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Calumet Specialty Products Partners, L.P. Reports Second Quarter 2012 Results
Significant items to report are as follows:
-- Quarterly net income of $65.7 million.
-- Record quarterly Adjusted EBITDA of $122.3 million and Distributable Cash Flow of $94.9 million.
-- Quarterly distribution increased to $0.59 per unit, a 5.4% increase over the first quarter of 2012 and a 19.2% increase from the second quarter of 2011.

INDIANAPOLIS, Aug. 1, 2012 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," the "Company," "Calumet," "we," "our" or "us") reported net income for the quarter ended June 30, 2012 of $65.7 million compared to a net loss of $7.7 million for the same quarter in 2011. These results include $15.3 million of noncash unrealized derivative losses as compared to both $14.4 million of noncash debt extinguishment costs and $3.1 million of noncash unrealized derivative losses in the second quarter of 2011.  For the six months ended June 30, 2012, Calumet reported net income of $117.6 million compared to a net loss of $3.5 million for the same period in 2011. These results include $10.8 million of noncash unrealized derivative gains as compared to $14.4 million of noncash debt extinguishment costs and $3.5 million of noncash unrealized derivative losses for the six months ended June 30, 2011. 

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below in the section titled "Non-GAAP Financial Measures") were $104.1 million and $122.3 million, respectively, for the quarter ended June 30, 2012 as compared to $32.7 million and $40.8 million, respectively, for the same quarter in 2011. Distributable Cash Flow (as defined below in the section titled "Non-GAAP Financial Measures") for the second quarter of 2012 was $94.9 million compared to $25.4 million for the same quarter in 2011. The increase in Adjusted EBITDA quarter over quarter was primarily due to the cumulative effect of a $78.2 million increase in gross profit and a $23.6 million increase in realized derivative gains, partially offset by an $11.6 million increase in selling, general and administrative expenses primarily from acquisitions and acquisition related costs, a $2.3 million increase in transportation expense and $7.9 million of insurance recoveries in the 2011 period with no comparable recoveries in the 2012 period. See the below section titled "Non-GAAP Financial Measures" and the attached tables for a discussion of EBITDA, Adjusted EBITDA, Distributable Cash Flow and other non-generally accepted accounting principles ("non-GAAP") financial measures, definitions of these measures and reconciliations of such measures to the comparable U.S. generally accepted accounting principles ("GAAP") measures.

"Our quarterly results were driven by strength in both our specialty and fuel products segments.  We continued to benefit from widened crack spreads from Canadian heavy and Bakken crude oil differentials to NYMEX WTI in the second quarter.   We are also pleased to add the Royal Purple employees and business to Calumet," said Bill Grube, Calumet's Chief Executive Officer. "This acquisition further strengthens our commitment to the growth and downstream integration of our specialty products portfolio," said Grube.

Net income reported for quarter ended June 30, 2012 increased $73.3 million quarter over quarter primarily due to a $78.2 million increase in gross profit, discussed below, and a $23.6 million increase in realized derivative gains, partially offset by a $12.2 million increase in noncash unrealized derivative losses, which may or may not be realized in the future as the derivatives are settled, an $11.6 million increase in selling, general and administrative expenses, a $7.8 million increase in interest expense and $7.9 million of insurance recoveries in the 2011 period with no comparable recoveries in the 2012 period.  

Gross profit by segment for the three and six months ended June 30, 2012 and 2011 is as follows:


Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011


(Dollars in thousands, except per barrel data)


(Dollars in thousands, except per barrel data)













Specialty products

$

88,618


$

58,308


$

155,087


$

106,199

Fuel products

40,190


(7,743)


57,965


(8,770)

Total gross profit (1)

$

128,808


$

50,565


$

213,052


$

97,429


Specialty products gross profit per barrel

$

25.39


$

20.84


$

22.42


$

19.50

Fuel products gross profit per barrel (including
 hedging activities

$

8.36


$

(2.94)


$

5.65


$

(1.83)

Fuel products gross profit per barrel 
 (excluding hedging activities

$

 

18.91


$

6.47


$

15.02


$

7.25


(1) We define specialty products and fuel products gross profit as sales less the cost of crude oil and other feedstocks and other production-related expenses, the most significant portion of which include labor, plant fuel, utilities, contract services, maintenance, depreciation and processing materials.

