INDIANAPOLIS, Feb. 16, 2011 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (Nasdaq: CLMT) (the "Partnership," "Calumet," "we," "our" or "us") reported net income for the quarter ended December 31, 2010 of $9.5 million compared to $8.2 million for the same quarter in 2009. For the year ended December 31, 2010, Calumet reported net income of $16.7 million compared to $61.8 million in 2009. These results include noncash unrealized derivative losses of $15.8 million and gains of $23.7 million for the years ended December 31, 2010 and 2009, respectively. Calumet reported net cash provided by operating activities of $134.1 million for the year ended December 31, 2010 as compared to $100.9 million in 2009.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined by the Partnership's credit agreements) were $34.1 million and $40.8 million, respectively, for the quarter ended December 31, 2010 as compared to $32.2 million and $26.8 million, respectively, for the same quarter in 2009. Distributable Cash Flow (as defined below) for the quarter ended December 31, 2010 was $31.5 million compared to $18.4 million for the same quarter in 2009. The increase in Adjusted EBITDA quarter over quarter was due primarily to higher gross profit, discussed below, partially offset by decreased realized gains on derivatives and increased transportation expense. (See the section of this press release titled "Non-GAAP Financial Measures" and the attached tables for 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 GAAP measures.)
"We are very pleased with our results for the fourth quarter. Our specialty products production levels and gross profit significantly improved in the third and fourth quarters of 2010, with our specialty products production reaching the highest point in our history for any fourth quarter. We continue to focus on increased run rates to meet higher demand for our specialty products and to benefit from current fuel products crack spreads," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "As a result of these improvements and our outlook, we raised our quarterly distribution to $0.47 per unit for the fourth quarter of 2010, a $0.01 per unit increase over the prior quarter," said Grube.
The $1.3 million improvement in net income quarter over quarter was due primarily to an increase of $20.7 million in gross profit, partially offset by decreased realized derivative gains of $4.7 million and higher transportation expense of $3.8 million due to increased sales volume. These results were also impacted by an increase in noncash unrealized derivative losses of $8.1 million, which may or may not be realized in the future as the derivatives are settled.
Gross profit by segment is as follows for the three months and year ended December 31, 2010 and 2009:
(In thousands, except per barrel data)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2010 2009 2010 2009
---- ---- ---- ----
(In thousands, except per barrel data)
Specialty products $56,710 $27,497 $187,416 $141,577
Fuel products (1,362) 7,111 11,333 31,525
------ ----- ------ ------
Total gross profit
(1) $55,348 $34,608 $198,749 $173,102
======= ======= ======== ========
Specialty products
gross profit per
barrel $19.75 $11.52 $17.41 $15.11
====== ====== ====== ======
$(0.55) $2.53 $1.19 $2.75
====== ===== ===== =====
Fuel products gross
profit per barrel
(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 of $29.2 million in specialty products segment gross profit quarter over quarter was due primarily to an increase of 19.4% in the average selling price per barrel, while the average cost of crude oil per barrel increased by only 13.7%. Also, specialty products sales volume increased 20.3%, due primarily to improvements in overall specialty products demand under improved economic conditions and from the addition of sales volumes under our specialty products agreements with Houston Refining LP, a wholly owned subsidiary of LyondellBasell ("Houston Refining"), which we entered into during the fourth quarter of 2009 (the "LyondellBasell Agreements").
The decrease of $8.5 million in fuel products segment gross profit quarter over quarter was due primarily to a 12.0% decrease in fuel products sales volume as a result of lower overall throughput rates at our Shreveport refinery due to the scheduled turnaround of various fuels processing units during the fourth quarter of 2010 as well as a net $10.3 million decrease in derivative gains on our fuel products crack spread cash flow hedges. Partially offsetting this decrease was a slight improvement in crack spreads as the average selling price per barrel of our fuel products increased by 17.5%, driven by market conditions, while the average cost of crude oil per barrel increased by 14.1%.
Quarterly Distribution
On January 14, 2011, the Partnership declared a quarterly cash distribution of $0.47 per unit for the quarter ended December 31, 2010 on all outstanding units. The distribution was paid on February 14, 2011 to unitholders of record as of the close of business on February 4, 2011. This distribution represents an increase of $0.01 per unit from the third quarter of 2010.
Conversion of Subordinated Units
On February 14, 2011, we satisfied the last of the earnings and distribution tests contained in our partnership agreement for the conversion of all 13,066,000 outstanding subordinated units into common units on a one-for-one basis. The last of these requirements was met upon payment of the quarterly distribution on February 14, 2011. On February 16, 2011, all of the subordinated units converted to common units.
Operations Summary
The following table sets forth unaudited information about our combined operations. Facility production volume differs from sales volume due to changes in inventory.
Three Months Ended December
31, Year Ended December 31,
2010 2009 2010 2009
---- ---- ---- ----
Sales volume
(bpd):
Specialty
products 31,217 25,939 29,496 25,671
Fuel products 26,847 30,517 26,172 31,415
--- ------ ------ ------
Total (1) 58,064 56,456 55,668 57,086
Total feedstock
runs (bpd) (2) 56,500 57,148 55,957 60,081
Facility
production
(bpd): (3)
Specialty
products:
Lubricating oils 14,966 12,279 13,697 11,681
Solvents 9,666 7,397 9,347 7,749
Waxes 1,408 952 1,220 1,049
Fuels 1,132 979 1,050 853
Asphalt and
other by-
products 7,673 7,219 6,907 7,574
----- ----- ----- -----
Total 34,845 28,826 32,221 28,906
------ ------ ------ ------
Fuel products:
Gasoline 8,991 10,043 8,754 9,892
Diesel 11,417 13,194 10,800 12,796
Jet fuel 4,110 5,299 5,004 6,709
By-products 379 370 535 489
--- --- --- ---
Total 24,897 28,906 25,093 29,886
------ ------ ------ ------
Total facility
production (3) 59,742 59,742 57,314 58,792
====== ====== ====== ======
(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.
(2) Total feedstock runs represent the barrels per day of crude oil and
other feedstocks processed at our facilities and certain third-party
facilities pursuant to supply and/or processing agreements. The
decrease in feedstock runs quarter over quarter is due primarily to
lower overall throughput rates at our Shreveport refinery due to the
scheduled turnaround of various fuels processing units during the fourth
quarter of 2010, partially offset by higher throughput rates at our
Princeton and Cotton Valley refineries and the addition of volumes under
the LyondellBasell Agreements.
