CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. The historical unaudited condensed consolidated financial statements included in this Quarterly Report reflect all of the assets, liabilities and results of operations ofCalumet Specialty Products Partners, L.P. ("Calumet," the "Company," "we," "our," or "us"). The following discussion analyzes the financial condition and results of operations of the Company for the three and nine months endedSeptember 30, 2021 . Unitholders should read the following discussion and analysis of our financial condition and results of operations in conjunction with our 2020 Annual Report and our historical unaudited condensed consolidated financial statements and notes included elsewhere in this Quarterly Report. Overview We manufacture, formulate, and market a diversified slate of specialty branded products to customers in various consumer-facing and industrial markets. Calumet is headquartered inIndianapolis, Indiana and operates twelve facilities throughoutNorth America . EffectiveJanuary 1, 2021 , we reorganized our business segments as a result of a change in how the CODM allocates resources, makes operating decisions and assesses the performance of the business. As a result, as ofJanuary 1, 2021 , our operations are managed by the CODM using the following reportable segments:Montana /Renewables; Specialty Products and Solutions; Performance Brands; and Corporate. Segment information presented herein reflects the impact of this reorganization for all periods presented. For additional information, see Note 13 - "Segments and Related Information" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements." In our Specialty Products and Solutions segment, we process crude oil and other feedstocks into a wide variety of customized lubricating oils, solvents, waxes and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for basic industrial, consumer and automotive goods. In ourMontana /Renewables segment, we process crude oil into a variety of fuels and fuel-related products, including gasoline, diesel, jet fuel, asphalt, heavy fuel oils and other products. Additionally, we are in the process of converting a significant portion of ourGreat Falls refinery into a Renewable Diesel Production facility, which we expect to commence operations in the second quarter of 2022. In our Performance Brands segment, we blend, package and market specialty products through ourRoyal Purple , Bel-Ray, and TruFuel brands. Our Corporate segment primarily consists of general and administrative expenses not allocated to the Specialty Products and Solutions,Montana /Renewables, or Performance Brands segments. Please read Note 13 - "Segments and Related Information" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" for further information. Third Quarter 2021 Update Outlook and Trends The world continues to navigate the COVID-19 pandemic. Global economic conditions continue to improve, driven by increases in vaccination rates in theU.S. and across the world, which has resulted in increased demand and higher prices for many industrial and consumer goods products, as well as energy prices. Additionally, most industries continued to see supply chain disruptions during the third quarter of 2021, and while the global dynamic is receiving elevated attention in all areas, it's difficult to predict when all challenges will be fully resolved. The global crisis has impacted Calumet's businesses in various ways. Concurrently, our businesses continue to see strong, growing demand for products across our segments. Our Performance Brands segment has been most impacted by the global supply chain disruption, and as we navigate this environment in a time of rapidly growing demand, our order backlog continues to grow. Our Specialty Products and Solutions segment is experiencing record specialty unit margins and fuels margins have increased for the third straight quarter as the industry reacts to a global economic recovery and a shortage of hydrocarbon products in certain markets. Asphalt markets continued to improve with seasonal demand strength through the end of summer into early fall. These fundamentals allowed for healthy unit margins in the third quarter of 2021 compared to the third quarter of 2020, despite a significantly higher price environment during this quarter. The following factors have impacted or may impact our results of operations during 2021: •We continue to see an increase in demand for our products as the domestic and global economies recover from the COVID-19 pandemic. We continue to monitor for the impact of COVID-19 variants, any increase in cases and/or the reinstatement of lockdowns and other restrictions, each of which could negatively impact the recovery from the COVID-19 pandemic. •We expect supply chains to remain disrupted, which is expected to continue to provide challenges to the availability and pricing of feedstocks, additives, packaging materials and transportation. •We continue to focus on improving operations. Our total feedstock runs were 80,021 barrels per day ("bpd") during the third quarter 2021 compared to 81,813 bpd during the third quarter 2020. This decrease is primarily attributed to lower production volumes at our Shreveport facility. 30 -------------------------------------------------------------------------------- Table of Contents •Our Specialty Products and Solutions margins have remained strong but certain of our end markets are susceptible to changes in Gross Domestic Product. As markets and results improve, we expect to make small investments in this segment that we believe are low-risk, high-return investments. •It is not possible to predict what future RINs costs may be given the price volatility, but RINs continue to have the potential to remain a significant non-cash expense in our results of operations. The approximate 25% decrease in the third quarter 2021 period-end market price of RINs in comparison to the second quarter 2021 market price of RINs favorably affected our financial results. See Note 7 - "Commitments and Contingencies" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" in this Quarterly Report for further information on the Company's RINs obligation. •We continue to evaluate opportunities to divest non-core businesses and assets in line with our strategy of de-leveraging and streamlining our business to better focus on the advancement of our core business. In addition, we may also consider the disposition of certain core assets or businesses, to the extent such a transaction would improve our capital structure or otherwise be accretive to the Company. Lastly, we may seek acquisitions of assets that management believes will be financially accretive and consistent with our strategic goals. We developed and executed a plan to manage health and safety risks and business continuity to protect our workforce and business during the COVID-19 pandemic. Comprehensive guidelines and requirements for the return to work of personnel to their locations have been implemented and these will continue to be monitored as we manage COVID-19. To reinforce cost control and preserve cash, we expect to continue to diligently manage operating and capital costs. As markets continue to improve, high-return low risk projects may be added opportunistically. Furthermore, the Company's conversion of ourGreat Falls, MT asset into a leading Renewable Diesel facility is on track. In addition to other project-related agreements, the Company has entered into an Engineering, Procurement and Construction Agreement withBurns & McDonnell Engineering Company, Inc. (as general contractor for the project); a License Agreement and Engineering Agreement withHaldor Topsoe A/S andHaldor Topsoe, Inc. , respectively (as technology provider