Calumet Specialty Products Partners, L.P. (CLMT)

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12.88

-0.41

(-3.09%)

At close: 04:00PM EDT

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B
Good article in the Dallas Morning News 5/15 edition about sustainable airplane fuel. The main thrust was for cooking oil conversion. The estimate was that that type of fuel would cost 2-3 dollars more than present diesel fuel. Then need for this type of fuel was expressed in billions of gallons just for the USA. Looks like Calumet has an unlimited market for it's Renewable Diesel.
I
We should be getting news in the next few months that should move the unit price. Buyer contracts for MRL product, green bond issue, MRL RND and SAF production start up about Sept 1, RIN issues goes away and finally an equity partner.
G
With management saying the stock is going to $63/share

Why would it make sense for these insiders to sell?

Todd Borgman. 11,000 shrs 4/18/2022
Bruce Fleming. 18,000 shrs. 4/18/2022
Scott Obermeier. 13,000 shrs 3/4/2022
Steve Mauwer 35,000 shrs 3/4/2022

I don’t understand? The stock price keeps going up? Right?
r
The large drop in pps in the last 2 days leaves me wondering whether they can survive or not. Their last ER was horrible and their only hope now is the GF conversion. What was surprising in their report was the loss almost across the board. Huge miss from -$.38 to - $1.00+. If we make to 20 or more it will be a miracle.
I
I still saying building a renewable Diesel and aviation fuel plant during an energy crisis and green energy push is a good idea. Production starts at 5K BPD early Sept. MRL will be monetized this year with an equity partner. They talk about Puget Sound as a delivery point for product. I'm guessing Alaska Airlines wants some of the renewable aviation fuel. Great PR move if they do.
G
Confirmation of a one month August Plant shutdown in Montana during a period where the crack spreads at $80/Bbl

31 days x 35 MB/D x $80/bbl

= 87 MM$ Lost opportunity

Who shuts a plant down in August?
CLMT
Why?
So they could make Asphalt
Which lost money in Q1

Who said some progress?
T
Saw a post on SA where 2-1-1 crack spreads were approaching $80. Can’t imagine that is correct. I’m going to see if I can verify that number. If true and they hold there for a while, we should have very good numbers for however long they hold up. Specialty’s margins in the short term will be under pressure but GF’s money making machine will more than offset that.
R
Some progress, especially for the weakest quarter, historically. Nice revenue beat and outlook. RINs and debt still sapping potential. It is tough to imagine “RemainCo” having a valuation above $10 pps in the intermediate term until debt is cleaned up, but perhaps more disappointing in the current share price is only $5-6 pps for the potential of MRL. Here’s to hoping for continued progress.
G
Good Bye
Bearish
I
Hard to say what 1rst quarter numbers will look like. It's been ugly the last 12 months except 3rd qtr 2021. The main thing will be MRL staying on track for Sept RND production start.
J
Nice analysis upgrade at Wells Fargo to 29 bucks,from 27
I
Nice run up since $12.99 on Monday.
r
Up on a down day, and on heavy volume. Iiiinteresting!
G
Nov 17, 2021
Calumet is pleased to announce a most wonderful deal with Oaktree in lieu of a JV

May6th, 2022
Calumet is getting out of the Oaktree deal at a loan extinguishing cost of $30,000,000. The was good, we found something better.

Oh yeah, we can’t tell you who are suppliers are or who the product buyers are either.

Why not?
G
Here is the JV Story told

We have a list of potential JV Partners
The JV is part of our deleveraging strategy
We are making our final selection
We will let you know when we’re ready
There is no JV, we’re going it alone
We don’t need a JV, we’re borrowing the money
Project not starting up April 2022 anyway
We’ll get a JV in late 2023 after we’ve demonstrated the project
We hired Lazarus to help us find a JV
The JV will be on board in Nov 2022
We’re going to get full value

We have a great management team
August Shutdown during historic margins
We make more money making Asphalt
But weak Asphalt prices are hurting
The story continues…
C
You can see the latest MRL status presentation here:

https://calumetspecialty.investorroom.com/Events

On schedule with construction and they are nearly finished signing sales contracts for the MRL products, which was 3X oversubscribed, so very high demand. Next update coming with the Q1 ER.
Calumet Specialty Products Partners, L.P. - Events & Presentations
calumetspecialty.investorroom.com
T
Valuation of MRL business From New Slide Deck

Here is the top and bottom end of the valuation projections from CLMT’s management. Multiples based on current market would range from 7.5X EBITDA to 13.4X. The 13.4X is based on the recent price multiples CVX just paid for REGI. EBITDA projections for MRL range from $400- $575 million. If they hit the very low end of the EBIDTA projection ($400 million) and the lowest selling multiple of 7.5X. The implied value of MRL would be $38.18/unit. If they hit the high end for both EBITDA ($575 million) and selling multiple of 13.4X (CVX price multiple paid for REGI), the implied value of MRL would be $97.93/unit.

If everything goes perfectly, that would imply a potential valuation range of $38/unit to as much as $98/unit. for MRL. But this is Calumet, so discount those numbers by 50% or $19/unit to $49/unit. Add the value of the RemainCo back to the equation and I think it’s certainly possible to see the price of Calumet over $50/unit in the next 24 months. It might even get there in the next 12 if the multiple achieved in a Spin-off is anywhere near the CVX multiple paid for REGI.

Hard to believe we are trading in the mid $13’s based on this slide deck, (page 23 & 24). I think we move up pretty quickly from here.
I
This is why you shouldn't sell in the $12's...
G
Did you hear…they are planning to borrow $500 million more?

350 MMS to pay of Oaktree in a sweetheart deal.
I
My only holding in the green on a very red day....