Calumet Specialty Products Partners,
Annual Report 2022

Plain-text annual report

2022 ANNUAL REPORT www.calumet.com Table of Contents ☑ ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Calumet Specialty Products Partners, L.P. Commission file number 000-51734 (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 2780 Waterfront Parkway East Drive , Suite 200 Indianapolis , (Address of Principal Executive Offices) IN (317) 328-5660 (Registrant’s Telephone Number, Including Area Code) None (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) 35-1811116 (I.R.S. Employer Identification Number) 46214 (Zip Code) Title of Each Class Common units representing limited partner interests Trading symbol(s) CLMT Name of Each Exchange on Which Registered The Nasdaq Stock Market LLC SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☑ Yes ☐ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer ☐ ☐ Accelerated filer Smaller Reporting Company Emerging growth company ☑ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No Table of Contents The aggregate market value of the common units held by non-affiliates of the registrant was approximately $649.2 million on June 30, 2022, based on $10.39 per unit, the closing price of the common units as reported on the Nasdaq Global Select Market on such date. On March 14, 2023, there were 79,835,801 common units outstanding. DOCUMENTS INCORPORATED BY REFERENCE NONE. Table of Contents Items 1 and 2. Item 1A. Item 1B. Business and Properties Risk Factors Unresolved Staff Comments CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. FORM 10-K — 2022 ANNUAL REPORT Table of Contents PART I Item 3. Item 4. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Item 9C. Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. Item 16. Legal Proceedings Mine Safety Disclosures PART II Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities [Reserved] Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Directors, Executive Officers of Our General Partner and Corporate Governance Executive and Director Compensation PART III Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services Exhibits Form 10-K Summary PART IV 1 Page 5 29 50 50 50 51 52 53 70 72 116 116 118 119 120 125 125 142 145 146 152 Table of Contents FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this “Annual Report”) includes certain “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “will,” “may,” “intend,” “believe,” “expect,” “outlook,” “anticipate,” “estimate,” “continue,” “plan,” “should,” “could,” “would,” or other similar words. The statements regarding (i) the effect, impact, potential duration or other implications of supply chain disruptions, global energy shortages and the ongoing novel coronavirus (“COVID-19”) pandemic on our business and operations; (ii) demand for finished products in markets we serve; (iii) estimated capital expenditures as a result of required audits or required operational changes or other environmental and regulatory liabilities; (iv) our anticipated levels of, use and effectiveness of derivatives to mitigate our exposure to crude oil price changes, natural gas price changes and fuel products price changes; (v) estimated costs of complying with the U.S. Environmental Protection Agency’s (“EPA”) Renewable Fuel Standard (“RFS”), including the prices paid for Renewable Identification Numbers (“RINs”) and the amount of RINs we may be required to purchase in any given compliance year, and the outcome of any litigation concerning our existing small refinery exemption (“SRE”) petitions; (vi) our ability to meet our financial commitments, debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditures; (vii) our access to capital to fund capital expenditures and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; (viii) our access to inventory financing under our supply and offtake agreements; (ix) general economic and political conditions, including inflationary pressures, general economic slowdown or a recession, political tensions, conflicts and war (such as the ongoing conflict in Ukraine and its regional and global ramifications); and (x) the future effectiveness of our enterprise resource planning system to further enhance operating efficiencies and provide more effective management of our business operations, as well as other matters discussed in this Annual Report that are not purely historical data, are forward-looking statements. These forward-looking statements are based on our expectations and beliefs as of the date hereof concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our current expectations for future sales and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisition or disposition transactions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause our actual results to differ from those in the forward-looking statements are those described in Part I, Item 1A “Risk Factors” of this Annual Report. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. References in this Annual Report to “Calumet Specialty Products Partners, L.P.,” “Calumet,” “the Company,” “we,” “our,” “us” or like terms refer to Calumet Specialty Products Partners, L.P. and its subsidiaries. References to “Predecessor” in this Annual Report refer to Calumet Lubricants Co., Limited Partnership and its subsidiaries, the assets and liabilities of which were contributed to Calumet Specialty Products Partners, L.P. and its subsidiaries upon the completion of our initial public offering in 2006. References in this Annual Report to “our general partner” refer to Calumet GP, LLC, the general partner of Calumet Specialty Products Partners, L.P. SUMMARY OF RISK FACTORS An investment in our common units involves a significant degree of risk. Below is a summary of certain risk factors that you should consider in evaluating us and our common units. However, this list is not exhaustive. Before you invest in our common units, you should carefully consider the risk factors discussed or referenced below and under Item 1A. “Risk Factors” in this Annual Report on Form 10-K. If any of the risks discussed below and under Item 1A. “Risk Factors” were actually to occur, our business, financial position or results of operations could be materially adversely affected. Risks Related to Our Business • Our business depends on supply and demand fundamentals, which can be adversely affected by numerous macroeconomic factors outside of our control, including a pandemic, epidemic or widespread outbreak of an infectious disease, such as COVID-19, as well as actions taken by commodity markets. • Our business has exposure to some commodities which are volatile, and a reduction in our margins will adversely affect the amount of cash we will have available to operate our business and for payments of our debt obligations. • Our hedging activities may not be effective in reducing our exposure to commodity price risk and may reduce our earnings, profitability and cash flows. • Decreases in the price of inventory and products may lead to a reduction in the borrowing base under our revolving credit facility and our ability to issue letters of credit or the requirement that we post substantial amounts of cash collateral for derivative instruments. 2 Table of Contents • We depend on certain third-party pipelines for transportation of feedstocks and products, and if these pipelines become unavailable to us, our revenues and cash available for payment of our debt obligations could decline. • The price volatility of fuel and utility services may result in decreases in our earnings, profitability and cash flows. • Our facilities incur operating hazards, and the potential limits on insurance coverage could expose us to potentially significant liability costs. • An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our financial condition and results of operations. • Competition in our industry is intense, and an increase in competition in the markets in which we sell our products could adversely affect our earnings and profitability. • We depend on unionized labor for the operation of many of our facilities which may result in increased labor costs or labor disruptions that could negatively impact our financial condition and results of operations. • Our method of valuing inventory may result in decreases in net income. • Our arrangement with Macquarie exposes us to Macquarie-related credit and performance risk as well as potential refinancing risks. • We have a substantial amount of indebtedness. • Our financing arrangements contain operating and financial provisions that restrict our business and financing activities. • A change of control could result in us facing substantial repayment obligations under our revolving credit facility, our senior notes, our secured hedge agreements, our S&O Agreements (as defined below), the MRL revolving credit agreement (as defined below) and Montana Renewables, LLC’s (“MRL”) financing arrangements with Stonebriar (as defined below). • In connection with the later expirations of the Montana Renewables Supply and Offtake Agreement, Montana Renewables will winddown activities under that agreement through September 30, 2023. The timing of the winddown and the potential for volatility in the feedstock markets may cause the winddown of the agreement to cost more or less than the Company currently estimates. • We must make substantial capital expenditures for our facilities to maintain their reliability and efficiency. • We may incur significant environmental costs and liabilities in the operation of our refineries, facilities, terminals and related facilities. • We are subject to compliance with stringent environmental and occupational health and safety laws and regulations. • The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions could have a material adverse effect on our results of operations and financial condition and our ability to make payments on our debt obligations. • Our and our customers’ operations are subject to risks arising out of the threat of climate change, including regulatory, political, litigation and financial risks, which could result in increased operating and capital costs for our customers and reduced demand for the products and services we provide. • We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits and authorizations or otherwise comply with occupational, environmental and other laws and regulations. Risks Related to Our Partnership Structure • We may not have sufficient cash from operations, following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to our general partner, to enable us to resume paying distributions to our unitholders or restore distributions to previous levels. • The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability. • Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to other unitholders’ detriment. • The Heritage Group and certain of its affiliates may engage in limited competition with us. 3 Table of Contents • Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. • Unitholders have limited voting rights and are not entitled to elect our general partner or its directors. Tax Risks to Common Unitholders • Our tax treatment depends on our status as a partnership for federal income tax purposes. Our cash available for distribution to unitholders may be substantially reduced if we become subject to entity-level taxation as a result of the Internal Revenue Service (“IRS”) (i) treating us a corporation or (ii) assessing and collecting tax directly from the partnership resulting from or any audit adjustments. • Our tax treatment or the tax treatment of our unitholders could be subject to potential legislative, judicial, or administrative changes and differing interpretations, possibly applied on a retroactive basis. • Our unitholders may be required to pay taxes on their share of our income even if they do not receive any distribution from us. A unitholder’s share of our taxable income may be increased as a result of the IRS successfully contesting any of the federal income tax positions we take. Tax gain or loss on the disposition of our common units could be more or less than expected. Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us. • Tax-exempt entities and foreign persons face unique tax issues from owning our common units that may result in adverse tax consequences to them. 4 Table of Contents Items 1 and 2. Business and Properties Overview PART I We manufacture, formulate and market a diversified slate of specialty products to customers across a broad range of consumer-facing and industrial markets. We also own what we believe is one of North America’s leading renewable diesel manufacturing facilities. We are headquartered in Indianapolis, Indiana and operate thirteen facilities throughout North America. Our business is organized into the following reportable segments: Specialty Products and Solutions; Montana/Renewables; Performance Brands; and Corporate. In our Specialty Products and Solutions segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products. In our Performance Brands segment, we blend, package and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our Montana/Renewables segment is comprised of two facilities - renewable fuels and specialty asphalt. At our Montana Renewables facility, we currently process a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel (“SAF”), renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha that are sold to customers under term contracts for onward distribution into renewable markets in the western half of North America. At our Montana specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets. Our Corporate segment primarily consists of general and administrative expenses not allocated to the Specialty Products and Solutions, Performance Brands or Montana/Renewables segments. 5 Table of Contents Our Assets Our primary operating assets consist of: Facility Calumet Packaging Location Louisiana Year Acquired 2012 Sales Volume for the Year Ended December 31, 2022 in Barrels per Day (“bpd”) 1,032 Royal Purple Missouri Karns City Dickinson Cotton Valley Princeton Shreveport Montana Refining Montana Renewables Texas Missouri Pennsylvania Texas Louisiana Louisiana Louisiana Montana Montana 2012 2012 2008 2008 1995 1990 2001 2012 2021 384 182 1,634 607 4,344 5,106 44,753 19,994 — Products Specialty products including premium industrial and consumer synthetic lubricants, fuels and solvents Specialty products including premium industrial and consumer synthetic lubricants Specialty products including polyol ester-based synthetic lubricants Specialty white mineral oils, solvents, petrolatums, gelled hydrocarbons, cable fillers and natural petroleum sulfonates Specialty white mineral oils, compressor lubricants and natural petroleum sulfonates Specialty solvents used principally in the manufacture of paints, cleaners, automotive products and drilling fluids Specialty lubricating oils, including process oils, base oils, transformer oils, refrigeration oils, and asphalt Specialty lubricating oils and waxes, gasoline, diesel, jet fuel and asphalt Specialty asphalt, gasoline, diesel, and jet fuel Renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha Storage, Distribution and Logistics Assets. We own and operate a product terminal in Burnham, Illinois with aggregate storage capacities of approximately 150,000 barrels. The Burnham terminal, as well as additional owned and leased facilities throughout the U.S., facilitate the distribution of products in the Upper Midwest, West Coast and Mid-Continent regions of the U.S. and Canada. We also use approximately 2,300 leased railcars primarily to receive and ship crude oil and distribute our specialty and fuel products throughout the U.S. and Canada. We use some of these railcars to source renewable feedstocks and distribute renewable diesel. In total, we have approximately 7.0 million barrels of aggregate storage capacity at our facilities and leased storage locations. Montana Renewables. At our Montana Renewables facility, we currently process, or expect to have the future capability to process, a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha. These renewable fuels are, or are expected to be, distributed into renewable markets in the western half of North America. In the fourth quarter of 2022, Montana Renewables commenced production of renewable diesel and renewable naphtha and delivered to customers. In the first quarter of 2023, we expect to commission the Montana Renewables project’s renewable hydrogen plant, and we expect to complete construction of the feedstock pre-treatment unit and sustainable aviation fuel shipping facilities. The commissioning of the renewable hydrogen plant will increase feedstock throughput capacity, the commissioning of the pre-treatment unit will fully unlock the geographic advantage we have in Montana by providing additional feed quality flexibility, and the commissioning of the sustainable aviation fuel shipping facilities will allow SAF shipments to commence under contract. We expect Montana Renewables to be immediately accretive to our cash flows once it is fully operational. 6 Table of Contents Business Strategies Our management team is dedicated to improving our operations by executing the following strategies: • Enhance Profitability of Our Existing Assets. We focus on identifying opportunities to improve our asset base, deepening our competitive advantages, and increasing our throughput, profitability, and cash flows. Our highest current priority is streamlining the operations at our Montana Renewables facility and planning for expansion projects at the facility. As part of this project design, we converted the historical Great Falls refinery into two independent facilities: a 14,000 bpd specialty asphalt plant and a 15,000 bpd renewable fuels production facility. Other examples include investments in a polymerized modified asphalt unit at our Great Falls Specialty Asphalt facility in 2022, additional wax blending assets at our Calumet Paralogics, LLC (“Paralogics”) facility in 2021, and the addition of storage capacity to increase sales of our most profitable solvents at our Cotton Valley facility in 2021. In addition, we have undertaken various small expansion and optimization projects in our Performance Brands segment over the past four years, including a new 1.0 gallon TruFuel packaging line to support growth, a new 2.1 gallon pail TruFuel line to meet the market demand for larger package sizes, and a new quart line in Porter, Texas to recognize efficiencies in packaging Bel-Ray products. We intend to continue increasing the profitability of our existing asset base through various low capital requirement measures which may include investments targeting more efficient logistics, improving the product mix of our processing units, and reducing costs through operational modernizations. • Maintain Sufficient Levels of Liquidity. We are actively focused on maintaining sufficient liquidity to fund our operations and business strategies. As part of a broader effort to maintain an adequate level of liquidity, the board of directors of our general partner unanimously voted to suspend cash distributions, effective beginning the quarter ended March 31, 2016. • Concentrate on Positive and Growing Cash Flows. We intend to continue to focus on operating assets and businesses that generate positive and growing cash flows. Approximately 92.7% of our continuing operations gross profit in 2022 was generated by our Specialty Products and Solutions segment, which is characterized by stable customer relationships due to our customers’ requirements for the specialized products we provide. In addition, we manage our exposure to crude oil price fluctuations in this segment by passing on incremental feedstock costs to our specialty products customers. In our Performance Brands segment, which accounted for approximately 15.8% of our continuing operations gross profit in 2022, we blend, package and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our fast-growing portfolio of high-performance brands are characterized by strong customer loyalty and stable cash flows. In our Montana/Renewables segment, which accounted for approximately (8.5)% of our continuing operations gross profit in 2022, we expect growth in cash flows as a result of the commissioning of production units at our Montana Renewables facility. Historically, renewable diesel margins have been both significantly higher and more stable than fuel margins. Further, the remaining Great Falls specialty asphalt facility is expected to produce a larger percentage of its products for local retail markets at lower net freight costs. • Develop and Expand Our Customer Relationships. Due to the specialized nature of certain of our products, the high cost of replacement and the long lead-time associated with the development and production of many of our specialty products, our customers are incentivized to continue their relationships with us. We believe that we offer a more diversified product slate to our customers than competitors do, and we also offer more technical support and bespoke services. In fiscal year 2022, we sold a range of over 1,900 specialty and fuels products to approximately 2,400 customers. We intend to continue to assist our existing customers in their efforts to expand their product offerings, as well as marketing specialty product formulations and services to new customers. By continuing to service our long-term relationships with our broad base of existing customers and by constantly targeting solutions for new customers, we seek to limit our dependence on any one portion of our customer base. • Disciplined Approach to Strategic and Complementary Acquisitions. We do not expect to focus on large acquisitions in the near term. However, should the right opportunity develop, our senior management team is prepared to consider acquiring low-risk assets where we can enhance operations and improve profitability and product lines that will complement and expand our specialty product offerings. For example, in March 2020, we acquired Paralogics, a producer of candle and industrial wax blends, which expanded our presence in the specialty wax blending and packaging market while adding new capabilities into our existing wax value chain. In the future, we intend to continue pursuing prudent, accretive acquisitions that will deepen our long- term competitive advantages. We intend to reduce our leverage over time and maintain a capital structure that facilitates competitive access to the capital markets. 7 Table of Contents Competitive Strengths We believe that we are well positioned to execute our business strategies successfully based on the following competitive strengths: • We Have Strong Relationships with a Premier Customer Base. We have long-term relationships with many of our customers and we believe that we will continue to benefit from these relationships. Many of these relationships involve lengthy approval processes or certifications that may make switching to a different supplier difficult. In fiscal year 2022, we sold our products to approximately 2,400 customers, and we are continually seeking to deepen those relationships across our broad and diversified customer base. No single customer accounted for more than 10% of our consolidated sales for any of the three years ended December 31, 2022, 2021 and 2020. • We Offer Our Customers a Diverse Range of Specialty Products. We offer a wide range of over 1,800 specialty products. We believe that our ability to provide our customers with a more diverse selection of products than most of our competitors gives us an advantage in meeting the needs of large, strategic customers and allows us to compete in profitable niches. We believe that we are the only specialty products manufacturer in North America that produces all six of the following products: naphthenic lubricating oils, paraffinic lubricating oils, waxes, solvents, white oils and petrolatums. Our ability to produce numerous specialty products allows us to ship products between our facilities for product upgrading in order to meet customer specifications. • Our Facilities Have a Unique Combination of Flexibility and Scale. Our facilities are equipped with advanced, flexible technology that allows us to produce high-grade specialty products. For example, our integrated specialty products complex in Northwest Louisiana consists of 27 processing units and 195 million gallons of storage capacity across 400 tanks and has a wide variety of specialized hydroprocessing, dewaxing, emulsifying and distillation capabilities that allow us to meet complex, bespoke customer needs at scale providing an advantaged cost. Our acquisition of Paralogics also added new capabilities into our existing wax business value chain, adding approximately 20 million pounds of annual blending and formulating capabilities. Our facilities also enjoy the value and optionality of integration as many products can be further processed and upgraded at our own facilities. • We Have Leading, High-Growth Brands. Our Performance Brands segment benefits from well-known high-performance premium brands in consumer, retail and industrial markets. These brands garner a premium and are well positioned for growth. Further, the majority of products in our Specialty Products and Solutions segment are marketed under well-known industrial and consumer-facing brands that are of high value in the market and in many cases were established several decades ago. • We Have an Experienced Management Team. Our team’s extensive experience within the specialty products, commodities and renewable energy industries provides a strong foundation to build and optimize a diversified, competitively advantaged business that can succeed in various business cycles and environments. Potential Acquisition and Divestiture Activities While we evaluate potential acquisitions of strategic and complementary assets that would deepen our competitive advantage, our focus has been and continues to be to de-lever our balance sheet. We continuously evaluate our portfolio to allow an objective assessment of potential divestiture candidates that are non-core to our business and/or worth more to a buyer than to us. The combination of acquisition and divestment activities is intended to maximize our return on invested capital by creating and maintaining a portfolio of core assets that optimize our blend of feedstocks, improve our operating efficiency and cash flows, and leverage our competitive strengths. We also intend to monetize all or a portion of our equity in MRL over time. As we optimize our asset portfolio, which may include the divestiture of certain non-core assets or all or a portion of our equity in MRL, we intend to redeploy capital into projects to develop assets that are better suited to our core specialty products business strategy and de-leverage our balance sheet. Going forward, we intend to tailor our approach toward owning businesses with stable cash flows and growing end markets. As a result, we may pursue potential arrangements with third parties to divest certain assets to enable us to further reduce the amount of our required capital commitments and potential capital expenditures. We expect that any potential divestitures of assets will also provide us with cash to reinvest in our business and repay debt. 8 Table of Contents Partnership Structure and Management Calumet Specialty Products Partners, L.P. is a Delaware limited partnership formed on September 27, 2005. Our general partner is Calumet GP, LLC, a Delaware limited liability company. As of March 14, 2023, we have 79,835,801 common units and 1,629,302 general partner units outstanding. Our general partner owns a 2% general partner interest in our partnership and all incentive distribution rights and has sole responsibility for conducting our business and managing our operations. For more information about our general partner’s board of directors and executive officers, please read Part III, Item 10 “Directors, Executive Officers of Our General Partner and Corporate Governance.” 9 Table of Contents Our Operating Assets and Contractual Arrangements General 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. (1) Total sales volume Total feedstock runs Facility production: Specialty Products and Solutions: (2) (3) Lubricating oils Solvents Waxes Fuels, asphalt and other by-products Total Specialty Products and Solutions Montana/Renewables: Gasoline Diesel Jet fuel Asphalt, heavy fuel oils and other Total Montana/Renewables Performance Brands Total facility production (3) 2022 2021 Year Ended December 31, 2021 % Change 2020 % Change (In bpd) 82,946 80,447 10,951 7,100 1,452 40,845 60,348 3,409 6,449 820 6,942 17,620 1,434 79,281 75,818 9,867 6,833 1,335 27,869 45,904 4,907 9,711 901 10,379 25,898 1,304 79,402 73,106 4.6 % 6.1 % 11.0 % 3.9 % 8.8 % 46.6 % 31.5 % (30.5)% (33.6)% (9.0)% (33.1)% (32.0)% 10.0 % 8.6 % (In bpd) 79,281 75,818 9,867 6,833 1,335 27,869 45,904 4,907 9,711 901 10,379 25,898 1,304 86,727 84,829 10,143 6,819 1,318 35,052 53,332 5,369 10,389 647 10,337 26,742 1,381 73,106 81,455 (8.6)% (10.6)% (2.7)% 0.2 % 1.3 % (20.5)% (13.9)% (8.6)% (6.5)% 39.3 % 0.4 % (3.2)% (5.6)% (10.2)% (1) (2) (3) 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. 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. 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. 10 Table of Contents The following table sets forth information about our sales of principal products by segment: Specialty Products and Solutions: Lubricating oils Solvents Waxes Fuels, asphalt and other by-products Total Montana/Renewables: Gasoline Diesel Jet fuel Asphalt, heavy fuel oils and other Total Performance Brands Consolidated sales 2022 Year Ended December 31, 2021 2020 (In millions) % of Sales (In millions) % of Sales (In millions) % of Sales $ $ $ $ $ $ 913.7 434.9 189.3 1,970.1 3,508.0 188.1 391.8 41.8 253.6 875.3 303.4 19.5 % $ 9.3 % 4.0 % 42.0 % 74.8 % $ 4.0 % $ 8.4 % 0.9 % 5.4 % 18.7 % $ 6.5 % $ 658.7 303.7 151.7 997.3 2,111.4 188.3 324.9 27.5 243.0 783.7 252.9 20.9 % $ 9.7 % 4.8 % 31.7 % 67.1 % $ 6.0 % $ 10.3 % 0.9 % 7.7 % 24.9 % $ 8.0 % $ 473.5 236.2 129.1 690.1 1,528.9 135.9 204.1 14.6 150.6 505.2 234.1 20.9 % 10.4 % 5.7 % 30.4 % 67.4 % 6.0 % 9.0 % 0.7 % 6.6 % 22.3 % 10.3 % 4,686.7 100.0 % $ 3,148.0 100.0 % $ 2,268.2 100.0 % Please read Note 19 — “Segments and Related Information” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” of this Annual Report for additional financial information about each of our segments and the geographic areas in which we conduct business. Northwest Louisiana Integrated Specialty Complex The assets in our Northwest Louisiana integrated specialty complex anchor our Specialty Products and Solutions business segment. The assets in the Northwest Louisiana integrated specialty complex, primarily consist of our Shreveport Refinery, Cotton Valley Refinery and Princeton Refinery, which in total, includes 27 processing units and 195 million gallons of storage capacity across 400 tanks and have a wide variety of specialized hydroprocessing, dewaxing, emulsifying and distillation capabilities that allow us to meet complex, bespoke customer needs at scale providing an advantaged cost. Shreveport Facility The Shreveport facility (“Shreveport”), located on a 240 acre site in Shreveport, Louisiana, currently has aggregate crude oil throughput capacity of 60,000 bpd and processes paraffinic crude oil and associated feedstocks into fuel products, paraffinic lubricating oils, waxes, asphalt and by-products. The Shreveport facility consists of 17 major processing units including hydrotreating, catalytic reforming and dewaxing units and approximately 3.3 million barrels of storage capacity in 130 storage tanks and related loading and unloading facilities and utilities. Since our acquisition of the Shreveport facility in 2001, we have expanded the facility’s capabilities by adding additional processing and blending facilities, adding a second reactor to the high pressure hydrotreater, resuming production of gasoline, diesel and other fuel products and adding both 18,000 bpd of crude oil throughput capacity and the capability to run up to 25,000 bpd of sour crude oil. 11 Table of Contents The following table sets forth historical information about production at our Shreveport facility: Crude oil throughput capacity Total feedstock runs Total facility production (2) (3) (1) (2) 2022 60,000 42,453 45,525 Shreveport Facility Year Ended December 31, 2021 (In bpd) 60,000 29,971 31,835 2020 60,000 40,028 40,084 (1) (2) (3) Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our Shreveport facility. Total feedstock runs do not include certain interplant feedstocks supplied by our Cotton Valley and Princeton facilities. Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks. 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. Total facility production includes certain interplant feedstock supplied to our Cotton Valley and Princeton facilities and our Karns City facility. The Shreveport facility has a flexible operational configuration and operating personnel that facilitates the development of opportunities to enhance profitability. Feedstock and product mix may fluctuate from one period to the next to capture market opportunities. The Shreveport facility receives crude oil via tank truck, railcar and a common carrier pipeline system that is operated by a subsidiary of Plains All American Pipeline, L.P. (“Plains”) and is connected to Shreveport’s facilities. The Plains pipeline system delivers local supplies of crude oil and condensates from north Louisiana and east Texas. The Plains pipeline also connects to a Plains terminal in Longview, TX, which gives the refinery access to crude oil in west Texas and access to the Cushing, Oklahoma storage hub. Crude oil is also purchased from various suppliers, including local producers, who deliver crude oil to the Shreveport facility via tank truck. The Shreveport facility also has direct pipeline access to the Enterprise Products Partners L.P. pipeline (“TEPPCO pipeline”), on which it can ship certain grades of gasoline, diesel and jet fuel. Further, the refinery has direct access to the Red River Terminal facility, which provides the facility with barge access, via the Red River, to major feedstock and petroleum products logistics networks on the Mississippi River and Gulf Coast inland waterway system. The Shreveport facility also ships its finished specialty products throughout the U.S. through both truck and railcar service. Cotton Valley Facility The Cotton Valley facility (“Cotton Valley”), located on a 77 acre site in Cotton Valley, Louisiana, currently has aggregate crude oil throughput capacity of 13,600 bpd, hydrotreating capacity of 6,500 bpd and processes crude oil into specialty solvents and residual fuel oil. The residual fuel oil is an important feedstock for the production of specialty products at our Shreveport facility. We believe the Cotton Valley facility produces the most complete, single-facility line of paraffinic solvents in the U.S. The Cotton Valley facility consists of three major processing units that include a crude unit, a hydrotreater and a fractionation train, approximately 625,000 barrels of storage capacity in 74 storage tanks and related loading and unloading facilities and utilities. Since our acquisition of the Cotton Valley facility in 1995, we have expanded the facility’s capabilities by installing a hydrotreater that removes aromatics, increased the crude unit processing capability to 13,600 bpd and reconfigured the facility’s fractionation train to improve product quality, enhance flexibility and lower utility costs. 12 Table of Contents The following table sets forth historical information about production at our Cotton Valley facility: Crude oil throughput capacity Total feedstock runs Total facility production (2) (3) (1) (2) 2022 13,600 8,975 5,317 Cotton Valley Facility Year Ended December 31, 2021 (In bpd) 13,600 8,349 4,698 2020 13,600 8,737 5,672 (1) (2) Total feedstock runs do not include certain interplant solvent feedstocks supplied by our Shreveport facility. Total facility production represents the barrels per day of specialty products yielded from processing crude oil and other feedstocks. The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstocks and the production of finished products, intermediates transferred to internal sites for further processing, and volume loss. (3) Total facility production includes certain interplant feedstocks supplied to our Shreveport facility. The Cotton Valley facility has a flexible operational configuration and operating personnel that facilitates the development of opportunities to enhance profitability. Feedstock and product mix may fluctuate from one period to the next to capture market opportunities, which allows us to respond to market changes and customer demands by modifying the refinery’s product mix. The reconfigured fractionation train also allows the facility to satisfy demand fluctuations efficiently without large finished product inventory requirements. The Cotton Valley facility receives crude oil via tank truck. The Cotton Valley facility’s feedstock is primarily low sulfur and paraffinic crude oil originating from north Louisiana and is purchased from various marketers and gatherers. In addition, the Cotton Valley facility receives interplant feedstocks for solvent production from the Shreveport facility. The Cotton Valley facility ships finished products by both truck and railcar service. Princeton Facility The Princeton facility (“Princeton”), located on a 208 acre site in Princeton, Louisiana, currently has aggregate crude oil throughput capacity of 10,000 bpd and processes naphthenic crude oil into lubricating oils and asphalt. In addition, feedstock is made for the Shreveport facility for further processing into ultra-low sulfur diesel. The asphalt produced at Princeton may be further processed or blended for coating and roofing product applications at the Princeton facility or transported to the Shreveport facility for further processing into bright stock. The Princeton facility consists of seven major processing units, approximately 650,000 barrels of storage capacity in 200 storage tanks and related loading and unloading facilities and utilities. Since our acquisition of the Princeton facility in 1990, we have debottlenecked the crude unit to increase production capacity to 10,000 bpd, increased the hydrotreater’s capacity to 7,000 bpd and upgraded the facility’s fractionation unit, which has enabled us to produce higher value specialty products. The following table sets forth historical information about production at our Princeton facility: Crude oil throughput capacity Total feedstock runs Total facility production (1) (2) (1) 2022 10,000 7,259 5,660 Princeton Facility Year Ended December 31, 2021 (In bpd) 10,000 7,266 4,881 2020 10,000 6,559 4,295 (1) (2) Total facility production represents the barrels per day of specialty products yielded from processing crude oil and other feedstocks. The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstocks and the production of finished products, intermediates transferred to internal sites for further processing, and volume loss. Total facility production includes certain interplant feedstocks supplied to our Shreveport facility. 13 Table of Contents The Princeton facility has a hydrotreater and significant fractionation capability enabling the refining of high quality naphthenic lubricating oils at numerous distillation ranges. The Princeton facility’s processing capabilities consist of atmospheric and vacuum distillation, hydrotreating, asphalt oxidation processing and clay/acid treating. In addition, we have the necessary tankage and technology to process our asphalt into higher value product applications such as coatings, road paving and specialty applications. The Princeton facility receives crude oil via tank truck, railcar and the Plains pipeline system. Its crude oil supply primarily originates from east Texas, south Texas and north Louisiana, purchased directly from third-party suppliers under month-to-month evergreen supply contracts and on the spot market. The Princeton facility ships its finished products throughout the U.S. via truck and railcar service. Great Falls Specialty Asphalt Facility The Great Falls specialty asphalt facility (“Great Falls”), located on a 65 acre site in Great Falls, Montana, currently has aggregate crude oil throughput capacity of 14,000 bpd and processes light and heavy crude oil from Canada into fuel and asphalt products. In the fourth quarter of 2022, we converted a significant portion of the Great Falls specialty asphalt facility into a renewable fuels production facility (see below). Upon completion of the conversion project, we continue to own and operate the conventional Great Falls specialty asphalt facility with a reconfigured processing capacity of 14,000 bpd of Canadian crude. The facility is focused on the production of high-quality specialty asphalt, as well as satisfying local demand for conventional fuels. The Great Falls specialty asphalt facility consists of 15 major processing units including hydrotreating, catalytic reforming, hydrocracking, fluid catalytic cracking and alkylation units, approximately 1.1 million barrels of storage capacity in 75 tanks and related loading and unloading facilities and utilities. The following table sets forth historical information about production at the Great Falls specialty asphalt facility: Crude oil throughput capacity Total feedstock runs Total facility production (1) (2) (2) 2022 Great Falls Specialty Asphalt Facility Year Ended December 31, 2021 (In bpd) 14,000 17,997 18,001 30,000 25,614 25,897 2020 30,000 26,204 26,742 (1) (2) Total feedstock runs represent the barrels per day of crude oil processed at our Great Falls specialty asphalt facility. Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks. The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstocks and the production of finished products and volume loss. Currently, the Great Falls specialty asphalt facility produces liquified petroleum gas, naphtha, gasoline, diesel, jet fuel and asphalt, which are shipped by railcar and truck service. Finished fuel and asphalt sales are primarily made through spot agreements and short-term contracts. The Great Falls specialty asphalt facility purchases crude oil from various suppliers and receives crude oil through the Interprovincial Bow River South and Rangeland pipeline systems, providing reliable access to high quality conventional crude oil from western Canada. In February 2016, we completed an expansion project that increased production capacity at our Great Falls specialty asphalt facility to 30,000 bpd. This project allows us to further capitalize on local access to cost-advantaged Canadian crude oil, while producing additional fuels and refined products for delivery into the regional market while meeting EPA requirements for gasoline and diesel product sulfur limits and reducing air emissions. The scope of this project included the installation of a new crude unit that can process up to 30,000 bpd of crude oil and other feedstocks, a third hydrogen plant and an 18,000 bpd mild hydrocracker. 14 Table of Contents Great Falls Renewable Fuels Facility (“Montana Renewables”) In the fourth quarter of 2022, Montana Renewables LLC, an unrestricted subsidiary of Calumet, completed the conversion of a significant portion of our Great Falls specialty asphalt facility into a renewable fuels production facility (the “Montana Renewables Facility”). The Montana Renewables Facility has a permitted throughput capacity of 15,000 bpd to pretreat and convert a wide variety of organic waste and vegetable oils into lower emissions, sustainable alternatives to fossil fuels, including renewable hydrogen, renewable natural gas, renewable propane, renewable naphtha, renewable kerosene/sustainable aviation fuel, and renewable diesel. As part of the conversion project, we also constructed and are commissioning an innovative renewable hydrogen unit, which will further lower carbon intensity and increase the throughput of the Montana Renewables facility. Further, a new state of the art feedstock pre-treater, which combined with proximity to advantaged feedstocks and low-carbon product markets is expected to provide lasting competitive advantage to Montana Renewables. Missouri Facility The Missouri facility (“Missouri”), located on a 22 acre site in Louisiana, Missouri, develops and produces polyol ester synthetic lubricants for use in refrigeration compressors, commercial aviation and polyol ester base stocks. In December 2015, we completed a project to more than double the production capacity of the facility from 35 million pounds to 75 million pounds per year. The facility has approximately 35,000 barrels of storage capacity in 64 tanks and related loading and unloading facilities and utilities. The facility receives its fatty acids and alcohol feedstocks and additives by truck and railcar under supply agreements or spot agreements with various suppliers. The Missouri facility utilizes the latest batch esterification processes designed to ensure blending accuracy while maintaining production flexibility to meet customer needs. Calumet Packaging The Calumet Packaging facility (“Calumet Packaging”), located on a 10 acre site in Shreveport, Louisiana, develops, blends and packages high performance synthetic lubricants, fuels and solvent products for use in industrial, commercial and automotive applications. The Calumet Packaging facility’s processing capability includes state-of-the-art blending and packaging equipment. The facility has approximately 75,000 barrels of storage capacity and related loading and unloading facilities. The facility receives its base oil feedstocks and additives by truck and rail under supply agreements or spot agreements with various suppliers. Royal Purple The Royal Purple facility (“Royal Purple”), located on a 20 acre site in Porter, Texas, develops, blends and packages high performance synthetic lubricants and fluid additive products for use in industrial, commercial and automotive applications. The Royal Purple facility’s processing capability includes 10 in-house packaging and production lines. Outsourced packaging services for specific products are also fulfilled. The facility has approximately 30,500 barrels of storage capacity in 91 tanks and related loading and unloading facilities. The facility receives its base oil feedstocks and additives by truck under supply agreements or spot agreements with various suppliers. Karns City and Dickinson Facilities and Other Processing Agreements The Karns City facility (“Karns City”), located on a 225 acre site in Karns City, Pennsylvania, has aggregate base oil throughput capacity of 3,000 bpd and produces white mineral oils, solvents, petrolatums, gelled hydrocarbons, cable fillers and natural petroleum sulfonates. The Karns City facility’s processing capability includes hydrotreating, fractionation, acid treating, filtering, blending and packaging. In addition, the facility has approximately 817,000 barrels of storage capacity in 250 tanks and related loading and unloading facilities and utilities. The Dickinson facility (“Dickinson”), located on a 28 acre site in Dickinson, Texas, has aggregate base oil throughput capacity of 1,300 bpd and produces white mineral oils, compressor lubricants and natural petroleum sulfonates. The Dickinson facility’s processing capability includes acid treating, filtering and blending. The facility has approximately 183,000 barrels of storage capacity in 186 tanks and related loading and unloading facilities and utilities. These facilities each receive their base oil feedstocks by railcar and truck under supply agreements or spot purchases with various suppliers, the most significant of which is a supply agreement with Phillips 66. Please read “— Our Crude Oil and Feedstock Supply” below for further discussion of the long-term supply agreement with Phillips 66. 15 Table of Contents The following table sets forth the combined historical information about production at our Karns City, Dickinson and certain other facilities: Feedstock throughput capacity Total feedstock runs Total production (2) (3) (3) (1) Combined Karns City, Dickinson and Other Facilities Year Ended December 31, 2021 (in bpd) 2022 2020 11,300 3,482 3,582 11,300 4,368 4,269 11,300 3,230 3,221 (1) (2) (3) Includes Karns City, Dickinson and certain other facilities. Includes feedstock runs at our Karns City and Dickinson facilities as well as throughput at certain third-party facilities pursuant to supply and/or processing agreements and includes certain interplant feedstocks supplied from our Shreveport refinery. Total production represents the barrels per day of specialty products yielded from processing feedstocks at our Karns City and Dickinson facilities and certain third-party facilities pursuant to supply and/or processing agreements. The difference between total production and total feedstock runs is primarily a result of the time lag between the input of feedstocks and the production of finished products. Other Logistics Assets Terminals are complementary to our refineries and play a key role in moving our products to end-user markets by providing services including distribution and blending to achieve specified products and storage and inventory management. In addition to the Burnham terminal, we own and lease additional facilities, primarily related to distribution of finished products, throughout the U.S. Burnham Terminal: We own and operate a terminal located on an 11 acre site, in Burnham, Illinois. The Burnham terminal receives specialty products from certain of our refineries primarily by railcar and distributes them by truck and railcar to our customers in the Upper Midwest and East Coast regions of the U.S. and in Canada. The terminal includes a tank farm with 90 tanks having aggregate storage capacity of approximately 150,000 barrels, supplying lube base oils, food grade white oils and aliphatic solvents, as well as viscosity index additives and tackifiers. We use approximately 2,300 railcars leased from various lessors. This fleet of railcars enables us to receive and ship crude oil and distribute various specialty products and fuel products throughout the U.S. and Canada to and from each of our facilities. Our Crude Oil and Feedstock Supply We purchase crude oil and other feedstocks from major oil companies as well as from various crude oil gatherers and marketers in Texas, north Louisiana and Canada. Crude oil supplies at our facilities are as follows: Refinery Shreveport Cotton Valley Crude Oil / Feedstock Slate West Texas Intermediate (“WTI”), local crude oils from East Texas, North Louisiana, Arkansas and Light Louisiana Sweet (“LLS”) Local paraffinic crude oil Great Falls Specialty Asphalt Facility Canadian Heavy (e.g. Bow River) and Canadian Light Sour Montana Renewables Facility Princeton Organic waste and vegetable oil materials Local and imported naphthenic crude oil Mode of Transportation Tank truck, railcar and Plains Pipeline Tank truck Front Range Pipeline Railcar Tank truck, railcar and Plains Pipeline In 2022, BP Products North America Inc. (“BP”) supplied us with approximately 62.2% of our total crude oil supply under term contracts and month-to-month evergreen crude oil supply contracts. In 2022, Macquarie Energy Canada LTD. (“Macquarie”) supplied us with approximately 24.0% of our total crude oil supply under a crude oil supply agreement. Each of our refineries is dependent on one or more key suppliers and the loss of any of these suppliers would adversely affect our financial results to the extent we were unable to find another supplier of this substantial amount of crude oil. 16 Table of Contents We have short-term and long-term contracts with our crude oil suppliers. For example, a majority of our crude oil supply contracts with Plains are currently month-to-month and terminable upon 90 days’ notice. Additionally, our crude oil supply agreement with BP was amended and restated in December 2016, and automatically renews for successive one-year terms each March unless terminated by either party upon 90 days’ notice (“BP Purchase Agreement”). This agreement has not been terminated by either party. We also purchase foreign crude oil when its spot market price is attractive relative to the price of crude oil from domestic sources. MRL, an unrestricted subsidiary of the Company, has entered into various term supply agreements for renewable feedstocks that are key to the operations of the Montana Renewables facility. We have various long-term feedstock supply agreements with Phillips 66, with some agreements operating under the option to continue on a month-to-month basis thereafter, for feedstocks that are key to the operations of our Karns City and Dickinson facilities. In addition, certain products of our refineries can be used as feedstocks by these facilities. We believe that adequate supplies of crude oil and feedstocks will continue to be available to us. Our cost to acquire crude oil and feedstocks and the prices for which we ultimately can sell refined products depend on a number of factors beyond our control, including regional and global supply of and demand for crude oil, other feedstocks and specialty and fuel products. These, in turn, are dependent upon, among other things, the availability of imports, overall economic conditions, production levels of domestic and foreign suppliers, U.S. relationships with foreign governments, political affairs and the extent of governmental regulation. We have historically been able to pass on the costs associated with increased crude oil and feedstock prices to our specialty products customers, although the increase in selling prices for specialty products typically lags the rising cost of crude oil. From time to time, we use a hedging program to manage a portion of our commodity price risk. Our Products, Markets and Customers Products We produce a full line of specialty products, including lubricating oils, solvents, waxes, food grade white oils, pharmaceutical grade petrolatums, and other products, as well as a variety of fuel and fuel related products, including asphalt and heavy fuel oils. We also blend, package and market high performance specialty products through our Royal Purple, Bel-Ray, and TruFuel brands. In the fourth quarter of 2022, we commenced production of renewable fuels, including renewable diesel and renewable naphtha. Upon completion of all planned phases of the Montana Renewables project, we expect to have the capability to produce a full slate of renewable fuels, including renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha, which we expect to distribute into renewable markets in the western half of North America. Our customers purchase specialty products primarily as raw material components for consumer-facing and industrial products. Our customers also purchase renewable fuels, which are consumed to reduce lifecycle carbon emissions. 17 Table of Contents The following table depicts a representative sample of the diversity of end-use applications for the products we produce: Representative Sample of End-Use Applications by Product (1) Lubricating Oils 20% Solvents 9% Waxes 4% • Waterless hand cleaners • Alkyd resin diluents • Automotive products • Calibration fluids • Charcoal lighter fluids • Chemical processing • Drilling fluids • Printing inks • Water treatment • Paint and coatings • Stains • Paraffin waxes • FDA compliant products • Candles • Adhesives • Crayons • Floor care • PVC • Paint strippers • Skin & hair care • Timber treatment • Waterproofing • Pharmaceuticals • Cosmetics • Hydraulic oils • Passenger car motor oils • Railroad engine oils • Cutting oils • Compressor oils • Metalworking fluids • Transformer oils • Rubber process oils • Industrial lubricants • Gear oils • Grease • Automatic transmission fluid • Animal feed dedusting • Baby oils • Bakery pan oils • Catalyst carriers • Gelatin capsule lubricants • Sunscreen Packaged and Synthetic Specialty Products 7% • Refrigeration compressor oils • Positive displacement and roto-dynamic compressor oils • Commercial and military jet engine oil • Lubricating greases • Gear oils • Aviation hydraulic oils • High performance small engine fuels • Two cycle and four stroke engine oils • High performance automotive engine oils • High performance industrial lubricants • High temperature chain lubricants • Food contact grade lubricants • Charcoal lighter fluids and other solvents • Engine treatment additives Fuels & Fuel Related Products Renewable Products 60% • Gasoline • Diesel • Jet fuel • Marine fuel • Ethanol free fuels • Fluid catalytic cracking feedstock • Asphalt vacuum residuals • Mixed butanes • Roofing flux • Paving asphalt • Heavy fuel oils • Renewable hydrogen • Renewable natural gas • Renewable propane • Renewable naphtha • Renewable kerosene/sustainable aviation fuel • Renewable diesel (1) Based on the percentage of total sales for the year ended December 31, 2022. Except for the listed fuel products, renewable products and certain packaged and synthetic specialty products, we do not produce any of these end-use products. Marketing Our salespeople regularly visit customers and work in conjunction with our marketing department, the laboratories at our production facilities and our technical services department, to focus on providing additional value to our customers, such as formulation assistance, regulatory insight, and creating specialized blends and packaging that work optimally for our customers. Markets Specialty Products. The specialty products market represents a small portion of the overall petroleum refining industry in the U.S. Of the approximately 130 refineries currently in operation in the U.S., only a small number of the refineries are considered specialty products producers and only a few compete with us in terms of the number of products produced. Our specialty products are utilized in applications across a broad range of industries, including: • • industrial goods such as metalworking fluids, belts, hoses, sealing systems, batteries, hot melt adhesives, pressure sensitive tapes, electrical transformers, refrigeration compressors and drilling fluids; and consumer goods such as candles, petroleum jelly, creams, tonics, lotions, coating on paper cups, chewing gum base, automotive aftermarket car-care products (e.g., fuel injection cleaners, tire shines and polishes), paints and coatings, charcoal lighter fluids and various aerosol products. We have the capability to ship our specialty products worldwide. In the U.S., we ship our specialty products via railcars, trucks and barges. We use our fleet of leased railcars to ship our specialty products and a majority of our specialty products sales are shipped in trucks owned and operated by several different third-party carriers. For international shipments, which accounted for less than 10% of our consolidated sales in 2022, we ship via railcars and trucks to several ports where the product is loaded onto vessels for shipment to customers abroad. Fuel Products. The fuel products market represents a large portion of the overall petroleum refining industry in the U.S. Of the approximately 130 refineries currently in operation in the U.S., a large number of the refineries are fuel products producers; however, only a few compete with us in our local markets. 18 Table of Contents Gulf Coast Market (PADD 3) Fuel products produced at our Shreveport facility can be sold locally or to the Midwest region of the U.S. through the TEPPCO pipeline. Local sales are made from the TEPPCO terminal in Bossier City, Louisiana, located approximately 15 miles from the Shreveport facility, as well as from our own Shreveport facility terminal. Gasoline, diesel and jet fuel from the Shreveport facility are sold primarily into the Louisiana, Texas and Arkansas markets, and any excess volumes are sold to marketers further up the TEPPCO pipeline. Should the appropriate market conditions arise, we have the capability to redirect and sell additional volumes into the Louisiana, Texas and Arkansas markets rather than transport them to the Midwest region via the TEPPCO pipeline. The Shreveport facility has the capacity to produce approximately 9,000 bpd of commercial jet fuel that can be marketed to the U.S. Department of Defense, sold as Jet-A locally or sold via the TEPPCO pipeline, or transferred to the Cotton Valley facility to be processed further as a feedstock to produce solvents. Additionally, we produce a number of fuel-related products including fluid catalytic cracking (“FCC”) feedstock, vacuum residuals and mixed butanes. FCC feedstock is sold to other refiners as a feedstock for their FCC units to make fuel products. Vacuum residuals are blended or processed further to make asphalt products. Volumes of vacuum residuals which we cannot process are sold locally into the fuel oil market or sold via railcar to other refiners. Mixed butanes are primarily available in the summer months and are primarily sold to local marketers. If the mixed butanes are not sold, they are blended into our gasoline production. Northwest Market (PADD 4) Fuel and asphalt products produced at our Great Falls specialty asphalt facility can be sold locally and in Missouri, Oklahoma, Texas, Arizona, North Dakota, South Dakota, Idaho, Oregon, Utah, Wyoming, Washington, Nevada, California and Canada. Seasonally, fuel products from the Great Falls specialty asphalt facility are transported to terminals in Washington and Utah. Renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha produced at our Montana Renewables facility are distributed into renewable markets in the western half of North America. Customers Specialty Products. We have a diverse customer base for our specialty products. In fiscal year 2022, we sold our specialty products to approximately 2,200 customers. Many of our customers are long-term customers who use our products in specialty applications, after an approval process ranging from six months to two years. Fuel Products. We have a diverse customer base for our fuel products. In fiscal year 2022, we sold our fuel products to approximately 200 customers. Our diverse customer base includes wholesale distributors and retail chains. We are able to sell the majority of the fuel products we produce at the Shreveport refinery to the local markets of Louisiana, Texas and Arkansas. We also have the ability to ship additional fuel products from the Shreveport refinery to the Midwest region through the TEPPCO pipeline. The majority of our fuel products produced at our Great Falls specialty asphalt facility are sold to local markets in Montana and Idaho as well as in Canada. The renewable fuel products produced at our Montana Renewables facility are distributed into renewable markets in the western half of North America. During the years ended December 31, 2022, 2021, and 2020, we had no customer that represented 10% or greater of consolidated sales. Competition Competition in our markets is from a combination of large, integrated petroleum companies and independent refiners. Many of our competitors are substantially larger than us and are engaged on a national or international basis in many segments of the petroleum products business, including exploration and production, refining, transportation and marketing. These competitors may have greater flexibility in responding to or absorbing market changes occurring in one or more of these business segments. We distinguish our competitors according to the products that they produce. Set forth below is a description of our significant competitors according to product category. Naphthenic Lubricating Oils. Our primary competitors in producing naphthenic lubricating oils include Ergon Refining, Inc., Cross Oil Refining and Marketing, Inc. and San Joaquin Refining Co., Inc. Paraffinic Lubricating Oils. Our primary competitors in producing paraffinic lubricating oils include Exxon Mobil Corporation, Motiva Enterprises, LLC, Phillips 66, HF Sinclair Corporation and Chevron Corporation. 19 Table of Contents Paraffin Waxes. Our primary competitors in producing paraffin waxes include Exxon Mobil Corporation, HF Sinclair Corporation, The International Group Inc. and Ergon, Inc.. Solvents. Our primary competitors in producing solvents include CITGO Petroleum Corporation, ExxonMobil Chemical Company and Total S.A. Polyol ester Based Specialty Products. Our primary competitors in producing polyol ester-based specialty products include LANXESS, ExxonMobil Corporation, BASF Corporation, Croda International plc, Nyco Products Corporation and Zschimmer & Schwartz, Inc. Packaged and Synthetic Specialty Products. Our primary competitors in retail and commercial packaged and synthetic specialty products include Exxon Mobil Corporation (Mobil 1), Valvoline, Inc. and other independent lubricant manufacturers. Our primary competitors in industrial packaged and synthetic specialty products include Exxon Mobil Corporation, Royal Dutch Shell plc, Fuchs and other independent lubricant manufacturers. Fuel Products and By-Products. Our primary competitors in producing fuel products in the local markets in which we operate include Delek US Holdings, Exxon Mobil Corporation, Phillips 66 and Cenex. Renewable Fuel Products. Our primary competitor in producing renewable fuel products in the local markets in which we operate is Chevron Corporation. Our ability to compete effectively depends on our responsiveness to customer needs and our ability to maintain competitive prices and product and service offerings. We believe that our flexibility and customer responsiveness differentiates us from many of our larger competitors. However, it is possible that new or existing competitors could enter the markets in which we operate, which could negatively affect our financial performance. Governmental Regulation From time to time, we are a party to certain claims and litigation incidental to our business, including claims made by various taxation and regulatory authorities, such as the IRS, the EPA and the U.S. Occupational Safety and Health Administration (“OSHA”), as well as various state environmental regulatory bodies and state and local departments of revenue, as the result of audits or reviews of our business. Environmental and Occupational Health and Safety Matters Environmental We conduct crude oil and specialty refining, blending and terminal operations, certain activities of which are subject to stringent federal, regional, state and local laws and regulations governing worker health and safety, the discharge of materials into the environment and environmental protection. These laws and regulations impose legal standards and obligations that are applicable to our operations, such as requiring the acquisition of permits to conduct regulated activities, restricting the manner in which we may release materials into the environment, requiring mitigation of pollutant discharges from current operations that may include incurring capital expenditures to limit or prevent unauthorized releases from our equipment and facilities, requiring remedial activities to mitigate pollution from former operations, imposing substantial liabilities for pollution resulting from our operations, and requiring the application of specific health and safety criteria addressing worker protection. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil and criminal penalties; the imposition of investigatory, remedial or corrective action obligations or the incurrence of capital expenditures; the occurrence of restrictions, delays or cancellations in the permitting, development or expansion of projects; and the issuance of injunctive relief limiting or prohibiting our activities in a particular area. Moreover, certain of these laws impose joint and several liability and strict liability for costs required to remediate and restore sites where petroleum hydrocarbons, wastes or other materials have been disposed of or released and areas where any such contamination has come to be located. In addition, new environmental and worker safety laws and regulations, amendment of existing laws and regulations, reinterpretation of legal requirements, increased governmental enforcement or other developments could significantly increase our operational or compliance expenditures, including as discussed below in more detail. Remediation of subsurface contamination continues at certain of our refinery sites and is being overseen by the appropriate governmental agencies. Based on current investigative and remedial activities, we believe that the cost to control or remediate the soil and groundwater contamination at these refineries will not have a material adverse effect on our financial condition. However, such costs are often unpredictable and, therefore, there can be no assurance that the future costs of these remedial projects will not become material. 20 Table of Contents Great Falls Refinery In connection with the acquisition of the Great Falls refinery from Connacher Oil and Gas Limited (“Connacher”), we became a party to an existing 2002 Refinery Initiative Consent Decree (the “Great Falls Consent Decree”) with the EPA and the Montana Department of Environmental Quality (the “MDEQ”). The material obligations imposed by the Great Falls Consent Decree have been completed. On September 27, 2012, Montana Refining Company, Inc., received a final Corrective Action Order on Consent, replacing the refinery’s previously held hazardous waste permit. This Corrective Action Order on Consent governs the investigation and remediation of contamination at the Great Falls refinery. We believe the majority of the impacts related to such contamination at the Great Falls refinery are covered by a contractual indemnity provided by a subsidiary of HF Sinclair Corporation (“the Seller”), the owner and operator of the Great Falls refinery prior to its acquisition by Connacher, under an asset purchase agreement between the Seller and Connacher, pursuant to which Connacher acquired the Great Falls refinery. Under this asset purchase agreement, the Seller agreed to indemnify Connacher and Montana Refining Company, Inc., subject to timely notification, certain conditions and certain monetary baskets and caps, for environmental conditions arising under the Seller’s ownership and operation of the Great Falls refinery and existing as of the date of sale to Connacher. During 2014, HF Sinclair Corporation (“Holly”) provided us a notice challenging our position that the Seller is obligated to indemnify our remediation expenses for environmental conditions to the extent arising under Holly’s ownership and operation of the refinery and existing as of the date of sale to Connacher. On September 22, 2015, we initiated a lawsuit against Holly and the Sellers. The court ordered that all of the claims be addressed in arbitration. The arbitration panel confirmed that the sellers of the Great Falls refinery retained the liability for all pre-closing contamination with respect to third-party claims indefinitely and with respect to first party claims for which the sellers received notice within five years after the sale of the refinery, which claims are subject to the requirements otherwise set forth in the asset purchase agreement. Among other things, the panel denied the Company’s demands for reimbursement for costs already incurred by the Company prior to the arbitration but left open the Company’s ability to make future claims. The Company expects that it may incur costs to remediate other environmental conditions at the Great Falls refinery. The Company currently believes that these other costs it may incur will not be material to its financial position or results of operations. 