News Releases

Calumet Specialty Products Partners, L.P. Reports Third Quarter 2011 Results
Significant items to report are as follows:
-- Quarterly net income of $19.6 million and record quarterly Adjusted EBITDA of $70.5 million.
-- Record quarterly Distributable Cash Flow of $50.5 million.
-- Completed the Superior Acquisition on September 30, 2011 for aggregate consideration of approximately $411 million funded by equity and debt financing.
PR Newswire
INDIANAPOLIS

INDIANAPOLIS, Nov. 2, 2011 /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 September 30, 2011 of $19.6 million compared to net income of $21.2 million for the same quarter in 2010. These results include $20.3 million of noncash unrealized derivative losses and $2.1 million of acquisition expenses related to the Superior Acquisition as compared to $1.9 million of noncash unrealized derivative gains in the third quarter of 2010. For the nine months ended September 30, 2011, Calumet reported net income of $16.2 million compared to net income of $7.2 million for the same period in 2010. These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $23.9 million of noncash unrealized derivative losses as compared to $13.8 million of noncash unrealized derivative losses for the same period in 2010.

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below) were $47.1 million and $70.5 million, respectively, for the quarter ended September 30, 2011 as compared to $44.0 million and $44.0 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below) for the quarter ended September 30, 2011 was $50.5 million compared to $30.9 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to a $34.5 million increase in gross profit, discussed below. 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 pleased to add the Superior refinery employees and assets from Murphy Oil Corporation and are working diligently on the integration. We are also pleased with our record results for the third quarter, noting improvements in both our specialty products and fuel products segments. We continue to focus on strong operations to meet demand for our specialty products and to better 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 in our operations and our outlook, we raised our quarterly distribution to $0.50 per unit for the third quarter of 2011," said Grube.

Net income reported for the quarter decreased $1.6 million quarter over quarter due primarily to increased selling, general and administrative expenses of $6.7 million (including $2.1 million of acquisition expenses related to the Superior Acquisition), increased interest expense of $4.8 million and increased noncash unrealized derivative losses of $22.3 million, which may or may not be realized in the future as the derivatives are settled, partially offset by a $34.5 million increase in gross profit.

Gross profit by segment for the three and nine months ended September 30, 2011 and 2010 is as follows:




                                         Three Months Ended                      Nine Months Ended
                                           September 30,                           September 30,
                                           -------------                           -------------
                                          2011               2010               2011               2010
                                          ----               ----               ----               ----
                                              (Dollars in thousands, except per barrel data)
     Specialty
     products                          $87,789            $60,880           $193,988           $130,706
     Fuel
     products                            8,812              1,226                 42             12,695
                                         -----              -----                ---             ------
     Total
     gross
     profit
     (1)                               $96,601            $62,106           $194,030           $143,401
                                       =======            =======           ========           ========

     Specialty
     products
     gross
     profit
     per
     barrel                           $31.32         $20.58         $23.52         $16.56
                                        ======             ======             ======             ======
     Fuel
     products
     gross
     profit
     per
     barrel                            $3.01          $0.48          $0.01          $1.79
                                         =====              =====              =====              =====

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

The increase in specialty products segment gross profit of $26.9 million quarter over quarter was due primarily to a 30.5% increase in the average selling price per barrel, partially offset by a 23.4% increase in the average cost of crude oil per barrel, a 5.2% decrease in sales volume and higher operating costs, primarily repairs and maintenance.

The increase in fuel products segment gross profit of $7.6 million quarter over quarter was due primarily to a 13.8% increase in sales volume and a 43.8% increase in the average selling price per barrel (excluding the impact of realized hedging losses), partially offset by increased realized losses on derivatives of $38.9 million in our fuel products hedging program, a 25.1% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.

The increase in specialty products segment gross profit of $63.3 million for the nine months ended September 30, 2011 compared to the same period in 2010 was due primarily to a 4.5% increase in sales volume and a 25.7% increase in the average selling price per barrel, partially offset by a 28.3% increase in the average cost of crude oil per barrel and higher operating costs, primarily repair and maintenance.

