Calumet, Inc. (CLMT) Q3 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 Calumet Specialty Products Partners, L.P. Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Joe Caminiti, Investor Relations. Thank you. Please go ahead, sir.

Thank you, Fellis. Good morning, everyone, and thank you for joining us today for our third quarter earnings results call. With us on today's call are Steve Mawer, CEO; Todd Borgmann, interim CFO; and Bruce Fleming, EVP of Strategy and Growth; and Scott Obermeier, EVP of Commercial. 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 information currently available to them. Although our management team 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 www.calumetspecialty.com. Also, a webcast replay of this call will also be available on our site within a few hours, and you can contact Alpha IR Group for Investor Relations support at (312) 445-2870. With that, I'll pass the call to Steve. Steve?

Thanks, Joe. Good morning, everybody, and thank you for joining us. First of all, I'd like to recognize the efforts of our employees in the third quarter. For all of us, the pandemic has progressed from what was an adrenaline-fueled leap into the unknown during the second quarter to the reality of an ongoing extended campaign. Our team's transitioned well, learning to adapt to this new way of working while keeping ourselves and our colleagues safe. The most crucial measures in this business are environmental and safety performance, and I'm pleased to say that we're tracking materially ahead of 2019. This shows that we're keeping our eyes on what really matters and is a testament to the commitment and focus of my colleagues at Calumet. So thank you, team. Thank you very much. We'll start our presentation on Slide 3. Overall, the message of the third quarter is one of recovery, led by the resilience of the U.S. consumer, together with a rebound in the industrial sector. This resilience allowed Calumet to deliver great results in our core specialty business, which was topped off with a record year-to-date performance from our finished lubes and chemicals unit. Overall, July was the bottom for Calumet, and the months since then have shown steady improvement. We're very pleased with our specialty results, with the segment's adjusted EBITDA so far trending ahead of the pre-pandemic 2019. As we've discussed before, this year-over-year outperformance has been led by strength across all of our consumer-facing products and brands. Separately, our more industrial facing specialty products and brands showed a marked recovery in demand across the third quarter. While some end markets and products still show the impacts of lower demand, total specialty sales volumes are at 90% of last year's levels. And encouragingly, the September month saw industrial volumes return to where they were in September 2019. The recovery in volumes has allowed us to resume our lean supply chain and apply our philosophy of running the business with less inventory, which is conducive to improving margin performance. At an industry level, we believe that the tightness we're seeing across several specialty markets comes from a combination of strengthening demand, restocking post lockdown and disruptions from an exceptionally active hurricane season. These factors explain why, as of today, we haven't yet observed the typical signs of the historical seasonal slowdown that we tend to see in our specialties businesses. It could still come, but there are indications that the overall uniqueness of this year has somewhat altered typical seasonal patents. The fuels market is, of course, grinding along near the bottom of its business cycle. And like everyone else in the refining business, we're focused on what we can control. In the case of Calumet, this focus has been led by deliver actions, specifically maximizing value from our local niche markets, bringing 2021 turnaround work forward into 2020, better spreading our system-wide workload and leveling multiyear spending. And also, we continue to aggressively reoptimize our run rates and yields as the markets evolve. Furthermore, in 2020, we also ran a hedge book, which was proportionately larger than many in our industry. Given the tough fuels environment, many have commented that if one is to be in refining right now, then the 2 best places to be are in the Northern Rockies or to have a focus on specialties and chemicals, and we are fortunate enough to be 2 for 2 with our assets in Montana and Northwest Louisiana, and we'll take you a little deeper into our Northwest Louisiana complex later in the presentation. Taking you back to late in the first quarter and the start of the lockdown, Calumet stepped into the unknown of a pandemic and a global economic collapse, carrying a debt load that is relatively high for our industry. As such, it was immediately clear that our financial objective was going to be to get through this pandemic without burning excessive amount of cash. Extreme disruption and down cycles tend to take out the most leveraged competitor, and we were and are determined that it would not be Calumet. Decisive actions were taken in order to see that challenge through to reality. We reduced our capital budget for the year by 35%, immediately accelerated our planned SG&A reduction strategy, reducing those costs by approximately 20% versus last year, and we removed $30 million of fixed operating costs. We reset yields and inventories for the new operating environment, and finally, in very short order, we significantly added to our hedge book. Throughout this period of decisive action and throughout this year, we've operated with the foundational thinking that we would not compromise on safe and reliable operations. The net consequence of these decisive actions by the team are that we end the third quarter far from burning cash, but rather cash positive so far this year, which is a good place to be and an extremely credible achievement by our team. So with that, I'll now turn the call over to Todd, who will give you a more detailed look at our financial results for the quarter. Todd?