The increase in specialty products segment gross profit of $30.3 million quarter over quarter was due primarily to a 24.7% increase in sales volume and an 8.8% decrease in the average cost of crude oil per barrel, partially offset by a 1.6% decrease in the average selling price per barrel.  Excluding incremental volumes from the Superior, TruSouth and Missouri Acquisitions, the specialty products average sales price per barrel increased 4.1% quarter over quarter.

The increase in fuel products segment gross profit of $47.9 million quarter over quarter was due primarily to an 82.9% increase in sales volume, mostly as a result of the Superior Acquisition, and a 14.6% decrease in the average cost of crude oil per barrel, partially offset by a 5.3% decrease in the average sales price per barrel (excluding the impact of those realized hedging losses reflected in sales) and increased realized losses on derivatives of $25.8 million.  Due primarily to the extremely volatile nature of the pricing differentials between NYMEX WTI and Canadian heavy and Bakken crude oils during 2012, certain derivative instruments were not accounted for as hedges.  As a result, we recorded a gain of $21.2 million to realized gain (loss) on derivative instruments instead of within gross profit in the unaudited condensed consolidated statements of operations for the second quarter of 2012.  Total loss on settled derivative instruments reflected in gross profit, as discussed above, and realized gain (loss) on derivative instruments was $32.0 million for the second quarter of 2012 an increased loss of $2.2 million quarter over quarter.

The increase in specialty products segment gross profit of $48.9 million for the six months ended June 30, 2012 compared to the same period in 2011 was due primarily to a 27.0% increase in sales volume and a 3.5% increase in the average selling price per barrel as discussed above, partially offset by a 0.7% increase in the average cost of crude oil per barrel.  Excluding incremental sales volumes from the Superior, TruSouth and Missouri Acquisitions, the specialty products average sales price per barrel increased 7.3% compared to same period in 2011.

The increase in fuel products segment gross profit of $66.7 million for the six months ended June 30, 2012 compared to the same period in 2011 was due primarily to a 113.6% increase in sales volume, mostly as a result of the Superior Acquisition, a 1.1% increase in the average sales price per barrel (excluding the impact of those realized hedging losses reflected in sales), a 5.2% decrease in the average cost of crude oil per barrel, partially offset by increased realized losses on derivatives of $49.8 million. Due primarily to the extremely volatile nature of the pricing differentials between NYMEX WTI and Canadian heavy and Bakken crude oils during 2012, certain derivative instruments were not accounted for as hedges.  As a result, we recorded a gain of $30.6 million to realized gain (loss) on derivative instruments instead of within gross profit in the unaudited condensed consolidated statements of operations for the six months ended June 30, 2012.  Total loss on settled derivative instruments reflected in gross profit, as discussed above, and realized gain (loss) on derivative instruments was $65.4 million for the six months ended June 30, 2012 an increased loss of $17.2 million year over year.

Quarterly Distribution

On July 20, 2012, the Company declared a quarterly cash distribution of $0.59 per unit on all outstanding units or $35.9 million for the second quarter of 2012. The distribution will be paid on August 14, 2012 to unitholders of record as of the close of business on August 3, 2012.  This quarterly distribution represents an increase of 5.4% over the first quarter of 2011 and a 19.2% increase from the second quarter of 2011. 

Operations Summary

The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased fuel product blendstocks such as ethanol and biodiesel in our fuel products segment.