21 Table of Contents Air Emissions Our operations are subject to the federal Clean Air Act, as amended (“CAA”), and comparable state and local laws. Amendments made to the CAA in 1990 require most industrial operations in the U.S. to incur capital expenditures to meet the air emission control standards that are developed and implemented by the EPA and state environmental agencies. Under the CAA, facilities that emit regulated air pollutants are subject to stringent regulations, including requirements to install various levels of control technology on sources of pollutants. In addition, in recent years, the petroleum refining sector has become subject to stringent federal regulations that impose maximum achievable control technology (“MACT”) on refinery equipment emitting certain listed hazardous air pollutants. Some of our facilities have been included within the categories of sources regulated by MACT rules. Our refining and terminal operations that emit regulated air pollutants are also subject to air emissions permitting requirements that incorporate stringent control technology requirements for which we may incur significant capital expenditures. Any renewal of those air emissions permits or a need to modify existing or obtain new air emissions permits has the potential to delay the development of our projects. We can provide no assurance that future compliance with existing or any new laws, regulations or permit requirements will not have a material adverse effect on our business, financial position or results of operations. For example, in 2015, the EPA issued a final rule under the CAA making the National Ambient Air Quality Standard (“NAAQS”) for ground-level ozone more stringent. Since that time, the EPA has issued area designations with respect to ground-level ozone and final requirements that apply to state, local and tribal air agencies for implementing the 2015 NAAQS for ground-level ozone. States are expected to implement more stringent requirements as a result of this new final rule, which could apply to our operations. EPA retained the 2015 standards for ground-level ozone after a review completed in 2020. In 2021, EPA announced that it would reconsider this standard, but has not yet taken any steps to do so publicly. Also, in 2015, the EPA published a final rule that amended three refinery standards already in effect, imposing additional or, in some cases, new emission control requirements on subject refineries. The final rule requires, among other things, the monitoring of air concentrations of benzene around the refinery fence line perimeter and submittal of the fence line monitoring data to the EPA on a quarterly basis; upgraded emissions controls for storage tanks, including controls for smaller capacity storage vessels and storage vessels storing materials with lower vapor pressures than previously regulated; enhanced performance requirements for flares including the use of a minimum of three pollution prevention measures, continuous monitoring of flares and pressure release devices and analysis and remedy of flare release events; and compliance with emissions standards for delayed coking units. These final rules and any other future air emissions rulemakings could impact us by requiring installation of new emission controls on some of our equipment, resulting in longer permitting timelines, and significantly increasing our capital expenditures and operating costs, which could adversely impact our business. From time to time the CAA authorizes the EPA to require modifications in the formulation of the refined transportation fuel products we manufacture in order to limit the emissions associated with the fuel product’s final use. For example, in February 2000, the EPA published regulations limiting the sulfur content allowed in gasoline. These regulations, referred to as “Tier 2 Standards,” required the phase-in of gasoline sulfur standards beginning in 2004, with special provisions for small refiners and for refiners serving those western U.S. states exhibiting lesser air quality problems. Similarly, the EPA published regulations that limit the sulfur content of highway diesel beginning in 2006 from its former level of 500 parts per million (“ppm”) to 15 ppm (the “ultra-low sulfur standard”). Our Shreveport and Great Falls facilities have implemented the sulfur standard with respect to produced gasoline and produced diesel meeting the ultra-low sulfur standard. In 2014, the EPA published more stringent sulfur standards, referred to as “Tier 3 Standards,” including requiring that motor gasoline will not contain more than 10 ppm of sulfur on an annual average basis by January 1, 2017, except in those instances where refineries received a “small refinery” exemption, in which event the deadline was extended to January 1, 2020. Our Shreveport and Great Falls facilities are fully compliant with the 10 ppm sulfur standard with respect to produced gasoline. In addition, we are required to meet the Mobile Source Air Toxics (“MSAT”) II Standards adopted by the EPA to reduce the benzene content of motor gasoline produced at our facilities and have completed capital projects at our Shreveport and Great Falls facilities to comply with those fuel quality requirements. 22 Table of Contents The EPA has issued RFS mandates, requiring refiners such as us to blend renewable fuels into the petroleum fuels they produce and sell in the United States. We, and other refiners subject to RFS, may meet the RFS requirements by blending the necessary volumes of renewable transportation fuels produced by us or purchased from third parties. To the extent that refiners are unable to blend renewable fuels into the products they produce in the quantities required to satisfy their obligations under the RFS program, those refiners may purchase renewable credits, referred to as RINs, to maintain compliance. To the extent that we exceed the minimum volumetric requirements for blending of renewable transportation fuels, we generate our own RINs for which we have the option of retaining the RINs for current or future RFS compliance or selling those RINs on the open market. We are unable to blend sufficient quantities of ethanol and biodiesel to meet our requirements and would, therefore, may have to purchase an increasing number of RINs. It is not possible at this time to predict with certainty what those volumes or costs may be. Existing laws and regulations could change, and the minimum volumes of renewable fuels that must be blended with refined petroleum fuels may increase. For more information on the RFS program, our participation in the program and risks associated with the program, see the following risk factor under Part I, Item 1A of this Form 10-K: “The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions could have a material adverse effect on our results of operations and financial condition and our ability to make payments on our debt obligations.” Climate Change Climate change continues to attract considerable public, governmental and scientific attention in the U.S. and foreign countries. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of greenhouse gases (“GHG”) or to control such future emissions. Consequently, it is possible that our operations as well as the operations of our customers may become subject to a series of regulatory, political, litigation and financial risks associated with the processing of fossil fuels and/or emissions of GHGs. The adoption of international, federal, regional or state legislation or regulations or other regulatory initiatives that impose more stringent standards for GHG emissions could require us to incur increased compliance costs or affect the price or availability of certain of our feedstocks or products. At the federal level, no comprehensive climate change legislation has been implemented to date. However, the EPA has determined that GHG emissions present a danger to public health and the environment and has adopted regulations under existing provisions of the federal CAA that, among other things: establish that Prevention of Significant Deterioration (“PSD”) construction permit programs and Title V operating permit programs will include reviews for GHG emissions from certain large stationary sources that are also potential major sources of criteria pollutant emissions; require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources; implement CAA emission new source performance standards (“NSPS”) directing the reduction of methane from certain new, modified or reconstructed facilities in the oil and natural gas sector; and together with the U.S. Department of Transportation (“DOT”), implement GHG emissions limits on vehicles manufactured for operation in the United States. Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. At the international level, there exists the United Nations-sponsored “Paris Agreement,” which calls upon nations to limit their GHG emissions through individually determined reduction goals every five years after 2020. There are also increasing financial risks for fossil fuel producers, as stockholders and bondholders currently invested in fossil-fuel energy companies may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors. Institutional lenders who provide financing to fossil-fuel energy companies are beginning to define sustainable lending practices and there is the possibility that financial institutions will adopt policies that limit funding for fossil fuel energy companies, as governmental and nongovernmental institutions focus on addressing climate- related risks in the financial sector. Although we are not an oil or gas producer, it is possible that limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities which could affect the price or availability of certain of our feedstocks. It should also be noted that some scientists have concluded that increasing concentrations of GHG in the earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic events; if any such effects were to occur, they could have an adverse effect on our operations. 23 Table of Contents Hazardous Substances and Wastes The Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA”), also known as the “Superfund” law, and comparable state laws impose liability without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a hazardous substance into the environment. Such classes of persons include the current and past owners and operators of sites where a hazardous substance was released and companies that disposed or arranged for disposal of hazardous substances at offsite locations, such as landfills. Under CERCLA, these “responsible persons” may be subject to joint and several, strict liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies. Separately, it is not uncommon for neighboring landowners and other third parties to file claims under relevant state laws for personal injury and property damage allegedly caused by the release of hazardous substances into the environment. In the course of our operations, we generate wastes or handle substances that may be regulated as hazardous substances, and we could become subject to liability under CERCLA and comparable state laws. We also may incur liability under the Resource Conservation and Recovery Act, as amended (“RCRA”), and comparable state laws, which impose requirements related to the handling, storage, treatment and disposal of hazardous and non-hazardous wastes. In the course of our operations, we generate petroleum product wastes and ordinary industrial wastes that may be regulated as hazardous wastes. In addition, our operations also generate non-hazardous solid wastes, which are regulated under RCRA and state laws. Historically, our environmental compliance costs under the existing requirements of RCRA and similar state and local laws have not had a material adverse effect on our results of operations, and the cost involved in complying with these requirements is not material. We currently own or operate, and have in the past owned or operated, properties that for many years have been used for refining and terminal activities. These properties in the past may have been operated by third parties whose treatment and disposal or release of petroleum hydrocarbons and wastes were not under our control. Although we used operating and disposal practices that were standard in the industry at the time, petroleum hydrocarbons or wastes have been released on or under the properties owned or operated by us. These properties and the materials disposed or released on them may be subject to CERCLA, RCRA and analogous state laws. Under such laws, we could be required to remove or remediate previously disposed wastes or property contamination or to perform remedial activities to prevent future contamination. In addition, new laws and regulations, amendment of existing laws and regulations, reinterpretation of legal requirements, increased governmental enforcement or other developments could significantly increase our operational or compliance expenditures. Water Discharges The Federal Water Pollution Control Act of 1972, as amended, also known as the federal Clean Water Act, and analogous state laws impose restrictions and stringent controls on the discharge of pollutants, including oil, into regulated waters. Such discharges are prohibited, except in accordance with the terms of a permit issued by the EPA or the appropriate state agencies. Any unpermitted release of pollutants, including crude oil or hydrocarbon specialty oils as well as refined products, could result in penalties, as well as significant remedial obligations. Spill prevention, control, and countermeasure requirements of federal laws require appropriate containment berms and similar structures to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture, or leak. Historically, our environmental compliance costs under the existing requirements of the federal Clean Water Act and similar state laws have not had a material adverse effect on our results of operations but these laws and their implementing regulations are subject to change and there can be no assurance that such future costs will not be material. The primary federal law for oil spill liability is the Oil Pollution Act of 1990, as amended (“OPA”), which addresses three principal areas of oil pollution — prevention, containment and cleanup. The OPA applies to vessels, offshore facilities and onshore facilities, including refineries, terminals and associated facilities that may affect waters of the U.S. Under the OPA, responsible parties, including owners and operators of onshore facilities, may be subject to oil cleanup costs and natural resource damages as well as a variety of public and private damages from oil spills. Historically, our past environmental compliance costs under the existing requirements of the OPA have not had a material adverse effect on our results of operations but this law and its implementing regulations are subject to change and there can be no assurance that such future costs will not be material. 24 Table of Contents Occupational Health and Safety We are subject to various laws and regulations relating to occupational health and safety, including the federal Occupational Safety and Health Act, as amended, and comparable state laws. These laws and regulations strictly govern the protection of the health and safety of employees. In addition, OSHA’s hazard communication standard, the EPA’s community right-to-know regulations under Title III of CERCLA and similar state statutes require that we maintain information about hazardous materials used or produced in our operations and provide this information to employees, contractors, state and local government authorities and customers. We maintain safety and training programs as part of our ongoing efforts to ensure compliance with applicable laws and regulations. We conduct periodic audits of Process Safety Management (“PSM”) systems at each of our locations subject to the PSM standard. Our compliance with applicable health and safety laws and regulations has required, and continues to require, substantial expenditures. Changes in occupational safety and health laws and regulations or a finding of non-compliance with current laws and regulations could result in additional capital expenditures or operating expenses, as well as civil penalties and, in the event of a serious injury or fatality, criminal charges. Other Environmental and Maintenance Items We perform preventive and normal maintenance on most, if not all, of our refining and terminal assets and make repairs and replacements when necessary or appropriate. We also conduct inspections of these assets as required by law or regulation. Insurance Our operations are subject to certain hazards of operations, including fire, explosion and weather-related perils. We maintain insurance policies, including business interruption insurance for each of our facilities, with insurers in amounts and with coverage and deductibles that we, with the advice of our insurance advisors and brokers, believe are reasonable and prudent. We cannot, however, ensure that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance will be available in the future at economical prices. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures. Seasonality The fuel and fuel related products that we manufacture, including asphalt products, are subject to seasonal demand and trends. Asphalt demand is generally lower in the first and fourth quarters of the year, as compared to the second and third quarters, due to the seasonality of the road construction and roofing industries we supply. Demand for gasoline and diesel is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic and agricultural activity. In addition, our natural gas costs can be higher during the winter months, as demand for natural gas as a heating fuel increases during the winter. As a result, our operating results for the first and fourth calendar quarters may be lower than those for the second and third calendar quarters of each year due to seasonality related to these and other products that we produce and sell. 25 Table of Contents Properties We own and lease the principal properties listed below. The principal properties which we own, as well as others not listed below, are pledged as collateral under our Collateral Trust Agreement as discussed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Master Derivative Contracts and Collateral Trust Agreement.” We believe that all properties are suitable for their intended purpose, are being efficiently utilized and provide adequate capacity to meet demand for the next several years. Property Shreveport facility Great Falls specialty asphalt facility Montana Renewables facility Princeton facility Cotton Valley facility Burnham terminal Karns City facility Dickinson facility Missouri facility Calumet Packaging facility Royal Purple facility Business Segment(s) Specialty Products and Solutions Montana/Renewables Montana/Renewables Specialty Products and Solutions Specialty Products and Solutions Specialty Products and Solutions Specialty Products and Solutions Specialty Products and Solutions Specialty Products and Solutions Performance Brands Performance Brands Acres 240 65 21 208 77 11 225 28 22 10 20 (1) Owned / Leased Owned Owned Owned / Leased Owned Owned Owned Owned Owned Owned Leased Owned Location Shreveport, Louisiana Great Falls, Montana Great Falls, Montana Princeton, Louisiana Cotton Valley, Louisiana Burnham, Illinois Karns City, Pennsylvania Dickinson, Texas Louisiana, Missouri Shreveport, Louisiana Porter, Texas (1) Montana Renewables LLC, an unrestricted subsidiary of Calumet, leases certain property from the Company. In addition to the items listed above, we lease or own a number of storage tanks, railcars, warehouses, equipment, land, crude oil loading facilities and precious metals. Intellectual Property Our patents relating to our refining operations are not material to us as a whole. Our patents include composition patents that are integral to certain products in the Specialty Products and Solutions segment. We own, have registered or have applied for registration of a variety of tradenames, service marks and trademarks for use in our business. The trademarks, tradenames and design marks under which we conduct our branded business (including Penreco, Orchex, Royal Purple, Bel-Ray and TruFuel) and other trademarks employed in the marketing of our products are integral to our marketing operations. We also license intellectual property rights from third parties. We are not aware of any facts as of the date of this filing which would negatively impact our continuing use of intellectual property or our licensed intellectual property. Office Facilities In addition to our principal properties discussed above, as of December 31, 2022, we were a party to a number of cancelable and noncancelable leases for certain properties, including our corporate headquarters in Indianapolis, Indiana. The corporate headquarters lease is for 58,501 square feet of office space. The lease term expires in August 2024. Please read Note 5 — “Leases” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” of this Annual Report for additional information regarding our leases. While we may require additional office space as our business expands, we believe that our existing facilities are adequate to meet our needs for the immediate future and that additional facilities will be available on commercially reasonable terms as needed. Human Capital Management We believe that our employees are significant contributors to our success and the future success of our Company, which depends on our ability to attract, retain and motivate qualified personnel. The skills, experience and industry knowledge of key employees significantly benefit our operations and performance. 26 Table of Contents As of March 15, 2023, our general partner employed approximately 1,530 people who provide direct support to our operations. Of these employees, approximately 580 are covered by collective bargaining agreements. Employees at the following locations are covered by the following separate collective bargaining agreements: Facility/ Refinery Cotton Valley Princeton Dickinson Shreveport Missouri Karns City Great Falls Union International Union of Operating Engineers International Union of Operating Engineers International Union of Operating Engineers United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union Expiration Date November 19, 2026 August 20, 2024 December 12, 2024 April 30, 2026 April 30, 2025 January 31, 2027 July 31, 2026 None of the employees at the Calumet Packaging facility, the Royal Purple facility or at the Burnham terminal are covered by collective bargaining agreements. Our general partner considers its employee relations to generally be good, with no history of work stoppages. Compensation and Benefits We have demonstrated a history of investing in our workforce by offering competitive salaries, fair wages and comprehensive benefits. To foster a stronger sense of ownership and align the interests of our personnel with unitholders, we provide short-term and long-term incentive programs that include short-term cash bonus awards under our Cash Incentive Plan and phantom units under our Long-Term Incentive Plan. Awards under each of these incentive programs are discretionary and are based on individual and company performance factors. Furthermore, we offer comprehensive benefits to our full-time employees working 30 hours or more per week, including long-term disability coverage, comprehensive health insurance, including vision and dental, employee Health Savings Accounts, including contributions to these accounts by us, competitive paid time off and sick leave programs, and student loan repayment matching opportunities. In addition, we provide a 401(k) retirement savings plan to assist our eligible employees in saving for their retirement. To be an employer of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor market to refine our compensation and benefits programs and other resources available to our personnel. Workforce Health and Safety The safety of our employees is a core tenet of our values, and our safety goal is zero incidents and zero injuries. A strong safety culture reduces risk, enhances productivity and builds a strong reputation in the communities in which we operate. We have earned a reputation as a safe and an environmentally responsible operator through continuous improvement in our safety performance. This makes us more attractive for current and new employees. We invest in safety training and coaching, promote risk assessments and encourage visible safety leadership. Employees are empowered and expected to stop or refuse to perform a job if it is not safe or cannot be performed safely. We sponsor emergency preparedness programs, conduct regular audits to assess our performance and celebrate our successes in which we acknowledge employees and contractors alike who have exhibited strong safety leadership during the course of the year. These many efforts combine to create a culture of safety throughout the company and provide a positive influence on our contractor community. We have continued to operate throughout the COVID-19 pandemic, in some cases subject to federal, state and local regulations, and we have taken and continue to take steps to protect the health and safety of our workers. In response to the COVID-19 pandemic, we have implemented protocols that we believe to be in the best interest of our employees, as well as the communities in which we operate, and that comply with government orders, when applicable. We continue to monitor the COVID-19 environment in order to protect the health and safety of our employees. 27 Table of Contents Diversity, Inclusion and Workplace Culture We are committed to building a culture where diversity and inclusion are core philosophies across our operations, including, but not limited to, our decisions around recruitment, promotion, transfer, leaves of absence, compensation, opportunities for career support and advancement, job performance and other relevant job-related criteria. We embrace an approach to hiring and advancement that considers the value of diversity, and we are also committed to making opportunities for development and progress available to all employees so their talents can be fully developed to maximize our and their success. We believe that creating an environment that cultivates a sense of belonging requires encouraging employees to continue to educate themselves about each other’s experiences, and we strive to promote the respect and dignity of all persons. We also believe it is important that we foster education, communication and understanding about diversity, inclusion and belonging. Address, Internet Website and Availability of Public Filings Our principal executive offices are located at 2780 Waterfront Parkway East Drive, Indianapolis, Indiana, 46214 and our telephone number is (317) 328-5660. Our website is located at www.calumet.com. Our Securities and Exchange Commission (“SEC”) filings are available on our website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We make available, free of charge on our website, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These documents are located on our website at www.calumet.com by selecting the “Investor Relations” link, and then selecting the “Financial Reporting” link and then selecting the “SEC Filings” link. We also make available, free of charge on our website, our charters for the Audit and Finance Committee, Compensation Committee, and Conflicts Committee, and our Related Party Transactions Policy and Code of Business Conduct and Ethics. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of the Code of Business Conduct and Ethics applicable to our executive officers and directors by posting such information on our website. These documents are located on our website at www.calumetspecialty.com by selecting the “Investor Relations” link, then selecting the “Governance” link, and then selecting “Governance Documents.” All reports and documents filed with the SEC are also available via the SEC website, www.sec.gov. The above information is available to anyone who requests it and is free of charge either in print from our website or upon request by contacting Investor Relations using the contact information listed above. Information on our website is not incorporated into this Annual Report or our other securities filings and is not a part of them. 28 Table of Contents Item 1A. Risk Factors An investment in our common units involves a significant degree of risk. Before you invest in our common units, you should carefully consider the risk factors discussed or referenced below. If any of the risks discussed below were actually to occur, our business, financial position or results of operations could be materially adversely affected. Risks Related to our Business Results of Operations and Financial Condition Our business depends on supply and demand fundamentals, which can be adversely affected by numerous macroeconomic factors outside of our control and which may in turn impact our operational and financial performance, including our ability to execute our business strategies in the expected time frame. Such macroeconomic factors include: • • • • • • • • • • • • • Reduction in the demand for, and the marketability of, our specialty products due to governmental regulations, including travel bans and restrictions, quarantines, shelter in place orders, and shutdowns; increased volatility in product margins; the health of our workforce and their access to our facilities due to a pandemic, epidemic or widespread outbreak of an infectious disease, such as the COVID-19 pandemic, which could result in a full or partial shutdown of our facilities if a significant portion of the workforce at a facility is impacted; the ability or willingness of our suppliers to provide raw materials, equipment, services or supplies for our operations or otherwise fulfill their contractual obligations, which could reduce our production levels or otherwise impact our ability to deliver refined or finished lubricant products timely or at all; the ability or willingness of our customers to fulfill their contractual obligations or any material reduction in, or loss of, orders or revenue from our customers; occurrence of operational hazards, including terrorism, cyberattacks or domestic vandalism, as well as information system failures or communication network disruptions; increased cost and reduced availability of capital for growth or maintenance expenditures; availability and operability of terminals, tankage and pipelines that store and transport our feedstocks and products; the amount of our borrowing base under our revolving credit facility and our ability to issue letters of credit or the requirement that we post substantial amounts of credit support; the impairment of our long-lived assets or goodwill, which could reduce our earnings; the impact of any economic downturn, recession, inflationary pressures, further increases in interest rates or other disruptions of the U.S. and global economies and financial and commodity markets; political tensions, conflicts and war, such as the ongoing conflict in Ukraine; and the effects of the COVID-19 pandemic could impact supply, demand, and the availability of employees required to operate our assets. Our business has exposure to some commodities which are volatile, and a reduction in our margins will adversely affect the amount of cash we will have available to operate our business and for payments of our debt obligations. In many cases, specialty products are produced from intermediates that ultimately originate from crude oil. Typically, we enjoy a cost advantage from processing crude oil into intermediates that are used as specialty feedstocks. This process also creates fuels and other by-products, which carry a margin to crude prices. Typically, the total margin of fuels and other by-products to crude oil is a positive, but in extreme demand scenarios, such as those seen during the height of the COVID-19 pandemic, this cost advantage can turn into a short-term disadvantage. When the margin between product sales prices and feedstock costs tightens, our earnings, profitability and cash flows are negatively impacted. A widely used benchmark to track margins in the fuel products industry is the Gulf Coast 2/1/1 crack spread (“Gulf Coast crack spread”), which represents the gross margin assuming that two barrels of a benchmark crude oil are converted, or cracked, into one barrel of gasoline and one barrel of diesel. The Gulf Coast 2/1/1 crack spread ranged from a high of $67.14 per barrel to a low of $19.38 per barrel during 2022 and averaged $39.96 per barrel during 2022 compared to an average of $17.54 in 2021. 29 Table of Contents Our actual fuels product margins may vary from the Gulf Coast crack spread due to the actual crude oil used and products produced, transportation costs, regional differences, and the timing of the purchase of the feedstock and sale of the refined products, but we use the Gulf Coast crack spread as an indicator of the volatility and general levels of fuels refining margins. Our specialty product margins are influenced by the price of our feedstocks, many of which are commodities. If feedstock prices increase, our margins would fall unless we are able to pass through these price increases to our customers. For example, during fiscal year 2022, higher material and feedstock costs adversely impacted our margins for our Performance Brands segment. Our hedging activities may not be effective in reducing our exposure to commodity price risk and may reduce our earnings, profitability and cash flows. From time to time, we utilize derivative financial instruments related to the future price of crude oil, natural gas and refined products to manage expected outcomes involving commodity price risk. We typically do not enter into derivative financial instruments to reduce our exposure to prices of the specialty products we sell as there is no established derivative market for such products. We limit our derivative transactions to only a portion of the volume of our expected purchase and sales requirements and, as a result, we will continue to have direct commodity price exposure to the unhedged portion of our expected purchase and sales requirements. Thus, we could be exposed to significant increases in commodity prices, which would increase the cost for a portion of our feedstock purchases. Our actual future purchase and sales requirements may be significantly higher or lower than we estimate at the time we enter into derivative transactions for such period. If the actual amount is higher than we estimate, we will have greater commodity price exposure than we intended. If the actual amount is lower than the amount that is subject to our derivative financial instruments, we might be forced to satisfy all or a portion of our derivative transactions without the benefit of the cash flow from our sale or purchase of the underlying physical commodity, which may result in a substantial diminution of our liquidity. As a result, our hedging activities may not be as effective as we intend in reducing our exposure to price risk. In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the applicable derivative instrument, the terms of the derivative instruments are imperfect, and our risk management policies and procedures are not properly followed. It is possible that the steps we take to monitor our derivative financial instruments may not detect and prevent violations of our risk management policies and procedures, particularly if deception or other intentional misconduct is involved. Decreases in the price of inventory and products may lead to a reduction in the borrowing base under our revolving credit facility and our ability to issue letters of credit or the requirement that we post substantial amounts of cash collateral for derivative instruments, which could adversely affect our liquidity, financial condition and our ability to make payments on our debt obligations. We rely on borrowings and letters of credit under our revolving credit facility to purchase feedstocks for our facilities, and to lease certain precious metals for use in our operations. The borrowing base under our revolving credit facility is determined weekly or monthly depending upon availability levels or the existence of a default or event of default. Reductions in the value of our inventories as a result of lower crude oil prices could result in a reduction in our borrowing base, which would reduce the amount of financial resources available to meet our operating requirements. If, under certain circumstances, our available capacity under our revolving credit facility falls below certain threshold amounts, or a default or event of default exists, then our cash balances in a dominion account established with the administrative agent will be applied on a daily basis to our outstanding obligations under our revolving credit facility. In addition, decreases in the price of crude oil or increases in crack spreads may require us to post substantial amounts of cash collateral to our hedging counterparties in order to maintain our derivative instruments. If, due to our financial condition or other reasons, the borrowing base under our revolving credit facility decreases, we are limited in our ability to issue letters of credit or we are required to post substantial amounts of cash collateral to our hedging counterparties, our liquidity, financial condition and our ability to make payments on our debt obligations could be materially and adversely affected. Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt and Credit Facilities” for additional information. We depend on certain third-party pipelines for transportation of feedstocks and products, and if these pipelines become unavailable to us, our revenues and cash available for payment of our debt obligations could decline. Our Shreveport facility is interconnected to a pipeline that supplies a portion of its crude oil and a pipeline that ships a portion of its refined fuel products to customers, such as pipelines operated by subsidiaries of Enterprise Products Partners L.P. and Plains. Our Great Falls facility receives crude oil through the Front Range pipeline system via the Bow River Pipeline in Canada. Since we do not own or operate any of these pipelines, their continuing operation is not within our control. 30 Table of Contents The unavailability of any of these third-party pipelines for the transportation of crude oil or our refined fuel products, because of acts of God, accidents, earthquakes or hurricanes, government regulation, terrorism or other third-party events, could lead to disputes or litigation with certain of our suppliers or a decline in our sales, net income and cash available for payments of our debt obligations. The price volatility of utility services may result in decreases in our earnings, profitability and cash flows. The volatility in costs of natural gas and other utility services, principally electricity, used by our facilities and other operations affect our net income and cash flows. Natural gas and utility prices are affected by factors outside of our control, such as supply and demand in both local and regional markets. Natural gas prices have historically been volatile. For example, daily prices for natural gas as reported on the NYMEX ranged between $9.68 and $3.72 per million British thermal unit (“MMBtu”) in 2022, and between $6.31 and $2.45 per MMBtu in 2021. Typically, electricity prices fluctuate with natural gas prices. Future increases in natural gas and utility prices may have a material adverse effect on our results of operations. However, international natural gas prices have been more volatile, and more expensive, than domestic prices, which can provide a competitive advantage to domestic plants. This dynamic means that market product prices may increase more than our utility costs, creating higher margins when natural gas and utility costs increase less than international competitors’ utility prices. Natural gas and utility costs constituted approximately 14.4% and 12.1% of our total operating expenses included in cost of sales for the years ended December 31, 2022 and 2021, respectively. As prices and industry competitive dynamics change, it could adversely affect our profitability and the amount of cash available for payments of our debt obligations. Our facilities incur operating hazards, and the potential limits on insurance coverage could expose us to potentially significant liability costs. Our facilities are subject to certain operating hazards, and our cash flow from those operations could decline if any of our facilities experience a major accident, pipeline rupture or spill, explosion or fire, is damaged by severe weather or other natural disaster, or otherwise is forced to curtail its operations or shut down. These operating hazards could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment, and pollution or other environmental damage. One or more of these developments may result in significant curtailment or suspension of our related operations. Although we maintain insurance policies, including personal and property damage and business interruption insurance for each of our facilities, we cannot ensure that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or significant interruption of operations. Our business interruption insurance will not apply unless a business interruption exceeds 60 days. Furthermore, we may be unable to maintain or obtain insurance of the type and amount we desire at reasonable rates. As a result of market conditions, premiums and deductibles for certain of our insurance policies have increased and could escalate further. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. In addition, we are not fully insured against all risks incident to our business because certain risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures. For example, we are not insured for all environmental liabilities, including, but not limited to, product spills and other releases at all of our facilities. If we were to incur a significant liability for which we are not insured or fully insured, it could affect our financial condition and diminish our ability to make payments of our debt obligations. Downtime for maintenance at our refineries and facilities will reduce our revenues and could limit our ability to make payments of our debt obligations. Our facilities consist of many processing units, a number of which have been in operation for extended periods of time. One or more of the units may require additional unscheduled downtime for unanticipated maintenance or repairs that are more frequent than our scheduled turnaround for each unit every one to five years. Scheduled and unscheduled maintenance reduce our revenues and increase our operating expenses during the period of time that our processing units are not operating and could limit our ability to make payments of our debt obligations. An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our financial condition and results of operations. We continually monitor our business, the business environment and the performance of our operations to determine if an event has occurred that indicates that a long-lived asset or goodwill may be impaired. If an event occurs, which is a determination that involves judgment, we may be required to utilize cash flow projections to assess our ability to recover the carrying value based on the ability to generate future cash flows. Our long-lived assets and goodwill impairment analyses are sensitive to changes in key assumptions used in our analysis, such as expected future cash flows, the degree of volatility in equity and debt markets and our unit price. If the assumptions used in our analysis are not realized, it is possible a material impairment charge may need to be recorded in the future. 31 Table of Contents We cannot accurately predict the amount and timing of any impairment of long-lived assets or goodwill. Further, as we continue to develop our strategy regarding certain of our non-core assets, we will need to continue to evaluate the carrying value of those assets. Any additional impairment charges that we may take in the future could be material to our results of operations and financial condition. Competition in our industry is intense, and an increase in competition in the markets in which we sell our products could adversely affect our earnings and profitability. We compete with a broad range of companies within our industry. Because of some of our competitors’ geographic diversity, larger and more complex refineries, integrated operations and greater resources, some of our competitors may be better able to withstand volatile market conditions, to obtain crude oil in time of shortage and to bear the economic risks inherent in all areas of the refining industry. In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel requirements of our industrial, commercial and individual consumers. The more successful these alternatives become as a result of governmental regulations, technological advances, consumer demand, improved pricing or otherwise, the greater the impact on pricing and demand for our products and our profitability. There are presently significant governmental and consumer pressures to increase the use of alternative fuels in the United States. While in some areas of our business these pressures are helpful, in other areas they can pose a significant risk. We depend on unionized labor for the operation of many of our facilities. Any work stoppages or labor disturbances at these facilities could disrupt our business and negatively impact our financial condition and results of operations. Substantially all of our operating personnel at our Shreveport, Great Falls, Princeton, Cotton Valley, Karns City, Dickinson and Missouri facilities are employed under collective bargaining agreements. If we are unable to renegotiate these agreements as they expire, any work stoppages or other labor disturbances at these facilities could have an adverse effect on our business and impact our ability to make payments of our debt obligations. In addition, employees who are not currently represented by labor unions may seek union representation in the future, and any renegotiation of current collective bargaining agreements may result in terms that are less favorable to us. Our method of valuing inventory may result in decreases in net income. The nature of our business requires us to maintain substantial quantities of inventories. Some of our inventory is commodity based, providing us little control over the changing market value of these inventories. Because our inventory is valued at the lower of cost or market (“LCM”) value, if the market value of our inventory were to decline to an amount less than our cost, we would record a write-down of inventory and a non-cash charge to cost of sales. In periods of decreasing crude oil or refined product prices, our inventory valuation methodology has resulted in and may in the future result in decreases in net income. We depend on key personnel for the success of our business and the loss of those persons could adversely affect our business and our ability to make payments of our debt obligations. The loss of the services of any member of senior management or key employee could have an adverse effect on our business and reduce our ability to make payments of our debt obligations. Our success in hiring, attracting and retaining senior management and other experienced and highly skilled employees will depend in part on our ability to provide competitive compensation packages and a high-quality work environment and maintain a desirable corporate culture. We may not be able to locate or employ on acceptable terms qualified replacements for senior management or other key employees if their services were no longer available. We do not maintain any key-man life insurance. 32 Table of Contents We are subject to cybersecurity risks and other cyber incidents resulting in disruption. Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow. We depend on information technology systems. In addition, our use of the internet, cloud services and other public networks, as well as having more of our workforce working remotely due to the COVID-19 pandemic, exposes our business and that of other third parties with whom we do business to security incidents and cyber-attacks. Further, geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of cyber- attacks. Such incidents could lead to unauthorized access to data and systems, intentional or inadvertent releases of confidential information, including personally identifiable information, corruption of data and disruption of critical systems and operations. Despite the security measures we have in place and any additional measures we may implement in the future, our facilities and systems, and those of our third-party service providers, could be vulnerable to security breaches, computer viruses, ransomware attacks, phishing attacks, lost or misplaced data, programming errors, human errors, acts of vandalism or other events. During 2021, we experienced a minor security incident at one of our operating locations, which was effectively contained. Any disruption of our systems or security breach or event resulting in the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us directly or our third-party service providers, could damage our reputation, expose us to the risks of litigation and liability or regulatory fines, penalties or intervention, disrupt our business, require us to incur significant costs to remediate damage resulting from the breach or improve our information technology systems, or otherwise affect our results of operations, which could materially and adversely affect our business, results of operations or financial condition. In addition, as cyber-attacks continue to evolve in magnitude and sophistication, and our reliance on digital technologies continues to grow, we have expended and expect to continue to expend additional resources in order to continue to enhance our cybersecurity measures and to investigate and remediate any digital systems, related infrastructure, technologies and network security vulnerabilities. While we carry cyber insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. We previously identified a material weakness in our internal control over financial reporting and if we fail to maintain an effective system of internal control, we may not be able to accurately and timely report our financial results. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements may not be prevented or detected on a timely basis. As previously disclosed, we identified a material weakness in internal control over financial reporting that pertains to the untimely and insufficient operation of controls in the financial statement close process, including lack of timely account reconciliation, analysis and review related to all financial statement accounts. We completed remediation measures related to the material weakness and concluded that our internal control over financial reporting was effective as of December 31, 2021. Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly or remain adequate and we cannot assure you that we will not identify additional material weaknesses in our internal control over financial reporting in the future. If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected. This failure could negatively affect the market price and trading liquidity of our common units, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties and generally materially and adversely impact our business and financial condition. Customers and Suppliers Our arrangement with Macquarie exposes us to Macquarie-related credit and performance risk as well as potential refinancing risks. In 2017, we entered into several agreements with Macquarie Energy North America Trading Inc. (“Macquarie”) to support the operations of the Great Falls facility (the “Great Falls S&O Agreements”) and to support the operations of the Shreveport facility (the “Shreveport S&O Agreements,” and, together with the Great Falls S&O Agreements, the “Great Falls and Shreveport S&O Agreements”). Pursuant to the Great Falls and Shreveport S&O Agreements, Macquarie has agreed to intermediate crude oil supplies and refined product inventories at our Great Falls and Shreveport facilities. Macquarie will own all of the crude oil in our tanks and substantially all of our refined product inventories prior to our sale of the inventories. In November 2022, MRL entered into a similar supply and offtake agreement with Macquarie, pursuant to which Macquarie will purchase renewable feedstocks and products at MRL’s Great Falls renewable fuels facility, provide certain financial accommodations to MRL based on liens granted over renewable feedstocks and products owned by MRL at other locations at the Great Falls renewable fuels facility, and endeavor to purchase from third parties and deliver permitted feedstocks to MRL (the “MRL S&O Agreement” and, together with the “Shreveport and Great Falls S&O Agreements, the “S&O Agreements”)). 33 Table of Contents On March 10, 2023, MRL and Macquarie entered into an amendment to the MRL S&O Agreement to provide that agreement will expire on September 30, 2023. When we executed the Great Falls and Shreveport S&O Agreements, the inventories associated with such agreements were taken out of our revolving credit facility borrowing base. The inventories associated with the MRL S&O Agreement are also not included in our revolving credit facility borrowing base. Should Macquarie choose to exercise its option to terminate any of the S&O Agreements early by giving nine months’ notice of such termination, pursuant to the terms of each such agreement, we would need to seek alternative sources of financing, such as putting the inventory associated with the Great Falls and Shreveport S&O Agreements back into our revolving credit facility, to meet our obligation to repurchase the inventory at then current market prices. In addition, upon expiration of any of the S&O Agreements, the cost of repurchasing the inventory may be at higher prices than we sold the inventory. If the price of the applicable products is well above the price at which we sold the inventory, we would have to pay more for the inventory than the price we sold the inventory for. If this is the case at the time of termination and we are unable to include the inventory associated with the Great Falls and Shreveport S&O Agreements in our borrowing base, we could suffer significant reductions in liquidity if Macquarie terminates the Great Falls and Shreveport S&O Agreements and we have to repurchase the inventories. Similarly, if MRL is unable to obtain alternative sources of financing, MRL could suffer significant reductions in liquidity. In connection with the expiration of the MRL S&O Agreement, MRL will winddown activities under that agreement. The timing of the winddown and volatility in the feedstock markets may cause the winddown of the agreement to cost more or less than MRL currently estimates. MRL intends to continue to improve its feedstock purchasing processes and to optimize those processes in a way that is more efficient than under the Supply and Offtake Agreement. While MRL believes it can effectively purchase feedstock independent of the MRL S&O Agreement, the direct purchase of feedstock is subject to MRL reaching satisfactory terms with the applicable feedstock suppliers. Indebtedness; Financing We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business. We had approximately $1.6 billion of outstanding indebtedness as of December 31, 2022, and availability for borrowings of approximately $337.6 million under our senior secured revolving credit facility. Following the amendment to our senior secured revolving credit facility on January 20, 2022, we have the ability to incur additional debt, including the ability to borrow up to an aggregate principal amount of $500.0 million at any time, subject to borrowing base limitations, under our revolving credit facility. A tranche of the revolving credit facility includes a $35.0 million senior secured first loaned in and last to be repaid out (“FILO”) revolving credit facility. In addition, as of December 31, 2022, MRL had no outstanding indebtedness under a secured revolving credit facility (the “MRL revolving credit agreement”) that was entered into on November 2, 2022. Our substantial indebtedness could adversely affect our results of operations, business and financial condition, and our ability to meet our debt obligations. In addition, our level of indebtedness could have important consequences to us, including the following: • • our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms; covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests that may affect our flexibility in planning for and reacting to changes in our business, including possible acquisition opportunities; • we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations, future business opportunities and payments of our debt obligations; our ability to execute our acquisition and divestiture strategy; and our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy in general. • • Any of these factors could result in a material adverse effect on our business, financial conditions, results of operations, business prospects and ability to satisfy our obligations under our senior notes, revolving credit facility and the MRL revolving credit agreement. Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as continuing the suspension of distributions to our unitholders, reducing or delaying our business activities, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing our 34 Table of Contents indebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all. Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt and Credit Facilities” for additional information regarding our indebtedness. Our financing arrangements contain operating and financial provisions that restrict our business and financing activities. The operating and financial restrictions and covenants in our financing arrangements, including our revolving credit facility, MRL revolving credit agreement, indentures governing each series of our outstanding senior notes and master derivative contracts, do currently restrict, and any future financing agreements could restrict, our ability to finance future operations or capital needs or to engage, expand or pursue our business activities, including restrictions on our ability to, among other things: • • • • sell assets, including equity interests in our subsidiaries; pay distributions on or redeem or repurchase our units or redeem or repurchase any subordinated debt and, in the case of the 9.25% Senior Secured First Lien Notes due 2024 (the “2024 Secured Notes”), our unsecured notes; incur or guarantee additional indebtedness or issue preferred units; create or incur certain liens; • make certain acquisitions and investments; • • • • • • • redeem or repay other debt or make other restricted payments; enter into transactions with affiliates; enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us; create unrestricted subsidiaries; enter into sale and leaseback transactions; enter into a merger, consolidation or transfer or sale of assets, including equity interests in our subsidiaries; and engage in certain business activities. Our revolving credit facility also contains a springing financial covenant which provides that, if availability under the revolving credit facility falls below the sum of the amount of FILO loans outstanding plus the greater of (i) 10.0% of the Borrowing Base (as defined in the Credit Agreement) then in effect, and (ii) $35.0 million (which amount is subject to increase in proportion to revolving commitment increases), then we will be required to maintain as of the end of each fiscal quarter a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of at least 1.0 to 1.0. Our existing indebtedness imposes, and any future indebtedness may impose, a number of covenants on us regarding collateral maintenance and insurance maintenance. As a result of these covenants and restrictions, we will be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. Our ability to comply with the covenants and restrictions in our revolving credit facility, the MRL revolving credit agreement, our secured hedge agreements and the indentures governing our senior notes may be affected by events beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants and restrictions may be impaired. A failure to comply with the covenants, ratios or tests in our revolving credit facility, the MRL revolving credit agreement, our secured hedge agreements, the indentures governing our senior notes or any future indebtedness could result in an event of default under our revolving credit facility, the MRL revolving credit agreement, our secured hedge agreements, the indentures governing our senior notes or our future indebtedness, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. Among other things, in the event of any default on our indebtedness, our debt holders and lenders: • will not be required to lend any additional amounts to us; • • could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable; could elect to require that all obligations accrue interest at the default rate, if such rate has not already been imposed; • may have the ability to require us to apply all of our available cash to repay these borrowings; 35 Table of Contents • may prevent us from making debt service payments under our other agreements, any of which could result in an event of default under our notes; or • in the event of a default by Calumet or its restricted subsidiaries, could foreclose on the collateral pledged pursuant to the terms of the revolving credit facility or the indenture and security documents governing the 2024 Secured Notes, respectively, or in the event of a default by Montana Renewables Holdings or MRL, could foreclose on the accounts receivables and open blenders tax credit refunds securing the MRL revolving credit agreement. If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full. Even if new financing were available, it may be on terms that are less attractive to us than our then existing credit facilities or it may not be on terms that are acceptable to us. In addition, our obligations under our revolving credit facility are secured by a first priority lien on our accounts receivable, inventory and substantially all of our cash; the obligations under the MRL revolving credit agreement are secured by accounts receivables and open blenders tax credit refunds; our obligations under our secured hedge agreements and the BP Purchase Agreement are secured by a lien on certain of our real property, plant and equipment, fixtures, intellectual property, certain financial assets, certain investment property, commercial tort claims, chattel paper, documents, instruments and proceeds of the forgoing (including proceeds of hedge agreements); and the 2024 Secured Notes are secured by a first-priority lien on all of the fixed assets that secure our obligations under our secured hedge agreements, and if we are unable to repay our indebtedness under the revolving credit facility, the MRL revolving credit agreement, the 2024 Secured Notes or satisfy the payment obligations under our secured hedge agreements or the payment obligations under the BP Purchase Agreement or obtain waivers of such defaults, then the lenders under our revolving credit facility and under the MRL revolving credit agreement, the counterparties to such agreements, and the holders of the 2024 Secured Notes could seek to foreclose on these assets. Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt and Credit Facilities,” “— Short-Term Liquidity,” “— Long-Term Financing” and “— Master Derivative Contracts and Collateral Trust Agreement” for additional information regarding our long-term debt. An increase in interest rates will cause our debt service obligations to increase. Prior to the amendment of our revolving credit facility on January 20, 2022 (the “Third Amendment”), borrowings under our revolving credit facility bore interest at a rate equal to prime plus a basis points margin or the London Interbank Offered Rate (“LIBOR”) plus a basis points margin, at our option. In light of announcements by the Chief Executive of the United Kingdom Financial Conduct Authority (the “FCA”), which regulates LIBOR, that it intends to stop persuading or requiring banks to submit rates for the calculation of LIBOR after 2021, the Third Amendment provided for the replacement of the LIBOR borrowing option with a daily Secured Overnight Financing Rate (“SOFR”) borrowing option. Additionally, borrowings under the MRL revolving credit agreement bear interest at a rate based on the daily SOFR. As of December 31, 2022, we had $104.0 million outstanding borrowings under our revolving credit facility, $35.8 million in standby letters of credit were issued under our revolving credit facility, and no outstanding borrowings under the MRL revolving credit agreement. The interest rate is subject to adjustment based on fluctuations in daily SOFR or the prime rate, as applicable. An increase in the interest rates associated with our floating-rate debt would increase our debt service costs and affect our results of operations. In addition, an increase in interest rates could adversely affect our future ability to obtain financing or materially increase the cost of any additional financing. 36 Table of Contents A change of control could result in us facing substantial repayment obligations under our revolving credit facility, our senior notes, our secured hedge agreements, our S&O Agreements, the MRL revolving credit agreement and MRL’s financing arrangements with Stonebriar. There is no restriction in our partnership agreement on the ability of our general partner to enter into a transaction which would trigger the change of control provisions of our revolving credit facility agreement, the indentures governing our senior notes, our Collateral Trust Agreement, our S&O Agreements, the MRL revolving credit agreement and MRL’s financing arrangements with Stonebriar. Certain events relating to a change of control of our general partner, our partnership and our operating subsidiaries would constitute an event of default under our revolving credit facility, our Collateral Trust Agreement and our S&O Agreements. In addition, an event of default under our revolving credit facility would likely constitute an event of default under the indentures governing our senior notes, our master derivatives contracts and the BP Purchase Agreement. As a result, upon a change of control event, we may be required to immediately repay the outstanding principal, any accrued interest on and any other amounts owed by us under our revolving credit facility, the senior notes and S&O Agreements and the outstanding payment obligations under our master derivatives contracts and the BP Purchase Agreement. In addition, if a change of control event occurs under the MRL revolving credit agreement, MRL may be required to immediately repay the outstanding principal, any accrued interest on and any other amounts owed by MRL under the MRL revolving credit agreement. The source of funds for these repayments would be our available cash or cash generated from other sources and there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness and other payment obligations in full. In addition, our obligations under our revolving credit facility are secured by a first-priority lien on our accounts receivable, inventory and substantially all of our cash; the obligations under the MRL revolving credit agreement are secured by accounts receivables and open blenders tax credit refunds; our 2024 Secured Notes are secured by a first-priority lien on all of the fixed assets that secure our obligations under our secured hedge agreements; and our obligations under our master derivatives contracts and the BP Purchase Agreement are secured by a first-priority lien on our and our subsidiaries’ real property, plant and equipment, fixtures, intellectual property, certain financial assets, certain investment property, commercial tort claims, chattel paper, documents, instruments and proceeds of the forgoing (including proceeds of hedge agreements). If we are unable to repay our indebtedness under the revolving credit facility, the 2024 Secured Notes, or satisfy the payment obligations under our master derivative contracts or the payment obligations under the BP Purchase Agreement or obtain waivers of such defaults, then the lenders under our revolving credit facility, the holders of our 2024 Secured Notes, the derivative counterparties under our master derivative contracts and BP, respectively, would have the right to foreclose on those assets, which would have a material adverse effect on us. Additionally, if we are unable to repay our indebtedness under the MRL revolving credit agreement, the lenders thereunder would have the right to foreclose on the accounts receivables and open blenders tax credit refunds securing that facility. Capital Projects and Future Growth We make capital expenditures in our facilities to maintain their reliability and efficiency. If we are unable to complete capital projects at their expected costs and/or in a timely manner, or if the market conditions assumed in our project economics deteriorate, results of operations or cash flows could be adversely affected. Delays or cost increases related to the engineering, procurement and construction of new facilities, or improvements and repairs to our existing facilities and equipment, could have a material adverse effect on our business, financial condition, results of operations or our ability to make payments on our debt obligations. Such delays or cost increases may arise as a result of unpredictable factors in the marketplace, many of which are beyond our control, including: • • • • • • denial or delay in obtaining regulatory approvals and/or permits; changes in government regulations, including environmental and safety regulations; unplanned increases in the cost of equipment, materials or labor; disruptions in transportation of equipment and materials; severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions, fires or spills) affecting our facilities, or those of our vendors and suppliers; shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages; • market-related increases in a project’s debt or equity financing costs; and/or • nonperformance or declarations of force majeure by, or disputes with, our vendors, suppliers, contractors or sub-contractors. Equipment, even if properly maintained, may require significant capital expenditures and expenses to keep it operating at optimum efficiency. 