for the Renewable Diesel process); and an Engineering and Procurement Agreement withTechnip Stone & Webster Process Technology, Inc. (as technology provider for the Renewable Hydrogen process). Contingencies For a summary of litigation and other contingencies, please read Note 7 - "Commitments and Contingencies" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements." Based on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued, which may result from these contingencies, will have a material adverse effect on our liquidity, financial condition or results of operations. Financial Results We reported net income of$51.5 million in the third quarter 2021 versus a net loss of$56.1 million in the third quarter 2020. We reported Adjusted EBITDA (as defined in Note 13 - "Segments and Related Information" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements") of$58.8 million in the third quarter 2021 versus$34.7 million in the third quarter 2020. We generated cash from operating activities of$59.4 million in the third quarter 2021 versus generating cash of$14.5 million in the third quarter of 2020, driven by an increase of$107.6 million in net income between the comparative periods, which was partially offset by an increase in the cash required for working capital. Please read Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" for a reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to Net income (loss), our most directly comparable financial performance measure calculated and presented in accordance withU.S. generally accepted accounting principles ("GAAP"). Specialty Products and Solutions segment Adjusted EBITDA was$46.3 million in the third quarter 2021 versus$23.2 million in the third quarter 2020. Compared to the third quarter of 2020, Specialty Products and Solutions third quarter 2021 segment Adjusted EBITDA was favorably impacted by a significant increase in specialty products net unit margins as a result of higher specialty product pricing and continued fuels market recovery, partially offset by the absence of$8.8 million in realized gains on derivative instruments in the prior year comparative period.Montana /Renewables segment Adjusted EBITDA was$24.4 million in the third quarter 2021 versus$9.7 million in the third quarter 2020. Compared to the third quarter of 2020,Montana /Renewables third quarter 2021 segment Adjusted EBITDA was favorably impacted by an increase in net unit margins as a result of a wider WCS-WTI crude spread and improved crack spreads for transportation fuels, which was partially offset by the absence of$8.3 million in realized gains on derivative instruments in the prior year comparative period. 31 -------------------------------------------------------------------------------- Table of Contents Performance Brands segment Adjusted EBITDA was$6.8 million in the third quarter 2021 versus$18.9 million in the third quarter 2020. Compared to the third quarter of 2020, Performance Brands segment Adjusted EBITDA was unfavorably impacted by a$5.4 million decrease in gross profit due to the natural lag in passing increasing costs through to customers in these branded and consumer markets. Further, supply chain difficulties, including packaging availability, difficult logistics markets, and additive and grease supply shortages continue to challenge our ability to keep pace with strong demand. Despite the ongoing supply chain difficulties, we have seen favorable improvements in pricing and demand for our TruFuel,Royal Purple , and Bel-Ray brands, which remained resilient and continued to see demand growth. Unfortunately, much of the demand currently sits in our backorder queue pending our industry's supply chains return to normal. Corporate Adjusted EBITDA was negative$18.7 million in the third quarter 2021 versus negative$17.1 million in the third quarter 2020 primarily due to higher labor and benefit expenses. Liquidity Update As ofSeptember 30, 2021 , we had total liquidity of$280.7 million comprised of$10.8 million of unrestricted cash and$269.9 million of availability under our revolving credit facility. As ofSeptember 30, 2021 , our revolving credit facility had a$345.9 million borrowing base,$27.9 million in outstanding standby letters of credit and$48.1 million of outstanding borrowings. We believe we will continue to have sufficient liquidity from cash on hand, projected cash flow from operations, borrowing capacity and other means by which to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures for at least the next 12 months. Please read Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for additional information. Renewable Fuel Standard Update Along with the broader refining industry, we remain subject to compliance costs under the RFS unless or until we receive a small refiner exemption from theEPA , which we have historically received. Under the regulation of theEPA , the RFS provides annual requirements for the total volume of renewable transportation fuels which are mandated to be blended into finished petroleum fuels. If a refiner does not meet its required annual Renewable Volume Obligation, the refiner can purchase blending credits in the open market, referred to as RINs. During the third quarter 2021, we recorded a non-cash benefit of$42.4 million for RINs, as compared to a non-cash RINs expense of$16.0 million for the third quarter 2020. Our annual gross RINs Obligation, which includes RINs that are required to be secured through either our own blending or through the purchase of RINs in the open market, is approximately 80 million RINs spread across four compliance categories (D3, D4, D5 and D6). The gross RINs obligations exclude our own renewables blending as well as the potential for any subsequent hardship waivers. Expenses related to RFS compliance have the potential to remain a significant expense for our two segments containing fuels products. If legal or regulatory changes occur that have the effect of increasing our RINs Obligation or eliminating or narrowing the availability of the small refinery exemption under the RFS program, we could be required to purchase additional RINs in the open market, which may materially increase our costs related to RFS compliance and could have a material adverse effect on our results of operations and liquidity. See Note 7 - "Commitments and Contingencies" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" in this Quarterly Report for further information on the Company's RINs obligation. Key Performance Measures Our sales and results of operations are principally affected by demand for specialty products, fuel product demand, global fuel crack spreads, the price of natural gas used as fuel in our operations, our ability to operate our production facilities at high utilization, and our results from derivative instrument activities. 