, and 2017 Superior Renewable Identification Numbers (“RINs”) exemption received in 2018. (2) Includes plant operating and maintenance costs including RINs costs.

2Q17 Adj EBITDA Divestitures Fuels Margin Specialty Margin Volume Operating Costs (1) SG&A Other (2) "Self Help" Program Benefit 2Q18 Adj EBITDA

$101.6 $(28.8) $38.7 $(18.6) $(10.9) $(30.8) $5.9 $14.0 $7.8 $78.9

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Cash Bridge – 1Q18 vs. 2Q18 ($MM)

1Q18 Cash 2021 Secured Notes Redemption Operating Cash Flow Proceeds From Sale

• f Businesses and JV

Working Capital Capital Expenditures Other 2Q18 Cash

$496.6 $(446.6) $25.3 $14.2 $(28.0) $(16.5) $(6.2) $38.8

$350 million of Restricted Cash

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Historical and Projected Capital Spending ($MM)

(1) Includes $36 million of contributions to DPR and $29 million of proceeds related to the sale of unconsolidated affiliates

2015 Capital Spending 2016 Capital Spending 2017 Capital Spending YTD 2018 Capital Spending 2018 Forecasted Capital Spending

$425 $122 $80 $34 $80 to $90

▪ 2018 CapEx forecast of $80-$90 million ▪ Heavier turnaround and maintenance activity scheduled

(1)

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Hedged a Portion of WCS and Midland Purchases & Diesel Sales

WCS USLD Crack(1) USLD - WCS Differential

BPD BPD 6,000 5,000 4,000 3,000 2,000 1,000 1Q19 2Q19 3Q19 4Q19 3,000 2,000 1,000 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 10,000 8,000 6,000 4,000 2,000 3Q18 4Q18 1Q19 2Q19

WTI Cushing - Midland Differential

$11.39 $15.13 $13.01 $11.88

BPD

$49.28 $50.88 $49.00 $49.00 $49.00 $49.00

(1) (USLC-WCS)/WTI Note: Hedge positions as of June 30, 2018.

72.1% 72.1% 72.1% 72.1%

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Stable Credit Metrics

(1) Fixed Charge Coverage Ratio is defined as Adjusted EBITDA divided by consolidated interest expense (plus capitalized interest), neither of which has been pro-forma adjusted for acquisitions or refinancing activity (2) Excludes $350 million of restricted cash

▪ Credit metrics remain strong ▪ Committed to long-term deleveraging ▪ Liquidity increased $20 million, excluding secured notes redemption

NET DEBT TO LTM ADJUSTED EBITDA (LEVERAGE) RATIO

4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 12.9x 9.0x 7.6x 6.6x 4.8x 4.9x 5.4x

LIQUIDITY AVAILABILITY ($MM)

4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 $365 $363 $369 $413 $416 $458 $382

FIXED CHARGE COVERAGE RATIO

4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1.0x 1.3x 1.5x 1.7x 1.7x 1.7x 1.6x

(1)

(2) (2)

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▪ Delivered $7.8 million in “self-help” during 2Q18, driven by: – Capturing supply-chain efficiencies – Contributions from Finished Lubricants(1) expansion ▪ Expecting to capture full-year total between $40-50 million ▪ Opportunistic growth projects started in 2Q18 – New Isomerate unit at San Antonio - increases ability to produce high-octane gasoline sales – Naphtha upgrade project at Great Falls - upgrades both quality and market price for naphtha products – Both projects have low capital costs and payback periods

• f ~1 year

▪ Continued growth expected in Finished Lubricants(1)

Self-Help in Action: Delivering Results

(1) Finished Lubricants and Chemicals previously referred to as "Branded & Packaged" division in prior presentations and releases

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3Q18 Outlook

▪ Expect typical seasonal effects in specialty products, offset somewhat by higher crude prices and planned maintenance at the Princeton facility – Quarter to reflect pricing adjustments from 2Q18 ▪ Anticipate typical seasonal patterns for fuels business after July, with benefit from wider crude differentials – Offset somewhat by turnaround activity at Great Falls scheduled for 3Q18 ▪ Expect to continue capturing the benefits of discounted crude – Planning ~24K bpd of advantaged crude tied to WCS – Planning ~17K bpd of advantaged crude tied to Midland-WTI during 2H18

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APPENDIX

Supplemental Financial Data

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Our Strategy & Roadmap for Growth

▪ Focus portfolio on high-return, niche specialty markets where we are competitively advantaged ▪ Capture one-to-two-year payouts with low capital investment requirements ▪ Reduce costs, optimize raw materials and enhance margins

Strategic M&A Opportunistic Growth Projects Operations Excellence “Self Help”

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Historical Adjusted EBITDA by Segment ($MM) as Reported

Discontinued Operations Specialty Products Segment Fuel Products Segment 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 $(5.9) $(7.9) $(3.3) $(3.5) $(3.7) $0.5 $6.4 $(0.3) $(1.4) (0.4) $58.5

$6.6

$59.0 $43.4 $28.0 $45.6 $67.1 $43.0 $30.8 $37.7 $53.7 $(46.0) $18.9

$70.0

$13.8

$53.9

$3.2

$27.7

$36.8

$78.7

$34.0

$101.6

$46.3

$95.7

$10.7

$41.2

$38.7

$75.0

$25.6

$78.9

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Adjusted EBITDA Bridge – YTD 2Q17 vs. YTD 2Q18 ($MM)

2Q17 YTD Adj EBITDA Divestitures Fuels Margin Specialty Margin Volume Operating Costs (1) SG&A Other (2) "Self Help" Program Benefit 2Q18 YTD Adj EBITDA

$180.3 $(47.8) $54.4 $(8.7) $(39.8) $(40.5) $(2.1) $42.0 $16.1 $153.9

(1) Includes RINs mark-to-market, LCM, acquisition costs, hedging activities, and 2017 Superior RINs exemption received in 2018. (2) Includes plant operating and maintenance costs including RINs costs.