Three Months Ended


Six Months Ended


June 30,


June 30,

 Sales volume (bpd):

2012


2011


2012


2011

Specialty products

38,352


30,747


38,005


30,089

Fuel products

52,846


28,901


56,352


26,530

Total  (1)

91,198


59,648


94,357


56,619









Total feedstock runs (2)

89,775


61,853


93,990


58,986

Facility production: (3)








Specialty products:








Lubricating oils

15,524


14,141


15,102


13,961

Solvents

10,189


11,051


9,658


10,592

Waxes

1,234


1,204


1,255


1,133

Fuels

914


435


680


533

Asphalt and other by-products

15,310


8,961


15,648


8,495

Total

43,171


35,792


42,343


34,714

Fuel products:








Gasoline

20,582


10,266


22,742


9,619

Diesel

20,176


11,424


21,648


11,095

Jet fuel

5,251


5,429


5,353


4,303

Heavy fuel oils and other

2,816


1,065


3,118


812

Total

48,825


28,184


52,861


25,829

Total facility production (3)

91,996


63,976


95,204


60,543

____________

(1)     Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to supply and/or processing agreements and sales of inventories.  Total sales volume includes the sale of purchased fuel product blendstocks such as ethanol and biodiesel in our fuel products segment sales.  The increase in total sales volume for the three and six months ended June 30, 2012 compared to the same periods in 2011 is due primarily to incremental sales of fuel products and asphalt subsequent to the Superior Acquisition on September 30, 2011, as well as increased sales volumes of lubricating oils.

(2)     Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our facilities and at certain third-party facilities pursuant to supply and/or processing agreements. The increase in the total feedstock runs for the three and six months ended June 30, 2012 compared to the same periods in 2011 is due primarily to incremental feedstock runs from the Superior refinery partially offset by decreased run rates at our Shreveport refinery during the second quarter of 2012 due to the ExxonMobil pipeline serving this refinery being shut down since April 28, 2012.

(3)     Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks at our facilities and at certain third-party facilities, pursuant to supply and/or processing agreements, including such agreements with LyondellBasell. The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstock and production of finished products and volume loss. The increase in total facility production for three and six months ended June 30, 2012 compared to the same periods in 2011 is due primarily to the operational items discussed above in footnote 2 of this table.

Derivatives Summary

The following table summarizes the derivative activity reflected in our unaudited condensed consolidated statements of operations and unaudited condensed statement of cash flows for the three and six months end June 30, 2012 and 2011.


Three Months Ended June 30,

Six Months Ended June 30,


2012

2011

2012

2011

Derivative loss reflected in sales                                        

$      (64,142)

$      (66,763)

$       (130,655)

$   (104,676)

Derivative gain reflected in cost of sales                          

10,913

39,333

34,624

58,434






Derivative loss reflected in gross profit                             

$      (53,229)

$      (27,430)

$         (96,031)

$     (46,242)






Realized gain (loss) on derivative instruments                

$         21,218

$        (2,370)

$            30,642

$        (1,984)

Unrealized gain (loss) on derivative instruments            

(15,280)

(3,124)

10,764

(3,541)

Derivative loss reflected in interest expense                    

(702)






Total derivative loss on unaudited condensed
         consolidated statements of operations                   

$      (47,291)

$      (32,924)

$         (54,625)

$     (52,469)











Total loss on derivatives settlements                                

$         33,962

$        28,404

$            65,979

$        43,788












Revolving Credit Facility Capacity

On June 30, 2012, Calumet had availability under its revolving credit facility of $388.4 million, based on a $564.0 million borrowing base, $175.6 million in outstanding standby letters of credit, and no outstanding borrowings. Calumet believes it will continue to have sufficient cash flow from operations and borrowing capacity to meet its financial commitments, minimum quarterly distributions to unitholders, debt service obligations, contingencies and anticipated capital expenditures.

About the Partnership

Calumet is a master limited partnership and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customized lubricating oils, solvents, waxes and asphalt used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel.  Calumet is based in Indianapolis, Indiana and has nine facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania, southeastern Texas and eastern Missouri.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, August 1, 2012, to discuss the financial and operational results for the second quarter of 2012. Anyone interested in listening to the presentation may call 866-202-3048 and enter passcode 82520227. For international callers, the dial-in number is 617-213-8843 and the passcode is 82520227.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 72610953. International callers can access the replay by calling 617-801-6888 and entering passcode 72610953. The replay will be available beginning Wednesday, August 1, 2012, at approximately 3:00 p.m. ET (2:00 p.m. CT) until Wednesday, August 15, 2012.