Thank you, Steve. Let's turn to Slide 4, where we provide third quarter highlights. Calumet generated $25.4 million of adjusted EBITDA in the third quarter. Our core specialty segment produced $56 million, and our fuels business generated negative $13.5 million. Year-to-date, our specialty segment has generated nearly $177 million of adjusted EBITDA, and as Steve mentioned, this business is trending ahead of 2019 levels through the first 3 quarters of the year. We finished the quarter with a cash of $109 million in total available liquidity of $269 million, both figures improving from the prior quarter. Since early in the pandemic, we've been focused on ensuring cash flow neutrality, and in the third quarter, Calumet generated $15 million of cash flow from operations and $8 million of free cash flow. We're also encouraged by recent trends we've seen in the credit markets, which indicate investors recognize the value of our specialty business and its ability to succeed even in the most challenging of environments. As you know, improving margins in our specialty business has been a strategic priority over the last 2 years. Specialty gross profit was $38.32 a barrel in Q3, while specialty adjusted EBITDA margin was 19.9%. These results are due largely to our diverse product offering, management of the volume margin dynamic and brand recognition in both consumer-facing and industrial markets as quarter-over-quarter specialty gross profit grew, despite crude prices increasing 47% from the second to third quarter. On Slide 5, we provide a bridge to our consolidated adjusted EBITDA totals versus this year's second quarter, an important development in the quarter was the return of industrial volumes. As this occurs, margins on a per barrel basis shrink due to the mix effect, but we are encouraged by the volume increase as total profit will benefit. Slide 6 compares our year-to-date adjusted EBITDA to the same time frame last year. In total, we have a $62 million bridge, of which $116.7 million is the negative impact of fuel margins, fuels volumes and rents. On the contrary, the combination of specialty margins volumes in transportation led to a $4.2 million improvement versus the same time period last year. Last, controllable operating costs and SG&A reductions represent a $45.6 million improvement compared to 2019. To reiterate, on an annualized basis, our SG&A expense is $36 million less than 2019. We don't take this lightly, and we are extremely proud of our employees for their bold and proactive response during this pandemic. Let's turn to Slide 7. Third quarter specialty EBITDA of $56 million was a $4.4 million or 8.5% improvement to last year's third quarter. The business continued to demonstrate margin expansion, up 540 basis points compared to the same period last year. This was fueled by consistent growth in our consumer-facing brands and good recovery in our industrial brands. The Finished Lubricants and Chemicals segment, including TruFuel, Royal Purple and Bel-Ray continued its record pace. The Penreco business has also performed well as food grade and pharmaceutical demand has been robust. And the Paralogics wax business is integrating well and outperforming expectations. Our sales team has been effective managing volumes and margins throughout the pandemic and the laser focus on product placement and industry diversification will continue as industrial demand returns to normal. Slide 8 details the quarterly results in our fuel segment. Third quarter adjusted EBITDA of negative $13.5 million was down compared to both the prior year and the sequential quarter, driven largely by the compression in crack spreads. We continue to benefit from our geographic advantages in this business with a focus on what we can control. For example, this quarter, the fuel business achieved record volumes of rack sales into our local markets, which is an advantage we continue -- we intend to continue benefiting from when markets recover. Turning to Slide 9. We bridge the sources and uses of cash year-to-date. You can see that our cash position has improved from the $19.1 million, where we began the year. Most importantly, we've produced $53.5 million of cash flow from operations year-to-date. Working capital management and CapEx discipline also contributed to the generation of $30.1 million of year-to-date free cash flow, which led to finishing the quarter with $109.4 million of cash on hand. On Slide 10, we provide a snapshot of our credit metrics. With $109 million of cash I just mentioned, we finished the quarter with over $269 million of total liquidity, up $20 million versus this year's second quarter. We continue to operate the day-to-day business with a focus on cash flows, while leverage reduction and balance sheet improvement remain as key components to our overall strategy. With that, I'll turn the call back to Steve.