The decrease in feedstock runs in 2010 compared to 2009 is due primarily
to our decision to reduce crude oil run rates at our Shreveport refinery
during the entire first quarter of 2010 because of the poor economics of
running additional barrels, the failure of an environmental operating
unit during the first quarter of 2010 and scheduled turnarounds
completed in the second and fourth quarters related to various operating
units at our Shreveport refinery. These decreases were partially offset
by higher year-long throughput rates at our Cotton Valley refinery and
the addition of volumes under the LyondellBasell Agreements.
(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 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 feedstock and production of finished products
and volume loss.
The increase in the production of specialty products for the fourth
quarter of 2010 compared to the same period in 2009 is primarily the
result of the addition of volumes under the LyondellBasell Agreements
and increased production at our Princeton and Cotton Valley refineries.
The reduction in production of fuel products quarter over quarter was
due primarily to lower overall throughput rates at our Shreveport
refinery, as discussed above in footnote 2 of this table.
The increase in the production of specialty products in 2010 compared to
2009 is primarily the result of the addition of volumes under the
LyondellBasell Agreements and higher throughput rates at our Cotton
Valley refinery. The reduction in production of fuel products in 2010 is
due primarily to reduced feedstock runs at our Shreveport refinery as
discussed above in footnote 2 of this table.
Credit Agreement Covenant Compliance
Compliance with the financial covenants under Calumet's credit agreements is measured quarterly based upon performance over the most recent four fiscal quarters. As of December 31, 2010, Calumet continued to be in compliance with all financial covenants under its credit agreements.
While assurances cannot be made regarding our future compliance with these financial covenants and subject to the inherent uncertainty of the crude oil pricing environment and general economic conditions, Calumet believes that it will continue to maintain compliance with such financial covenants.
Revolving Credit Facility Capacity
On December 31, 2010, Calumet had availability under its revolving credit facility of $145.5 million, based on a $247.0 million borrowing base, $90.7 million in outstanding standby letters of credit, and outstanding borrowings of $10.8 million. Calumet believes that it will 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. However, Calumet is subject to business and operational risks that could materially adversely affect its cash flows. A material decrease in Calumet's cash flow from operations or a significant, sustained decline in crude oil prices would likely produce a corollary material adverse effect on Calumet's borrowing capacity under its revolving credit facility and potentially its ability to comply with the covenants under its credit facilities. Substantial declines in crude oil prices, if sustained, may materially diminish Calumet's borrowing base, which is based in part on the value of Calumet's crude oil inventory, which could result in a material reduction in Calumet's borrowing capacity under its revolving credit facility. A significant increase in crude oil prices, if sustained, would likely result in increased working capital funded by borrowings under its revolving credit facility.
About the Partnership
The Partnership is a Delaware limited partnership formed on September 27, 2005 and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products. The Partnership also has contractual arrangements with Houston Refining and other third parties which provide additional volumes of finished products for its specialty products segment.
The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.
A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, February 16, 2011, to discuss the financial and operational results for the fourth quarter of 2010. Anyone interested in listening to the presentation may call 866-783-2137 and enter passcode 53261725. For international callers, the dial-in number is 857-350-1596 and the passcode is 53261725.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 68811364. International callers can access the replay by calling 617-801-6888 and entering passcode 68811364. The replay will be available beginning Wednesday, February 16, 2011, at approximately 4:00 p.m. until Wednesday, March 2, 2011.
The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements and information in this press release 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, but are not limited to, those summarized below: 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 the Partnership's hedging and other risk management activities; the ability of the Partnership to comply with the financial covenants contained in its credit facilities; the availability of, and the Partnership's ability to consummate, acquisition or combination opportunities; labor relations; the Partnership's access to capital to fund expansions, acquisitions and its working capital needs and its 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; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of the Partnership's credit ratings and ability to receive open credit from its suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; 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; fluctuations in the debt and equity markets; and general economic, market or business conditions. Other factors that could cause our actual results to differ from our projected results are described in our filings with the Securities and Exchange Commission, 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 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 of EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide quarterly and annual reconciliations of net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow and an annual reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net cash provided by 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, support our indebtedness and meet minimum quarterly
distributions;
-- 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 our 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 as net income plus interest expense (including debt issuance and extinguishment costs), taxes and depreciation and amortization. We define Adjusted EBITDA to be Consolidated EBITDA as defined in our credit facilities. Consistent with that definition, Adjusted EBITDA means, for any period: (1) net income plus (2)(a) interest expense; (b) taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) unrealized items decreasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); and (f) other non-recurring expenses reducing net income which do not represent a cash item for such period; minus (3)(a) tax credits; (b) unrealized items increasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); (c) unrealized gains from mark to market accounting for hedging activities; and (d) other non-recurring expenses and unrealized items that reduced net income for a prior period, but represent a cash item in the current period.
We are required to report Adjusted EBITDA to our lenders under our credit facilities and it is used to determine our compliance with the consolidated leverage and consolidated interest coverage tests thereunder.
We define Distributable Cash Flow as Adjusted EBITDA less replacement capital expenditures, cash interest paid (excluding capitalized interest) and income tax expense. Distributable Cash Flow is used by us and our investors to analyze our ability to pay distributions.
EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, operating income, net cash provided by 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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2010 2009 2010 2009
---- ---- ---- ----
Unaudited Unaudited Unaudited
Sales $596,210 $495,865 $2,190,752 $1,846,600
Cost of sales 540,862 461,257 1,992,003 1,673,498
------- ------- --------- ---------
Gross profit 55,348 34,608 198,749 173,102
---- ------ ------- -------
Operating costs
and expenses:
Selling, general
and
administrative 12,330 8,873 35,224 32,570
Transportation 22,011 18,205 85,471 67,967
Taxes other than
income taxes 1,170 683 4,601 3,839
Other 590 479 1,963 1,366
--- --- ----- -----
Operating income 19,247 6,368 71,490 67,360
------ ----- ------ ------
Other income
(expense):
Interest expense (7,992) (8,239) (30,497) (33,573)
Realized gain
(loss) on
derivative
instruments 443 5,129 (7,704) 8,342
Unrealized gain
(loss) on
derivative
instruments (2,008) 6,064 (15,843) 23,736
Other 23 (1,074) (147) (3,929)
--- ------ ---- ------
Total other
income (expense) (9,534) 1,880 (54,191) (5,424)
------ ----- ------- ------
Income before
income taxes 9,713 8,248 17,299 61,936
Income tax
expense 259 81 598 151
--- --- --- ---
Net income $9,454 $8,167 $16,701 $61,785
====== ====== ======= =======
Allocation of net
income:
Net income $9,454 $8,167 $16,701 $61,785
Less:
General partner's
interest in net
income 189 163 334 1,236
--- --- --- -----
Net income
available to
limited partners $9,265 $8,004 $16,367 $60,549
====== ====== ======= =======
Weighted average
limited partner
units
outstanding -
basic 35,342 32,786 35,335 32,372
====== ====== ====== ======
Weighted average
limited partner
units
outstanding -
diluted 35,361 32,786 35,351 32,372
====== ====== ====== ======
Common and
subordinated
unitholders'
basic and
diluted net
income per unit $0.26 $0.24 $0.46 $1.87
===== ===== ===== =====
Cash
distributions
declared per
common and
subordinated
unit $0.47 $0.455 $1.84 $1.81
===== ====== ===== =====
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2010 2009
------------- -------------
Unaudited
ASSETS
Current assets:
Cash and cash equivalents $37 $49
Accounts receivable, net 157,961 122,768
Inventories 147,110 137,250
Derivative assets - 30,904
Prepaid expenses and other current
assets 4,003 8,672
----- -----
Total current assets 309,111 299,643
Property, plant and equipment, net 612,433 629,275
Goodwill 48,335 48,335
Other intangible assets, net 29,666 38,093
Other noncurrent assets, net 17,127 16,510
------ ------
Total assets $1,016,672 $1,031,856
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $174,715 $109,976
Other current liabilities 31,338 20,165
Current portion of long-term debt 4,844 5,009
Derivative liabilities 32,814 4,766
------ -----
Total current liabilities 243,711 139,916
Pension and postretirement benefit
obligations 9,168 9,433
Other long-term liabilities 1,083 1,111
Long-term debt, less current portion 364,431 396,049
------- -------
Total liabilities 618,393 546,509
Partners' capital:
Partners' capital 425,898 472,703
Accumulated other comprehensive income
(loss) (27,619) 12,644
------- ------
Total partners' capital 398,279 485,347
------- -------
Total liabilities and partners'
capital $1,016,672 $1,031,856
========== ==========
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
------------
2010 2009
---- ----
Unaudited
Operating activities
Net income $16,701 $61,785
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 64,151 65,407
Amortization of turnaround costs 10,006 7,256
Provision for doubtful accounts 74 (916)
Unrealized (gain) loss on derivative instruments 15,843 (23,736)
Other non-cash activities 1,343 5,896
Changes in assets and liabilities:
Accounts receivable (35,267) (12,296)
Inventories (9,860) (18,726)
Prepaid expenses and other current assets 4,669 (2,848)
Derivative activity 2,990 8,531
Other assets (12,690) (6,889)
Accounts payable 64,739 15,951
Other liabilities 11,853 206
Pension and postretirement benefit obligations (409) 1,233
---- -----
Net cash provided by operating activities 134,143 100,854
Investing activities
Additions to property, plant and equipment (35,001) (23,521)
Proceeds from disposal of property, plant and
equipment 242 807
--- ---
Net cash used in investing activities (34,759) (22,714)
Financing activities
Repayments of borrowings - revolving credit
facility (29,068) (62,639)
Repayment of borrowings - term loan credit
facility (3,850) (3,850)
Payments on capital lease obligation (1,302) (1,542)
Proceeds from public offerings, net 793 51,225
Contribution from Calumet GP, LLC 18 1,102
Change in bank overdraft - (3,013)
Common units repurchased for vested phantom unit
grants (248) (164)
Distributions to partners (65,739) (59,258)
------- -------
Net cash used in financing activities (99,396) (78,139)
------- -------
Net increase in cash and cash equivalents (12) 1
Cash and cash equivalents at beginning of period 49 48
--- ---
Cash and cash equivalents at end of period $37 $49
=== ===
Supplemental disclosure of cash flow information
Interest paid $26,389 $30,343
Income taxes paid $188 $161
==== ====
Supplemental disclosure of noncash financing and
investing activities
Equipment acquired under capital lease $- $1,659
=== ======
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA, AND
DISTRIBUTABLE CASH FLOW
(In thousands)
Three Months
Ended Year Ended
December 31, December 31,
------------
2010 2009 2010 2009
---- ---- ---- ----
Unaudited Unaudited Unaudited Unaudited
Reconciliation of Net
Income to EBITDA,
Adjusted EBITDA and
Distributable Cash
Flow:
Net income $9,454 $8,167 $16,701 $61,785
Add:
Interest expense 7,992 8,239 30,497 33,573
Depreciation and
amortization 16,424 15,707 61,248 62,103
Income tax expense 259 81 598 151
--- --- --- ---
EBITDA $34,129 $32,194 $109,044 $157,612
------- ------- -------- --------
Add:
Unrealized (gain) loss
from mark to market
accounting for
hedging activities $4,150 $(4,027) $18,833 $(14,458)
Prepaid non-recurring
expenses and accrued
non-recurring
expenses, net of cash
outlays 2,525 (1,408) 2,492 2,863
----- ------ ----- -----
Adjusted EBITDA $40,804 $26,759 $130,369 $146,017
------- ------- -------- --------
Less:
Replacement capital
expenditures (1) (2,252) (1,048) (24,342) (13,787)
Cash interest expense
(2) (6,754) (7,219) (26,389) (30,343)
Income tax expense (259) (81) (598) (151)
---- --- ---- ----
Distributable Cash
Flow $31,539 $18,411 $79,040 $101,736
======= ======= ======= ========
(1) Replacement capital expenditures are defined as those capital
expenditures which do not increase operating capacity or reduce
operating costs.
(2) Represents cash interest paid by the Partnership, excluding
capitalized interest.