37 Table of Contents Any one or more of these occurrences noted above could have a significant impact on our business or subject us to significant cost overruns. If we were unable to make up the delays or to recover the related costs, or if market conditions change, we may not realize the anticipated benefits of our capital projects and it could materially and adversely affect our financial position, results of operations or cash flows and, as a result, our ability to make payments of our debt obligations. From time to time, we may seek to divest portions of our business, which could materially affect our results of operations and result in disruption to other parts of the business. We may dispose of portions of our current business or assets, based on a variety of factors and strategic considerations, consistent with our strategy of preserving liquidity and streamlining our business to better focus on the advancement of our core business. We expect that any potential divestitures of assets will also provide us with cash to reinvest in our business and repay indebtedness. These dispositions, together with any other future dispositions we make, may involve risks and uncertainties, including disruption to other parts of our business, potential loss of employees, customers or revenue, exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. In addition, any such divestitures may not yield the targeted improvements in our business. Any of the foregoing could adversely affect our financial condition and results of operations or cash flows and, as a result, our ability to make payments of our debt obligations. Environmental and Regulatory Matters We may incur significant environmental remediation costs and liabilities in the operation of our refineries, facilities, terminals and related facilities. The operation of our refineries, blending and packaging sites, terminals, and related facilities subject us to the risk of incurring significant environmental remediation costs and liabilities due to our handling of petroleum hydrocarbons and wastes or hazardous substances or wastes, because of air emissions and water discharges related to our operations and activities, and as a result of historical operations and waste disposal practices at our facilities or in connection with our activities, some of which may have been conducted by prior owners or operators. We could incur significant remedial costs in the cleanup of any petroleum hydrocarbons or wastes or hazardous substances or wastes that may have been released on, under or from the properties owned or operated by us. While we believe we have adequately reserved for these possibilities, such costs and liabilities are difficult to predict and could exceed the amount reserved. Some environmental laws may impose joint and several, strict liability for releases of petroleum hydrocarbons and wastes or hazardous substances or wastes, which means in some situations, we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. Private parties, including the owners of properties adjacent to our operations and facilities where our petroleum hydrocarbons or wastes or hazardous substances or wastes are taken for reclamation or disposal, may also have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage. We may not be able to recover some or any of these costs from insurance or other sources of indemnity. To the extent that the costs associated with meeting any or all of these requirements are significant and not adequately secured or indemnified for, there could be a material adverse effect on our business, financial condition and results of operations or cash flows and, as result, our ability to make payments of our debt obligations. We are subject to operational compliance with stringent environmental and occupational health and safety laws and regulations that may expose us to significant costs and liabilities. Our refining, blending and packaging site, terminal and related facility operations are subject to stringent federal, regional, state and local laws and regulations governing worker health and safety, the discharge of materials into the environment and environmental protection. These laws and regulations impose legal requirements that are applicable to our operations, including the obligation to obtain permits to conduct regulated activities, the incurrence of significant capital expenditures for air pollution control equipment to limit or prevent releases of pollutants from our facilities, the expenditure of significant monies in the application of specific health and safety criteria addressing worker protection, the requirement to maintain information about hazardous materials used or produced in our operations and to provide this information to required parties, and the incurrence of significant costs and liabilities for pollution resulting from our operations or from those of prior owners or operators of our facilities. Numerous federal and state governmental authorities, such as the U.S. EPA, OSHA and the Louisiana Department of Environmental Quality (“LDEQ”), have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring challenging and costly actions. From time to time, we receive notices of violation, other enforcement proceedings and regulatory inquiries from governmental agencies alleging non-compliance with applicable environmental and occupational health and safety laws and regulations. Failure to comply with such laws and regulations as well as any issued permits and orders may result in the assessment of administrative, civil, and criminal sanctions, including monetary penalties, the imposition of remedial or corrective action obligations or the incurrence of capital expenditures, the occurrence of delays or cancellations in the permitting, development or expansion of projects, litigation, and the issuance of injunctions limiting or preventing some or all of our operations. 38 Table of Contents New worker safety and environmental laws and regulations, revised interpretations of such existing laws and regulations, increased governmental enforcement or other developments could require us to make additional, unforeseen expenditures. The adoption of more stringent environmental laws or regulations could impact us by requiring installation of new emission controls on some of our equipment, resulting in longer permitting timelines, and significantly increasing our capital expenditures and operating costs, which could adversely impact our business, cash flows and results of operation. Please read Items 1 and 2 “Business and Properties — Environmental and Occupational Health and Safety Matters” for additional information. The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions could have a material adverse effect on our results of operations and financial condition and our ability to make payments on our debt obligations. The EPA has issued RFS mandates, requiring refiners to blend renewable fuels into the transportation fuels they produce and sell in the United States. We, and other refiners subject to RFS requirements, may meet the RFS requirements by blending the necessary volumes of renewable transportation fuels into our production. To the extent that refiners cannot blend renewable fuels into the products they produce in the quantities required to satisfy their obligations under the RFS program, those refiners may purchase renewable credits, referred to as RINs, which are created by blending done by others to maintain compliance. Under the RFS provisions of the Clean Air Act, the volume of renewable fuels that obligated parties are required to blend into their finished petroleum fuels increases annually over time until 2025. Each year the EPA sets or adjusts volume mandates for the percentage of cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel volume to be blended into all gasoline and diesel produced or imported during the applicable year. Most recently, the EPA has established final volume mandates for RFS program year 2022 under final rules published in October 2022. Our Shreveport and Great Falls refineries are normally subject to compliance with the RFS mandates. However, the EPA granted certain of our refineries the small refinery exemption (“SRE”) under the RFS in past years including, most recently, for the 2018 program year. However, as noted below, EPA later reversed their earlier decision and in April 2022 issued a “blanket denial” of our SRE’s for the 2018 program year (along with other SRE petitions from small refineries for those years), which decision we are currently appealing. In connection with the denial of the SRE’s for the 2018 program year, the EPA provided an alternate compliance approach to allow the refineries subject to the “blanket denial” of their 2018 SRE’s to meet their 2018 compliance obligations without purchasing or redeeming additional RINs. The alternate compliance approach is being appealed by Growth Energy. Refineries that received a SRE were not subject to the requirements of RFS as an “obligated party” for transportation fuels produced at these “small” refineries for those calendar years. We have submitted SRE petitions for our Shreveport and Great Falls refineries for program years 2019, 2020, 2021 and 2022. The EPA has not yet acted on our 2021 or 2022 SRE petitions. Our 2019 and 2020 petitions were subject to a “blanket denial” in June 2022 (along with all other SRE petitions from all small refineries for those years). The April and June 2022 denials were based on an across-the-board determination that no refinery suffers disproportionate economic hardship from the RFS program, a contention which was subsequently rejected by the Government Accountability Office. The failure to obtain SREs for certain of our refineries could result in the need to purchase RINs to satisfy our obligations under the RFS and it is not possible at this time to predict with certainty what those costs may be. We have appealed the SRE denials for compliance years 2018, 2019 and 2020. Refer to Note 7 - “Commitments and Contingencies” under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information. Our involvement in such litigation may strain our resources, increase our costs and distract management, even if we are successful at certain stages. As long as the final outcome of our SRE petitions remains uncertain, we expect to carry a RINs liability on our balance sheet and any changes to such liability will be recognized as a charge or credit to net income (loss). As a result of such charges, investors may have a negative outlook on our financial position regardless of the actual impact these charges have on our business. In addition, on January 27, 2022, EPA extended the compliance reporting deadlines and attestation engagement reporting deadlines for program years 2019, 2020 and 2021, calculated based on the future effective dates of other EPA RFS rulemakings. Nonetheless, we may in the future become subject to civil penalties if we are not in compliance with the RFS by such extended compliance deadlines. While we received a SRE for certain of our refineries in past years, there is no assurance that such an exemption will be obtained for any of our refineries in future years, which would result in the need for more RINs for the applicable calendar year. Our annual 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 65 million RINs spread across four compliance categories (D3, D4, D5 and D6). The EPA’s implementation of the RFS program has been subject to numerous court challenges in recent years, including with respect to selection of the final volume mandates, movement of the point of compliance, and the granting and denial of certain SREs. In January 2020, the U.S. Court of Appeals for the 10th Circuit vacated EPA orders granting the SRE to three refineries that petitioned for the exemption in 2016, holding that those three refineries were not eligible to receive the exemptions because they had failed to receive continuous exemptions in prior years, and that EPA erred in its consideration of 39 Table of Contents the refineries’ disproportionate economic hardship. The court remanded the matter to the EPA for further proceedings and denied a rehearing in April 2020. The refineries filed a petition for a writ of certiorari which was accepted by the U.S. Supreme Court on the eligibility question only. In June 2021, the Supreme Court reversed the 10th Circuit’s decision on the eligibility question and held that the Act authorizes EPA to exempt a small refinery from compliance even if the refinery had not received an exemption each year since the program commenced. In separate litigation, the D.C. Circuit Court of Appeals granted a request by the EPA to remand without vacatur its August 2019 decision to grant 31 SREs for program year 2018 for reconsideration and ordered the EPA to take a new action as to those SREs no later than April 7, 2022. In April 2022, EPA issued a “blanket denial” of our SRE’s for the 2018 program year (along with previously granted SRE petitions provided to small refineries for those years). We cannot predict the outcome of these matters or whether they may result in increased RFS program compliance costs. Moreover, the price of RINs remains subject to extreme volatility, with the potential for significant increases in price driven by political decisions rather than fundamentals. There also continues to be a shortage of advanced biofuel production resulting in increased difficulties meeting the original RFS program mandates. Our refineries produce a higher ratio of diesel than national averages, and since ethanol cannot be blended into diesel we therefore have a more difficult “compliance pathway” than average. The inability to receive an exemption under the RFS program for one or more of our refineries, any increase in the final minimum volumes of renewable fuels that must be blended with refined petroleum fuels, and/or any increase in the cost to acquire RINs may, individually or in the aggregate, have the potential to result in significant costs in connection with RIN compliance, which costs could be material. Our and our customers’ operations are subject to risks arising out of the threat of climate change, including regulatory, political, litigation and financial risks, which could result in increased operating and capital costs for our customers and reduced demand for the products and services we provide. The threat of climate change continues to attract considerable attention in the United States and foreign countries. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of GHGs as well as to eliminate such future emissions. As a result, our operations and potentially the operations of our customers are subject to a series of regulatory, political, physical, litigation and financial risks associated with the production and processing of fossil fuels and emissions of GHGs. Please see Items 1 and 2 “Business and Properties — Environmental and Occupational Health and Safety Matters” for more discussion on the threat of climate change and restriction of GHG emissions. The adoption and implementation of any international, federal, regional or state executive actions, legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions or put a price on GHG emissions could result in increased compliance costs, additional operating restrictions or reduced demand for some of our services and products. Further, increasing concentrations of GHGs in the Earth’s atmosphere may produce climatic changes that have significant physical effects, such as increased frequency and severity of storms, floods, wildfires and other climatic events. If any such effects were to occur, they could have an adverse effect on our operations or the operations of our suppliers and customers and result in more frequent and severe disruptions to our business and those of our suppliers and customers, increased costs to repair damaged facilities or maintain or resume operations, and increased insurance costs. Increasing attention to the risks of climate change has also resulted in an increased possibility of lawsuits or investigations brought by public and private entities against companies in the oil and natural gas sector in connection with their greenhouse gas emissions. While we do not produce oil or natural gas, if we were to be targeted by any such litigation or investigations, we may incur liability, which, to the extent that societal pressures or political or other factors are involved, could be imposed without regard to the causation of or contributions to the asserted damage, or to mitigating factors. There are also increasing financial risks if stockholders and bondholders concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors. Additionally, the lending and investment practices of institutional lenders have been the subject of intensive lobbying efforts in recent years pressuring such lenders to not to provide funding for oil and natural gas producers. While we do not produce oil or natural gas, such developments could affect our cost and access to capital. Similarly, political, physical, financial and litigation risks may result in certain companies engaged in the oil and natural gas production business restricting, delaying or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing the ability to continue to operate in an economic manner, which also could reduce demand for our products and services. The occurrence of one or more of these developments could have a material adverse effect on our business, financial condition, results of operations and cash flows. Moreover, the increased competitiveness of alternative energy sources (such as wind, solar, geothermal and tidal), as well as any regulatory or other incentives to conserve energy, could reduce demand for hydrocarbons and therefore for our products, which could lead to a reduction in our revenues and cash flow available for 40 Table of Contents payments on our debt obligations. For example, the Inflation Reduction Act of 2022 contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies. We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits and authorizations or otherwise comply with occupational, environmental and other laws and regulations. Our operations require numerous permits and authorizations under various occupational, environmental and other laws and regulations. These authorizations and permits are subject to revocation, renewal or modification and can require operational changes to limit impacts or potential impacts on the environment and/or the health or safety of workers. New policy objectives and regulatory initiatives pursued under the Biden Administration as well as changes in leadership or priorities at the state level may result in more stringent conditions with respect to the acquisition of these authorizations and permits. Additionally, a violation of an authorization or permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations, injunctions and/or facility shutdowns. Any or all of these matters could have a negative effect on our business, results of operations and cash flow available for payments on our debt obligations. Subsidiaries We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets and our ability to resume distributions to our unitholders and make payments of our debt obligations depends on the performance of our subsidiaries and their ability to distribute funds to us. We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to make payments of debt obligations depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us is restricted by our revolving credit facility and the indentures governing our senior notes and may be restricted by, among other things, applicable state laws and other laws and regulations. If we are unable to obtain the funds necessary to distribute cash to our unitholders or make payments of debt obligations, we may be required to adopt one or more alternatives, such as a refinancing our indebtedness or incurring borrowings under our revolving credit facility. We cannot assure unitholders that we would be able to refinance our indebtedness or that the terms on which we could refinance our indebtedness would be favorable. Risks Related to Montana Renewables Risks related to the operations of Montana Renewables Montana Renewables was formed in 2021 and has a limited operating history, as Montana Renewables has only been producing renewable fuels since December 2022. The Company is experienced in operating facilities, such as the Montana Renewables facility, and expects to continue to leverage the Company’s operating experience, as well as its experience in selling and distributing renewable fuels. As with any facilities of similar size and nature, the operations of Montana Renewables could be affected by many factors, including start-up problems, the breakdown or failure of equipment or processes, the performance of Montana Renewables below expected levels of output or efficiency, renewable feedstock or utility supply disruptions, environmental proceedings or other litigation that compel cessation of all or a portion of the operations, cyber-security considerations, increased stringent environmental operating, storage and transportation regulations, and/or, labor disputes. Additionally, the operations of Montana Renewables could be affected by both natural or man-made catastrophic events beyond the control of MRHL, such as fires, earthquakes, floods, severe storms, extreme temperatures, explosions, major accidents, armed conflict, hostilities, acts of terrorism, health emergencies, cyber and physical attacks and/or similar events. The occurrence of such events could significantly reduce or eliminate revenues generated by Montana Renewables and significantly increase the expenses of Montana Renewables, thereby jeopardizing the ability of Montana Renewables to generate revenues sufficient to pay its outstanding debt obligations. While MRHL will maintain insurance to protect against certain of these operating risks, the proceeds of such insurance may not be adequate to cover Montana Renewable’s lost revenues or increased costs. Under such circumstances, no assurance can be given concerning the ability of Montana Renewables to generate sufficient revenues to make timely payments of its debt obligations. MRHL may also face civil liabilities or fines in the ordinary course of its business as a result of damages to third parties. These liabilities may result in MRHL making indemnification payments in accordance with applicable laws to the extent and in the amount that such indemnification payments are not covered by MRHL’s insurance policies. MRHL may be unable to attract and retain qualified managers and skilled employees to operate Montana Renewable facilities efficiently which could adversely affect the operations, cash flows and liquidity of Montana Renewables. The renewable fuels business requires a highly specialized workforce, and accordingly, it can be difficult to find qualified and affordable personnel. Additionally, labor expenses may increase as a result of a shortage in the supply of skilled personnel and MRHL may be forced to incur significant training expenses if unable to hire employees with the requisite skills. 41 Table of Contents Substantially all operating personnel at Montana Renewables are employed under a collective bargaining agreement. If MRHL is unable to renegotiate this agreement as it expires, any work stoppages or other labor disturbances could have an adverse effect on the operations of Montana Renewables and MRHL’s ability to pay outstanding debt obligations. During the first several months of operation, new facilities like Montana Renewables could be susceptible to operational failures which may result in temporary maintenance shutdowns. Although the initial commissioning was successful, any significant curtailing of production at Montana Renewables may result in materially lower levels of revenues or cash flows and materially increased expenses for the duration of any downtime and may materially adversely impact the Company’s results of operations, financial conditions and ability to pay the principal of, redemption premium, if any, and/or interest on outstanding debt obligations. Related Parties MRHL has no assets other than Montana Renewables. Several of the Company’s affiliates have been and are expected to be involved with the construction, start-up and operation of Montana Renewables, including the sales and marketing of the renewable fuels produced by Montana Renewables. The support and experience of the Company’s affiliates are expected to be important to the success of Montana Renewables. However, no affiliates of the Company are obligated to make any payments with respect to outstanding debt obligations of Montana Renewables or MRHL. Several of the Company’s affiliates have been involved in the construction, start-up and operation of Montana Renewables, and such transactions between the Company and its affiliates present possible conflicts of interest that could have an adverse effect on the Company if they are not managed appropriately. Transportation Risk Montana Renewables relies on railroad, trucking and pipeline companies to transport renewable feedstock materials to the Montana Renewables site, and to deliver renewable fuels to Montana Renewable’s customers. These transportation operations, equipment and services are subject to various hazards, including extreme weather conditions, floods, droughts, work stoppages, delays, accidents such as spills and derailments and other accidents and other operating hazards. Increasing climate risk may exacerbate weather conditions so as to materially affect the economics of traditional transportation methods. These transportation operations, equipment and services are also subject to environmental, safety, and regulatory oversight. Due to concerns related to accidents, local and national governments could implement new regulations affecting the transportation of the Company’s renewable feedstock materials or renewable fuels. The Company may be unable to ship the renewable fuels or obtain renewable feedstock materials as a result of these transportation companies’ failure to operated properly, or if new and more stringent regulatory requirements are implemented affecting transportation operations or equipment. If there are significant increases in the cost of such transportation services or equipment, or changes in such costs relative to transportation costs incurred by competitors, the Company’s sales revenues and/or cost of operations could be materially and adversely affected. Reliance on Other Third Parties The viability of Montana Renewables and the ability of MRHL to make payments under outstanding debt obligations depend significantly upon the performance by third parties. If the current or future parties related to the operation of Montana Renewables, including the Company, do not perform (or become financially unable to perform) their obligations under various agreements related to Montana Renewables, then the Company may not be able to acquire alternate goods or services to cover such nonperformance and the Company may be unable to make payments under its debt obligations. Intellectual Property The operation of Montana Renewables is dependent upon the use of intellectual property licensed by third parties. If the Company fails to comply with terms of license agreements related to such intellectual property, the licensor(s) may have the right to terminate the Company’s license(s). Failure to obtain or maintain these licenses could have a material adverse effect on the ability of the Company to operate Montana Renewables. Change in Cost or Availability of Utility Services The cost and availability of utility services, including, water supply, water disposal, sewage services and electrical service are subject to change due to market economic forces and/or government regulations. Increases in the cost of necessary utility services could adversely affect the Company’s ability to pay outstanding debt obligations. 42 Table of Contents Feedstock Supply The cost of renewable feedstock materials accounts for a significant portion of the total cost of the production of renewable fuels. In addition, the quality of the feedstock is important to the successful operation of Montana Renewables. As a result, any increase in cost or decrease in availability of acceptable renewable feed stock materials could significantly negatively impact the Company’s ability to generate revenues at Montana Renewables. The prices of renewable feedstock materials are subject to a multitude of external factors, including, but not limited to, supply- demand balances, weather conditions, market sentiment in relation to future supplies, storage and throughput capacity of suppliers, and forms of taxation to which suppliers may be subject which are passed through. Market for Renewable Fuels The continued operation of Montana Renewables requires that the Company be able to sell the renewable fuels produced at Montana Renewables at prices high enough to generate sufficient revenues to pay, among other things, the operation and maintenance costs of Montana Renewables and outstanding debt obligations. No assurances can be given by the Company that the market demand for renewable fuels will be sufficient through the term of outstanding debt obligations and/or the market price of renewable fuels will be sufficient to enable the Company to generate sufficient revenues to make payments described above. The market for renewable fuels is affected by changes in environmental regulations or requirements for the use of renewable energy products. If there is a change in such regulations or requirements, then the ability of the Company to sell renewable fuels at high enough prices to generate sufficient revenues to pay, among other things, the operation and maintenance costs of Montana Renewables and outstanding debt obligations, could be materially and adversely affected. Competition The production of renewable fuels is a growing industry and the Company is expected to encounter significant competition in the marketplace. New technologies or methods of operation may be developed that improve the quality of the fuel, increase production, or decrease the costs of production. In addition, the Company may develop additional facilities that compete with Montana Renewables. The Company believes that Montana Renewables is strategically located and will be successful. However, there can be no assurance that the Company’s projections will be realized or that Montana Renewables will generate revenues sufficient to pay outstanding debt obligations. Governmental Regulations and Permits Montana Renewables will be required to comply with a number of statutes and regulations relation to the safety and health of Montana Renewable’s employees and the public during its operation, such as: limits on noise emissions from Montana Renewables, safety and health standards, practices and procedures applicable to the operation of Montana Renewables; environmental protection requirements, including standards relating to the discharge of pollutants to the air, water and land; and employment, hiring and anti-discrimination requirements relating to the operation of Montana Renewables by the Company. Risks Related to Our Partnership Structure Cash Distributions to Unitholders We may not have sufficient cash from operations, following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to our general partner, to enable us to resume paying distributions to our unitholders or restore distributions to previous levels. In April 2016, we announced suspension of our quarterly cash distribution to unitholders and have not paid any quarterly distributions since. We may not have sufficient available cash from operations in the future to enable us to resume payment of a distribution to unitholders. The amount of cash we can distribute on our common units principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things: • • • • • • • • overall demand for specialty products; the level of foreign and domestic production of crude oil and refined products; our ability to produce fuel products and specialty products that meet our customers’ unique and precise specifications; the marketing of alternative and competing products; the extent of government regulation; results of our hedging activities; global or national health concerns; and overall economic and local market conditions. 43 Table of Contents In addition, the actual amount of cash we have available for distribution will depend on other factors, some of which are beyond our control, including: • • • • • • the level of capital expenditures we make, including those for acquisitions, if any; our debt service requirements; fluctuations in our working capital needs; our ability to borrow funds and access capital markets; restrictions on distributions and on our ability to make working capital borrowings for distributions contained in our debt instruments; and the amount of cash reserves established by our general partner for the proper conduct of our business. If we generate insufficient cash from our operations for a sustained period of time and/or forecasts demonstrate expectations of continued future insufficiencies, the board of directors of our general partner may determine not to reinstate our distribution to unitholders. Any such continued suspension or elimination of distributions may cause the trading price of our units to decline. The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability. Unitholders should be aware that the amount of cash we have available for distribution depends primarily upon our cash flow from operating activities, cash on hand and working capital borrowings, and not solely on profitability, which will be affected by non-cash items. As a result, we may make cash distributions during periods when we record net losses and may not make cash distributions during periods when we record net income. General Partner, The Heritage Group and Partnership Agreement At March 14, 2023, The Heritage Group and certain of their affiliates own an approximate 20.5% limited partner interest in us and own and control our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to other unitholders’ detriment. At March 14, 2023, The Heritage Group and certain of their affiliates own an approximate 20.5% limited partner interest in us. In addition, The Heritage Group and certain of their affiliates control our general partner. Conflicts of interest may arise between our general partner and its affiliates, on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, the general partner may favor its own interests and the interests of its affiliates over the interests of our unitholders. These conflicts include, among others, the following situations: • • • • • • • our general partner is allowed to take into account the interests of parties other than us, such as its affiliates, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our unitholders; our general partner has limited its liability and reduced its fiduciary duties under our partnership agreement and has also restricted the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty. As a result of purchasing common units, unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under Delaware law; our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities, and reserves, each of which can affect the amount of cash that is distributed to unitholders; our general partner determines which costs incurred by it and its affiliates are reimbursable by us; our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is a maintenance capital expenditure, which reduces operating surplus, or a capital expenditure for acquisitions or capital improvements, which does not. This determination can affect the amount of cash that is available for distribution to our unitholders; our general partner has the flexibility to cause us to enter into a broad variety of derivative transactions covering different time periods, the net cash receipts or payments from which will increase or decrease operating surplus and adjusted operating surplus, with the result that our general partner may be able to shift the recognition of operating surplus and adjusted operating surplus between periods to increase the distributions it and its affiliates receive on their incentive distribution rights; and in some instances, our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions. 44 Table of Contents The Heritage Group and certain of its affiliates may engage in limited competition with us. Pursuant to the omnibus agreement we entered into in connection with our initial public offering, The Heritage Group and its controlled affiliates have agreed not to engage in, whether by acquisition or otherwise, the business of refining or marketing specialty lubricating oils, solvents and wax products as well as gasoline, diesel and jet fuel products in the continental U.S. for so long as it controls us. This restriction does not apply to certain assets and businesses which are more fully described under Part III, Item 13 “Certain Relationships and Related Transactions and Director Independence — Omnibus Agreement.” The owners of our general partner, other than The Heritage Group, are not prohibited from competing with us, except to the extent described above. Currently, The Heritage Group is an active marketer of asphalt products and has been engaged in this business for much longer than us. In certain geographical areas, there can be overlap where both The Heritage Group and we market asphalt. Our partnership agreement limits our general partner’s fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. For example, our partnership agreement: • • • • permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner. Examples include the exercise of its limited call right, its voting rights with respect to the units it owns, its registration rights and its determination whether or not to consent to any merger or consolidation of our partnership or amendment of our partnership agreement; provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith, meaning it believed the decision was in the best interests of our partnership; generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us. In determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and provides that our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person’s conduct was criminal. By purchasing a common unit, a unitholder agrees to be bound by the provisions in the partnership agreement, including the provisions discussed above. Unitholders have limited voting rights and are not entitled to elect our general partner or its directors. Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders do not elect our general partner or its board of directors, and have no right to elect our general partner or its board of directors on an annual or other continuing basis. The board of directors of our general partner is chosen by the members of our general partner. Furthermore, if the unitholders are dissatisfied with the performance of our general partner, the vote of the holders of at least 66 2/3% of all outstanding units voting together as a single class is required to remove the general partner. At March 14, 2023, the owners of our general partner and certain of their affiliates own approximately 20.5% of our common units. As a result of these limitations, the price at which the common units trade could be diminished because of the absence or reduction of a takeover premium in the trading price. Our partnership agreement restricts the voting rights of those unitholders owning 20% or more of our common units. Unitholders’ voting rights are further restricted by the partnership agreement provision providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees, and persons who acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter. Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to 45 Table of Contents acquire information about our operations, as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management. Our general partner interest or control of our general partner may be transferred to a third party without unitholder consent. Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of the unitholders. Furthermore, our partnership agreement does not restrict the ability of the members of our general partner from transferring their respective membership interests in our general partner to a third party. The new members of our general partner would then be in a position to replace the board of directors and officers of our general partner with their own choices and thereby control the decisions taken by the board of directors. We do not have our own officers and employees and rely solely on the officers and employees of our general partner and its affiliates to manage our business and affairs. We do not have our own officers and employees and rely solely on the officers and employees of our general partner and its affiliates to manage our business and affairs. We can provide no assurance that our general partner will continue to provide us the officers and employees that are necessary for the conduct of our business nor that such provision will be on terms that are acceptable to us. If our general partner fails to provide us with adequate personnel, our operations could be adversely impacted and our cash available for payments of our debt obligations could be reduced. We may issue additional common units without unitholder approval, which would dilute our current unitholders’ existing ownership interests. We may issue an unlimited number of limited partner interests of any type without the approval of our unitholders. Our partnership agreement does not give our unitholders the right to approve our issuance of common units or equity securities ranking junior to the common units at any time. In addition, our partnership agreement does not prohibit the issuance by our subsidiaries of equity securities, which may effectively rank senior to the common units. The issuance of additional common units or other equity securities of equal or senior rank to the common units will have the following effects: • • • • • our unitholders’ proportionate ownership interest in us may decrease; the amount of cash available for distribution on each unit may decrease; the relative voting strength of each previously outstanding unit may be diminished; the market price of the common units may decline; and the ratio of taxable income to distributions, if any may increase. Our general partner’s determination of the level of cash reserves may reduce the amount of available cash for distribution to unitholders. Our partnership agreement requires our general partner to deduct from operating surplus cash reserves that it establishes are necessary to fund our future operating expenditures. In addition, our partnership agreement also permits our general partner to reduce available cash by establishing cash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are a party, or to provide funds for future distributions to partners. These reserves will affect the amount of cash available for distribution to unitholders. Cost reimbursements due to our general partner and its affiliates will reduce cash available for payments of our debt obligations. Prior to making any distribution on the common units, we will reimburse our general partner and its affiliates for all expenses they incur on our behalf. Any such reimbursement will be determined by our general partner and will reduce the cash available for payments of our debt obligations. These expenses will include all costs incurred by our general partner and its affiliates in managing and operating us. Please read Part III, Item 13 “Certain Relationships and Related Transactions and Director Independence.” Our general partner has a limited call right that may require unitholders to sell their units at an undesirable time or price. If at any time our general partner and its affiliates own more than 80% of the issued and outstanding common units, our general partner will have the right, but not the obligation, which right it may assign to any of its affiliates or to us, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their then-current market price. As a result, unitholders may be required to sell their common units to our general partner, its affiliates or us at an undesirable time or price and may not receive any return on their investment. Unitholders may also incur a tax liability upon a sale of their common units. At March 14, 2023, our general partner and its affiliates own approximately 20.5% of our common units. 46 Table of Contents Unitholder liability may not be limited if a court finds that unitholder action constitutes control of our business. A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those contractual obligations of the partnership that are expressly made without recourse to the general partner. Our partnership is organized under Delaware law and we conduct business in a number of other states. The limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some of the other states in which we do business. Unitholders could be liable for any and all of our obligations as if they were a general partner if: • • a court or government agency determined that we were conducting business in a state but had not complied with that particular state’s partnership statute; or unitholders’ right to act with other unitholders to remove or replace the general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business. Unitholders may have liability to repay distributions that were wrongfully distributed to them. Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act, which we call the Delaware Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a period of three years from the date of the impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount. Purchasers of units who become limited partners are liable for the obligations of the transferring limited partner to make contributions to the partnership that are known to the purchaser of the units at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement. Liabilities to partners on account of their partnership interest and liabilities that are non-recourse to the partnership are not counted for purposes of determining whether a distribution is permitted. Tax Risks to Common Unitholders Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as not being subject to a material amount of entity-level taxation by individual states or local entities. If the IRS were to treat us as a corporation or we became subject to a material amount of entity-level taxation for state or local tax purposes, our cash available to make payments of our debt obligations could be substantially reduced. Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as a corporation for federal income tax purposes unless we satisfy a “qualifying income” requirement. We requested and obtained a favorable private letter ruling from the IRS to the effect that, based on facts presented in the private letter ruling request, our income from refining, blending, processing, packaging, marketing and distribution of lubricants will constitute “qualifying income” within the meaning of Section 7704 of the Code. Based upon our current operations and private letter rulings we have received with respect to certain aspects of our business, we believe we satisfy the qualifying income requirement. However, no ruling has been requested regarding our treatment as a partnership for U.S. Federal income tax purposes. Failing to meet the qualifying income requirement or a change in current law could cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity. If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate. Because a tax would be imposed upon us as a corporation, our cash available for payment of our other debt obligations could be substantially reduced. From time to time, members of Congress propose and consider substantive changes to the existing U.S. federal income tax laws that affect publicly-traded partnerships including the elimination of partnership tax treatment for certain publicly traded partnerships. The enactment of such a law or the modification or interpretation of an existing law could subject us to taxation as a corporation or otherwise subjects us to a material amount of entity-level taxation for federal, state or local income tax purposes. At the state level, several states have been evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise, or other forms of taxation. For example, we are required to pay the Texas Margin Tax each year at a maximum effective rate of 0.75% for our “margin,” as defined in the law, apportioned to Texas in the prior year. Imposition of these or similar types of federal and state taxes on us in the jurisdictions in which we operate or in other jurisdictions to which we may expand could substantially reduce our cash available for payment of principal and interest on our senior notes and our other debt obligations. 47 Table of Contents Our tax treatment or the tax treatment of our unitholders could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. Current law may change so as to cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to entity-level taxation. From time to time the U.S. government considers substantive changes to the existing federal income tax laws that affect publicly traded partnerships. We are unable to predict whether any such additional legislation or any other tax-related proposals will ultimately be enacted. Moreover, any modification to the federal income tax laws and interpretations thereof may or may not be applied retroactively. Any such changes could materially adversely impact a unitholder’s investment in our common units. If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to our unitholders or to make payments of our debt obligations. We have not requested a ruling from the IRS, and the IRS has not otherwise made any determination, regarding our status as a partnership for federal income tax purposes The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to attempt to sustain some or all of the positions we take, and a court may not ultimately agree with some or all of our positions. Any contest with the IRS may materially and adversely impact the market for our common units and the price at which they trade. In addition, our costs of any contest with the IRS will be borne indirectly by our unitholders as the costs will reduce our cash available for distribution and for payments of our debt obligations. The IRS may challenge aspects of our proration method, and, if successful, we would be required to change the allocation of items of income, gain, loss and deduction among our unitholders. We prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first business day of each month, instead of on the basis of the date a particular unit is transferred. The U.S. Department of Treasury and the IRS issued Treasury Regulations that permit publicly traded partnerships to use a monthly simplifying convention that is similar to ours, but they do not specifically authorize all aspects of the proration method we have adopted. If the IRS were to successfully challenge this method, we could be required to change the allocation of items of income, gain, loss and deduction among our unitholders. We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction. The IRS may challenge these methodologies or the resulting allocations, and such a challenge could adversely affect the value of our common units. In determining the items of income, gain, loss and deduction allocable to our unitholders, including when we issue additional units, we must determine the fair market value of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we make many fair market value estimates using a methodology based on the market value of our common units as a means to measure the fair market value of our assets. The IRS may challenge these valuation methods and the resulting allocations of income, gain, loss and deduction. A successful IRS challenge to these methods or allocations could adversely affect the amount, character and timing of taxable income or loss being allocated to our unitholders. It also could affect the amount of gain from our unitholders’ sale of our common units and could have a negative impact on the value of our common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions. Our unitholders may be required to pay taxes on their share of our income even if they do not receive any distributions from us. Our unitholders will be required to pay any federal income taxes and, in some cases, state and local income taxes on their share of our taxable income even if they receive no distributions from us. Our unitholders may not receive distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income. We may engage in transactions to de-lever the Partnership and manage our liquidity that may result in income and gain to our unitholders. For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, our unitholders may be allocated taxable income and gain resulting from the sale. The ultimate effect of any such allocations will depend on the unitholder’s individual tax position with respect to its units. Unitholders are encouraged to consult their tax advisors with respect to the consequences of potential transactions that may result in income and gain to unitholders. 48 Table of Contents Tax gain or loss on the disposition of our common units could be more or less than expected. If our unitholders sell their common units, they will recognize a gain or loss equal to the difference between the amount realized and their tax basis in those common units. Prior distributions to our unitholders in excess of the total net taxable income they were allocated for a common unit, which decreased their tax basis in that common unit, will, in effect, become taxable income to our unitholders if the common unit is sold at a price greater than their tax basis in that common unit, even if the price they receive is less than their original cost. A substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture. In addition, because the amount realized includes a unitholder’s share of nonrecourse liabilities, if our unitholders sell their common units, they may incur a tax liability in excess of the amount of cash received from the sale. Tax-exempt entities and foreign persons face unique tax issues from owning our common units that may result in adverse tax consequences to them. Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs) raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from U.S. federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Non-U.S. unitholders are generally taxed and subject to income tax filing requirements by the United States on income effectively connected with a U.S. trade or business (“effectively connected income”). A unitholder’s share of our income, gain, loss and deduction, and any gain from the sale of our units will generally be considered “effectively connected income.” As a result, distributions to a non-U.S. unitholder will be subject to withholding at the highest applicable effective tax rate and a non-U.S. unitholder who sells or otherwise disposes of a unit will also be subject to U.S. federal income tax on the gain realized from the sale or disposition of that unit. Distributions to foreign persons will be reduced by withholding taxes at the highest applicable effective tax rate, and foreign persons will be required to file U.S. federal tax returns and pay tax on their share of our taxable income. Upon the sale, exchange or other disposition of a common unit by a foreign person, the transferee is generally required to withhold 10% of the amount realized on such sale, exchange or other disposition if any portion of the gain on such sale, exchange or other disposition would be treated as effectively connected with a U.S. trade or business. The U.S. Department of the Treasury and the IRS have recently issued final regulations providing guidance on the application of these rules for transfers of certain publicly traded partnership interests, including transfers of our common units. Under these regulations, the “amount realized” on a transfer of our common units will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and such broker will generally be responsible for the relevant withholding obligations. Distributions to foreign persons may also be subject to additional withholding under these rules to the extent a portion of a distribution is attributable to an amount in excess of our cumulative net income that has not previously been distributed. The U.S. Department of the Treasury and the IRS have provided that these rules will generally not apply to transfers of, or distributions on, our common units occurring before January 1, 2023. Our unitholders may be subject to state and local taxes and return filing requirements in states where they do not live as a result of investing in our common units. In addition to federal income taxes, our unitholders may be subject to other taxes, including state and local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we conduct business or own property now or in the future, even if they do not live in any of those jurisdictions. Our unitholders may be required to file tax returns and pay taxes in some or all of these various jurisdictions or be subject to penalties for failure to comply with those requirements. We currently own assets and conduct business in 32 states, most of which impose a personal income tax. 49 Table of Contents If the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders or to make payments of our debt obligations might be substantially reduced. If the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us. Generally, we expect to elect to have our unitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, but there can be no assurance that such election will be made, or applicable, in all circumstances. If we are unable to have our unitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, our current unitholders may bear some or all of the economic burden resulting from such audit adjustment, even if such unitholders did not own units in us during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, our cash available for distribution to our unitholders and for payments of our debt obligations might be substantially reduced. A unitholder whose common units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of common units) may be considered as having disposed of those common units. If so, the unitholder would no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the disposition. Because there are no specific rules governing the U.S. federal income tax consequence of loaning a partnership interest, a unitholder whose common units are the subject of a securities loan may be considered to have disposed of the loaned units. In that case, the unitholder may no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those common units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a securities loan are urged to consult a tax advisor to determine whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from lending their common units. Item 1B. Unresolved Staff Comments None. Item 3. Legal Proceedings We are not a party to, and our property is not the subject of, any pending legal proceedings other than ordinary routine litigation incidental to our business. Our operations are subject to a variety of risks and disputes normally incident to our business. As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the ordinary course of business. Please read Items 1 and 2 “Business and Properties — Environmental and Occupational Health and Safety Matters” for a description of our current regulatory matters related to the environment, health and safety. Additionally, the information provided under Note 7 - “Commitments and Contingencies” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 50 Table of Contents Item 5. Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information PART II Our common units are quoted and traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CLMT.” As of March 14, 2023, there were approximately 23 unitholders of record of our common units. As of March 14, 2023, there were 79,835,801 common units outstanding. Cash Distribution Policy General. Within 45 days after the end of each quarter, we distribute our available cash (as defined in our partnership agreement), if any, to unitholders of record on the applicable record date. Available Cash. Available cash generally means, for any quarter, all cash on hand at the end of the quarter: • less the amount of cash reserves established by our general partner to: • • • provide for the proper conduct of our business; comply with applicable law, any of our debt instruments or other agreements; and provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters. • plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter for which the determination is being made. Working capital borrowings are generally borrowings that will be made under our revolving credit facility and in all cases are used solely for working capital purposes or to pay distributions to partners. Cash Distribution Policy. We distribute to the holders of common units on a quarterly basis at least the minimum quarterly distribution of $0.45 per unit, or $1.80 in aggregate per year, to the extent we have sufficient cash from our operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner. However, since April 2016, we have not paid, and there is no guarantee that we will pay the minimum quarterly distribution on the units in any quarter. Please read “— Distribution Suspension.” Even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by our general partner, taking into consideration the terms of our partnership agreement. We will be prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default exists, under our debt instruments, including our Credit Agreement and the indentures governing our 2024 Secured Notes, 11.00% Senior Notes due 2025 (the “2025 Notes”), and 8.125% Senior Notes due 2027 (the “2027 Notes”). Please read Note 9 - “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary Data” for a discussion of the restrictions in our debt instruments that restrict our ability to make distributions. General Partner Interest and Incentive Distribution Rights. Our general partner is entitled to 2% of all quarterly distributions since inception that we make prior to our liquidation. As of March 14, 2023, this general partner interest is represented by 1,629,302 general partner units. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest. The general partner’s 2% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its 2% general partner interest. Our general partner also currently holds incentive distribution rights that entitle it to receive increasing percentages, up to a maximum of 50%, of the cash we distribute from operating surplus (as defined in our partnership agreement) in excess of $0.495 per unit. The maximum distribution of 50% includes distributions paid to our general partner on its 2% general partner interest, and assumes that our general partner maintains its general partner interest at 2%. The maximum distribution of 50% does not include any distributions that our general partner may receive on units that it owns. Our general partner earned no incentive distribution rights for the years ended December 31, 2022 and 2021. 51 Table of Contents Our general partner is entitled to incentive distributions if the amount we distribute to unitholders with respect to any quarter exceeds specified target levels shown below: Minimum Quarterly Distribution First Target Distribution Second Target Distribution Third Target Distribution Thereafter Distribution Suspension Total Quarterly Distribution Target Amount Per Common Unit $0.45 up to $0.495 above $0.495 up to $0.563 above $0.563 up to $0.675 above $0.675 Marginal Percentage Interest in Distributions Unitholders General Partner 98 % 98 % 85 % 75 % 50 % 2 % 2 % 15 % 25 % 50 % In April 2016 and effective beginning the first quarter 2016, the board of directors of our general partner suspended payment of our quarterly cash distribution. The board of directors of our general partner will continue to evaluate our ability to reinstate the distribution and we currently are not permitted to resume cash distributions pursuant to the terms of the indentures governing our senior notes. Equity Compensation Plans The equity compensation plan information required by Item 201(d) of Regulation S-K in response to this Item 5 is incorporated by reference from Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters” of this Annual Report. Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. Reserved 52 Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The historical consolidated financial statements included in this Annual Report reflect all of the assets, liabilities and results of operations of Calumet Specialty Products Partners, L.P. and its consolidated subsidiaries (“Calumet,” the “Company,” “we,” “our,” or “us”). The following discussion analyzes the financial condition and results of operations of the Company for the years ended December 31, 2022, 2021, and 2020. Unitholders should read the following discussion and analysis of the financial condition and results of operations of the Company in conjunction with the historical consolidated financial statements and notes included elsewhere in this Annual Report. Overview We manufacture, formulate and market a diversified slate of specialty products to customers across a broad range of consumer-facing and industrial markets. We also own what we believe is one of North America’s leading renewable diesel manufacturing facilities. We are headquartered in Indianapolis, Indiana and operate twelve facilities throughout North America. Our operations are managed using the following reportable segments: Specialty Products and Solutions; Performance Brands; Montana/Renewables; and Corporate. For additional information, see Note 19 — “Segments and Related Information” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” In our Specialty Products and Solutions segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products. In our Performance Brands segment, we blend, package and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our Montana/Renewables segment is comprised of two facilities — renewable fuels and specialty asphalt. At our Great Falls renewable fuels facility, we currently process, or expect to have the future capability to process, a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha that are, or are expected to be, distributed into renewable markets in the western half of North America. At our Montana specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets. Our Corporate segment primarily consists of general and administrative expenses not allocated to the Specialty Products and Solutions, Performance Brands or Montana/Renewables segments. 2022 Update Outlook and Trends During the fourth quarter of 2022, global economic activity continued to be impacted by macroeconomic uncertainty, inflationary pressures and geopolitical concerns, including the war in Ukraine. These items, combined with lasting reductions to energy supply made at the peak of COVID-19, have led to a global energy shortage and increased commodity prices. Governments around the world responded to Russia’s invasion of Ukraine by imposing economic sanctions, and global central banks began addressing inflation by, among other things, increasing interest rates. The global energy crisis is a result of demand for hydrocarbons returning to pre-pandemic levels coupled with decreased global energy production and disrupted energy trade flows, particularly in Europe and Asia. The resulting extreme natural gas prices have raised the cost to produce fuels internationally. This has led to an elevated margin environment in North America where the cost to produce hydrogen is relatively advantaged to the rest of the world. These factors have impacted our businesses in various ways. Our Specialty Products and Solutions segment continues to experience strong margins as we see the benefit of a fully integrated specialty business and a strong market environment. At our Great Falls renewable fuels facility, we commenced production and fulfilled shipments of customer orders during the fourth quarter. Further, production resumed at our legacy Great Falls facility following the planned turnaround associated with the separation and start-up of Montana Renewables. Our Performance Brands segment continued to be challenged during the current quarter as feedstock costs remain elevated in the seasonally slow quarter. As a fully integrated specialty business, our product lines perform differently in response to changing market conditions, and the Performance Brands segment has been most impacted by the inflationary environment. Across all of our business segments we continue to see strong, growing demand for our products. However, we will continue to monitor macroeconomic signals and indicators that may point to recessionary risk in the future, which may impact our businesses. As we saw during 2020 with COVID-19 and the start of the global pandemic, our integrated business model and diversified product portfolio provides an advantaged response to changing market conditions, including recessionary trends. While we are not immune to the impacts of an economic downturn, we believe our specialty business is well positioned to withstand one. We also continue to monitor COVID-19 statistics and we will continue to assess conditions around our facilities. Our established COVID protocols have proven successful and remain available as necessary to ensure a safe working environment for all of our employees. 53 Table of Contents In the first quarter of 2023, we expect to commission the Montana Renewables project’s renewable hydrogen plant, and we expect to complete construction of the feedstock pre-treatment unit and sustainable aviation fuel shipping facilities. The commissioning of the renewable hydrogen plant will increase feedstock throughput capacity, the commissioning of the pre-treatment unit will fully unlock the geographic advantage we have in Montana by providing additional feed quality flexibility, and the commissioning of the sustainable aviation fuel shipping facilities will allow SAF shipments to commence under contract. Contingencies For a summary of litigation and other contingencies, please read Note 7 — “Commitments and Contingencies” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to 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 a net loss of $171.8 million in 2022, versus a net loss of $260.1 million in 2021. We reported Adjusted EBITDA (as defined in Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures”) of $389.6 million in 2022, versus $110.3 million in 2021. We generated cash from operating activities of $100.6 million in 2022, versus using cash from operating activities of $44.0 million in 2021, primarily driven by an increase of $207.9 million in gross profit between the comparative periods, partially offset by an increase in the cash required for working capital to support the start-up of production at our Great Falls renewable fuels facility. Please read Item 7 “Management’s Discussion and Analysis — 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 with U.S. generally accepted accounting principles (“GAAP”). Specialty Products and Solutions segment Adjusted EBITDA was $379.0 million in 2022 compared to $104.6 million in the prior year. Compared to the prior year, Specialty Products and Solutions 2022 segment Adjusted EBITDA was favorably impacted by an increase in sales volumes driven by strong operations and the absence of downtime from a planned full plant turnaround and the polar vortex at our Shreveport facility that occurred in the prior year. This impact was coupled with the favorable impact of the strong margin environment experienced in the current year. Montana/Renewables segment Adjusted EBITDA was $75.8 million in 2022 compared to $44.4 million in 2021. Compared to the prior year, Montana/Renewables 2022 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. These impacts were partially offset by the unfavorable impact of lower volumes as a result of a planned turnaround at our Montana facility in the current year period, coupled with the impact of increased operating costs driven by higher utility costs. Performance Brands segment Adjusted EBITDA was $20.2 million in 2022 compared to $33.8 million in 2021. Compared to the prior year, Performance Brands segment Adjusted EBITDA was unfavorably impacted by a $12.7 million decrease in gross profit due higher packaging costs and the natural lag in passing increased costs though to customers in our branded and consumer markets. This impact was slightly offset by the favorable impact of price increases we implemented during the current year, whereby we were able to pass through higher feedstock costs for certain of our products. Supply chain difficulties continue to impact results, but are significantly improving. Corporate segment Adjusted EBITDA was negative $85.4 million in 2022 versus negative $72.5 million in 2021 primarily due to higher labor and benefit expenses, primarily as it relates to an increase in expenses for our annual cash incentive plan, which are directly tied to the achievement of annual Adjusted EBITDA performance targets established by the Compensation Committee of the Company. Liquidity Update As of December 31, 2022, we had total liquidity of $372.8 million comprised of $35.2 million of cash and $337.6 million of availability under our revolving credit facility. As of December 31, 2022, our revolving credit facility had a $477.4 million borrowing base, $35.8 million in outstanding standby letters of credit and $104.0 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 7 “Management’s Discussion and Analysis - Liquidity and Capital Resources” and Part I, Item 1A. “Risk Factors” for additional information. 