Thank you, Todd. Let's go to Slide 11. In last quarter's call, we reviewed 2 focus items: one covering our TruFuel business, and another covering how our specialties margin versus volume envelope has been performing through the pandemic. The deeper dive received a lot of appreciative investor feedback, and so our intent is to continue sharing in order to further help you understand what we are up to and our story. So for today's call, given the recovery in industrials, we thought it might be good to spend a couple of minutes on our interconnected complex facilities in Northwest Louisiana. Calumet's interconnected specialty product sites at Shreveport, Princeton and Cotton Valley are collectively the largest high-yield specialty petroleum product complex in the U.S. Cotton Valley's focus is the production of solvent, marketed under our Consol and Magiesol brands. Princeton is on naphthenic base oil production facility, and that includes such industry known brands as CALTRAN electrical oils and HYDROCAL process oils. Shreveport, our largest Louisiana facility, serves 3 distinct roles for us: first, Shreveport is focused on parafinic base oils, particularly our CALPAR brand, which is sold into a variety of industrial specialty applications, together with Orchex, which is our branded agricultural spray oil. Shreveport is also at the heart of our rapidly growing wax business, most well-known through our Titan brand, which is sold into the candle industry. The second role Shreveport plays is, it's the flywheel around which these other sites exchange intermediates for optimization value. And third, Shreveport is a feedstock platform for other Calumet businesses further downstream, which includes our businesses in white oils, blended and formulated waxes, petrol items and specialty gels, all manufactured at other Calumet locations. The strength of our interconnected Louisiana sites, coupled with Shreveport's extended reach further downstream into other Calumet businesses, provides the operating flexibility to deliver stable performance and growing specialty segment results even in 2020. What brings these facilities together other than their geographical proximity is that collectively, we have an extremely flexible asset base focused on custom distillation, hydro treating across the entire pressure envelope, together with catalytic and solvent extraction, most particularly in dewaxing. Within the specialty petroleum product business, this gives us real scale and flexibility, and we continuously work on how to optimize this unique set of flexible assets. So now on to our outlook on Slide 12. U.S. consumer data remains remarkably good, and as long as that holds up, it is our expectation that our positive trajectory on consumer-facing specialty should hold. Our industrial brands appear to be well into recovery mode. Inventories and supply chains are in a good position, and the seasonal slowdown that we often see is not yet upon us. Fuels is currently near the bottom of its business cycle, and we will continue to focus on controllable actions. Our decisive actions on costs, marketing strategies and hedging have got us this far through the pandemic without cash burn and has helped Calumet in a good position to emerge strongly once the business cycle turns. And with that, I'd like to turn the call over to the operator to open up the line for Q&A. Operator?

[Operator Instructions] Your first question comes from the line of Neil Mehta with Goldman Sachs.

We do appreciate that incremental color that you provided around Shreveport here. Look, the first question that I have is around lubricants business and of course, we don't enter the world of speculation here, but there were press reports about the potential to monetize, it sounds, your assets for a certain amount of money. Just your thoughts on those -- on that lubricants business? How core is it and the potential for monetization to try to unlock value that might not being reflected in the unit price right now?

Great. Neil, it's Steve. As you know, I mean the lubricants and chemicals business has really taken COVID and its stride. It's powered through it, set a year-to-date record, and we believe that the future growth potential of all the brands inside this business is substantial. As responsible stewards of the business, management, the Board continuously review what the value of any product of Calumet is to us. And I think as it would be for any company, Neil, that valuation is a synthesis of cash flows, growth potential and strategic importance. It's clear from market reaction commentary that people understand this hypothetical situation will potentially change our leverage and debt quantum significantly. And I think, right now, given its highly speculative, as you hit on, I really can't comment further on speculation beyond that.

Yes. No, very clear. I'm sure there'll be other questions around this today. The follow-up I have is around Great Falls. And it is a good asset in the sense that it runs a lot of WCS, which is a differentiated crude grade right now. Results came in a little softer than I think what most investors were expecting out of that asset. Can you just talk about anything that could have been unusual or onetime? Or if it was just a function of the product and crude environment? And then how do you think about minimizing losses from the fuels business as you go into 2021 at the forward curve? What levers do you have before WCS prices start to widen back out overtime?

Neil, this is Bruce. Of course, we're reporting Great Falls and Shreveport fuels together. So I would not want you to leap to a conclusion about either facility, but in aggregate, over the summer, we have had a softer fuels environment for everybody than last year. Great Falls is incrementally affected by that, as you noted. And the WCS business is actually a key contributor to the gross margin environment up there, and of course, it's been narrower, which is adverse. So with all the obvious points being made, that is a good part of the country to be a refiner, and I think the proof of that is that the facility has run full on a volume basis throughout this pandemic.