The decrease in fuel products segment gross profit of $12.7 million for the nine months ended September 30, 2011 compared to the same period in 2010 was due primarily to increased realized losses on derivatives of $94.0 million in our fuel products hedging program, a 29.5% increase in the cost of crude oil per barrel and increased production of by-products, partially offset by a 9.2% increase in sales volume and a 40.9% increase in the average selling price per barrel, excluding the impact of realized hedging losses. During the second quarter of 2011, our fuel products hedged volumes, combined with lower refinery run rates, resulted in our diesel and jet fuel sales volumes being approximately 100% hedged at approximately $12.00 per barrel, preventing us from realizing the benefit of increased market crack spreads for these products. By-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in run rates at the Shreveport refinery.

Superior Acquisition

On September 30, 2011, we completed the acquisition of the Superior, Wisconsin refinery and associated operating assets and inventories and related business of Murphy Oil Corporation (the "Superior Acquisition") for aggregate consideration of approximately $411.1 million, excluding certain customary post-closing purchase price adjustments. The Superior refinery produces gasoline, diesel, asphalt and specialty petroleum products that are marketed primarily in the Midwest region of the U.S., including the surrounding border states, and Canada. The Superior Acquisition was financed by a combination of (i) net proceeds of $193.6 million from our September 2011 public offering of common units, (ii) net proceeds of $180.3 million from the September 2011 private placement of 93/8% senior notes due May 1, 2019 and (iii) borrowings under our revolving credit facility.

We believe the Superior Acquisition provides greater scale, geographic diversity and development potential our refining business, as our current total refining throughput capacity has increased by approximately 50% to 135,000 barrels per day.

Quarterly Distribution

On October 11, 2011, the Company declared a quarterly cash distribution of $0.50 per unit on all outstanding units, or $26.3 million for the third quarter of 2011. The distribution will be paid on November 14, 2011 to unitholders of record as of the close of business on November 4, 2011. This quarterly distribution of $0.50 equates to $2.00 per unit, or approximately $105.3 million on an annualized basis, and represents an increase of $0.005 per unit from the second quarter of 2011.

Operations Summary

The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventories.




                                   Three Months Ended               Nine Months Ended
                                     September 30,                    September 30,
                                     -------------                    -------------
     Sales
      volume
      (bpd):                        2011            2010           2011            2010
                                    ----            ----           ----            ----
       Specialty
       products                   30,464          32,152         30,215          28,916
      Fuel
       products                   31,873          28,011         28,331          25,945
                                  ------          ------         ------          ------
      Total
       (1)                        62,337          60,163         58,546          54,861

      Total
       feedstock
       runs
       (2)                        63,567          61,678         60,529          55,774
      Facility
       production: (3)
      Specialty
       products:
         Lubricating
         oils                     15,017          14,707         14,316          13,268
        Solvents                  10,963          10,715         10,717           9,240
        Waxes                      1,434           1,307          1,234           1,157
        Fuels                        491             942            519           1,023
         Asphalt
         and
         other
         by-
         products                  8,984         8,079        8,660         6,649
                                   -----           -----          -----           -----
    Total                         36,889          35,750         35,446          31,337
                                  ------          ------         ------          ------
      Fuel products:
        Gasoline                   9,741           8,538          9,660           8,674
        Diesel                    13,470          11,883         11,896          10,592
        Jet
         fuel                      4,872           5,336          4,495           5,306
        By-
         products                    492             735            704             586
                                     ---             ---            ---             ---
    Total                         28,575          26,492         26,755          25,158
                                  ------          ------         ------          ------
      Total
       facility
       production
       (3)                        65,464          62,242         62,201          56,495
                                  ======          ======         ======          ======
    ____________

    (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 at certain third-party facilities
     pursuant to supply and/or processing agreements. The
     increase in the total feedstock runs for the three
     months ended September 30, 2011 compared to the same
     quarter in 2010 is due primarily to the decision to
     increase crude oil run rates at our facilities because
     of favorable economics of running additional barrels.
     The increase in feedstock runs for the nine months ended
     September 30, 2011 compared to the same period in 2010
     is due primarily to the decision to increase crude oil
     run rates at our facilities because of favorable
     economics of running additional barrels and the failure
     of an environmental operating unit at our Shreveport
     refinery which impacted run rates in the 2010 period.
     This increase is partially offset by the impact of the
     approximately three week shutdown during May and June
     2011 of the ExxonMobil crude oil pipeline serving our
     Shreveport refinery resulting from the Mississippi River
     flooding occurring during this period.