The information contained in this press release is available on Calumet's website at http://www.calumetspecialty.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release concerning results for the three and six months ended June 30, 2012 may constitute "forward-looking statements."  The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature.  These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us.  While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.  All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions.  Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.  Important factors that could cause actual results to differ materially from those in the forward-looking statements include: the overall demand for specialty hydrocarbon products, fuels and other refined products; our ability to produce specialty products and fuels that meet our customers' unique and precise specifications; the impact of fluctuations and rapid increases or decreases in crude oil and crack spread prices, including the resulting impact on our liquidity; the results of our hedging and other risk management activities; our ability to comply with financial covenants contained in our debt instruments; the availability of, and our ability to consummate, acquisition or combination opportunities and the impact of any completed acquisitions; labor relations; our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets, businesses or third-party product supply and processing relationships; our ability to timely and effectively integrate the operations of recently acquired businesses or assets, particularly those in new geographic areas or in new lines of business; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of our credit ratings and ability to receive open credit lines from our suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; our ability to access sufficient crude oil supply through long-term or month-to-month evergreen contracts and on the spot market; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations, including guidance related to the Dodd-Frank Wall Street Reform and Consumer Protection Act; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; our ability to access the debt and equity markets; accidents or other unscheduled shutdowns; and general economic, market or business conditions.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with Securities and Exchange Commission ("SEC"), including our 2011 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

We include in this press release the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net income (loss) and net cash provided by (used in) operating activities, our most directly comparable financial performance and liquidity measures calculated and presented in accordance with GAAP.

EBITDA, Adjusted EBITDA and Distributable Cash Flow are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

  • the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
  • the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
  • our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
  • the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay distributions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.

We define EBITDA for any period as net income (loss) plus interest expense (including debt issuance and extinguishment costs), income taxes and depreciation and amortization.

We define "Adjusted EBITDA" for any period as: (1) net income (loss) plus (2)(a) interest expense; (b) income taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) realized gains under derivative instruments excluded from the determination of net income (loss); (f) 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); (g) debt refinancing fees, premiums and penalties and (h) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; minus (3)(a)  unrealized gains from mark to market accounting for hedging activities; (b) realized losses under derivative instruments excluded from the determination of net income  and (c) other non-recurring expenses and unrealized items that reduced net income (loss) for a prior period, but represent a cash item in the current period.

We define "Distributable Cash Flow" for any period as Adjusted EBITDA less replacement capital expenditures, turnaround costs, cash interest expense (consolidated interest expense less non-cash interest expense) and income tax expense. Distributable Cash Flow is used by us, our investors and analysts to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash Flow that are presented in this release have been updated to reflect the calculation of "Consolidated Cash Flow" contained in the indentures governing our 9⅜% senior notes due May 1, 2019 that were issued in April and September 2011 (the "2019 Notes") and the indenture governing our 9⅝% senior notes due August 1, 2020 that were issued in June 2012 (the "2020 Notes").  We are required to report Consolidated Cash Flow to our holders of the 2019 Notes and 2020 Notes and Adjusted EBITDA to the lenders under our revolving credit facility, and these measures are used by them to determine our compliance with certain covenants governing those debt instruments.  Adjusted EBITDA and Distributable Cash Flow that are presented in this press release for prior periods have been updated to reflect the use of the new calculations.  Please see our filings with the SEC, including our 2011 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for additional details regarding the covenants governing our debt instruments.

EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA and Distributable Cash Flow, management recognizes and considers the limitations of these measurements. EBITDA, Adjusted EBITDA and Distributable Cash Flow do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA and Distributable Cash Flow are only three of the measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA and Distributable Cash Flow in the same manner. The following tables present a reconciliation of both net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow, and Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.