And the steps that you guys are taking in order to -- as you go into 2021, what levers do you have to pull in order to drive -- to minimize losses as we work through the pandemic?

Well, I think the operational levers are the same for us as everybody work pretty nimble, given our 2 positions on reoptimizing and tracking closely matching output from the facilities to the local market demands and customer demands. It's been very volatile for everybody, but I think we've hung in there pretty well. I'll tell you, most of what you're seeing is the $64.5 million hickey from RIN prices skyrocketing in this year as opposed to a fundamental change in our operational competencies.

Your next question comes from the line of Roger Read with Wells Fargo.

Okay. Yes. I guess what I'd like to kind of get, I mean, it sounds like things are definitely improving in specialty. I mean, I'm sure a lot of this is volume driven. I was just curious as we look through thinking about what you were able to do in terms of pricing, right? We had a tremendous amount of crude volatility early in the year, kind of a little more stable since midyear. So how has that affected your pricing? And then with the recovery and what we've heard in a lot of places across the business, all across everywhere that there have been rundown of inventories. And then everybody, all of a sudden demand popped up. Have you been able to or do you expect to capture any sort of extra margin on a -- fixing the just-in-time issues that have crept up out there? Maybe just -- maybe that's a mix question, but I was just curious if any of that was coming through it?

Roger, Scott here. Let me take the first crack at it and Todd to weigh in, if needed. But when we look at the product mix, Roger, first, on the profit per barrel type of view, and it was mentioned during the presentation, but results were still over $38 a barrel. So I think what we saw during the quarter as the volume started ramping back up, really led by those industrials. The margin per barrel came back a little bit more to -- closer to normalization. But just for perspective, Roger, if you just go back even 2 years ago, it's still basically $10 a barrel above where we were just a few years ago. So $38 plus a barrel is still solid margin. And I think as we're in Q4, the inventories remain relatively low out there. There are some lower refining rates, the hurricane impact, et cetera. I think, overall, the supply demand and the overall supply chain in the market is pretty firm out there overall.

Yes. I appreciate that. I guess -- you did a lot of things cut back on a lot of low margin or low-priced type product offerings to improve that margin. So I'm not really sure when I looked at it, I can compare the high 30s to previously to high 20s and recognize whether that was changes you had already made or we were actually seeing changes in the market. So that's what I was really trying to get at with the question there.

Yes. I guess, Roger, this is Todd. I could chime in a little bit, too, because like you said, crude prices have varied substantially. And when you look at Q2 versus Q3, and we see a 47% increase in crude prices, yet margins hold all wall industrial demand returns, I think, it tells you something about kind of the market and the resilience of the consumer side. And we don't think that this is just some sort of crude anomaly, this is -- the specialty markets are strong right now. And…

Yes. This is -- Roger, Steve. If I could add to Todd. I mean just a couple of observations maybe to give you some more anecdotal feel as to how we think about it. I mean, first of all, clearly, we had a period a few days back where we had a material sell up on the crude complex, and we didn't see price cuts in any of specialties from anyone. So I think that just shows you, generally, there is a feeling that supply chains are tight. And then I think one of the best -- to me, one of the best indicators that supply chains are tight and sustaining that way is, we're facing the good news, bad news problem, that it's very difficult to get trucks and truckers. And so that tells us just how tight situation is right now.

Okay. Good. That kind of dovetails from what we've been hearing. And then I guess my completely unrelated follow-up question for you, Todd. Obviously, the company has come through what's been a brutal year for most companies we cover on the cash flow side, you all come through, I'll just say, strong. What, if anything, do we need to look at into the, I'll say, the end of this year or the beginning of next, in terms of expectations on cash flow or cash management? And then is there any potential as an MLP for Calumet to participate under the CARES Act in terms of any tax recoveries? I mean, I know it's, generally speaking, not a tax business, but I just didn't know if there was anything wrinkling the tax laws or something like that, that could benefit the company.

Sure. No, thanks, Roger. The -- as far as what to expect in 2020, the rest of 2020, it's quite an uncertain world out there. So I'd hesitate to look forward too far. Our goal does remain to be cash flow neutral in 2020. No change on that. We're committed to that. What I can tell you is what we've seen so far into the fourth quarter is more of the same on specialty. So the industrial return continues. Consumer-facing strength continues to be strong. We don't see any reason for that relative strength to change. As you know, it's difficult because we do see seasonality in the fourth quarter, typically in the -- particularly in the industrial brands. But like I said earlier, we have not seen those yet. So, so far, so good. We may see something different, and so far, so good.