54 Table of Contents 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 refinery exemption from the EPA, which we have historically received. Administered by the EPA, the RFS provides annual requirements for the total volume of renewable transportation fuels that are mandated to be blended into finished transportation 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. For the year ended December 31, 2022, we accrued a non-cash expense of $197.9 million for RINs, as compared to a non-cash expense of $116.0 million for RINs for the year ended December 31, 2021. Our 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 spread across four compliance categories (D3, D4, D5 and D6). The gross RINs obligations may be satisfied by our own renewables blending, RIN purchases, or receipt of small refinery exemptions. 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 II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information on the Company’s RINs obligation. Unrestricted Subsidiaries See Note 20 - “Unrestricted Subsidiaries” under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information regarding certain financial information of our unrestricted subsidiaries. Key Performance Measures Our sales and results of operations are principally affected by demand for specialty products, fuel and renewable 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. Our primary raw materials are crude oil, renewable feedstocks and other specialty feedstocks, and our primary outputs are specialty consumer facing and industrial products, specialty branded products, and fuel and renewable fuel products. The prices of crude oil, specialty products and fuel and renewable 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 may also 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 II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” 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 typically improve profitability both through the spreading of fixed costs over greater volumes and the additional gross profit achieved on the incremental volumes. 55 Table of Contents 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. 56 Table of Contents Results of Operations 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. (1) Total sales volume Total feedstock runs Facility production: Specialty Products and Solutions: (2) (3) Lubricating oils Solvents Waxes Fuels, asphalt and other by-products Total Specialty Products and Solutions Montana/Renewables: Gasoline Diesel Jet fuel Asphalt, heavy fuel oils and other Total Montana/Renewables Performance Brands Total facility production (3) 2022 Year Ended December 31, 2021 (In bpd) 2020 82,946 80,447 10,951 7,100 1,452 40,845 60,348 3,409 6,449 820 6,942 17,620 1,434 79,402 79,281 75,818 9,867 6,833 1,335 27,869 45,904 4,907 9,711 901 10,379 25,898 1,304 73,106 86,727 84,829 10,143 6,819 1,318 35,052 53,332 5,369 10,389 647 10,337 26,742 1,381 81,455 (1) (2) (3) 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. 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. 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. 57 Table of Contents The following table reflects our 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.” 2022 Year Ended December 31, 2021 (In millions) 2020 Sales Cost of sales Gross profit Operating costs and expenses: Selling General and administrative Taxes other than income taxes Loss on impairment and disposal of assets Other operating expense Operating income (loss) Other income (expense): Interest expense Debt extinguishment costs Gain (loss) on derivative instruments Other income (expense) Total other expense Net loss before income taxes Income tax expense Net loss Net loss attributable to noncontrolling interest Net loss attributable to partners EBITDA Adjusted EBITDA Distributable Cash Flow $ 4,686.7 4,335.9 350.8 53.9 141.0 13.7 0.7 8.1 133.4 (175.9) (41.4) (81.7) (2.8) (301.8) (168.4) 3.4 (171.8) (6.7) (165.1) 110.7 389.6 87.4 $ $ $ $ $ 3,148.0 $ 3,005.1 142.9 52.8 151.1 12.5 4.1 8.0 (85.6) (149.5) (0.5) (23.3) 0.3 (173.0) (258.6) 1.5 (260.1) $ — (260.1) $ (1.4) $ 110.3 $ (120.1) $ 2,268.2 2,169.1 99.1 47.8 91.1 9.8 6.8 15.5 (71.9) (125.9) — 52.4 (2.5) (76.0) (147.9) 1.1 (149.0) — (149.0) 83.1 217.3 41.1 $ $ $ $ $ $ 58 Table of Contents Non-GAAP Financial Measures We include in this Annual 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 calculated and presented in accordance with GAAP. 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. We believe 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) attributable to partners plus interest expense (including amortization of debt issuance costs), income taxes and depreciation and amortization. Historically, we considered net income (loss) to be the most directly comparable GAAP measure to EBITDA. Commencing with the third quarter of 2022, we reported net loss attributable to noncontrolling interest related to the preferred equity investment from Warburg Pincus in the Montana Renewables business. As a result of this change, we believe net income (loss) attributable to partners is the most directly comparable GAAP measure to EBITDA. 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) attributable to partners; (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) attributable to partners; (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) attributable to partners; (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 Annual Report is similar to the calculation of “Consolidated Cash Flow” contained in the indentures governing our senior notes. We are required to report Consolidated Cash Flow to the holders of our senior notes and Adjusted 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 “Liquidity and Capital Resources — Debt and Credit Facilities” for additional details regarding the covenants governing our debt instruments. 59 Table of Contents EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to Net income (loss), Net income (loss) attributable to partners 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. The following tables present a reconciliation of Net income (loss) attributable to partners, our most directly comparable GAAP financial performance measure to EBITDA, Adjusted EBITDA and Distributable Cash Flow, for each of the periods indicated. Reconciliation of Net loss attributable to partners to EBITDA, Adjusted EBITDA and Distributable Cash Flow: Net loss attributable to partners Add: Interest expense Depreciation and amortization Income tax expense Noncontrolling interest adjustments EBITDA Add: LCM / LIFO (gain) loss Unrealized (gain) loss on derivative instruments Debt extinguishment costs Amortization of turnaround costs Loss on impairment and disposal of assets RINs mark-to-market loss Other non-recurring expenses Equity based compensation and other items Noncontrolling interest adjustments Adjusted EBITDA Less: Replacement and environmental capital expenditures Cash interest expense Turnaround costs Income tax expense (2) (1) Distributable Cash Flow 2022 Year Ended December 31, 2021 (In millions) 2020 (165.1) $ (260.1) $ (149.0) 175.9 98.3 3.4 (1.8) 110.7 6.6 45.9 41.4 23.1 0.7 115.7 15.6 32.9 (3.0) 389.6 77.9 158.3 62.6 3.4 87.4 $ $ $ $ $ 149.5 107.7 1.5 — (1.4) (50.3) 24.4 0.5 17.0 4.1 57.7 7.6 50.7 — 110.3 29.0 138.9 61.0 1.5 (120.1) $ $ $ $ $ $ 125.9 105.1 1.1 — 83.1 28.5 (2.8) — 14.6 6.8 75.8 1.4 9.9 — 217.3 31.8 119.9 23.4 1.1 41.1 $ $ $ $ $ $ (1) (2) 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. Represents consolidated interest expense less non-cash interest expense. 60 Table of Contents Year Ended December 31, 2022, Compared to Year Ended December 31, 2021 Sales. Sales increased $1,538.7 million, or 48.9%, to $4,686.7 million in 2022 from $3,148.0 million in 2021. Sales for each of our principal product categories in these periods were as follows: Sales by segment: Specialty Products and Solutions: Lubricating oils Solvents Waxes Fuels, asphalt and other by-products Total Specialty Products and Solutions Total Specialty Products and Solutions sales volume (in barrels) Average Specialty Products and Solutions sales price per barrel Montana/Renewables: (1) Gasoline Diesel Jet fuel Asphalt, heavy fuel oils and other (2) Total Montana/Renewables Total Montana/Renewables sales volume (in barrels) Average Montana/Renewables sales price per barrel Total Performance Brands Total Performance Brands sales volume (in barrels) Average Performance Brands sales price per barrel (3) Total sales Total sales volume (in barrels) 2022 Year Ended December 31, 2021 (In millions, except barrel and per barrel data) % Change $ $ $ $ $ $ $ $ $ 913.7 434.9 189.3 1,970.1 3,508.0 22,461,000 156.18 188.1 391.8 41.8 253.6 875.3 7,298,000 119.94 303.4 517,000 586.85 4,686.7 30,276,000 $ $ $ $ $ $ $ $ $ 658.7 303.7 151.7 997.3 2,111.4 18,394,000 114.79 188.3 324.9 27.5 243.0 783.7 10,038,000 78.07 252.9 505,000 500.79 3,148.0 28,937,000 38.7 % 43.2 % 24.8 % 97.5 % 66.1 % 22.1 % 36.1 % (0.1)% 20.6 % 52.0 % 4.4 % 11.7 % (27.3)% 53.6 % 20.0 % 2.4 % 17.2 % 48.9 % 4.6 % (1) (2) (3) Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty products at the Princeton and Cotton Valley facilities and Dickinson and Karns City facilities, (b) polyol ester synthetic lubricants produced at the Missouri facility, and (c) fuels products produced at the Shreveport facility. Represents asphalt, heavy fuel oils and other products produced in connection with the production of fuels at the Great Falls specialty asphalt facility. Represents packaged and synthetic specialty products at our Royal Purple, Bel-Ray and Calumet Packaging facilities. The components of the $1,396.6 million increase in Specialty Products and Solutions segment sales in 2022, as compared to 2021, were as follows: Sales price Volume Total Specialty Products and Solutions segment sales increase Dollar Change (In millions) 929.8 466.8 1,396.6 $ $ Specialty Products and Solutions segment sales increased period over period, primarily due to the significantly higher price environment in the current year period and strong throughput. The favorable volumes impact was due to reliable operations and the absence of the downtime from a planned full plant turnaround and the polar vortex at our Shreveport facility in the prior year comparative period. 61 Table of Contents The components of the $91.6 million increase in Montana/Renewables segment sales in 2022, as compared to 2021, were as follows: Sales price Volume Total Montana/Renewables segment sales increase Dollar Change (In millions) 305.6 (214.0) 91.6 $ $ Montana/Renewables segment sales increased primarily due to increased sales prices as a result of the significantly higher price environment in the current year period. This impact was partially offset by the impact of lower sales volumes between the two comparative periods, which was the result of a planned turnaround at our Montana facility in the current year period in preparation for the commissioning of the renewable diesel unit. The components of the $50.5 million increase in Performance Brands segment sales in 2022, as compared to 2021, were as follows: Sales price Volume Total Performance Brands segment sales increase Dollar Change (In millions) 44.9 5.6 50.5 $ $ Performance Brands segment sales increased primarily due to the significantly higher price environment. Gross Profit. Gross profit increased $207.9 million, or 145.5%, to $350.8 million in 2022 from $142.9 million in 2021. Gross profit for our business segments were as follows: Gross profit by segment: Specialty Products and Solutions: Gross profit Percentage of sales Specialty Products and Solutions gross profit per barrel Montana/Renewables: Gross profit (loss) Percentage of sales Montana/Renewables gross profit (loss) per barrel Performance Brands: Gross profit Percentage of sales Performance Brands gross profit per barrel Total gross profit Percentage of sales 2022 Year Ended December 31, 2021 (Dollars in millions, except per barrel data) % Change $ $ $ $ $ $ $ 325.1 9.3 % 14.47 (29.9) (3.4)% (4.10) 55.6 18.3 % 107.54 350.8 7.5 % 62.6 3.0 % 3.40 12.0 1.5 % 1.20 68.3 27.0 % 135.25 142.9 4.5 % 419.3 % 6.3 % 325.6 % (349.2)% (4.9)% (441.7)% (18.6)% (8.7)% (20.5)% 145.5 % 3.0 % $ $ $ $ $ $ $ 62 Table of Contents The components of the $262.5 million increase in Specialty Products and Solutions segment gross profit in 2022, as compared to 2021, were as follows: 2021 reported gross profit Sales price RINs Operating costs LCM / LIFO inventory adjustments Volume Cost of materials 2022 reported gross profit Dollar Change (In millions) 62.6 929.8 (63.6) (36.2) (21.0) 103.4 (649.9) 325.1 $ $ The increase in Specialty Products and Solutions segment gross profit for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to stronger net unit margins as a result of strong specialty market demand and the strong margin environment experienced during the current year period. This favorable impact was coupled with a favorable volumes impact driven by the absence in the current year period of the planned turnaround and unplanned downtime at our Shreveport facility in the prior year comparative period. These impacts were partially offset by higher operating costs due to higher utility costs as well as higher RINs expense. The components of the $41.9 million decrease in Montana/Renewables segment gross profit (loss) in 2022, as compared to 2021, were as follows: 2021 reported gross profit Sales price RINs Operating costs Volume LCM / LIFO inventory adjustments Cost of materials 2022 reported gross profit (loss) Dollar Change (In millions) 12.0 305.6 (16.3) (36.2) (47.3) (32.4) (215.3) (29.9) $ $ The decrease in Montana/Renewables segment gross profit for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to lower volumes as a result of a planned turnaround at our Montana facility in the current year period, coupled with the impact of increased RINs expense and an increase in operating costs driven by higher utility costs. In addition, there was an unfavorable impact due to a $13.0 million charge to cost of sales for expected future losses under firm purchase commitments in the current year period. These impacts were partially offset by the favorable impact of a significantly stronger crack spread environment leading to higher margins. The components of the $12.7 million decrease in Performance Brands segment gross profit in 2022, as compared to 2021, were as follows: 2021 reported gross profit Sales price Operating costs LCM / LIFO inventory adjustments Volume Cost of materials 2022 reported gross profit 63 Dollar Change (In millions) 68.3 44.8 (2.5) (3.5) 2.1 (53.6) 55.6 $ $ Table of Contents The decrease in Performance Brands segment gross profit for the year ended December 31, 2022, as compared to the same period in 2021, was primarily driven by higher material and feedstock costs and supply chain challenges that resulted in higher operating costs. These impacts were partially offset by higher sales prices. General and administrative. General and administrative expenses decreased $10.1 million, or 6.7%, to $141.0 million in 2022 from $151.1 million in 2021. The decrease was due primarily to a $17.9 million decrease in equity-based compensation related expenses, which was primarily the result of changes in the Company’s unit price. This impact was partially offset by a $9.5 million increase in labor and benefits expenses, primarily as it relates to an increase in expenses for our annual cash incentive plan, which are directly tied to the achievement of annual Adjusted EBITDA performance targets established by the Compensation Committee of the Company. Interest expense. Interest expense increased $26.4 million, or 17.7%, to $175.9 million in 2022 from $149.5 million in 2021. The increase was primarily due to interest expense incurred for our MRL credit facility in the current year period, which was absent in the prior year comparative period, and higher financing costs related to our Supply and Offtake Agreements in the current year in comparison to the prior year. Loss on derivative instruments. There was a $81.7 million loss on derivative instruments in 2022, compared to a $23.3 million loss in the same period in 2021. The $35.8 million realized loss on derivative instruments in the current year period was primarily due to the settlement of our crack spread swaps positions during the period. The unrealized loss on derivative instruments was primarily the result of a $31.3 million unrealized loss on crack spread swaps positions, coupled with the unrealized loss on the inventory financing embedded derivative of $14.6 million in the current year period, compared to an unrealized loss of $25.7 million in the prior year comparative period. Debt extinguishment costs. There was a $41.4 million loss for debt extinguishment costs in 2022, compared to a $0.5 million loss for debt extinguishment costs in 2021. The loss for debt extinguishment costs in the current period primarily comprised of $1.0 million for the extinguishment of the 2023 Notes, $2.1 million for losses in conjunction with the repurchase of $36.5 million aggregate principal amount of the 2025 Notes and $38.3 million for losses in conjunction with the repayment of all borrowings outstanding under the MRL credit facility in the current year period. Please refer to Note 9 “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional information. Year Ended December 31, 2021, Compared to Year Ended December 31, 2020 Refer to Item 7 “Management’s Discussion and Analysis — Year Ended December 31, 2021, Compared to Year Ended December 31, 2020” of our 2021 Annual Report for a description of the factors impacting our results of operations for the year ended December 31, 2021 in comparison to the year ended December 31, 2020. Liquidity and Capital Resources Our principal sources of cash have historically included cash flow from operations, proceeds from public equity offerings, proceeds from notes offerings, bank borrowings and other financial arrangements. Principal uses of cash have included capital expenditures, acquisitions, distributions to our limited partners and general partner and debt service. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. In general, we expect that our short-term liquidity needs, including debt service, working capital, replacement and environmental capital expenditures and capital expenditures related to internal growth projects, will be met primarily through projected cash flow from operations, borrowings under our revolving credit facility and asset sales. On January 20, 2022, we issued and sold $325.0 million in aggregate principal amount of our 2027 Notes, in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933 to eligible purchasers at par. We received net proceeds of $319.1 million, after deducting the initial purchasers’ discount and offering expenses. On January 12, 2022, we issued a notice of conditional redemption for $325.0 million in aggregate principal amount of the 2023 Notes at a redemption price of par, plus accrued and unpaid interest to the redemption date of February 11, 2022, conditioned on the completion of an offering of at least $300.0 million aggregate principal amount of senior debt securities on or before February 11, 2022. As the conditions precedent were met on January 20, 2022, we funded the redemption of the 2023 Notes with the net proceeds from the offering of the 2027 Notes and the remainder from cash on hand. In conjunction with the redemption, we incurred debt extinguishment costs of $1.0 million. On January 20, 2022, we entered into the Credit Facility Amendment governing our senior secured revolving credit facility, which among other changes, (a) extends the term of the revolving credit facility for five years from the date of the 64 Table of Contents Credit Facility Amendment, (b) reduces aggregate commitments under the revolving credit facility to $500.0 million, which includes a FILO tranche, and (c) replaces LIBOR as a reference interest rate with a new reference interest rate based on daily SOFR. During the third quarter of 2022, we repurchased $36.5 million aggregate principal amount of the 2025 Notes at an average price of 104.3% of par value, plus accrued and unpaid interest thereon up to, but not including, the respective transaction dates. On August 5, 2022, MRL, a wholly owned subsidiary of the Company, entered into Equipment Schedule No. 2 (the “Equipment Schedule”) and an Interim Funding Agreement (the “Funding Agreement”) with Stonebriar Commercial Finance LLC (“Stonebriar”). The Equipment Schedule and the Funding Agreement each constitute a schedule under the Master Lease Agreement (the “Lease Agreement”) dated as of December 31, 2021 between MRL and Stonebriar. The Equipment Schedule provides that Stonebriar will purchase from and lease back to MRL a hydrocracker, intended to produce renewable diesel and related products, for a purchase price of $250.0 million. The Funding Agreement provides $100.0 million in financing for the design and construction of a feedstock pre-treater facility. On August 5, 2022, the Company repaid all borrowings outstanding under the MRL credit facility with a combination of proceeds from the issuance and sale of preferred units in Montana Renewables Holdings LLC, a wholly owned subsidiary of the Company and the direct parent of MRL (“MRHL”) and the Stonebriar Transactions (as defined herein). In conjunction with the redemption of the MRL credit facility, the Company recorded a loss from debt extinguishment of $38.3 million, which is reflected in loss from debt extinguishment in the consolidated statements of operations for the year ended December 31, 2022. Please refer to Note 21 - “Redeemable Noncontrolling Interest” for additional information regarding the issuance and sale of preferred units in MRHL and Note 9 - “Long-Term Debt - MRL Asset Financing Arrangements” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional information regarding the Stonebriar Transactions. On August 5, 2022 (the “Closing Date”), MRHL issued and sold 12,500,000 preferred units (“Preferred Units”) in MRHL to an affiliate of Warburg Pincus LLC for $250.0 million for an immediate cash payment of $200.0 million and the agreement to pay the remaining $50.0 million in cash not later than October 3, 2022 (the “Deferred Purchase Price”) in exchange for a 14.2045% Percentage Interest in MRHL. The Company received the cash payment for the Deferred Purchase Price on October 3, 2022. The Preferred Units are not interest bearing and carry certain minimum return thresholds. Please refer to Note 21 - “Redeemable Noncontrolling Interest” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional information. On November 2, 2022 (the “Effective Date”), MRL entered into, as borrower, a Credit Agreement (the “MRL Revolving Credit Agreement”) with MRHL, the parent company of MRL, and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and lender, which MRL Revolving Credit Agreement provides for a secured revolving credit facility in the maximum amount of $90.0 million outstanding, with the option to request additional commitments of up to $15.0 million, and with a maturity date of November 2, 2027. As of December 31, 2022, there was no borrowing capacity under the MRL Revolving Credit Agreement. As of December 31, 2022, the Company had no outstanding borrowings under the MRL Revolving Credit Agreement. On November 2, 2022, MRL also entered into a Supply and Offtake Agreement (“S&O Agreement”) with Macquarie Energy North America Trading Inc., a Delaware corporation (“Macquarie”), pursuant to which Macquarie will (i) purchase renewable feedstocks and products located at specified locations at MRL’s Great Falls, Montana refinery (the “Refinery”), (ii) provide certain financial accommodations to MRL based on liens granted over renewable feedstocks and products owned by MRL at other locations at the Refinery, and (iii) endeavor to purchase from third parties and deliver permitted feedstocks to MRL in monthly amounts up to an average of approximately 15,000 barrels per day. On March 10, 2023, Macquarie and MRL entered into an amendment to the MRL S&O Agreement, which provides that the agreement will expire on September 30, 2023. We expect to fund planned capital expenditures in 2023 of approximately $125 million to $145 million, excluding MRL capital expenditures, primarily with cash on hand, and cash flows from operations. Future internal growth projects or acquisitions may require expenditures in excess of our then-current cash flow from operations and borrowing availability under our revolving credit facilities and may require us to issue debt or equity securities in public or private offerings or incur additional borrowings under bank credit facilities to meet those costs. We continue to anticipate that capital improvement expenditure requirements will be funded from borrowings under our revolving credit facilities or by funding accessed through capital markets. 65 Table of Contents The borrowing base on our revolving credit facility increased from approximately $328.7 million as of December 31, 2021, to approximately $477.4 million at December 31, 2022, resulting in a corresponding increase in our borrowing availability from approximately $296.0 million at December 31, 2021, to approximately $337.6 million at December 31, 2022. Total liquidity, consisting of cash and available funds under our revolving credit facility, increased from $334.1 million at December 31, 2021 to $372.8 million at December 31, 2022. 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 most recent two years: Net Cash provided by (used in) operating activities Net Cash used in investing activities Net Cash provided by financing activities Net increase (decrease) in cash and cash equivalents 2022 Year Ended December 31, 2021 (In millions) 2020 $ $ 100.6 (536.0) 348.7 (86.7) $ $ (44.0) (82.8) 139.3 12.5 $ $ 62.8 (46.3) 73.8 90.3 Operating Activities. Operating activities provided cash of $100.6 million in 2022 compared to using cash of $44.0 million in 2021. The change was impacted by a decrease in net loss of $88.3 million as a result of an increase in gross profit, partially offset by an increase in the cash required for working capital to support the start-up of production at our Great Falls renewable fuels facility. Investing Activities. Investing activities used cash of $536.0 million in 2022 compared to a use of cash of $82.8 million in 2021. The change is related to increases in cash expenditures for additions to property, plant and equipment in the current year in comparison to the prior year. The cash expenditures for additions to property, plant and equipment in the current year are mainly related to our renewable diesel project. Financing Activities. Financing activities provided cash of $348.7 million in 2022 compared to providing cash of $139.3 million in 2021. The change is primarily due to $250.0 million of proceeds received for the sale of preferred units in MRHL and a $302.9 million increase in proceeds received for other financing activities in the current year period in comparison to the prior year period. In the current year period, we received $372.9 million of proceeds for other financing activities, mostly related to our MRL asset financing arrangements in comparison to $70.0 million of proceeds received from our Shreveport terminal asset financing arrangement in the prior year comparative period. These increases in cash provided by financing activities was partially offset by the $347.3 million repayment of the MRL credit facility. Please refer to Note 21 — “Redeemable Noncontrolling Interest” for additional information regarding the issuance and sale of preferred units and Note 9 - “Long-Term Debt - MRL Asset Financing Arrangements” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional information regarding the MRL asset financing arrangements. 66 Table of Contents 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): Capital improvement expenditures Replacement capital expenditures Environmental capital expenditures Turnaround capital expenditures Total 2023 Capital Spending Forecast 2022 Year Ended December 31, 2021 (In millions) 2020 $ $ 458.3 69.2 8.7 62.6 598.8 $ $ 53.9 24.0 5.0 61.0 143.9 $ $ 12.2 24.7 7.1 23.4 67.4 Excluding MRL capital expenditures, we are forecasting total capital expenditures of approximately $125 million to $145 million in 2023. Our forecasted capital expenditures for MRL are related to the final construction of a renewable hydrogen plant, feedstock pre-treatment unit and sustainable aviation fuel shipping facilities. In the first quarter of 2023, we expect to commission Montana Renewables renewable hydrogen plant, and we expect to complete construction of the feedstock pre-treatment unit and sustainable aviation fuel shipping facilities. We financed $150.0 million of the capital expenditures for these projects through our Master Lease Agreement with Stonebriar. We anticipate that capital expenditure requirements will be provided primarily through cash flow from operations, cash on hand, available borrowings under our revolving credit facility and by accessing capital markets as necessary. Further, we continue to anticipate that capital improvement expenditure requirements will be funded from borrowings under our revolving credit facilities or by funding accessed through capital markets. 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. Debt and Credit Facilities As of December 31, 2022, our primary debt and credit instruments consisted of: • • • • • • $500.0 million senior secured revolving credit facility maturing in January 2027 (after giving effect to the Third Amendment to our revolving credit facility (the “Credit Facility Amendment”)), subject to borrowing base limitations, with a maximum letter of credit sub-limit equal to $255.0 million, which amount may be increased to 90% of revolver commitments in effect with the consent of the Agent (as defined in the Credit Agreement) (“revolving credit facility”); $90.0 million senior secured revolving credit facility, with the option to request additional commitments of up to $15.0 million, maturing in November 2027 (the “MRL Revolving Credit Agreement”); $200.0 million of 9.25% Senior Secured First Lien Notes due 2024; $513.5 million of 11.00% Senior Notes due 2025; $325.0 million of 8.125% Senior Notes due 2027; and $370.1 million of financing through our MRL asset financing arrangements. We were in compliance with all covenants under our debt instruments in place as of December 31, 2022, and believe we have adequate liquidity to conduct our business. 67 Table of Contents Inventory Financing Please refer to Note 8 — “Inventory Financing Agreements” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional information regarding our Supply and Offtake Agreements. Short-Term Liquidity As of December 31, 2022, our principal sources of short-term liquidity were (i) approximately $337.6 million of availability under our revolving credit facility, (ii) inventory financing agreements related to our Great Falls facility, Shreveport facility and Great Falls renewable fuels facility and (iii) $35.2 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, please read Note 9 — “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” 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 of December 31, 2022, we had $200.0 million in 2024 Secured Notes, $513.5 million in 2025 Notes, and $325.0 million in 2027 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 of December 31, 2022, we had $370.1 million of debt outstanding for our MRL asset financing arrangements and $58.2 million of other debt outstanding for the Shreveport terminal asset financing arrangement. Borrowings under the MRL asset financing arrangements are obligations of our unrestricted subsidiaries MRL and MRHL solely, and are non-recourse to the Company and its restricted subsidiaries. For additional information regarding our MRL asset financing arrangements, see Note 9 — “Long-Term Debt” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” in this Annual Report. 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 more information regarding our senior notes, please read Note 9 — “Long-Term Debt” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” in this Annual Report. Master Derivative Contracts and Collateral Trust Agreement Under our credit support arrangements, our payment obligations under all of our master derivatives contracts for commodity hedging generally are secured by a first priority lien on our and our subsidiaries’ real property, plant and equipment, fixtures, intellectual property, certain financial assets, certain investment property, commercial tort claims, chattel paper, documents, instruments and proceeds of the foregoing (including proceeds of hedge arrangements). We had no additional letters of credit or cash margin posted with any hedging counterparty as of December 31, 2022. Our master derivatives contracts and Collateral Trust Agreement (as defined below) continue to impose a number of covenant limitations on our operating and financing activities, including limitations on liens on collateral, limitations on dispositions of collateral and collateral maintenance and insurance requirements. For financial reporting purposes, we do not offset the collateral provided to a counterparty against the fair value of our obligation to that counterparty. Any outstanding collateral is released to us upon settlement of the related derivative instrument liability. Our various hedging agreements contain language allowing our hedge counterparties to request additional collateral if a specified credit support threshold is exceeded. However, these credit support thresholds are set at levels that would require a substantial increase in hedge exposure to require us to post additional collateral. As a result, we do not expect further increases in fuel products crack spreads or interest rates to significantly impact our liquidity due to requirements to post additional collateral. 68 Table of Contents Additionally, we have a collateral trust agreement (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. The Collateral Trust Agreement limits to $150.0 million the extent to which forward purchase contracts for physical commodities are covered by, and secured under, the Collateral Trust Agreement and the Parity Lien Security Documents (as defined in the Collateral Trust Agreement). There is no such limit on financially settled derivative instruments used for commodity hedging. Subject to certain conditions set forth in the Collateral Trust Agreement, we have the ability to add secured hedging counterparties from time to time. Credit Ratings In January 2022, S&P reaffirmed a rating of B- on our senior unsecured notes and upgraded our Company outlook to stable. Also in January 2022, Moody’s reaffirmed a rating of Caa1 on our senior unsecured notes and a Company rating of B3, with the stable outlook maintained. Our 2024 Secured Notes issued in 2020 are rated B+ by S&P and B1 by Moody’s. Equity Transactions In April 2016, the board of directors of our general partner suspended payment of our quarterly cash distribution. The board of directors of our general partner will continue to evaluate our ability to reinstate the distribution. Seasonality Impacts on Liquidity The fuel and fuel related products that we manufacture, including asphalt products, are subject to seasonal demand and trends. Asphalt demand is generally lower in the first and fourth quarters of the year, as compared to the second and third quarters, due to the seasonality of the road construction and roofing industries we supply. Demand for gasoline and diesel is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic and agricultural activity. In addition, our natural gas costs can be higher during the winter months, as demand for natural gas as a heating fuel increases during the winter. As a result, our operating results for the first and fourth calendar quarters may be lower than those for the second and third calendar quarters of each year due to seasonality related to these and other products that we produce and sell. Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make judgements and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. Considerable judgement is often involved in making these determinations. Critical estimates are those that require the most difficult, subjective or complex judgements in the preparation of the financial statements and the accompanying notes. We evaluate these estimates and judgements on a regular basis. We believe our assumptions and estimates are reasonable and appropriate. However, the use of different assumptions could result in significantly different results and actual results could differ from those estimates. The following discussion of accounting estimates is intended to supplement the Summary of Significant Accounting Policies presented in Note 3 to our consolidated financial statements in Part II, Item 8. We consider an accounting estimate to be critical if: • The accounting estimate requires us to make assumptions about matters that are highly uncertain at the time the accounting estimate is made; and • We reasonably could have used different estimates in the current period, or changes in these estimates are reasonably likely to occur from period to period as new information becomes available, and a change in these estimates would have a material impact on our financial condition or results from operations. Valuation of Goodwill We assess goodwill for impairment annually and whenever events or changes in circumstances indicate its carrying value may not be recoverable. The Company tests goodwill either quantitatively or qualitatively for impairment. The Company assessed goodwill for impairment qualitatively and quantitatively during the year ended December 31, 2022 and qualitatively during the year ended December 31, 2021. In assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we assess relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgment and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and Company specific events and the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact. In the first step of the quantitative assessment, our assets and liabilities, including existing goodwill and other intangible assets, are assigned to the identified reporting units to determine the carrying value of the reporting units. If the carrying value of a reporting unit is in excess of its fair value, an impairment may exist, and we must perform an impairment analysis, in which the implied fair value of the goodwill is compared to its carrying value to determine the impairment charge, if any. When performing the quantitative assessment, as required in the impairment test, the fair value of the reporting unit is determined using the income approach. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, corporate tax structure and product offerings. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the reporting unit. If the carrying value of a reporting unit is in excess of its fair value, an impairment would be recognized in an amount equal to the excess that the carrying value exceeded the estimated fair value, limited to the carrying value of goodwill. Inputs used to estimate the fair value of the Company’s reporting units are considered Level 3 inputs of the fair value hierarchy and include the following: • The Company’s financial projections for its reporting units are based on its analysis of various supply and demand factors which include, among other things, industry-wide capacity, planned utilization rates, end-user demand, crack spreads, capital expenditures and economic conditions. Such estimates are consistent with those used in the Company’s planning and capital investment reviews and include recent historical prices and published forward prices. • The discount rate used to measure the present value of the projected future cash flows is based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. This discount rate is also compared to recent observable market transactions, if possible. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. Fair values calculated for the purpose of testing our goodwill for impairment are estimated using the expected present value of future cash flows method and comparative market prices when appropriate. Significant judgment is involved in performing these fair value estimates since the results are based on forecasted assumptions. Meaningful factors that would significantly impact our financial projections are changes in customer demand levels or loss of significant portions of our business. We believe that the assumptions and estimates used in the assessment of our goodwill as of October 1, 2022 were reasonable. Valuation of Finite Long-Lived Assets Property, plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated undiscounted future cash flows related to the asset are less than the carrying value, we recognize a loss equal to the difference between the carrying value and the estimated fair value, usually determined by the estimated discounted future cash flows of the asset. When a decision has been made to dispose of property, plant and equipment prior to the end of the previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life. Estimated undiscounted future cash flows are used for the purpose of testing our finite long-lived assets for impairment. Fair values calculated for the purpose of measuring impairments on finite long-lived assets are estimated using the expected present value of future cash flows method and comparative market prices when appropriate. Significant judgment is involved in estimating undiscounted future cash flows and performing these fair value estimates since the results are based on forecasted assumptions. We base our estimated undiscounted future cash flows and fair value estimates on projected financial information which we believe to be reasonable. However, actual results may differ from these projections. Valuation of Renewable Identification Numbers (“RINs”) Obligation We account for our current period RINs obligation by multiplying the quantity of RINs shortage (based on actual results) by the period end RINs spot price, which is recorded as an estimated RINs obligation in the consolidated balance sheets. This liability is revalued at the end of each subsequent accounting period, which produces non-cash mark-to-market adjustments that are reflected in cost of sales in the consolidated statements of operations (with the exception of RINs for compliance year 2019 related to the divested San Antonio refinery, which amount is reflected in other operating expense in the consolidated statements of operations). RINs generated by blending renewable fuels may be sold or held to offset future RINs Obligations. Any gains or losses from RINs sales are recorded in cost of sales in the consolidated statements of operations. The liabilities associated with our RINs obligation are considered recurring fair value measurements. Certain inputs used to estimate the fair value of our RINs Obligation are considered Level 2 inputs of the fair value hierarchy, as the inputs include RINs spot prices obtained from an independent pricing service. However, certain vintage RINs are very thinly traded, and the period end spot prices might not be an accurate reflection of the actual amount that we could purchase RINs in the open market in the quantities that would be required to satisfy our RINs volume obligation. The RFS allows small refineries to apply at any time for a Small Refinery Exemption (“SRE”) from the renewable blending requirements, and we have applied in respect of compliance years 2019, 2020, 2021 and 2022. The EPA has not acted on our 2021 or 2022 SRE petitions. Our 2019 and 2020 petitions were subject to a “blanket denial” in June 2022 (along with all other SRE petitions from all small refineries for those years). These denials were based on EPA’s across-the-board determination that no refinery suffers disproportionate economic hardship from the RFS program, a contention which was subsequently rejected by the Government Accountability Office. We have appealed the 2018, 2019 and 2020 SRE denials, with the Montana refinery appeal being heard in the D.C. Circuit (transferred from the Ninth Circuit) and the Shreveport refinery appeal being heard in the Fifth Circuit. The merits panel in the Fifth Circuit will also consider EPA’s argument that the Shreveport refinery appeal should be transferred to the D.C. Circuit. The Company filed motions in both appeals asking the circuit courts to stay our 2019 and 2020 RFS obligations while the merits appeals are pending. In January 2023, the Fifth Circuit granted the motion for stay relating to the Shreveport refinery, ruling that the Company is likely to be successful on the merits of its appeal on the basis that EPA’s denial was an unlawful retroactive application of a new small refinery hardship standard. The motion for stay relating to the Montana refinery remains pending in the D.C. Circuit. Please read Note 7 — “Commitments and Contingencies” for further information on our RINs obligation. We believe that our small refineries (“the refineries”) qualify for SREs on the merits and we have asked EPA to approve our petitions. The Company has previously applied for and received SREs through 2018, following a structure procedure administered by the EPA. According to documentation we have received from the EPA, the analysis prepared by the Department of Energy (“DOE”) under this procedure showed that the Company’s refineries met the criteria for disproportionate economic hardship for the 2018, 2019 and 2020 compliance years. The reversal of our previously approved 2018 SRE in April 2022, and the blanket denial in June 2022 by EPA of our 2019 and 2020 petitions were based on EPA’s retroactive across-the-board determination despite the affirmative findings from the DOE who recommended the SRE grant. Management believes that we have viable legal arguments to challenge the denials, including that the denials are inconsistent with the CAA, the Administrative Procedure Act, EPA’s regulations, the DOE’s analysis and/or the factual record, and are unlawful retroactive applications of a new standard. If our appeals are successful, a court would likely direct EPA to issue a new decision on the refineries’ SRE petitions or prevent EPA from enforcing RFS obligations on small refineries in the relevant years. However, as with any legal action, a challenge to an EPA decision denying the refineries’ SRE petitions may ultimately be unsuccessful. This would present a number of uncertainties and complexities caused primarily by the passage of time since we first submitted the SRE petitions, including for example the potential expiration and/or unavailability or limited availability in the market of vintage 2019 and 2020 RINs, the specifics of other potential forthcoming EPA actions, the results of other parties’ potential litigation avenues and outcomes, and post-litigation uncertainties around the timing and magnitude of any resolution. Based on current information we believe the most likely outcome is either successful appellate litigation or reaching an alternative resolution. If we are ultimately successful in obtaining the refineries’ SREs (or a non-enforcement equivalent), the value of the liability would be zero. If we are ultimately unsuccessful in our appeals, the timing, amount and form our actual liability may depend upon the resolution obtained, potentially as part of subsequent, additional litigation. For example, if resolution for the 2019 and 2020 compliance years used the market price of RINs on the day the EPA was obligated to rule on the refineries’ 2019 SRE petitions, the value of the liability would be approximately $50.7 million. Recent Accounting Pronouncements For a summary of recently issued and adopted accounting standards applicable to us, please read Note 3 — “Summary of Significant Accounting Policies” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” 69 Table of Contents Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks from adverse changes in commodity prices, the price of credits needed to comply with governmental programs, interest rates and foreign currency exchange rates. Information relating to quantitative and qualitative disclosures about material market risk is set forth below. Commodity Price Risk Derivative Instruments We are exposed to price risks due to fluctuations in the price of crude oil, refined products (primarily in our fuel products segment), natural gas and precious metals. We use various strategies to reduce our exposure to commodity price risk. We do not attempt to eliminate all of our risk as the costs of such actions are believed to be too high in relation to the risk posed to our future cash flows, earnings and liquidity. The strategies we use to reduce our risk utilize both physical forward contracts and financially settled derivative instruments, such as swaps, collars, options and futures, to attempt to reduce our exposure with respect to: • • • • • crude oil purchases and sales; refined product sales and purchases; natural gas purchases; precious metals; and fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such as NYMEX WTI, Light Louisiana Sweet, WCS, WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent. We manage our exposure to commodity markets, credit, volumetric and liquidity risks to manage our costs and volatility of cash flows as conditions warrant or opportunities become available. These risks may be managed in a variety of ways that may include the use of derivative instruments. Derivative instruments may be used for the purpose of mitigating risks associated with an asset, liability and anticipated future transactions and the changes in fair value of our derivative instruments will affect our earnings and cash flows; however, such changes should be offset by price or rate changes related to the underlying commodity or financial transaction that is part of the risk management strategy. We do not speculate with derivative instruments or other contractual arrangements that are not associated with our business objectives. Speculation is defined as increasing our natural position above the maximum position of our physical assets or trading in commodities, currencies or other risk bearing assets that are not associated with our business activities and objectives. Our positions are monitored routinely by a risk management committee and discussed with the board of directors of our general partner quarterly to ensure compliance with our stated risk management policy and documented risk management strategies. All strategies are reviewed on an ongoing basis by our risk management committee, which will add, remove or revise strategies in anticipation of changes in market conditions and/or in risk profiles. These changes in strategies are to position us in relation to our risk exposures in an attempt to capture market opportunities as they arise. Please read Note 10 — “Derivatives” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for a discussion of the accounting treatment for the various types of derivative instruments, for a further discussion of our hedging policies and for more information relating to our implied crack spreads of crude oil, diesel, and gasoline derivative instruments. Our derivative instruments and overall hedging positions are monitored regularly by our risk management committee, which includes executive officers. The risk management committee reviews market information and our hedging positions regularly to determine if additional derivatives activity is advised. A summary of derivative positions and a summary of hedging strategy are presented to our general partner’s Board of Directors quarterly. 70 Table of Contents Compliance Price Risk Renewable Identification Numbers We are exposed to market risks related to the volatility in the price of credits needed to comply with governmental programs. The EPA sets annual volume obligations for the percentage of renewable fuels that must be blended into transportation fuels consumed in the U.S., and as a producer of transportation fuels from petroleum, we are subject to those obligations. To the extent we are unable to physically blend renewable fuels to satisfy the EPA requirement, we may purchase RINs in the open market to satisfy the annual obligations. We have not entered into any derivative instruments to manage this risk. Holding other variables related to RINs obligations constant, a $1.00 increase in the price of RINs would be expected to have a negative impact on Net income (loss) of approximately $65.0 million per year. Interest Rate Risk Our exposure to interest rate changes on fixed and variable rate debt is limited to the fair value of the debt issued, which would not have a material impact on our earnings or cash flows. The following table provides information about the fair value of our fixed and variable rate debt obligations as of December 31, 2022 and December 31, 2021, which we disclose in Note 10 — “Long- Term Debt” and Note 11 — “Fair Value Measurements” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” Financial Instrument: 2023 Notes 2024 Secured Notes 2025 Notes 2027 Notes Revolving credit facility MRL credit facility MRL revolving credit agreement Shreveport terminal asset financing arrangement MRL asset financing arrangements December 31, 2022 December 31, 2021 Fair Value Carrying Value Fair Value Carrying Value $ $ $ $ $ $ $ $ $ — $ 203.7 $ 536.1 $ 305.4 $ 104.0 $ — $ — $ 58.2 $ 370.1 $ (In millions) — $ 199.3 $ 509.2 $ 321.5 $ 100.9 $ — $ (0.6) $ 57.2 $ 368.8 $ 325.6 $ 217.2 $ 598.1 $ — $ — $ 303.5 $ — $ 64.3 $ — $ 322.3 198.8 543.2 — (2.0) 296.2 — 63.0 — For our variable rate debt, if any, changes in interest rates generally do not impact the fair value of the debt instrument but may impact our future earnings and cash flows. We had a $500.0 million revolving credit facility as of December 31, 2022, with borrowings bearing interest at the prime rate or SOFR, at our option, plus the applicable margin. We had $104.0 million of outstanding variable rate debt as of December 31, 2022 and no outstanding variable rate debt as of December 31, 2021. Holding other variables constant (such as debt levels), a 100 basis point change in interest rates on our variable rate debt as of December 31, 2022, would be expected to have an impact on Net income (loss) of approximately $1.0 million per year. Foreign Currency Risk We have minimal exposure to foreign currency risk and as such the cost of hedging this risk is viewed to be in excess of the benefit of further reductions in our exposure to foreign currency exchange rate fluctuations. 71 Table of Contents Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Board of Directors of Calumet GP, LLC General Partner and the Partners of Calumet Specialty Products Partners, L.P. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Calumet Specialty Products Partners, L.P. (“the Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), partners’ capital (deficit) and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 15, 2023, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 72 Table of Contents Renewable Identification Numbers (“RINs”) Obligation Description of the Matter As of December 31, 2022, the Company’s RINs obligation was $476.8 million, comprised of the current obligation of $399.3 million and the long-term obligation of $77.5 million. As described in Notes 3 and 7 to the consolidated financial statements, the RINs obligation is an estimated provision for the future purchase of RINs in order to satisfy the U.S. Environmental Protection Agency’s (“EPA”) annual requirement to blend renewable fuels into certain transportation fuel products pursuant to the Renewable Fuel Standard. Auditing management’s RINs obligation was complex and judgmental due to estimation uncertainty in the Company’s determination of the fair value of the RINs obligation under the Renewable Fuel Standard. The complexity and estimation uncertainty was primarily due to the calculation of the RINs shortage and the independent pricing assumptions, respectively. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the RINs obligation estimation process. For example, we tested controls over management’s review of the methodology used to calculate the obligation and the RINs shortage and independent pricing assumptions, as noted above. Description of the Matter To audit the Company’s RINs obligation, our audit procedures included, among others, evaluating the appropriateness of management’s methodology to calculate the RINs obligation under the Renewable Fuel Standard including testing the completeness and accuracy of the underlying data used by management in estimating the fair value of the obligation. We involved our specialists to assist in our evaluation of management’s methodology. Additionally, we compared the spot prices utilized by the Company in their estimate of the RINs obligation to an independent pricing source. Valuation of Goodwill for the Performance Brands Reporting Unit At December 31, 2022, the Company’s Performance Brands reporting unit goodwill was $123.7 million. As described in Notes 3 and 6 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level, or more frequently if events or changes in circumstances indicate the goodwill might be impaired. The impairment test for goodwill consists of measuring the fair value of the reporting unit and comparing it to the reporting unit’s carrying amount. The Company performs its annual goodwill impairment testing on October 1 of each year. Auditing management’s annual goodwill impairment test was complex and judgmental because the estimates underlying the determination of fair value of the reporting unit involves management’s judgments on significant assumptions. In particular, management estimates fair value using the income approach which is sensitive to certain significant assumptions, such as forecasted revenue and related revenue growth rate, earnings before interest, taxes, depreciation and amortization (EBITDA), and the discount rate commensurate with the risks involved. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the Performance Brands goodwill impairment review process. For example, we tested controls over management’s review of the methodology used to calculate the fair value of the reporting unit and management’s review of the significant assumptions described above and the completeness and accuracy of the data to develop such estimates. To test the estimated fair value of the Company’s Performance Brands reporting unit, our audit procedures included, among others, assessing the appropriateness of the valuation methodology and testing the significant assumptions discussed herein. For example, we compared the significant assumptions in the prospective financial data used by management to current industry and economic trends and historical performance. We assessed the reasonableness of the forecasted future revenue growth rate and EBITDA by comparing the forecasts to historical results. We performed sensitivity analyses of certain significant assumptions to evaluate the change in the fair value resulting from changes in the significant assumptions. We also involved our valuation specialists to assist in the evaluation of the fair value methodology and certain significant assumptions in the fair value estimate. We further tested the completeness and accuracy of the underlying data used in the fair value estimate. We have served as the Company’s auditor since 2002. /s/ Ernst & Young LLP Indianapolis, Indiana March 15, 2023 73 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS Year Ended December 31, 2022 2021 (In millions, except unit data) Current assets: Cash and cash equivalents Accounts receivable, net: ASSETS Trade, less allowance for credit losses of $1.3 million and $2.0 million, respectively Other Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Goodwill Other intangible assets, net Operating lease right-of-use assets Restricted cash Other noncurrent assets, net Total assets Current liabilities: LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) Accounts payable Accrued interest payable Accrued salaries, wages and benefits Other taxes payable Obligations under inventory financing agreements Current portion of RINs obligation Other current liabilities Current portion of operating lease liabilities Current portion of long-term debt Derivative liabilities Total current liabilities Pension and postretirement benefit obligations Other long-term liabilities Long-term operating lease liabilities Long-term RINs obligation, less current portion Long-term debt, less current portion Total liabilities Commitments and contingencies Redeemable noncontrolling interest Partners’ capital (deficit): Limited partners’ interest (79,189,583 units and 78,676,262 units, issued and outstanding at December 31, 2022 and 2021, respectively) General partner’s interest Accumulated other comprehensive loss Total partners’ capital (deficit) Total liabilities and partners’ capital (deficit) See accompanying notes to consolidated financial statements. 74 $ $ $ $ $ $ $ 35.2 $ 245.7 22.3 268.0 498.0 19.2 820.4 1,482.0 173.0 36.3 107.5 — 122.6 2,741.8 442.4 34.6 93.0 9.5 221.8 399.3 34.3 70.7 20.0 26.5 1,352.1 4.8 18.3 37.1 77.5 1,539.7 3,029.5 250.0 (529.9) 0.5 (8.3) (537.7) 2,741.8 $ $ $ $ $ $ 38.1 216.8 36.2 253.0 326.6 14.9 632.6 949.7 173.0 45.8 157.7 83.8 85.3 2,127.9 301.0 27.7 93.7 11.6 173.0 200.1 20.2 65.1 7.4 — 899.8 6.7 15.8 93.1 78.8 1,418.8 2,513.0 — (378.8) 3.8 (10.1) (385.1) 2,127.9 Table of Contents Sales Cost of sales Gross profit Operating costs and expenses: Selling General and administrative Taxes other than income taxes Loss on impairment and disposal of assets Other operating expense Operating income (loss) Other income (expense): Interest expense Debt extinguishment costs Gain (loss) on derivative instruments Other income (expense) Total other expense Net loss before income taxes Income tax expense Net loss Net loss attributable to noncontrolling interest Net loss attributable to partners Allocation of net loss to partners: Net loss attributable to partners Less: General partners’ interest in net loss Net loss available to limited partners Weighted average limited partner units outstanding: Basic and diluted Limited partners’ interest basic and diluted net loss per unit: Limited partners’ interest CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS 2022 Year Ended December 31, 2021 (In millions, except unit and per unit data) 4,686.7 $ 4,335.9 350.8 3,148.0 $ 3,005.1 142.9 2020 53.9 141.0 13.7 0.7 8.1 133.4 (175.9) (41.4) (81.7) (2.8) (301.8) (168.4) 3.4 (171.8) $ (6.7) (165.1) $ 52.8 151.1 12.5 4.1 8.0 (85.6) (149.5) (0.5) (23.3) 0.3 (173.0) (258.6) 1.5 (260.1) $ — (260.1) $ (165.1) $ (260.1) $ (3.3) (161.8) $ (5.2) (254.9) $ 2,268.2 2,169.1 99.1 47.8 91.1 9.8 6.8 15.5 (71.9) (125.9) — 52.4 (2.5) (76.0) (147.9) 1.1 (149.0) — (149.0) (149.0) (3.0) (146.0) 79,336,283 78,980,839 78,369,091 (2.04) $ (3.23) $ (1.86) $ $ $ $ $ $ See accompanying notes to consolidated financial statements. 75 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Net loss Other comprehensive income (loss): Cash flow hedges: Cash flow hedge loss Defined benefit pension and retiree health benefit plans Total other comprehensive income (loss) Comprehensive loss Less: Comprehensive loss attributable to noncontrolling interest Comprehensive loss attributable to partners’ capital (deficit) 2022 Year Ended December 31, 2021 (In millions) 2020 (171.8) $ (260.1) $ (149.0) — 1.8 1.8 (170.0) (6.7) (163.3) $ $ — 2.2 2.2 (257.9) — (257.9) $ $ (0.2) (1.5) (1.7) (150.7) — (150.7) $ $ $ See accompanying notes to consolidated financial statements. 76 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (DEFICIT) Accumulated Other Comprehensive Loss Partners’ Capital (Deficit) General Partner (In millions) Limited Partners Total Balance at December 31, 2019 Other comprehensive loss Net loss attributable to partners Settlement of tax withholdings on equity-based incentive compensation Amortization of phantom units Balance at December 31, 2020 Other comprehensive income Net loss attributable to partners Settlement of tax withholdings on equity-based incentive compensation Amortization of phantom units Balance at December 31, 2021 Other comprehensive income Net loss attributable to partners Settlement of phantom units Settlement of tax withholdings on equity-based incentive compensation Modification of phantom units Amortization of phantom units Adjustment to ASC 480 redemption value Balance at December 31, 2022 $ $ $ $ (10.6) (1.7) — — — (12.3) 2.2 — — — (10.1) 1.8 — — — — — — (8.3) $ $ $ $ 12.0 — (3.0) — — 9.0 — (5.2) — — 3.8 — (3.3) — — — — — 0.5 $ $ $ $ 20.2 — (146.0) (0.5) 1.0 (125.3) — (254.9) (0.6) 2.0 (378.8) — (161.8) 6.7 (4.1) 13.5 5.7 (11.1) (529.9) $ $ $ $ 21.6 (1.7) (149.0) (0.5) 1.0 (128.6) 2.2 (260.1) (0.6) 2.0 (385.1) 1.8 (165.1) 6.7 (4.1) 13.5 5.7 (11.1) (537.7) See accompanying notes to consolidated financial statements. 77 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS Operating activities Net loss Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization Amortization of turnaround costs Non-cash interest expense Debt extinguishment costs Non-cash RINs expense Unrealized (gain) loss on derivative instruments Loss on impairment and disposal of assets Equity based compensation Lower of cost or market inventory adjustment Other non-cash activities Changes in assets and liabilities: Accounts receivable Inventories Prepaid expenses and other current assets Turnaround costs Accounts payable Accrued interest payable Accrued salaries, wages and benefits Other taxes payable Other liabilities Net cash provided by (used in) operating activities Investing activities Additions to property, plant and equipment Acquisition of businesses, net of cash acquired Proceeds from sale of property, plant and equipment Net cash provided by discontinued operations Net cash used in investing activities Financing activities Proceeds from borrowings — revolving credit facility Repayments of borrowings — revolving credit facility Proceeds from borrowings — senior notes Repayments of borrowings — senior notes Payments on finance lease obligations Proceeds from inventory financing Payments on inventory financing Proceeds from sale of redeemable noncontrolling interest in subsidiary Payments for issuance of Preferred Units Proceeds from MRL Credit Facility Repayments of borrowings — MRL Credit Facility Proceeds from other financing obligations Payments on other financing obligations Debt issuance costs Net cash provided by financing activities Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Cash and cash equivalents Restricted cash Supplemental disclosure of cash flow information Interest paid, net of capitalized interest Supplemental disclosure of non-cash investing activities Non-cash property, plant and equipment additions 2022 Year Ended December 31, 2021 (In millions) 2020 $ (171.8) $ (260.1) $ (149.0) 98.3 23.1 17.6 41.4 197.9 45.9 0.7 15.8 19.4 2.2 (15.0) (190.8) (5.2) (62.6) 57.3 8.4 9.5 (2.1) 10.6 100.6 (536.2) — 0.2 — (536.0) 1,695.1 (1,591.1) 325.0 (363.1) (0.9) 2,166.0 (2,132.6) 250.0 (4.4) — (347.3) 372.9 (15.6) (5.3) 348.7 (86.7) 121.9 35.2 35.2 — 151.4 136.9 $ $ $ $ $ 107.7 17.0 10.6 0.5 149.5 24.4 4.1 50.7 (44.7) 2.4 (91.4) (27.0) (3.7) (61.0) 71.0 (3.2) 17.1 2.1 (10.0) (44.0) (82.9) — 0.1 — (82.8) 1,122.1 (1,230.1) — (150.0) (0.6) 1,046.7 (999.2) — — 300.0 — 70.0 (7.6) (12.0) 139.3 12.5 109.4 121.9 38.1 83.8 142.9 51.4 $ $ $ $ $ 105.1 14.6 6.0 — 116.4 (2.8) 6.8 5.5 24.0 (2.1) 25.5 14.0 0.6 (23.4) (38.1) (1.0) (12.5) (2.3) (24.5) 62.8 (44.0) (3.3) 0.1 0.9 (46.3) 1,130.7 (1,022.7) — — (0.5) 756.1 (786.0) — — — — 31.4 (33.4) (1.8) 73.8 90.3 19.1 109.4 109.4 — 120.2 4.6 $ $ $ $ $ See accompanying notes to consolidated financial statements. 78 Table of Contents 1. Description of the Business CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Calumet Specialty Products Partners, L.P. (the “Company”) is a publicly-traded Delaware limited partnership listed on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “CLMT.” The general partner of the Company is Calumet GP, LLC, a Delaware limited liability company. As of December 31, 2022, the Company had 79,189,583 limited partner common units and 1,616,114 general partner equivalent units outstanding. The general partner owns 2% of the Company and all of the incentive distribution rights (as defined in the Company’s partnership agreement, “IDRs”), while the remaining 98% is owned by limited partners. The Company manufactures, formulates, and markets a diversified slate of specialty branded products to customers in various consumer-facing and industrial markets. Calumet is headquartered in Indianapolis, Indiana and operates twelve facilities throughout North America. 2. Change in Accounting Policy During the first quarter of fiscal 2021, the Company changed its method of accounting for shipping and handling costs, which are primarily costs paid to third-party shippers for transporting products to customers. Under the new method of accounting, the Company includes shipping costs in cost of sales, whereas previously, they were included in operating costs and expenses under the caption transportation expense. The Company believes that including these expenses in cost of sales is preferable, as it better aligns these costs with the related revenue in the gross profit calculation and is consistent with the practices of other industry peers. This change in accounting principle has been applied retrospectively, and the consolidated statements of operations reflect the effect of this accounting principle change for all periods presented. This reclassification had no impact on net income (loss) before income taxes, net income (loss) attributable to limited partners, limited partners’ interest basic net income (loss) per unit, or limited partners’ interest diluted net income (loss) per unit. The consolidated balance sheets, consolidated statements of comprehensive income (loss), consolidated statements of partners’ capital (deficit), and consolidated statements of cash flows were not impacted by this accounting principle change. The consolidated statement of operations for the year ended December 31, 2020 has been adjusted to reflect this change in accounting policy. The impact of the adjustment for the year ended December 31, 2020 was an increase of $111.0 million to cost of sales and a corresponding decrease to transportation expense in the consolidated statements of operations. 3. Summary of Significant Accounting Policies Consolidation The consolidated financial statements and related notes reflect the accounts of the Company, its wholly-owned subsidiaries, and its majority-owned subsidiaries. All intercompany profits, transactions and balances have been eliminated. Reclassifications Certain amounts in the prior years’ consolidated financial statements have been reclassified to conform to the current year presentation. Use of Estimates The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash include all highly liquid investments with a maturity of three months or less at the time of purchase. Restricted cash as of December 31, 2021 represents cash that was legally restricted under the MRL Credit Facility, and it is presented as a non-current asset because it is only available for capital additions related to the renewable diesel project. 