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Calumet Specialty Products Partners, L.P. Reports Fourth Quarter and Annual 2012 Results
Significant items to report are as follows:

INDIANAPOLIS, Feb. 13, 2013 /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 December 31, 2012 of $45.7 million compared to $26.9 million for the same quarter in 2011. These results include $7.6 million of noncash unrealized derivative gains as compared to $13.5 million of noncash unrealized derivative gains in the fourth quarter of 2011.  For the year ended December 31, 2012, Calumet reported net income of $205.7 million compared to net income of $43.0 million in 2011. Fiscal year 2012 results include $3.8 million of noncash unrealized derivative losses as compared to both $10.4 million of noncash unrealized derivative losses and $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) in 2011. 

Adjusted EBITDA (as defined below in the section of this press release titled "Non-GAAP Financial Measures") was $91.3 million for the quarter ended December 31, 2012 as compared to $65.0 million for the same quarter in 2011. Distributable Cash Flow (as defined below in the section of this press release titled "Non-GAAP Financial Measures") for the quarter ended December 31, 2012 was $54.6 million compared to $33.1 million for the same quarter in 2011. The $26.3 million increase in Adjusted EBITDA quarter over quarter was primarily due to a $61.6 million increase in gross profit partially offset by an $18.8 million increase in total in selling and general and administrative expenses ($6.3 million of which was noncash amortization expense) and an $8.9 million increase in realized derivative losses. Adjusted EBITDA resulting from acquisitions consummated in 2012 was $10.1 million for the quarter, while Calumet's legacy assets generated increased Adjusted EBITDA of $16.2 million quarter over quarter. See the section of this press release titled "Non-GAAP Financial Measures" and the included 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 fourth quarter results reflect an increase in gross profit as compared to the prior year period from both our legacy business and from our acquisitions completed in 2012.  We continue to benefit from the Canadian heavy crude oil differentials at both our Superior and Montana refineries.  Also, we have started to increase the supply of Bakken crude oil to our Shreveport refinery," said Bill Grube, Calumet's Chief Executive Officer.  "We are pleased to add the San Antonio refinery and its employees to Calumet starting in the first quarter of 2013.  This acquisition further diversifies our niche refining portfolio," added Grube.

Net income for the quarter ended December 31, 2012 increased $18.9 million quarter over quarter primarily due to a $61.6 million increase in gross profit, as discussed below, partially offset by a $10.9 million increase in selling expenses ($6.3 million of which was noncash amortization expense), a $7.9 million increase in general and administrative expenses, a $6.2 million increase in interest expense and an $8.9 million increase in realized derivative losses.  Included in general and administrative expenses were $3.5 million of nonrecurring professional fees related to acquisition activities. 

Gross profit by segment for the three months and years ended December 31, 2012 and 2011 are as follows:






For the Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011


(Dollars in thousands, except per barrel data)

 

Specialty products

$

62,967


$

64,659


$

308,629


$

258,648

Fuel products

78,752


15,441


204,548


15,482

Total gross profit

$

141,719


$

80,100


$

513,177


$

274,130









Specialty products gross profit per barrel

$

18.90


$

21.22


$

22.10


$

22.90

Fuel products gross profit per barrel (including hedging

  activities)

$

12.50


$

3.02


$

9.41


$

1.21

Fuel products gross profit per barrel (excluding hedging

  activities)

$

15.41


$

7.23


$

16.59


$

9.05


Gross Profit Comparison of Quarters Ended December 31, 2012 and December 31, 2011

Specialty Products

The decrease in specialty products segment gross profit of $1.7 million, or 2.6%, quarter over quarter was due primarily to a decrease in sales volumes for solvents and waxes as well as a decrease in the average sales price per barrel (excluding the impact of our 2012 acquisitions) of  lubricating oils, which declined more than the average cost of crude oil.  These reductions to gross profit were substantially offset by the additional gross profit generated from our 2012 acquisitions.

Fuel Products

The increase in fuel products segment gross profit of $63.3 million quarter over quarter was due primarily to a 23.3% increase in sales volume, mostly as a result of the Montana acquisition as well as higher sales volume from our legacy operations and a 113.1% increase in the gross profit per barrel due to increased crack spreads.  Legacy Calumet operations provided $50.0 million of the increase in gross profit, while newly acquired operations provided gross profit of $13.3 million in the quarter. Total loss on settled derivative instruments reflected in gross profit, as discussed above, and realized loss on derivative instruments was $27.3 million for the fourth quarter of 2012, an increased loss of $2.5 million quarter over quarter. 