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,
------------
2010 2009
---- ----
(Unaudited) (Unaudited)
Reconciliation of Distributable Cash Flow,
Adjusted EBITDA and EBITDA to net cash
provided by operating activities:
Distributable Cash Flow $79,040 $101,736
Less:
Replacement capital expenditures (1) 24,342 13,787
Cash interest expense (2) 26,389 30,343
Income tax expense 598 151
--- ---
Adjusted EBITDA $130,369 $146,017
======== ========
Add:
Unrealized gain (loss) from mark to market
accounting for hedging activities $( 18,833) $14,458
Prepaid non-recurring expenses and
accrued non-recurring expenses, net of
cash outlays (2,492) (2,863)
------ ------
EBITDA $109,044 $157,612
======== ========
Add:
Interest expense, net of amortization (26,633) (29,902)
Unrealized (gain) loss on derivative
instruments 15,843 (23,736)
Income tax expense (598) (151)
Provision for doubtful accounts 74 (916)
Changes in assets and liabilities:
Accounts receivable (35,267) (12,296)
Inventory (9,860) (18,726)
Other current assets 4,669 (2,848)
Derivative activity 2,990 8,531
Accounts payable 64,739 15,951
Other liabilities 11,853 (905)
Other, including changes in noncurrent
assets and liabilities (2,711) 8,240
------ -----
Net cash provided by operating activities $134,143 $100,854
======== ========
(1) Replacement capital expenditures are defined as those capital
expenditures which do not increase operating capacity or reduce
operating costs.
(2) Represents cash interest paid by the Partnership, excluding
capitalized interest.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
EXISTING COMMODITY DERIVATIVE INSTRUMENTS
December 31, 2010
Fuel Products Segment
The following tables provide information about our derivative
instruments related to our fuel products segment as of December 31,
2010, all of which are designated as hedges:
Barrels Average
Crude Oil Swap Contracts by
Expiration Dates Purchased BPD Swap
--------------------------- --------- --- ($/Bbl)
-------
First Quarter 2011 1,215,000 13,500 $75.32
Second Quarter 2011 1,729,000 19,000 76.62
Third Quarter 2011 1,610,000 17,500 77.38
Fourth Quarter 2011 1,334,000 14,500 77.71
Calendar Year 2012 5,535,000 15,123 86.30
--------- -----
Totals 11,423,000
Average price $81.41
Diesel Swap Contracts by Barrels
Expiration Dates Sold BPD Average
------------------------ ------- --- Swap
($/Bbl)
-------
First Quarter 2011 630,000 7,000 $89.57
Second Quarter 2011 637,000 7,000 89.57
Third Quarter 2011 552,000 6,000 91.74
Fourth Quarter 2011 552,000 6,000 91.74
Calendar Year 2012 1,560,000 4,262 99.27
--------- -----
Totals 3,931,000
Average price $94.03
Jet Fuel Swap Contracts by Barrels
Expiration Dates Sold BPD Average
-------------------------- ------- --- Swap
($/Bbl)
-------
First Quarter 2011 405,000 4,500 $86.12
Second Quarter 2011 819,000 9,000 $86.12
Third Quarter 2011 920,000 10,000 89.86
Fourth Quarter 2011 644,000 7,000 89.21
Calendar Year 2012 3,838,500 10,488 99.78
--------- -----
Totals 6,626,500
Average price $95.28
Gasoline Swap Contracts by Barrels
Expiration Dates Sold BPD Average
-------------------------- ------- --- Swap
($/Bbl)
-------
First Quarter 2011 180,000 2,000 $81.84
Second Quarter 2011 273,000 3,000 82.66
Third Quarter 2011 138,000 1,500 85.50
Fourth Quarter 2011 138,000 1,500 85.50
Calendar Year 2012 136,500 373 89.04
------- -----
Totals 865,500
Average price $84.40
The following table provides a summary of these derivatives and
implied crack spreads for the crude oil, diesel and gasoline swaps
disclosed above, all of which are designated as hedges.
Swap Contracts by Expiration Dates Barrels Implied
---------------------------------- Purchased BPD Crack
--------- --- Spread
($/Bbl)
-------
First Quarter 2011 1,215,000 13,500 $11.96
Second Quarter 2011 1,729,000 19,000 11.87
Third Quarter 2011 1,610,000 17,500 12.75
Fourth Quarter 2011 1,334,000 14,500 12.16
Calendar Year 2012 5,535,000 15,123 13.07
--------- -----
Totals 11,423,000
Average price $12.62
At December 31, 2010, the Partnership had the following put options
related to jet fuel crack spreads in its fuel products segment, none
of which are designated as hedges.
Average Average
Sold Bought
Barrels Put Put
Jet Fuel Put Option Crack Spread
Contracts by Expiration Dates ------- BPD ($/Bbl) ($/Bbl)
-------------------------------- --- ------- -------
First Quarter 2011 630,000 7,000 $4.00 $6.00
Fourth Quarter 2011 184,000 2,000 4.75 7.00
------- ---- ----
Totals 814,000
Average price $4.17 $6.23
Specialty Products Segment
The following table provides information about our derivatives
related to our specialty products segment as of December 31, 2010,
none of which are designated as hedges:
Crude Oil Swap Contracts by
Expiration Dates Barrels BPD Average
--------------------------- Purchased --- Swap($/Bbl)
--------- -----------
February 2011 33,600 1,200 $83.10
March 2011 37,200 1,200 83.55
------ -----
Totals 70,800
Average price $83.34
SOURCE Calumet Specialty Products Partners, L.P.
SOURCE: Calumet Specialty Products Partners, L.P.
PR Newswire
INDIANAPOLIS, Feb. 16, 2011
INDIANAPOLIS, Feb. 16, 2011 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (Nasdaq: CLMT) (the "Partnership," "Calumet," "we," "our" or "us") reported net income for the quarter ended December 31, 2010 of $9.5 million compared to $8.2 million for the same quarter in 2009. For the year ended December 31, 2010, Calumet reported net income of $16.7 million compared to $61.8 million in 2009. These results include noncash unrealized derivative losses of $15.8 million and gains of $23.7 million for the years ended December 31, 2010 and 2009, respectively. Calumet reported net cash provided by operating activities of $134.1 million for the year ended December 31, 2010 as compared to $100.9 million in 2009.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined by the Partnership's credit agreements) were $34.1 million and $40.8 million, respectively, for the quarter ended December 31, 2010 as compared to $32.2 million and $26.8 million, respectively, for the same quarter in 2009. Distributable Cash Flow (as defined below) for the quarter ended December 31, 2010 was $31.5 million compared to $18.4 million for the same quarter in 2009. The increase in Adjusted EBITDA quarter over quarter was due primarily to higher gross profit, discussed below, partially offset by decreased realized gains on derivatives and increased transportation expense. (See the section of this press release titled "Non-GAAP Financial Measures" and the attached tables for 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 GAAP measures.)