79 Table of Contents Accounts Receivable CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company performs periodic credit evaluations of customers’ financial condition and generally does not require collateral. Accounts receivable are carried at their face amounts. The Company maintains an allowance for credit losses for estimated losses in the collection of accounts receivable. The Company makes estimates regarding the future ability of its customers to make required payments based on historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, expected future trends and other factors that may affect customers’ ability to pay. Individual accounts are written off against the allowance for credit losses after all reasonable collection efforts have been exhausted. The activity in the allowance for credit losses was as follows (in millions): Beginning balance Provision Write-offs, net Ending balance Inventories 2022 December 31, 2021 2020 $ $ 2.0 (0.7) — 1.3 $ $ 0.8 1.2 — 2.0 $ $ 0.9 (0.1) — 0.8 The cost of inventory is recorded using the last-in, first-out (“LIFO”) method. Costs include crude oil and other feedstocks, labor, processing costs and refining overhead costs. Inventories are valued at the lower of cost or market value. The replacement cost of these inventories, based on current market values, would have been $99.9 million and $64.9 million higher than the carrying value of inventory as of December 31, 2022 and 2021, respectively. On March 31, 2017, June 19, 2017 and November 2, 2022, the Company sold inventory comprised of crude oil, refined products and renewable feedstocks to Macquarie Energy North America Trading Inc. (“Macquarie”) under Supply and Offtake Agreements as described in Note 8 — “Inventory Financing Agreements” related to the Great Falls, Shreveport and Montana Renewables facilities, respectively. Inventories consist of the following (in millions): Titled Inventory December 31, 2022 Supply & Offtake Agreements (1) Total Titled Inventory December 31, 2021 Supply & Offtake Agreements (1) Raw materials Work in process Finished goods $ $ 99.6 62.5 137.3 299.4 $ $ 22.5 95.7 80.4 198.6 $ $ 122.1 158.2 217.7 498.0 $ $ 41.0 52.5 121.1 214.6 $ $ 19.9 28.5 63.6 112.0 $ $ Total 60.9 81.0 184.7 326.6 (1) Amounts represent LIFO value and do not necessarily represent the value at which the inventory was sold. Please read Note 8 - “Inventory Financing Agreements” for further information. Under the LIFO inventory method, the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs, resulting in a better matching of costs and revenues. For the years ended December 31, 2022 and December 31, 2021, the Company recorded decreases (exclusive of lower of cost or market (“LCM”) adjustments) of $12.8 million and $5.6 million, respectively, in cost of sales in the consolidated statements of operations due to the liquidation of inventory layers. For the year ended December 31, 2020, the Company recorded an increase (exclusive of LCM adjustments) of $4.5 million in cost of sales in the consolidated statements of operations due to the liquidation of inventory layers. 80 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. During the year ended December 31, 2022, the Company recorded an increase in cost of sales in the consolidated financial statements of operations of $19.4 million, substantially all of which was the result of declining market prices for renewable feedstocks at our Montana Renewables facility. During the year ended December 31, 2021, the Company recorded a decrease in cost of sales in the consolidated statements of operations of $44.7 million due to the sale of inventory previously adjusted through the LCM valuation. During the year ended December 31, 2020, the Company recorded an increase in cost of sales in the consolidated statements of operations of $24.0 million as a result of declining market prices. Derivatives The Company is exposed to fluctuations in the price of numerous commodities, such as crude oil (its principal raw material), as well as the sales prices of gasoline, diesel, natural gas and jet fuel. Given the historical volatility of commodity prices, these fluctuations can significantly impact sales, gross profit and net income. Therefore, the Company utilizes derivative instruments primarily to minimize its price risk and volatility of cash flows associated with the purchase of crude oil, natural gas, and the sale of fuel products. The Company employs various hedging strategies and does not hold or issue derivative instruments for trading purposes. For further information, please read Note 10 - “Derivatives.” On a regular basis, the Company enters into commodity contracts with counterparties for the purchase or sale of crude oil, blendstocks and various finished products. These contracts usually qualify for the normal purchase / normal sale exemption under ASC 815 and, as such, are not measured at fair value. Property, Plant and Equipment Property, plant and equipment are stated on the basis of cost. Depreciation is calculated using the straight-line method over the estimated useful lives. Assets under finance leases are amortized over the lesser of the useful life of the asset or the term of the lease. Property, plant and equipment, including depreciable lives, consisted of the following (in millions): Land Buildings and improvements (10 to 40 years) Machinery and equipment (10 to 20 years) Furniture, fixtures and software (5 to 10 years) Assets under finance leases (1 to 14 years) Construction-in-progress (1) Less accumulated depreciation December 31, 2022 2021 $ $ 8.9 35.6 2,153.7 48.7 6.9 222.5 2,476.3 (994.3) 1,482.0 $ $ 8.7 35.5 1,649.6 47.9 8.3 116.3 1,866.3 (916.6) 949.7 (1) Assets under finance leases consist of buildings and machinery and equipment. As of December 31, 2022 and 2021, finance lease assets are recorded net of accumulated amortization of $4.1 million and $4.1 million, respectively. Under the composite depreciation method, the cost of partial retirements of a group is charged to accumulated depreciation. However, when there are dispositions of complete groups or significant portions of groups, the cost and related accumulated depreciation are retired, and any gain or loss is reflected in earnings. During 2022, 2021 and 2020, the Company incurred $194.5 million, $151.1 million and $126.3 million, respectively, of interest expense of which $18.6 million, $1.6 million and $0.4 million, respectively, was capitalized as a component of property, plant and equipment. The Company periodically assesses its operations and legal requirements to determine if recognition of an asset retirement obligation is necessary. The Company has not recorded an asset retirement obligation as of December 31, 2022 or 2021 given the timing of any retirement and related costs are currently indeterminable. 81 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During the years ended December 31, 2022, 2021 and 2020, the Company recorded $88.7 million, $95.9 million and $91.1 million, respectively, of depreciation expense on its property, plant and equipment. Depreciation expense included $0.7 million, $0.7 million and $0.6 million for the years ended 2022, 2021 and 2020, respectively, related to the Company’s finance lease assets. The Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized software is amortized using the straight-line method over five years. As of December 31, 2022 and 2021, the Company had $43.5 million and $42.8 million, respectively, of capitalized software costs. As of December 31, 2022 and 2021, the Company had $41.4 million and $36.0 million, respectively, of accumulated depreciation related to the capitalized software costs. During the years ended December 31, 2022, 2021 and 2020, the Company recorded $5.4 million, $7.8 million and $7.4 million, respectively, of amortization expense on capitalized computer software. Goodwill Goodwill represents the excess of purchase price over fair value of the net assets acquired in various acquisitions. Please read Note 6 - “Goodwill and Other Intangible Assets” for more information. The Company assesses goodwill for impairment annually as of October 1st and whenever events or changes in circumstances indicate its carrying value may not be recoverable in accordance with ASC 350, Intangibles — Goodwill and Other (Topic 350) and ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Under ASC 350, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. The Company assessed goodwill for impairment qualitatively and quantitatively for the year ended December 31, 2022 and qualitatively for the year ended December 31, 2021. In assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgment and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and Company specific events and making the assessment on whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact. In the first step of the quantitative assessment, the Company’s assets and liabilities, including existing goodwill and other intangible assets, are assigned to the identified reporting units to determine the carrying value of the reporting units. Under ASU 2017-04, goodwill impairment testing is done by comparing the fair value of the reporting unit to its carrying value. If the carrying amount exceeds the fair value, the Company would recognize an impairment charge for the amount that the reporting unit's carrying value exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. When performing the quantitative assessment, the fair value of the reporting units is determined using the income approach. The income approach focuses on the income-producing capability of the reporting unit, measuring the current value of the reporting unit by calculating the present value of its future economic benefits such as cash earnings, cost savings, corporate tax structure and product offerings. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the reporting unit. For more information, please read Note 6 — “Goodwill and Other Intangible Assets.” Finite-Lived Intangible Assets Finite-lived intangible assets consist of intangible assets associated with customer relationships, tradenames, trade secrets, patents and royalty agreements that were acquired in various acquisitions. The majority of these assets are being amortized using undiscounted estimated future cash flows over the term of the related agreements. Intangible assets associated with customer relationships are being amortized using the undiscounted estimated future cash flows method based upon assumed rates of annual customer attrition. For more information, please read Note 6 — “Goodwill and Other Intangible Assets.” 82 Table of Contents Other Noncurrent Assets CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Other noncurrent assets include turnaround costs. Turnaround costs represent capitalized costs associated with the Company’s periodic major maintenance and repairs and the net carrying value of turnaround costs included in other noncurrent assets in the consolidated balance sheets were $119.7 million and $82.3 million as of December 31, 2022 and 2021, respectively. The Company capitalizes these costs and amortizes the costs on a straight-line basis over the lives of the turnaround assets which is generally two to five years. These amounts are net of accumulated amortization of $54.0 million and $41.5 million at December 31, 2022 and 2021, respectively. Renewable Identification Numbers (“RINs”) Obligation The Company’s RINs volume obligation (“RVO”) is an estimated provision for the future purchase of RINs in order to satisfy the U.S. Environmental Protection Agency’s (“EPA”) requirement to blend renewable fuels into certain transportation fuel products pursuant to the Renewable Fuel Standard (“RFS”). A RIN is a 38-character number assigned to each physical gallon of renewable fuel produced in or imported into the United States. The EPA sets annual volume obligations for the percentage of renewable fuels that must be blended into transportation fuels consumed in the U.S. and, as a producer of transportation fuels from petroleum, the Company is subject to those obligations. Compliance is demonstrated by tendering RINs to the EPA documenting that blending has been accomplished. To the extent the Company is unable to physically blend renewable fuels to satisfy the EPA requirement, it may purchase RINs in the open market to satisfy the annual obligations. The Company accounts for its current period RVO by multiplying the quantity of RINs shortage (based on actual results) by the period end RINs spot price, which is recorded as both a current and long-term liability in the consolidated balance sheets. These liabilities are revalued at the end of each subsequent accounting period, which produce non-cash mark-to-market adjustments that are reflected in cost of sales in the consolidated statements of operations (with the exception of RINs for compliance year 2019 related to the San Antonio refinery, which amount is reflected in other operating expense in the consolidated statements of operations). RINs generated by blending may be sold or held to offset future RVO. Any gains or losses from RINs sales are recorded in cost of sales in the consolidated statements of operations. The liabilities associated with the Company’s RVO are considered recurring fair value measurements. Please read Note 7 — “Commitments and Contingencies” for further information on the Company’s RVO. Impairment of Long-Lived Assets The Company periodically evaluates the carrying value of long-lived assets to be held and used, including finite-lived intangible assets, when events or circumstances warrant such a review. The carrying value of a long-lived asset to be held and used is considered impaired when the anticipated separately identifiable undiscounted cash flows from such an asset are less than the carrying value of the asset. In such an event, a write-down of the asset would be recorded through a charge to operations, based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using anticipated cash flows assumed by a market participant discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of other than by sale are considered held and used until disposal. During the years ended December 31, 2022 and 2021, the Company did not identify any impairment indicators that suggested the carrying values of its long-lived assets are not recoverable at the asset groups within the Specialty Products and Solutions, Montana/Renewables, Performance Brands and Corporate segments. As a result of the long-lived asset impairment assessment performed, no impairment charges were recorded for the years ended December 31, 2022 and 2021. For the year ended December 31, 2020, the Company recorded a loss of $5.1 million for the write-off of an other receivable for payments due from an unconsolidated affiliate, which is included in loss on impairment and disposal of assets in the consolidated statements of operations. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue Recognition, which states that revenue is recognized when control of the promised goods are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. Please read Note 4 - “Revenue Recognition” for additional information on our revenue recognition accounting policies and elections. Revenues associated with transactions commonly called buy/sell contracts, in which the purchase and sale of inventory with the same counterparty are entered into “in contemplation” of one another, are combined and reported as a net purchase in cost of sales in the consolidated statements of operations. 83 Table of Contents Concentrations of Credit Risk CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company performs periodic credit evaluations of its customers’ financial condition and in some instances requires cash in advance or letters of credit prior to shipment for domestic orders. For international orders, letters of credit are generally required, and the Company maintains insurance policies which cover certain export orders. The Company maintains an allowance for credit losses account for estimated losses resulting from the inability of its customers to make required payments. The allowance for credit losses is developed based on several factors including historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions, expected future trends and other factors that may affect customers’ ability to pay, which exist as of the balance sheet dates. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company has derivative positions with a limited number of counterparties. The evaluation of these counterparties is performed quarterly in connection with the Company’s ASC 820-10, Fair Value Measurements and Disclosures, valuations to determine the impact of the counterparty credit risk on the valuation of its derivative instruments. Earnings per Unit The Company calculates earnings per unit under ASC 260-10, Earnings per Share. The Company treats incentive distribution rights (“IDRs”) as participating securities for the purposes of computing earnings per unit in the period that the general partner becomes contractually obligated to receive IDRs. Also, the undistributed earnings are allocated to the partnership interests based on the allocation of earnings to the Company’s partners’ capital accounts as specified in the Company’s partnership agreement. When distributions exceed earnings, net income is reduced by the actual distributions with the resulting net loss being allocated to capital accounts as specified in the Company’s partnership agreement. Unit-Based Compensation For unit-based compensation equity awards granted, compensation expense is recognized in the Company’s consolidated financial statements on a straight-line basis over the awards’ vesting periods based on their fair values on the dates of grant. The unit-based compensation awards vest over a period not exceeding four years. The amount of compensation expense recognized at any date is at least equal to the portion of the grant date value of the award that is vested at that date. For more information, please read Note 13 — “Unit-Based Compensation.” Unit-based compensation liability awards are awards that are currently expected to be settled in cash on their vesting dates, rather than in equity units (“Liability Awards”). Liability Awards are recorded in accrued salaries, wages and benefits based on the vested portion of the fair value of the awards on the balance sheet date. The fair value of Liability Awards is updated at each balance sheet date and changes in the fair value of the vested portions of the Liability Awards are recorded as increases or decreases to compensation expense. The Company recognizes forfeitures as they occur. Please read Note 13 — “Unit-Based Compensation” for more information on Liability Awards. Advertising Expenses The Company expenses advertising costs as incurred which totaled $9.1 million, $7.4 million and $4.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Advertising expenses are reported as selling expenses in the consolidated statements of operations. Recently Adopted Accounting Pronouncements On January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which changed the impairment model for most financial instruments. Previous guidance required the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under ASU 2016-13, the Company is required to use a current expected credit loss (“CECL”) model that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of the update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. The result of the adoption of ASU 2016-13 was de-minimis and did not result in an adjustment to beginning partners’ capital (deficit). The allowance for credit losses for accounts receivable was $1.3 million and $2.0 million at December 31, 2022 and 2021, respectively. 84 Table of Contents 4. Revenue Recognition CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of the promised goods are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines the performance obligations and assesses whether each promised good is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Products The Company manufactures, formulates, and markets a diversified slate of specialty branded products to customers in various consumer-facing and industrial markets. In addition, the Company produces fuel and fuel related products, including gasoline, diesel, jet fuel, asphalt, and other fuels products, as well as renewable diesel and renewable naphtha. At our Montana Renewables facility, we expect to have the future capability to process a variety of geographically advantaged renewable feedstocks into renewable fuels, including: renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha. These renewable fuels are, or are expected to be, distributed into renewable markets in the western half of North America. The Company also blends, packages and markets high-performance branded specialty products through its Royal Purple, Bel-Ray, and TruFuel brands. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to variable consideration such as product returns, rebates or other discounts to determine the net consideration to which the Company expects to be entitled. The Company transfers control and recognizes revenue upon shipment to the customer or, in certain cases, upon receipt by the customer in accordance with contractual terms. Revenue is recognized when obligations under the terms of a contract with a customer are satisfied and control of the promised goods are transferred to the customer. The contract with the customer states the final terms of the sale, including the description, quantity and price of each product or service purchased. For fuel products, payment is typically due in full between 2 to 30 days of delivery or the start of the contract term, such that payment is typically collected 2 to 30 days subsequent to the satisfaction of performance obligations. For specialty products, payment is typically due in full between 30 to 90 days of delivery or the start of the contract term, such that payment is typically collected 30 to 90 days subsequent to the satisfaction of performance obligations. In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The expected costs associated with a product assurance warranty continues to be recognized as expense when products are sold. The Company does not offer promised services that could be considered warranties that are sold separately or provide a service in addition to assurance that the related product complies with agreed upon specifications. The Company establishes provisions based on the methods described in ASC 606 for estimated returns and warranties as variable consideration when determining the transaction price. Excise and Sales Taxes The Company assesses, collects and remits excise taxes associated with the sale of certain of its fuel products. Furthermore, the Company collects and remits sales taxes associated with certain sales of its products to non-exempt customers. The Company excludes excise taxes and sales taxes that are collected from customers from the transaction price in its contracts with customers. Accordingly, revenue from contracts with customers is net of sales-based taxes that are collected from customers and remitted to taxing authorities. Shipping and Handling Costs Shipping and handling costs are deemed to be fulfillment activities rather than a separate distinct performance obligation. Cost of Obtaining Contracts The Company may incur incremental costs to obtain a sales contract, which under ASC 606 should be capitalized and amortized over the life of the contract. The Company has elected to apply the practical expedient in ASC 340-40-50-5 allowing the Company to expense these costs since the contracts are short-term in nature with a contract term of one year or less. 85 Table of Contents Contract Balances CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Under product sales contracts, the Company invoices customers for performance obligations that have been satisfied, at which point payment is unconditional. Accordingly, a product sales contract does not give rise to contract assets or liabilities under ASC 606. The Company’s receivables, net of allowance for expected credit losses from contracts with customers as of December 31, 2022 and 2021 was $245.7 million and $216.8 million, respectively. Transaction Price Allocated to Remaining Performance Obligations The Company’s product sales are short-term in nature with a contract term of one year or less. The Company has utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Additionally, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. 5. Leases The Company has various operating and finance leases primarily for the use of land, storage tanks, railcars, equipment, precious metals and office facilities that have remaining lease terms of greater than one year to seventeen years, some of which include options to extend the lease for up to 33 years, and some of which include options to terminate the lease within one year. Supplemental balance sheet information related to the Company’s leases for the periods presented were as follows (in millions): Assets: Operating lease assets Finance lease assets Total leased assets Liabilities: Current Operating Finance Non-current Operating Finance Total lease liabilities Classification: Operating lease right-of-use assets Property, plant and equipment, net (1) Current portion of operating lease liabilities Current portion of long-term debt Long-term operating lease liabilities Long-term debt, less current portion December 31, 2022 December 31, 2021 $ $ $ $ 107.5 $ 2.8 110.3 $ 70.7 $ 0.9 37.1 2.5 111.2 $ 157.7 4.2 161.9 65.1 0.8 93.1 3.2 162.2 (1) As of December 31, 2022 and 2021, finance lease assets are recorded net of accumulated amortization of $4.1 million and $4.1 million, respectively. 86 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense related to the Company’s leases for the periods presented were as follows (in millions): Lease Costs: Fixed operating lease cost Short-term operating lease cost (2) Variable operating lease cost Finance lease cost: (1) Amortization of finance lease assets Interest on lease liabilities Total lease cost Classification: Cost of Sales; SG&A Expenses Cost of Sales; SG&A Expenses Cost of Sales; SG&A Expenses Cost of Sales Interest expense 2022 December 31, 2021 2020 $ $ 75.4 $ 8.2 19.2 0.7 1.3 104.8 $ 51.5 7.8 13.8 0.7 0.4 74.2 $ $ 46.2 8.6 1.9 0.6 0.4 57.7 (1) (2) The Company’s leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. The Company’s railcar leases typically include a mileage limit the railcar can travel over the life of the lease. For any mileage incurred over this limit, the Company is obligated to pay an agreed upon dollar value for each mile that is traveled over the limit. Operating lease expense included in the consolidated statements of operations was $102.8 million, $73.1 million and $56.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Cash paid related to operating lease obligations approximated lease expense for 2022, 2021 and 2020, respectively. As of December 31, 2022, the Company had estimated minimum commitments for the payment of rentals under leases which, at inception, had a noncancelable term of more than one year, as follows (in millions): Maturity of Lease Liabilities 2023 2024 2025 2026 2027 Thereafter Total Less: Interest Present value of lease liabilities Less obligations due within one year Long-term lease obligations Operating Leases (1) Finance (2) Leases Total $ $ $ $ 75.4 16.6 11.3 4.7 2.9 7.2 118.1 10.3 107.8 70.7 37.1 $ $ $ $ 1.1 1.1 0.8 0.7 0.2 — 3.9 0.5 3.4 0.9 2.5 $ $ $ $ 76.5 17.7 12.1 5.4 3.1 7.2 122.0 10.8 111.2 71.6 39.6 (1) (2) As of December 31, 2022, the Company’s operating lease payments included no material options to extend lease terms that are reasonably certain of being exercised. The Company has no legally binding minimum lease payments for leases signed but not yet commenced as of December 31, 2022. As of December 31, 2022, the Company’s finance lease payments included no material options to extend lease terms that are reasonably certain of being exercised. In addition, the Company has no legally binding minimum lease payments for leases that have been signed but not yet commenced as of December 31, 2022. 87 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Weighted-Average Lease Term and Discount Rate The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating and finance leases for the periods presented were as follows: Lease Term and Discount Rate: Weighted-average remaining lease term (years): Operating leases Finance leases Weighted-average discount rate: Operating leases Finance leases 6. Goodwill and Other Intangible Assets December 31, 2022 December 31, 2021 2.7 3.9 6.9 % 7.1 % 3.1 4.8 7.0 % 7.3 % For the years ended December 31, 2022 and 2021, the Company performed its annual goodwill assessment for each of the years then ended, and determined that the fair value of each of its reporting units with goodwill exceeded its carrying value. Thus, no impairment charge for goodwill related to the Specialty Products and Solutions segment or Performance Brands segment was recorded in the consolidated statements of operations within asset impairment for the years ended December 31, 2022 and 2021, respectively. There is no goodwill within the reporting units for the Montana/Renewables segment or the Corporate segment. Inputs used to estimate the fair value of the Company’s reporting units are considered Level 3 inputs of the fair value hierarchy and include the following: • • The Company’s financial projections for its reporting units are based on its analysis of various supply and demand factors which include, among other things, industry-wide capacity, its planned utilization rate, end-user demand, crack spreads, capital expenditures and economic conditions. Such estimates are consistent with those used in the Company’s planning and capital investment reviews and include recent historical prices and published forward prices. The discount rate used to measure the present value of the projected future cash flows is based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. This discount rate is also compared to recent observable market transactions, if possible. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. Changes in goodwill balances for the periods indicated below are as follows (in millions): (1) Net balance as of December 31, 2020 Additions Impairment Net balance as of December 31, 2021 Additions Impairment (1) Net balance as of December 31, 2022 (1) Total accumulated goodwill impairment as of December 31, 2022 and 2021, is $35.5 million. 88 Specialty Products and Solutions Performance Brands Consolidated Total $ $ $ 49.3 $ — — 49.3 $ — — 49.3 $ 123.7 $ — — 123.7 $ — — 123.7 $ 173.0 — — 173.0 — — 173.0 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Other intangible assets consist of the following (in millions): Customer relationships Tradenames Trade secrets Patents Royalty agreements December 31, 2022 December 31, 2021 Weighted Average Life (Years) 22 11 13 12 20 19 $ $ Gross Amount Accumulated Amortization (153.6) $ (23.7) (50.1) (1.6) (3.9) (232.9) $ $ $ 181.8 26.8 52.9 1.6 6.1 269.2 Gross Amount Accumulated Amortization (147.4) $ (22.3) (48.5) (1.6) (3.6) (223.4) $ 181.8 26.8 52.9 1.6 6.1 269.2 Tradenames, trade secrets, patents and royalty agreements are being amortized to properly match expenses with the undiscounted estimated future cash flows over the terms of the related agreements or the period expected to be benefited. The costs of agreements with terms allowing for the potential extension of such agreements are being amortized based on the initial term only. Customer relationships are being amortized to properly match expenses with the undiscounted estimated future cash flows based upon assumed rates of annual customer attrition. For the years ended December 31, 2022, 2021 and 2020, the Company recorded amortization expense of intangible assets of $9.5 million, $11.8 million and $14.3 million, respectively. As of December 31, 2022, the Company estimates that amortization of intangible assets for the next five years will be as follows (in millions): Year 2023 2024 2025 2026 2027 7. Commitments and Contingencies Contingencies Amortization Amount $ $ $ $ $ 7.8 6.5 4.9 3.8 3.2 From time to time, the Company is a party to certain claims and litigation incidental to its business, including claims made by various taxation and regulatory authorities, such as the Internal Revenue Service, the EPA and the U.S. Occupational Safety and Health Administration (“OSHA”), as well as various state environmental regulatory bodies and state and local departments of revenue, as the result of audits or reviews of the Company’s business. In addition, the Company has property, business interruption, general liability and various other insurance policies that may result in certain losses or expenditures being reimbursed to the Company. Environmental The Company conducts crude oil and specialty refining, blending and terminal operations and such activities are subject to stringent federal, regional, state and local laws and regulations governing worker health and safety, the discharge of materials into the environment and environmental protection. These laws and regulations impose obligations that are applicable to the Company’s operations, such as requiring the acquisition of permits to conduct regulated activities, restricting the manner in which the Company may release materials into the environment, requiring remedial activities or capital expenditures to mitigate pollution from former or current operations, requiring the application of specific health and safety criteria addressing worker protection and imposing substantial liabilities for pollution resulting from its operations. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil and criminal penalties; the imposition of investigatory, remedial or corrective action obligations or the incurrence of capital expenditures; the occurrence of delays in the permitting, development or expansion of projects and the issuance of injunctive relief limiting or prohibiting Company activities. Moreover, certain of these laws impose joint and several, strict liability for costs required to remediate and restore sites where petroleum hydrocarbons, wastes or other materials have been released or disposed. In addition, new laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement or other developments, some of which legal requirements are discussed below, could significantly increase the Company’s operational or compliance expenditures. 89 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Remediation of subsurface contamination is in process at certain of the Company’s refinery sites and is being overseen by the appropriate state agencies. Based on current investigative and remedial activities, the Company believes that the soil and groundwater contamination at these refineries can be controlled or remediated without having a material adverse effect on the Company’s financial condition. However, such costs are often unpredictable and, therefore, there can be no assurance that the future costs will not become material. Renewable Identification Numbers Obligation and Litigation The Renewable Fuel Standard (“RFS”) provision of the Clean Air Act allows small refineries to apply at any time for a Small Refinery Exemption (“SRE”) from the renewable blending requirements, and we have applied in respect of compliance years 2019, 2020, 2021 and 2022. In September 2022, EPA finalized an alternative RIN retirement schedule for small refineries as set forth below: Compliance Year 2019 2020 RINs Retirement Due Date Calumet carried forward its 2019 RVO into the 2020 compliance year as provided under the RFS. Calumet’s 2019 RVO is now due with the 2020 RVO. Under the Alt RIN Retirement schedule, five installments of 20% are due: February 1, 2023 May 1, 2023 August 1, 2023 November 1, 2023 February 1, 2024 2021 2022 However, the Fifth Circuit has granted the Shreveport refinery’s motion to stay enforcement while the appeal is pending. A similar motion regarding the Montana refinery remains pending in the D.C. Circuit. March 31, 2023 September 1, 2023 2018 RVO. In April 2022, EPA issued new decisions denying 36 petitions from small refineries seeking SREs for program year 2018 that had been remanded by the U.S. Court of Appeals for the D.C. Circuit to EPA. EPA had previously granted 31 of these 36 petitions in August 2019, including petitions from the Company. Concurrent with the April 2022 denial action, EPA provided an alternate compliance approach to allow these 31 small refineries to meet their 2018 compliance obligations without purchasing or redeeming additional RINs. In April 2022, the Company filed a petition for review of EPA’s denial of the 2018 SRE petition for the Shreveport refinery in the U.S. Court of Appeals for the Fifth Circuit. In June 2022, the Company filed a petition for review of EPA’s denial of the 2018 SRE petition for the Montana refinery in the U.S. Court of Appeals for the Ninth Circuit and filed a protective petition for review in the U.S. Court of Appeals for the D.C. Circuit challenging the EPA’s denials of both the Shreveport and Montana refineries’ petitions. Upon a motion made by EPA, the Ninth Circuit dismissed the Company’s appeal of the denial of the Montana refinery’s 2018 SRE petition for improper venue in favor of the D.C. Circuit appeal. EPA filed a similar motion to dismiss or transfer in the Fifth Circuit; however the Fifth Circuit denied EPA’s motion and ordered the merits panel to consider both the merits of the appeal and the venue question raised by EPA. These 2018 RVO appeals have been consolidated with the 2019-2020 RVO appeals described below. 90 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 2019-2020 RVO. In June 2022, EPA issued final decisions denying 69 pending petitions from small refineries seeking SREs for compliance years 2016 to 2021, including petitions submitted by the Company seeking exemptions for program years 2019 and 2020, based on an across-the-board determination that no small refinery suffers disproportionate economic hardship from the RFS program, a contention which was subsequently rejected by the Government Accountability Office. In September 2022, EPA finalized an alternative RIN retirement schedule for small refineries as set forth above. The alternative RIN retirement schedule allows the use of RINs generated in post-2020 compliance years to meet the 2020 RFS obligations. The Company’s small refineries are eligible to use this alternative schedule. In August 2022, the Company filed a petition for review of EPA’s denial of the 2019 and 2020 SRE petitions for the Shreveport refinery in the U.S. Court of Appeals for the Fifth Circuit, and a petition for review of EPA’s denial of the 2019 and 2020 SRE petitions for the Montana refinery in the U.S. Court of Appeals for the Ninth Circuit. The Company again filed a protective petition for review in the U.S. Court of Appeals for the D.C. Circuit challenging both of the EPA’s denials. These appeals have been consolidated with the applicable program year 2018 appeals. Upon a motion made by EPA, the Ninth Circuit transferred the Company’s Montana appeal, which is now pending in the D.C. Circuit. The Fifth Circuit denied EPA’s request to dismiss or transfer the appeal, ruling that merits panel will also consider EPA’s argument that the Shreveport refinery appeals should be transferred to the D.C. Circuit. The Company filed motions in both appeals asking the circuit courts to stay the Company’s 2019 and 2020 RFS obligations while the merits appeals are pending. In January 2023, the Fifth Circuit granted the Company’s motion for stay relating to the Shreveport refinery, holding that the Company is likely to be successful on the merits of its appeal on the basis that EPA’s denial was an unlawful retroactive application of a new small refinery hardship standard. The motion for stay relating to the Montana refinery remains pending in the D.C. Circuit. 2021-2022 RVO. In October 2022, Calumet applied for SREs for 2021 and 2022 compliance years and is presently awaiting EPA response. The Company continues to anticipate that RFS compliance may continue to result in a significant expense for the Specialty Products and Solutions and Montana/Renewables segments. If legal or regulatory changes occur that have the effect of increasing the RINs Obligation, increasing the market price of RINs, or eliminating or narrowing the availability of SREs, the Company could be required to purchase additional RINs in the open market, which may materially increase the costs related to RFS compliance and could have a material adverse effect on the results of operations and liquidity. As of December 31, 2022 and 2021, the Company had a RINs Obligation recorded on the consolidated balance sheets of $476.8 million and $278.9 million, respectively. Please read Note 3 — “Summary of Significant Accounting Policies” for additional information. Occupational Health and Safety The Company is subject to various laws and regulations relating to occupational health and safety, including the federal Occupational Safety and Health Act, as amended, and comparable state laws. These laws and regulations strictly govern the protection of the health and safety of employees. In addition, OSHA’s hazard communication standard, the EPA’s community right-to-know regulations under Title III of the federal Comprehensive Environmental Response, Compensation and Liability Act, as amended, and similar state statutes require the Company to maintain information about hazardous materials used or produced in the Company’s operations and provide this information to employees, contractors, state and local government authorities and customers. The Company maintains safety and training programs as part of its ongoing efforts to promote compliance with applicable laws and regulations. The Company conducts periodic audits of process safety management systems at each of its locations subject to this standard. The Company’s compliance with applicable health and safety laws and regulations has required, and continues to require, substantial expenditures. Changes in occupational safety and health laws and regulations or a finding of non-compliance with current laws and regulations could result in additional capital expenditures or operating expenses, as well as civil penalties and, in the event of a serious injury or fatality, criminal charges. 91 Table of Contents Labor Matters CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company has approximately 580 employees covered by various collective bargaining agreements, or approximately 38% of its total workforce of approximately 1,530 employees. These agreements have expiration dates of April 30, 2026, July 31, 2026, November 19, 2026, January 31, 2027, April 30, 2025, August 20, 2024 and December 12, 2024. The Company has no employees covered by a collective bargaining agreement that will expire in less than one year and does not expect any work stoppages. Other Matters, Claims and Legal Proceedings Beginning in 2017, the Company initiated the first of several claims in Cascade County Circuit Court against the Montana Department of Revenue to recover overpaid taxes resulting from the county’s excessive property tax assessment of the Company’s Great Falls refinery for the 2017, 2018, and 2019 tax years. For the year ended December 31, 2020, the county had refunded, as the result of various court decisions, $6.0 million in excessive taxes and interest to the Company. The claims arising from the 2017, 2018, and 2019 tax years are closed. The $6.0 million was recorded as a reduction of taxes other than income taxes in the consolidated statements of operations for the year ended December 31, 2020. The Company is subject to other matters, claims and litigation incidental to its business. The Company has recorded accruals with respect to certain of its matters, claims and litigation where appropriate, that are reflected in the audited consolidated financial statements but are not individually considered material. For other matters, claims and litigation, the Company has not recorded accruals because it has not yet determined that a loss is probable or because the amount of loss cannot be reasonably estimated. While the ultimate outcome of matters, claims and litigation currently pending cannot be determined, the Company currently does not expect these outcomes, individually or in the aggregate (including matters for which the Company has recorded accruals), to have a material adverse effect on its financial position, results of operations or cash flows. The outcome of any matter, claim or litigation is inherently uncertain, however, and if decided adversely to the Company, or if the Company determines that settlement of particular litigation is appropriate, the Company may be subject to liability that could have a material adverse effect on its financial position, results of operations or cash flows. Standby Letters of Credit The Company has agreements with various financial institutions for standby letters of credit which have been issued primarily to vendors. As of December 31, 2022 and 2021, the Company had outstanding standby letters of credit of $35.8 million and $32.7 million, respectively, under its senior secured revolving credit facility (the “revolving credit facility”). Please read Note 9 - “Long- Term Debt” for additional information regarding the Company’s revolving credit facility. At December 31, 2022 and 2021, the maximum amount of letters of credit the Company could issue under its revolving credit facility was subject to borrowing base limitations, with a maximum letter of credit sublimit equal to $255.0 million and $300.0 million, respectively, which may be increased with consent of the Agent (as defined in the Credit Agreement) to 90% of revolver commitments then in effect ($500.0 million at December 31, 2022 and $600.0 million at December 31, 2021). As of December 31, 2022 and 2021, the Company had availability to issue letters of credit of approximately $337.6 million and approximately $296.0 million, respectively, under its revolving credit facility. 92 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Crude Oil Supply, Other Feedstocks and Finished Products Purchase commitments consist primarily of obligations to purchase fixed volumes of crude oil, other feedstocks and finished products for resale from various suppliers based on current market prices at the time of delivery. The Company is currently purchasing a majority of its crude oil under month-to-month evergreen contracts or on a spot basis. Certain other feedstocks are purchased under various term supply agreements. As of December 31, 2022, the estimated minimum purchase commitments under the Company’s crude oil, other feedstock supply and finished product agreements were as follows (in millions): Year (1) 2023 2024 2025 2026 2027 Thereafter Total Commitment 722.4 25.2 25.2 25.2 6.9 — 804.9 $ $ (1) For the year ended December 31, 2022, the Company recorded a $13.0 million charge to cost of sales for expected future losses under firm purchase commitments. Throughput Contract Prior to 2020, the Company entered into a long-term agreement to transport crude oil at a minimum of 5,000 bpd through a pipeline, which commenced service in the second quarter of 2020. The agreement also contains a capital recovery charge that increases 2% per annum. The agreement is for seven years. As of December 31, 2022, the estimated minimum unconditional purchase commitments, including the capital recovery charge, under the agreement were as follows (in millions): Commitment (1) 3.9 4.0 4.0 4.0 2.4 — 18.3 $ $ Year 2023 2024 2025 2026 2027 Thereafter Total (1) (1) As of December 31, 2022, the estimated minimum payments for the unconditional purchase commitments have been accrued and are included in other current liabilities and other long-term liabilities in the consolidated balance sheets. This liability was accrued due to the fact that the contract was entered into to supply crude to a divested facility. 8. Inventory Financing Agreements The Company is party to several agreements with Macquarie to support the operations of the Great Falls refinery, the Shreveport refinery and Montana Renewables (as amended, the “Supply and Offtake Agreements”). The Great Falls refinery and Shreveport refinery agreements have an expiration date of June 30, 2026. The Montana Renewables Supply and Offtake Agreement was amended on March 10, 2023 to change the expiration date to September 30, 2023. The Supply and Offtake Agreements allow the Company to purchase crude oil, refined products and renewable feedstocks from Macquarie or one of its affiliates. Per the Supply and Offtake Agreements, Macquarie will provide up to 30,000 barrels per day of crude oil to the Great Falls refinery, 60,000 barrels per day of crude oil to the Shreveport refinery, and 15,000 barrels per day of renewable feedstocks to the Great Falls renewable fuels facility. 93 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) While title to certain inventories will reside with Macquarie, the Supply and Offtake Agreements are accounted for by the Company similar to a product financing arrangement; therefore, the inventories sold to Macquarie will continue to be included in the Company’s consolidated balance sheets until processed and sold to a third party. For the years ended December 31, 2022 and 2021, the Company incurred an expense of $30.6 million and $15.4 million, respectively, for financing costs related to the Supply and Offtake Agreements, which are included in interest expense in the Company’s consolidated statements of operations. For the year ended December 31, 2020, the Company received a $1.1 million benefit for financing costs related to the Supply and Offtake Agreements, which is included in interest expense in the Company’s consolidated statements of operations. The Company has provided cash collateral of $33.9 million related to the initial purchase of the Great Falls refinery, Shreveport refinery, and Great Falls renewable fuels facility inventory to cover credit risk for future crude oil and renewable diesel feedstock deliveries and potential liquidation risk if Macquarie exercises its rights and sells the inventory to third parties. The collateral was recorded as a reduction to the obligations. The Supply and Offtake Agreements also include a deferred payment arrangement (“Deferred Payment Arrangement”) whereby the Company can defer payments on just-in-time crude oil purchases from Macquarie owed under the agreements up to the value of the collateral provided (90% of the collateral is inventory). The deferred amounts under the Deferred Payment Arrangement will bear interest at a rate equal to the SOFR plus 3.25% per annum for Shreveport and both Great Falls facilities. Amounts outstanding under the Deferred Payment Arrangement are included in obligations under inventory financing agreements in the Company’s consolidated balance sheets. Changes in the amount outstanding under the Deferred Payment Arrangement are included within cash flows from financing activities in the consolidated statements of cash flows. As of December 31, 2022 and December 31, 2021, the Company had $36.0 million and $17.0 million of deferred payments outstanding, respectively. In addition to the Deferred Payment Arrangement, Macquarie has advanced the Company an additional $5.0 million which remains outstanding as of December 31, 2022. 94 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 9. Long-Term Debt Long-term debt consisted of the following (in millions): December 31, 2022 December 31, 2021 Borrowings under amended and restated senior secured revolving credit agreement with third-party lenders, interest payments quarterly, borrowings due February 2028, weighted average interest rates of 4.7% and 2.4% for the years ended December 31, 2022 and 2021, respectively. Borrowings under 2023 Notes, interest at a fixed rate of 7.75%, interest payments semiannually, borrowings due April 2023, effective interest rate of 8.3% for the years ended December 31, 2022 and December 31, 2021. Borrowings under the 2024 Secured Notes, interest at a fixed rate of 9.25%, interest payments semiannually, borrowings due July 2024, effective interest rate of 9.5% for the years ended December 31, 2022 and December 31, 2021. Borrowings under 2025 Notes, interest at a fixed rate of 11.0%, interest payments semiannually, borrowings due April 2025, effective interest rate of 11.4% for the years ended December 31, 2022 and December 31, 2021. Borrowings under the 2027 Notes, interest at a fixed rate of 8.125%, interest payments semiannually, borrowings due July 2027, effective interest rate of 8.3% for the year ended December 31, 2022. MRL Credit Facility, interest payments quarterly, borrowings due November 2024, effective interest rate of 12.5% for the year ended December 31, 2021. Shreveport terminal asset financing arrangement MRL asset financing arrangements Other Finance lease obligations, at various interest rates, interest and principal payments monthly through June 2028 Less unamortized debt issuance costs Less unamortized discounts Total debt Less current portion of long-term debt Total long-term debt (1) $ 104.0 $ — 200.0 513.5 325.0 — 58.2 370.1 — 3.4 (12.1) (2.4) 1,559.7 20.0 1,539.7 $ $ — 325.0 200.0 550.0 — 303.5 64.3 — 0.7 4.0 (17.8) (3.5) 1,426.2 7.4 1,418.8 (1) Deferred debt issuance costs are being amortized by the effective interest rate method over the lives of the related debt instruments. These amounts are net of accumulated amortization of $22.3 million and $22.5 million at December 31, 2022 and 2021, respectively. Senior Notes 8.125% Senior Notes due 2027 (the “2027 Notes”) On January 20, 2022, the Company issued and sold $325.0 million in aggregate principal amount of 2027 Notes, in a private placement pursuant to Section 4(a)(2) of the Securities Act to eligible purchasers at par. The Company received net proceeds of $319.1 million, after deducting the initial purchasers’ discount and offering expenses, which the Company used, along with cash on hand, to fund the redemption of $325.0 million aggregate principal amount of its 2023 Senior Notes at a redemption price of par, plus accrued and unpaid interest to the redemption date of February 11, 2022. In conjunction with the redemption of the 2023 Senior Notes, the Company recorded a loss from debt extinguishment of $1.0 million, which is reflected in loss from debt extinguishment in the consolidated statements of operations for the year ended December 31, 2022. Interest on the 2027 Notes is paid semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2022. 11.00% Senior Notes due 2025 (the “2025 Notes”) On October 11, 2019, the Company issued and sold $550.0 million in aggregate principal amount of 11.00% Senior Notes due April 15, 2025, in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), to eligible purchasers at par. The Company received net proceeds of $539.9 million net of initial purchasers’ fees and estimated expenses, which it used, along with revolver borrowings and cash on hand, to fund the redemption of $761.2 million in aggregate principal amount of outstanding 6.50% Notes due 2021. Interest on the 2025 Notes is paid semiannually in arrears on April 15 and October 15 of each year. 95 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) On July 6, 2020, the Company commenced a consent solicitation to holders of the 2025 Notes for amendments to the indenture governing the 2025 Notes to allow for the consummation of the 2024 Notes Exchange Transaction. On August 5, 2020, the Company executed the First Supplemental Indenture to the indenture governing the 2025 Notes to allow the 2024 Notes Exchange Transaction. During the year ended December 31, 2022, the Company repurchased $36.5 million aggregate principal amount of its 2025 Notes at an average price of 104.3% of par value, plus accrued and unpaid interest thereon up to, but not including the respective transaction dates. In conjunction with the repurchases of the 2025 Notes during the year ended December 31, 2022, the Company recorded a loss from debt extinguishment of $2.1 million, which is reflected in loss from debt extinguishment in the consolidated statements of operations. 9.25% Senior Secured First Lien Notes due 2024 (the “2024 Secured Notes”) On August 5, 2020, we consummated a transaction whereby we exchanged approximately $200.0 million aggregate principal amount of our outstanding 2022 Notes for $200.0 million aggregate principal amount of newly issued 2024 Secured Notes, approximately at par (the “2024 Notes Exchange Transaction”). Interest on the 2024 Secured Notes is paid semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021. The 2024 Secured Notes are secured by a first priority lien (subject to certain exceptions) on all the fixed assets that secure the Company’s obligations under their secured hedge agreements, as governed by the Collateral Trust Agreement. 7.75% Senior Notes due 2023 (the “2023 Notes”) On March 27, 2015, the Company issued and sold $325.0 million in aggregate principal amount of 7.75% Senior Notes due April 15, 2023 in a private placement pursuant to Section 4(a)(2) of the Securities Act, to eligible purchasers at a discounted price of 99.257 percent of par. The Company received net proceeds of approximately $317.0 million net of discount, initial purchasers’ fees and expenses, which the Company used to fund the redemption of $178.8 million in aggregate principal amount of outstanding 9.625% Senior Notes due 2020 on April 28, 2015, to repay borrowings outstanding under its revolving credit facility and for general partnership purposes, including planned capital expenditures at the Company’s facilities and working capital. Interest on the 2023 Notes was paid semiannually in arrears on April 15 and October 15 of each year. On February 11, 2022, the Company redeemed $325.0 million in aggregate principal amount of the 2023 Notes at a redemption price of par, plus accrued and unpaid interest. In conjunction with the redemption of the 2023 Senior Notes, the Company recorded a loss from debt extinguishment of $1.0 million, which is reflected in loss from debt extinguishment in the consolidated statements of operations for the year ended December 31, 2022. 7.625% Senior Notes due 2022 (the “2022 Notes”) On November 26, 2013, the Company issued and sold $350.0 million in aggregate principal amount of 7.625% Senior Notes due January 15, 2022, in a private placement pursuant to Section 4(a) (2) of the Securities Act, to eligible purchasers at a discounted price of 98.494 percent of par. The Company received net proceeds of approximately $337.4 million, net of discount, initial purchasers’ fees and expenses, which the Company used for general partnership purposes, to fund previously announced organic growth projects, the purchase price of the Bel-Ray acquisition and the redemption of $100.0 million in aggregate principal amount outstanding of 9.375% Senior Notes due 2019. Interest on the 2022 Notes was paid semiannually in arrears on January 15 and July 15 of each year. On August 5, 2020, the Company consummated the 2024 Notes Exchange Transaction whereby it exchanged approximately $200.0 million aggregate principal amount of its outstanding 2022 Notes for $200.0 million aggregate principal amount of newly issued 2024 Secured Notes. In connection with the 2024 Notes Exchange Transaction, the Company incurred $5.4 million of fees. In 2021, the Company redeemed $150.0 million aggregate principal amount of its 2022 Notes at a redemption price of par, plus accrued and unpaid interest. In conjunction with the redemption, the Company recorded debt extinguishment costs of $0.5 million. 96 Table of Contents Senior Notes CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The 2024 Secured Notes, 2025 Notes and 2027 Notes (collectively, the “Senior Notes”) are subject to certain automatic customary releases, including the sale, disposition, or transfer of capital stock or substantially all of the assets of a subsidiary guarantor, designation of a subsidiary guarantor as unrestricted in accordance with the applicable indenture, exercise of legal defeasance option or covenant defeasance option, liquidation or dissolution of the subsidiary guarantor and a subsidiary guarantor ceases to both guarantee other Company debt and to be an obligor under the revolving credit facility. The Company’s operating subsidiaries may not sell or otherwise dispose of all or substantially all of their properties or assets to, or consolidate with or merge into, another company if such a sale would cause a default under the indentures governing the Senior Notes. The indentures governing the Senior Notes contain covenants that, among other things, restrict the Company’s ability and the ability of certain of the Company’s subsidiaries to: (i) sell assets; (ii) pay distributions on, redeem or repurchase the Company’s common units or redeem or repurchase its subordinated debt; (iii) make investments; (iv) incur or guarantee additional indebtedness or issue preferred units; (v) create or incur certain liens; (vi) enter into agreements that restrict distributions or other payments from the Company’s restricted subsidiaries to the Company; (vii) consolidate, merge or transfer all or substantially all of the Company’s assets; (viii) engage in transactions with affiliates and (ix) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. At any time when the Senior Notes are rated investment grade by either Moody’s Investors Service, Inc. (“Moody’s”) or S&P Global Ratings (“S&P”) and no Default or Event of Default, each as defined in the indentures governing the Senior Notes, has occurred and is continuing, many of these covenants will be suspended. As of December 31, 2022, the Company was in compliance with all covenants under the indentures governing the Senior Notes. MRL Asset Financing Arrangements On August 5, 2022, Montana Renewables, LLC (“MRL”), a wholly owned subsidiary of the Company, entered into Equipment Schedule No. 2 (the “Equipment Schedule”) and an Interim Funding Agreement (the “Funding Agreement”) with Stonebriar Commercial Finance LLC (“Stonebriar”). The Equipment Schedule and the Funding Agreement each constitute a schedule under the Master Lease Agreement (the “Lease Agreement”) dated as of December 31, 2021 between MRL and Stonebriar. The Equipment Schedule provides that Stonebriar will purchase from and lease back to MRL a hydrocracker, intended to produce renewable diesel and related products, for a purchase price of $250.0 million. The Funding Agreement provides $100.0 million in financing for the design and construction of a feedstock pre-treater facility. The transactions with Stonebriar described in this paragraph are referred to herein as the “MRL Asset Financing Arrangements.” Third Amended and Restated Senior Secured Revolving Credit Facility On January 20, 2022, the Company entered into the Third Amendment to its revolving credit facility (the “Credit Agreement”) governing its senior secured revolving credit facility maturing in January 2027, which provides maximum availability of credit under the revolving credit facility of $500.0 million, including a FILO tranche, subject to borrowing base limitations, and includes a $500.0 million incremental uncommitted expansion feature. Lenders under the revolving credit facility have a first priority lien on, among other things, the Company’s accounts receivable and inventory and substantially all of its cash (collectively, the “Credit Agreement Collateral”). In September 2019, the borrowing base was expanded by $99.6 million by adding the fixed assets of the Company’s Great Falls refinery as collateral under the Credit Agreement. The $99.6 million expansion amortizes to zero on a straight-line basis over ten quarters starting in the first quarter of 2020. In connection with the transfer of various assets at the Great Falls refinery to MRL on November 18, 2021, the remaining portion of this $99.6 million expansion was removed from the borrowing base. The borrowing capacity at December 31, 2022, under the revolving credit facility was approximately $477.4 million. As of December 31, 2022, the Company had $104.0 million of outstanding borrowings under the revolving credit facility and outstanding standby letters of credit of $35.8 million, leaving approximately $337.6 million of unused capacity. The revolving credit facility contains various covenants that limit, among other things, the Company’s ability to: incur indebtedness; grant liens; dispose of certain assets; make certain acquisitions and investments; redeem or prepay other debt or make other restricted payments such as distributions to unitholders; enter into transactions with affiliates; and enter into a merger, consolidation or sale of assets. Further, the revolving credit facility contains one springing financial covenant which provides that only if the Company’s availability to borrow loans under the revolving credit facility falls below the greater of (i) 10.0% of the Borrowing Base (as defined in the Credit Agreement) then in effect, and (ii) $35.0 million (which amount is subject to increase in proportion to revolving commitment increases), then we will be required to maintain as of the end of each fiscal quarter a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of at least 1.0 to 1.0. As of December 31, 2022, the Company was in compliance with all covenants under the revolving credit facility. 97 Table of Contents MRL Revolving Credit Agreement CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) On November 2, 2022 (the “Effective Date”), MRL entered into, as borrower, a Credit Agreement (the “MRL Revolving Credit Agreement”) with Montana Renewables Holdings LLC (“MRHL”), the parent company of MRL, and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and lender, which MRL Revolving Credit Agreement provides for a secured revolving credit facility in the maximum amount of $90.0 million outstanding, with the option to request additional commitments of up to $15.0 million, and with a maturity date of November 2, 2027. As of December 31, 2022, there was no borrowing capacity under the MRL Revolving Credit Agreement. As of December 31, 2022, the Company had no outstanding borrowings under the MRL Revolving Credit Agreement. MRL Credit Facility On November 18, 2021 (the “Closing Date”), MRL, Montana Renewables Holdings LLC (“Montana Renewables Holdings”), the parent of MRL and an unrestricted, non-guarantor subsidiary of the Partnership for purposes of the agreements governing the Partnership’s indebtedness, Oaktree Fund Administration, LLC and the lenders from time to time party thereto (the “Oaktree Lenders”) entered into a Credit Agreement, which provides for a $300.0 million senior secured term loan facility (the “MRL Credit Facility”). On the Closing Date, $300.0 million was drawn under the MRL Credit Facility to finance the transfer for value of various assets at the Great Falls refinery, including the hydrocracker, a hydrogen plant, and several products tanks to MRL. The MRL Credit Facility is not subject to amortization and matures on November 18, 2024. The MRL Credit Facility is secured by substantially all of the assets of MRL and a pledge of 100% of the equity interest in MRL held by Montana Renewables Holdings. The interest rate per annum applicable to the MRL Credit Facility is 8.00%. If interest on the MRL Credit Facility is not paid when due on any quarterly interest payment date (each, a “Quarterly Date”), then interest for the immediately preceding quarterly period shall be deemed to have accrued in an amount equal to the product of (i) the percentage of the interest amount that was not paid in cash on the relevant Quarterly Date multiplied by (ii) 2.00% per annum above the interest rate otherwise applicable thereto, which amount, in each case, shall be added to the principal balance of the loans then outstanding under the MRL Credit Facility. On August 5, 2022, the Company repaid all borrowings outstanding under the MRL credit facility with a combination of proceeds from the issuance and sale of preferred units in MRHL and the Stonebriar Transactions (as defined herein). In conjunction with the redemption of the MRL credit facility, the Company recorded a loss from debt extinguishment of $38.3 million, which is reflected in loss from debt extinguishment in the consolidated statements of operations for the year ended December 31, 2022. Please refer to Note 21 - “Redeemable Noncontrolling Interest” for additional information regarding the issuance and sale of preferred units in MRHL and Note 9 - “Long-Term Debt - MRL Asset Financing Arrangements” for additional information regarding the Stonebriar Transactions. Master Derivative Contracts The Company’s payment obligations under all of the Company’s master derivatives contracts for commodity hedging generally are secured by a first priority lien on the Company’s real property, plant and equipment, fixtures, intellectual property, certain financial assets, certain investment property, commercial tort claims, chattel paper, documents, instruments and proceeds of the foregoing (including proceeds of hedge arrangements). The Company had no additional letters of credit or cash margin posted with any hedging counterparty as of December 31, 2022. The Company’s master derivatives contracts and Collateral Trust Agreement (as defined below) continue to impose a number of covenant limitations on the Company’s operating and financing activities, including limitations on liens on collateral, limitations on dispositions of collateral and collateral maintenance and insurance requirements. Collateral Trust Agreement The Company has a collateral trust agreement (“The Collateral Trust Agreement”) which governs how various secured Company creditors, including secured hedging counterparties, our creditor on a forward purchase contract for physical commodities, and holders of our 2024 Secured Notes share collateral pledged as security for the payment of respective payment obligations to them. The Collateral Trust Agreement limits to $150.0 million the extent to which forward purchase contracts for physical commodities are covered by, and secured under, the Collateral Trust Agreement and the Parity Lien Security Documents (as defined in the Collateral Trust Agreement). There is no such limit on financially settled derivative instruments used for commodity hedging. Subject to certain conditions set forth in the Collateral Trust Agreement, the Company has the ability to add secured parties from time to time. 98 Table of Contents Maturities of Long-Term Debt CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of December 31, 2022, principal payments on debt obligations and future minimum rentals on finance lease obligations are as follows (in millions): Year 2023 2024 2025 2026 2027 Thereafter Total 10. Derivatives Maturity 20.0 222.2 537.8 26.8 472.7 294.7 1,574.2 $ $ The Company is exposed to price risks due to fluctuations in the price of crude oil, refined products, natural gas and precious metals. The Company uses various strategies to reduce its exposure to commodity price risk. The strategies to reduce the Company’s risk utilize both physical forward contracts and financially settled derivative instruments, such as swaps, collars, options and futures, to attempt to reduce the Company’s exposure with respect to: • • • • • crude oil purchases and sales; fuel product sales and purchases; natural gas purchases; precious metals purchases; and fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such as New York Mercantile Exchange West Texas Intermediate (“NYMEX WTI”), Light Louisiana Sweet, Western Canadian Select (“WCS”), WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent. The Company manages its exposure to commodity markets, credit, volumetric and liquidity risks to manage its costs and volatility of cash flows as conditions warrant or opportunities become available. These risks may be managed in a variety of ways that may include the use of derivative instruments. Derivative instruments may be used for the purpose of mitigating risks associated with an asset, liability and anticipated future transactions and the changes in fair value of the Company’s derivative instruments will affect its earnings and cash flows; however, such changes should be offset by price or rate changes related to the underlying commodity or financial transaction that is part of the risk management strategy. The Company does not speculate with derivative instruments or other contractual arrangements that are not associated with its business objectives. Speculation is defined as increasing the Company’s natural position above the maximum position of its physical assets or trading in commodities, currencies or other risk bearing assets that are not associated with the Company’s business activities and objectives. The Company’s positions are monitored routinely by a risk management committee to ensure compliance with its stated risk management policy and documented risk management strategies. All strategies are reviewed on an ongoing basis by the Company’s risk management committee, which will add, remove or revise strategies in anticipation of changes in market conditions and/or its risk profiles. Such changes in strategies are to position the Company in relation to its risk exposures in an attempt to capture market opportunities as they arise. The Company is obligated to repurchase crude oil and refined products from Macquarie at the termination of the Supply and Offtake Agreements in certain scenarios. The Company has determined that the redemption feature on the initially recognized liability related to the Supply and Offtake Agreements is an embedded derivative indexed to commodity prices. As such, the Company has accounted for this embedded derivative at fair value with changes in the fair value, if any, recorded in gain (loss) on derivative instruments in the Company’s consolidated statements of operations please read Note 8 - “Inventory Financing Agreements" for additional information. The Company recognizes all derivative instruments at their fair values as either current assets or current liabilities in the consolidated balance sheets (please read Note 11 - “Fair Value Measurements”). Fair value includes any premiums paid or received and unrealized gains and losses. Fair value does not include any amounts receivable from or payable to counterparties, or collateral provided to counterparties. Derivative asset and liability amounts with the same counterparty are netted against each other for financial reporting purposes in accordance with the provisions of our master netting arrangements. 