# Dear Fellow Unitholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NASDAQ_CLMT_2019/NASDAQ_CLMT_2019.mmd` · pages 1-7_

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Dear Fellow Unitholders,

I am proud to say that in 2019 our Partnership delivered solid financial results, as we executed against our strategic priorities, improved our operational performance, and drove meaningful margin and free cash flow growth. For the year, Calumet:

• Generated our highest free cash flow since 2012,

• Significantly expanded our margins in our Specialty Products portfolio,

• Drove strong utilizations, setting numerous records across the portfolio,

• Set personal and process safety records,

• Launched Phase II of our Self-Help program,

• Reduced inventories and completed debottleneck projects at multiple facilities,

• Successfully refinanced our 2021 notes, lowering annual interest payments by over $21 million vs. 2018,

• Significantly lowered our total debt by $391 million,

• Reduced our leverage ratio \( ^{(2)} \)  to 4.0x,

• Completed the divestiture of the San Antonio fuels refinery, and

• Transitioned the CFO position to Keith Jennings, who brings significant specialty chemicals experience.

While I'm proud of the hard work our employees have demonstrated this year, we remain focused on continuing Calumet's transition to a more focused specialty-centric business. I am pleased to report that the momentum we generated in 2019 has positioned us for future long-term growth in our core Specialty Products business, as we work to become the premier specialty products company in the world.

## Fiscal 2019 In Review

On a GAAP basis, the Partnership's net loss of \(43.6 million, or \)0.55 per common unit, improved versus a net loss of \(55.1 million or \)0.69 per unit in 2018. We delivered \(263 million in Adjusted EBITDA \( ^{(1)} \)  between our two operating segments. In particular, our Specialty Products segment contributed \)208 million of Adjusted EBITDA \( ^{(1)} \) , an increase of 24% versus last year, driven by strong sales volume growth across several of our key Specialty Product categories. Similarly, our Fuels business segment contributed \(153 million in Adjusted EBITDA \) ^{(1)} \( , reflecting the positive impact of improved throughput and capacity utilization across our portfolio. These improvements were offset by a turnaround at our Shreveport facility and weaker fuels market fundamentals, most notably the WCS/WTI differential, which tightened meaningfully compared to the year prior.

In the beginning of the year we launched Phase II of our Self-Help program, which has a three-year goal to deliver an additional $100 million of Adjusted EBITDA \( ^{(1)} \)  by the end of 2021. This program delivered $30 million in incremental

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profitability in 2019, with significant contributions from operational improvements at our Shreveport and San Antonio refineries. These structural improvements allowed us to recognize increased production capacity, improved margin capture and lower operating costs. After four years of successfully improving our profitability and cost structure, Self-Help is firmly embedded within our culture.

2019 was a year of significant improvements on our balance sheet as well, with a number of key successes on the financing side of our business. First, we reduced our debt by \(391 million, primarily through repurchasing our unsecured notes in the open market. This debt reduction lowered our interest expense by over \)21 million during the year. Our lower debt, combined with multiple years of improving our profitability, allowed our Partnership to de-lever meaningfully across the year. We exited 2019 with a leverage ratio \( ^{2)} \)  of 4.0x, which was down from 5.6x at the end of 2018. Next, we successfully completed the refinancing of the Partnership's 2021 notes, extending the maturity to 2025. This improved debt maturity ladder, in conjunction with the overall reduction in leverage, represented significant progress in Calumet's ongoing balance sheet improvement goals. Our stronger balance sheet was recognized by ratings agencies and as a result, Calumet secured multiple credit rating upgrades to both the securities and the corporate family credit rating. These upgrades allowed our Company to not only obtain improved trade credit terms with our vendors, but also expanded the capacity on our credit facility.

Last year was an important year in our transformational efforts to grow our core Specialty Products portfolio, and we achieved a number of improvements that will further facilitate long-term growth in our core business. The implementation and deployment of our ERP system, and the ongoing rationalization of low-margin products from our business, has better positioned Calumet's portfolio to not only grow earnings, but also increase the predictability and stability of our financial results. That was evident in the 320-basis point improvement we saw in our Adjusted EBITDA \( ^{(1)} \)  margin, which ended the year at 15.4%. As we move forward, we have set a long-term goals to achieve a 40 per barrel gross margin and maintain a 15% Adjusted EBITDA \( ^{(1)} \)  margin for our Specialty Products portfolio.

We also continued to move toward our long-term vision to focus on our Specialty Products business through additional portfolio optimization. This included the strategic divestiture of our San Antonio fuels refinery in November for \(63 million, plus adjustments for net working capital, inventories and post-closing amounts. Then in early 2020, we launched a formal review of strategic options for our fuels refinery in Great Falls, Montana and separately completed a small acquisition of Paralogics, LLC, which expands our presence in the wax formulating, blending and packaging market.

Finally, we transitioned our executive management team by adding Keith Jennings as Chief Financial Officer, which reflects our ongoing transition to becoming the premier company in the specialty products market. In addition to his years of direct experience in the specialty chemicals business, Keith brings to Calumet deep corporate finance and the capital markets skillset that will be vital in our growth efforts over the coming years. Lastly, in early 2020 we announced the promotion of Scott Obermeier to Executive Vice President Commercial, to bring even further focus and leadership to our high-value, core specialty business. Scott brings over 20 years of experience in sales and marketing as well as general

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management roles focused on the specialty chemicals market, and I am excited to see him execute against our growth strategy for the portfolio over the next few years.

## 2020 Priorities

For those of you that have been part of the fundamental changes the Partnership has undergone over the last few years, we thank you for the continued support. And for those that have recently gained interest in our story, we welcome you. We are excited about the future of our Partnership and are fortunate enough to have such a devoted group of individuals that have continued to help shape and strengthen our business to what it is today. 2020 has brought new challenges related to the global COVID-19 pandemic, but the hard work we've done over the last few years has significantly enhanced our liquidity position, balance sheet flexibility, and cash flow generation capabilities, all of which have truly built a stronger Calumet.

In 2020, we will remain focused on strengthening our core Specialty Products portfolio, improving the operational performance of our manufacturing assets, executing against our self-help goals, and further improving our balance sheet. While my time with Calumet comes to a close, it's important to reflect on the journey that Calumet has undergone to transform itself. With Steve Mawer coming on board as Chief Executive Officer in April of 2020, I can confidently say that the Company is in good hands and is well poised to achieve its strategic goals. I am very grateful for having the opportunity to lead this organization for the last four years, and I am incredibly proud of our employees and the accomplishments we have made. I'd like to thank you, our unitholders, for your continued support and wish all of you a safe and healthy 2020.

![](images/3_0.jpg)

## Tim Go

## Chief Executive Officer

(1) EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Pro forma Adjusted EBITDA are non-GAAP financial measures provided in this presentation. For reconciliations to the nearest GAAP financial measures please see the Partnership's filings with the Securities and Exchange Commission ("SEC"), including the latest Annual Report on Form 10-K. These non-GAAP financial measures are not defined by GAAP and should not be considered in isolation or as an alternative to net income (loss) or other financial measures prepared in accordance with GAAP. We do not provide reconciliation of non-GAAP financial measures on a forward-looking basis as it is impractical to do so without unreasonable effort.

(2) Leverage ratio defined as Net Debt to trailing twelve-month Adjusted EBITDA