    (3)  Total facility production represents the barrels per
     day of specialty products and fuel products yielded from
     processing crude oil and other feedstocks at our
     facilities and at certain third-party facilities,
     pursuant to supply and/or processing agreements,
     including such agreements with LyondellBasell. The
     difference between total facility production and total
     feedstock runs is primarily a result of the time lag
     between the input of feedstock and production of
     finished products and volume loss. The increase in
     production in the three and nine months ended September
     30, 2011 compared to the same periods in 2010 is due
     primarily to higher throughput rates at our Shreveport
     refinery period over period as discussed above in
     footnote 2 of this table.

Revolving Credit Facility Capacity

As of September 30, 2011, in conjunction with the Superior Acquisition, Calumet fully exercised the $300.0 million expansion option under its revolving credit facility to increase the maximum availability of credit under the revolving credit facility from $550.0 million to $850.0 million, subject to borrowing base limitations. On September 30, 2011, Calumet had availability under its revolving credit facility of $271.5 million, based on a $535.5 million borrowing base, $208.0 million in outstanding standby letters of credit, and outstanding borrowings of $56.0 million. Calumet believes 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.

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 and waxes 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 six facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania and southeastern Texas.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, November 2, 2011, to discuss the financial and operational results for the third quarter of 2011. Anyone interested in listening to the presentation may call 866-700-6979 and enter passcode 98945363. For international callers, the dial-in number is 617-213-8836 and the passcode is 98945363.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 20383912. International callers can access the replay by calling 617-801-6888 and entering passcode 20383912. The replay will be available beginning Wednesday, November 2, 2011, at approximately 4:00 p.m. until Wednesday, November 16, 2011.

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 may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "may," "intend," "believe," "expect," "anticipate," "estimate," "continue" 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: 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 debt instruments; 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 ability to access sufficient crude oil supply through 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; fluctuations in the debt and equity markets; accidents or other unscheduled shutdowns; our ability to successfully integrate the Superior Acquisition 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. Other factors described herein, or factors that are unknown or unpredictable, could also have a material adverse effect on future results. Our forward looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward looking statement. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. 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.

All subsequent written and oral forward-looking statements concerning Calumet, Murphy Oil Corporation, the Superior Acquisition or other related matters, and attributable to Calumet or Murphy Oil Corporation or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Calumet undertakes 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 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 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 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 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; (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; (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 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 and our investors to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash that are presented in this release have been updated to reflect the calculation of "Consolidated Cash Flow" contained in the indenture governing our 93/8% senior notes due May 1, 2019 that were issued in April and September 2011 (the "2019 Notes"). We are required to report Consolidated Cash Flow to the holders of the 2019 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 release for prior periods have been updated to reflect the use of the new calculations.

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 (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.



                                    CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (In thousands, except per unit data)

                                                       For the Three
                                                       Months Ended                For the Nine Months Ended
                                                      September 30,                      September 30,
                                                      -------------                      -------------
                                                       2011            2010              2011               2010
                                                       ----            ----              ----               ----

