Good day, ladies and gentlemen, and welcome to the Calumet Specialty Products Partners Q3 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I would now like to introduce your first speaker for today’s conference, Mr. Joe Caminiti with Investor Relations. Please go ahead.

Thank you, Andrew. Good afternoon everyone and thank you for joining us today for our third quarter 2016 earnings results call. With us on today's call are Tim Go, CEO; Pat Murray, EVP and Chief Financial Officer; Bill Anderson, EVP of Sales; Ed Juno, EVP of Operations; and Bruce Fleming, EVP of Strategy and Growth. Before we proceed, allow me to remind everyone that during the course of this call, we may provide various forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such statements are based on the beliefs of our management, as well as assumptions made by them, and in each case, based on the information currently available to them. Although our management believes that the expectations reflected in such forward-looking statements are reasonable, neither the partnership its general partner nor our management can provide any assurances that the expectations will prove to be correct. Please refer to the partnership’s press release that was issued this morning, as well as our latest filings with the Securities and Exchange Commission for a list of factors that may affect our actual results and could cause them to differ from our forward-looking statements made on this call. As a reminder, you may now download a PDF of the presentation slides that will accompany the remarks made on today's conference call as indicated in the press release we issued earlier today. You may access these slides in the Investor Relations section of our website at calumetspecialty.com. Also, a webcast replay of this call will also be available on our site within a few hours and you can contact the Alpha IR Group for Investor Relations support at 312-445-2870. With that, I'd like to pass the call to Tim Go. Tim?

Thanks Joe and thanks to all of you for joining us today. Let’s start on Slide 4, and I’ll walk through the third quarter’s highlights. A big picture to take away is that we continue to make solid progress against our strategic priorities to reshape and reposition Calumet. We’ve come together as an organization with a strong sense of urgency to both change our culture and to simultaneously drive our operations excellence initiatives. As a reminder, our operations excellence initiative is being driven by multiple integrated business teams, composed of cross-functional groups of leaders who’ve been tasked with improving the long-term performance of each and every asset and product line in a portfolio. The success of our team's hard work is readily apparent in our results today as we've driven an estimated $71 million in incremental self-help, adjusted EBITDA for the first nine months of the year. These results have already surpassed the midpoint of our annual goal to deliver $60 million to $75 million in self-help in 2016. And our teams remain diligent on a daily basis, finding new ways to bring stronger financial and business discipline to our organization. In fact, we will talk you through a handful of new margin capture initiatives later in today's presentation. All of which are being implemented as we speak and we’re a direct development of this more collaborative culture that we’ve been fostering. So let’s talk about some of our specific results this period. We were able to deliver solid results again this quarter, not as high as last year, but solid given today's still challenging market environment. Specifically, we generated adjusted EBITDA of $53.9 million, as the consistent performance of our specialty products segment was partially offset by lower performance in our fuels products and oilfield services segments. Included in…

Thanks Tim. Good afternoon everyone and thank you for joining us today. I will start on Slide 14, which provides our adjusted EBITDA bridge year-over-year. We have reported adjusted EBITDA of $53.9 million in the third quarter 2016 versus $75.4 million in the third quarter of 2015. Third quarter 2016 reported adjusted EBITDA, includes an unfavorable lower cost to market inventory adjustment of $8.4 million and debt expense of $10.1 million related to the partnership ongoing compliance with the U.S. renewable fuel standard. There has been a lot of questions about RINs of late by our investors and they want to take their opportunity to provide some context on our exposure there. For the full-year 2016, we anticipate our gross RINs application to be approximately $120 billion RINs based on the recent production capacity expansions at two of our fuel products refineries. As we’ve talked about before, we have multiple ways to reduce this obligation through blending activity, such as through the biodiesel production that we have at our Dickinson, Texas plant. These capabilities allow us to blend of a approximately 50% of our obligation. We continue to examine other ways that we can minimize the liabilities associated with the RINs. We have more work to do, but we believe that through a combination of initiatives, we will be able to reduce our liability slightly further as we move forward. Now please turn to Slide 15 for a review of our year-to-date adjusted EBITDA comparison. Most of the drivers of the walk from our nine months in 2016 versus the same period last year are similar to the quarter-over-quarter explanations. However, as illustrated in this chart, we estimate a benefit of $71 million in adjusted EBITDA generated in the nine months 2016, resulted from our self-help underscoring the overall importance…

Thanks Pat. As you can see, we are making progress to really change the way do business. We have created flexibility and optionality in our business as well. This, positions us to continue to evaluate a number of different path forward for the organization all centered around our great core specialty products platform that will maximize value for all of our stakeholders. Our operations excellence activities are exceeding our initial expectations and they are bringing us together in making us a stronger team. We have more work to do, but we're growing more and more confident about our path forward, and we look forward to talking to you further about our plans for 2017 when we discuss our fourth quarter results early next year. That concludes our prepared remarks. So, Andrew we’ll go ahead and open the line for questions at this time.

