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”).

The Company’s operations are managed by the CODM using the following reportable segments:

•

Specialty Products. The specialty products segment produces a variety of lubricating oils, solvents, waxes, synthetic lubricants and other products which are sold to customers who purchase these products primarily as raw material components for basic automotive, industrial and consumer goods. Specialty products also include synthetic lubricants used in manufacturing, mining and automotive applications.


•	Fuel Products. The fuel products segment produces primarily gasoline, diesel, jet fuel and asphalt which are primarily sold to customers located in the PADD 3 and PADD 4 areas within the U.S.


•	Corporate. The corporate segment primarily consists of general and administrative expenses not allocated to the specialty products or fuel products segments.

Prior to the sale of Anchor, as disclosed in Note 4 - “Discontinued Operations,” the Company reported an oilfield services segment, which was solely comprised of Anchor. As a result of Anchor’s classification as a discontinued operation, the Company removed the oilfield services segment.

During the third quarter of 2019, the CODM changed how the Company assesses performance, allocates resources, and allocates certain costs. In response to those changes, a corporate segment was added. Prior to the third quarter of 2019, various pricing models were used in determining the calculation of inter-segment sales. Beginning in the third quarter of 2019, all inter-segment sales are calculated using market-based transfer pricing. Further, cost allocations were modified to conform to the new segment alignments. This change in management reporting has resulted in an increase in the inter-segment sales reported by the Company’s specialty products operating segment. Prior period amounts have been recast to conform with the current presentation. These changes in management reporting had no impact on consolidated revenue, segment reporting of external sales or consolidated Adjusted EBITDA.

The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies as disclosed in Note 2 - “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 at cost plus a specified mark-up. The Company will periodically refine its expense allocation methodology for its segment reporting as more refined information becomes available and the industry or market changes. 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, premiums and penalties; (f) any net loss realized in connection with an asset sale that was deducted in computing net income (loss) and (g) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense.

The Company manages its assets on a total company basis, not by segment. Therefore, management does not review any asset information by segment and, accordingly, the Company does not report asset information by segment.

Reportable segment information is as follows (in millions):



Year Ended December 31, 2019	Specialty Products			Fuel Products ⁽¹⁾			Corporate			Eliminations			Consolidated Total
Sales:
External customers	$	1,354.1		$	2,098.5		$	—		$	—		$	3,452.6
Inter-segment sales	93.2			47.7			—			(140.9		)	—
Total sales	$	1,447.3		$	2,146.2		$	—		$	(140.9	)	$	3,452.6
Income from unconsolidated affiliates	$	3.8		$	—		$	—		$	—		$	3.8

Adjusted EBITDA	$	220.2		$	182.0		$	(97.6	)	$	—		$	304.6
Reconciling items to net loss:
Depreciation and amortization	47.1			74.7			7.6			—			129.4
Loss on impairment and disposal of assets	—			11.6			25.4			—			37.0
Loss on sale of business, net	—			8.7			—			—			8.7
Interest expense	—			16.3			118.3			—			134.6
Debt extinguishment costs	—			—			2.2			—			2.2
Unrealized loss on derivatives	1.0			25.1			—			—			26.1
Gain on sale of unconsolidated affiliate	(1.2		)	—			—			—			(1.2		)
Other non-recurring expenses													3.5
Equity based compensation and other items													7.4
Income tax expense													0.5
Net loss from continuing operations													$	(43.6	)

Year Ended December 31, 2018	Specialty Products			Fuel Products			Corporate			Eliminations			Consolidated Total
Sales:
External customers	$	1,382.4		$	2,115.1		$	—		$	—		$	3,497.5
Inter-segment sales	98.1			81.3			—			(179.4		)	—
Total sales	$	1,480.5		$	2,196.4		$	—		$	(179.4	)	$	3,497.5
Loss from unconsolidated affiliates	$	(3.7	)	$	—		$	—		$	—		$	(3.7	)