    Sales                                          $777,780        $595,273        $2,116,790         $1,594,542
    Cost of sales                                   681,179         533,167         1,922,760          1,451,141
                                                    -------         -------         ---------          ---------
    Gross profit                                     96,601          62,106           194,030            143,401
    Operating costs and
     expenses:
      Selling, general and
       administrative                                14,148           7,403            35,143             22,894
      Transportation                                 23,696          23,258            69,462             63,460
      Taxes other than income
       taxes                                          1,683           1,308             4,246              3,431
      Insurance recoveries                               -              -            (8,698)                -
      Other                                             543             565             1,781              1,373
                                                        ---             ---             -----              -----
    Operating income                                 56,531          29,572            92,096             52,243
                                                     ------          ------            ------             ------
    Other income (expense):
      Interest expense                              (12,577)         (7,794)          (30,602)           (22,505)
      Debt extinguishment costs                          -              -           (15,130)                -
      Realized loss on
       derivative instruments                        (3,814)         (2,288)           (5,798)            (8,147)
      Unrealized gain (loss) on
       derivative instruments                       (20,335)          1,931           (23,876)           (13,835)
      Other                                              45            (121)              148               (170)
                                                        ---            ----               ---               ----
    Total other expense                             (36,681)         (8,272)          (75,258)           (44,657)
                                                    -------          ------           -------            -------
    Net income before income
     taxes                                           19,850          21,300            16,838              7,586
    Income tax expense                                  236              79               674                339
                                                        ---             ---               ---                ---
    Net income                                      $19,614         $21,221           $16,164             $7,247
                                                    =======         =======           =======             ======
    Allocation of net income:
      Net income                                    $19,614         $21,221           $16,164             $7,247
      Less:
       General partner's interest
        in net income                                   392             424               323                145
       General partner's
        incentive distribution
        rights                                           40              -                40                 -
                                                        ---            ---               ---               ---
      Net income attributable to
       limited partners                             $19,182         $20,797           $15,801             $7,102
                                                    =======         =======           =======             ======
      Weighted average limited
       partner units outstanding
       - basic                                       41,828          35,337            39,352             35,332
                                                     ======          ======            ======             ======
      Weighted average limited
       partner units outstanding
       -diluted                                      41,837          35,352            39,368             35,351
                                                     ======          ======            ======             ======
      Limited partners' interest
       basic and diluted net
       income per unit                                $0.46           $0.59             $0.40              $0.20
                                                      =====           =====             =====              =====
    Cash distributions
     declared per limited
     partner  unit                                    $0.50           $0.46             $1.47              $1.37
                                                      =====           =====             =====              =====



              CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In thousands, except unit data)

                                       September         December
                                           30,                31,
                                          2011               2010
                                       ----------          ---------
                                     (Unaudited)
                    ASSETS
    Current assets:
      Cash and cash equivalents                $66                $37
      Accounts receivable:
        Trade                              198,888            157,185
        Other                               34,106                776
                                            ------                ---
                                           232,994            157,961
      Inventories                          446,506            147,110
      Prepaid expenses and other
       current assets                        4,547              1,909
      Deposits                               2,520              2,094
                                             -----              -----
    Total current assets                   686,633            309,111
    Property, plant and
     equipment, net                        843,111            612,433
    Goodwill                                48,335             48,335
    Other intangible assets, net            24,423             29,666
    Other noncurrent assets, net            39,094             17,127
                                            ------             ------
    Total assets                        $1,641,596         $1,016,672
                                        ==========         ==========
       LIABILITIES AND PARTNERS'
                 CAPITAL
    Current liabilities:
      Accounts payable                    $232,589           $146,730
      Accounts payable - related
       party                                 1,488             27,985
      Accrued salaries, wages and
       benefits                             11,888              7,559
      Taxes payable                          8,850              7,174
      Other current liabilities              7,544             16,605
      Current portion of long-
       term debt                               749              4,844
      Derivative liabilities               160,861             32,814
                                           -------             ------
    Total current liabilities              423,969            243,711
      Pension and postretirement
       benefit obligations                  25,349              9,168
      Other long-term liabilities            1,062              1,083
      Long-term debt, less
       current portion                     642,293            364,431
                                           -------            -------
    Total liabilities                    1,092,673            618,393
    Commitments and
     contingencies
    Partners' capital:
      Limited partners' interest
       (50,779,778 units and
       35,279,778 units issued and
       outstanding at September
       30, 2011 and December 31,
       2010, respectively)                 652,229          407,773
      General partner's interest            23,373             18,125
      Accumulated other
       comprehensive loss                 (126,679)           (27,619)
                                          --------            -------
    Total partners' capital                548,923            398,279
                                           -------            -------
    Total liabilities and
     partners' capital                  $1,641,596         $1,016,672
                                        ==========         ==========