99 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following tables summarize the Company’s gross fair values of its derivative instruments, presenting the impact of offsetting derivative liabilities in the Company’s consolidated balance sheets (in millions): Balance Sheet Location Gross Amounts of Recognized Liabilities December 31, 2022 Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets December 31, 2021 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Derivative instruments not designated as hedges: Specialty Products and Solutions segment: Inventory financing obligation Crack spread swaps Montana/Renewables segment: Inventory financing obligation Total derivative instruments Obligations under inventory financing agreements Derivative liabilities / Other long-term liabilities Obligations under inventory financing agreements $ $ (38.0) $ — $ (38.0) $ (17.4) $ — $ (50.6) (15.8) 19.3 11.3 (31.3) — (4.5) (10.5) — — (104.4) $ 30.6 $ (73.8) $ (27.9) $ — $ (17.4) — (10.5) (27.9) Certain of the Company’s outstanding derivative instruments are subject to credit support agreements with the applicable counterparties which contain provisions setting certain credit thresholds above which the Company may be required to post agreed-upon collateral, such as cash or letters of credit, with the counterparty to the extent that the Company’s mark-to-market net liability, if any, on all outstanding derivatives exceeds the credit threshold amount per such credit support agreement. The majority of the credit support agreements covering the Company’s outstanding derivative instruments also contain a general provision stating that if the Company experiences a material adverse change in its business, in the reasonable discretion of the counterparty, the Company’s credit threshold could be lowered by such counterparty. The Company does not expect that it will experience a material adverse change in its business. The cash flow impact of the Company’s derivative activities are included within cash flows from operating activities in the consolidated statements of cash flows. Derivative Instruments Not Designated as Hedges For derivative instruments not designated as hedges, the change in fair value of the asset or liability for the period is recorded to gain (loss) on derivative instruments in the consolidated statements of operations. Upon the settlement of a derivative not designated as a hedge, the gain or loss at settlement is recorded to gain (loss) on derivative instruments in the consolidated statements of operations. The Company has entered into natural gas swaps, crack spread swaps and crude oil basis swaps that are not designated as cash flow hedges for accounting purposes. However, these instruments provide economic hedges of the purchases and sales of the Company’s natural gas, crude oil, gasoline and refined products. The Company recorded the following gains (losses) in its consolidated statements of operations related to its derivative instruments not designated as hedges (in millions): 100 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Type of Derivative Specialty Products and Solutions segment: Inventory financing obligation Crack spread swaps Crude oil swaps Montana/Renewables segment: Inventory financing obligation WCS crude oil basis swaps Total Derivative Positions Amount of Realized Gain (Loss) Recognized in Loss on Derivative Instruments Year Ended December 31, Amount of Unrealized Gain (Loss) Recognized in Loss on Derivative Instruments Year Ended December 31, 2022 2021 2022 2021 $ $ — (35.0) (0.8) — — (35.8) $ $ — — — — 1.1 1.1 $ $ (20.6) (31.3) — 6.0 — (45.9) $ $ (16.3) — — (9.4) 1.3 (24.4) At December 31, 2022, the Company had the following notional contract volumes related to outstanding derivative instruments: Derivative instruments not designated as hedges: Crack spread swaps - sales Derivative instruments not designated as hedges: Crack spread swaps - sales 11. Fair Value Measurements Total Outstanding Notional Notional Contract Volumes by Year of Maturity Unit of Measure 2023 7,300,000 7,300,000 Barrels Total Outstanding Notional Notional Contract Volumes by Year of Maturity Unit of Measure 2024 1,830,000 1,830,000 Barrels The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. These tiers include the following: • • • Level 1 — inputs include observable unadjusted quoted prices in active markets for identical assets or liabilities Level 2 — inputs include other than quoted prices in active markets that are either directly or indirectly observable Level 3 — inputs include unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions In determining fair value, the Company uses various valuation techniques and prioritizes the use of observable inputs. The availability of observable inputs varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded and other characteristics particular to the instrument. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants and the valuation does not require significant management judgment. For other financial instruments, pricing inputs are less observable in the marketplace and may require management judgment. 101 Table of Contents Recurring Fair Value Measurements Derivative Assets and Liabilities CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Derivative instruments are reported in the accompanying consolidated financial statements at fair value. The Company’s derivative instruments consist of over-the-counter (“OTC”) contracts, which are not traded on a public exchange. Substantially all of the Company’s derivative instruments are with counterparties that have long-term credit ratings of at least A3 and BBB+ by Moody’s and S&P, respectively. To estimate the fair values of the Company’s commodity derivative instruments, the Company uses the forward rate, the strike price, contractual notional amounts, the risk free rate of return and contract maturity. Various analytical tests are performed to validate the counterparty data. The fair values of the Company’s derivative instruments are adjusted for nonperformance risk and creditworthiness of the hedging entities through the Company’s credit valuation adjustment (“CVA”). The CVA is calculated at the counterparty level utilizing the fair value exposure at each payment date and applying a weighted probability of the appropriate survival and marginal default percentages. The Company uses the counterparty’s marginal default rate and the Company’s survival rate when the Company is in a net asset position at the payment date and uses the Company’s marginal default rate and the counterparty’s survival rate when the Company is in a net liability position at the payment date. Observable inputs utilized to estimate the fair values of the Company’s derivative instruments were based primarily on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Based on the use of various unobservable inputs, principally non-performance risk, creditworthiness of the hedging entities and unobservable inputs in the forward rate, the Company has categorized these derivative instruments as Level 3. Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. The Company believes it has obtained the most accurate information available for the types of derivative instruments it holds. Please read Note 10 - “Derivatives” for further information on derivative instruments. Pension Assets Pension assets are reported at fair value in the accompanying consolidated financial statements. At December 31, 2022 and 2021, the Company’s investments associated with its Pension Plan (as such term is hereinafter defined) consisted of (i) cash and cash equivalents, (ii) fixed income bond funds, (iii) mutual equity funds, and (iv) mutual balanced funds. The fixed income bond funds, mutual equity funds, and mutual balanced funds are measured at fair value using a market approach based on quoted prices from national securities exchanges and are categorized in Level 1 of the fair value hierarchy. Liability Awards Unit-based compensation Liability Awards are awards that are currently expected to be settled in cash on their vesting dates, rather than in equity units. The Liability Awards are categorized as Level 1 because the fair value of the Liability Awards is based on the Company’s quoted closing unit price as of each balance sheet date. Renewable Identification Numbers Obligation The Company’s RINs Obligation is categorized as Level 2 and is measured at fair value using the market approach based on prices obtained from an independent pricing service. Please read Note 3 - “Summary of Significant Accounting Policies” for further information on the Company’s RINs Obligation. Precious Metals Obligations The fair value of precious metals obligations is based upon unadjusted exchange-quoted prices and is, therefore, classified within Level 1 of the fair value hierarchy. 102 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Hierarchy of Recurring Fair Value Measurements The Company’s recurring assets and liabilities measured at fair value were as follows (in millions): Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total December 31, 2022 December 31, 2021 Assets: Pension Plan investments Total recurring assets at fair value Liabilities: Derivative liabilities: Inventory financing obligation Crack spread swaps Total derivative liabilities RINs obligation Precious metals obligations Liability Awards Total recurring liabilities at fair value $ $ $ $ $ 26.4 26.4 — — — — (7.5) (52.9) (60.4) $ $ $ $ $ — — — — — (476.8) — — (476.8) $ $ $ $ $ — — (42.5) (31.3) (73.8) — — — (73.8) $ $ $ $ $ 26.4 26.4 (42.5) (31.3) (73.8) (476.8) (7.5) (52.9) (611.0) $ $ $ $ $ 34.5 34.5 — — — — (6.8) (63.1) (69.9) $ $ $ $ $ — — — — — (278.9) — — (278.9) $ $ $ $ $ — — (27.9) — (27.9) — — — (27.9) $ $ $ $ $ The table below sets forth a summary of net changes in fair value of the Company’s Level 3 financial assets and liabilities (in millions): Fair value at January 1, Realized gain (loss) on derivative instruments Unrealized loss on derivative instruments Settlements Fair value at December 31, Total loss included in net loss attributable to changes in unrealized loss relating to financial assets and liabilities held as of December 31, Nonrecurring Fair Value Measurements For the Year Ended December 31, 2021 2022 $ $ $ (27.9) (35.8) (45.9) 35.8 (73.8) (45.9) $ $ $ 34.5 34.5 (27.9) — (27.9) (278.9) (6.8) (63.1) (376.7) (3.5) 1.1 (24.4) (1.1) (27.9) (24.4) Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The Company assesses goodwill for impairment annually and whenever events or changes in circumstances indicate its carrying value may not be recoverable. The fair value of the reporting units is determined using the income approach. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, corporate tax structure and product offerings. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation and risks associated with the reporting unit. These assets would generally be classified within Level 3, in the event that the Company were required to measure and record such assets at fair value within its consolidated financial statements. Please read Note 6 - “Goodwill and Other Intangible Assets” for further information on goodwill impairment. The Company periodically evaluates the carrying value of long-lived assets to be held and used, including finite-lived intangible assets and property plant and equipment, when events or circumstances warrant such a review. Fair value is determined primarily using anticipated cash flows assumed by a market participant discounted at a rate commensurate with the risk involved and these assets would generally be classified within Level 3, in the event that the Company was required to measure and record such assets at fair value within its consolidated financial statements. Please read Note 3 - “Summary of Significant Accounting Policies” for further information on long-lived asset impairment. 103 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Estimated Fair Value of Financial Instruments Cash, cash equivalents and restricted cash The carrying value of cash, cash equivalents and restricted cash are each considered to be representative of their fair value. Debt The estimated fair value of long-term debt at December 31, 2022 and 2021, consists primarily of senior notes. The estimated aggregate fair value of the Company’s 2023 Notes defined as Level 1 was based upon quoted market prices in an active market. The estimated fair value of the Company’s 2024 Secured Notes and 2025 and 2027 Senior Notes defined as Level 2 was based upon quoted prices for identical or similar liabilities in markets that are not active. The carrying value of borrowings, if any, under the Company’s revolving credit facility, MRL Credit Facility, MRL Revolving Credit Agreement, MRL asset financing arrangements, finance lease obligations and other obligations are classified as Level 3. Please read Note 9 - “Long-Term Debt” for further information on long-term debt. The Company’s carrying value and estimated fair value of the Company’s financial instruments, carried at adjusted historical cost, were as follows (in millions): Financial Instrument: 2023 Notes 2024 Secured Notes, 2025 Notes, and 2027 Notes Revolving credit facility MRL Credit Facility MRL Revolving Credit Agreement Shreveport terminal asset financing arrangement MRL asset financing arrangements Finance leases and other obligations 12. Partners’ Capital (Deficit) Units Authorized Level Fair Value Carrying Value Fair Value Carrying Value December 31, 2022 December 31, 2021 1 2 3 3 3 3 3 3 $ $ $ $ $ $ $ $ — $ 1,045.2 $ 104.0 $ — $ — $ 58.2 $ 370.1 $ 3.4 $ — $ 1,030.0 $ 100.9 $ — $ (0.6) $ 57.2 $ 368.8 $ 3.4 $ 325.6 $ 815.3 $ — $ 303.5 $ — $ 64.3 $ — $ 4.7 $ 322.3 742.0 (2.0) 296.2 — 63.0 — 4.7 As of December 31, 2022 and 2021, the Company has 92,473,023 and 91,073,023 of common units authorized for issuance. Units Outstanding Of the 79,189,583 common units outstanding at December 31, 2022, 62,522,042 common units were held by the public, with the remaining 16,667,541 common units held by the Company’s affiliates (including members of the Company’s general partner and their families). Significant information regarding rights of the limited partners includes the following: • • • • • Rights to receive distributions of available cash within 45 days after the end of each quarter, to the extent the Company has sufficient cash from operations after the establishment of cash reserves. Limited partners have limited voting rights on matters affecting the Company’s business. The general partner may consider only the interests and factors that it desires and has no duty or obligation to give any consideration of any interests of the Company’s limited partners. Limited partners have no right to elect the board of directors of the Company’s general partner. The vote of the holders of at least 66 2/3% of all outstanding units voting together as a single class is required to remove the general partner. Any holder, other than the general partner or the general partner’s affiliates, that owns 20% or more of any class of units outstanding cannot vote on any matter. The Company may issue an unlimited number of limited partner interests without the approval of the limited partners. Limited partners may be required to sell their units to the general partner if at any time the general partner owns more than 80% of the issued and outstanding common units. 104 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Distributions and Incentive Distribution Rights The Company’s general partner is entitled to incentive distributions if the amount it distributes to unitholders with respect to any quarter exceeds specified target levels shown below: Minimum Quarterly Distribution First Target Distribution Second Target Distribution Third Target Distribution Thereafter Total Quarterly Distribution Per Common Unit Target Amount $0.45 up to $0.495 above $0.495 up to $0.563 above $0.563 up to $0.675 above $0.675 Marginal Percentage Interest in Distributions Unitholders General Partner 98 % 98 % 85 % 75 % 50 % 2 % 2 % 15 % 25 % 50 % The Company’s ability to make distributions is limited by its debt instruments. The revolving credit facility generally permits the Company to make cash distributions to unitholders as long as immediately after giving effect to such a cash distribution the Company has availability under the revolving credit facility at least the greater of (i) 15% of the Aggregate Borrowing Base (as defined in the credit agreement) then in effect, and (ii) $60.0 million (which amount is subject to increase in proportion to revolving commitment increases). Further, the revolving credit facility contains one springing financial covenant which provides that only if the Company’s availability under the revolving credit facility falls below the greater of (a) 10.0% of the Borrowing Base (as defined in the credit agreement) then in effect, and (b) $35.0 million (which amount is subject to increase in proportion to revolving commitment increases), the Company will be required to maintain as of the end of each fiscal quarter a Fixed Charge Coverage Ratio (as defined in the credit agreement) of at least 1.0 to 1.0. The indentures governing the Company’s various senior notes restrict the Company’s ability to make cash distributions. Under the indenture governing the 2024 Secured Notes and 2025 Senior Notes, the Company may pay distributions to its unitholders in an amount equal to available cash from operating surplus (as defined in the Company’s partnership agreement) with respect to its preceding fiscal quarter, subject to certain customary adjustments described in the indentures, if the Company’s fixed charge coverage ratio (as defined in the indentures) for the most recently ended four full fiscal quarters is not less than 3.0 to 1.0. If the Company’s fixed charge coverage ratio is less than 3.0 to 1.0, the Company will be able to pay distributions to its unitholders up to an amount equal to a $25.0 million basket, subject to certain customary adjustments described in the indentures. The indentures governing the 2027 Senior Notes reduces this minimum fixed charge coverage ratio to 2.5 to 1.0. The Company’s distribution policy is as defined in its partnership agreement. In April 2016, the board of directors of the Company’s general partner determined to suspend payment of the Company’s quarterly cash distribution to unitholders and the Company is not currently permitted to resume cash distributions pursuant to the terms of the indentures governing the Company’s outstanding senior notes. The board of directors of the Company’s general partner will continue to evaluate the Company’s ability to reinstate the quarterly cash distribution. The Company made no distributions to its partners for the years ended December 31, 2022 and 2021. For the years ended December 31, 2022 and 2021, the general partner was allocated no incentive distribution rights. 13. Unit-Based Compensation The Company’s general partner originally adopted a Long-Term Incentive Plan on January 24, 2006, which was amended and restated effective December 10, 2015 and further amended effective December 9, 2021 (the “LTIP”), for its employees, consultants and directors and its affiliates who perform services for the Company. The LTIP provides for the grant of restricted units, phantom units, unit options and substitute awards and, with respect to unit options and phantom units, the grant of distribution equivalent rights (“DERs”). Following unitholder approval of the December 9, 2021 amendment to the LTIP, which was obtained on February 16, 2022, an aggregate of 5,283,960 common units may be delivered pursuant to awards under the LTIP. Units withheld to satisfy the Company’s general partner’s tax withholding obligations are available for delivery pursuant to other awards. The LTIP is administered by the compensation committee of the Company’s general partner’s board of directors. Liability Awards are awards that are currently expected to be settled in cash on their vesting dates, rather than in equity units. Phantom unit Liability Awards are recorded in accrued salaries, wages and benefits in the consolidated balance sheets based on the vested portion of the fair value of the awards on the balance sheet date. The fair value of Liability Awards is updated at each balance sheet date and changes in the fair values of the vested portions of the awards are recorded as increases or decreases to compensation expense within general and administrative expense in the consolidated statements of operations. 105 Table of Contents Phantom Units CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Non-employee directors and certain management level employees of the Company’s general partner have been granted phantom units under the terms of the LTIP as part of their respective compensation packages related to fiscal years 2022 and 2021. The phantom units granted to non-employee directors and employees related to fiscal years 2022 and 2021 have a three-year cliff vest on the third anniversary following the grant date. Although ownership of common units related to the vesting of such LTIP phantom units does not transfer to the recipients until the phantom units vest, the recipients have DERs on these phantom units from the date of grant. Non-employee directors and certain senior management level employees of the Company’s general partner are eligible to defer their earned director fees or earned annual cash incentive amounts, respectively, into the Deferred Compensation Plan. When such individuals elect to defer any portion of their compensation into the plans, these deferred amounts are credited to the participant in the form of phantom units. The compensation committee may recommend a matching contribution for the deferred amounts at its discretion. For unit-based compensation equity awards granted, the Company uses the market price of its common units on the grant date to calculate the fair value and related compensation cost of the phantom units. The Company amortizes this compensation cost to partners’ capital (deficit) and general and administrative expense in the consolidated statements of operations using the straight-line method over the service period, as it expects these units to fully vest. A summary of the Company’s non-vested phantom units as of December 31, 2022, and the changes during the years ended December 31, 2022 and 2021, are presented below: Non-vested at January 1, 2020 Granted Vested Forfeited Non-vested at December 31, 2020 Granted Vested Forfeited Non-vested at December 31, 2021 Granted Vested Forfeited Non-vested at December 31, 2022 Number of Phantom Units Weighted-Average Grant Date Fair Value 2,901,288 3,210,041 (2,191,846) (1,548,615) 2,370,868 821,964 (1,002,338) (61,933) 2,128,561 931,926 (1,706,783) (39,322) 1,314,382 $ $ $ $ 5.21 2.87 3.11 4.28 2.21 4.71 3.34 3.68 2.31 15.02 5.61 6.62 6.58 For the year ended December 31, 2022, compensation expense of $32.9 million was recognized in the consolidated statements of operations related to phantom unit grants. For the year ended December 31, 2021, compensation expense of $50.7 million was recognized in the consolidated statements of operations related to phantom unit grants. As of December 31, 2022, there was a total of $15.2 million of unrecognized compensation costs related to non-vested phantom unit grants, $14.4 million of which was attributable to Liability Awards. These costs are expected to be recognized over a weighted-average period of approximately two years. The total fair value of phantom units vested during the years ended December 31, 2022 and 2021, was $26.1 million and $11.7 million, respectively. 106 Table of Contents 14. Employee Benefit Plans Defined Contribution Plan CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company has a domestic defined contribution plan administered by its general partner for (i) all full-time employees that are eligible to participate in the plan (the “401(k) Plan”). Participants in the 401(k) Plan are allowed to contribute 1% to 70% of their pre-tax earnings to the plan, subject to government imposed limitations. The Company matches 100% of each 1% of eligible compensation contributed by the participant up to 4% and 50% of each additional 1% of eligible compensation contributed up to 6%, for a maximum contribution by the Company of 5% of eligible compensation contributed per participant. The plan also includes a profit-sharing component for eligible employees. Contributions under the profit-sharing component are determined by the board of directors of the Company’s general partner and are discretionary. The funding policy is consistent with funding requirements of applicable laws and regulations. The Company recorded the following 401(k) Plan matching contribution expense in the consolidated statements of operations (in millions): 401(k) Plan matching contribution expense Defined Benefit Pension Plan 2022 Year Ended December 31, 2021 2020 $ 6.9 $ 5.9 $ 5.6 The Company has domestic noncontributory defined benefit plans for those salaried employees as well as those employees represented by either the United Steelworkers (the “USW”) or the International Union of Operating Engineers (the “IUOE”); who (i) were formerly employees of Penreco and became employees of the Company as a result of the acquisition of Penreco on January 3, 2008 (the “Penreco Pension Plan”) or (ii) were formerly employees of Montana Refining Company, Inc. and who became employees of the Company as a result of the acquisition of the Great Falls refinery on October 1, 2012 (the “Great Falls Pension Plan” and together with the Penreco Pension Plan, the “Pension Plan”). Both the Penreco Pension Plan and the Great Falls Pension Plans were last amended in 2009 and 2015 respectively, which curtailed employees covered by the plans from accumulating additional benefits in subsequent years following the amendment date. During 2022, the Company made an immaterial amount of contributions to its Pension Plan and expects to contribute less than $0.1 million to its Pension Plan in 2023. The accumulated and projected benefit obligations for the Pension Plan were $31.2 million and $41.2 million as of December 31, 2022 and 2021, respectively. For the years ended December 31, 2022 and 2021, the discount rate used to determine the benefit obligations was 5.19% and 2.72%, respectively, for the Penreco Pension Plan and 5.16% and 2.70%, respectively, for the Great Falls Pension Plan. For the years ended December 31, 2022 and 2021, the expected rate of return on plan assets for the Penreco Pension Plan and Great Falls Pension Plan was 4.50% and 4.50%, respectively. The fair value of plan assets was $26.4 million and $34.5 million as of December 31, 2022 and 2021, respectively. The estimated benefit payments for the Pension Plan, which reflect expected future service, as appropriate, are expected to be less than $2.3 million in each of the next five years. 107 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 15. Accumulated Other Comprehensive Loss The table below sets forth a summary of changes in accumulated other comprehensive loss by component for the years ended December 31, 2022 and 2021 (in millions): Accumulated other comprehensive loss at December 31, 2020 Other comprehensive income before reclassifications Net current period other comprehensive income Accumulated other comprehensive loss at December 31, 2021 Other comprehensive income before reclassifications Net current period other comprehensive income Accumulated other comprehensive loss at December 31, 2022 16. Income Taxes Defined Benefit Pension And Retiree Health Benefit Plans Total $ $ $ (12.3) 2.2 2.2 (10.1) 1.8 1.8 (8.3) $ $ $ (12.3) 2.2 2.2 (10.1) 1.8 1.8 (8.3) The Company, as a partnership, is generally not liable for federal and state income taxes on the earnings of Calumet Specialty Products Partners, L.P., its wholly-owned subsidiaries, and its majority owned subsidiaries. However, the Company conducts certain activities through immaterial, wholly-owned subsidiaries that are corporations, which in certain circumstances are subject to federal, state and local income taxes. Additionally, the Company is subject to franchise taxes in certain states. Income taxes on the earnings of the Company, with the exception of the above- mentioned taxes, are the responsibility of its partners, with earnings of the Company included in partners’ earnings. For the years ended December 31, 2022, 2021, and 2020, the Company recognized income tax expense of $3.4 million, $1.5 million, and $1.1 million, respectively. As a result of the Company’s analysis, management has determined that the Company does not have any material uncertain tax positions. 17. Earnings per Unit The following table sets forth the computation of basic and diluted earnings per limited partner unit (in millions, except unit and per unit data): Numerator for basic and diluted earnings per limited partner unit: Net loss Net loss attributable to noncontrolling interest Net loss attributable to limited partners Less: General partner’s interest in net loss Net loss available to limited partners Denominator for basic and diluted earnings per limited partner unit: Weighted average limited partner units outstanding Limited partners’ interest basic and diluted net loss per unit: (1) Limited partners’ interest 2022 Year Ended December 31, 2021 2020 $ $ $ $ (171.8) (6.7) (165.1) (3.3) (161.8) $ $ $ (260.1) — (260.1) (5.2) (254.9) $ $ $ (149.0) — (149.0) (3.0) (146.0) 79,336,283 78,980,839 78,369,091 (2.04) $ (3.23) $ (1.86) (1) Total diluted weighted average limited partner units outstanding excludes a de-minimus amount of potentially dilutive phantom units which would have been anti-dilutive for the years ended December 31, 2022, 2021, and 2020. 108 Table of Contents 18. Transactions with Related Parties CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During the years ended December 31, 2022, 2021, and 2020, the Company had product sales to related parties of $16.5 million, $19.9 million, and $16.4 million, respectively. Trade accounts and other receivables from related parties at December 31, 2022 and 2021 were $1.9 million and $3.1 million, respectively. The Company also had purchases from related parties during the years ended December 31, 2022, 2021, and 2020 of $11.7 million, $9.7 million, and $16.3 million, respectively. Accounts payable to related parties were $1.5 million and $2.3 million, at December 31, 2022 and 2021, respectively. The general partner employs all of the Company’s employees and the Company reimburses the general partner for certain of its expenses. 19. Segments and Related Information Segment Reporting The Company determines its reportable segments based on how the business is managed internally for the products sold to customers, including how results are reviewed and resources are allocated by the chief operating decision makers (“CODM”). Effective January 1, 2021, the Company reorganized its business segments as a result of a change in how the CODM allocates resources, makes operating decisions and assesses the performance of its business. As a result, as of January 1, 2021, the Company’s operations are managed by the CODM using the following reportable segments: • Specialty Products and Solutions. The Specialty Products and Solutions segment consists of our customer-focused solutions and formulations businesses, covering multiple specialty product lines, anchored by our unique integrated complex in Northwest Louisiana. In this segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products. • Montana/Renewables. The Montana/Renewables segment is composed of our Great Falls specialty asphalt facility and our Great Falls renewable fuels facility, which was a dual-train energy transition project that commenced production in late 2022. When our Great Falls renewable fuels facility is fully operational, we will process a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha that we expect to distribute into renewable markets in the western half of North America. At our Montana specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets. • • Performance Brands. The Performance Brands segment includes our fast-growing portfolio of high-quality, high-performing brands. In this segment, we blend, package, and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Corporate. The Corporate segment primarily consists of general and administrative expenses not allocated to the Montana/Renewables, Specialty Products and Solutions, or Performance Brands segments. The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies as disclosed in Note 3 - “Summary of Significant Accounting Policies,” except that the disaggregated financial results for the reporting segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting internal operating decisions. The Company accounts for inter-segment sales and transfers using market-based transfer pricing. The Company will periodically refine its expense allocation methodology for its segment reporting as more specific information becomes available and the industry or market changes. In addition, the accounting policies of the reporting segments for shipping and handling costs, which are primarily costs paid to third-party shippers for transporting products to customers, are the same as that described in Note 2 - “Change in Accounting Policy.” The Company evaluates performance based upon Adjusted EBITDA (a non-GAAP financial measure). The Company defines 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. 109 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Reportable segment information is as follows (in millions): Year Ended December 31, 2022 Sales: External customers Inter-segment sales Total sales Adjusted EBITDA Reconciling items to net loss attributable to partners: Depreciation and amortization LCM / LIFO (gain) loss Loss on impairment and disposal of assets Interest expense Debt extinguishment costs Unrealized (gain) loss on derivatives RINs mark-to-market loss Other non-recurring expenses Equity based compensation and other items Income tax expense Noncontrolling interest adjustments Net loss attributable to partners Capital expenditures PP&E, net $ $ $ $ $ Specialty Products and Solutions (1) (2) Performance Brands Montana/Renewables Corporate Eliminations Consolidated Total 3,508.0 24.7 3,532.7 379.0 $ $ $ 63.0 (14.2) — 32.3 — 51.9 75.0 303.4 $ — 303.4 $ 20.2 $ 11.3 (0.3) — 1.2 — — — 875.3 — 875.3 75.8 $ $ $ 41.1 21.1 0.7 29.8 38.3 (6.0) 40.7 $ $ $ — — — (85.4) 6.0 — — 112.6 3.1 — — 68.4 382.4 $ $ 2.0 $ 34.1 $ 528.1 1,062.7 $ $ 0.3 2.8 $ $ 110 $ $ $ — (24.7) (24.7) — — — — — — — — $ $ $ — — 4,686.7 — 4,686.7 389.6 121.4 6.6 0.7 175.9 41.4 45.9 115.7 15.6 32.9 3.4 (4.8) (165.1) 598.8 1,482.0 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2021 Sales: External customers Inter-segment sales Total sales Adjusted EBITDA Reconciling items to net loss attributable to partners: Depreciation and amortization LCM / LIFO gain Loss on impairment and disposal of assets Interest expense Unrealized loss on derivatives RINs mark-to-market loss Other non-recurring expenses Equity-based compensation and other items Income tax expense Net loss attributable to partners Capital expenditures PP&E, net $ $ $ $ $ Specialty Products and Solutions Performance Brands Montana/Renewables Corporate Eliminations Consolidated Total 2,111.4 16.1 2,127.5 104.6 $ $ $ 68.5 (35.1) 3.1 18.5 16.3 40.9 252.9 — 252.9 33.8 $ $ $ 13.6 (3.8) 0.1 0.3 — — 783.7 — 783.7 44.4 $ $ $ 34.6 (11.4) 0.8 8.3 8.1 16.8 $ $ $ — — — (72.5) 8.0 — 0.1 122.4 — — 57.6 375.5 $ $ 3.3 34.3 $ $ 83.0 531.3 $ $ — 8.6 $ $ 111 — (16.1) (16.1) — — — — — — — — — $ $ $ $ $ $ 3,148.0 — 3,148.0 110.3 124.7 (50.3) 4.1 149.5 24.4 57.7 8.1 50.7 1.5 (260.1) 143.9 949.7 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2020 Sales: External customers Inter-segment sales Total sales Adjusted EBITDA Reconciling items to net loss attributable to partners: Depreciation and amortization LCM / LIFO loss Loss on impairment and disposal of assets Interest expense Unrealized gain on derivatives RINs mark-to-market loss Other non-recurring expenses Equity-based compensation and other items Income tax expense Net loss attributable to partners Capital expenditures PP&E, net $ $ $ $ $ Specialty Products and Solutions Performance Brands Montana/Renewables Corporate Eliminations Consolidated Total 1,528.9 12.6 1,541.5 151.0 $ $ $ 60.9 23.5 0.2 0.6 (1.8) 53.7 234.1 0.3 234.4 61.1 $ $ $ 16.0 1.5 1.4 0.3 — — 505.2 — 505.2 71.4 $ $ $ 35.1 3.5 — 0.4 (1.0) 22.1 $ $ $ — — — (66.2) 7.7 — 5.2 124.6 — — 49.8 406.0 $ $ 1.7 34.0 $ $ 14.2 463.2 $ $ 1.7 16.6 $ $ — (12.9) (12.9) — — — — — — — — — $ $ $ $ $ $ 2,268.2 — 2,268.2 217.3 119.7 28.5 6.8 125.9 (2.8) 75.8 1.4 9.9 1.1 (149.0) 67.4 919.8 (1) (2) For the year ended December 31, 2022, Adjusted EBITDA for the Specialty Products and Solutions segment included a $13.9 million gain recorded in cost of sales in the consolidated statements of operations for proceeds received under the Company’s business interruption insurance policy. The Company incurred business losses due to increased costs arising from a polar vortex that occurred in 2021 in northwest Louisiana. As a result, the Company filed a contingent business interruption claim. Specifically, the losses included a loss of throughput at the Shreveport refinery and additional transportation related expenses. For the year ended December 31, 2022, Adjusted EBITDA for the Specialty Products and Solutions segment included a $4.4 million gain recorded in cost of sales in the consolidated statements of operations for proceeds received under the Company’s property damage insurance policy as a result of damages caused by a polar vortex that occurred in 2021. Geographic Information International sales accounted for less than ten percent of consolidated sales in each of the years ended December 31, 2022, 2021, and 2020 respectively. 112 Table of Contents Product Information CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company offers specialty, fuels, and packaged products primarily in categories consisting of lubricating oils, solvents, waxes, gasoline, diesel, jet fuel, asphalt, heavy fuel oils, high- performance branded specialty products, and other specialty and fuels products. The following table sets forth the major product category sales for each segment (dollars in millions): Specialty Products and Solutions: Lubricating oils Solvents Waxes Fuels, asphalt and other by-products Total Montana/Renewables: Gasoline Diesel Jet fuel Asphalt, heavy fuel oils and other Total Performance Brands: Consolidated sales Major Customers 2022 913.7 434.9 189.3 1,970.1 3,508.0 188.1 391.8 41.8 253.6 875.3 303.4 Year Ended December 31, 2021 19.5 % $ 9.3 % 4.0 % 42.0 % 74.8 % $ 4.0 % $ 8.4 % 0.9 % 5.4 % 18.7 % $ 6.5 % $ 658.7 303.7 151.7 997.3 2,111.4 188.3 324.9 27.5 243.0 783.7 252.9 20.9 % $ 9.7 % 4.8 % 31.7 % 67.1 % $ 6.0 % $ 10.3 % 0.9 % 7.7 % 24.9 % $ 8.0 % $ 2020 473.5 236.2 129.1 690.1 1,528.9 135.9 204.1 14.6 150.6 505.2 234.1 20.9 % 10.4 % 5.7 % 30.4 % 67.4 % 6.0 % 9.0 % 0.7 % 6.6 % 22.3 % 10.3 % 4,686.7 100.0 % $ 3,148.0 100.0 % $ 2,268.2 100.0 % $ $ $ $ $ $ During the years ended December 31, 2022, 2021, and 2020 the Company had no customer that represented 10% or greater of consolidated sales. Major Suppliers During the years ended December 31, 2022, 2021, and 2020 the Company had two counterparties that supplied approximately 86.2%, 90.2%, and 82.9%, respectively, of its crude oil supply. 20. Unrestricted Subsidiaries As defined in the indentures governing the Company’s outstanding senior notes, an unrestricted subsidiary means Montana Renewables Holdings, MRL and any other subsidiary of the Company, other than Calumet Finance Corp., that is designated by the Company’s general partner’s board of directors as an unrestricted subsidiary, but only to the extent that such subsidiary: • • • • has no indebtedness other than non-recourse debt owing to any person other than the Company or any of its restricted subsidiaries, except to the extent permitted by the indentures of the senior notes; is not party to any agreement, contract, arrangement or understanding with the Company or any restricted subsidiary of the Company unless the terms of any such agreement, contract, arrangement or other understanding are no less favorable to the Company or such restricted subsidiary than those that might be obtained at the time from persons who are not affiliates of the Company, except to the extent permitted by the indentures of the senior notes; is a person with respect to which neither the Company nor any of its restricted subsidiaries has any direct or indirect obligation (a) to subscribe for additional equity interests or (b) to maintain or preserve such person’s financial condition or to cause such person to achieve any specified levels of operating results, except to the extent permitted by the indentures of the senior notes; and has not guaranteed or otherwise directly or indirectly provided credit support for any indebtedness of the Company or any of its restricted subsidiaries. 113 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the years ended December 31, 2022 and December 31, 2021, respectively, Montana Renewables Holdings and MRL were the only unrestricted subsidiaries of the Company. In accordance with the indentures governing the Company’s outstanding senior notes, the following table sets forth certain financial information of (i) the Company and its restricted subsidiaries, on a combined basis, (ii) the Company’s unrestricted subsidiaries, on a combined basis, and (iii) the Company and its subsidiaries, on a consolidated basis, in each case, as of December 31, 2022 and December 31, 2021, respectively. December 31, 2022 Cash and cash equivalents Accounts receivable Inventory Prepaid expenses and other current assets Property, plant and equipment, net Operating lease right-of-use assets Other noncurrent assets, net Accounts payable Accounts payable - Intercompany Obligations under inventory financing agreements Other current liabilities Current portion of operating lease liabilities Current portion of long-term debt Long-term operating lease liabilities Long-term debt Redeemable noncontrolling interest Partners’ capital (deficit) Partners’ capital (deficit) - Intercompany December 31, 2021 Accounts receivable - Trade Accounts receivable - Intercompany Property, plant and equipment, net Restricted cash Accounts payable - Intercompany Long-term debt Partners’ capital (deficit) Partners’ capital (deficit) - Intercompany Parent Company and Restricted Subsidiaries 9.4 259.8 370.1 13.2 760.7 105.7 113.8 307.6 — 158.2 21.2 70.1 8.2 35.9 1,183.3 — (461.7) — Parent Company and Restricted Subsidiaries 216.8 — 698.4 — — 1,122.6 (379.7) — $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Unrestricted Subsidiaries $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 25.8 $ 8.2 $ 127.9 $ 6.0 $ 856.8 $ 1.8 $ 8.8 $ 134.8 $ 130.8 $ 63.6 $ 13.1 $ 0.6 $ 11.8 $ 1.2 $ 356.4 $ 250.0 $ (76.0) $ 149.0 $ Unrestricted Subsidiaries $ $ $ $ $ $ $ $ — $ 6.9 $ 390.3 $ 83.8 $ 43.1 $ 296.2 $ (5.4) $ 146.7 $ Eliminations Consolidated Total — — — — (135.5) — — — (130.8) — — — — — — — — (149.0) Eliminations — (6.9) (139.0) — (43.1) — — (146.7) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 35.2 268.0 498.0 19.2 1,482.0 107.5 122.6 442.4 — 221.8 34.3 70.7 20.0 37.1 1,539.7 250.0 (537.7) — Consolidated Total 216.8 — 949.7 83.8 — 1,418.8 (385.1) — For the year ended December 31, 2022, the Company’s unrestricted subsidiaries had revenue of $65.9 million, cost of sales of $78.6 million, which was inclusive of depreciation expense of $15.0 million, selling, general and administrative expense of $2.0 million, interest expense of $32.8 million, debt extinguishment costs of $38.3 million, unrealized gain on derivative instruments of $11.3 million, other income of $0.4 million, and net loss attributable to noncontrolling interest of $6.7 million. For the year ended December 31, 2021, the Company’s unrestricted subsidiaries had tolling revenue of $6.9 million, operating costs of $5.4 million, which was exclusive of depreciation expense of $1.7 million, and interest expense of $5.2 million. 21. Redeemable Noncontrolling Interest On August 5, 2022 (the “Closing Date”), MRHL issued and sold 12,500,000 preferred units (“Preferred Units”) in MRHL to an affiliate of Warburg Pincus LLC for $250.0 million for an immediate cash payment of $200.0 million and the agreement to pay the remaining $50.0 million in cash not later than October 3, 2022 (the “Deferred Purchase Price”) in exchange for a 14.2045% Percentage Interest in MRHL. The Company received the cash payment for the Deferred Purchase Price on October 3, 2022. The Preferred Units are not interest bearing and carry certain minimum return thresholds. 114 Table of Contents CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Holders of the Preferred Units are entitled to receive a preferred return equal to the greater of (i) an internal rate of return, or IRR, as defined in the Second Amended and Restated Limited Liability Company Agreement of MRHL (the “Second A&R LLC Agreement”), equal to 8.0% and (ii) a multiple on invested capital, or MOIC (as defined in the Second A&R LLC Agreement), initially equal to 1.35 and increasing by 0.01 each anniversary of the Closing Date up to a maximum MOIC equal to 1.40 on or after the fifth anniversary of the Closing Date (the “Preferred Return”). Pursuant to the Second A&R LLC Agreement, MRHL is required to distribute all Available Cash (as defined in the Second A&R LLC Agreement), to the members of MRHL (the “Members”) in the following priority: (i) 37.5% to the holders of the Preferred Units and 62.5% to all other Members pro rata based on their Percentage Interests (as defined in the Second A&R LLC Agreement) until the holders of the Preferred Units receive the Preferred Return and (ii) thereafter, 100.0% to the Members pro rata based on their Percentage Interests. Additionally, pursuant to the Second A&R LLC Agreement the Company is required to make distributions to the Members sufficient to enable them to pay, on a quarterly basis, federal, state and local taxes arising from the allocations made to such members. Further, such distributions are determined by the Company and shall be made within thirty (30) days after the close of each applicable quarter. Any tax liability distributions shall be treated as an advance against, and shall reduce the amount of, the next distribution that the members would otherwise receive pursuant to the agreement. At any time following the fifth anniversary of the Closing Date, if MRHL has not had an Initial Public Offering or Change of Control (each as defined in the Second A&R LLC Agreement), Warburg has the right to initiate an Initial Public Offering or Change of Control transaction pursuant to the terms of the Second A&R LLC Agreement. Upon the closing of a Qualified Initial Public Offering (as defined in the Second A&R LLC Agreement), each of MRHL and Warburg have the right to elect to convert all (but not less than all) of the Preferred Units (i) first by MRHL paying each holder of Preferred Units an amount in cash equal to such holder’s Preferred Return (to the extent not already paid) and (ii) thereafter, the Preferred Units automatically convert into the same number of common units of MRHL and will be entitled to participate in any distributions of Available Cash to the Members in proportion to their respective Percentage Interests. The Second A&R LLC Agreement also provides certain drag-along rights in connection with a Change of Control, subject to a minimum preferred return requirement for certain transactions that are consummated before the third anniversary of the Closing Date. The redeemable noncontrolling interest in MRHL is reflected as temporary equity in the consolidated balance sheets due to the redemption features described above and included a balance of $250.0 million as of December 31, 2022. The Company recorded the Preferred Units at their issuance date fair value, net of issuance costs. We recorded an adjustment for the $6.7 million net loss attributable to noncontrolling interest and $4.4 million preferred unit issuance costs to accrete the carrying amount to redemption value as of December 31, 2022. As of the reporting date, there are no triggering, change of control, early redemption or monetization events that are probable that would require us to revalue the Preferred Units. The following table shows the change in our redeemable noncontrolling interest in MRHL from initial measurement at August 5, 2022 to December 31, 2022. Issuance of Preferred Units Net loss attributable to noncontrolling interest Preferred unit issuance costs Adjustment to ASC 480 redemption value Balance at December 31, 2022 22. Subsequent Events $ $ December 31, 2022 250.0 (6.7) (4.4) 11.1 250.0 As of March 8, 2023, the fair value of the Company’s derivative liabilities have decreased by approximately $13.8 million subsequent to December 31, 2022. 115 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022. Management’s Annual Report on Internal Control Over Financial Reporting The management of Calumet Specialty Products Partners, L.P. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and board of directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, based on criteria for effective internal control over financial reporting described in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (“COSO”), and has concluded that we maintained effective internal control over financial reporting as of December 31, 2022. Ernst & Young LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements and has issued a report on the effectiveness of internal control over financial reporting, which is included herein. Changes in Internal Control over Financial Reporting No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 116 Report of Independent Registered Public Accounting Firm To the Board of Directors of Calumet GP, LLC General Partner and the Partners of Calumet Specialty Products Partners, L.P. Opinion on Internal Control Over Financial Reporting We have audited Calumet Specialty Products Partners, L.P.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Calumet Specialty Products Partners, L.P. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 2022, and the related notes, and our report dated March 15, 2023, which expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Indianapolis, Indiana March 15, 2023 117 Table of Contents Item 9B. Other Information Supply and Offtake Agreement Amendment On March 10, 2023, Montana Renewables LLC entered into the Second Amendment to Supply and Offtake Agreement (“S&O Agreement Amendment”) with Macquarie Energy North America Trading Inc. to provide that such agreement will expire on September 30, 2023. Change of Control Protection Plan On March 13, 2023, the Board of Directors (the “Board”) of Calumet GP, LLC (the “General Partner”), the general partner of Calumet Specialty Products Partners, L.P. (the “Company”), adopted a Change of Control Protection Plan (the “Plan”), effective March 13, 2023. The Plan provides certain cash and other specified benefits to eligible employees of the General Partner whose employment is terminated in the event of a Qualifying Termination in connection with a Change of Control (each as defined in the Plan). The Plan is intended to be an “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA and is maintained as an unfunded plan for the purpose of providing benefits to a select group of management or highly compensated employees. The foregoing descriptions of the S&O Agreement Amendment and the Plan are qualified in its entirety by reference to the S&O Agreement Amendment and the Plan, a copy of each of which are attached hereto as Exhibits 10.48 and 10.49, respectively, and are incorporated by reference herein. 118 Table of Contents Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 119 Table of Contents Item 10. Directors, Executive Officers of Our General Partner and Corporate Governance Management of Calumet Specialty Products Partners, L.P. and Director Independence PART III Our general partner, Calumet GP, LLC, manages our operations and activities. Unitholders are limited partners and are not entitled to elect the directors of our general partner or directly or indirectly participate in our management or operations. Our general partner owes certain contractual duties to our unitholders pursuant to various provisions of our partnership agreement as well as fiduciary duties to its owners. The directors of our general partner oversee our operations. The owners of our general partner have appointed nine members to our general partner’s board of directors. The directors of our general partner are generally elected by a majority vote of the owners of our general partner on an annual basis. However, as long as trusts established for the benefit of our former executive vice chairman of our general partner, F. William Grube, his family members or Permitted Transferees (as defined in our partnership agreement), continue to own at least 30% of the membership interests in our general partner, the Grube Family Group (as defined in our partnership agreement) has the right to appoint a member of Mr. Grube’s family to serve as a director of our general partner. The directors of our general partner hold office until the earlier of their death, resignation, removal or disqualification or until their successors have been elected and qualified. Pursuant to Section 5615 of the Nasdaq Stock Market, LLC Marketplace Rules (“Nasdaq Rules”), a listed limited partnership like us is not required to have a majority of independent directors on the board of directors of our general partner or to establish a compensation committee or a nominating/governance committee. However, four of our general partner’s nine directors are “independent” as that term is defined in the Nasdaq Rules and Rule 10A-3 of the Exchange Act. In determining the independence of each director, our general partner has adopted standards that incorporate the Nasdaq Rules and Exchange Act standards. Our general partner’s independent directors as determined in accordance with those standards are: James S. Carter, Daniel L. Sheets, John (“Jack”) G. Boss, and Karen A. Twitchell. The board of directors held eleven meetings during 2022. The officers of our general partner manage the day-to-day affairs of our business. Officers serve at the discretion of the board of directors. Directors and Executive Officers The following table shows information regarding the directors and executive officers of Calumet GP, LLC as of March 15, 2023: Name Stephen P. Mawer Todd Borgmann Bruce A. Fleming Scott Obermeier Vincent Donargo Gregory J. Morical James S. Carter Daniel J. Sajkowski Amy M. Schumacher Daniel L. Sheets Paul C. Raymond III Jennifer G. Straumins John (“Jack”) G. Boss Karen A. Twitchell Age 58 40 66 50 62 54 73 63 51 65 57 49 63 67 Position with Calumet GP, LLC Chairman of the Board Chief Executive Officer Executive Vice President — Montana Renewables & Corporate Development Executive Vice President — Specialties Executive Vice President — Chief Financial Officer Vice President, General Counsel & Secretary Director Director Director Director Director Director Director Director Each director’s biographical information set forth below includes the particular experience and qualifications that led the board of directors to conclude that the director is qualified to serve in such capacity. Stephen P. Mawer has served as chairman of the board of our general partners since January 2023 and has served as a board member of our general partner since March 2016. From May 2022 until December 2022, Mr. Mawer served in the role of Executive Chairman of our general partner. From April 2020 until May 2022, Mr. Mawer served as the Chief Executive Officer of our general partner. He retired as president of Koch Supply & Trading in 2014 following a 27-year career in commodities trading, risk management and refining operations. While at Koch, Mr. Mawer led global commodities trading and served as a senior member of the Koch Industries management team. Mr. Mawer holds Bachelor’s and Master’s degrees in chemical engineering from the University of Cambridge, England. Currently, he serves as a member of the Board of Directors at Zenith 120 Table of Contents Energy Management, a midstream company, as well as chairman of ClimeCo Corporation, an environmental commodities development and management company. He previously served as a member of the advisory board of Heritage Environmental Services. Mr. Mawer brings extensive knowledge of petroleum markets, refining economics, supply/marketing optimization, sustainability and renewable fuels, and risk management. Todd Borgmann has served as Chief Executive Officer of our general partner since May 2022. From February 2021 until the appointment to his current position, Mr. Borgmann served as Executive Vice President — Chief Financial Officer of our general partner. Mr. Borgmann has over fourteen years of experience with Calumet, serving the Company across a diverse set of management roles. For the five years preceding his appointment to Executive Vice President — Chief Financial Officer, Mr. Borgmann served as Senior Vice President — Chief Financial Officer, Senior Vice President — Interim Chief Financial Officer, and Vice President of Supply & Trading, developing extensive knowledge of petroleum markets, refining operations and risk management. Mr. Borgmann has also served as Calumet’s Vice President of Business Development and Director of the Partnership’s White Oils and Petroleum sales. Mr. Borgmann earned a Bachelor of Science in Industrial Engineering from Purdue University and a Masters of Business Administration from the University of Notre Dame. Bruce A. Fleming has served as Executive Vice President — Montana Renewables & Corporate Development of our general partner since February 2021. From March 2016 until the appointment to his current position, Mr. Fleming served as Executive Vice President — Strategy & Growth of our general partner. From 2004 until joining the Company, Mr. Fleming served as the vice president of mergers & acquisitions at Tesoro Corporation and as an officer of Tesoro Companies Inc. From 1997 through 2004, Mr. Fleming served as managing director of Hong Kong-based Orient Refining Ltd., and from 1981 through 1996 he held senior operations, business development and planning roles with Amoco Oil and Amoco Corporation where he was most recently vice president of China business development. Mr. Fleming earned a Ph.D. in chemical engineering from Princeton University and a B.S. in chemical engineering from the University of Delaware. He is a member of the Board of M&A Standards. Scott Obermeier was named Executive Vice President — Specialties of our general partner in January 2023. Prior to the appointment to his current position, Mr. Obermeier served as Executive Vice President — Specialty Products & Solutions and Executive Vice President — Commercial. Mr. Obermeier has been a Vice President with the Company since November 2017 and has more than 20 years of experience in sales and marketing as well as general management roles focused on the specialty chemicals market. Prior to his work with Calumet, he spent 10 years with Univar Solutions Inc., most recently serving as vice president where he managed the global chemical distributor’s organic chemicals business. Mr. Obermeier is a graduate of the University of Northern Iowa, with a degree in chemistry marketing. Vincent Donargo was named Executive Vice President — Chief Financial Officer of our general partner effective May 2022. From August 2020 until the appointment his current position, Mr. Donargo served as the Chief Accounting Officer of our general partner. Mr. Donargo also served as the Chief Financial Officer of Novus Capital Corporation, a special purpose acquisition corporation, from its inception in March 2020 through the closing of its initial business combination in January 2021. From December 2019 through March 2020, Mr. Donargo was providing financial advisory and consulting services to private clients. From May 2019 to December 2019, Mr. Donargo served as Executive Vice President and Chief Financial Officer of the Celadon Group Inc. From November 2017 to April 2019, he was Vice President and Chief Accounting Officer of the Celadon Group Inc., where he was brought in to assist with Celadon Group’s financial restructuring. The Celadon Group Inc. filed for Chapter 11 bankruptcy in December 2019. From August 2016 to November 2017, Mr. Donargo was Executive Vice President and Chief Financial Officer of Beaulieu Group LLC, a North American carpet and flooring manufacturing company, where he assisted the company with its financial restructuring process. The Beaulieu Group filed for Chapter 11 bankruptcy in July 2017. Prior to joining Beaulieu Group, Mr. Donargo held senior finance positions at several publicly traded companies, including Executive Vice President and Chief Financial Officer of Brightstar Corporation from April 2014 to August 2016 and Executive Vice President, Chief Financial Officer and Treasurer of Brightpoint, Inc. from September 2005 until it was acquired by Ingram Macro Inc. in November 2012. From 1998 to 2005, Mr. Donargo was the strategic business unit controller, director of finance and corporate controller of Aearo Company, a safety product manufacturing company. Mr. Donargo holds a BA in Accounting from Rutgers University. Gregory J. Morical is the Vice President, General Counsel & Secretary of our general partner and has served as our General Counsel since April 2012. Prior to joining the Company, Mr. Morical served as the General Counsel of Dormir, Inc. and U.S. Biopsy, LLC, as an in-house counsel in other companies, as associate at Ice Miller LLP and as a judicial clerk for the U.S. Court of Appeals for the Seventh Circuit and the Supreme Court of Ohio. Mr. Morical has a J.D. from Indiana University School of Law-Bloomington and a B.A. in political science from DePauw University. 121 Table of Contents James S. Carter has served as a member of the board of directors of our general partner since January 2006. Mr. Carter worked in various operations, commercial and business analysis capacities at ExxonMobil including vice president of U.S. marketing and sales of fuels and specialty products, manager of U.S. refining and marketing planning and analysis, manager of U.S. distribution activities, analysis manager of ExxonMobil International, and advisor to ExxonMobil headquarters for European refining and marketing until his retirement in 2003. Mr. Carter was previously a board member of the Association of Audit Committee Members, Inc. He received his B.S. in mechanical engineering from Clemson University and his M.B.A. in finance and accounting from Tulane University. Mr. Carter brings extensive managerial experience with one of the largest integrated energy companies in the world. He possesses a broad background in petroleum products marketing, with specific experience in the marketing of fuel products. Daniel J. Sajkowski has served as a member of the board of directors of our general partner since September 2014. Mr. Sajkowski has served as executive vice president, Growth and New Ventures of The Heritage Group since 2013. Prior to joining The Heritage Group, Mr. Sajkowski was the senior director — downstream technology at Sapphire Energy from 2010 until 2013. From 2004 to 2010, Mr. Sajkowski served as business unit leader at BP’s Whiting, Indiana refinery. During his career with BP/Amoco, Mr. Sajkowski also held positions as the manager of integrated supply and trading from 2002 until 2004 and vice president of refining technology from 2000 until 2002. Mr. Sajkowski earned his B.S. and M.S. degrees in chemical engineering from the University of Michigan and a Ph.D. in chemical engineering from Stanford University. He also completed The General Manager Program at Harvard University. Mr. Sajkowski has extensive refining industry experience including planning, operations and managerial roles for a large multinational refining company. His broad background of experience provides helpful insight to the Company in its implementation of strategic initiatives and its refinery operations in general. Amy M. Schumacher has served as a member of the board of directors of our general partner since September 2014. Ms. Schumacher has been part of The Heritage Group family of businesses since 2003, working in various capacities and leading a variety of growth projects along the way. In 2008, Ms. Schumacher founded Monument Chemical and served as President and CEO for eight years. In 2016, Ms. Schumacher transitioned to President of The Heritage Group and was appointed Chief Executive Officer in 2020. From 1998 to 2003, Ms. Schumacher served as a consultant with Accenture. Ms. Schumacher received her B.S. in civil engineering from Purdue University and her M.S. in management from the Massachusetts Institute of Technology Sloan School. Ms. Schumacher currently serves as CEO and a trustee for The Heritage Group and sits on a number of private subsidiary boards. Ms. Schumacher is the daughter of Fred M. Fehsenfeld, Jr., the former chairman of the board of our general partner. Ms. Schumacher has extensive managerial experience including planning and strategy. She possesses a broad background within the chemicals industry, with specific experience in strategic growth projects. Daniel L. Sheets has served as a member of the board of directors of our general partner since October 2018. Mr. Sheets worked in various capacities at Lubrizol including president of Lubrizol Additives from 2009 through his retirement in 2018 and vice president from 2005 to 2008. Prior to that time, Mr. Sheets served as vice president for engine additives and served as global business manager for fuels, refinery and oilfield products at Lubrizol. Mr. Sheets received his B.S. in electrical engineering from Pennsylvania State University. Mr. Sheets has extensive strategy, supply chain, sales and marketing and value capture experience. He possesses a broad background in petroleum products marketing, with specific experience in the marketing of lubricants, lubricant additives and specialty chemicals. Paul C. Raymond III has served as a member of the board of directors of our general partner since November 2020. Mr. Raymond brings over three decades of industry experience, which includes serving in his current role of chief executive officer of Monument Chemical and previously as president and chief executive officer of Sonneborn, LLC. Mr. Raymond holds a B.S in chemical engineering from Rice University and earned his Ph.D. in chemical engineering from the University of Texas at Austin. Mr. Raymond brings extensive specialty chemicals knowledge and strategic insights, and his impressive track record leading and growing similar businesses makes him a terrific asset and provides helpful insight to the Partnership's board of directors. Jennifer G. Straumins has served as a member of the board of directors of our general partner since February 2021. Ms. Straumins is the Chairman of Maverick Performance Products’ Board of Directors and a Board member for Wincoram Asset Management. Prior to founding Maverick Performance Product’s, Jennifer was an employee of Calumet Specialty Products Partners for 13 years holding various positions. Prior to joining Calumet, Jennifer held financial planning positions with Great Lakes Chemical Company and Exxon Chemical Company. Jennifer received her B.E. in Chemical Engineering from Vanderbilt University and her MBA from the University of Kansas. 