32 -------------------------------------------------------------------------------- Our primary raw materials are crude oil and other specialty feedstocks, and our primary outputs are specialty consumer-facing and industrial products, specialty branded products, and fuel products. The prices of crude oil, specialty products and fuel products are subject to fluctuations in response to changes in supply, demand, market uncertainties and a variety of factors beyond our control. We monitor these risks and from time-to-time enter into derivative instruments designed to help mitigate the impact of commodity price fluctuations on our business. The primary purpose of our commodity risk management activities is to economically hedge our cash flow exposure to commodity price risk. We also may hedge when market conditions exist that we believe to be out of the ordinary and particularly supportive of our financial goals. We enter into derivative contracts for future periods in quantities that do not exceed our projected purchases of crude oil and natural gas and sales of fuel products. Please read Note 10 - "Derivatives" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" for additional information. Our management uses several financial and operational measurements to analyze our performance. These measurements include the following: •sales volumes; •segment gross profit; •segment Adjusted gross profit; •segment Adjusted EBITDA; and •selling, general and administrative expenses. Sales volumes. We view the volumes of Specialty Products and Solutions products,Montana /Renewables products and Performance Brands products sold as an important measure of our ability to effectively utilize our operating assets. Our ability to meet the demands of our customers is driven by the volumes of feedstocks that we run at our facilities. Higher volumes improve profitability both through the spreading of fixed costs over greater volumes and the additional gross profit achieved on the incremental volumes. Segment gross profit. Specialty Products and Solutions,Montana /Renewables and Performance Brands products gross profit are important measures of profitability of our segments. We define gross profit as sales less the cost of crude oil and other feedstocks, LCM/LIFO adjustments, and other production-related expenses, the most significant portion of which includes labor, plant fuel, utilities, contract services, maintenance, transportation, RINs, depreciation and amortization and processing materials. We use gross profit as an indicator of our ability to manage margins in our business over the long-term. The increase or decrease in selling prices typically lags behind the rising or falling costs, respectively, of feedstocks throughout our business. Other than plant fuel, RINs mark-to-market adjustments, and LCM/LIFO adjustments, production related expenses generally remain stable across broad ranges but can fluctuate depending on maintenance activities performed during a specific period. Segment Adjusted gross profit. Specialty Products and Solutions,Montana /Renewables and Performance Brands products segment Adjusted gross profit measures are useful as they exclude transactions not related to our core cash operating activities and provide metrics to analyze the profitability of the core cash operations of our segments. We define segment Adjusted gross profit as segment gross profit excluding the impact of (a) LCM inventory adjustments; (b) the impact of liquidation of inventory layers calculated using the LIFO method; (c) RINs mark-to-market adjustments; and (d) depreciation and amortization. Segment Adjusted EBITDA. We believe that Specialty Products and Solutions,Montana /Renewables and Performance Brands segment Adjusted EBITDA measures are useful as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay interest to our noteholders. Adjusted EBITDA allows us to meaningfully analyze the trends and performance of our core cash operations as well as to make decisions regarding the allocation of resources to segments. Corporate Adjusted EBITDA primarily reflects general and administrative costs. 33 -------------------------------------------------------------------------------- Results of Operations for the Three and Nine Months EndedSeptember 30, 2021 and 2020 Production Volume. The following table sets forth information about our continuing operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased blendstocks such as ethanol and specialty blendstocks, as well as the resale of crude oil. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change (In bpd) (In bpd) Total sales volume (1) 82,844 85,529 (3.1) % 79,511 88,429 (10.1) % Total feedstock runs (2) 80,021 81,813 (2.2) % 73,988 85,282 (13.2) % Facility production: (3) Specialty Products and Solutions: Lubricating oils 10,817 10,634 1.7 % 9,537 9,839 (3.1) % Solvents 7,163 6,323 13.3 % 6,832 6,500 5.1 % Waxes 1,529 1,199 27.5 % 1,305 1,253 4.2 % Fuels, asphalt and other by-products 29,242 32,696 (10.6) % 25,492 36,376 (29.9) % Total Specialty Products and Solutions 48,751 50,852 (4.1) % 43,166 53,968 (20.0) % Montana/Renewables: Gasoline 4,763 5,670 (16.0) % 4,979 5,436 (8.4) % Diesel 10,328 10,412 (0.8) % 10,147 10,466 (3.0) % Jet fuel 1,169 764 53.0 % 974 698 39.5 % Asphalt, heavy fuel oils and other 10,883 9,605 13.3 % 11,035 10,306 7.1 % Total Montana/Renewables 27,143 26,451 2.6 % 27,135 26,906 0.9 % Performance Brands 1,226 1,458 (15.9) % 1,355 1,407 (3.7) % Total facility production (3) 77,120 78,761 (2.1) % 71,656 82,281 (12.9) % (1)Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to supply and/or processing agreements, sales of inventories and the resale of crude oil to third-party customers. Total sales volume includes the sale of purchased blendstocks. (2)Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our facilities and at certain third-party facilities pursuant to supply and/or processing agreements. (3)The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstocks and production of finished products and volume loss. 34 -------------------------------------------------------------------------------- Table of Contents The following table reflects our unaudited condensed consolidated results of operations and includes the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow. For a reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to Net income (loss), our most directly comparable financial performance measure calculated and presented in accordance with GAAP, please read "- Non-GAAP Financial Measures." Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In millions) Sales $ 874.9$ 568.0 $ 2,282.2 $ 1,714.3 Cost of sales 741.6 551.5 2,171.8 1,609.8 Gross profit 133.3 16.5 110.4 104.5 Operating costs and expenses: Selling 12.4 11.2 40.0 37.1 General and administrative 30.9 29.7 97.3 76.7 Other operating expense (3.3) 6.4 20.0 22.6 Operating income (loss) 93.3 (30.8) (46.9) (31.9) Other income (expense): Interest expense (38.2) (33.3) (109.3) (93.2) Gain (loss) on derivative instruments (3.3) 7.9 (15.4) 57.7 Other 0.1 0.2 0.1 1.3 Total other expense (41.4) (25.2) (124.6) (34.2) Net income (loss) before income taxes 51.9 (56.0) (171.5) (66.1) Income tax expense 0.4 0.1 1.5 0.8 Net income (loss) $ 51.5$ (56.1) $ (173.0) $ (66.9) EBITDA $ 116.6$ 3.5 $ 16.5 $ 105.9 Adjusted EBITDA $ 58.8$ 34.7 $ 85.7 $ 183.5 Distributable Cash Flow $ 12.6$ (5.6) $ (75.1) $ 50.9 Non-GAAP Financial Measures We include in this Quarterly Report the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow. We provide reconciliations of EBITDA, Adjusted EBITDA and Distributable Cash Flow to Net income (loss), our most directly comparable financial performance measure. EBITDA, Adjusted EBITDA and Distributable Cash Flow are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess: •the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; •the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; •our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and •the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. Management believes that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay interest to our noteholders. However, the indentures governing our senior notes contain covenants that, among other things, restrict our ability to pay distributions. We believe that excluding these transactions allows investors to meaningfully analyze trends and performance of our core cash operations. We define EBITDA for any period as net income (loss) plus interest expense (including amortization of debt issuance costs), income taxes and depreciation and amortization. 