                          CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (In thousands)

                                                                For the Nine Months
                                                                       Ended
                                                                  September 30,
                                                                  -------------
                                                                 2011              2010
                                                                 ----              ----
    Operating activities
    Net income                                                $16,164            $7,247
    Adjustments to reconcile net income
     to net cash provided by (used in)
     operating activities:
      Depreciation and amortization                            43,644            44,410
      Amortization of turnaround costs                          8,288             6,639
      Non-cash interest expense                                 2,363             2,879
      Non-cash debt extinguishment costs                       14,401                -
      Provision for doubtful accounts                             255                74
      Unrealized loss on derivative
       instruments                                             23,876            13,835
      Other non-cash activities                                 1,830             1,467
      Changes in assets and liabilities:
        Accounts receivable                                   (44,714)          (42,004)
        Inventories                                          (109,787)          (12,964)
        Prepaid expenses and other current
         assets                                                (1,926)           (1,103)
        Derivative activity                                     4,928               849
        Turnaround costs                                       (8,849)           (9,041)
        Other assets                                             (197)               -
        Deposits                                                 (426)            4,767
        Accounts payable                                       54,916            68,995
        Accrued salaries, wages and
         benefits                                               2,917              (419)
        Taxes payable                                           1,676               769
        Other liabilities                                      (9,082)            1,492
        Pension and postretirement benefit
         obligations                                             (836)             (190)
                                                                 ----              ----
    Net cash provided by (used in)
     operating activities                                        (559)           87,702
    Investing activities
    Additions to property, plant and
     equipment                                                (30,667)          (27,310)
    Proceeds from insurance claim -
     equipment                                                  1,942                -
    Superior Acquisition, including a
     $30,574 receivable from seller                          (441,626)               -
    Proceeds from sale of equipment                               219               201
                                                                  ---               ---
    Net cash used in investing
     activities                                              (470,132)          (27,109)
    Financing activities
    Proceeds from borrowings -
     revolving credit agreement                             1,152,898           745,722
    Repayments of borrowings -
     revolving credit agreement                            (1,107,730)         (753,749)
    Repayments of borrowings - term
     loan credit agreement                                   (367,385)           (2,888)
    Payments on capital lease
     obligations                                                 (802)           (1,023)
    Proceeds from issuance of common
     units, net                                               281,870               793
    Proceeds from 2019 senior notes
     offerings                                                586,000                -
    Debt issuance costs                                       (23,140)               -
    Contributions from Calumet GP, LLC                          6,011                18
    Common units repurchased for vested
     phantom unit grants                                         (620)             (248)
    Distributions to partners                                 (56,382)          (49,179)
                                                              -------           -------
    Net cash provided by (used in)
     financing activities                                     470,720           (60,554)
                                                              -------           -------
    Net increase in cash and cash
     equivalents                                                   29                39
    Cash and cash equivalents at
     beginning of period                                           37                49
                                                                  ---               ---
    Cash and cash equivalents at end of
     period                                                       $66               $88
                                                                  ===               ===
    Supplemental disclosure of cash
     flow information
    Interest paid                                             $13,381           $19,635
                                                              =======           =======
    Income taxes paid                                            $548              $138
                                                                 ====              ====



                                       CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                         UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA AND
                                                DISTRIBUTABLE CASH FLOW
                                                    (In thousands)

                                                        Three Months Ended                  Nine Months Ended
                                                           September 30,                      September 30,
                                                           -------------                      -------------
                                                         2011             2010             2011             2010
                                                         ----             ----             ----             ----
    Reconciliation of Net Income to EBITDA,
     Adjusted EBITDA and Distributable Cash
     Flow:

      Net income                                      $19,614          $21,221          $16,164           $7,247
        Add:
         Interest expense                              12,577            7,794           30,602           22,505
         Debt extinguishment costs                         -               -           15,130               -
         Depreciation and amortization                 14,680           14,908           43,644           44,410
         Income tax expense                               236               79              674              339
                                                          ---              ---              ---              ---
      EBITDA                                          $47,107          $44,002         $106,214          $74,501
                                                      -------          -------         --------          -------
        Add:
         Unrealized (gain) loss on
          derivatives                                 $20,335          $(1,931)         $23,876          $13,835
         Realized gain (loss) on
          derivatives, not included in
          net income                                     (771)            (594)           4,366              848
         Amortization of turnaround
          costs                                         2,542            2,539            8,288            6,639
         Non-cash equity based
          compensation                                  1,335              (10)           3,298              442
                                                        -----              ---            -----              ---
      Adjusted EBITDA                                 $70,548          $44,006         $146,042          $96,265
                                                      -------          -------         --------          -------
        Less:
         Replacement capital
          expenditures (1)                             $6,608           $5,751          $14,204          $22,093
         Cash interest expense (2)                     11,869            6,821           28,239           19,626
         Turnaround costs                               1,348              493            8,849            9,041
         Income tax expense                               236               79              674              339
                                                          ---              ---              ---              ---
    Distributable Cash Flow                           $50,487          $30,862          $94,076          $45,166
                                                      =======          =======          =======          =======

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

                                                              Nine Months Ended
                                                                September 30,
                                                                -------------
                                                               2011             2010
                                                               ----             ----
    Reconciliation of Distributable Cash Flow,
     Adjusted EBITDA and EBITDA to net cash
     provided by (used in) operating activities:
    Distributable Cash Flow                                 $94,076          $45,166
      Add:
        Replacement capital expenditures
         (1)                                                 14,204           22,093
        Cash interest expense (2)                            28,239           19,626
        Turnaround costs                                      8,849            9,041
        Income tax expense                                      674              339
                                                                ---              ---
    Adjusted EBITDA                                        $146,042          $96,265
                                                           ========          =======
      Less:
        Unrealized loss on derivative
         instruments                                         23,876           13,835
        Realized gain on derivatives, not
         included in net income                               4,366              848
        Amortization of turnaround costs                      8,288            6,639
        Non-cash equity based
         compensation                                         3,298              442
                                                              -----              ---
    EBITDA                                                 $106,214          $74,501
                                                           ========          =======
      Add:
        Unrealized loss on derivative
         instruments                                         23,876           13,835
        Cash interest expense (2)                           (28,239)         (19,626)
        Non-cash equity based
         compensation                                         3,298              442
        Amortization of turnaround costs                      8,288            6,639
        Income tax expense                                     (674)            (339)
        Provision for doubtful accounts                         255               74
        Debt extinguishment costs                              (729)               -
      Changes in assets and liabilities:
        Accounts receivable                                 (44,714)         (42,004)
        Inventories                                        (109,787)         (12,964)
        Other current assets                                 (2,352)           3,664
        Turnaround costs                                     (8,849)          (9,041)
        Derivative activity                                   4,928              849
        Other assets                                           (197)               -
        Accounts payable                                     54,916           68,995
        Other liabilities                                    (4,489)           1,842
        Other, including changes in
         noncurrent assets and
         liabilities                                         (2,304)             835
                                                             ------              ---
    Net cash provided by (used in)
     operating activities                                     $(559)         $87,702
                                                              =====          =======

    (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 September 30, 2011

Fuel Products Segment

The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel and gasoline swaps as of September 30, 2011, all of which are designated as cash flow hedges.