122 Table of Contents Ms. Straumins brings extensive specialty chemicals knowledge and strategic insights. Her background provides helpful insight to the Company in its implementation of strategic initiatives and operations in general. John (“Jack”) G. Boss has served as a member of the board of directors of our general partner since August 2022. Mr. Boss brings over 40 years of experience to the Board of Calumet. He currently serves on the Board of Directors of Cooper-Standard (NYSE: CPS), Wabash National (NYSE: WNC) and Libbey, Inc. Most recently, he was the President and Chief Executive Officer of Momentive Performance Materials, a specialty chemicals and materials business from 2014 until 2020. Prior to this role, Mr. Boss served in the role of President of Honeywell Safety Products from 2012 to 2014. Mr. Boss held various managerial roles within Honeywell’s Specialty and Chemicals businesses from 2003 through 2014. Prior to Honeywell, Mr. Boss served as Vice President at Great Lakes Chemical Corporation. Mr. Boss holds a B.S. in Mechanical Engineering from West Virginia University and an MBA from Rutgers University. Karen A. Twitchell has served as a member of the board of directors of our general partner since August 2022. Ms. Twitchell brings more than a dozen years of Board experience and 30 years of executive experience to the Board of Calumet. Ms. Twitchell was Chair of the Board of Trecora Resources (NYSE: TREC), a petrochemical and specialty wax manufacturer, until the sale of the company in June 2022. In addition, she serves on the Board of Kraton Corp and HMTX Industries. Previously, she served on KMG Chemicals’ (NYSE: KMG) Board. From 2010 to 2013, Ms. Twitchell was Executive Vice President and Chief Financial Officer of Landmark Aviation, a private equity-backed fixed base operator for the aviation industry. Prior to 2010, Ms. Twitchell was Vice President and Treasurer of LyondellBasell Industries/Lyondell Chemical Company. Ms. Twitchell has also held senior management positions in the aluminum and cement manufacturing industries. Ms. Twitchell has a B.A. in Economics from Wellesley College and an MBA degree from Harvard Business School. Board of Directors Committees Conflicts Committee Three members of the board of directors of our general partner serve on a conflicts committee to review specific matters that the board believes may involve conflicts of interest. The conflicts committee determines if the resolution of the conflict of interest is fair and reasonable to us. The members of the conflicts committee may not be owners, officers or employees of our general partner or directors, officers, or employees of its affiliates, and must meet the independence and experience standards established by Nasdaq and the Exchange Act to serve on an audit committee of a board of directors, and certain other requirements. Any matters approved by the conflicts committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by our general partner of any duties it may owe us or our unitholders. The three independent board members who serve on the conflicts committee are Messrs. James S. Carter, Daniel L. Sheets, and Ms. Karen A. Twitchell. Ms. Twitchell serves as the chair of the conflicts committee. The conflicts committee held no meetings during 2022. Compensation Committee The board of directors of our general partner also has a compensation committee which, among other responsibilities, has overall responsibility for evaluating and either approving or recommending to the board of directors the director, chief executive officer and senior executive compensation plans, policies and programs of the Company. Nasdaq does not require a limited partnership like us to have a compensation committee comprised entirely of independent directors. Accordingly, Mr. Daniel L. Sheets, Ms. Amy M. Schumacher, and Ms. Karen A. Twitchell serve as members of our compensation committee. Mr. Sheets serves as the chair of the compensation committee. Ms. Schumacher is not an independent member of the compensation committee. The compensation committee held five meetings during 2022. The board of directors has adopted a written charter for the compensation committee which defines the scope of the committee’s authority. The committee may form and delegate some or all its authority to subcommittees comprised of committee members when it deems appropriate. The committee is responsible for reviewing and recommending to the board of directors for its approval the annual salary and other compensation components for the chief executive officer. The committee reviews and makes recommendations to the board of directors for its approval of any of the Company’s equity compensation-based plans, including the Long-Term Incentive Plan, or any cash bonus or incentive compensation plans or programs. Also, the committee reviews and approves all annual salary and other compensation arrangements and components for the senior executives of the Company. Further, the compensation committee periodically reviews and makes a recommendation to the board of directors for changes in the compensation of all directors. The committee has the authority to retain or terminate any compensation consultant that assists it in the evaluation of director and senior executive compensation and to obtain independent advice and assistance from internal and external legal, accounting and other advisors. The committee did not engage a compensation consultant for the 2022 year. 123 Table of Contents Audit and Finance Committee The board of directors of our general partner has an audit and finance committee comprised of four directors, Messrs. James S. Carter, Daniel L. Sheets, John (“Jack”) G. Boss, and Ms. Karen A. Twitchell, each of whom the board of directors of our general partner has determined meets the independence and experience standards established by Nasdaq and the SEC. In addition, the board of directors of our general partner has determined that Mr. Carter is an “audit committee financial expert” as defined by the SEC. Mr. Carter serves as the chair of the audit and finance committee. The audit and finance committee held five meetings during 2022. The board of directors has adopted a written charter for the audit and finance committee. The audit and finance committee assists the board of directors in its oversight of the integrity of our financial statements and our compliance with legal and regulatory requirements and corporate policies and controls. The audit and finance committee has the sole authority to retain and terminate our independent registered public accounting firm, approves all auditing services and related fees and the terms thereof and pre-approves any non-audit services to be rendered by our independent registered public accounting firm. The audit and finance committee is also responsible for confirming the independence and objectivity of our independent registered public accounting firm. Our independent registered public accounting firm is given unrestricted access to the audit and finance committee. Risk Committee The board of directors of our general partner has established a risk committee which, among other responsibilities, oversees the Company’s risk assessment practices. Messrs. Daniel J. Sajkowski, Paul C. Raymond III, Stephen P. Mawer, and Ms. Jennifer G. Straumins serve as members of our risk committee. Mr. Sajkowski serves as the chair of the risk committee. The board of directors has adopted a written charter for the risk committee which defines the scope of the committee’s authority. The risk committee held four meetings during 2022. Strategy and Growth Committee The board of directors of our general partner has established a strategy and growth committee which, among other responsibilities, oversees our (i) long-term strategy, (ii) risks and opportunities relating to such strategy, (iii) strategic decisions regarding investments, mergers, acquisitions and divestitures, (iv) capitalization, (v) ownership structure and (vi) distribution policy. Messrs. Paul C. Raymond III, Stephen P. Mawer, John (“Jack”) G. Boss, and Ms. Jennifer G. Straumins serve as members of the strategy and growth committee. Mr. Raymond serves as the chair of the strategy and growth committee. The board of directors has adopted a written charter for the strategy and growth committee which defines the scope of the committee’s authority. The strategy and growth committee held five meetings during 2022. Leadership and Talent Development Committee The board of directors of our general partner has established a leadership and talent development committee which, among other responsibilities, monitors our strategic, long-term, and sustainable approach to talent and development issues relating to people. Messrs. Daniel J. Sajkowski, Daniel L. Sheets, John (“Jack”) G. Boss, and Ms. Amy M. Schumacher serve as members of our leadership and talent development committee. Mr. Boss serves as the chair of the leadership and talent development committee. The board of directors has adopted a written charter for the leadership and talent development committee which defines the scope of the committee’s authority. The leadership and talent development committee held four meetings during 2022. Code of Ethics We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers, employees and contractors. Available on our website at www.calumetspecialty.com are copies of our board of director’s committee charters and Code of Business Conduct and Ethics, all of which also will be provided to unitholders without charge upon their written request to: Investor Relations, Calumet Specialty Products Partners, L.P., 2780 Waterfront Parkway East Drive, Indianapolis, Indiana, 46214. We intend to disclose, to the extent required, future amendments to certain provisions of the Code of Business Conduct and Ethics, and waivers of the Code of Business Conduct and Ethics granted to executive officers and directors, on our website within four business days following the date of the amendment or waiver. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act, as amended, requires Calumet’s directors and certain executive officers, as well as beneficial owners of ten percent or more of Calumet’s common units, to report their holdings and transactions in Calumet’s securities. Based on information furnished to Calumet and contained in reports filed pursuant to Section 16(a), as well as written representations that no other reports were required for 2022, Calumet’s directors and executive officers filed all reports required by Section 16(a). 124 Table of Contents Item 11. Executive and Director Compensation This Compensation Discussion & Analysis describes the rationale and policies for compensation of the following individuals, who are our named executive officers for the 2022 fiscal year: COMPENSATION DISCUSSION & ANALYSIS Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Title (1) (1) Chairman of the Board Chief Executive Officer Executive Vice President — Chief Financial Officer Executive Vice President — Montana Renewables & Corporate Development Executive Vice President — Specialties Vice President, General Counsel & Secretary (2) (1) (1) (2) Effective May 1, 2022, Mr. Borgmann succeeded Mr. Mawer as the Company’s Chief Executive Officer and Mr. Donargo succeeded Mr. Borgmann as Executive Vice President — Chief Financial Officer of the Company. Effective January 1, 2023, Mr. Mawer transitioned from Executive Chairman to non-executive Chairman of Board of Directors of our general partner. Effective January 1, 2023, Mr. Obermeier transitioned from Executive Vice President — Specialty Products & Solutions to Executive Vice President — Specialties. Overview The compensation committee of the board of directors of our general partner oversees our compensation programs. Our general partner maintains compensation and benefits programs designed to allow us to attract, motivate and retain the best possible employees, including executive compensation programs designed to reward the achievement of both short-term and long-term goals necessary to promote growth and generate positive unitholder returns. Our executive compensation programs are based on a pay-for-performance philosophy. They include both long-term compensation under the Calumet GP, LLC Amended and Restated Long-Term Incentive Plan (the “LTIP”) and short-term compensation, which, together with base salary and employee benefits, provide a total compensation package intended to be competitive with the companies with which we compete for executive talent. Under their collective authority, the compensation committee and the board of directors maintain the right to develop and modify compensation programs and policies as they deem appropriate. Factors they may consider in making decisions to materially increase or decrease compensation include our overall financial performance, our growth over time, changes in the complexity of our business operations as well as individual executive job scope, complexity and performance, and changes in competitive compensation practices in our labor markets. In determining any forms of compensation other than the base salary for the senior executives, or in the case of the chief executive officer, the recommendation to the board of directors of the forms of compensation for the chief executive officer, the compensation committee considers our financial performance and relative unitholder return, the value of similar incentive awards to senior executives at comparable companies and the awards granted to senior executives in past years. 125 Table of Contents Objectives of Compensation Programs Our executive compensation programs are designed with the following primary objectives: • reward strong individual performance that drives our positive financial results and enterprise value; • make incentive compensation a significant portion of an executive’s total compensation, designed to balance short-term and long-term performance; • • align the interests of our executives with those of our unitholders; and attract, develop and retain executives with a compensation structure that is competitive with other publicly-traded company’s of similar size. Our primary business objectives are to generate cash flows, reduce debt leverage and grow our business. As a result, Adjusted EBITDA is the primary measurement of performance taken into account in making compensation decisions, as we believe this represents the most comprehensive measurement of our ability to generate cash flows and recognizes the integrated and collaborative effort required by the full executive team to maximize performance. As such, both short-term and long-term compensation is earned or awarded based on Adjusted EBITDA performance, as well as achievement of individual performance objectives. Adjusted EBITDA is a non-GAAP measure that we define, consistent with the terms of our Credit Agreement and senior notes indentures. The most directly comparable GAAP performance measure for Adjusted EBITDA is Net loss. Please read Part II, Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures.” Executive Officer Transitions On May 1, 2022, (the “Transition Date”), as part of the Company’s planned executive transition, Mr. Mawer transitioned to Executive Chairman of the Company, and Mr. Borgmann was appointed to succeed him as the Company’s Chief Executive Officer. Additionally, Mr. Donargo was appointed Executive Vice President — Chief Financial Officer of the Company to succeed Mr. Borgmann. We entered into promotion letters with each of these executives in connection with the transition which provided for changes to each executive’s base salary, target bonus and target compensation under the LTIP effective as of the Transition Date, as described below. Base Salary Target Bonus Target LTIP Award Stephen P. Mawer $300,000 Todd Borgmann $650,000 Vincent Donargo $400,000 80% of base salary 60% of base salary 150% of base salary 100% of base salary 100% of base salary 80% of base salary On January 1, 2023, Mr. Mawer transitioned from Executive Chairman to non-executive Chairman of the board of directors of our general partner. In connection with this transition, and as a result of Mr. Borgmann’s increased responsibilities, Mr. Borgmann’s base salary was further increased to $735,000 and his target LTIP award was further increased to 150% of base salary. Process for Determining Compensation Role of Compensation Committee The compensation committee of our board of directors of our general partner has primary responsibility for overseeing our executive compensation program. In general, the compensation committee recommends to the board of directors the compensation of our chief executive officer and approves the compensation of the other named executive officers. Although the compensation committee has the authority to engage a compensation consultant, it did not engage a compensation consultant during 2022. Review of Named Executive Officer Performance In making determinations regarding the compensation elements for each named executive officer, the compensation committee considers the scope of responsibilities and experience and balances these against competitive salary levels and other components of the compensation. The compensation committee has the opportunity to meet with the named executive officers and does so at their own discretion at various times during the year, which allows the compensation committee to form its own assessment of each individual’s performance. Role of Management In conjunction with the Vice President — Human Resources of the Company, the Chief Executive Officer (“CEO”) evaluates the performance of other named executive officers, as well as other members of management in the Company, against individual and business objectives. Based on the outcomes, the CEO makes recommendations to the compensation committee in regard to compensation for both named executive officers and other members of management of the Company. 126 Table of Contents Elements of Executive Compensation The total compensation and benefits program for our named executive officers consists of the following elements: • • • • • base salary short-term cash awards under an annual incentive plan long-term incentive compensation, including unit-based awards under the LTIP deferred compensation, retirement, health and welfare benefits limited perquisites These elements are designed to constitute an integrated executive compensation structure meant to incentivize a high level of individual executive officer performance in line with our financial and operating goals. Base Salary Base salaries provide executives with a base level of income as consideration for fulfillment of the roles and responsibilities of their positions. The base salary levels are intended to assist in attracting and retaining the services of quality individuals who are essential for the growth and profitability of Calumet. Generally, changes in the base salary levels for our executive officers are reviewed on an annual basis by the compensation committee and are effective at the beginning of the following fiscal year. In addition to the base salary changes made in connection with our executive officer transitions on the Transition Date, Mr. Donargo, Mr. Fleming, Mr. Obermeier, and Mr. Morical received annual merit increases on January 1, 2022. The table below sets forth each named executive officer’s base salary as of the end of the 2021 and 2022 fiscal years: Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Short-Term Cash Bonus Awards Base Salary as of 12/31/2021 Base Salary as of 12/31/2022 $ $ $ $ $ $ 725,000 334,100 330,525 431,197 342,990 297,026 $ $ $ $ $ $ 300,000 650,000 400,000 447,022 391,664 332,721 We provide short-term cash bonus awards to named executive officers under our annual cash incentive plan (the “Cash Incentive Plan”). These awards are designed to incentivize executives in meeting financial performance, operational, and strategic objectives on an annual basis. The compensation committee determines each named executive officer’s target cash bonus award at the beginning of the year, expressed as a percentage of each named executive officer’s base salary actually earned. The following table sets forth each named executive officer’s minimum, target and stretch cash bonus awards for 2022 all as a percentage of each named executive officer’s base salary, which for Messrs. Mawer, Borgmann and Donargo reflect the levels in effect prior to the Transition Date for one-third of the year and the levels in effect after the Transition Date for the remainder of the year. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Adjusted EBITDA Minimum 60% 75% 50% 75% 50% 40% Target 115% 150% 100% 150% 100% 80% Stretch 175% 225% 200% 225% 150% 120% As in prior years, funding of our cash bonus awards for the 2022 fiscal year were based on the achievement of Adjusted EBITDA performance targets. As described above, Adjusted EBITDA represents the most comprehensive measurement of our ability to generate cash flows and grow our business, and as a result, the compensation committee believes that Adjusted EBITDA establishes a direct link between executive compensation and our financial performance. At the recommendation of the compensation committee, the board of directors approved the minimum, target and stretch levels of Adjusted EBITDA for 2022 based on budgets prepared by management after consideration of the specific circumstances we expected to face during 127 Table of Contents 2022. No cash bonus awards for 2022 would be paid if Adjusted EBITDA falls below the minimum performance level established by the board of directors, and performance between the minimum and target levels or between the target and stretch levels would result in an interpolated payout. The table below sets forth the minimum, target and stretch levels of Adjusted EBITDA for 2022 under our short-term cash bonus program as well as our actual Adjusted EBITDA results. Adjusted EBITDA is defined in Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures.” Adjusted EBITDA (in millions) Individual Performance Objectives Minimum $150.0 Target $200.0 Stretch $275.0 Actual $389.6 Although Mr. Mawer’s cash bonus award for 2022 was based solely on Adjusted EBITDA performance, the cash bonus awards for the other named executive officers were based on achievement of Adjusted EBITDA performance and achievement of operational, strategic, and individual performance goals. Individual performance objectives for Mr. Borgmann were determined by the board of directors while the individual performance objectives for Messrs. Donargo, Fleming, Obermeier and Morical were recommended by the chief executive officer and approved by the compensation committee. Individual performance and objectives are specific to each officer position and are set at the beginning of the fiscal year. Criteria used to measure an individual’s performance may include assessment of objective criteria (e.g., execution of projects, improving profitability, or timely completing an acquisition or divestiture) as well as qualitative factors such as the executive’s ability to lead, ability to communicate, and successful adherence to our stated values (i.e., commitment to safety, commitment to integrity, respect, commitment to excellence, innovation, entrepreneurship and collaboration). There are no specific weights assigned to these various elements of performance. 2022 Approved Cash Bonus Awards In consideration of the above Adjusted EBITDA and individual performance, the compensation committee recommended and board of directors approved the following cash bonus awards for the 2022 fiscal year. Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Name 2022 Bonus $ $ $ $ $ $ 783,750 1,279,334 608,764 1,005,800 610,830 399,265 Long-Term Unit-Based Awards 2022 LTI Awards In fiscal year 2022, the compensation committee established a minimum, target and stretch long-term incentive (LTI) award opportunity for each named executive officer, expressed as a percentage of each named executive officer’s base salary as of the end of the fiscal year. The following table sets forth each named executive officer’s minimum, target and stretch LTI awards for 2022 all as a percentage of each named executive officer’s base salary. Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Minimum 30% 50% 40% 30% 40% 30% Target 60% 100% 80% 60% 80% 60% Stretch 90% 150% 120% 90% 120% 90% 128 Table of Contents Our 2022 LTI award program provided each named executive officer with the opportunity to receive a grant of phantom units based on our Adjusted EBITDA performance and, for the named executive officers other than Mr. Mawer, individual performance objectives, consistent with the terms applicable to our 2022 cash bonus awards described above. The dollar amount earned under the 2022 LTI award program based on performance is converted into a number of phantom units based on the closing price of our common units on the date the phantom units are issued. The phantom units are granted under the LTIP and vest on the third anniversary of the date of grant. Following vesting, the phantom units are settled in common units (or cash equivalent). Because of the three-year cliff vesting, we believe phantom units establish a direct link between executive compensation and the interests of our unitholders, serve as a strong retention incentive and reinforces unit ownership levels among our executives. The table below sets forth the dollar value earned under the 2022 LTI program and the resulting number of phantom units granted on February 21, 2023 based on our 2022 performance. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical 2022 Strategic Repositioning Grants 2022 LTI Award Earned $542,500 $975,000 $480,000 $402,320 $470,000 $299,500 Number of Phantom Units Granted 27,806 49,974 24,603 20,621 24,090 15,348 In February 2022, the board of directors of our general partner approved grants of phantom units to certain of our named executive officers as an incentive to successfully complete the MRL project. Messrs. Mawer and Borgmann each received 83,333 phantom units, Mr. Fleming received 133,333 phantom units, and Mr. Morical received 33,333 phantom units, each of which vest in full on the third anniversary of the date of grant. Other Elements of Compensation Health and Welfare Benefits We offer a variety of health and welfare benefits to all eligible employees of our general partner. These benefits are consistent with the types of benefits provided by our peer group and are provided to maintain a competitive position in terms of attracting and retaining executive officers and other employees. In addition, the health and welfare programs are intended to protect employees against catastrophic loss and encourage a healthy lifestyle. The executive officers generally are eligible for the same benefit programs on the same basis as the rest of our employees. Our U.S. health and welfare programs include medical, pharmacy, dental, life and accidental death and dismemberment insurance coverages. In addition, all U.S.-based employees working over 30 hours per week are eligible for long-term disability coverage. In addition to the long-term disability coverage provided to all eligible employees, we provide our executive officers with a compensation allowance, which is grossed up for the payment of taxes, to allow them to purchase additional long-term disability coverage on an after-tax basis at no net cost to them. As structured, these combined long-term disability benefits will pay 60% of monthly earnings, as defined by the policy, up to a maximum of $15,000 per month during a period of continuing disability up to normal retirement age, as defined by the policy. Retirement Benefits We provide the Calumet GP, LLC Retirement Savings Plan (the “401(k) Plan”) to assist our U.S.-based eligible officers and employees in saving for their retirement. Our executive officers participate in the same retirement savings plan as other eligible employees. We match 100% of each 1% of eligible compensation contributed by the participant up to 4% and 50% of each additional 1% of eligible compensation contributed up to 6%, for a maximum contribution by us of 5% of eligible compensation contributed per participant. 129 Table of Contents Perquisites We provide our named executive officers with limited perquisites and other personal benefits that we believe are reasonable and consistent with our overall compensation programs and philosophy. These benefits are provided to enable us to attract and retain these executives. Decisions made with respect to this compensation element do not significantly factor into or affect decisions made with respect to other compensation elements. Each executive officer is provided with all, or certain of, the following benefits as a supplement to their other compensation: • • Executive Physical Program: We generally pay for a complete and professional annual personal physical exam for each named executive officer appropriate for their age to improve their health and productivity. Spousal and Family Travel: On an occasional basis, we pay expenses related to travel of the spouses or certain family members of our executive officers in order to accompany the executive officer to business-related events. For the year ended December 31, 2022, we paid no expenses related to travel for family members of our executive officers. The compensation committee periodically reviews the perquisite program to determine if adjustments are appropriate. Other Compensation Related Matters Clawback Policy The LTIP includes provisions that address the potential need to recover awards granted under that plan. To the extent that applicable laws or listing standards would require it, or otherwise as determined appropriate by us, all awards granted under the LTIP shall be subject to clawback, forfeiture, repurchase or recoupment, as appropriate. We intend to adopt a clawback policy compliant with the Nasdaq listing standards implementing Exchange Act Rule 10D-1 upon or prior to the effectiveness of such standards. Executive Ownership of Units While we have not adopted any security ownership requirements or policies for our executives, our executive compensation programs foster the enhancement of executives’ equity ownership through long-term unit-based awards under the LTIP. For a listing of security ownership by our named executive officers, please read Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters.” The board of directors of our general partner has adopted the Insider Trading Policy of Calumet GP, LLC and Calumet Specialty Products Partners, L.P. (the “Insider Trading Policy”), which provides guidelines to employees, officers and directors with respect to transactions in our securities. Pursuant to Calumet’s Insider Trading Policy, all executive officers and directors must confer with our general counsel before effecting any put or call options for our securities or purchase or sale of common units. Further, the Insider Trading Policy states that we strongly discourage any put or call options transactions by officers, directors and all other employees and consultants. The Insider Trading Policy is available on our website at www.calumetspecialty.com or a copy will be provided at no cost to unitholders upon their written request to: Investor Relations, Calumet Specialty Products Partners, L.P., 2780 Waterfront Parkway East Drive, Suite 200, Indianapolis, Indiana, 46214. Employment Agreements As of December 31, 2022, there were no active employment agreements between our general partner and any of our executive officers. We provide offer letters to newly hired or promoted employees that set forth the general terms of their employment with us as of the offer letter date, but, with the exception of Mr. Obermeier’s promotion letter, those letters do not provide for severance, change in control or other post-termination benefits. Mr. Obermeier’s promotion letter sets forth the general terms of his employment with us as of the offer date and provides that, in the event he is terminated without cause within 24 months following a Change in Control, he shall receive 200% of the sum of his base salary and target bonus, in each case in effect as of the termination date and, contingent upon him signing the Company’s standard severance and release agreement. Mr. Obermeier’s promotion letter does not provide for severance or other post-termination benefits. Risk Considerations in our Overall Compensation Program Our compensation policies and practices are designed to provide rewards for achieving financial, operational, and strategic objectives that will support the growth and profitability of our business. Currently, our incentive compensation programs are based on performance, at the Company level, relative to goals we set for Adjusted EBITDA. In our assessment of risk related to such use of a single financial performance metric, we considered the relative difficulty for any employee to engage in an undue amount of risk-taking activity with a result that would be reasonably likely to have a material adverse effect on us due to the breadth and scope of activities, both operational and financial, across that organization that are captured in the calculation of Adjusted EBITDA. Also, we considered the current approval controls that exist to mitigate against excessive risk-taking that might impact Adjusted EBITDA and, in turn, our compensation programs. For example, we have specific approval policies 130 Table of Contents related to the entry into derivative instruments, material commercial agreements and material capital expenditures. In addition, our full board of directors, including its various committees, regularly assesses our key risk areas to monitor the impacts of such risks on our financial performance. Further, we considered the design of our incentive compensation programs, noting that the inclusion of both short-term cash incentive awards and long-term unit awards further align the interest our employees and our unitholders. As a result of these considerations, we have concluded that the risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on us. 2022 Summary Compensation Table The following table sets forth the annual compensation earned by or granted to our named executive officers for the fiscal years ended December 31, 2022, 2021 and 2020. Mr. Borgmann was not a named executive officer for 2020 and neither Mr. Donargo nor Mr. Morical were named executive officers prior to 2022. Name and Principal Position Stephen P. Mawer Executive Chairman Todd Borgmann Chief Executive Officer Vincent Donargo Executive Vice President - Chief Financial Officer Bruce A. Fleming Executive Vice President - Montana Renewables & Corporate Strategy Scott Obermeier Executive Vice President - Specialties Gregory J. Morical Vice President, General Counsel & Secretary Year Salary ($) Bonus ($) Unit Awards ($) (1) Non-Equity Incentive Plan Compensation ($) (2) All Other Compensation ($) (3) Total ($) Summary Compensation Table for 2022 2022 2021 2020 2022 2021 2022 2022 2021 2020 2022 2021 2020 2022 $ $ $ $ $ $ $ $ $ $ $ $ $ 441,667 $ 725,000 $ 543,750 $ 568,593 $ 334,100 $ 380,478 $ 447,022 $ 431,197 $ 422,742 $ 397,220 $ 342,990 $ 333,000 $ 332,721 $ — $ 543,750 $ — $ — $ 250,575 $ — $ — $ 323,498 $ — $ — $ 257,243 $ 100,000 $ — $ 1,763,328 $ 1,540,622 $ 61,270 $ 2,195,828 $ 548,528 $ 480,000 $ 2,355,648 $ 708,911 $ — $ 470,000 $ 562,926 $ 1,120,126 $ 787,828 $ 783,750 $ — $ — $ 1,279,334 $ — $ 608,764 $ 1,005,800 $ — $ — $ 610,830 $ — $ — $ 399,265 $ 211,990 $ 16,564 $ 70,019 $ 21,434 $ 19,897 $ 120,087 $ 25,652 $ 19,830 $ 19,553 $ 22,616 $ 11,724 $ 11,980 $ 33,342 $ 3,200,735 2,825,936 675,039 4,065,189 1,153,100 1,589,329 3,834,122 1,483,436 442,295 1,500,666 1,174,883 1,565,106 1,553,156 (1) The amounts reported as unit awards for the 2021 fiscal year have been adjusted from the prior year to include the aggregate grant date fair value of certain phantom unit awards that were granted to our named executive officers on February 22, 2022 related to fiscal year 2021 performance, as follows: (i) 86,604 phantom units granted to Mr. Mawer, (ii) 30,787 phantom units granted to Mr. Borgmann, (iii) 9,024 phantom units granted to Mr. Donargo, (iv) 39,733 phantom units granted to Mr. Fleming, (v) 31,606 phantom units granted to Mr. Obermeier, and (vi) 22,301 phantom units granted to Mr. Morical. Under SEC rules the grant date fair value, calculated in accordance with FASB ASC Topic 718, disregarding estimated forfeitures, of these phantom units is reflected in this column for 2021. Amounts in this column for 2022 include the aggregate grant date fair value calculated in accordance with FASB ASC Topic 718, disregarding estimated forfeitures, of the following strategic repositioning phantom unit awards granted on February 22, 2022 under the LTIP: (i) 83,333 phantom units granted to each of Messrs. Mawer and Borgmann, (ii) 133,333 phantom units granted to Mr. Fleming, and (iii) 33,333 phantom units granted to Mr. Morical. Finally, amounts in this column also include the grant date fair value of the following phantom unit awards granted on February 21, 2023 under the LTIP, which were granted as part of our 2022 long-term incentive program based on our Adjusted EBITDA performance during 2022 and under SEC rules are considered compensation with respect to 2022 even though granted in 2023: (i) 27,806 phantom unit granted to Mr. Mawer, (ii) 49,974 phantom units granted to Mr. Borgmann, (iii) 24,603 phantom units granted to Mr. Donargo, (iv) 20,621 phantom units granted to Mr. Fleming, (v) 24,090 phantom units granted to Mr. Obermeier, and (vi) 15,348 phantom units granted to Mr. Morical. For more information regarding these phantom units, see “Compensation Discussion & Analysis — Elements of Executive Compensation — Long-Term Unit-Based Awards — 2022 LTI Awards” above. The grant date fair value of each phantom unit award is based on the closing price of our common units on the applicable date of grant. Please read Note 13 to our consolidated financial statements for the fiscal year ending December 31, 2022 for a discussion of the assumptions used to determine the FASB ASC Topic 718 value of the awards. 131 Table of Contents (2) Amounts in this column for 2022 reflect the bonuses earned by each named executive officer under the Cash Incentive Plan based on our Adjusted EBITDA performance during 2022, including the portion of such bonus that was deferred into our Deferred Compensation Plan by Messrs. Mawer, Donargo, and Morical. For more information regarding these bonuses, see “Compensation Discussion & Analysis — Elements of Executive Compensation — Short-Term Cash Bonus Awards” above. (3) The following table provides the aggregate “All Other Compensation” information for each of the named executive officers for 2022: Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce Fleming Scott Obermeier Gregory J. Morical 401(k) Plan Matching Contributions HSA Plan Matching Contributions Long-Term Disability Insurance Premiums Long-Term Disability Insurance Premium Tax Gross-up Term Life Insurance Premiums Deferred Compensation Plan Matching Contributions Total $ $ 24,250 1,000 1,305 1,697 863 182,875 211,990 $ $ 17,290 $ 1,000 1,305 1,697 142 — 21,434 $ 13,771 $ — 1,305 1,697 1,853 101,461 120,087 $ 20,527 $ — 1,305 1,697 2,123 — 25,652 $ 18,654 $ — 1,305 1,697 960 — 22,616 $ 15,250 1,000 1,305 1,697 781 13,309 33,342 Grants of Plan-Based Awards The following table includes information about awards granted to our named executive officers during 2022, which includes the bonus opportunities under the Cash Incentive Plan and phantom unit awards under the LTIP. 132 Table of Contents Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) Estimated Future Payouts Under Equity Incentive Plan Awards (2) Grant Date Minimum ($) Target ($) Stretch ($) Minimum ($) Target ($) Stretch ($) Grant Date Fair Value of Unit and Option Awards ($) (4) All Other Unit Awards: Number of Units (#) (3) 261,250 $ 522,500 $ 783,750 $ 180,833 $ 361,667 $ 542,500 426,445 $ 852,890 $ 1,279,334 $ 325,000 $ 650,000 $ 975,000 202,921 $ 405,843 $ 608,764 335,267 $ 670,533 $ 1,005,800 198,610 $ 397,220 $ 610,845 133,088 $ 266,177 $ 399,265 $ $ $ $ 160,000 $ 320,000 $ 480,000 134,107 $ 268,213 $ 402,320 158,888 $ 317,776 $ 476,664 99,816 $ 199,633 $ 299,500 $ $ $ $ $ $ 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 2/22/2022 27,806 $ 49,488 $ 83,333 $ 37,116 $ 49,974 $ 13,683 $ 83,333 $ 17,104 $ 24,603 $ 9,024 $ 20,621 $ 17,659 $ 542,500 724,999 1,220,828 543,749 975,000 200,456 1,220,828 250,574 480,000 132,202 402,320 258,704 133,333 $ 1,953,328 22,074 $ 323,384 24,090 $ 14,047 $ 17,559 $ 15,348 $ 12,164 $ 33,333 $ 10,137 $ 469,997 205,789 257,239 299,500 178,203 488,328 148,507 (1) Amounts in this column represent the minimum, target and stretch incentive opportunities for short-term bonus awards under the Cash Incentive Plan. The actual bonuses paid to our named executive officers for 2022 under the Cash Incentive Plan can be found in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above and are described in more detail under “Compensation Discussion & Analysis — Elements of Executive Compensation — Short-Term Cash Bonus Awards” above. (2) Amounts in this column represent the minimum, target and stretch incentive levels for our 2022 LTI award program. Following the end of the 2022 fiscal year, the amount earned based on our Adjusted EBITDA performance is converted into a number of phantom units by dividing the dollar amount earned by the closing price of our common unit on the date the phantom units are granted. For the 2022 LTI award program, phantom unit grants were granted on February 21, 2023 based on a per unit price of $19.51. For more information regarding our LTI award program, see “Compensation Discussion & Analysis — Elements of Executive Compensation — 2022 LTI Awards” above. (3) The phantom unit awards in this column vest on the third anniversary of the date of grant. (4) Amounts in this column represent the grant date fair value calculated in accordance with FASB ASC Topic 718, disregarding estimated forfeitures. The grant date fair value of each phantom unit award is based on the closing price of our common units on the applicable date of grant. Please read Note 13 to our consolidated financial statements for the fiscal year ending December 31, 2022 for a discussion of the assumptions used to determine the FASB ASC Topic 718 value of the awards. 133 Table of Contents Outstanding Equity Awards at Fiscal Year-End The table below reflects information regarding outstanding unit awards held by the named executive officers as of December 31, 2022. None of the named executive officers held outstanding option awards. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Number of Units That Have Not Vested (#)(1) Unit Awards 242,524 138,617 25,422 — 56,706 79,134 $ $ $ $ $ $ Market Value of Units That Have Not Vested ($)(2) 4,093,805 2,339,855 429,123 — 957,197 1,335,782 (1) The phantom units in this column reflect time-based phantom units held by the named executive officers as of December 31, 2022, but excludes the phantom units granted to our named executive officers in February 2023 as part of the 2022 LTI award program, as such awards were not outstanding as of December 31, 2022. These phantom units will vest as follows: Vesting Date July 1, 2023 September 1, 2023 December 31, 2023 July 1, 2024 February 22, 2025 Stephen P. Mawer 2,913 — 68,310 1,364 169,937 242,524 Todd Borgmann — — 24,497 — 114,120 138,617 Vincent Donargo — 10,000 6,398 — 9,024 25,422 Bruce A. Fleming — — — — — — Scott Obermeier — — 25,100 — 31,606 56,706 Gregory J. Morical 1,696 — 20,601 1,203 55,634 79,134 (2) Market value of phantom units reported in these columns is calculated by multiplying the closing market price of $16.88 of our common units at December 30, 2022, the last trading day of the 2022 fiscal year, by the number of phantom units outstanding. Option Exercises and Units Vested The following table provides information about phantom units held by the named executive officers that vested during the 2022 fiscal year. None of the named executive officers exercised any option awards. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Number of Units Acquired on Vesting (#)(1) Unit Awards — 25,227 — 46,250 — — $ $ $ $ $ $ Value Realized on Vesting ($)(2) — 352,926 — 647,038 — — (1) Amounts in this column represent the phantom units held by each named executive officer that vested during the 2022 fiscal year. (2) Amounts in this column equal the number of phantom units vested multiplied by the closing price of our common units on the applicable vesting date (or, if the vesting date was not a trading day, on the last trading day immediately prior to such date). 134 Table of Contents Nonqualified Deferred Compensation We maintain the Calumet Specialty Products Partners, L.P. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) to encourage our officers to save for retirement and to assist us in retaining our officers. Pursuant to the Deferred Compensation Plan, a select group of management, including the named executive officers, and all of the non-employee directors are eligible to participate by making an annual irrevocable election to defer, in the case of management, all or a portion of their annual cash incentive award under the Cash Incentive Plan, and, in the case of non-management directors, all or none of their annual cash retainer. The deferred amounts are credited to participants’ accounts in the form of phantom units, with each phantom unit representing a notional unit that entitles the holder to receive either an actual common unit or the cash value of a common unit (determined by using the fair market value of a common unit at the time a determination is needed). The phantom units credited to each participant’s account also receive distribution equivalent rights, which are credited to the participant’s account in the form of additional phantom units. In our sole discretion, we may make matching contributions of phantom units or purely discretionary contributions of phantom units, in amounts and at times as the compensation committee recommends and the board of directors approves. Participants will at all times be 100% vested in amounts they have deferred; however, amounts we have contributed may be subject to a vesting schedule, as determined appropriate by the compensation committee. Distributions from the Deferred Compensation Plan are payable on the earlier of the date specified by each participant on their deferral election form and the participant’s termination of employment. Death, disability, normal retirement or a change in control require automatic distribution of the Deferred Compensation Plan benefits and will also accelerate at that time the vesting of any portion of a participant’s account that has not already become vested. Benefits will be distributed to participants in the form of our common units, cash or a combination of common units and cash at the election of the compensation committee. In the event that accounts are paid in common units, such units will be distributed pursuant to the LTIP. Unvested portions of a participant’s account will be forfeited in the event that a distribution was due to a participant’s voluntary resignation or a termination for cause. To ensure compliance with Section 409A of the Code, distributions to participants that are considered “specified employees” (as defined in Code Section 409A of the Code) may be delayed for a period of six months following such employees’ termination of employment with us. The table below sets forth information regarding the value of accumulated benefits of our named executive officers under the Deferred Compensation Plan as of December 31, 2022. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Executive Contributions in 2022 ($) (1) Registrant Contributions in 2022 ($) (2) Aggregate Earnings in 2022 ($) Aggregate Withdrawals / Distributions in 2022 ($) Aggregate Balance at End of 2022 (3)(4) ($) $ $ $ $ $ $ 548,625 — 304,382 — — 39,927 $ $ $ $ $ $ 182,875 — 101,461 — — 13,309 $ $ $ $ $ $ 135 171,385 180,047 — 1,185,484 — 140,712 $ $ $ $ $ $ — (352,926) — (647,038) — — $ $ $ $ $ $ 1,517,635 2,353,308 405,843 8,238,098 — 645,441 Table of Contents (1) Amounts in this column represent the portion of the annual cash incentive bonus earned under the Cash Incentive Plan that the executive officer elected to defer into our Deferred Compensation Plan. These amounts are reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above for the 2022 fiscal year (which were paid during the 2023 fiscal year). (2) Amounts in this column represent the value of the matching contributions made by the Company for the portion of the named executive officer’s annual cash incentive bonus under the Cash Incentive Plan that was deferred into our Deferred Compensation Plan. These amounts are reported in the “All Other Compensation” column of the Summary Compensation Table above for the 2022 fiscal year. (3) The aggregate balance for each named executive officer as of December 31, 2022 was determined by multiplying all phantom units in each named executive officer’s account under the Deferred Compensation Plan by the closing price of our common units on December 30, 2022 (the last trading day of 2022). The phantom units in each named executive officer’s account as of December 31, 2022 was as follows: (i) Mr. Mawer, 46,572, (ii) Mr. Borgmann, 139,414, (iii) Mr. Fleming, 488,039, and (iv) Mr. Morical, 38,237. (4) The aggregate balance for each named executive officer as of December 31, 2022 includes the following amounts that were included in the Summary Compensation Table in prior fiscal years: (i) Mr. Mawer; $786,135, (ii) Mr. Borgmann, $2,353,308, and (iii) Mr. Fleming, $8,238,098. Potential Payments Upon Termination or Change in Control As of December 31, 2022, the Company did not have any change in control or severance agreements with any named executive officer; however, certain of our compensatory arrangements provide the named executive officers with benefits in the event of certain terminations or a change of control transaction. The board of our general partner adopted a Change in Control Policy, effective March 13, 2023. We believe these benefits are important retention tools and, with respect to the change of control benefits, these benefits provide the named executive officers with a sense of stability, both in the middle of transactions that may create uncertainty regarding their future employment and post-termination as they seek future employment and an opportunity to realize value from these awards in the event of such transaction. Phantom Unit Awards Under the LTIP Although the LTIP provides the Committee with broad discretion to accelerate outstanding phantom units in the event of certain termination events or a change of control, the outstanding phantom unit award agreements provide for full accelerated vesting in the event of a named executive officer’s death, disability or normal retirement (termination after reaching age 62), as well as in the event of a “change in control.” For purposes of the LTIP, “change of control” generally occurs upon one or more of the following events: (i) any person or group, other than a person or group who is our affiliate, becomes the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the voting power of our outstanding equity interests; (ii) a person or group, other than our general partner or one of our general partner’s affiliates, becomes our general partner; or (iii) the sale or other disposition, including by liquidation or dissolution, of all or substantially all of our assets or the assets of our general partner in one or more transactions to any person or group other than an a person or group who is our affiliate. Phantom Units Under the Deferred Compensation Plan Each named executive officer’s phantom units under the Deferred Compensation Plan will become fully vested in the event of such named executive officer’s death, disability or normal retirement (termination after reaching age 62), as well as in the event of a “change of control” (which generally has the meaning provided under the LTIP, as described above). Executive Long-Term Disability Coverage Each of our named executive officers is eligible to receive a compensation allowance to purchase additional long-term disability coverage, which is in addition to the long-term disability coverage the Company provides to all employees. As a result of this additional long-term disability coverage, each named executive officer would be entitled to receive additional benefits in the event of their qualifying long-term disability, which when combined with the long-term disability coverage provided to all eligible employees will result in payment of 60% of monthly earnings, as defined by the policy, up to a maximum of $15,000 per month until normal retirement age. All named executive officers purchased the additional long-term disability coverage. Quantification of Potential Payments The table below shows the value sets forth the amount of compensation or other benefits due to each named executive officer in the event of the specified terminations of employment or a change of control, assuming such termination or change of 136 Table of Contents control occurred on December 31, 2022. The amounts below are only estimates of the amounts that would be received upon a change of control or termination of employment—the actual amount will only be determined at the time such event occurs. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Plan Death; Normal Retirement ($) Disability ($) Change of Control ($) (1) LTIP Phantom Units Deferred Compensation Plan Executive Long-Term Disability Coverage Total (1) (2) (1) LTIP Phantom Units Deferred Compensation Plan Executive Long-Term Disability Coverage Total (1) (2) (1) LTIP Phantom Units Deferred Compensation Plan Executive Long-Term Disability Coverage Total (1) (2) (1) LTIP Phantom Units Deferred Compensation Plan Executive Long-Term Disability Coverage Total (1) (2) (1) LTIP Phantom Units Deferred Compensation Plan Base Salary Executive Long-Term Disability Coverage Total (3) (1) (2) (1) LTIP Phantom Units Deferred Compensation Plan Executive Long-Term Disability Coverage Total (1) (2) $ $ $ $ $ $ $ $ $ $ $ $ 4,021,626 $ 4,021,626 $ 72,196 — 4,093,822 2,339,855 — — 2,339,855 429,123 — — 429,123 — — — — 957,197 — — — 957,197 1,286,847 48,935 — $ $ $ $ $ $ $ $ $ $ 72,196 108,000 4,201,822 2,339,855 — 108,000 2,447,855 429,123 — 108,000 537,123 — — 108,000 108,000 957,197 — — 108,000 1,065,197 1,286,847 48,935 108,000 $ $ $ $ $ $ $ $ $ $ 1,335,782 $ 1,443,782 $ 4,021,626 72,196 — 4,093,822 2,339,855 — — 2,339,855 429,123 — — 429,123 — — — — 957,197 — 783,328 — 1,740,525 1,286,847 48,935 — 1,335,782 (1) The values reported with respect to LTIP phantom units and the Deferred Compensation Plan are based on the closing price of our common stock on December 30, 2022 (the last trading day of the 2022 fiscal year) of $16.88 and the total number of unvested units that would accelerate and vest upon a qualifying termination event or change of control. Units that were fully vested as of December 31, 2022 are not reflected here. (2) Includes only the portion of each named executive officer’s long-term disability benefits that are in excess of the long-term disability benefits generally provided to employees of our general partner. (3) As per his promotion letter, Mr. Obermeier will receive two times his base salary if a qualifying termination occurs within twenty-four months following a Change in Control. 137 Table of Contents Officers or employees of our general partner who also serve as directors do not receive additional compensation for their service as a director of our general partner. Each director who is not an officer or employee of our general partner receives an annual fee as well as compensation for attending meetings of the board of directors and board committee meetings. Non-employee directors were entitled to fees and equity awards for 2022 that consisted of the following: DIRECTOR COMPENSATION • • • • • • • • • • an annual fee of $70,000; an annual equity award in the form of restricted or phantom units, valued at approximately $100,000; an audit and finance committee chair annual fee of $20,000; a non-chair audit and finance committee member annual fee of $10,000; a strategy and growth committee chair annual fee of $10,000; a non-chair strategy and growth committee annual fee of $5,000; a conflicts committee and compensation committee chair annual fee of $8,000; a non-chair conflicts committee and compensation committee annual fee of $4,000; all other committee chair annual fee of $5,000; and all other committee member annual fee of $2,500. In addition, we reimburse each non-employee director for his or her out-of-pocket expenses incurred in connection with attending meetings of the board of directors or board committees. Under certain circumstances, we will also indemnify each director for his or her actions associated with being a director to the fullest extent permitted under Delaware law. The following table sets forth certain compensation information of our non-employee directors for the year ended December 31, 2022: Name James S. Carter Daniel J. Sajkowski Amy M. Schumacher Daniel L. Sheets Paul C. Raymond III Jennifer G. Straumins John (“Jack”) G. Boss (3) Karen A. Twitchell Fred M. Fehsenfeld, Jr. Robert E. Funk (4) (3) (4) Fees Earned or Paid in Cash ($) (1) Unit Awards ($) (2) Total 93,993 77,500 78,362 91,497 82,501 77,500 23,000 22,500 19,750 47,750 $ $ $ $ $ $ $ $ $ $ 131,346 100,000 126,124 130,508 127,483 100,000 50,000 50,000 6,583 — $ $ $ $ $ $ $ $ $ $ 225,339 177,500 204,486 222,005 209,984 177,500 73,000 72,500 26,333 47,750 $ $ $ $ $ $ $ $ $ $ (1) (2) The amounts in this column include director fees which have been deferred under the Deferred Compensation Plan. During 2022, each eligible non-employee director other than Mr. Sajkowski and Ms. Straumins elected to defer some or all of their director fees. Mr. Boss and Ms. Twitchell were not eligible to participate in the Deferred Compensation Plan for fiscal year 2022. The amounts in this column are calculated based on the aggregate grant date fair value of (i) annual phantom unit awards issued to non-employee directors serving on the board on the date the awards were granted, and (ii) matching phantom unit awards granted to those non-employee directors who deferred all, or a portion of, the fees they earned in 2022 pursuant to the Deferred Compensation Plan. The amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, disregarding estimated forfeitures. Please read Note 13 to our consolidated financial statements for the fiscal year ending December 31, 2022 for a discussion of the assumptions used to determine the FASB ASC Topic 718 value of the awards. As of December 31, 2022, the following directors each held outstanding phantom units, including phantom units held under the Deferred Compensation Plan, as follows: Mr. Carter, 158,771; Mr. Sajkowski, 93,969; Ms. Schumacher, 150,016; Mr. Sheets, 127,702; Mr. Raymond, 44,864; Ms. Straumins, 13,974; Mr. Boss, 2,526; and Ms. Twitchell, 2,526. (3) Mr. Boss and Ms. Twitchell were appointed to the board of directors on August 2, 2022. 138 Table of Contents (4) Amounts reported for Mr. Fehsenfeld and Mr. Funk relate to fees earned during the period of time each respective individual served on the board of directors during the year ended December 31, 2022. Deferred Compensation Plan Our directors are eligible to defer all or a portion of their fees earned into the Deferred Compensation Plan. When directors elect to defer any portion of their compensation into the plan, these deferred amounts are credited to the participant in the form of phantom units. The compensation committee may recommend a matching contribution for the deferred fees at its discretion. Phantom units credited to a participant’s account as either a deferral or a matching contribution carry distribution equivalent rights to be credited to the participant’s account in the form of additional phantom units. Matching contributions in the form of phantom units were credited to the accounts of each director who elected to defer all or a portion of their fees earned into the Deferred Compensation Plan for fiscal year 2022 in the following number of phantom units: Mr. Carter, 2,029; Ms. Schumacher, 1,694; Mr. Sheets, 1,970; and Mr. Raymond, 1,779. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of our compensation committee are Daniel L. Sheets, Amy M. Schumacher, and Karen A. Twitchell, who are all members of the board of our general partner. Please read Item 13 “Certain Relationships and Related Transactions and Director Independence” for descriptions of our transactions in fiscal year 2022 with certain entities related to Mr. Sheets, Ms. Schumacher, and Ms. Twitchell. Ms. Schumacher is not an independent member of the compensation committee. No executive officer of our general partner served as a member of the compensation committee of another entity that had an executive officer serving as a member of our board of directors or compensation committee. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters The following table sets forth the beneficial ownership of our units as of March 14, 2023, held by: • • • • each person who beneficially owns 5% or more of our outstanding units; each director of our general partner; each named executive officer of our general partner; and all directors and executive officers of our general partner as a group. The amounts and percentages of units beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he or she has no economic interest. 139 Table of Contents Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all units shown as beneficially owned by them, subject to community property laws where applicable. Except as indicated by footnote, the address for the beneficial owners listed below is 2780 Waterfront Parkway East Drive, Suite 200, Indianapolis, Indiana, 46214. (4) (5) (3) (2) (1)(6) (1)(2) Name of Beneficial Owner The Heritage Group Calumet, Incorporated Adams Asset Advisors, LLC Wasserstein Debt Opportunities Management, LP and related persons Dorset Management Corporation and related persons James S. Carter Daniel J. Sajkowski Amy M. Schumacher Daniel L. Sheets Paul C. Raymond III Jennifer G. Straumins John (“Jack”) G. Boss Karen A. Twitchell Stephen P. Mawer Bruce A. Fleming (8) Scott Obermeier Todd Borgmann Vincent Donargo Gregory J. Morical All directors and executive officers as a group (14 persons) (8) (7) (8) (8) (8) (8) Common Units Beneficially Owned Percentage of Total Units Beneficially Owned 11,867,533 1,934,287 5,441,613 6,534,338 4,522,000 319,138 167,749 181,673 61,472 6,963 663,520 — — 150,054 314,348 187,799 69,391 — 33,845 2,155,952 14.86 % 2.42 % 6.82 % 8.18 % 5.66 % * * * * * * * * * * * * * * 2.70 % * (1) (2) (3) = less than 1 percent. Twenty-nine grantor trusts indirectly own all of the outstanding general partner interests in The Heritage Group, an Indiana general partnership. The direct or indirect beneficiaries of the grantor trusts are members of the Fehsenfeld family. Each of the grantor trusts has five trustees, Fred M. Fehsenfeld, Jr., James C. Fehsenfeld, Nicholas J. Rutigliano, William S. Fehsenfeld and Amy M. Schumacher, each of whom exercises equivalent voting rights with respect to each such trust. Each of Fred M. Fehsenfeld, Jr. and Amy M. Schumacher, who are directors of our general partner, disclaims beneficial ownership of all of the common units owned by The Heritage Group, and none of these units are shown as being beneficially owned by such directors in the table above. Of these common units, 367,197 are owned by The Heritage Group Investment Company, LLC (“Investment LLC”). Investment LLC is under common ownership with The Heritage Group. The Heritage Group, although not the owner of the common units, serves as the Manager of Investment LLC, and in that capacity has sole voting and investment power over the common units. The Heritage Group disclaims beneficial ownership of the common units owned by Investment LLC except to the extent of its pecuniary interest therein. The address for The Heritage Group is 5400 W. 86th St., Indianapolis, Indiana, 46268. The common units of Calumet, Incorporated are indirectly owned 45.8% by The Heritage Group and 5.1% by Fred M. Fehsenfeld, Jr. personally. Fred M. Fehsenfeld, Jr. was formerly a director of Calumet, Incorporated. Accordingly, 885,294 of the common units owned by Calumet, Incorporated are also shown as being beneficially owned by The Heritage Group in the table above, and 97,971 of the common units owned by Calumet, Incorporated are beneficially owned by Fred M. Fehsenfeld, Jr. The Heritage Group and Fred M. Fehsenfeld, Jr. disclaim beneficial ownership of all of the common units owned by Calumet, Incorporated in excess of their respective pecuniary interests in such units. The address of Calumet, Incorporated is 5400 W. 86th St., Indianapolis, Indiana, 46268. As noted in the Schedule 13G filed with the SEC on January 14, 2023, the filing person has indicated that it has or shares beneficial ownership of such units. According to the Schedule 13G, Adams Asset Advisors has sole voting power and sole dispositive power over 4,033,903 units and shared voting power and shared dispositive power over 1,407,710 units. The address for Adams Asset Advisors, LLC is 8150 N. Central Expwy #M1120, Dallas, Texas 75206. 140 Table of Contents (4) (5) (6) (7) (8) Based on the Schedule 13G/A filed with the SEC on February 10, 2023. According to the Schedule 13G/A, Wasserstein Debt Opportunities Management has shared voting power and shared dispositive power over 6,072,088 units. 5,672,088 of the reported units are owned directly by private investment funds and separately managed accounts for which Wasserstein Debt Opportunities Management serves as the investment adviser. 400,000 of the reported units represent options, which have not been exercised, beneficially owned by private investment funds for which Wasserstein Debt Opportunities Management serves as the investment adviser. The general partner of Wasserstein Debt Opportunities Management is WDO Management GP, LLC (the “General Partner”). Rajay Bagaria is a control person of Wasserstein Debt Opportunities Management and manager of the General Partner, and could be deemed to share such indirect beneficial ownership with Wasserstein Debt Opportunities Management and the General Partner. Additionally, Mr. Bagaria personally owns 462,250 units, over which he has sole voting power and sole dispositive power, and such units are reflected in the table. Joseph Dutton is a control person of Wasserstein Debt Opportunities Management and could be deemed to share such indirect beneficial ownership with Wasserstein Debt Opportunities Management. Mr. Bagaria and Mr. Dutton each disclaim any beneficial ownership of any such units of common units representing limited partnership interest in excess of their actual pecuniary interest therein. The business address of Wasserstein Debt Opportunities Management is 1185 Avenue of the Americas, 39th Floor, New York, NY 10036. Based on the Schedule 13G/A filed with the SEC on February 13, 2023. According to the Schedule 13G/A, Dorset Management Corporation has sole voting power and sole dispositive power over 4,440,000 units. According to the Schedule 13G/A, David M. Knott, Jr., president of Dorset Management Corporation, has sole voting power and sole dispositive power over 4,522,000 units and shared voting power and shared dispositive power over zero units. The business address of Dorset Management Corporation is 485 Underhill Boulevard, Suite 205, Syosset, New York 11791. Includes common units that are owned by the spouse and children of Amy M. Schumacher, for which she disclaims beneficial ownership. Jennifer G. Straumins disclaims beneficial ownership of all common units reported herein. Ownership of common unit amounts for our executive officers excludes outstanding phantom unit awards, both vested and unvested as of March 14, 2023, which we expect to settle in common units. Each executive officer’s total beneficially owned common units, vested phantom units, and unvested phantom units are set forth in the table below. Name Stephen P. Mawer Todd Borgmann Vincent Donargo Bruce A. Fleming Scott Obermeier Gregory J. Morical Common Units Beneficially Owned Vested Phantom Units Unvested Phantom Units Total 150,054 69,391 — 314,348 187,799 33,845 42,296 224,414 — 819,841 — 31,355 270,330 188,591 50,025 — 80,796 94,482 462,680 482,396 50,025 1,134,189 268,595 159,682 141 Table of Contents Equity Compensation Plan Information The following table summarizes information about our equity compensation plans as of December 31, 2022: (a) (b) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (2) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) 1,358,148 N/A 1,358,148 $ $ — N/A — — N/A — Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (1) (1) Represents securities under the LTIP. (2) As of December 31, 2022, the LTIP contemplates the issuance or delivery of up to 5,283,960 common units to satisfy awards under the plan. The number of units presented in column (a) represents the maximum number of common units that may be delivered pursuant to outstanding awards under the plan as of December 31, 2022. If such maximum number of common units had been delivered pursuant to outstanding awards, no common units would have remained available for future delivery under column (c) as of December 31, 2022. Item 13. Certain Relationships and Related Transactions and Director Independence Distributions and Payments to Our General Partner and its Affiliates Owners of our general partner and their affiliates own 16,695,396 common units representing an approximately 20.5% limited partner interest in us. In addition, our general partner owns a 2% general partner interest in us and all of the incentive distribution rights. Our general partner is entitled to receive incentive distributions if the amount we distribute with respect to any quarter exceeds levels specified in our partnership agreement. Under the quarterly incentive distribution provisions, generally our general partner is entitled, without duplication, to 15% of amounts we distribute in excess of $0.495 ($1.98 annualized) per unit, 25% of the amounts we distribute in excess of $0.563 ($2.25 annualized) per unit and 50% of amounts we distribute in excess of $0.675 ($2.70 annualized) per unit. We suspended distributions in April 2016. Please read Part II, Item 5 “Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities — Cash Distribution Policy” for additional information related to our distribution policy and the incentive distribution rights. Our general partner does not receive any management fee or other compensation for its management of our partnership; however, our general partner and its affiliates are reimbursed for all expenses incurred on our behalf. These expenses include the cost of employee, officer and director compensation and benefits properly allocable to us and all other expenses necessary or appropriate to the conduct of our business and allocable to us. The partnership agreement provides that our general partner determines the expenses that are allocable to us. There is no limit on the amount of expenses for which our general partner and its affiliates may be reimbursed. 