35 -------------------------------------------------------------------------------- Table of Contents During the first quarter of 2021, the CODM changed the definition and calculation of Adjusted EBITDA, which we use for evaluating performance, allocating resources and managing the business. The revised definition and calculation of Adjusted EBITDA now excludes RINs mark-to-market adjustments (see item (j) below), which were previously included. This revised definition and calculation better reflects the performance of our Company's business segments including cash flows and core operating activities. Adjusted EBITDA has been revised for all periods presented to reflect this change. Please read Note 13 - "Segments and Related Information" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" for further information. We define Adjusted EBITDA for any period as EBITDA adjusted for (a) impairment; (b) unrealized gains and losses from mark-to-market accounting for hedging activities; (c) realized gains and losses under derivative instruments excluded from the determination of net income (loss); (d) non-cash equity-based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income (loss); (e) debt refinancing fees, extinguishment costs, premiums and penalties; (f) any net gain or loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) amortization of turnaround costs; (h) LCM inventory adjustments; (i) the impact of liquidation of inventory layers calculated using the LIFO method; (j) RINs mark-to-market adjustments; and (k) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense. We define Distributable Cash Flow for any period as Adjusted EBITDA less replacement and environmental capital expenditures, turnaround costs, cash interest expense (consolidated interest expense less non-cash interest expense), gain (loss) from unconsolidated affiliates, net of cash distributions and income tax expense (benefit). We define Adjusted EBITDA Margin as Adjusted EBITDA divided by sales. The definition of Adjusted EBITDA presented in this Quarterly Report is similar to the calculation of "Consolidated Cash Flow" contained in the indentures governing our Senior Notes (as defined in this Quarterly Report) and the calculation of "Consolidated EBITDA" contained in the Credit Agreement. We are required to report Consolidated Cash Flow to the holders of our Senior Notes and Consolidated EBITDA to the lenders under our revolving credit facility, and these measures are used by them to determine our compliance with certain covenants governing those debt instruments. Please read Note 9 - "Long-Term Debt" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" in this Quarterly Report for additional details regarding the covenants governing our debt instruments. EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to Net income (loss) or Operating income (loss) or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA and Distributable Cash Flow, management recognizes and considers the limitations of these measurements. EBITDA and Adjusted EBITDA do not reflect our liabilities for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA and Distributable Cash Flow are only three of several measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA and Distributable Cash Flow in the same manner. 36 -------------------------------------------------------------------------------- Table of Contents The following tables present a reconciliation of Net income (loss), our most directly comparable GAAP financial performance measure to EBITDA, Adjusted EBITDA and Distributable Cash Flow, for each of the periods indicated. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In millions) Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA and Distributable Cash Flow: Net income (loss)$ 51.5 $ (56.1) $ (173.0) $ (66.9) Add: Interest expense 38.2 33.3 109.3 93.2 Depreciation and amortization 26.5 26.2 78.7 78.8 Income tax expense 0.4 0.1 1.5 0.8 EBITDA$ 116.6 $ 3.5 $ 16.5 $ 105.9 Add: LCM / LIFO (gain) loss$ (4.7) $ 1.1 $ (45.1) $ 35.5 Unrealized (gain) loss on derivative instruments 3.3 9.2 16.5 (21.2) Amortization of turnaround costs 4.0 4.0 12.2 12.7 Debt extinguishment costs - - 0.4 - Loss on impairment and disposal of assets - - 1.9 6.7 Gain on sale of business, net (0.2) - (0.2) - RINs mark-to-market (gain) loss (66.9) 9.3 56.3 33.4 Equity-based compensation and other items 6.7 2.1 24.4 6.2 Other non-recurring expenses - 5.5 2.8 4.3 Adjusted EBITDA$ 58.8 $ 34.7 $ 85.7 $ 183.5 Less: Replacement and environmental capital expenditures (1)$ 0.5 $ 5.0 $ 14.3 $ 23.7 Cash interest expense (2) 36.6 31.6 104.2 88.4 Turnaround costs 8.7 3.6 40.8 19.7 Income tax expense 0.4 0.1 1.5 0.8 Distributable Cash Flow$ 12.6 $ (5.6) $ (75.1) $ 50.9 (1)Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs. Environmental capital expenditures include asset additions to meet or exceed environmental and operating regulations. (2)Represents consolidated interest expense less non-cash interest expense. 37 -------------------------------------------------------------------------------- Table of Contents Changes in Results of Operations for the Three Months EndedSeptember 30, 2021 and 2020 Sales. Sales increased$306.9 million , or 54.0%, to$874.9 million in the three months endedSeptember 30, 2021 , from$568.0 million in the same period in 2020. Sales for each of our principal product categories in these periods were as follows: Three Months Ended September 30, 2021 2020 % Change (Dollars in millions, except barrel and per barrel data) Sales by segment: Specialty Products and Solutions: Lubricating oils$ 192.0 $ 122.5 56.7 % Solvents 81.7 54.6 49.6 % Waxes 40.6 33.8 20.1 % Fuels, asphalt and other by-products (1) 269.2 155.3 73.3 % Total Specialty Products and Solutions$ 583.5 $ 366.2 59.3 %
Total Specialty Products and Solutions sales volume (in barrels)
4,836,000 4,983,000 (3.0) %
Average Specialty Products and Solutions sales price per
barrel $ 120.66 $ 73.49 64.2 %
Montana/Renewables:
Gasoline $ 53.9 $ 38.8 38.9 %
Diesel 92.6 50.9 81.9 %
Jet Fuel 8.6 3.7 132.4 %
Asphalt, heavy fuel oils and other (2) 73.3 47.5 54.3 %
Total Montana/Renewables $ 228.4 $ 140.9 62.1 %
Total Montana/Renewables sales volume (in barrels) 2,664,000 2,756,000 (3.3) %
Average Montana/Renewables sales price per barrel $ 85.74 $ 51.12 67.7 %
Performance Brands:
Total Performance Brands (3) $ 63.0 $ 60.9 3.4 %
Total Performance Brands sales volume (in barrels) 121,000 130,000 (6.9) %
Average Performance Brands sales price per barrel $ 520.66 $ 468.46 11.1 %
Total sales $ 874.9 $ 568.0 54.0 %
Total Specialty Products and Solutions,
7,621,000 7,869,000 (3.2) % (1)Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty products at thePrinceton andCotton Valley refineries and Dickinson and Karns City facilities, (b) polyolester synthetic lubricants produced at theMissouri facility, and (c) fuels products produced at theShreveport refinery . (2)Represents asphalt, heavy fuel oils and other products produced in connection with the production of fuels at theGreat Falls refinery . (3)Represents packaged and synthetic specialty products at the Royal Purple, Bel-Ray andCalumet Packaging facilities. The components of the$217.3 million increase in Specialty Products and Solutions segment sales for the three months endedSeptember 30, 2021 , as compared to the three months endedSeptember 30, 2020 , were as follows: Dollar Change (In millions) Volume$ (10.8) Sales price 228.1
Total Specialty Products and Solutions segment sales increase
Specialty Products and Solutions segment sales increased period over period
primarily due to significantly higher prices for both specialty products and
transportation fuels. The favorable price impact was partially offset by a
decrease in sales volumes as a result of unplanned downtime at our Shreveport
facility in the third quarter of 2021.