 

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)



For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2012


2011


2012


2011


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)













Sales

$

1,086,996


$

733,770


$

2,256,582


$

1,339,010

Cost of sales

958,188


683,205


2,043,530


1,241,581

Gross profit

128,808


50,565


213,052


97,429

Operating costs and expenses:








Selling, general and administrative

22,046


10,467


40,188


20,995

Transportation

24,957


22,691


52,499


45,766

Taxes other than income taxes

1,918


1,203


3,648


2,563

Insurance recoveries


(7,910)



(8,698)

Other

1,428


703


3,244


1,238

Operating income

78,459


23,411


113,473


35,565

Other income (expense):








Interest expense

(18,392)


(10,544)


(36,976)


(18,025)

Debt extinguishment costs


(15,130)



(15,130)

Realized gain (loss) on derivative instruments

21,218


(2,370)


30,642


(1,984)

Unrealized gain (loss) on derivative instruments

(15,280)


(3,124)


10,764


(3,541)

Other

(4)


274


114


103

Total other income (expense)

(12,458)


(30,894)


4,544


(38,577)

Net income (loss) before income taxes

66,001


(7,483)


118,017


(3,012)

Income tax expense

339


168


432


438

Net income (loss)

$

65,662


$

(7,651)


$

117,585


$

(3,450)

Allocation of net income (loss):








Net income (loss)

$

65,662


$

(7,651)


$

117,585


$

(3,450)

Less:








General partner's interest in net income (loss)

1,314


(153)


2,352


(69)

General partner's incentive distribution rights

1,096



1,619


Nonvested share based payments


377





685



Net income (loss) available to limited partners

$

62,875


$

(7,498)


$

112,929


$

(3,381)

Weighted average limited partner units outstanding








Basic


55,028



39,886



53,354



38,373

Diluted


55,074



39,886



53,380



38,373

Limited partners' interest basic and diluted net
    income (loss) per unit

$

1.14


$

(0.19)


$

2.12


$

(0.09)

Cash distributions declared per limited partner unit

$

0.56


$

0.475


$

1.09


$

0.945

 

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)



    June 30, 2012

December  31, 2011


(Unaudited)


ASSETS



Current assets:



Cash and cash equivalents                                                                                                                  

$

65,474

$

64

Accounts receivable, net

248,585

212,065

Inventories                                                                                                                                              

513,319

497,740

Derivative assets                                                                                                                                    

14,949

58,502

Prepaid expenses and other current assets                                                                                        

11,307

8,179

Deposits                                                                                                                                                   

7,869

2,094

Total current assets                                                                                                                                    

861,503

778,644

Property, plant and equipment, net                                                                                                        

856,510

842,101

Restricted cash

263,313

Goodwill                                                                                                                                                       

50,450

48,335

Other intangible assets, net                                                                                                                      

27,019

22,675

Other noncurrent assets, net                                                                                                                     

52,363

40,303

Total assets                                                                                                                                                 

$

2,111,158

$

1,732,058

LIABILITIES AND PARTNERS' CAPITAL



Current liabilities:



Accounts payable                                                                                                                                  

$

247,626

$

302,826

Accrued interest payable

10,348

10,500

Accrued salaries, wages and benefits                                                                                                 

12,277

13,481

Taxes payable                                                                                                                                        

15,140

13,068

Other current liabilities                                                                                                                          

7,823

4,600

Current portion of long-term debt                                                                                                      

773

551

Derivative liabilities                                                                                                                               

45,531

43,581

Total current liabilities

339,518

388,607

Pension and postretirement benefit obligations                                                                               

26,547

26,957

Other long-term liabilities                                                                                                                     

1,139

1,055

Long-term debt, less current portion                                                                                                  

862,255

586,539

Total liabilities                                                                                                                                            

1,229,459

1,003,158

Commitments and contingencies



Partners' capital:                                                                                                                                        



Partners' capital                                                                                                                                     

899,761

690,373

Accumulated other comprehensive income (loss)                                                                           

(18,062)

38,527

Total partners' capital                                                                                                                               

881,699

728,900

Total liabilities and partners' capital                                                                                                      

$

2,111,158

$

1,732,058

 

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



For the Six Months Ended


June 30,


2012


2011

Operating activities

     (Unaudited)


     (Unaudited)

Net income (loss)

$

117,585


$

(3,450)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:




Depreciation and amortization                                                                                                                   

39,286


28,964

Amortization of turnaround costs                                                                                                               

7,161


5,746

Non-cash interest expense                                                                                                                            

2,759


1,655

Non-cash debt extinguishment costs


14,401

Provision for doubtful accounts                                                                                                                  

267


255

Unrealized (gain) loss on derivative instruments                                                                                      

(10,764)