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EXHIBIT A: Capital Structure Overview

Actual Actual Actual Actual Actual Actual Actual Actual ($ in millions) 9/30/16 12/31/16 3/31/17 6 /30/17 9/30/17 12/31/17 3/31/18 6 /30/2018 Cash $ 17.8 $ 4.2 $ 4.6 $ 26 .6 $ 26 .5 $ 514.3 $ 496 .6 $ 38 .8 ABL Revolver Borrowings $ 0.1 $ 10.2 $ 39.2 $ 0.4 $ 0.1 $ 0.2 $ — $ 0.1 7.6 25% Senior Notes due 2022 350.0 350.0 350.0 350.0 350.0 350.0 350.0 350.0 6 .50% Senior Notes due 2021 900.0 900.0 900.0 900.0 900.0 900.0 900.0 900.0 7.75% Senior Notes due 2023 325.0 325.0 325.0 325.0 325.0 325.0 325.0 325.0 11.50% Senior Secured Notes due 2021 400.0 400.0 400.0 400.0 400.0 400.0 400.0 — Note Payable - related party 19.6 — — — — — — — Capital Leases 47.5 46 .5 45.9 45.2 44.7 44.0 43.7 42.2 Other 4.6 8 .0 7.6 7.3 6 .9 6 .6 6 .3 5.9 Total Debt $ 2,046 .8 $ 2,039.7 $ 2,06 7.7 $ 2,027.9 $ 2,026 .7 $ 2,025.8 $ 2,025.0 $ 1,6 23.2 Partners’ Capital $ 294.2 $ 218 .7 $ 213.3 $ 224.0 $ 201.6 $ 119.9 $ 115.4 $ 6 6 .6 Total Capitalization $ 2,341.0 $ 2, 258 .4 $ 2, 28 1.0 $ 2,251.9 $ 2,228 .3 $ 2,145.7 $ 2,140.4 $ 1,6 8 9.8 LTM Adjusted EBITDA (as reported) $ 92.9 $ 158 .2 $ 230.3 $ 26 1.9 $ 303.7 $ 317.2 $ 313.5 $ 290.8 Net Debt / LTM Adjusted EBITDA (as reported) 21.8 x 12.9x 9.0x 7.6 x 6 .6 x 4.8 x 4.9x 5.4x Net Debt / Total Capitalization 8 7% 90% 90% 8 9% 90% 93% 93% 96 %

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EXHIBIT B: Reconciliation of Segment Adjusted EBITDA to Net Income (Loss)

($ in millions) 3/31/16 6 /30/16 9/30/16 12/31/16 3/31/17 6 /30/17 9/30/17 12/31/17 3/31/18 6 /30/2018 Segment Adjusted EBITDA Specialty products Adjusted EBITDA $ 58 .5 $ 59.0 $ 43.4 $ 28 .0 $ 45.6 $ 6 7.1 $ 43.0 $ 30.8 $ 37.7 $ 53.7 Fuel products Adjusted EBITDA (46 .0) 18 .9 13.8 3.2 36 .8 34.0 46 .3 10.7 38 .7 25.6 Discontinued operations Adjusted EBITDA (5.9) (7.9) (3.3) (3.5) (3.7) 0.5 6 .4 (0.3) (1.4) (0.4) Total segment Adjusted EBITDA $ 6 .6 $ 70.0 $ 53.9 $ 27.7 $ 78 .7 $ 101.6 $ 95.7 $ 41.2 $ 75.0 $ 78 .9 Less: Unrealized (gain) loss on derivative Instruments $ (4.6 ) $ (23.8 ) $ 4.9 $ 3.6 $ (10.6 ) $ (1.3) $ — $ (1.4) $ (2.0) $ (0.8 ) Realized derivative activities, not included in net income (loss) or settled in a prior period (2.1) (2.3) (4.8 ) 2.8 — — 9.7 — — 2.1 Amortization of turnaround costs 9.1 8 .3 7.9 8 .0 7.4 6 .6 6 .4 3.9 3.3 2.7 Debt extinguishment costs — — — — — — — — 0.6 58 .2 (Gain) loss on the sale of businesses, net — — — — — — — (173.4) — — Impairment charges — 33.4 — 2.5 0.4 — — 206 .9 — — Loss on sale of unconsolidated affiliate — 113.9 — — — — — — — — Non-cash equity based compensation and

• ther items

2.6 1.5 (2.2) 3.1 2.8 2.2 7.3 3.6 3.2 0.8 EBITDA $ 1.6 $ (6 1.0) $ 48 .1 $ 7.8 $ 78 .7 $ 94.1 $ 72.3 $ 1.6 $ 6 9.9 $ 15.9 Less: Interest expense $ 30.3 $ 42.8 $ 44.6 $ 44.0 $ 43.9 $ 44.5 $ 47.4 $ 47.3 $ 45.2 $ 37.5 Depreciation and amortization 38 .8 43.8 44.5 44.0 41.1 40.9 48 .6 37.9 29.7 29.5 Income tax expense (benefit) 0.2 0.3 (7.6 ) (0.6 ) (0.1) (0.9) (0.1) — (0.2) 0.8 Net income (loss) $ (6 7.7) $ (147.9) $ (33.4) $ (79.6 ) $ (6 .2) $ 9.6 $ (23.6 ) $ (8 3.6 ) $ (4.8 ) $ (51.9)

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CONTACT INFORMATION

Chris Hodges or Joe Caminiti Alpha IR 312-445-2870 Email: CLMT@alpha-ir.com