"We are very pleased with our results for the fourth quarter. Our specialty products production levels and gross profit significantly improved in the third and fourth quarters of 2010, with our specialty products production reaching the highest point in our history for any fourth quarter. We continue to focus on increased run rates to meet higher demand for our specialty products and to benefit from current fuel products crack spreads," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "As a result of these improvements and our outlook, we raised our quarterly distribution to $0.47 per unit for the fourth quarter of 2010, a $0.01 per unit increase over the prior quarter," said Grube.
The $1.3 million improvement in net income quarter over quarter was due primarily to an increase of $20.7 million in gross profit, partially offset by decreased realized derivative gains of $4.7 million and higher transportation expense of $3.8 million due to increased sales volume. These results were also impacted by an increase in noncash unrealized derivative losses of $8.1 million, which may or may not be realized in the future as the derivatives are settled.
Gross profit by segment is as follows for the three months and year ended December 31, 2010 and 2009:
(In thousands, except per barrel data) | ||||||
Three Months Ended December 31, | Year Ended December 31, | |||||
2010 | 2009 | 2010 | 2009 | |||
(In thousands, except per barrel data) | ||||||
Specialty products | $ 56,710 | $ 27,497 | $ 187,416 | $ 141,577 | ||
Fuel products | (1,362) | 7,111 | 11,333 | 31,525 | ||
Total gross profit (1) | $ 55,348 | $ 34,608 | $ 198,749 | $ 173,102 | ||
Specialty products gross profit per barrel | $ 19.75 | $ 11.52 | $ 17.41 | $ 15.11 | ||
Fuel products gross profit per barrel | $ (0.55) | $ 2.53 | $ 1.19 | $ 2.75 | ||
(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 of $29.2 million in specialty products segment gross profit quarter over quarter was due primarily to an increase of 19.4% in the average selling price per barrel, while the average cost of crude oil per barrel increased by only 13.7%. Also, specialty products sales volume increased 20.3%, due primarily to improvements in overall specialty products demand under improved economic conditions and from the addition of sales volumes under our specialty products agreements with Houston Refining LP, a wholly owned subsidiary of LyondellBasell ("Houston Refining"), which we entered into during the fourth quarter of 2009 (the "LyondellBasell Agreements").
The decrease of $8.5 million in fuel products segment gross profit quarter over quarter was due primarily to a 12.0% decrease in fuel products sales volume as a result of lower overall throughput rates at our Shreveport refinery due to the scheduled turnaround of various fuels processing units during the fourth quarter of 2010 as well as a net $10.3 million decrease in derivative gains on our fuel products crack spread cash flow hedges. Partially offsetting this decrease was a slight improvement in crack spreads as the average selling price per barrel of our fuel products increased by 17.5%, driven by market conditions, while the average cost of crude oil per barrel increased by 14.1%.
Quarterly Distribution
On January 14, 2011, the Partnership declared a quarterly cash distribution of $0.47 per unit for the quarter ended December 31, 2010 on all outstanding units. The distribution was paid on February 14, 2011 to unitholders of record as of the close of business on February 4, 2011. This distribution represents an increase of $0.01 per unit from the third quarter of 2010.
Conversion of Subordinated Units
On February 14, 2011, we satisfied the last of the earnings and distribution tests contained in our partnership agreement for the conversion of all 13,066,000 outstanding subordinated units into common units on a one-for-one basis. The last of these requirements was met upon payment of the quarterly distribution on February 14, 2011. On February 16, 2011, all of the subordinated units converted to common units.
Operations Summary
The following table sets forth unaudited information about our combined operations. Facility production volume differs from sales volume due to changes in inventory.
Three Months Ended December 31, | Year Ended December 31, | ||||
2010 | 2009 | 2010 | 2009 | ||
Sales volume (bpd): | |||||
Specialty products | 31,217 | 25,939 | 29,496 | 25,671 | |
Fuel products | 26,847 | 30,517 | 26,172 | 31,415 | |
Total (1) | 58,064 | 56,456 | 55,668 | 57,086 | |
Total feedstock runs (bpd) (2) | 56,500 | 57,148 | 55,957 | 60,081 | |
Facility production (bpd): (3) | |||||
Specialty products: | |||||
Lubricating oils | 14,966 | 12,279 | 13,697 | 11,681 | |
Solvents | 9,666 | 7,397 | 9,347 | 7,749 | |
Waxes | 1,408 | 952 | 1,220 | 1,049 | |
Fuels | 1,132 | 979 | 1,050 | 853 | |
Asphalt and other by-products | 7,673 | 7,219 | 6,907 | 7,574 | |
Total | 34,845 | 28,826 | 32,221 | 28,906 | |
Fuel products: | |||||
Gasoline | 8,991 | 10,043 | 8,754 | 9,892 | |
Diesel | 11,417 | 13,194 | 10,800 | 12,796 | |
Jet fuel | 4,110 | 5,299 | 5,004 | 6,709 | |
By-products | 379 | 370 | 535 | 489 | |
Total | 24,897 | 28,906 | 25,093 | 29,886 | |
Total facility production (3) | 59,742 | 59,742 | 57,314 | 58,792 | |
(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. (2) Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our facilities and certain third-party facilities pursuant to supply and/or processing agreements. The decrease in feedstock runs quarter over quarter is due primarily to lower overall throughput rates at our Shreveport refinery due to the scheduled turnaround of various fuels processing units during the fourth quarter of 2010, partially offset by higher throughput rates at our Princeton and Cotton Valley refineries and the addition of volumes under the LyondellBasell Agreements. The decrease in feedstock runs in 2010 compared to 2009 is due primarily to our decision to reduce crude oil run rates at our Shreveport refinery during the entire first quarter of 2010 because of the poor economics of running additional barrels, the failure of an environmental operating unit during the first quarter of 2010 and scheduled turnarounds completed in the second and fourth quarters related to various operating units at our Shreveport refinery. These decreases were partially offset by higher year-long throughput rates at our Cotton Valley refinery and the addition of volumes under the LyondellBasell Agreements. (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 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 feedstock and production of finished products and volume loss. The increase in the production of specialty products for the fourth quarter of 2010 compared to the same period in 2009 is primarily the result of the addition of volumes under the LyondellBasell Agreements and increased production at our Princeton and Cotton Valley refineries. The reduction in production of fuel products quarter over quarter was due primarily to lower overall throughput rates at our Shreveport refinery, as discussed above in footnote 2 of this table. The increase in the production of specialty products in 2010 compared to 2009 is primarily the result of the addition of volumes under the LyondellBasell Agreements and higher throughput rates at our Cotton Valley refinery. The reduction in production of fuel products in 2010 is due primarily to reduced feedstock runs at our Shreveport refinery as discussed above in footnote 2 of this table. | |
Credit Agreement Covenant Compliance
Compliance with the financial covenants under Calumet's credit agreements is measured quarterly based upon performance over the most recent four fiscal quarters. As of December 31, 2010, Calumet continued to be in compliance with all financial covenants under its credit agreements.
