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| PART I |
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| Items 1 and 2. | Business and Properties | 5 |
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| Item 1A. | Risk Factors | 29 |
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| Item 1B. | Unresolved Staff Comments | 51 |
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| Item 1C. | Cybersecurity | 51 |
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| Item 3. | Legal Proceedings | 52 |
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| Item 4. | Mine Safety Disclosures | 52 |
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| PART II |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 53 |
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| Item 6. | [Reserved] | 53 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 54 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 77 |
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| Item 8. | Financial Statements and Supplementary Data | 79 |
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| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 133 |
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| Item 9A. | Controls and Procedures | 133 |
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| Item 9B. | Other Information | 135 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 135 |
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| PART III |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 136 |
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| Item 11. | Executive and Director Compensation | 137 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 137 |
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| Item 13. | Certain Relationships and Related Transactions and Director Independence | 137 |
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| Item 14. | Principal Accounting Fees and Services | 138 |
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| PART IV |
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| Item 15. | Exhibits | 139 |
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) includes certain “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “will,” “may,” “intend,” “believe,” “expect,” “outlook,” “anticipate,” “estimate,” “continue,” “plan,” “should,” “could,” “would,” or other similar words. The statements regarding (i) demand for finished products in markets we serve; (ii) estimated capital expenditures as a result of required audits or required operational changes or other environmental and regulatory liabilities; (iii) our anticipated levels of, use and effectiveness of derivatives to mitigate our exposure to crude oil price changes, natural gas price changes and fuel products price changes; (iv) estimated costs of complying with the U.S. Environmental Protection Agency’s (“EPA”) Renewable Fuel Standard (“RFS”), including the prices paid for Renewable Identification Numbers (“RINs”) and the amount of RINs we may be required to purchase in any given compliance year, and the outcome of any litigation concerning our existing small refinery exemption (“SRE”) petitions; (v) our ability to monetize federal clean fuel production tax credits (“CFPCs”) under Section 45Z of the Internal Revenue Code and the price we expect to receive for CFPCs; (vi) our ability to meet our financial commitments, debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditures; (vii) our access to capital to fund capital expenditures and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; (viii) our access to inventory financing under our supply and offtake agreements; (ix) the effect, impact, potential duration or other implications of supply chain disruptions and global energy shortages on our business and operations; (x) general economic and political conditions, including inflationary pressures, changes in global trade policy and tariffs, instability in financial institutions, the shutdown of the U.S. federal government, general economic slowdown or a recession, political tensions, conflicts and war (such as the ongoing conflicts in Ukraine, Venezuela, and the Middle East and their regional and global ramifications); (xi) the future effectiveness of our information technology systems to further enhance operating efficiencies and provide more effective management of our business operations; (xii) our expectation regarding our business outlook with respect to the Montana Renewables business; (xiii) an ability to maintain an effective system of internal controls; (xiv) the expected benefits of the Conversion (as defined herein) to us and our stockholders; (xv) our expectation that the DOE Facility (as defined herein) will enable MRL (as defined herein) to complete the MaxSAFTM construction on time and on budget; and (xvi) our ability to maintain or improve our carbon intensity at our MRL facility, as well as other matters discussed in this Annual Report that are not purely historical data, are forward-looking statements. These forward-looking statements are based on our expectations and beliefs as of the date hereof concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our current expectations for future sales and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisition or disposition transactions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause our actual results to differ from those in the forward-looking statements are those described in Part I, Item 1A “Risk Factors” of this Annual Report. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
References in this Annual Report to “Calumet,” “the Company,” “we,” “our,” “us” or like terms refer to (i) Calumet Specialty Products Partners, L.P. (the “Partnership”) and its subsidiaries before the completion of the Conversion and (ii) Calumet, Inc. and its subsidiaries as of the completion of the Conversion and thereafter. References in this Annual Report to “the General Partner” refer to Calumet GP, LLC, the general partner of the Partnership.
An investment in our common shares involves a significant degree of risk. Below is a summary of certain risk factors that you should consider in evaluating us and our common shares. However, this list is not exhaustive. Before you invest in our common shares, you should carefully consider the risk factors discussed or referenced below and under Item 1A. “Risk Factors” in this Annual Report on Form 10-K. If any of the risks discussed below and under Item 1A. “Risk Factors” were actually to occur, our business, financial position or results of operations could be materially adversely affected.