Your next question comes from the line of Gregg Brody with Bank of America.

Just following up on the question about the Finished Lubricants business. I know this is market speculation, but just so as we think about it, is it easy to separate these businesses from your other businesses? Are there any limitations to doing that?

So I guess the way we would kind of frame it up is that currently, the businesses are integrated, but they're not strategically integrated. So I -- maybe the key point, geographically, we don't have any kind of shared facilities, primarily between the finished lubes business and our other asset base. So we talked a little bit about the integrated complex in Shreveport just now, Greg. I mean because of slide real estate we didn't put on there, but obviously, we have a major packaging and distribution facility as well for the finished lubes business, and that's where we have the TruFuel production line. That's in Shreveport, but it's like 15 miles away. So there is no pipes or anything like that integrated from an asset base.

Got it. So it is strategically aligned. So -- or integrated. So how do you -- what would be the steps to, I guess, separate it? Is it just -- is there anything that's arduous? Or is it fairly simple to do?

Gregg, this is Bruce. I might give a little more context around this. So first of all, the general structure of the company isolates each of our assets legally. We isolate them for P&L purposes internally. We roll that up, obviously, to a high level when we report, but we have the ability to have a very clear look at how the businesses perform. And part of that is we've got absolute arms-length separation if there are molecules moving back and forth. Now the speculative interest in finished lubes is probably getting a little overheated here. But if you want to keep thinking about it as a separable component, everything we've got is separable in that way. Think of it as virtual integration, not physical, and I think you'll be on the right track.

Got it. Just in terms of -- I appreciate all the color on the chems -- on the specialty chems business. Is there -- one of the challenges of forecasting this year has been just volumes, knowing exactly how COVID's impacting it. It sounds like you said for this year -- for this quarter, as of October, you're back to last year's volumes. Is that -- did I hear that correctly?

I think we said September, specifically. We've had an opposite trajectory. We've had an opposite trajectory, sorry I just forgot how to pronounce that word, during the third quarter and the lines have met in September, the '19 and '20 lines.

So is it fair to say that based on what you're telling us, you've not seen the normal seasonality that you historically have seen in the fourth quarter? And you were at last year's September numbers that theoretically, volumes in specialty could be higher this quarter than last year?

Yes. Gregg, Scott. I would say, theoretically, yes. And I think the wildcard becomes if seasonality comes into play or not. We haven't seen it yet. So that, at a minimum, it appears it may be delayed, and we just don't know if it's going to come or not on the seasonality, but yes.

And if I could just add a technical accounting comment, that the numbers, the volume like-on-like we're giving you is pro forma because in '19, we had a processing deal. So if you want to forensically attack the Q, you need to get that in mind.

Got it. And then just last question for me. Actually, maybe I have 2 more. First one I'll say is RINs headwinds. How should we think about that on a steady state impacting your refining business, if we stay around here for this quarter and thereafter?

Well we accrue against the shortfall. The system operation blends as much ethanol as we can. We like the blending ethanol. We wish we could do more, but I'll leave you at short. I would not want you to think that we have any insights on where that market is headed. RINs, prices and markets are just absolute chaos, strongly reactive to political or policy developments. So all I can tell you is that we're waiting for the RFS reform like the rest of the world.

Got it. No, I appreciate that. And just a last one for you. So you talked about the substantial SG&A savings you've had this year. Is it your sense that, that's sustainable at those levels? Does it need to go up if there is a recovery? Does it kind of go down further?

Yes. No, Gregg, this is Todd. We think mostly, it's sustainable. There's been some kind of structural changes made in the business as far as outside contract services, headcount, those types of things that are sustainable. Naturally, as travel comes back and as we hit the road more and things like that, we'll see a little bit of regression. But I'd say, for the most part, we've made the step change in SG&A, and we expect to keep the majority of it.

[Operator Instructions] Your next question comes from the line of Jason Gabelman with Cowen.