Adjusted EBITDA	$	162.2		$	199.2		$	(97.5	)	$	—		$	263.9
Reconciling items to net loss:
Depreciation and amortization	50.1			72.2			8.6			—			130.9
Gain on sale of business, net	—			4.8			—			—			(4.8		)
Interest expense	0.2			23.1			132.2			—			155.5
Debt extinguishment costs	—			—			58.8			—			58.8
Unrealized gain on derivatives	(1.0		)	(29.2		)	—			—			(30.2		)
Equity-based compensation and other items													4.0
Income tax expense													0.7
Net loss from continuing operations													$	(51.0	)



Year Ended December 31, 2017	Specialty Products			Fuel Products			Corporate			Eliminations			Consolidated Total
Sales:
External customers	$	1,300.4		$	2,463.4		$	—		$	—		$	3,763.8
Inter-segment sales	78.1			63.0			—			(141.1		)	—
Total sales	$	1,378.5		$	2,526.4		$	—		$	(141.1	)	$	3,763.8
Loss from unconsolidated affiliates	$	—		$	—					$	—		$	—

Adjusted EBITDA	$	188.3		$	225.8		$	(99.8	)	$	—		$	314.3
Reconciling items to net loss:
Depreciation and amortization	69.1			106.4			3.6			—			179.1
Loss on impairment and disposal of assets	60.3			147.0			—			—			207.3
Gain on sale of business, net	—			(236.0		)	—			—			(236.0		)
Interest expense	(1.7		)	12.8			172.0			—			183.1
Unrealized gain on derivatives	(1.0		)	(2.6		)	—			—			(3.6		)
Equity-based compensation and other items													15.8
Income tax benefit													(0.1		)
Net loss from continuing operations													$	(31.3	)

⁽¹⁾

Adjusted EBITDA for the Fuel Products segment for the year ended December 31, 2019 included a $6.5 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 2012 pipeline rupture 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 crude transportation expenses.

Geographic Information

International sales accounted for less than 10% of consolidated sales in each of the three years ended December 31, 2019, 2018 and 2017. Substantially all of the Company’s long-lived assets are domestically located.

Product Information

The Company offers specialty products primarily in categories consisting of lubricating oils, solvents, waxes, packaged and synthetic specialty products and other. Fuel products categories primarily consist of gasoline, diesel, jet fuel, asphalt, heavy fuel oils and other. The following table sets forth the major product category sales for each segment (dollars in millions):



	Year Ended December 31,
	2019				2018				2017
Specialty products:
Lubricating oils	$	593.1	17.2	%	$	600.1	17.2	%	$	584.2	15.5	%
Solvents	325.9		9.4	%	331.9		9.5	%	274.4		7.3	%
Waxes	119.3		3.4	%	117.0		3.3	%	117.2		3.1	%
Packaged and synthetic specialty products	230.8		6.7	%	256.8		7.3	%	260.7		6.9	%
Other	85.0		2.5	%	76.6		2.2	%	63.9		1.7	%
Total	1,354.1		39.2	%	1,382.4		39.5	%	1,300.4		34.5	%
Fuel products:
Gasoline	679.6		19.7	%	683.1		19.5	%	948.5		25.2	%
Diesel	859.1		24.9	%	910.0		26.0	%	877.9		23.4	%
Jet fuel	134.6		3.9	%	100.1		2.9	%	135.0		3.6	%
Asphalt, heavy fuel oils and other	425.2		12.3	%	421.9		12.1	%	502.0		13.3	%
Total	2,098.5		60.8	%	2,115.1		60.5	%	2,463.4		65.5	%
Consolidated sales	$	3,452.6	100.0	%	$	3,497.5	100.0	%	$	3,763.8	100.0	%

Major Customers

During the years ended December 31, 2019, 2018 and 2017, the Company had no customer that represented 10% or greater of consolidated sales.

Major Suppliers

During the years ended December 31, 2019, 2018 and 2017, the Company had two suppliers that supplied approximately 62.3%, 58.8% and 65.7%, respectively, of its crude oil supply.