38
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Table of Contents
The components of the $87.5 million increase in Montana /Renewables segment sales
for the three months ended September 30, 2021 , as compared to the three months
ended September 30, 2020 , were as follows:
Dollar Change
(In millions)
Volume $ (4.7)
Sales price 92.2
Total
Montana /Renewables segment sales increased due to significantly higher global commodity prices. Sales volumes were relatively flat between the two comparative periods. The components of the$2.1 million increase in Performance Brands segment sales for the three months endedSeptember 30, 2021 , as compared to the three months endedSeptember 30, 2020 , were as follows: Dollar Change (In millions) Volume $ (3.9) Sales price 6.0
Total Performance Brands segment sales increase $ 2.1
Performance Brands segment sales increased due to an increase in product prices and partially offset by slightly lower sales volumes due to industry wide supply chain disruptions. Gross Profit. Gross profit increased$116.8 million , or 707.9%, to$133.3 million in the three months endedSeptember 30, 2021 , from$16.5 million in the same period in 2020. Gross profit for our business segments were as follows: Three Months Ended September 30, 2021 2020 % Change (Dollars in millions, except per barrel data) Gross profit by segment: Specialty Products and Solutions: Gross profit $ 74.0$ 0.5 14,700.0 % Percentage of sales 12.7 % 0.1 % 12.6 % Specialty Products and Solutions gross profit per barrel $ 15.30$ 0.10 15,200.0 % Montana/Renewables: Gross profit (loss) $ 42.7$ (6.0) 811.7 % Percentage of sales 18.7 % (4.3) % 23.0 % Montana/Renewables gross profit (loss) per barrel $ 16.03$ (2.18) 835.3 % Performance Brands: Gross profit $ 16.6$ 22.0 (24.5) % Percentage of sales 26.3 % 36.1 % (9.8) % Performance Brands gross profit per barrel$ 137.19 $ 169.23 (18.9) % Total gross profit $ 133.3$ 16.5 707.9 % Percentage of sales 15.2 % 2.9 % 12.3 % 39
-------------------------------------------------------------------------------- Table of Contents The components of the$73.5 million increase in Specialty Products and Solutions segment gross profit for the three months endedSeptember 30, 2021 , as compared to the three months endedSeptember 30, 2020 , were as follows: Dollar
Change
(In millions)
Three months ended September 30, 2020 reported gross profit $ 0.5 Cost of materials (173.4) Operating costs (15.9) LCM / LIFO inventory adjustments 1.3 Volumes (2.4) Sales price 228.1 RINs expense 35.8
Three months ended
The increase in Specialty Products and Solutions segment gross profit for the three months endedSeptember 30, 2021 , as compared to the same period in 2020, was primarily due to stronger net unit margins as a result of higher specialty product pricing and a decrease in non-cash RINs expense as a result of lower market prices for RINs. These factors were partially offset by higher operating costs as a result of increases in repairs and maintenance expenses and higher utility costs. The components of the$48.7 million increase inMontana /Renewables segment gross profit (loss) for the three months endedSeptember 30, 2021 , as compared to the three months endedSeptember 30, 2020 , were as follows:
Dollar Change
(In millions)
Three months ended September 30, 2020 reported gross profit (loss) $ (6.0)
Cost of materials (61.6)
LCM / LIFO inventory adjustments 0.3 Volumes (0.9) Operating costs (3.9) RINs expense 22.6 Sales price 92.2 Three months endedSeptember 30, 2021 reported gross profit
$ 42.7
The increase inMontana /Renewables segment gross profit (loss) for the three months endedSeptember 30, 2021 , as compared to the same period in 2020, was primarily due to a wider crude WCS-WTI differential and improved crack spreads for transportation fuels during the current quarter driven by the overall improvement in market conditions and a decrease in non-cash RINs expense as a result of lower market prices for RINs. The components of the$5.4 million decrease in Performance Brands segment gross profit for the three months endedSeptember 30, 2021 , as compared to the three months endedSeptember 30, 2020 , were as follows: Dollar
Change
(In millions)
Three months ended
(13.9)
LCM / LIFO inventory adjustments 4.2 Volumes (1.9) Operating costs 0.1 Sales price 6.1
Three months ended
The decrease in Performance Brands segment gross profit for the three months endedSeptember 30, 2021 , as compared to the same period in 2020, was primarily driven by inflating material costs and the impact of supply chain disruptions during the current quarter. These factors were partially offset by higher product prices. 40 -------------------------------------------------------------------------------- Table of Contents General and administrative. General and administrative expenses increased$1.2 million , or 4.0%, to$30.9 million in the three months endedSeptember 30, 2021 , from$29.7 million in the same period in 2020. The increase was primarily due to a$2.0 million increase in labor and benefits related expenses. Interest expense. Interest expense increased$4.9 million , or 14.7%, to$38.2 million in the three months endedSeptember 30, 2021 , from$33.3 million in the same period in 2020. The increase was primarily due to higher financing costs related to our Supply and Offtake Agreements in the current quarter in comparison to the prior year comparative period. Gain (loss) on derivative instruments. There was a$3.3 million loss on derivative instruments in the three months endedSeptember 30, 2021 , compared to a$7.9 million gain in the same period in 2020. The$17.1 million realized gain on derivative instruments in the third quarter of 2020 was due to the settlement of our crack spread swaps and WCS crude oil basis swaps positions during the prior year period. There were no outstanding derivative positions settled in the third quarter of 2021. The impact of this item was partially offset by a$5.9 million decrease in unrealized losses on derivatives in the third quarter of 2021 in comparison to the prior year comparative period. 41 -------------------------------------------------------------------------------- Table of Contents Changes in Results of Operations for the Nine Months EndedSeptember 30, 2021 and 2020 Sales. Sales increased$567.9 million , or 33.1%, to$2,282.2 million in the nine months endedSeptember 30, 2021 , from$1,714.3 million in the same period in 2020. Sales for each of our principal product categories in these periods were as follows: Nine Months Ended September 30, 2021 2020 % Change (Dollars in millions, except barrel and per barrel data) Sales by segment: Specialty Products and Solutions: Lubricating oils$ 482.2 $ 352.5 36.8 % Solvents 223.0 179.0 24.6 % Waxes 110.1 92.2 19.4 % Fuels, asphalt and other by-products (1) 692.1 532.9 29.9 % Total Specialty Products and Solutions$ 1,507.4 $ 1,156.6 30.3 %
Total Specialty Products and Solutions sales volume (in barrels)