Gross Profit Comparison of Quarters Ended December 31, 2012 and September 30, 2012

Specialty Products

Specialty products segment gross profit declined $27.6 million, or 30.5%, due primarily to a 10.4% decrease in sales volumes as well as a decrease in the average sales price per barrel of lubricating oils, which declined more than the average cost of crude oil, and less favorable product mix.

Fuel Products

The increase in fuel products segment gross profit of $10.9 million was due primarily to $13.3 million of gross profit from our newly acquired operations, partially offset by lower crack spreads realized in our legacy Calumet operations.

Gross Profit Comparison of Years Ended December 31, 2012 and December 31, 2011

Specialty Products

The increase in specialty products segment gross profit of $50.0 million year over year was due primarily to increased gross profit from newly acquired operations of $16.3 million and an increase in lubricating oils sales volume. 

Fuel Products

The increase in fuel products segment gross profit of $189.1 million year over year was due primarily to a 69.2% increase in sales volume, mostly as a result of the Superior and Montana acquisitions and an 83.3% increase in gross profit per barrel partially offset by increased realized losses on derivatives of $50.8 million.  Legacy Calumet assets provided $37.0 million of the increase in gross profit while newly acquired operations increased gross profit by $152.1 million. Total loss on settled derivative instruments reflected in gross profit and realized gain (loss) on derivative instruments was $144.6 million for the year ended December 31, 2012, an increased loss of $33.4 million year over year.

Quarterly Distribution

On January 14, 2013, the Company declared a quarterly cash distribution of $0.65 per unit ($2.60 on an annualized basis) on all outstanding units, or $44.3 million, for the fourth quarter of 2012. The distribution will be paid on February 14, 2013 to unitholders of record as of the close of business on February 4, 2013.  This quarterly distribution represents an increase of 4.8% over the third quarter of 2012 and a 22.6% increase over the fourth 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 the fuel products segment.   The tables include the results of operations at the Superior refinery commencing October 1, 2011, Missouri facility commencing January 3, 2012, TruSouth facility commencing January 6, 2012,  Royal Purple facility commencing July 3, 2012 and Montana refinery commencing October 1, 2012.



Three Months Ended December 31,


Year Ended December 31,


2012


2011


2012


2011

Sales volume:

(bpd)


(bpd)

Specialty products

36,207


33,120


38,258


30,948

Fuel products

68,478


55,533


59,531


35,186

Total  (1)

104,685


88,653


97,789


66,134









Total feedstock runs (2)

105,107


95,308


97,600


69,295

Facility production: (3)








Specialty products:








Lubricating oils

13,787


14,751


14,524


14,427

Solvents

8,995


9,887


9,332


10,508

Waxes

1,314


1,373


1,280


1,269

Packaged and synthetic specialty products (4)

1,379



1,351


Fuels

786


667


669


556

Asphalt and other by-products

15,679


14,336


14,219


10,090

Total

41,940


41,014


41,375


36,850









Fuel products:








Gasoline

28,495


24,532


24,394


13,409

Diesel

24,810


23,102


22,438


14,721

Jet fuel

4,341


4,597


4,325


4,520

Heavy fuel oils and other

4,434


3,503


3,640


1,409

Total

62,080


55,734


54,797


34,059

Total facility production (3)

104,020


96,748


96,172


70,909

___________


(1) Total sales volume includes sales from the production at Calumet's 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 as components of finished fuel products in

      our fuel products segment sales.

 

      The increase in total sales volume in 2012 compared to 2011, as well as quarter over quarter, is due primarily to

      incremental sales of fuel products, asphalt and packaged and synthetic specialty products subsequent to the

      Superior, Missouri, TruSouth, Royal Purple and Montana acquisitions.


(2) Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at Calumet's

      facilities and at certain third-party facilities pursuant to supply and/or processing agreements.