I wanted to first ask just about how you're thinking about that longer term. You have -- I think the next notes due are $150 million in a couple of years. So maybe thoughts around how you plan on attacking that? And then just a long-term view on where you want debt-to-EBITDA levels to be? And if you think you can get there organically or if you do think there needs to be some -- something on the inorganic side. And kind of tangential to that, thinking about -- there's obviously been a lot of questions about this finished lubes part of the business. But you previously referred to Great Falls as noncore, and it seems like that's something that you're going to be holding on to at least for now, just given the difficulty in transacting refining deals. Is there anything on the specialty side that you consider less core relative to the other parts of the business?

Thanks, Jason. This is Todd. Let me take the first part of your question, if that's all right, on the kind of the upcoming debt, and then I'll turn it over to Steve to talk a little bit more about some of the longer-term questions you mentioned. So as far as the 2022, remember, we did the exchange in Q2, so we're just left with $150 million maturing in 2022. We think that's a very manageable amount, and we have some flexibility. So we just talked about, we got $269 million of liquidity. It's the cheapest debt we have at the moment. We've been generating cash. So we're willing and comfortable to go current as we kind of give ourselves some time to optimize our options. So I guess that would be hopefully part of one of your question. And then, Steve, do you want to speak a little bit to sort of the longer term?

Yes. On the deleveraging, forgive me if I make an answer that might sound a little facetious. I mean -- and let me use a golfing analogy, right? I can sit here and tell you that I'd like to be a scratch golfer or I'd like to be a better golfer. And let's kind of talk about leveraging from I want to be a better golfer rather than I want to be a scratch golfer. So I'm not going to give an aspirational target from that perspective but clearly, Management and the Board look at where our cost of capital is and say that some combination of deleveraging and clarifying our mixed business model is the path forward. If you go back to January, February, I think there was a very clear organic path forward, and right now, I'd say that organic path forward is much less. So we're thoughtfully continuing to look about how we can reduce our cost of capital through a combination of addressing those 2 issues. So I hope that kind of covers the second one. And then on the third one, you'll have to refresh me.

Just on -- I mean, yes, it was kind of tied to the last question, which -- it was just around, you kind of referred to a Great Falls as noncore historically. Is there something with in the specialties business that you consider not necessarily noncore but not as core, I guess, as other parts of the business. Just along the lines of the conversation about the finished lubes segment?

Yes. Yes, this may not be a very satisfying answer. I mean, we like, I think, pretty much everything we're doing in specialties. We like everything we look at has got some difference in growth opportunity, but we see growth opportunities across all of it. So I just kind of maybe pivot back to what I said earlier and then hand over to Bruce to get his take, which is whenever we look at valuation, it's obviously going to be some synthesis of cash flows growth potential and strategic importance. And that strategic importance is a kind of tactical overlay, but I think all of it is particularly -- has a relative degree of strategic importance. Bruce, you want to add?

Sure. Steve, thank you. I appreciate the kind of longer-term strategic journey nature of your interest. And if we maybe give a little bit of a foundation. If you go back to December 31, 2016, we had $2.0 billion of debt. And this quarter, the report that Todd is putting out has that at $1.2 billion. So we made an $800 million inroad against our long-term debt structure over that period of time, and it was a good balance between ops improving the site level at the individual business level and M&A activity. Those 2 things took care of the debt that I just mentioned and also funded a great deal of inward investment, the organic part. So we're actually pretty reasonably pleased with the balance. And as Steve indicated, that was going really well until we sailed into the COVID storm. So we'll see. But we do like to think about balance. And so when people want to take a list of our assets and draw a line somewhere and say, core versus noncore, that's probably a little inflexible compared to how we think about it. So the diversification that we've got is the strength. Pieces of the business have been rotational. The cycles don't sync up, and if you think about it that way, we're just looking at the mix. We're looking at the portfolio. If something was to bolt-on or bolt-off, it would be against that backdrop, that context.

And at this time, there are no further questions. I would like to turn the call back over to Mr. Caminiti.

Joe, you want me to wrap?

Go ahead, Steve. It's your call.

Thank. Okay. Well, again, I appreciate everybody being on the call. I would point out, I was talking about golf earlier, and I can assure you no when at Calumet has time to play gold these days. We're working hard on getting through the pandemic. I want to thank you all again for your interest in Calumet. The team has executed at a high level throughout 2020 in the face of significant challenges and uncertainty. We've taken proactive actions to both protect the business and to position it for long-term success. I'm extremely proud of everybody at Calumet and look forward to seeing what we can do in 2021. I appreciate your time. Have a great day and good a weekend. Thank you.

Ladies and gentlemen, that does conclude today's conference call. You may now disconnect. Thank you for your participating.