Calumet Specialty Products Partners reported last Monday it suffered a larger fourth quarter loss than it first reported four weeks ago, losing $83.6 million vs. $79.6 million in the year-ago quarter and $64.9 million stated in its original fourth quarter report.
Calumet said the $83.6 million Net loss for the fourth quarter 2017 included the impact of: (1) a $173.4 million net gain on sale from the divestitures of both the Superior, Wisconsin refinery and Anchor Drilling Fluids USA, LLC; (2) $206.9 million non-cash impairment charges primarily related to the revaluation of the Partnership's property, plant and equipment at several facilities; and (3) a $6.1 million adjustment related to allowances for bad debt reserves. Without these adjustments, Net loss for the fourth quarter 2017 would have been $44.0 million.
Revised net loss for the year was $103.8 million vs $328.6 million for 2016 but higher than the $85.1 million originally reported.
Calumet reported that EBITDA was $41.2 million, better than the $27.7 million reported in the year-ago quarter but revised down from $60.1 million in the original earnings report. The $41.2 million Adjusted EBITDA for the fourth quarter 2017 included: (1) a $9.6 million favorable net impact related to lower of cost or market ("LCM") inventory adjustments and last-in, first-out ("LIFO") inventory layers; (2) a $12.9 million net expense related to enterprise resource planning ("ERP") system expenses and realized hedging losses; and (3) a $6.1 million adjustment related to allowances for bad debt reserves. Without these impacts, Adjusted EBITDA for the fourth quarter 2017 would have been $50.6 million.
During the fourth quarter 2017, total specialty products segment gross profit increased 8.3% compared to the year-ago period, driven by healthier market conditions, offset somewhat by rising crude feedstock costs. Adjusted EBITDA for the fourth quarter 2017 was $30.8 million, which was a 10.0% improvement compared to the year-ago period, despite the lower sales volumes associated with the lubes turnaround at Shreveport. The segment's Adjusted EBITDA Margin for the fourth quarter was 9.8% versus 9.2% for the prior year comparable period, despite some additional charges associated with the ERP implementation. The segment also benefited from a $2.5 million favorable LCM inventory adjustment, which was partially offset by a $2.1 million LIFO inventory liquidation loss.
During fiscal year 2017, total specialty products sales volumes decreased 3.8% year-over-year, driven primarily by supply-chain disruptions that took place in the third quarter and the lubes turnaround at Shreveport in the fourth quarter. Specialty products segment Adjusted EBITDA decreased slightly due to consistently rising feedstock costs throughout 2017 and decreased sales volumes, partially offset by record volume and profit performance in the higher-margin packaged and synthetic specialty products and record throughput at the Cotton Valley refinery. On an annual basis, the specialty products segment's Adjusted EBITDA Margin was 14.3% in 2017, compared to 15.1% in 2016, which was due to the higher price of crude and the additional charges associated with the ERP implementation. Specialty products segment performance for 2017 was also impacted by a $10.9 million favorable LCM inventory adjustment and a $3.0 million LIFO inventory liquidation loss.
Calumet attributes the mistake that prompted the revisions to “the ongoing implementation and associated learning process related to our new enterprise resource planning system."