[Operator Instructions] And our first question comes from the line of Neil Mehta with Goldman Sachs. Your line is now open.

Good afternoon everyone and thank you for your comments today. I have a couple of questions just around the strengthening of the balance sheet, which you just spoke to a little bit today, what you think the opportunity is there for asset monetization and asset sales, specifically as it relates to some of the fuels refining assets to help bringing cash flow to reduce the debt level?

Yes Neil, this is Tim. We talked about this a little bit in our prepared remarks, what I will tell you is that we've completed our valuation effort. We talked about the role that Bruce Fleming has played in our organization. We've incorporated our five-year plan outlooks into all of these assets and developed our hold analysis based on those future growth opportunities that we see. And we know and are executing against those strategic plans for those assets. Just like Dakota Prairie if an opportunity comes up where there is value to another portfolio that’s higher than ours, and they can provide value that’s more than what we can see in our own portfolio we will certainly consider those opportunities. Just like we did with Dakota Prairie, we are continuing to entertain those types of opportunities, but we remain very disciplined in our approach and right now we're focused on executing our strategic five-year plans for all of our assets, including our refining assets.

I appreciate that I know, Tim we will get a better look at 2017 on the fourth-quarter call, but big picture can you talk about the 2017 capital spending plan, what are the pluses and minuses and how should we think about it relative to where we are tracking here in 2016?

Yes Neil that’s a good question. I know you are getting into that time of the cycle where these questions are going to become more relevant. We are still in the middle of our planning phase. I would say we were preparing to provide firm guidance in the fourth-quarter call. So what I can tell you is, it will be similar to what our guidance was this year. We had the SAP ERP project this year that we’ve talked about in prior calls, that is not going to be capital spending next year. So that’s a minus in the capital spending plan. However, we are starting our turnaround cycle plan and so we've - between 2017 and 2018 and 2019, we will see some increased turnaround activities across those years, again starting the ramp up in 2017, and just in round numbers Neil we're not ready to give final guidance, but in round numbers that turnaround mode will basically offset the SAP project that’s not in the 2017 plan. Does that make sense?

That does. I appreciate the comments Tim and talk to you soon.

Thanks Neil.

And our next question comes from the line of Ed Westlake with Credit Suisse. Your line is now open.

Hi, it’s Johannes Vandertuin here. Thank you for taking my questions. Just a kind of a little bit on what Neil was getting at previously, key to moving the company forward will be reducing leverage and repairing the balance sheet, within your five-year plans do you have a sense as to when you will feel like you will start to get a better hold using that kind of-based case on the balance sheet and bringing down the debt levels?

Johannes, this is Tim. What I would tell you is, when we put together our strategic five-year plans, we put together our operational excellence goals that’s the 150 million to 200 million that we talked about in the last quarter and that we continue to track against. When you - the way I would try and answer your question and I would say you kind of look at that target, that guidance and start applying that towards our balance sheet, and that’s the way we're looking at it right now. You know, we've got more aggressive internal goals that we're going after than the 150 to 200 that we are putting out there for public consumption, and our teams, as I mentioned earlier have been working very hard here over the past six months and putting these plans together in actually starting to execute them. And the 150 million to 200 million is the way I would tell you to put into your models, try to figure out how we are going to deleverage our balance sheet over time.

Okay. Thank you. And just kind of a follow-up on that, you had mentioned before that as a team you’re willing to entertain the possible sale of assets if the company comes and approaches you and says, we're willing to pay you enough that it’s worthwhile to do so, is that a comment that’s reserved just for the fuels assets or would you also entertain the sale of a core asset if something came up?