13,557,000 15,992,000 (15.2) %
Average Specialty Products and Solutions sales price per
barrel $ 111.19 $ 72.32 53.7 %
Montana/Renewables:
Gasoline $ 137.4 $ 103.0 33.4 %
Diesel 241.7 150.3 60.8 %
Jet Fuel 21.0 11.7 79.5 %
Asphalt, heavy fuel oils and other (2) 180.3 115.4 56.2 %
Total Montana/Renewables $ 580.4 $ 380.4 52.6 %
Total Montana/Renewables sales volume (in barrels) 7,754,000 7,857,000 (1.3) %
Average Montana/Renewables sales price per barrel $ 74.85 $ 48.42 54.6 %
Performance Brands:
Total Performance Brands (3) $ 194.4 $ 177.3 9.6 %
Total Performance Brands sales volume (in barrels) 395,000 380,000 3.9 %
Average Performance Brands sales price per barrel $ 492.15 $ 466.58 5.5 %
Total sales $ 2,282.2 $ 1,714.3 33.1 %
Total Specialty Products and Solutions,
21,706,000 24,229,000 (10.4) % (1)Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty products at thePrinceton andCotton Valley refineries and Dickinson and Karns City facilities, (b) polyolester synthetic lubricants produced at theMissouri facility, and (c) fuels products produced at theShreveport refinery . (2)Represents asphalt, heavy fuel oils and other products produced in connection with the production of fuels at theGreat Falls refinery . (3)Represents packaged and synthetic specialty products at the Royal Purple, Bel-Ray andCalumet Packaging facilities. The components of the$350.8 million increase in Specialty Products and Solutions segment sales for the nine months endedSeptember 30, 2021 , as compared to the nine months endedSeptember 30, 2020 , were as follows: Dollar Change (In millions) Volume$ (176.1) Sales price 526.9
Total Specialty Products and Solutions segment sales increase
Specialty Products and Solutions segment sales increased period over period,
primarily due to the significantly higher price environment in the current year
period. The favorable price impact was partially offset by a decrease in sales
volumes as a result of the planned turnaround at our Shreveport facility in the
first quarter of 2021, unplanned downtime resulting from the polar vortex and
supply chain disruptions.
42--------------------------------------------------------------------------------
Table of Contents
The components of the
Dollar Change
(In millions)
Volume $ (5.0)
Sales price 205.0
Total
Montana /Renewables segment sales increased primarily due to increased sales prices as a result of the significantly higher price environment in the current year, in-line with the overall improvement in market conditions. Sales volumes were relatively flat between the two comparative periods. The components of the$17.1 million increase in Performance Brands segment sales for the nine months endedSeptember 30, 2021 , as compared to the nine months endedSeptember 30, 2020 , were as follows: Dollar Change (In millions) Volume $ 7.0 Sales price 10.1
Total Performance Brands segment sales increase $ 17.1
Performance Brands segment sales increased due to increases in volumes and prices, which were both driven by continued growth in the business for our TruFuel,Royal Purple , and Bel-Ray brands. Gross Profit. Gross profit increased$5.9 million , or 5.6%, to$110.4 million in the nine months endedSeptember 30, 2021 , from$104.5 million in the same period in 2020. Gross profit for our business segments were as follows: Nine Months Ended September 30, 2021 2020 % Change (Dollars in millions, except per barrel data) Gross profit by segment: Specialty Products and Solutions: Gross profit $ 43.4$ 26.8 61.9 % Percentage of sales 2.9 % 2.3 % 0.6 % Specialty Products and Solutions gross profit per barrel $ 3.20$ 1.68 90.5 % Montana/Renewables: Gross profit $ 10.5$ 18.0 (41.7) % Percentage of sales 1.8 % 4.7 % (2.9) % Montana/Renewables gross profit per barrel $ 1.35$ 2.29 (41.0) % Performance Brands: Gross profit $ 56.5$ 59.7 (5.4) % Percentage of sales 29.1 % 33.7 % (4.6) % Performance Brands gross profit per barrel$ 143.04 $ 157.11 (9.0) % Total gross profit $ 110.4$ 104.5 5.6 % Percentage of sales 4.8 % 6.1 % (1.3) % 43
-------------------------------------------------------------------------------- Table of Contents The components of the$16.6 million increase in Specialty Products and Solutions segment gross profit for the nine months endedSeptember 30, 2021 , as compared to the nine months endedSeptember 30, 2020 , were as follows: Dollar
Change
(In millions)
Nine months ended September 30, 2020 reported gross profit $ 26.8 Cost of materials (477.0) Operating costs (31.0) LCM / LIFO inventory adjustments 60.9 Volumes (41.7) Sales price 526.9 RINs expense (21.5)
Nine months ended
The increase in Specialty Products and Solutions segment gross profit for the nine months endedSeptember 30, 2021 , as compared to the same period in 2020, was primarily due to stronger net unit margins as a result of strong specialty market demand and a decrease in non-cash LCM charges as the value of our inventory increases with global commodity inflation. These factors were partially offset by the unfavorable volumes impact resulting from the planned turnaround at our Shreveport facility in the first quarter of 2021 and unplanned downtime resulting from the polar vortex and logistics disruptions. Higher operating costs were due to expenses for freeze-related repairs and higher utility costs. The components of the$7.5 million decrease inMontana /Renewables segment gross profit for the nine months endedSeptember 30, 2021 , as compared to the nine months endedSeptember 30, 2020 , were as follows: Dollar
Change
(In millions)
Nine months ended
(203.0)
LCM / LIFO inventory adjustments 15.0 Volumes (1.6) Operating costs (7.6) RINs expense (15.3) Sales price 205.0
Nine months ended
The decrease inMontana /Renewables segment gross profit for the nine months endedSeptember 30, 2021 , as compared to the same period in 2020, was primarily due to an increase in operating costs driven by higher utility costs. The components of the$3.2 million decrease in Performance Brands segment gross profit for the nine months endedSeptember 30, 2021 , as compared to the nine months endedSeptember 30, 2020 , were as follows: Dollar
Change
(In millions)
Nine months ended
(24.0)
LCM / LIFO inventory adjustments 4.7 Volumes 3.3 Operating costs 2.7 Sales price 10.1
Nine months ended