142 Table of Contents Omnibus Agreement We entered into an omnibus agreement, dated January 31, 2006, with The Heritage Group and certain of its affiliates pursuant to which The Heritage Group and its controlled affiliates agreed not to engage in, whether by acquisition or otherwise, the business of refining or marketing specialty lubricating oils, solvents and wax products as well as gasoline, diesel and jet fuel products in the continental U.S. (“restricted business”) for so long as The Heritage Group controls us. This restriction does not apply to: • • • • • • • any business owned or operated by The Heritage Group or any of its affiliates as of January 31, 2006; the refining and marketing of asphalt and asphalt-related products and related product development activities; the refining and marketing of other products that do not produce “qualifying income” as defined in the Internal Revenue Code; the purchase and ownership of up to 9.9% of any class of securities of any entity engaged in any restricted business; any restricted business acquired or constructed that The Heritage Group or any of its affiliates acquires or constructs that has a fair market value or construction cost, as applicable, of less than $5.0 million; any restricted business acquired or constructed that has a fair market value or construction cost, as applicable, of $5.0 million or more if we have been offered the opportunity to purchase it for fair market value or construction cost and we decline to do so with the concurrence of the conflicts committee of the board of directors of our general partner; and any business conducted by The Heritage Group with the approval of the conflicts committee of the board of directors of our general partner. Employee Costs Our general partner employs all of our employees and we reimburses the general partner for certain of its expenses. Product Sales and Related Purchases During 2022, we made ordinary course sales of certain specialty products to Monument Chemicals, Inc. (“Monument Chemicals”), a specialty chemical company owned in part by The Heritage Group and Jennifer G. Straumins. Paul C. Raymond III is the Chief Executive Officer of Monument Chemicals. We made an immaterial amount of purchases from Monument Chemicals in 2022. The total sales made by us to Monument Chemicals in 2022 were approximately $7.7 million. As of December 31, 2022, there was approximately $1.7 million due to us from Monument Chemicals related to these products sales. We anticipate that we will continue to sell products to Monument Chemicals in the future. We believe that the product sales prices and credit terms offered to Monument Chemicals are comparable to prices and terms offered to non-affiliated third-party customers. During 2022, we made ordinary course purchases of certain services from Heritage-Crystal Clean Inc. (“Crystal Clean”), a cleaning and waste removal company owned in part by The Heritage Group and Fred M. Fehsenfeld, Jr. as an individual. The total purchases made by us from Crystal Clean in 2022 for cleaning and waste removal services were approximately $0.2 million. As of December 31, 2022, there was an immaterial amount due from us to Crystal Clean related to these purchases. We expect that we will continue to utilize these services from Crystal Clean in the future. We believe that the product purchase prices and credit terms offered to us by Crystal Clean are comparable to prices and terms offered to us by non-affiliated third-party vendors. During 2022, we made ordinary course purchases from Heritage Environmental Services (“Heritage Environmental”), a cleaning and waste removal company owned in part by The Heritage Group and Fred M. Fehsenfeld, Jr. as an individual. Total purchases made by us from Heritage Environmental in 2022 for cleaning and waste removal services were approximately $6.9 million. As of December 31, 2022, there was a $1.0 million balance due from us to Heritage Environmental related to these purchases. We expect that we will continue to utilize these services from Heritage Environmental in the future. During 2022, we made ordinary course sales of certain specialty products to Heritage Advanced Products, LLC (“Heritage Advanced”), a specialty chemical company owned in part by The Heritage Group. The total sales made by us to Heritage Advanced in 2022 were approximately $0.4 million. As of December 31, 2022, there was no balance due to us from Heritage Advanced related to these products sales. We anticipate that we will continue to sell products to Heritage Advanced in the future. We believe that the product sales prices and credit terms offered to Heritage Advanced are comparable to prices and terms offered to non-affiliated third-party customers. During 2022, we made ordinary course sales of certain fuel products to Asphalt Materials of $7.7 million, a company in the asphalt formulation and manufacturing business owned in part by The Heritage Group. As of December 31, 2022, there was an 143 Table of Contents approximately $0.2 million balance due to us from Asphalt Materials related to these products sales. We anticipate that we will continue to sell products to Asphalt Materials in the future. We believe that the product sales prices and credit terms offered to Asphalt Materials are comparable to prices and terms offered to non-affiliated third-party customers. Intellectual Property Rights Agreement On January 6, 2012, the Partnership acquired all of the membership interests of TruSouth Oil, LLC (“TruSouth”). As part of the transaction, TruSouth, the Partnership and the sellers of TruSouth, which included The Heritage Group, entered into an Intellectual Property Rights Agreement dated January 6, 2012 (“IPRA”). In the IPRA, TruSouth (now known as Calumet Branded Products, LLC (“Calumet Branded”)) agreed to pay the sellers a royalty on each qualified gallon of engineered fuel sold to third parties. For the years ended December 31, 2022 and 2021, Calumet Branded paid The Heritage Group a total of $0.7 million and $0.7 million, respectively, in royalties under the IPRA. Procedures for Review and Approval of Related Person Transactions Effective February 9, 2007, to further formalize the process by which related person transactions are analyzed and approved or disapproved, the board of directors of our general partner has adopted the Calumet Specialty Products Partners, L.P. Related Person Transactions Policy (the “Policy”) to be followed in connection with all related person transactions (as defined by the Policy) involving the Company and its subsidiaries. The Policy was adopted to provide guidelines and procedures for the application of the partnership agreement to related person transactions and to further supplement the conflict resolution policies already set forth therein. The Policy defines a “related person transaction” to mean any transaction since the beginning of the Company’s last fiscal year (or any currently proposed transaction) in which: (i) the Company or any of its subsidiaries was or is to be a participant; (ii) the amount involved exceeds $120,000 (including any series of similar transactions exceeding such amount on an annual basis); and (iii) any related person (as defined in the Policy) has or will have a direct or indirect material interest. Under the terms of the policy, our general partner’s chief executive officer (“CEO”) has the authority to approve a related person transaction (considering any and all factors as the CEO determines in his sole discretion to be relevant, reasonable or appropriate under the circumstances) so long as it is: (a) in the normal course of the Company’s business; (b) not one in which the CEO or any of his immediate family members has a direct or indirect material interest; and (c) on terms no less favorable to the Company than those generally being provided to or available from unrelated third parties or fair to the Company, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Company). The compensation committee has delegated certain powers and duties to the CEO under the Company’s Long-Term Incentive Plan, including the authority to approve the issuances of equity or grants of awards under the plan subject to limitations on such delegated powers and duties. Pursuant to the Policy, any other related person transaction must be approved by the conflicts committee acting in accordance with the terms and provisions of its charter. A copy of the Policy is available on our website at www.calumet.com and will be provided to unitholders without charge upon their written request to: Investor Relations, Calumet Specialty Products Partners, L.P., 2780 Waterfront Parkway E. Drive, Indianapolis, Indiana, 46214. Please read Item 10 “Directors, Executive Officers of Our General Partner and Corporate Governance” for a discussion of director independence matters. 144 Table of Contents Item 14. Principal Accounting Fees and Services The following table details the aggregate fees billed for professional services rendered by our independent auditor, Ernst & Young, LLP (PCAOB ID 42), during 2022 and 2021 (in millions): Audit fees Audit-related fees Total Year Ended December 31, 2022 2021 $ $ 4.2 — 4.2 $ $ 4 — 4 “Audit fees” above include those related to our annual audit, audit of subsidiaries and quarterly review procedures. Pre-Approval Policy The audit and finance committee of our general partner’s board of directors has adopted an audit and finance committee charter, which is available on our website at www.calumetspecialty.com. The charter requires the audit and finance committee to pre-approve all audit and non-audit services to be provided by our independent registered public accounting firm. The audit and finance committee does not delegate its pre-approval responsibilities to management or to an individual member of the audit and finance committee. Services for the audit, tax and all other fee categories above were pre-approved by the audit and finance committee. 145 Table of Contents Item 15. Exhibits (a)(1) Consolidated Financial Statements PART IV The consolidated financial statements of Calumet Specialty Products Partners, L.P. are included in Part II, Item 8 “Financial Statements and Supplementary Data.” (a)(2) Financial Statement Schedules All schedules are omitted because they are not applicable, or the required information is shown in the consolidated financial statements or notes thereto. (a)(3) Exhibits See Index to Exhibits of this Annual Report. 146 Table of Contents Exhibit Number 2.1 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 10.1 10.2† 10.3*† 10.4 Index to Exhibits Description Membership Interest Purchase Agreement, dated November 10, 2019, by and between Calumet Refining, LLC and Starlight Relativity Acquisition Company LLC (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 12, 2019 (File No. 000-51734)). Certificate of Limited Partnership of Calumet Specialty Products Partners, L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on October 7, 2005 (File No. 333-128880)). Amended and Restated Limited Partnership Agreement of Calumet Specialty Products Partners, L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 13, 2006 (File No. 000-51734)). Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Calumet Specialty Products Partners, L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 11, 2006 (File No. 000-51734)). Amendment No. 2 to First Amended and Restated Agreement of Limited Partnership of Calumet Specialty Products Partners, L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 18, 2008 (File No. 000-51734)). Amendment No. 3 to First Amended and Restated Agreement of Limited Partnership of Calumet Specialty Products Partners, L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 4, 2018 (File No. 000-51734)). Certificate of Formation of Calumet GP, LLC (incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on October 7, 2005 (File No. 333-128880)). Amended and Restated Limited Liability Company Agreement of Calumet GP, LLC (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 13, 2006 (File No. 000-51734)). Specimen Unit Certificate representing common units (incorporated by reference to Exhibit 3.7 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 4, 2010 (File No. 000-51734)). Description of Common Units (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 5, 2020 (File No. 000-51734)). Indenture, dated October 11, 2019, by and among Calumet Specialty Products Partners, L.P., Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 11, 2019 (File No. 000-51734)). Form of 11.00% Senior Notes due 2025 (included in Exhibit 4.3). Indenture, dated as of August 5, 2020, by and among Calumet Specialty Products Partners, L.P., Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on August 5, 2020 (File No. 000-51734)). Form of 9.25% Senior Secured First Lien Note due 2024 (included in Exhibit 4.5). Indenture, dated January 20, 2022, by and among Calumet Specialty Products Partners, L.P., Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 24, 2022 (File No. 000-51734)). Form of 8.125% Senior Notes due 2027 (included in Exhibit 4.7). Amended Crude Oil Sale Contract, effective April 1, 2008, between Plains Marketing, L.P. and Calumet Shreveport Fuels, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 20, 2008 (File No. 000-51734)). Calumet Specialty Products Partners, L.P. Executive Deferred Compensation Plan, dated December 18, 2008 and effective January 1, 2009 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 22, 2008 (File No. 000-51734)). Form of Phantom Unit Grant Agreement Omnibus Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 13, 2006 (File No. 000-51734)). — — — — — — — — — — — — — — — — — — — — 147 Table of Contents Exhibit Number 10.5† 10.6 10.7 10.8 — — — — 10.9 — 10.10 10.11 10.12 10.13 10.14 10.15 10.16† — — — — — — — Description Form of Unit Option Grant (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1/A filed with the Commission on November 16, 2005 (File No. 333-128880)). Temporary Waiver Under Supply and Offtake Agreement, dated as of November 14, 2017, between Macquarie Energy North America Trading Inc. and Calumet Shreveport Refining LLC (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 2, 2018 (File No. 000-51734)). Temporary Waiver Under Supply and Offtake Agreement, dated as of December 12, 2017, between Macquarie Energy North America Trading Inc. and Calumet Shreveport Refining, LLC (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 2, 2018 (File No. 000-51734)). Consent Letter under the Second Amended and Restated Credit Agreement, dated as of November 13, 2017, by and among Calumet Specialty Products Partners, L.P. and certain of its subsidiaries as Borrowers, certain of its subsidiaries as Guarantors, the Lenders, Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A. and Wells Fargo Capital Finance, LLC, as Co-Syndication Agents, U.S. Bank National Association and Deutsche Bank Trust Company Americas, as Co- Documentation Agents and Bank of America, N.A., J.P. Morgan Securities LLC and Wells Fargo Capital Finance, LLC, as Joint Lead Arrangers and Joint Book Runners (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 2, 2018 (File No. 000- 51734)). Consent Letter under the Second Amended and Restated Credit Agreement, dated as of November 27, 2017, by and among Calumet Specialty Products Partners, L.P. and certain of its subsidiaries as Borrowers, certain of its subsidiaries as Guarantors, the Lenders, Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A. and Wells Fargo Capital Finance, LLC, as Co-Syndication Agents, U.S. Bank National Association and Deutsche Bank Trust Company Americas, as Co- Documentation Agents and Bank of America, N.A., J.P. Morgan Securities LLC and Wells Fargo Capital Finance, LLC, as Joint Lead Arrangers and Joint Book Runners (incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K filed with the Commission on April 2, 2018 (File No. 000- 51734)). Third Amended and Restated Credit Agreement, dated as of February 23, 2018, by and among Calumet Specialty Products Partners, L.P. and certain of its subsidiaries as Borrowers, certain of its subsidiaries as Guarantors, the Lenders, Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A and Wells Fargo Bank, N.A., as Co-Syndication Agents (incorporated by reference from exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the commission on March 1, 2018 (File-No. 000-51734)). First Amendment to Third Amended and Restated Credit Agreement, dated as of September 4, 2019, by and among Calumet Specialty Products Partners, L.P. and certain of its subsidiaries as Borrowers, certain of its subsidiaries as Guarantors, the Lenders, Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as Co-Syndication Agents (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on September 6, 2019 (File No. 000-51734)). Consent and Amendment No. 2 to Third Amended and Restated Credit Agreement dated as of November 18, 2021, by and among Calumet Specialty Products Partners, L.P., Bank of America, N.A., and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 24, 2021 (File No. 000-51734)). Third Amendment to Credit Agreement dated as of January 20, 2022, by and among Calumet Specialty Products Partners, L.P., Bank of America, N.A., and the other parties signatory thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 24, 2022 (File No. 000-51734)) Amended and Restated Collateral Trust Agreement, dated as of April 20, 2016, among Calumet Specialty Products Partners, L.P., the obligors party thereto, the secured hedge counterparties party thereto and Wilmington Trust, National Association, as Trustee and Collateral Trustee (incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the commission on April 21, 2016 (File No. 000-51734)). Second Amended and Restated Intercreditor Agreement, dated April 20, 2016, by and among the Collateral Trustee, Bank of America, N.A., as administrative agent, and the obligors named therein (incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the commission on April 21, 2016 (File No. 000-51734)). Amended and Restated Long-Term Incentive Plan, effective as of December 10, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 11, 2015 (File No. 000-51734)). 148 Table of Contents Exhibit Number 10.17† 10.18 10.19 10.20 10.21 10.22† 10.23† 10.24 10.25† 10.26† 10.27† 10.28† 10.29 10.30 10.31+ Description First Amendment to Calumet GP, LLC Amended and Restated Long-Term Incentive Plan, effective as of December 9, 2021 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 22, 2022 (File No. 000-51734) Supply and Offtake Agreement, dated as of June 19, 2017, between Macquarie Energy North America Trading Inc., Calumet Shreveport Fuels, LLC and Calumet Shreveport Lubricants & Waxes, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2017 (File No. 000-51734)). First Amendment to Supply and Offtake Agreement, dated March 28, 2018 between Macquarie Energy North America Trading Inc. and Calumet Shreveport Refining, LLC formerly known as Calumet Shreveport Lubricants and Waxes, LLC and successor by merger to Calumet Shreveport Fuels, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2015 ( File No. 000-51734)). Second Amendment to Supply and Offtake Agreement, dated December 21, 2018 between Macquarie Energy North America Trading Inc. and Calumet Shreveport Refining, LLC formerly known as Calumet Shreveport Lubricants and Waxes, LLC and successor by merger to Calumet Shreveport Fuels, LLC (incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 7, 2019 (File No. 000-51734)). Third Amendment to Supply and Offtake Agreement, dated May 9, 2019, between Macquarie Energy North America Trading Inc. and Calumet Shreveport Refining, LLC formerly known as Calumet Shreveport Lubricants and Waxes, LLC and successor by merger to Calumet Shreveport Fuels, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 10, 2019 (File No. 000-51734)). Form of Award Agreement (incorporated by reference to Exhibit 10.4 (included as an attachment to Exhibit 10.3) to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2017 (File No. 000-51734)). First Amendment to the Form of Award Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on December 28, 2017 (File No. 000-51734)). Buyer Parent Guaranty, dated as of August 11, 2017, by and between Husky Oil Operations Limited and Calumet Lubricants Co., Limited Partnership (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on August 14, 2017 (File No. 000-51734)). Employment Letter, effective as of April 3, 2020, by and between Calumet GP, LLC and Stephen P. Mawer (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 2, 2020 (File No. 000-51734)). Todd Borgmann Promotion Letter, effective as of September 1, 2020, between Calumet GP, LLC and Todd Borgmann (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 6, 2020 (File No. 000-51734)). Employment Letter, effective as of February 29, 2016, by and between Calumet GP, LLC and Bruce A. Fleming (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 4, 2022 (File No. 000-51734)). Scott Obermeier Promotion Letter, effective as of January 27, 2020, between Calumet GP, LLC and Scott Obermeier (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 4, 2022 (File No. 000-51734)). Amendment No. 1 to Amended and Restated Collateral Trust Agreement, dated as of July 31, 2020, by and among the Partnership, the obligors party thereto and Wilmington Trust, National Association, as collateral trustee (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on August 5, 2020 (File No. 000-51734)). Consent to Third Amended and Restated Credit Agreement, dated July 3, 2020, by and among Calumet Specialty Products Partners, L.P. and certain of its subsidiaries, as Borrowers, the Lenders party thereto and Bank of America, N.A., as Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 6, 2020 (File No. 000-51734)). Support Agreement, dated July 6, 2020, among Calumet Specialty Products Partners, L.P., Calumet Finance Corp. and the Holders party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the commission on July 6, 2020 (File No. 000-51734)). — — — — — — — — — — — — — — 149 Table of Contents Exhibit Number 10.32 10.33 10.34 10.35# 10.36† 10.37† 10.38† 10.39 10.40 10.41 10.42 10.43 10.44 10.45 10.46 — — — — — — — — — — — — — — — Description Master Lease Agreement, together with Property Schedule No. 1 thereto, each dated as of February 12, 2021, and each by and between Stonebriar Commercial Finance LLC and Calumet Shreveport Refining, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the commission on February 16, 2021 (File No. 000-51734)). Credit Agreement dated as of November 18, 2021, among Montana Renewables, LLC, Montana Renewables Holdings LLC, Oaktree Fund Administration, LLC and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 24, 2021 (File No. 000-51734)). Master Lease Agreement, dated December 31, 2021, by and between Montana Renewables, LLC and Stonebriar Commercial Finance LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 6, 2022 (File No. 000-51734)). Interim Funding Agreement, dated December 31, 2021, by and between Montana Renewables, LLC and Stonebriar Commercial Finance LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 6, 2022 (File No. 000-51734)). Stephen P. Mawer Promotion Letter, effective as of May 1, 2022, between Calumet GP, LLC and Stephen P. Mawer (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 1, 2022 (File No. 000-51734)). Todd Borgmann Promotion Letter, effective as of May 1, 2022, between Calumet GP, LLC and Todd Borgmann (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 1, 2022 (File No. 000-51734)). Vince Donargo Promotion Letter, effective as of May 1, 2022, between Calumet GP, LLC and Vince Donargo (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 1, 2022 (File No. 000-51734)). Preferred Unit Purchase Agreement, among Montana Renewables Holdings LLC, Calumet Specialty Products Partners, L.P., WPGG 14 United Aggregator, L.P. and, solely for the purposes of Section 4.4, Calumet GP, LLC, dated as of August 5, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2022 (File No. 000-51734)). Second Amended and Restated Limited Liability Company Agreement of Montana Renewables Holdings LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on August 10, 2022 (File No. 000-51734)). Equipment Schedule No. 2, dated August 5, 2022, by and between Montana Renewables, LLC and Stonebriar Commercial Finance LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2022 (File No. 000-51734)). Interim Funding Agreement, dated August 5, 2022, by and between Montana Renewables, LLC and Stonebriar Commercial Finance LLC (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2022 (File No. 000-51734)). Amendment to Interim Funding Agreement, dated August 5, 2022, by and between Montana Renewables, LLC and Stonebriar Commercial Finance LLC (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2022 (File No. 000- 51734)). Credit Agreement, dated November 2, 2022, by and among Montana Renewables, LLC, Montana Renewables Holdings LLC and Wells Fargo Bank, National Association, as agent and lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 7, 2022 (File No. 000-51734)). Supply and Offtake Agreement, dated as of November 2, 2022, by and between Montana Renewables, LLC and Macquarie Energy North America Trading Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 7, 2022 (File No. 000-51734)). Sixth Amendment to Supply and Offtake Agreement, dated as of November 2, 2022, by and among Calumet Shreveport Refining, LLC, Calumet Refining, LLC, Calumet Specialty Products Partners, L.P. and Macquarie Energy North America Trading Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 7, 2022 (File No. 000-51734)). 150 Table of Contents Exhibit Number 10.47 10.48* 10.49* 21.1* 23.1* 31.1* 31.2* 32.1** 101.INS* 101.SCH* 101.CAL* 101.DEF* 101.LAB* 101.PRE* 104* Description — — — — — — — — — — — — — — — Tenth Amendment to Supply and Offtake Agreement, dated as of November 2, 2022, by and among Calumet Montana Refining, LLC, Calumet Refining, LLC, Calumet Specialty Products Partners, L.P., Calumet Specialty Products Canada, ULC, Montana Renewables, LLC Macquarie Energy North America Trading Inc and Macquarie Energy Canada Ltd. (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 7, 2022 (File No. 000-51734)). Second Amendment to Supply and Offtake Agreement, dated as of March 10, 2023, by and between Macquarie Energy North America Trading Inc. and Montana Renewables, LLC. Change of Control Protection Plan List of Subsidiaries of Calumet Specialty Products Partners, L.P. Consent of Ernst & Young, LLP, independent registered public accounting firm. Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002. Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. Inline XBRL Taxonomy Extension Schema Document. Inline XBRL Taxonomy Extension Calculation Linkbase Document. Inline XBRL Taxonomy Extension Definition Linkbase Document. Inline XBRL Taxonomy Extension Label Linkbase Document. Inline XBRL Taxonomy Extension Presentation Linkbase Document. The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted Inline XBRL (included within the Exhibit 101 attachments) † * ** + # Identifies management contract and compensatory plan arrangements. Filed herewith. Furnished herewith. Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the Commission upon request. Certain confidential information contained in this agreement has been omitted because it is both (i) not material and (ii) the type of information that the Partnership treats as private or confidential. 151 Table of Contents Item 16. Form 10-K Summary None. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: March 15, 2023 CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CALUMET GP, LLC its general partner /s/ Todd Borgmann Todd Borgmann Chief Executive Officer By: By: 152 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on indicated. the dates Name /s/ Todd Borgmann Todd Borgmann /s/ Vincent Donargo Vincent Donargo /s/ Ryan A. Willman Ryan A. Willman /s/ Stephen P. Mawer Stephen P. Mawer /s/ James S. Carter James S. Carter /s/ Karen A. Twitchell Karen A. Twitchell /s/ Paul C. Raymond III Paul C. Raymond III /s/ Daniel J. Sajkowski Daniel J. Sajkowski /s/ Amy M. Schumacher Amy M. Schumacher /s/ Daniel L. Sheets Daniel L. Sheets /s/ Jennifer G. Straumins Jennifer G. Straumins /s/ John (“Jack”) G. Boss John (“Jack”) G. Boss Chief Executive Officer of Calumet GP, LLC (Principal Executive Officer) Date: March 15, 2023 Title Date Executive Vice President and Chief Financial Officer of Calumet GP, LLC (Principal Financial Officer) Date: March 15, 2023 Chief Accounting Officer of Calumet GP, LLC (Principal Accounting Officer) Date: March 15, 2023 Director and Chairman of the Board of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC Director of Calumet GP, LLC 153 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Date: March 15, 2023 Exhibit 10.3 Calumet GP, LLC Long-Term Incentive Plan Grant of Phantom Units with DERs Grantee: Grant Date: 1. Grant of Phantom Units with DERs. Calumet GP, LLC (the “Company”) hereby grants to you ___ Phantom Units under the Calumet GP, LLC Long-Term Incentive Plan (the “Plan”) on the terms and conditions set forth herein and in the Plan, which is incorporated herein by reference as a part of this Agreement. This grant of Phantom Units also includes a tandem grant of a DER with respect to each Phantom Unit. You shall not be credited with DERs for any distributions made with respect to a Unit prior to January 15, 2023. 2. Vesting. (a) Phantom Units. Except as otherwise provided in Paragraph 3 below, the Phantom Units granted hereunder shall vest 100% on the third anniversary of the Grant Date. (b) DERs. The right to receive DERs on and after January 15, 2023 shall be 100% vested on and after such date. If a tandem Phantom Unit is forfeited, your tandem DER with respect to such Phantom Unit shall automatically terminate at that time. 3. Events Occurring Prior to Vesting. (a) Death, Disability or Normal Retirement. If your employment with the Company terminates as a result of your death or a Disability (defined below) or in connection with your Normal Retirement (defined below), all outstanding Phantom Units then held by you automatically shall become fully vested. For purposes of clarity, in the event that your employment with the Company is terminated for any reason other than for Cause at the time that you are eligible for a Normal Retirement, the Company will consider your termination to be in connection with your Normal Retirement for purposes of this Section 3(a). (b) Other Terminations from the Company. If your employment with the Company terminates for any reason other than as provided in Paragraph 3(a) above, all unvested Phantom Units then held by you automatically shall be forfeited without paymen upon such termination. (c) Change of Control. All outstanding Phantom Units held by you automatically shall become fully vested upon a Change of Control. Exhibit 10.3 For purposes of this Paragraph 3, the terms used above shall be defined as follows: (i) “employment with the Company” shall include being an employee or a director of, or a consultant to, the Company. However, if your Award is subject to Section 409A, whether your employment with the Company has terminated will be determined in accordance with the regulations issued under Section 409A that govern a “separation from service.” (ii) “Disability” means (a) your inability to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) you are, by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan of the Company. (iii) “Normal Retirement” means you have reached the age of 62 years. 4. Payments. Settlements of the Phantom Units and the DERs shall be subject to and pursuant to rules and procedures established by the Committee in its sole discretion. (a) Phantom Units. As soon as administratively practicable after the vesting of a Phantom Unit, but in no event later than the 60th day following the vesting event, you shall receive from the Company one Unit for each such vested Phantom Unit; provided, however, the Committee may, in its sole discretion, direct that a cash payment be made to you in lieu of the delivery of such Unit. Any such cash payment shall be equal to the Fair Market Value of the Unit on the payment date. If more than one Phantom Unit vests at the same time, the Committee may elect to pay such vested Award in Units, cash or any combination thereof, in its discretion. (b) DERs. On or as soon as practicable following the date a cash distribution is made by the Partnership with respect to a Unit, but in no event later than the 60th day following the distribution date and provided that such cash distribution is made on or after January 15, 2023, the Company shall pay you with respect to each Phantom Unit then held by you, an amount of cash equal to the amount of cash distributed with respect to a Unit on or promptly following the date on which the distribution is otherwise paid to the holders of Units generally, but in no event later than the 60th day following the distribution date. (c) Section 409A Delay: Notwithstanding the timing of payment set forth in Section 4(a) or (b) above, the Phantom Units and the DERs subject to this Agreement may be paid out in accordance with Section 8(m) of the Plan, if applicable. Section 8(m) of the Plan sets forth rules regarding the potential six month delay of certain payments, as required by Section 409A. 5. Limitations Upon Transfer. All rights under this Agreement shall belong to you alone and may not be transferred, assigned, pledged, or hypothecated by you in any way (whether by operation of law or otherwise), other than by will or the laws of descent and distribution Exhibit 10.3 and shall not be subject to execution, attachment, or similar process. Upon any attempt by you to transfer, assign, pledge, hypothecate, or otherwise dispose of such rights contrary to the provisions in this Agreement or the Plan, or upon the levy of any attachment or similar process upon such rights, such rights shall immediately become null and void. 6. Restrictions. By accepting this grant, you agree that any Units which you may acquire upon payment of this award will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. You also agree that (i) the certificates representing the Units acquired under this award may bear such legend or legends as the Committee deems appropriate in order to assure compliance with applicable securities laws, (ii) the Company may refuse to register the transfer of the Units to be acquired under this award on the transfer records of the Partnership if such proposed transfer would in the opinion of counsel satisfactory to the Partnership constitute a violation of any applicable securities law, and (iii) the Partnership may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Units to be acquired under this award. 7. Withholding of Taxes. To the extent that the vesting or payment of a Phantom Unit or DER results in the receipt of compensation by you with respect to which the Company or an Affiliate has a tax withholding obligation pursuant to applicable law, the Company or Affiliate shall withhold from any cash payment such amount of money as may be required to meet its withholding obligations under such applicable laws. No payment of a vested Phantom Unit in the form of a Unit shall be made pursuant to this Agreement until you have paid or made arrangements approved by the Company or the Affiliate to satisfy in full the applicable tax withholding requirements of the Company or Affiliate with respect to such event, which may include the Company withholding a number of Units having a value equal to the amount of its tax withholding obligation. 8. Rights as Unitholder. You, or your executor, administrator, heirs, or legatees shall have the right to vote and receive distributions on Units and all the other privileges of a unitholder of the Partnership only from the date of issuance of a Unit certificate in your name representing payment of a vested Phantom Unit. 9. Insider Trading Policy. The terms of the Company’s Insider Trading Policy are incorporated herein by reference. The timing of the delivery of any Units pursuant to a vested Phantom Unit shall be subject to and comply with such Policy. 10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and upon any person lawfully claiming under you. 11. Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to the Phantom Units granted hereby. Without limiting the scope of the preceding sentence, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect. Exhibit 10.3 12. Modifications. Except as provided below, any modification of this Agreement shall be effective only if it is in writing and signed by both you and an authorized officer of the Company. 13. Clawback. To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Committee, your Awards and amounts paid or payable pursuant to or with respect to your Awards shall be subject to the provisions of any applicable clawback policies or procedures adopted by the Company or the Partnership, which clawback policies or procedures may provide for forfeiture, repurchase and/or recoupment of your Awards and amounts paid or payable pursuant to or with respect to your Awards. Notwithstanding any provision of the Plan or this Agreement to the contrary, the Company and the Partnership reserve the right, without the consent of you or your beneficiary, to adopt any such clawback policies and procedures, including such policies and procedures applicable to the Plan or this Award with retroactive effect. 14. Severability. If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein. 15. Governing Law. This grant shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflicts of laws principles thereof. 16. Conflicts. In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall control. Capitalized terms used in this Agreement but not defined herein shall have the meanings ascribed to such terms in the Plan, unless the context requires otherwise. CALUMET GP, LLC By: ___________________________ Name: ___________________________ Title: ___________________________  Exhibit 10.48 13846217v7 SECOND AMENDMENT TO SUPPLY AND OFFTAKE AGREEMENT THIS SECOND AMENDMENT TO SUPPLY AND OFFTAKE AGREEMENT (this “Second Amendment”) is entered into as of the Second Amendment Closing Date (as defined below) by and between Macquarie Energy North America Trading Inc., a Delaware corporation (“Macquarie”), and Montana Renewables, LLC, a Delaware limited liability company (the “Company”). RECITALS A. Macquarie and the Company entered into that certain Supply and Offtake Agreement dated November 2, 2022 (as amended by the First Amendment dated December 30, 2022 and as otherwise amended, restated, supplement or modified from time to time, the “Supply and Offtake Agreement”). B. Macquarie and the Company have agreed to amend certain provisions of the Supply and Offtake Agreement, and each of Macquarie and the Company is willing to enter into such amendments, as more particularly described herein, subject to the terms and conditions of this Second Amendment. C. Capitalized terms used but not defined in this Second Amendment have the meanings set forth therefor in the Supply and Offtake Agreement. AGREEMENTS AND AMENDMENTS NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned parties hereby agree as follows: Amendments to Supply and Offtake Agreement. (a) Article 1.1, Definitions, of the Supply and Offtake Agreement is hereby amended by adding the following new definitions in their proper alphabetical order: “Second Amendment” means the Second Amendment to Supply and Offtake Agreement, dated as of the Second Amendment Closing Date, by and between Macquarie and the Company. “Second Amendment Closing Date” means March 10, 2023. (b) Section 3.1, Term, of the Supply and Offtake Agreement is hereby amended by replacing the reference to “November 2, 2025” in the second sentence of such section with a reference to “September 30, 2023”. Representations, Warranties and Covenants. Each of Macquarie and the Company represents and warrants to each other that (a) it possesses all requisite power and authority to execute, deliver and comply with the terms of this Second Amendment, (b) no other consent of any Person is required for this Second Amendment to be effective, and (c) the execution and delivery of this Second Amendment, and, as applicable, the other agreements 2 referenced herein to which any such Person is a party, does not violate its respective organizational documents. Scope of Amendment; Reaffirmation. (a) All references hereafter to the Supply and Offtake Agreement shall refer to the Supply and Offtake Agreement as amended by this Second Amendment. Except as modified by this Second Amendment and by other amendments to the Transaction Documents, the Transaction Documents are unchanged and continue in full force and effect. However, in the event of any inconsistency between the terms of the Supply and Offtake Agreement (as amended by this Second Amendment) and any other Transaction Document, the terms of the Supply and Offtake Agreement shall control (except solely with respect to any fees, amounts and payments set forth in the Fees and Adjustments Letter, as amended from time to time, as to which the Fees and Adjustments Letter shall control) and such other Transaction Documents (other than the Fees and Adjustments Letter) shall be deemed to be amended to conform to the terms of the Supply and Offtake Agreement. (b) Each of Macquarie and the Company hereby reaffirms its obligations under the Transaction Documents to which it is a party and agrees that all Transaction Documents to which it is a party remain in full force and effect and continue to be its legal, valid, and binding obligations enforceable in accordance with their terms (as the same are modified, as applicable, by this Second Amendment). Miscellaneous. (a) Form. Each agreement, document, instrument or other writing to be furnished to Macquarie and the Company, as applicable, under any provision of this Second Amendment must be in form and substance satisfactory to the parties hereto and their counsel. (b) Headings. The headings and captions used in this Second Amendment are for convenience only and will not be used to construe the meaning or intent of the terms of this Second Amendment, the Supply and Offtake Agreement, or the other Transaction Documents. (c) Successors and Permitted Assigns. This Second Amendment is binding upon, and inures to the benefit of the parties to this Second Amendment and their respective successors and permitted assigns. Unless otherwise provided in the Transaction Documents, all covenants, agreements, indemnities, representations and warranties made in any of the Transaction Documents survive and continue in effect as long as the Transaction Obligations are outstanding. Nothing expressed or implied in this Second Amendment is intended to create any rights, obligations or benefits under the Supply and Offtake Agreement, as amended hereby, in any person other than the parties thereto and hereto and their respective successors and permitted assigns. (d) Invalidity. If any Article, Section or provision of this Second Amendment shall be determined to be null and void, voidable or invalid by a court of competent 3 jurisdiction, then for such period that the same is void or invalid, it shall be deemed to be deleted from the Supply and Offtake Agreement, as amended hereby, and the remaining portions of the Supply and Offtake Agreement, as amended hereby, shall remain in full force and effect. (e) Multiple Counterparts. This Second Amendment may be executed in one or more counterparts by the parties hereto and initially delivered by facsimile transmission, pdf or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument. (f) GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. (g) No Waiver. This Second Amendment is not intended to operate as a waiver of Macquarie’s rights and remedies and does not constitute or operate as (i) a waiver of (or a consent to) any existing Default or Event of Default, if any, or any other noncompliance with any provision of the Supply and Offtake Agreement, as amended hereby, or any other Transaction Document, (ii) an agreement to waive any existing or future Default or Event of Default, if any, or any such noncompliance, or (iii) a waiver of Macquarie’s right to insist upon strict compliance with each term, covenant, condition and provision of the Supply and Offtake Agreement, as amended hereby, and the other Transaction Documents. (h) FINAL AGREEMENT. THE TERMS OF THIS SECOND AMENDMENT, THE SUPPLY AND OFFTAKE AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND THERETO WITH RESPECT TO THE MATTERS SET FORTH HEREIN AND THEREIN, AND NO REPRESENTATIONS OR WARRANTIES SHALL BE IMPLIED OR PROVISIONS ADDED IN THE ABSENCE OF A WRITTEN AGREEMENT TO SUCH EFFECT BETWEEN THE PARTIES HERETO OR THERETO. THIS SECOND AMENDMENT, THE SUPPLY AND OFFTAKE AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. No promise, representation or inducement has been made by any party hereto or thereto that is not embodied in the Supply and Offtake Agreement, as amended by this Second Amendment, or the other Transaction Documents, and no party hereto or thereto shall be bound by or liable for any alleged representation, promise or inducement not so set forth herein or therein. [SIGNATURES ON FOLLOWING PAGES.] Signature Page to Second Amendment to Supply and Offtake Agreement IN WITNESS WHEREOF, this Second Amendment is executed effective as of the Second Amendment Closing Date. MACQUARIE ENERGY NORTH AMERICA TRADING INC. By: /s/ Ozzie Pagan Name: Ozzie Pagan Title: Executive Director By: /s/ Tara Teeter Name: Tara Teeter Title: Division Director MONTANA RENEWABLES, LLC By: /s/ Vincent Donargo Vincent Donargo Executive Vice President and Chief Financial Officer  Exhibit 10.49 CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CHANGE OF CONTROL PROTECTION PLAN Section 1. Purpose. The purpose of this Calumet Specialty Products Partners, L.P. Change of Control Protection Plan, effective as of March 13, 2023, is to provide assurances of specified benefits to eligible employees of the Employer whose employment is terminated in a Qualifying Termination in connection with a Change of Control. This Plan is intended to be an “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA and is maintained as an unfunded plan for the purpose of providing benefits to a select group of management or highly compensated employees within the meaning of 29 C.F.R. § 2520.104-24. Section 2. Definitions. a) “Accrued Obligations” means (i) all earned but unpaid Base Pay through the date of termination prorated for any partial period of employment, payable in accordance with customary payroll practices and the requirements of applicable law; (ii) any benefits to which such individual has a vested entitlement as of the date of termination, payable in accordance with the terms of any applicable benefit plan or as otherwise required by law; (iii) any accrued but unused vacation, payable in a lump sum with the individual’s final paycheck or as otherwise required by law; and (iv) any approved but not yet reimbursed business expenses incurred prior to the date of termination, payable in accordance with applicable policies of the Employer. b) “Act” means the Securities Exchange Act of 1934, as amended. c) “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. For the avoidance of doubt, the term “Affiliate” shall include The Heritage Group and any Affiliates of The Heritage Group. d) “Base Pay” means the annual base salary in effect for the Covered Executive immediately prior to termination of employment, and excludes any bonuses, incentive compensation, equity compensation or any other special payments. e) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Act. f) “Board” means the Board of Directors of the General Partner. g) “Bonus” means the target annual cash bonus amount in effect for the Covered Executive in accordance with the General Partner’s annual cash incentive plan, or any other annual, quarterly or similar cash incentive program maintained by the 2 Employer, for the year in which the termination of employment occurs. h) “Cause” means, and shall be deemed to have occurred upon, one or more of the following events: i. commission of an act of fraud, embezzlement, misappropriation, willful misconduct or breach of fiduciary duty against the Employer or other harmful or potentially harmful conduct to the Employer’s best interest, as reasonably determined by the Committee; ii. any conviction, plea of no contest or nolo contendere, deferred adjudication or unadjudicated probation for any felony, or any crime involving moral turpitude; or iii. continued failure to substantially perform Covered Employee’s material obligations and duties of employment with the Employer; or iv. any material breach of any policy of the Employer applicable to the Covered Executive. i) “Change of Control” means, and shall be deemed to have occurred upon, one or more of the following events: i. any “person” or “group”, within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than an Affiliate, becomes the Beneficial Owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the voting power of the outstanding equity interests of the Company; ii. a Person other than the General Partner or an Affiliate of the General Partner becomes the general partner of the Company; iii. the sale or other disposition, including by liquidation or dissolution, of all or substantially all of the assets of the General Partner or the Company in one or more transactions to any Person other than an Affiliate; or iv. any other transaction, such as a reorganization, consolidation, sale of a business segment, spin-off, split-off, merger or similar event that the Board, in its sole discretion, determines to be a Change of Control with respect to a particular Covered Executive. j) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and any guidance and/or regulations promulgated thereunder. k) “Code” means the Internal Revenue Code of 1986, as amended, and any guidance and/or regulations promulgated thereunder. l) “Committee” means the Compensation Committee of the Board or another duly constituted committee of the Board designated by the Board to administer this Plan. m) “Company” means Calumet Specialty Products Partners, L.P. and any successor partnership or other entity. 3 n) “Comparable Offer” means an offer of employment or continued employment with the Employer, a successor or an acquirer that: (i) provides for no less favorable Base Pay and Bonus, in the aggregate, than the Base Pay and Bonus provided to the Covered Executive immediately prior to the Change of Control, (ii) provides for welfare and retirement benefits that are substantially comparable in the aggregate to those received by the Covered Executive immediately prior to the Change of Control, and (iii) does not require a relocation of the primary location from which the Executive works (which may include a home office) to a location that increases the Covered Executive’s normal commute by more than 50 miles. o) “Covered Executive” means the Company’s Chief Executive Officer and each other employee of an Employer who, at the time of the Change of Control, (i) is a Vice President or above and (ii) directly reports to the Company’s Chief Executive Officer, as well as any other employee of an Employer specifically designated by the Committee for participation in this Plan. p) “Deferred Compensation Plan” means the Calumet Specialty Products Partners, L.P. Executive Deferred Compensation Plan, as the same may be amended from time to time. q) “Disability” means (i) a Covered Executive’s inability to perform the essential functions of their position by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Covered Executive is, by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan of the Employer. r) “Employer” means, collectively, the Company, the General Partner, and each Affiliate which has adopted this Plan as a participating employer. An Affiliate may evidence its adoption of this Plan by a formal action of its governing body. An entity will cease to be a participating Employer as of the date such entity ceases to be an Affiliate. For purposes of determining the entity responsible for making payments hereunder to a Covered Executive, “Employer” shall mean the legal entity on whose payroll records the Covered Executive is listed. s) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any guidance and/or regulations promulgated thereunder. t) “General Partner” means Calumet GP, LLC, a Delaware limited liability company. u) “Good Reason” means the occurrence of any of the following, without the Covered Executive’s written consent: i. a material reduction in the Covered Executive’s Base Pay; 4 ii. a material reduction in the Covered Executive’s Bonus; iii. the relocation of the primary location from which the Covered Executive works (which may include a home office) to a location that increases the Covered Executive’s normal commute by more than 50 miles; or iv. a material diminution in the authority, duties or responsibilities of the Covered Executive. For a resignation to be for “Good Reason,” (1) the Covered Executive must provide written notice to the Committee specifying the alleged grounds for Good Reason within 20 calendar days after its occurrence (or if later, the covered Executive’s first knowledge of its occurrence), (2) the Employer must have failed to cure such grounds within 15 calendar days following the receipt of such notice, and (3) the Covered Executive must resign within 20 calendar days following the expiration of such cure period. v) “LTIP” means the Calumet GP, LLC Amended and Restated Long-Term Incentive Plan, as may be amended from time to time, and any successor equity compensation plan of the Company. w) “Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity, or other entity. x) “Plan” means this Calumet Specialty Products Partners, L.P. Change of Control Protection Plan, as amended from time to time. y) “Plan Benefit” means the payments and benefits specified for a Covered Executive in Appendix A, as the same may be amended by the Committee from time to time. z) “Protection Period” means the period commencing 30-days prior to the date a Change of Control is consummated and ending on the 12-month anniversary thereof. aa) “Qualifying Termination” means a Covered Executive’s termination of employment with the Employer and its subsidiaries either by the Employer without Cause or by the Covered Executive for Good Reason. Section 3. Eligibility. a) A Covered Executive shall be automatically eligible to participate in this Plan upon becoming a Covered Executive. b) Unless otherwise provided by the Committee, a Covered Executive shall not be eligible for Plan Benefits if: i. the Covered Executive voluntarily terminates employment with the Employer for any reason other than Good Reason, including retirement or job abandonment; 5 ii. the Covered Executive terminates employment as a result of death or Disability; iii. the Covered Executive’s employment is terminated by the Employer for Cause; iv. the Covered Executive voluntarily rejects a Comparable Offer for employment during the Protection Period; or v. the Covered Executive’s employment is terminated at any time outside of the Protection Period. c) As a condition to receiving the Plan Benefits, the Covered Executive must execute and not revoke a separation and release of claims agreement in a form provided by the Employer (the “Separation Agreement”). The Separation Agreement must be executed and delivered to the Employer within the period of time set forth therein. Section 4. Plan Benefits. a) In the event of a Covered Executive’s termination of employment for any reason, such Covered Executive shall be entitled to receive the Accrued Obligations. Participation in all benefit plans of the Employer will terminate upon a Covered Executive’s date of termination except as otherwise specifically provided in the applicable plan. b) In the event of a Covered Executive’s Qualifying Termination, the Covered Executive will be eligible to receive the Plan Benefits in accordance with the terms hereof. The Plan Benefits for a Covered Executive shall be determined as set forth in Appendix A, as the same may be amended by the Committee from time to time. c) To the extent that any Covered Executive receives payment under this Plan in excess of the Plan Benefits to which such Covered Executive is entitled, the Covered Executive shall promptly return any excess to the Employer upon request (to the fullest extent permitted by applicable law); moreover, the Plan Benefits shall be subject to repayment upon the Employer’s discovery of any act or occurrence that would have been grounds for termination of employment for Cause had Employer known of such act or occurrence at the time of the Covered Executive’s termination of employment. Section 5. Administration. a) This Plan shall be administered by the Committee in its sole and absolute discretion, and all determinations by the Committee shall be final, binding, and conclusive on all parties. The Employer reserves the right to, and may, enhance a Covered Executive’s Plan Benefits, in writing, in its sole discretion and without an amendment to this Plan, and may provide for other forms of severance pay or benefits. b) In the event of any conflict or inconsistency between another document and the terms of this Plan, the terms and conditions of this Plan shall govern and control. 6 c) The Committee shall have the authority, consistent with the terms of this Plan, to (i) designate Covered Executives, (ii) determine the terms and conditions relating to the Plan Benefit, if any, (iii) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in this Plan, (iv) establish, amend, suspend or waive any rules and procedures with respect to this Plan, and (v) make any other determination and take any other action that the Committee deems necessary or desirable for administration of this Plan, including, without limitation, the timing and amount of payments. The Committee may delegate to one or more of the officers of the Employer the authority to act on behalf of the Committee in administering this Plan. Section 6. Funding. The obligations of the Employer under this Plan are not funded through contributions to a trust or otherwise, and all benefits shall be payable from the general assets of the Employer. Nothing contained in this Plan shall give a Covered Executive any right, title or interest in any property of the Employer. Covered Executives shall be mere unsecured creditors of the Employer. Section 7. Code Section 409A. a) Compliance. Notwithstanding anything herein to the contrary, this Plan is intended to be interpreted and applied so that the payments and benefits set forth herein either shall be exempt from the requirements of Code Section 409A or shall comply with the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be exempt from or in compliance with Code Section 409A. To the extent that the Company determines that any provision of this Plan would cause a Covered Executive to incur any additional tax or interest under Code Section 409A, the Company shall be entitled to reform such provision to attempt to comply with or be exempt from Code Section 409A through good faith modifications. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Covered Executives and the Company without violating the provisions of Code Section 409A. Notwithstanding any of the foregoing to the contrary, none of the Company or its subsidiaries or affiliates or any of their officers, directors, members, employees, agents, advisors, predecessors, successors, or equity holders shall have any liability for the failure of this Plan to be exempt from, or to comply with, the requirements of Section 409A of the Code. Each payment and/or benefit provided hereunder shall be a payment in a series of separate payments for purposes of Code Section 409A. b) Separation from Service. Notwithstanding anything in this Plan to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan unless such termination is also a “separation from service” within the meaning of Code Section 409A. 7 c) Reimbursements. To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Plan constitutes nonqualified deferred compensation (within the meaning of Code Section 409A): i. any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by the Covered Executive, ii. the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and iii. the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in effect. Section 8. Amendment and Termination. Prior to the consummation of a Change of Control, the Committee may amend or terminate this Plan at any time, without notice, and for any or no reason, except as prohibited by law. No such action shall adversely affect the rights of any Covered Executive who has previously experienced a Qualifying Termination without the Covered Executive’s written consent. Upon or after the consummation of a Change of Control, the Company and the Committee may not, without a Covered Executive’s written consent, amend or terminate this Plan in any way, nor take any other action, that (i) prevents that Covered Executive from becoming eligible for the Plan Benefits, or (ii) reduces or alters to the detriment of the Covered Executive the Plan Benefits payable, or potentially payable, to a Covered Executive under this Plan (including, without limitation, imposing additional conditions on such payments or benefits). This Plan shall automatically terminate upon the later of the (i) payment of all applicable benefits under this Plan or (ii) 90 days following the end of the Protection Period. Section 9. Employment at Will. Nothing in this Plan or any other act of the Employer shall be considered effective to change a Covered Executive’s status as an at-will employee or guarantee any duration of employment. Either the Employer or a Covered Executive may terminate the employment relationship at any time, for any reason or no reason, and with or without advance notice. Section 10. Transfer and Assignment; Effect of Death. In no event may any Covered Executive sell, transfer, anticipate, assign or otherwise dispose of any right or interest under this Plan. At no time will any such right or interest be subject to the claims of creditors nor liable to attachment, execution, or other legal process. If a Covered Executive dies prior to receiving full payment of benefits to which he or she is entitled, any unpaid 8 benefits will be paid to the Covered Executive’s surviving spouse, or if the Covered Executive does not have a surviving spouse, to the Covered Executive’s estate. Section 11. Severability. If any provision of this Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of this Plan, and this Plan will be construed and enforced as if such provision had not been included. Section 12. Successors. Any successor to the Employer of all or substantially all of the Employer’s business and/or assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or other transaction) will assume the obligations under this Plan and agree expressly to perform the obligations under this Plan in the same manner and to the same extent as the Employer would be required to perform such obligations in the absence of a succession. For all purposes under this Plan, the term “Employer” will include any successor to the Employer’s business and/or assets which become bound by the terms of this Plan by operation of law, or otherwise. Section 13. Withholding; Taxes. The Employer shall withhold from Plan Benefits all federal, state and local income or other taxes required to be withheld therefrom and any other required payroll deductions. Section 14. Compensation. Benefits payable hereunder shall not constitute compensation under any other plan or arrangement, except as expressly provided in such plan or arrangement. Section 15. Entire Agreement. This Plan represents the entire agreement of the Employer and such Covered Executive with respect to the subject matter hereof and supersedes all prior understandings, whether written or oral. Section 16. Governing Law. The provisions of this Plan will be construed, administered, and enforced in accordance with the laws of the State of Delaware, without regard to conflicts of laws principles thereof. Section 17. Claims and Appeals. a) Claims Procedure. Any Covered Executive or other person who believes they are entitled to any payment under this Plan may submit a claim in writing to the Committee (or its authorized delegate). Such claim must be submitted within 90 days of the earlier of: 9 i. the date the claimant learned he or she is entitled to benefits under this Plan, or ii. the date the claimant learned that he or she will not be entitled to any benefits under this Plan. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will describe any additional information needed to support the claim and this Plan’s procedures for appealing the denial. The denial notice will be provided within 90 days after the claim is received. If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90 day period. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Committee expects to render its decision on the claim. b) Appeal Procedure. If the claimant’s claim is denied, the claimant (or his or her authorized representative) may apply in writing to the Committee for a review of the decision denying the claim. Review must be requested within 60 days following the date the claimant received the written notice of their claim denial or else the claimant loses the right to review. The claimant (or representative) then has the right to review and obtain copies of all documents and other information relevant to the claim, upon request and at no charge, and to submit issues and comments in writing. The Committee will provide written notice of its decision on review within 60 days after it receives a review request. If additional time (up to 60 days) is needed to review the request, the claimant (or representative) will be given written notice of the reason for the delay. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Committee expects to render its decision. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will include a statement that the claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents and other information relevant to the claim and a statement regarding the claimant’s right to bring an action under Section 502(a) of ERISA. Section 18. Certain Excise Taxes. Notwithstanding anything to the contrary in this Plan, if a Covered Executive is a “disqualified individual” (as defined in Section 280G(c) of the Code), and the Plan Benefit provided for under this Plan, together with any other payments and benefits which the Covered Executive has the right to receive from the Employer or any other Person, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the Plan Benefit provided for under this Plan shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by the Covered Executive will be $1.00 less than three times the Covered 10 Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by the Covered Executive shall be subject to the excise tax imposed by Section 4999 of the Code, or (b) paid in full, whichever produces the better net after-tax position to the Covered Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The determination as to whether any such reduction in the amount of the payments provided hereunder is necessary shall be made by the Employer in good faith. If a reduced payment is made or provided and through error or otherwise that payment, when aggregated with other payments and benefits used in determining if a parachute payment exists, exceeds $1.00 less than three times the Covered Executive’s base amount, then the Covered Executive shall immediately repay such excess to the Employer upon notification that an overpayment has been made. Nothing in this Plan shall require the Employer to be responsible for, or have any liability or obligation with respect to, the Covered Executive’s excise tax liabilities under Section 4999 of the Code. 11 Exhibit A Plan Benefits 1. Cash Payment. An amount in cash, payable by the Employer in lump sum promptly and in all events within 30 days following the date on which the Separation Agreement required by Section 3(c) becomes effective and irrevocable, equal to the sum of the Covered Executive’s (i) Base Pay plus (ii) Bonus, multiplied by the multiple set forth below for the Covered Executive’s role: Position Cash Payment Multiple Chief Executive Officer 1.5X All Other Covered Executives 1.0X Notwithstanding the foregoing, if the period within which a Covered Executive could execute and revoke the Separation Agreement spans two calendar years, the Plan Benefit hereunder shall be payable in the second calendar year. 2. Other Benefits. a) Continued medical, dental and vision benefits coverage for the Covered Executive and his or her covered dependents for 12 months following the date of termination at the Employer’s expense; provided, that if the continued coverage contemplated hereunder cannot be provided under applicable Employer plans or policies or would be discriminatory and would result in the imposition of excise taxes or other liabilities on the Employer or its subsidiaries for failure to comply with any requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable), or other applicable law, the Covered Executive shall instead receive a lump sum cash payment equal to the monthly COBRA premium amount for the Covered Executive and his or her covered dependents’ continuation of medical, dental and vision coverage multiplied by 12, less any months of coverage previously provided. b) Reimbursement for the cost of outplacement services with a provider designated by the Employer, provided that the cost of such reimbursement shall not exceed $10,000 and such services must be provided within six months following the Qualifying Termination. c) All outstanding, unvested time-based and performance-based equity or equity-based incentives granted under the LTIP held by the Covered Executive shall accelerate and vest in full effective as of immediately prior to such Qualifying Termination. For purposes hereof, performance-based equity awards shall vest at the greater of target or actual performance through the date of such Qualifying Termination. d) In accordance with Section 5.7 of the Deferred Compensation Plan, upon a Qualifying Termination, any Units or Phantom Units (each as defined in the Deferred 12 Compensation Plan) held by the Covered Executive under the Deferred Compensation Plan shall be distributed and governed in accordance with Section 2(c), above, and the otherwise applicable terms of the LTIP.  SUBSIDIARIES OF CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. (As of December 31, 2022) Exhibit 21.1 Name of Subsidiary Calumet Operating, LLC Calumet Refining, LLC Calumet Shreveport Refining, LLC Calumet Finance Corp. Calumet Karns City Refining, LLC Calumet Dickinson Refining, LLC Calumet Missouri, LLC Calumet Montana Refining, LLC Montana Renewables, Inc. Montana Renewables Holdings LLC Montana Renewables, LLC Calumet Branded Products, LLC Bel-Ray Company, LLC Kurlin Company, LLC Calumet Mexico, LLC Calumet Specialty Oils de Mexico, S. de R.L. de C.V. Calumet Princeton Refining, LLC Calumet Cotton Valley Refining, LLC Calumet Specialty Products Canada, ULC Calumet International, Inc. Calumet Paralogics, LLC Jurisdiction of Organization Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Mexico Delaware Delaware Canada Delaware Delaware Consent of Independent Registered Public Accounting Firm Exhibit 23.1 We consent to the incorporation by reference in the Registration Statements: (1) Registration Statement (Form S-8 No. 333-263317) of Calumet Specialty Products Partners, L.P.; (2) Registration Statement (Form S-8 No. 333-226740) of Calumet Specialty Products Partners, L.P., (3) Registration Statement (Form S-8 No. 333-208511) of Calumet Specialty Products Partners, L.P., (4) Registration Statement (Form S-8 No. 333-186961) of Calumet Specialty Products Partners, L.P., and (5) Registration Statement (Form S-8 No. 333-138767) of Calumet Specialty Products Partners, L.P.. of our reports dated March 15, 2023, with respect to the consolidated financial statements of Calumet Specialty Products Partners, L.P., and the effectiveness of internal control over financial reporting of Calumet Specialty Products Partners, L.P. included in this Annual Report (Form 10-K) for the year ended December 31, 2022. /s/ Ernst & Young LLP Indianapolis, Indiana March 15, 2023 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Exhibit 31.1 I, Todd Borgmann, certify that: 1. I have reviewed this Annual Report on Form 10-K of Calumet Specialty Products Partners, L.P. (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit and finance committee of the registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 15, 2023 /s/ Todd Borgmann Todd Borgmann Chief Executive Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P. (Principal Executive Officer) CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Exhibit 31.2 I, Vincent Donargo, certify that: 1. I have reviewed this Annual Report on Form 10-K of Calumet Specialty Products Partners, L.P. (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit and finance committee of the registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 15, 2023 /s/ Vincent Donargo Vincent Donargo Executive Vice President and Chief Financial Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P. (Principal Financial Officer) CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. § 1350 Exhibit 32.1 In connection with the Annual Report of Calumet Specialty Products Partners, L.P. (the “Company”) on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of Calumet GP, LLC, the general partner of the Company, does hereby certify that: (a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934. (b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. March 15, 2023 March 15, 2023 /s/ Todd Borgmann Todd Borgmann Chief Executive Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P (Principal Executive Officer) /s/ Vincent Donargo Vincent Donargo Executive Vice President and Chief Financial Officer of Calumet GP, LLC, general partner of Calumet Specialty Products Partners, L.P (Principal Financial Officer) 

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