 

      The increase in total feedstock runs in 2012 compared to 2011 is due primarily to incremental feedstock runs

      from the Superior, Missouri, TruSouth, Royal Purple and Montana acquisitions, partially offset by decreased run

      rates at the Shreveport refinery during 2012 due to the April 28, 2012 shutdown of the ExxonMobil pipeline

      serving this refinery for a portion of its crude oil requirements. The increase in the total feedstock runs quarter

      over quarter is due primarily to incremental feedstock runs from the acquisition of the Montana refinery on

      October 1, 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 Calumet's facilities and at certain third-party facilities pursuant to

      supply and/or processing agreements, including the LyondellBasell agreements. The difference between total

      facility production and total feedstock runs is primarily a result of the time lag between the input of feedstocks

      and production of finished products and volume loss. The increase in total facility production in 2012 over 2011 is

      due primarily to the operational items discussed above in footnote 2 of this table.


(4) Represents packaged and synthetic specialty products at the Royal Purple, TruSouth and Missouri facilities.


Derivatives Summary

The following table summarizes the derivative activity reflected in the consolidated statements of operations and consolidated statements of cash flows for the three months and years ended December 31, 2012 and 2011.



Three Months Ended December 31,


Year Ended December 31,


2012


2011


2012


2011


(In thousands)


(In thousands)

Derivative loss reflected in sales

$

(25,609)


$

(45,950)


$

(205,836)


$

(211,751)

Derivative gain reflected in cost of sales

9,321


23,224


51,751


108,433

Derivative loss reflected in gross profit

$

(16,288)


$

(22,726)


$

(154,085)


$

(103,318)









Realized gain (loss) on derivative instruments

$

(11,034)


$

(2,111)


$

9,452


$

(7,909)

Unrealized gain (loss) on derivative instruments

7,550


13,493


(3,787)


(10,383)

Derivative loss reflected in interest expense




(702)

Total derivative loss on consolidated statements of operations

$

(19,772)


$

(11,344)


$

(148,420)


$

(122,312)

Total loss on derivatives settlements

$

(33,258)


$

(18,205)


$

(149,665)


$

(100,932)


Revolving Credit Facility Capacity

On December 31, 2012, Calumet had availability under its revolving credit facility of $355.1 million, based on a $577.5 million borrowing base, $222.4 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 eleven facilities located in northwest Louisiana, northwest Wisconsin, northern Montana, western Pennsylvania, Texas and eastern Missouri.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, February 13, 2013, to discuss the financial and operational results for the fourth quarter of 2012. Anyone interested in listening to the presentation may call 800-215-2410 and enter passcode 30352716. For international callers, the dial-in number is 617-597-5410 and the passcode is 30352716.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 83503566. International callers can access the replay by calling 617-801-6888 and entering passcode 83503566. The replay will be available beginning Wednesday, February 13, 2013, at approximately 3:00 p.m. ET (2:00 p.m. CT) until Wednesday, February 27, 2013.

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 months and year ended December 31, 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 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 they are made.  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 9 3/8% senior notes due May 1, 2019 that were issued in April and September 2011 (the "2019 Notes") and the indenture governing our 9 5/8% 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, operating income, 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 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 CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

 


For the Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011


(Unaudited)


(Unaudited)



Sales

$

1,220,882


$

1,018,133


$

4,657,282


$

3,134,923

Cost of sales

1,079,163


938,033


4,144,105


2,860,793

Gross profit

141,719


80,100


513,177


274,130

Operating costs and expenses:








Selling

14,888


4,018


41,556


12,237

General and administrative

19,571


11,675


60,904


38,599

Transportation

26,997


24,725


107,900


94,187

Taxes other than income taxes

3,702


1,415


9,073


5,661

Insurance recoveries




(8,698)

Other

2,960


5,071


7,816


6,852

Operating income

73,601


33,196


285,928


125,292

Other income (expense):








Interest expense

(24,326)


(18,145)


(85,573)


(48,747)

Debt extinguishment costs




(15,130)

Realized gain (loss) on derivative instruments

(11,034)


(2,111)


9,452


(7,909)

Unrealized gain (loss) on derivative instruments

7,550


13,493


(3,787)


(10,383)

Other

88


694


470


842

Total other expense

(27,722)


(6,069)


(79,438)


(81,327)

Income before income taxes

45,879


27,127


206,490


43,965

Income tax expense

143


255


753


929

Net income

$

45,736


$

26,872


$

205,737


$

43,036

Allocation of net income:








Net income

$

45,736


$

26,872


$

205,737


$

43,036

Less:








General partner's interest in net income

915


538


4,115


861

General partner's incentive distribution rights

2,177


282


5,433


322

Non-vested share based payments

252



1,199


Net income available to limited partners

$

42,392


$

26,052


$

194,990


$

41,853

Weighted average limited partner units outstanding:








Basic

57,746


51,589


55,559


42,599

Diluted

57,898


51,600


55,677


42,644

Limited partners' interest basic net income per unit

$

0.73


$

0.50


$

3.51


$

0.98

Limited partners' interest diluted net income per unit

$

0.73


$

0.50


$

3.50


$

0.98

Cash distributions declared per limited partner unit

$

0.62


$

0.50


$

2.30


$

1.94


 


CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 


December 31, 2012


December 31, 2011


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$                    32,174


$                           64

Accounts receivable, net

226,783


212,065

Inventories

553,574


497,740

Derivative assets

3,088


58,502

Prepaid expenses and other current assets

10,368


8,179

Deposits

7,959


2,094

Total current assets

833,946


778,644

Property, plant and equipment, net

986,875


842,101

Goodwill

187,013


48,335

Other intangible assets, net

197,083


22,675

Other noncurrent assets, net

48,128


40,303

Total assets

$               2,253,045


$               1,732,058

LIABILITIES AND PARTNERS' CAPITAL             




Current liabilities:




Accounts payable

$                  333,416


$                  302,826

Accrued interest payable

23,526


10,500

Accrued salaries, wages and benefits

20,067


13,481

Accrued income taxes payable

27,577


452

Other taxes payable

13,676


12,616

Other current liabilities

8,397


4,600

Current portion of long-term debt

771


551

Derivative liabilities

47,968


43,581

Total current liabilities

475,398


388,607

Pension and postretirement benefit obligations

23,999


26,957

Other long-term liabilities

1,125


1,055

Long-term debt, less current portion

862,730


586,539

Total liabilities

1,363,252


1,003,158

Commitments and contingencies




Partners' capital:




Partners' capital

915,272


690,373

Accumulated other comprehensive income (loss)

(25,479)


38,527

Total partners' capital

889,793


728,900

Total liabilities and partners' capital

$               2,253,045


$               1,732,058





 


CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 


Year Ended


December 31,


2012


2011

Operating activities

(Unaudited)

Net income

$

205,737


$

43,036

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

91,669


63,009

Amortization of turnaround costs

13,356


11,384

Non-cash interest expense

6,081


3,728

Non-cash debt extinguishment costs


14,401

Provision for doubtful accounts

22


380

Unrealized (gain) loss on derivative instruments

3,787


10,383

Loss on disposal of fixed assets

2,488


1,525

Non-cash equity based compensation

6,512


4,895

Other non-cash activities

1,070


74

Changes in assets and liabilities:




Accounts receivable

34,609


(54,484)

Inventories

17,898


(167,028)

Prepaid expenses and other current assets

21,680


(425)

Derivative activity

(5,033)


11,742

Turnaround costs

(14,899)


(14,052)

Deposits

(5,852)


Other assets

(4,007)


(426)

Accounts payable

11,859


131,261

Accrued interest payable

13,026


7,350

Accrued salaries, wages and benefits

1,039


4,066

Accrued income taxes payable

(518)


366

Other taxes payable

(14,709)


5,528

Other liabilities

1,932


(12,033)

Pension and postretirement benefit obligations

(7,639)


(902)

Net cash provided by operating activities

380,108


63,778

Investing activities




Additions to property, plant and equipment

(57,053)


(49,478)

Proceeds from insurance recoveries — equipment


1,942

Cash paid for acquisitions, net of cash acquired

(569,191)


(413,173)

Proceeds from sale of property, plant and equipment

2,010


285

Net cash used in investing activities

(624,234)


(460,424)

Financing activities




Proceeds from borrowings — revolving credit facility

1,558,323


1,598,680

Repayments of borrowings — revolving credit facility

(1,558,323)


(1,609,512)

Repayments of borrowings — term loan credit facility


(367,385)

Payments on capital lease obligations

(1,499)


(1,069)

Proceeds from public offerings of common units, net

146,558


294,702

Proceeds from senior notes offerings

270,187


586,000

Debt issuance costs

(7,622)


(27,666)

Contributions from Calumet GP, LLC

3,122


6,286

Units repurchased for phantom unit grants

(2,110)


(620)

Distributions to partners

(132,400)


(82,743)

Net cash provided by financing activities

276,236


396,673

Net increase (decrease) in cash and cash equivalents

32,110


27

Cash and cash equivalents at beginning of year

64


37

Cash and cash equivalents at end of year

$

32,174


$

64


 


CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

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

(In thousands)