Yes, Johannes that’s a question I often get asked too. And we would entertain, I mean the way we would articulate our strategy and the way I look at our assets is the same regardless of whether it’s a specialty asset and oilfields services assets or our fuels refining asset. We have [indiscernible] for all of our assets and we know what they are worth to us. And if someone comes and sees more value, even in our specialties assets because of their synergies or because of their outlook or goals, then as good stewards of this company, we have an obligation to look at that. So, yes we would consider it.

Okay, and internally just kind of looking at the fourth quarter and into next year, have you been sensitizing how you think the company is going to perform based off of some of the volatility that could exist within the market, and specifically what I'm thinking about is that I know many of my colleagues and I are thinking about okay were oil price is going to go, what is the effect of the OPEC meeting going to be, therefore is oil going to be up or down into the first part of next year? How kind of sensitive is your plan to those sorts of fluctuations in the macro environment around you, when it comes to execution?

Yes, Johannes we’ve got a strategic planning group that continues to look at various scenarios. Various market cases that could happen, especially through the fourth quarter and the first quarter, which seasonally tends to be tougher for example on fuels. We’ve looked at expected cases and then we've looked at high cases and low cases, and we filled our strategies off of the range of outcomes of those various scenarios. We are looking at just one of them and we continue to run our business off of that Johannes. So, I don't know what else to say, but many of those include stress test and we continue to plan our business around that.

And I guess, drilling down on that is, how comfortable are you in a stressed scenario, according to the stress test in terms of being able to push the business forward?

We’re comfortable Johannes, as we pass on our own scenarios and what we have to do. Now in different scenarios we do different things and we have different actions, but we pass on all our scenarios.

Okay, well thank you very much. Appreciate the time.

And our next question comes from the line of Brad Heffern with RBC Capital Markets. Your line is now open.

Good afternoon everyone.

Good afternoon.

Tim, I appreciate the chart that you put in the deck about basically you're relating crude pricing versus WTI, one thing I was noticing and wondering about was you’ve run an increasing amount of Canadian heavy every quarter for the last four quarters, but the discount versus WTI has been going down since the beginning of 2016, is that just worse pricing on the non-Canadian heavies, that you have been buying that's driving that or what is underlying that?

Yes, those are just seasonal changes. I don't think Brad that you should think that quarter-by-quarter and draw a trend just because of the very complex crude system that’s out there and the different qualities that are out there, what I think you should do is look at it more on a year average basis and you see we drew in that dotted line showing the 2015 average in that chart. And I think that’s more of what you should look at. The last few quarters, even though there has been some quarter-by-quarter volatility, they are all still below the 2015 average line and that chart.

Okay. Fair enough. And then the New Tolling Agreement you guys signed, is there any figure you can put out about what the implication is financially, is there an EBITDA number associated with that or can you just say if it’s even material?

We can't put any numbers out there Brad as you subscribed. This is something that is between us and our counterparty. What I can tell you is it’s built in to the $150 million to $200 million self-help target that we put out there. We think it is material and we are very excited about the opportunity.

Okay, understood. And then finally, we saw one of your peers acquire a lubricants operation earlier this week. I know some investors have been looking at that as a comparable for your specialty products business. I was curious if you could give any color either Tim or maybe Bruce, as to how compatible you think the businesses are and whether you think that the valuations are reflective of what you think must be valued at?

Yes, I’ll be happy to make a comment and then I’ll flip it over to Bruce and if he wants to embellish on that any. With the recent M&A activities that have been occurring and Holly purchasing Petro-Canada. I think it’s validation for us to see a respective player like Holly confirm our business model and focus on our specialties business. There is a lot of overlap between Petro-Canada’s business and our business in terms of wide oils and base oils, but there is not complete overlap and we have so many specialties areas that are not overlapped with the Petro-Canada business in ex-solvents other things. So, I don't, I'm probably not in a position to comment in the Holly deal, but what I can tell you is that some people might consider the valuation on our business. I would just take it at as a validation of the value we see in our specialties business. And Bruce do you have anything else to add on to that.

Yes gratefully. Brad thanks for the question. We do watch our competitors and try to have a sense of their strategies and strengths and directions as part of our benchmark and so we are familiar with the form of PCOI [ph] and we congratulate HollyFrontier on a good acquisition at six times their EBITDA, according to the headline numbers. In fact that represents a really good deal and not a sector valuation. So, I would certainly direct you to the specialty chemical peers and between us and a couple of them you’d probably form a view in anywhere in the 10 to 15 multiple range for the sector.