Risks Related to Our Business
| ● | Our business depends on supply and demand fundamentals, which can be adversely affected by numerous macroeconomic factors outside of our control. |
| ● | Our business has exposure to some commodities which are volatile, and a reduction in our margins will adversely affect the amount of cash we will have available to operate our business and for payments of our debt obligations. |
| ● | Our hedging activities may not be effective in reducing our exposure to commodity price risk and may reduce our earnings, profitability and cash flows. |
| ● | Decreases in the price of inventory and products may lead to a reduction in the borrowing base under our revolving credit facility and our ability to issue letters of credit or the requirement that we post substantial amounts of cash collateral for derivative instruments. |
| ● | We depend on certain key suppliers and third-party pipelines for transportation of feedstocks and products, and if these suppliers or pipelines become unavailable to us, our revenues and cash available for payment of our debt obligations could decline. |
| ● | The price volatility of utility services may result in decreases in our earnings, profitability and cash flows. |
| ● | Our facilities incur operating hazards, and the potential limits on insurance coverage could expose us to potentially significant liability costs. |
| ● | An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our financial condition and results of operations. |
| ● | Competition in our industries is intense, and an increase in competition in the markets in which we sell our products could adversely affect our earnings and profitability. |
| ● | We depend on unionized labor for the operation of many of our facilities. Any work stoppages or labor disturbances at these facilities could disrupt our business and negatively impact our financial condition and results of operations. |
| ● | Our method of valuing inventory may result in decreases in net income. |
| ● | Our arrangement with J. Aron (as defined herein) exposes us to J. Aron-related credit and performance risk as well as potential refinancing risks. |
| ● | We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business. |
| ● | Our financing arrangements contain operating and financial provisions that restrict our business and financing activities. |
| ● | A change of control could result in us facing substantial repayment obligations under our revolving credit facility, our senior notes, our secured hedge agreements, and our Supply and Offtake Agreement (as defined below). |
| ● | We must make substantial capital expenditures for our facilities to maintain their reliability and efficiency. |
| ● | We may incur significant environmental costs and liabilities in the operation of our refineries, facilities, terminals and related facilities. |
| ● | We are subject to compliance with stringent environmental and occupational health and safety laws and regulations. |
| ● | The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions could have a material adverse effect on our results of operations and financial condition and our ability to make payments on our debt obligations. |
| ● | Our and our customers’ operations are subject to risks arising out of the threat of climate change, including operational, regulatory, political, litigation and financial risks, which could result in increased operating and capital costs for our customers and reduced demand for the products and services we provide. |
| ● | We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits and authorizations or otherwise comply with occupational, environmental and other laws and regulations. |
Risks Related to Montana Renewables
| ● | If there is not sufficient demand for renewable energy, if renewable energy markets do not develop or take longer to develop than we anticipate, or if we do not realize the expected SAF premium we may be unable to achieve our investment objectives for Montana Renewables, LLC (“MRL”). |
| ● | Montana Renewables is subject to a number of statutes and regulations that could have a material adverse effect on Montana Renewables’ operations. |
| ● | Montana Renewables is subject to numerous operating risks, which could materially adversely impact our results of operations and financial conditions. |
| ● | A significant component of our product margin consists of a variety of government subsidies, incentives and mandates. |
| ● | Transactions between the Company and MRL present possible conflicts of interest that could have an adverse effect on the Company if they are not managed appropriately. |
| ● | Increases to the cost of transportation services or equipment related to our feedstock materials and renewable transportation fuels could materially and adversely affect our sales revenues and cost of operations. |
| ● | The production of renewable fuels is a growing industry, and we are expecting to encounter significant competition in the marketplace. |
Risks Related to Our Common Stock
| ● | The price of our common stock may experience volatility. |
| ● | Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make it more difficult for a third party to acquire control of us. |
| ● | The value of our common stock may be diluted by future equity issuances (including upon the exercise of the outstanding warrants), and shares eligible for future sale may have adverse effects on our share price. |
Risks Related to Tax Matters
| ● | We are subject to risks arising from compliance with and changes in tax laws. |
| ● | We are currently unable to fully utilize the clean fuel production tax credits (“CFPCs”) that we generate, and as such, we are exposed to fluctuations in the prices of CFPCs and the potential unavailability of parties willing to purchase CFPCs. |
Part I