The decrease in Performance Brands segment gross profit for the nine months endedSeptember 30, 2021 , as compared to the same period in 2020, was primarily driven by higher material and feedstock costs and supply chain challenges that resulted in a growing order backlog. The impact of this item was partially offset by higher volumes and sales prices as a result of our continued growth in the business for our TruFuel,Royal Purple , and Bel-Ray brands. 44 -------------------------------------------------------------------------------- Table of Contents General and administrative. General and administrative expenses increased$20.6 million , or 26.9%, to$97.3 million in the nine months endedSeptember 30, 2021 , from$76.7 million in the same period in 2020. The increase was primarily due to a$21.9 million increase in equity-based compensation related expenses, which was primarily the result of an increase in the Company's unit price. Interest expense. Interest expense increased$16.1 million , or 17.3%, to$109.3 million in the nine months endedSeptember 30, 2021 , from$93.2 million in the same period in 2020. The increase was primarily due to higher financing costs related to our Supply and Offtake Agreements in the current year period in comparison to the prior year comparative period. Gain (loss) on derivative instruments. There was a$15.4 million loss on derivative instruments in the nine months endedSeptember 30, 2021 , compared to a$57.7 million gain in the same period in 2020. The$36.5 million realized gain on derivative instruments in the prior year comparative period was due to the settlement of our crack spread swaps and WCS crude oil basis swaps positions during the period. We recorded a realized gain of$1.1 million for the settlement of our WCS crude oil basis swaps position in the current year period. In addition, the unrealized loss on the inventory financing embedded derivative was$17.8 million in the current year period, compared to an unrealized gain of$9.2 million in the prior year comparative period. Liquidity and Capital Resources General The following should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" included under Part II, Item 7 in our 2020 Annual Report. There have been no material changes in that information other than as discussed below. Also, see Note 8 - "Inventory Financing Agreements" and Note 9 - "Long-Term Debt" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" in this Quarterly Report for additional discussions related to our Supply and Offtake Agreements and our long-term debt. Cash Flows from Operating, Investing and Financing Activities We believe that we have sufficient liquid assets, cash flow from operations, borrowing capacity and adequate access to capital markets to meet our financial commitments, debt service obligations and anticipated capital expenditures for at least the next 12 months. We continue to seek to lower our operating costs, selling expenses and general and administrative expenses as a means to further improve our cash flow from operations with the objective of having our cash flow from operations support all of our capital expenditures and interest payments. However, we are subject to business and operational risks that could materially adversely affect our cash flows. A material decrease in our cash flow from operations including a significant, sudden decrease in crude oil prices would likely produce a corollary effect on our borrowing capacity under our revolving credit facility and potentially our ability to comply with the covenants under our revolving credit facility. A significant, sudden increase in crude oil prices, if sustained, would likely result in increased working capital requirements which would be funded by borrowings under our revolving credit facility. In addition, our cash flow from operations may be impacted by the timing of settlement of our derivative activities. Gains and losses from derivative instruments that do not qualify as cash flow hedges are recorded in unrealized gain (loss) on derivative instruments until settlement and will impact operating cash flow in the period settled. The following table summarizes our primary sources and uses of cash in each of the periods presented: Nine Months Ended September 30, 2021 2020 (In millions) Net cash provided by (used in) operating activities$ (29.9) $ 64.9 Net cash used in investing activities (34.2) (37.2) Net cash provided by (used in) financing activities (34.5) 62.6 Net increase (decrease) in cash and cash equivalents $
(98.6)
Operating Activities. Operating activities used cash of$29.9 million during the nine months endedSeptember 30, 2021 compared to providing cash of$64.9 million during the same period in 2020. The change was impacted by an increase in net loss of$106.1 million , which was partially offset by a decrease in the cash required for working capital. Investing Activities. Investing activities used cash of$34.2 million during the nine months endedSeptember 30, 2021 compared to a use of cash of$37.2 million during the same period in 2020. The change is related to decreases in cash expenditures for additions to property, plant and equipment in the current year period relative to the prior year comparative period. 45 -------------------------------------------------------------------------------- Table of Contents Financing Activities. Financing activities used cash of$34.5 million in the nine months endedSeptember 30, 2021 compared to providing cash of$62.6 million during the same period in 2020. The change is primarily due to a$160.0 million change resulting from lower borrowings on our revolving credit facility in the current year compared to the prior year, which was partially offset by a$70.0 million change due to an increase in net proceeds received from our inventory financing arrangements in the current year as compared to the prior year. In addition, the$70.0 million proceeds from our sale and leaseback transaction offset the repurchase of a portion of our 2022 Notes. Capital Expenditures Our property, plant and equipment capital expenditure requirements consist of capital improvement expenditures, replacement capital expenditures, environmental capital expenditures and turnaround capital expenditures. Capital improvement expenditures include the acquisition of assets to grow our business, facility expansions, or capital initiatives that reduce operating costs. Replacement capital expenditures replace worn out or obsolete equipment or parts. Environmental capital expenditures include asset additions to meet or exceed environmental and operating regulations. Turnaround capital expenditures represent capitalized costs associated with our periodic major maintenance and repairs. The following table sets forth our capital improvement expenditures, replacement capital expenditures, environmental capital expenditures and turnaround capital expenditures in each of the periods shown (including capitalized interest): Nine Months Ended September 30, 2021 2020 (In millions) Capital improvement expenditures $ 20.0$ 11.1 Replacement capital expenditures 11.4
20.2
Environmental capital expenditures 2.9
3.5