Great. Thank you for that color.

Our next question comes from the Sean Sneeden with Oppenheimer. Your line is open.

Hi, thank you for taking the questions.

Hi Sean

Pat maybe for you to start, can you elaborate on the new crude supply agreement, I guess can you give us a little bit more color about what exactly it is and did I hear you correctly that there is a $150 million lean associated with that?

Yes, there is $150 million lean that’s allowed under our indentures for forward crude oil purchase contracts and that lean construct has been in place for long time, it’s not new. It’s been there really since we entered into - think our first indenture of unsecured notes. What it allows us to do is this new agreement is allowing us to move further into the maximization or the optimization of that $150 million lean. So, we’re effectively under that lean enhancing our crude oil payment terms with the counterparty and that will effectively give us greater payables and help with our overall working capital and liquidity. So, the way I would look at it, we were already utilizing the lean, just not fully. This is a substantial increase in the utilization of lean and then we're going to keep exploring ways and options to fully optimize the lean over time.

Got it. And is that crude supply agreement, is that the driver behind the jump in letters of credit in the quarter? You said that you went from 64 million to call 113, is that what was going on there?

It’s not related to that. I think over time we have evaluation with suppliers around letters of credit, sometimes the letter of credit amounts move around just based on the timing and which crude oil suppliers were utilizing can change with changes in crude oil price, but it’s not related to this particular item. I think again, as we explore ways that we can utilize that lean, which again is essentially a form of credit support, I think there are opportunities to look at our letters of credit and have a positive impact there, but those two things are not related today.

Okay, got you. I guess just kind of moving on, can you talk a little bit about working capital in the quarter, it looked like your inventories was a decent source of cash, but basically everything else was more or less offset that, but can you talk about I guess what the driver was behind all that?

I think the key headline here is that we’ve continued to pull inventories lower. Over the course of the quarter that is about $25 million benefit. I think that moments within things like AR and AP often are the result of timing differences and not fanatic of something else. So, if we were going to continue to focus on all of our efforts to continue to reduce our working capital over time, if you look at, it’s just the impacts of working capital where for the course of the quarter. They really were pretty much even, but I guess I would comment that if you look at sort of views of working capital in concert with other balance sheet changes, and lower CapEx and the like, and we continue see progress in terms of what our cash flow overall has - that profile has looked like by quarter over the course of the year.

Okay that is helpful. And then maybe just two quick ones, one I mean it looks like your RINs expense was actually somewhat consistent with the second quarter, which I think you had the benefit from the small refinery exemption that flow through, just given the jump in prices in the quarter, what was the driver there, is that just timing related from when you actually went and purchased RINs or could you elaborate on that all?

It was really more, just the typical standard obligation. There wasn’t too much mark-to-market impact in the quarter.

Okay. And then Tim, okay you involved your - can you talked a little bit about the competitive dynamics in specialty now, you had the Holly transaction, I guess, specifically are you anticipating any pricing pressures on some of your more commoditized elements like base oils, I think Holly has kind of indicated that they are trying to grow the loops business on the whole going forward?

Yes Sean, I’m happy to try away. I mean, it’s still early and obviously there’s a lot of observations and we have to watch and see what happens but let me just point out that Petro-Canada was running this business before Holly. We were competitors with Petro-Canada and are pretty familiar with what they were doing and how our businesses overlapped and competed with Petro-Canada. Whether Holly is going to change or be similar to that. We will just have to wait and see, but I think we're pretty familiar at least with their capabilities and their offerings, and feel like we understand that business.

Okay, so suffice it to say from kind of judging your body language correctly here, the expectation is, at least in the near term you're not anticipating any significant changes from at least talking about market dynamics.

Yes and again I can’t speak for Holly in terms of what their intentions or plans are, but we know what our business look like with Petro-Canada in the mix and we will just continue to watch and see how that changes as Holly gets to understand the business and decides to make changes or not. So, I really can't provide you any more background or details on that Sean, we will just have to wait and see.

Okay, thank you very much.

All right ladies and gentlemen that is all the time we have allocated for questions today. So with that said, I would like to turn the conference back over to CEO, Mr. Tim Go for any further remarks.

Okay, thanks Andrew. Thank you again everyone for your time today and your continued support. Have a great day.

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.