3,541

Non-cash equity based compensation

1,875


1,963

Other non-cash activities                                                                                                                              

813


(1,625)

Changes in assets and liabilities:




Accounts receivable                                                                                                                                  

(31,815)


(48,479)

Inventories                                                                                                                                                  

(4,828)


(111,555)

Prepaid expenses and other current assets                                                                                            

(2,856)


(1,747)

Derivative activity                                                                                                                                     

(590)


5,699

Turnaround costs                                                                                                                                       

(14,141)


(7,501)

Deposits                                                                                                                                                       

(5,775)


(12,735)

Accounts payable                                                                                                                                      

(57,872)


58,145

Accrued interest payable

(152)


4,689

Accrued salaries, wages and benefits                                                                                                     

(718)


383

Taxes payable                                                                                                                                            

2,072


1,186

Other liabilities                                                                                                                                            

2,389


(9,473)

Pension and postretirement benefit obligations                                                                                   

(142)


(620)

Net cash provided by (used in) operating activities

44,554


(70,558)

Investing activities




Additions to property, plant and equipment                                                                                                 

(22,456)


(20,635)

Proceeds from insurance recoveries - equipment


1,942

Acquisitions of TruSouth and Missouri

(46,402)


Change in restricted cash

(263,313)


Proceeds from sale of property, plant and equipment                                                                                

1,913


130

Net cash used in investing activities                                                                                                                

(330,258)


(18,563)

Financing activities




Proceeds from borrowings — revolving credit facility                                                                                 

1,055,168


692,543

Repayments of borrowings — revolving credit facility                                                                               

(1,055,168)


(675,285)

Repayments of borrowings — term loan credit facility                                                                              


(367,385)

Payments on capital lease obligations                                                                                                           

(881)


(534)

Proceeds from public offering of common units, net                                                                                  

146,597


92,290

Proceeds from senior notes offering

270,187


400,000

Debt issuance costs

(7,483)


(17,582)

Contributions from Calumet GP, LLC                                                                                                           

3,122


1,970

Common units repurchased for vested phantom unit grants                                                                    

(2,110)


(620)

Distributions to partners                                                                                                                                    

(58,318)


(36,258)

Net cash provided by financing activities                                                                                                      

351,114


89,139

Net increase in cash and cash equivalents                                                                                                    

65,410


18

Cash and cash equivalents at beginning of period                                                                                      

64


37

Cash and cash equivalents at end of period                                                                                                 

$

65,474


$

55

 

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW

(In thousands)



Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011

Reconciliation of Net Income (Loss) to EBITDA, Adjusted
  EBITDA and Distributable Cash Flow:

(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)









Net income (loss)

$

65,662


$

(7,651)


$

117,585


$

(3,450)

Add:








Interest expense

18,392


10,544


36,976


18,025

Debt extinguishment costs


15,130



15,130

Depreciation and amortization

19,662


14,532


39,286


28,964

Income tax expense

339


168


432


438

EBITDA

$

104,055


$

32,723


$

194,279


$

59,107

Add:








Unrealized (gain) loss on derivatives

$

15,280


$

3,124


$

(10,764)


$

3,541

Realized gain (loss) on derivatives, not included in net 
            income (loss)

(1,950)


1,394


(590)


5,137

Amortization of turnaround costs

3,639


2,533


7,161


5,746

Non-cash equity based compensation and other non-
            cash items

1,283


1,067


1,875


1,963

Adjusted EBITDA

$

122,307


$

40,841


$

191,961


$

75,494

Less:








Replacement capital expenditures (1)

$

3,900


$

3,505


$

9,141


$

7,596

Cash interest expense (2)

17,006


9,887


34,217


16,370

Turnaround costs

6,208


1,914


14,141


7,501

Income tax expense

339


168


432


438

Distributable Cash Flow

$

94,854


$

25,367


$

134,030


$

43,589














(1)  Replacement capital expenditures are defined as those capital expenditures, which do not increase operating capacity or reduce operating costs and exclude turnaround costs.