While assurances cannot be made regarding our future compliance with these financial covenants and subject to the inherent uncertainty of the crude oil pricing environment and general economic conditions, Calumet believes that it will continue to maintain compliance with such financial covenants.
Revolving Credit Facility Capacity
On December 31, 2010, Calumet had availability under its revolving credit facility of $145.5 million, based on a $247.0 million borrowing base, $90.7 million in outstanding standby letters of credit, and outstanding borrowings of $10.8 million. Calumet believes that it will 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. However, Calumet is subject to business and operational risks that could materially adversely affect its cash flows. A material decrease in Calumet's cash flow from operations or a significant, sustained decline in crude oil prices would likely produce a corollary material adverse effect on Calumet's borrowing capacity under its revolving credit facility and potentially its ability to comply with the covenants under its credit facilities. Substantial declines in crude oil prices, if sustained, may materially diminish Calumet's borrowing base, which is based in part on the value of Calumet's crude oil inventory, which could result in a material reduction in Calumet's borrowing capacity under its revolving credit facility. A significant increase in crude oil prices, if sustained, would likely result in increased working capital funded by borrowings under its revolving credit facility.
About the Partnership
The Partnership is a Delaware limited partnership formed on September 27, 2005 and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products. The Partnership also has contractual arrangements with Houston Refining and other third parties which provide additional volumes of finished products for its specialty products segment.
The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.
A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, February 16, 2011, to discuss the financial and operational results for the fourth quarter of 2010. Anyone interested in listening to the presentation may call 866-783-2137 and enter passcode 53261725. For international callers, the dial-in number is 857-350-1596 and the passcode is 53261725.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 68811364. International callers can access the replay by calling 617-801-6888 and entering passcode 68811364. The replay will be available beginning Wednesday, February 16, 2011, at approximately 4:00 p.m. until Wednesday, March 2, 2011.
The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements and information in this press release 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, but are not limited to, those summarized below: 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 the Partnership's hedging and other risk management activities; the ability of the Partnership to comply with the financial covenants contained in its credit facilities; the availability of, and the Partnership's ability to consummate, acquisition or combination opportunities; labor relations; the Partnership's access to capital to fund expansions, acquisitions and its working capital needs and its 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; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of the Partnership's credit ratings and ability to receive open credit from its suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; 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; fluctuations in the debt and equity markets; and general economic, market or business conditions. Other factors that could cause our actual results to differ from our projected results are described in our filings with the Securities and Exchange Commission, 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 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 of EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide quarterly and annual reconciliations of net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow and an annual reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net cash provided by 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, support our indebtedness and meet minimum quarterly distributions;
- 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 our 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 as net income plus interest expense (including debt issuance and extinguishment costs), taxes and depreciation and amortization. We define Adjusted EBITDA to be Consolidated EBITDA as defined in our credit facilities. Consistent with that definition, Adjusted EBITDA means, for any period: (1) net income plus (2)(a) interest expense; (b) taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) unrealized items decreasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); and (f) other non-recurring expenses reducing net income which do not represent a cash item for such period; minus (3)(a) tax credits; (b) unrealized items increasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); (c) unrealized gains from mark to market accounting for hedging activities; and (d) other non-recurring expenses and unrealized items that reduced net income for a prior period, but represent a cash item in the current period.
We are required to report Adjusted EBITDA to our lenders under our credit facilities and it is used to determine our compliance with the consolidated leverage and consolidated interest coverage tests thereunder.
We define Distributable Cash Flow as Adjusted EBITDA less replacement capital expenditures, cash interest paid (excluding capitalized interest) and income tax expense. Distributable Cash Flow is used by us and our investors to analyze our ability to pay distributions.
EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, operating income, net cash provided by 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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per unit data) | |||||
Three Months Ended December 31, | Year Ended December 31, | ||||