 

 


For the Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011

Reconciliation of Net income to EBITDA, Adjusted

 EBITDA and Distributable Cash Flow:

(Unaudited)


(Unaudited)

Net income

$

45,736


$

26,872


$

205,737


$

43,036

Add:








Interest expense

24,326


18,145


85,573


48,747

Debt extinguishment costs




15,130

Depreciation and amortization

27,841


19,365


91,669


63,009

Income tax expense

143


255


753


929

EBITDA

$

98,046


$

64,637


$

383,732


$

170,851

Add:








Unrealized (gain) loss on derivatives

(7,550)


(13,493)


3,787


10,383

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

     income

(5,937)


6,630


(5,033)


10,996

Amortization of turnaround costs

3,041


3,096


13,356


11,384

Non-cash equity based compensation and other non-

     cash items

3,660


4,108


8,768


7,406

Adjusted EBITDA

$

91,260


$

64,978


$

404,610


$

211,020

Less:








Replacement capital expenditures (1)

13,137


9,658


28,341


23,862

Cash interest expense (2)

22,654


16,780


79,492


45,019

Turnaround costs

758


5,203


14,899


14,052

Income tax expense

143


255


753


929

Distributable Cash Flow

$

54,568


$

33,082


$

281,125


$

127,158


(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 OPERATING ACTIVITIES

(In thousands)

 


Year Ended December 31,


2012


2011

Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to Net cash

 provided by operating activities:

(Unaudited)

Distributable Cash Flow

$

281,125


$

127,158

Add:




Replacement capital expenditures (1)

28,341


23,862

Cash interest expense (2)

79,492


45,019

Turnaround costs

14,899


14,052

Income tax expense

753


929

Adjusted EBITDA

$

404,610


$

211,020

Less:




Unrealized loss on derivative instruments

3,787


10,383

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

(5,033)


10,996

Amortization of turnaround costs

13,356


11,384

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

8,768


7,406

EBITDA

$

383,732


$

170,851

Add:




Unrealized loss on derivative instruments

3,787


10,383

Cash interest expense (2)

(79,492)


(45,019)

Non-cash equity based compensation

6,512


4,895

Amortization of turnaround costs

13,356


11,384

Income tax expense

(753)


(929)

Provision for doubtful accounts

22


380

Debt extinguishment costs


(729)

Changes in assets and liabilities:




Accounts receivable

34,609


(54,484)

Inventories

17,898


(167,028)

Other current assets

15,828


(425)

Turnaround costs

(14,899)


(14,052)

Derivative activity

(5,033)


11,742

Other noncurrent assets

(4,007)


(426)

Accounts payable

11,859


131,261

Accrued interest payable

13,026


7,350

Accrued income taxes payable

(518)


366

Other current liabilities

(11,738)


(2,439)

Other, including changes in non-current liabilities

(4,081)


697

Net cash provided by operating activities

$

380,108


$

63,778


(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 December 31, 2012

Fuel Products Segment

The following table provides a summary of Calumet's derivatives and implied crack spreads for its crude oil, diesel, jet and gasoline swaps, as well as Calumet's Canadian heavy crude oil versus NYMEX WTI crude oil basis swaps as of December 31, 2012.


Swap Contracts by Expiration Dates       

Barrels


BPD


Implied Crack

Spread ($/Bbl)

First Quarter 2013

2,295,000


25,500


$

23.77

Second Quarter 2013

2,366,000


26,000


27.77

Third Quarter 2013

1,794,000


19,500


28.11

Fourth Quarter 2013

1,472,000


16,000


29.55

Calendar Year 2014

5,110,000


14,000


26.70

Calendar Year 2015

4,781,500


13,100


26.32

Totals     

17,818,500





Average price     





$

26.74














The following table provides a summary of Calumet's Canadian heavy crude oil versus NYMEX WTI crude oil basis swaps as of December 31, 2012.


Crude Oil Basis Swap Contracts

by Expiration Dates

Barrels Purchased


BPD


Average Differential to

NYMEX WTI ($/Bbl)

First Quarter 2013

180,000


2,000


$

(23.75)

Second Quarter 2013

364,000


4,000


(27.38)

Third Quarter 2013

184,000


2,000


(23.75)

Fourth Quarter 2013

184,000


2,000


(23.75)

Totals     

912,000





Average differential    





$

(25.20)















 

SOURCE Calumet Specialty Products Partners, L.P.

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