    Crude Oil and Fuel Products Swap Contracts by
     Expiration Dates
                                                                     Implied
    ---------------------------------------------                     Crack
                                                                    --------
                                                                     Spread
                                                   Barrels    BPD    ($/Bbl)
                                                   -------    ---   -------
    Fourth Quarter 2011                            1,334,000 14,500   $12.16
    Calendar Year 2012                             5,626,000 15,372    13.27
    Calendar Year 2013                             3,690,000 10,110    24.95
    Calendar Year 2014                             1,000,000  2,740    25.01
                                                   ---------           -----
    Totals                                        11,650,000
    Average price                                                     $17.85

At September 30, 2011, Calumet had the following put options related to jet fuel crack spreads in its fuel products segment, none of which are designated as cash flow hedges.




    Jet Fuel Put Option Crack Spread Contracts
     by Expiration Dates                                     Average  Average
    ------------------------------------------               -------  -------
                                                                       Bought
                                                             Sold Put    Put
                                                             -------- -------
                                               Barrels  BPD  ($/Bbl)  ($/Bbl)
                                               -------  ---  -------  -------
    Fourth Quarter 2011                        184,000 2,000    $4.75    $7.00
    Totals                                     184,000
    Average price                                               $4.75    $7.00

Specialty Products Segment

At September 30, 2011 Calumet did not have any derivatives outstanding related to crude oil purchases in its specialty products segment.

Fuel Products Segment Derivative Instruments Entered into Subsequent to September 30, 2011

The following table provides a summary of Calumet's implied crack spreads for the crude oil, diesel and gasoline swaps that were entered into subsequent to September 30, 2011 in conjunction with the Superior Acquisition, all of which are designated as cash flow hedges.





    Crude Oil and Fuel Products
     Swap Contracts by
     Expiration Dates
                                                             Implied
    ---------------------------                                Crack
                                                             --------
                                                              Spread
                                    Barrels        BPD       ($/Bbl)
                                    -------        ---       -------
    Fourth Quarter 2011              552,000      6,000        $23.72
    Calendar Year 2012             5,490,000     15,000         23.39
                                   ---------                    -----
    Totals                         6,042,000
    Average price                                              $23.42

SOURCE Calumet Specialty Products Partners, L.P.

SOURCE: Calumet Specialty Products Partners, L.P.

Calumet Specialty Products Partners, L.P. Reports Third Quarter 2011 Results Significant items to report are as follows: -- Quarterly net income of $19.6 million and record quarterly Adjusted EBITDA of $70.5 million. -- Record quarterly Distributable Cash Flow of $50.5 million. -- Completed the Superior Acquisition on September 30, 2011 for aggregate consideration of approximately $411 million funded by equity and debt financing.

PR Newswire

INDIANAPOLIS, Nov. 2, 2011 /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 September 30, 2011 of $19.6 million compared to net income of $21.2 million for the same quarter in 2010. These results include $20.3 million of noncash unrealized derivative losses and $2.1 million of acquisition expenses related to the Superior Acquisition as compared to $1.9 million of noncash unrealized derivative gains in the third quarter of 2010. For the nine months ended September 30, 2011, Calumet reported net income of $16.2 million compared to net income of $7.2 million for the same period in 2010.  These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $23.9 million of noncash unrealized derivative losses as compared to $13.8 million of noncash unrealized derivative losses for the same period in 2010. 

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below) were $47.1 million and $70.5 million, respectively, for the quarter ended September 30, 2011 as compared to $44.0 million and $44.0 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below) for the quarter ended September 30, 2011 was $50.5 million compared to $30.9 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to a $34.5 million increase in gross profit, discussed below. 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 pleased to add the Superior refinery employees and assets from Murphy Oil Corporation and are working diligently on the integration.  We are also pleased with our record results for the third quarter, noting improvements in both our specialty products and fuel products segments.  We continue to focus on strong operations to meet demand for our specialty products and to better 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 in our operations and our outlook, we raised our quarterly distribution to $0.50 per unit for the third quarter of 2011," said Grube.

Net income reported for the quarter decreased $1.6 million quarter over quarter due primarily to increased selling, general and administrative expenses of $6.7 million (including $2.1 million of acquisition expenses related to the Superior Acquisition), increased interest expense of $4.8 million and increased noncash unrealized derivative losses of $22.3 million, which may or may not be realized in the future as the derivatives are settled, partially offset by a $34.5 million increase in gross profit.

