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What’s Changing in Calumet Specialty’s Businesses?

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Specialty Products segment

Calumet Specialty Products Partners (CLMT) carries its operations through three segments—Specialty Products, Fuel Products, and Oilfield Services. The Specialty Products segment produces lubricating oils, synthetic lubricants, solvents, waxes, and other products. The segment’s EBITDA (earnings before interest, tax, depreciation, and amortization) was $67.1 million for 2Q17—compared to $59 million for 2Q16. The Specialty Products segment contributed ~66% to Calumet Specialty Products Partners’ 2Q17 EBITDA.

The segment’s gross profit per barrel was $41.87 for the quarter ending June 30, 2017—compared to $35.69 for the same quarter last year. The segment’s 2Q17 EBITDA rose 14% YoY (year-over-year). The above graph shows the company’s EBITDA by segment in the last 14 quarters.

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It should be noted that Calumet Specialty Products Partners’ specialty products margins remained relatively stable even in the volatile commodity price environment. Its specialty products margins are also much higher compared to its Fuel Products segment’s margins. The sale of the Superior refinery will allow the company to focus on specialty products, which is its core area of operations.

Fuel Products segment

The Fuel Products segment’s performance improved YoY in the last three quarters. The growth in 2Q17 was driven by a 17% increase in the benchmark Gulf Coast 2-1-1 crack spread, higher price differentials, and decreased renewable fuel standard compliance costs.

The segment’s total sales volumes fell nearly 8% in 2Q17—compared to the levels last year. The segment’s EBITDA for 2Q17 rose 80% to $34 million—compared to $18.9 million for 2Q16. The segment’s gross profit per barrel was $3.92 for 2Q17—compared to $2.84 per barrel for 2Q16.

Oilfield Services segment

The Oilfield Services segment turned profitable in 2Q17 for the first time since 2014. The segment’s EBITDA was $0.5 million for 2Q17—compared to -$7.9 million for 2Q16. The segment benefited from the US land-based rig count, which rose 112% YoY in 2Q17.

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