(2)  Represents consolidated interest expense less non-cash interest expense.

 

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

RECONCILIATION OF DISTRIBUTABLE CASH FLOW, ADJUSTED EBITDA AND EBITDA TO NET CASH
PROVIDED BY (USED IN) OPERATING
ACTIVITIES

(In thousands)



Six Months Ended


June 30,


2012


2011

Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash
  provided by (used in) operating activities:

(Unaudited)

 


(Unaudited)

 







Distributable Cash Flow

$

134,030


$

43,589

Add:




Replacement capital expenditures (1)                                                                                                       

9,141


7,596

Cash interest expense (2)                                                                                                                              

34,217


16,370

Turnaround costs                                                                                                                                           

14,141


7,501

Income tax expense                                                                                                                                      

432


438

Adjusted EBITDA

$

191,961


$

75,494

Less:




Unrealized (gain) loss on derivative instruments                                                                                      

(10,764)


3,541

Realized gain on derivatives, not included in net income (loss)                                                            

(590)


5,137

Amortization of turnaround costs                                                                                                              

7,161


5,746

Non-cash equity based compensation and other non-cash items                                                        

1,875


1,963

EBITDA

$

194,279


$

59,107

Add:




Unrealized (gain) loss on derivative instruments                                                                                      

(10,764)


3,541

Cash interest expense (2)                                                                                                                             

(34,217)


(16,370)

Non-cash equity based compensation                                                                                                       

1,875


1,963

Amortization of turnaround costs                                                                                                              

7,161


5,746

Income tax expense                                                                                                                                      

(432)


(438)

Provision for doubtful accounts                                                                                                                  

267


255

Debt extinguishment costs


(729)

Changes in assets and liabilities:




Accounts receivable                                                                                                                                      

(31,815)


(48,479)

Inventories                                                                                                                                                      

(4,828)


(111,555)

Other current assets                                                                                                                                       

(8,631)


(14,482)

Turnaround costs                                                                                                                                           

(14,141)


(7,501)

Derivative activity                                                                                                                                         

(590)


5,699

Accounts payable                                                                                                                                          

(57,872)


58,145

Other liabilities                                                                                                                                                                                                                                                                                                                         

3,591


(3,215)

Other, including changes in noncurrent liabilities                                                                                     

671


(2,245)

Net cash provided by (used in) operating activities                                                                                          

$

44,554


$

(70,558)


(1)  Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs.

(2)  Represents consolidated interest expense less non-cash interest expense.


CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

COMMODITY DERIVATIVE INSTRUMENTS

As of June 30, 2012

Fuel Products Segment

The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel, jet and gasoline swaps as of June 30, 2012.

 

 

                                                                                                                                        

Crude Oil and Fuel Products Swap Contracts by Expiration Dates

 

 

 

Barrels


 

 

 

BPD


Implied Crack

Spread ($/Bbl)

Third Quarter 2012

2,852,000


31,000


$     18.12

Fourth Quarter 2012

2,622,000


28,500


19.20

Calendar Year 2013

7,149,000


19,586


26.50

Calendar Year 2014

1,910,000


5,233


25.22

Totals

14,533,000





Average price





$     23.37

Specialty Products Segment

The following table provides a summary of Calumet's derivatives for its crude oil purchases as of June 30, 2012.

 

 

                                                                                                                                        

Crude Oil Swap Contracts by Expiration Dates

 

 

Barrels

Purchased


 

 

 

BPD


 

Average

Swap

($/Bbl)

Calendar Year 2013

200,000


548


$     84.75

Totals

200,000





Average price





$     84.75

The following table provides a summary of Calumet's derivatives for its natural gas purchases as of June 30, 2012.

 

 

Natural Gas Contracts by Expiration Dates

 

 

MMBtu


 

 

 $/MMBtu


Third Quarter 2012

1,200,000


$

4.03


Fourth Quarter 2012

600,000



4.08


Totals

1,800,000




Average price



$

4.05








 

SOURCE Calumet Specialty Products Partners, L.P.

Jennifer Straumins, +1-317-328-5660, jennifer.straumins@calumetspecialty.com