Turnaround capital expenditures 40.8 19.7 Total $ 75.1$ 54.5 2021 Capital Spending Forecast We expect to incur capital expenditures of approximately$165.0 million to$175.0 million in 2021, which includes$70.0 million to$75.0 million on the Renewable Diesel project and$90.0 million to$100.0 million on sustaining, environmental, and small growth capital expenditures. The Renewable Diesel capital includes spending advanced from 2022 following early receipt of permits. We have also released equipment purchase orders ahead of schedule to mitigate the potential risk of being negatively impacted by global supply chain challenges. As announced last quarter, the sustaining capital includes approximately$30.0 million ofMontana turnarounds that were advanced from 2022; our strategy is to levelMontana site workload across 2021 and 2022 to manage scope and risk during this heavy construction period. We anticipate that our total capital expenditure requirements will be provided primarily through cash flow from operations, cash on hand, available borrowings under our revolving credit facility, Renewable Diesel partnership, or by accessing capital markets as necessary. If future capital expenditures require expenditures in excess of our then-current cash flow from operations and borrowing availability under our revolving credit facility, we may be required to issue debt or equity securities in public or private offerings or incur additional borrowings under bank credit facilities to meet those costs, if such options are available to us. Debt and Credit Facilities As ofSeptember 30, 2021 , our primary debt and credit instruments consisted of the following: •$600.0 million senior secured revolving credit facility maturing inFebruary 2023 ("revolving credit facility"); •$80.0 million of 7.625% Senior Notes due 2022 ("2022 Notes"); •$325.0 million of 7.75% Senior Notes due 2023 ("2023 Notes"); •$200.0 million of 9.25% Senior Secured First Lien Notes due 2024 ("2024 Secured Notes"); and •$550.0 million of 11.00% Senior Notes due 2025 ("2025 Notes"). We were in compliance with all covenants under the debt instruments in place as ofSeptember 30, 2021 and believe we have adequate liquidity to conduct our business. 46 -------------------------------------------------------------------------------- Table of Contents The borrowing base on our revolving credit facility increased from approximately$289.7 million as ofSeptember 30, 2020 , to approximately$345.9 million atSeptember 30, 2021 , resulting in a corresponding increase in our borrowing availability from approximately$159.9 million atSeptember 30, 2020 , to approximately$269.9 million atSeptember 30, 2021 . Total liquidity, consisting of unrestricted cash and available funds under our revolving credit facility, increased from$269.3 million atSeptember 30, 2020 to$280.7 million atSeptember 30, 2021 . Inventory Financing Please refer to Note 8 - "Inventory Financing Agreements" in Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" for additional information regarding our Supply and Offtake Agreements. Short-Term Liquidity As ofSeptember 30, 2021 , our principal sources of short-term liquidity were (i)$269.9 million of availability under our revolving credit facility, (ii) inventory financing agreements related to theGreat Falls and Shreveport refineries and (iii)$10.8 million of cash on hand. Borrowings under our revolving credit facility can be used for, among other things, working capital, capital expenditures and other lawful partnership purposes including acquisitions. For additional information regarding our revolving credit facility, see Note 9 - "Long-Term Debt" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" in this Quarterly Report. Long-Term Financing In addition to our principal sources of short-term liquidity listed above, subject to market conditions, we may meet our cash requirements (other than distributions of Available Cash (as defined in our partnership agreement) to our common unitholders) through the issuance of long-term notes or additional common units. From time to time, we issue long-term debt securities referred to as our senior notes. All of our outstanding senior notes, other than the 2024 Secured Notes, are unsecured obligations that rank equally with all of our other senior debt obligations to the extent they are unsecured. As ofSeptember 30, 2021 we had$80.0 million in 2022 Notes,$325.0 million in 2023 Notes,$200.0 million in 2024 Secured Notes, and$550.0 million in 2025 Notes outstanding. The 2024 Secured Notes and the related guarantees are secured by a first priority lien (subject to certain exceptions) on all the fixed assets that secure our obligations under the secured hedge agreements, as governed by the Collateral Trust Agreement, which governs how secured hedging counterparties and holders of the 2024 Secured Notes share collateral pledged as security for the payment obligations owed by us to the secured hedging counterparties under their respective master derivatives contracts and the holders of the 2024 Secured Notes. In addition, as ofSeptember 30, 2021 , we had$66.4 million of other debt outstanding for the Shreveport terminal asset financing arrangement. During the nine months endedSeptember 30, 2021 , we repurchased$70.0 million in aggregate principal amount of the 2022 Notes at a redemption price of par, plus accrued and unpaid interest to the redemption date ofJune 5, 2021 . To date, our debt balances have not adversely affected our operations, our ability to repay or refinance our indebtedness. Based on our historical record, we believe that our capital structure will continue to allow us to achieve our business objectives. For additional information regarding our senior notes, please read Note 9 - "Long-Term Debt" under Part I, Item 1 "Financial Statements - Notes to Unaudited Condensed Consolidated Financial Statements" in this Quarterly Report and Note 10 - "Long-Term Debt" in Part II, Item 8 "Financial Statements and Supplementary Data" of our 2020 Annual Report. OnFebruary 12, 2021 , we entered into a sale and leaseback transaction withStonebriar Commercial Finance LLC ("Stonebriar"), whereby we sold and leased back certain of our fuels terminal assets at theShreveport refinery . We received gross proceeds of$70.0 million from the sale, with the leaseback having a term of seven years. Please read Note 21 - "Subsequent Events" in Part II, Item 8 "Financial Statements and Supplementary Data" of our 2020 Annual Report for additional information. Master Derivative Contracts and Collateral Trust Agreement For additional discussion regarding our master derivative contracts and collateral trust agreement, see "Master Derivative Contracts and Collateral Trust Agreement" under Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2020 Annual Report. Off-Balance Sheet Arrangements We did not enter into any material off-balance sheet transactions during the three and nine months endedSeptember 30, 2021 . 47 -------------------------------------------------------------------------------- Table of Contents Critical Accounting Estimates For additional discussion regarding our critical accounting estimates, see "Critical Accounting Estimates" under Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2020 Annual Report. 48
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