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November 27, 2019

Volume 3 Issue 8

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Calumet Fined for Inaccurate Earnings Report

The Securities and Exchange Commission on Nov. 25 charged Calumet Specialty Products Partners L.P. with posting an inaccurate and misleading earnings release in 2017. Without admitting or denying the findings, Calumet consented to entry of the SEC’s order and agreed to pay a fine of $250,000 as part of a resolution to the investigation.

According to the SEC’s order – detailed in a Nov. 25 news release – in late 2017 Indianapolis-based Calumet implemented a new enterprise resource planning system, which resulted in various operating and reporting disruptions, including limitations on the company’s ability to maintain an effective internal control environment and meet external reporting deadlines. The SEC’s order found that the company was seven weeks late filing its financial results for the third quarter of 2017 and, in that filing, announced two material weaknesses in internal control over financial reporting.

The SEC said in its news release that Calumet’s ERP implementation issues and weakness in internal control over financial reporting continued into March 2018, pointing out that Calumet’s independent auditor noted on March 1 that year that Calumet’s pervasive ERP system issues had resulted in a delay in the company’s financial statement close process and execution of certain financial statement controls.

Despite these issues, Calumet issued an earnings release on March 8 announcing its 2017 financial results. SEC noted that 11 days later, Calumet disclosed that it expected its 2017 financial results to differ from what the company reported in its March 8 earnings release. Calumet’s shares declined over 8 percent that day, the SEC pointed out.

“On April 2 Calumet filed its 2017 annual report, which disclosed financial results that were materially different from what had been reported in the March 8 earnings release,” SEC stated. “For example, Calumet’s earnings release had under-reported the company’s 2017 net loss by 18 percent.” The annual report indicated a $103.8 million net loss for 2017, which is 18 percent higher than the $85.1 million net loss reported in the March 8 earnings news release.

Calumet CEO Tim Go said in a company news release yesterday, “We are pleased that the investigation has concluded regarding the company’s disclosures and procedures. With this matter now behind us, we can focus all our efforts on continuing out transformation, growing our core specialty business and enhancing value for our partners and unitholders.”