2010 | 2009 | 2010 | 2009 | ||
Unaudited | Unaudited | Unaudited | |||
Sales | $ 596,210 | $ 495,865 | $ 2,190,752 | $ 1,846,600 | |
Cost of sales | 540,862 | 461,257 | 1,992,003 | 1,673,498 | |
Gross profit | 55,348 | 34,608 | 198,749 | 173,102 | |
Operating costs and expenses: | |||||
Selling, general and administrative | 12,330 | 8,873 | 35,224 | 32,570 | |
Transportation | 22,011 | 18,205 | 85,471 | 67,967 | |
Taxes other than income taxes | 1,170 | 683 | 4,601 | 3,839 | |
Other | 590 | 479 | 1,963 | 1,366 | |
Operating income | 19,247 | 6,368 | 71,490 | 67,360 | |
Other income (expense): | |||||
Interest expense | (7,992) | (8,239) | (30,497) | (33,573) | |
Realized gain (loss) on derivative instruments | 443 | 5,129 | (7,704) | 8,342 | |
Unrealized gain (loss) on derivative instruments | (2,008) | 6,064 | (15,843) | 23,736 | |
Other | 23 | (1,074) | (147) | (3,929) | |
Total other income (expense) | (9,534) | 1,880 | (54,191) | (5,424) | |
Income before income taxes | 9,713 | 8,248 | 17,299 | 61,936 | |
Income tax expense | 259 | 81 | 598 | 151 | |
Net income | $ 9,454 | $ 8,167 | $ 16,701 | $ 61,785 | |
Allocation of net income: | |||||
Net income | $ 9,454 | $ 8,167 | $ 16,701 | $ 61,785 | |
Less: | |||||
General partner's interest in net income | 189 | 163 | 334 | 1,236 | |
Net income available to limited partners | $ 9,265 | $ 8,004 | $ 16,367 | $ 60,549 | |
Weighted average limited partner units outstanding – basic | 35,342 | 32,786 | 35,335 | 32,372 | |
Weighted average limited partner units outstanding – diluted | 35,361 | 32,786 | 35,351 | 32,372 | |
Common and subordinated unitholders' basic and diluted net income per unit | $ 0.26 | $ 0.24 | $ 0.46 | $ 1.87 | |
Cash distributions declared per common and subordinated unit | $ 0.47 | $ 0.455 | $ 1.84 | $ 1.81 | |
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||
December 31, 2010 | December 31, 2009 | ||
Unaudited | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 37 | $ 49 | |
Accounts receivable, net | 157,961 | 122,768 | |
Inventories | 147,110 | 137,250 | |
Derivative assets | — | 30,904 | |
Prepaid expenses and other current assets | 4,003 | 8,672 | |
Total current assets | 309,111 | 299,643 | |
Property, plant and equipment, net | 612,433 | 629,275 | |
Goodwill | 48,335 | 48,335 | |
Other intangible assets, net | 29,666 | 38,093 | |
Other noncurrent assets, net | 17,127 | 16,510 | |
Total assets | $ 1,016,672 | $ 1,031,856 | |
LIABILITIES AND PARTNERS' CAPITAL | |||
Current liabilities: | |||
Accounts payable | $ 174,715 | $ 109,976 | |
Other current liabilities | 31,338 | 20,165 | |
Current portion of long-term debt | 4,844 | 5,009 | |
Derivative liabilities | 32,814 | 4,766 | |
Total current liabilities | 243,711 | 139,916 | |
Pension and postretirement benefit obligations | 9,168 | 9,433 | |
Other long-term liabilities | 1,083 | 1,111 | |
Long-term debt, less current portion | 364,431 | 396,049 | |
Total liabilities | 618,393 | 546,509 | |
Partners' capital: | |||
Partners' capital | 425,898 | 472,703 | |
Accumulated other comprehensive income (loss) | (27,619) | 12,644 | |
Total partners' capital | 398,279 | 485,347 | |
Total liabilities and partners' capital | $ 1,016,672 | $ 1,031,856 | |
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||
Year Ended December 31, | |||||
2010 | 2009 | ||||
Unaudited | |||||
Operating activities | |||||
Net income | $ 16,701 | $ 61,785 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 64,151 | 65,407 | |||
Amortization of turnaround costs | 10,006 | 7,256 | |||
Provision for doubtful accounts | 74 | (916) | |||
Unrealized (gain) loss on derivative instruments | 15,843 | (23,736) | |||
Other non-cash activities | 1,343 | 5,896 | |||
Changes in assets and liabilities: | |||||
Accounts receivable | (35,267) | (12,296) | |||
Inventories | (9,860) | (18,726) | |||
Prepaid expenses and other current assets | 4,669 | (2,848) | |||
Derivative activity | 2,990 | 8,531 | |||
Other assets | (12,690) | (6,889) | |||
Accounts payable | 64,739 | 15,951 | |||
Other liabilities | 11,853 | 206 | |||
Pension and postretirement benefit obligations | (409) | 1,233 | |||
Net cash provided by operating activities | 134,143 | 100,854 | |||
Investing activities | |||||
Additions to property, plant and equipment | (35,001) | (23,521) | |||
Proceeds from disposal of property, plant and equipment | 242 | 807 | |||
Net cash used in investing activities | (34,759) | (22,714) | |||
Financing activities | |||||
Repayments of borrowings – revolving credit facility | (29,068) | (62,639) | |||
Repayment of borrowings – term loan credit facility | (3,850) | (3,850) | |||
Payments on capital lease obligation | (1,302) | (1,542) | |||
Proceeds from public offerings, net | 793 | 51,225 | |||
Contribution from Calumet GP, LLC | 18 | 1,102 | |||
Change in bank overdraft | — | (3,013) | |||
Common units repurchased for vested phantom unit grants | (248) | (164) | |||
Distributions to partners | (65,739) | (59,258) | |||
Net cash used in financing activities | (99,396) | (78,139) | |||
Net increase in cash and cash equivalents | (12) | 1 | |||
Cash and cash equivalents at beginning of period | 49 | 48 | |||
Cash and cash equivalents at end of period | $ 37 | $ 49 | |||
Supplemental disclosure of cash flow information | |||||
Interest paid | $ 26,389 | $ 30,343 | |||
Income taxes paid | $ 188 | $ 161 | |||
Supplemental disclosure of noncash financing and investing activities | |||||
Equipment acquired under capital lease | $ — | $ 1,659 | |||
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA, AND DISTRIBUTABLE CASH FLOW (In thousands) | ||||||
Three Months Ended December 31, | Year Ended December 31, | |||||
2010 | 2009 | 2010 | 2009 | |||
Unaudited | Unaudited | Unaudited | Unaudited | |||
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Distributable Cash Flow: | ||||||
Net income | $ 9,454 | $ 8,167 | $ 16,701 | $ 61,785 | ||
Add: | ||||||
Interest expense | 7,992 | 8,239 | 30,497 | 33,573 | ||
Depreciation and amortization | 16,424 | 15,707 | 61,248 | 62,103 | ||
