Calumet Specialty Products Partners L.P. will close a lubricants plant in New Jersey and furlough manufacturing employees at a Missouri synthetic lubricants plant as part of its efforts to shore up the company’s balance sheet, according to a statement released last week.
In an April 9 press release labeled “balance sheet and liquidity update,” Calumet said these and other measures will save $20 million to $30 million. A Calumet spokesperson said the company would not comment further.
According to the company’s website, its Bel-Ray Co. subsidiary operates the 32-acre Farmingdale, New Jersey, blending plant, which produces synthetic, industrial and commercial lubricating oils. Applications for the lubricants include aerospace, automotive, energy, food, marine, military, mining, motorcycle, OEM, powersports, steel, textile and other industries.
Calumet acquired Bel-Ray in late 2013. The company was founded in New Jersey in 1946 by William Kiefer. In August 2017, Calumet announced it would roll out three new Bel-Ray branded product lines for passenger car motor oils, commercial lubricants and industrial lubricants by the first quarter of 2018, replacing some products sold under the Quantum brand.
According to Calumet’s website, its refinery and production facility in Louisiana, Missouri, produces polyol ester-based synthetic lubricants, using fatty acids and alcohols as feedstock and a batch esterification process. Examples of polyol esters include dipentaerythritol, pentaerythritol and trimethylolpropane esters. Polyol esters typically reduce volatility and improve lubricity. Polyol esters are used in a variety of lubricants, including synthetic refrigeration lubricants, fire-resistant hydraulic fluids, jet aviation jet oils and passenger car motor oils.
The company said it has approximately $320 million of available liquidity as of March 31, including approximately $100 million of cash on hand and over $220 million of undrawn capacity on the partnership’s revolving credit facility.
“Calumet exited the first quarter with sufficient liquidity to appropriately fund its business operations in this fast-changing business environment,” H. Keith Jennings, chief financial officer of Calumet, said in the press release. “Over the past four years, we have taken significant steps to strengthen our balance sheet and solidify our sources of liquidity, improved inventory management, reduced capital expenditures, and entered into our third-party supply and offtake agreement, which increased our working capital flexibility. Our self-help initiatives and culture have eliminated costs across our system, further improving our financial resiliency, and in 2020 we have already achieved the full $20 million goal for adjusted [earnings before interest, taxes, depreciation and amortization] improvement through general and administrative cost reductions.”
Jennings continued, “We intend to manage our business to generate positive cash flow from operating activities, and will take further steps, as required, to manage costs and working capital through this period of global economic uncertainty.”
The company outlined additional responses to the Covid-19 pandemic.
“We continue to closely monitor the impacts of the Covid-19 pandemic, and our foremost concern is the safety of our employees and the communities we serve,” said Chief Executive Officer Steve Mawer. “Our specialty and fuels production facilities have continued to operate with limited disruption across our supply chain. The federal guidelines and state orders put in place to protect the public have deemed our businesses as essential. Our products and formulations are vital to a diverse set of markets, from healthcare and personal care products, to food processing and water treatment. While the demand landscape remains uncertain, to date our businesses have not experienced a significant step down in customer demand.”