Income tax expense | 259 | 81 | 598 | 151 | ||
EBITDA | $ 34,129 | $ 32,194 | $ 109,044 | $ 157,612 | ||
Add: | ||||||
Unrealized (gain) loss from mark to market accounting for hedging activities | $ 4,150 | $ (4,027) | $ 18,833 | $ (14,458) | ||
Prepaid non-recurring expenses and accrued non-recurring expenses, net of cash outlays | 2,525 | (1,408) | 2,492 | 2,863 | ||
Adjusted EBITDA | $ 40,804 | $ 26,759 | $ 130,369 | $ 146,017 | ||
Less: | ||||||
Replacement capital expenditures (1) | (2,252) | (1,048) | (24,342) | (13,787) | ||
Cash interest expense (2) | (6,754) | (7,219) | (26,389) | (30,343) | ||
Income tax expense | (259) | (81) | (598) | (151) | ||
Distributable Cash Flow | $ 31,539 | $ 18,411 | $ 79,040 | $ 101,736 | ||
(1) Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs. (2) Represents cash interest paid by the Partnership, excluding capitalized interest. | ||||||
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, | |||
2010 | 2009 | ||
(Unaudited) | (Unaudited) | ||
Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by operating activities: | |||
Distributable Cash Flow | $ 79,040 | $ 101,736 | |
Less: | |||
Replacement capital expenditures (1) | 24,342 | 13,787 | |
Cash interest expense (2) | 26,389 | 30,343 | |
Income tax expense | 598 | 151 | |
Adjusted EBITDA | $ 130,369 | $ 146,017 | |
Add: | |||
Unrealized gain (loss) from mark to market accounting for hedging activities | $( 18,833) | $ 14,458 | |
Prepaid non-recurring expenses and accrued non-recurring expenses, net of cash outlays | (2,492) | (2,863) | |
EBITDA | $ 109,044 | $ 157,612 | |
Add: | |||
Interest expense, net of amortization | (26,633) | (29,902) | |
Unrealized (gain) loss on derivative instruments | 15,843 | (23,736) | |
Income tax expense | (598) | (151) | |
Provision for doubtful accounts | 74 | (916) | |
Changes in assets and liabilities: | |||
Accounts receivable | (35,267) | (12,296) | |
Inventory | (9,860) | (18,726) | |
Other current assets | 4,669 | (2,848) | |
Derivative activity | 2,990 | 8,531 | |
Accounts payable | 64,739 | 15,951 | |
Other liabilities | 11,853 | (905) | |
Other, including changes in noncurrent assets and liabilities | (2,711) | 8,240 | |
Net cash provided by operating activities | $ 134,143 | $ 100,854 | |
(1) Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs. (2) Represents cash interest paid by the Partnership, excluding capitalized interest. | |||
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. EXISTING COMMODITY DERIVATIVE INSTRUMENTS December 31, 2010 Fuel Products Segment The following tables provide information about our derivative instruments related to our fuel products segment as of December 31, 2010, all of which are designated as hedges: | |
Crude Oil Swap Contracts by Expiration Dates | Barrels Purchased | BPD | Average Swap ($/Bbl) | ||
First Quarter 2011 | 1,215,000 | 13,500 | $ 75.32 | ||
Second Quarter 2011 | 1,729,000 | 19,000 | 76.62 | ||
Third Quarter 2011 | 1,610,000 | 17,500 | 77.38 | ||
Fourth Quarter 2011 | 1,334,000 | 14,500 | 77.71 | ||
Calendar Year 2012 | 5,535,000 | 15,123 | 86.30 | ||
Totals | 11,423,000 | ||||
Average price | $ 81.41 | ||||
Diesel Swap Contracts by Expiration Dates | Barrels Sold | BPD | Average Swap ($/Bbl) | |
First Quarter 2011 | 630,000 | 7,000 | $ 89.57 | |
Second Quarter 2011 | 637,000 | 7,000 | 89.57 | |
Third Quarter 2011 | 552,000 | 6,000 | 91.74 | |
Fourth Quarter 2011 | 552,000 | 6,000 | 91.74 | |
Calendar Year 2012 | 1,560,000 | 4,262 | 99.27 | |
Totals | 3,931,000 | |||
Average price | $ 94.03 | |||
Jet Fuel Swap Contracts by Expiration Dates | Barrels Sold | BPD | Average Swap ($/Bbl) | |
First Quarter 2011 | 405,000 | 4,500 | $ 86.12 | |
Second Quarter 2011 | 819,000 | 9,000 | $ 86.12 | |
Third Quarter 2011 | 920,000 | 10,000 | 89.86 | |
Fourth Quarter 2011 | 644,000 | 7,000 | 89.21 | |
Calendar Year 2012 | 3,838,500 | 10,488 | 99.78 | |
Totals | 6,626,500 | |||
Average price | $ 95.28 | |||
Gasoline Swap Contracts by Expiration Dates | Barrels Sold | BPD | Average Swap ($/Bbl) | ||
First Quarter 2011 | 180,000 | 2,000 | $ 81.84 | ||
Second Quarter 2011 | 273,000 | 3,000 | 82.66 | ||
Third Quarter 2011 | 138,000 | 1,500 | 85.50 | ||
Fourth Quarter 2011 | 138,000 | 1,500 | 85.50 | ||
Calendar Year 2012 | 136,500 | 373 | 89.04 | ||
Totals | 865,500 | ||||
Average price | $ 84.40 | ||||
The following table provides a summary of these derivatives and implied crack spreads for the crude oil, diesel and gasoline swaps disclosed above, all of which are designated as hedges. | ||||
Swap Contracts by Expiration Dates | Barrels Purchased | BPD | Implied Crack Spread ($/Bbl) | |
First Quarter 2011 | 1,215,000 | 13,500 | $ 11.96 | |
Second Quarter 2011 | 1,729,000 | 19,000 | 11.87 | |
Third Quarter 2011 | 1,610,000 | 17,500 | 12.75 | |
Fourth Quarter 2011 | 1,334,000 | 14,500 | 12.16 | |
Calendar Year 2012 | 5,535,000 | 15,123 | 13.07 | |
Totals | 11,423,000 | |||
Average price | $ 12.62 | |||
At December 31, 2010, the Partnership had the following put options related to jet fuel crack spreads in its fuel products segment, none of which are designated as hedges. | |||||
Jet Fuel Put Option Crack Spread Contracts by Expiration Dates | Barrels | BPD | Average Sold Put ($/Bbl) | Average Bought Put ($/Bbl) | |
First Quarter 2011 | 630,000 | 7,000 | $ 4.00 | $ 6.00 | |
Fourth Quarter 2011 | 184,000 | 2,000 | 4.75 | 7.00 | |
Totals | 814,000 | ||||
Average price | $ 4.17 | $ 6.23 | |||
Specialty Products Segment The following table provides information about our derivatives related to our specialty products segment as of December 31, 2010, none of which are designated as hedges: | ||||
Crude Oil Swap Contracts by Expiration Dates | Barrels Purchased | BPD | Average Swap($/Bbl) | |
February 2011 | 33,600 | 1,200 | $ 83.10 | |
March 2011 | 37,200 | 1,200 | 83.55 | |
Totals | 70,800 | |||
Average price | $ 83.34 | |||
SOURCE Calumet Specialty Products Partners, L.P.
CONTACT: Jennifer Straumins, Investor Relations of Calumet Specialty Products Partners, L.P., +1-317-328-5660
Web Site: http://www.calumetspecialty.com