Gross profit by segment for the three and nine months ended September 30, 2011 and 2010 is as follows:



Three Months Ended


Nine Months Ended


September 30,


September 30,


2011


2010


2011


2010


(Dollars in thousands, except per barrel data)

Specialty products

$

87,789


$

60,880


$

193,988


$

130,706

Fuel products

8,812


1,226


42


12,695

Total gross profit (1)

$

96,601


$

62,106


$

194,030


$

143,401









Specialty products gross profit per barrel

$

31.32


$

20.58


$

23.52


$

16.56

Fuel products gross profit per barrel

$

3.01


$

0.48


$

0.01


$

1.79


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




The increase in specialty products segment gross profit of $26.9 million quarter over quarter was due primarily to a 30.5% increase in the average selling price per barrel, partially offset by a 23.4% increase in the average cost of crude oil per barrel, a 5.2% decrease in sales volume and higher operating costs, primarily repairs and maintenance.

The increase in fuel products segment gross profit of $7.6 million quarter over quarter was due primarily to a 13.8% increase in sales volume and a 43.8% increase in the average selling price per barrel (excluding the impact of realized hedging losses), partially offset by increased realized losses on derivatives of $38.9 million in our fuel products hedging program, a 25.1% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.

The increase in specialty products segment gross profit of $63.3 million for the nine months ended September 30, 2011 compared to the same period in 2010 was due primarily to a 4.5% increase in sales volume and a 25.7% increase in the average selling price per barrel, partially offset by a 28.3% increase in the average cost of crude oil per barrel and higher operating costs, primarily repair and maintenance.

The decrease in fuel products segment gross profit of $12.7 million for the nine months ended September 30, 2011 compared to the same period in 2010 was due primarily to increased realized losses on derivatives of $94.0 million in our fuel products hedging program, a 29.5% increase in the cost of crude oil per barrel and increased production of by-products, partially offset by a 9.2% increase in sales volume and a 40.9% increase in the average selling price per barrel, excluding the impact of realized hedging losses. During the second quarter of 2011, our fuel products hedged volumes, combined with lower refinery run rates, resulted in our diesel and jet fuel sales volumes being approximately 100% hedged at approximately $12.00 per barrel, preventing us from realizing the benefit of increased market crack spreads for these products. By-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in run rates at the Shreveport refinery.

Superior Acquisition

On September 30, 2011, we completed the acquisition of the Superior, Wisconsin refinery and associated operating assets and inventories and related business of Murphy Oil Corporation (the "Superior Acquisition") for aggregate consideration of approximately $411.1 million, excluding certain customary post-closing purchase price adjustments. The Superior refinery produces gasoline, diesel, asphalt and specialty petroleum products that are marketed primarily in the Midwest region of the U.S., including the surrounding border states, and Canada.  The Superior Acquisition was financed by a combination of (i) net proceeds of $193.6 million from our September 2011 public offering of common units, (ii) net proceeds of $180.3 million from the September 2011 private placement of 9⅜% senior notes due May 1, 2019 and (iii) borrowings under our revolving credit facility.  

We believe the Superior Acquisition provides greater scale, geographic diversity and development potential our refining business, as our current total refining throughput capacity has increased by approximately 50% to 135,000 barrels per day.

Quarterly Distribution

On October 11, 2011, the Company declared a quarterly cash distribution of $0.50 per unit on all outstanding units, or $26.3 million for the third quarter of 2011. The distribution will be paid on November 14, 2011 to unitholders of record as of the close of business on November 4, 2011. This quarterly distribution of $0.50 equates to $2.00 per unit, or approximately $105.3 million on an annualized basis, and represents an increase of $0.005 per unit from the second quarter of 2011.

Operations Summary

The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventories.



Three Months Ended


Nine Months Ended


September 30,


September 30,

Sales volume (bpd):

2011


2010


2011


2010

Specialty products

30,464


32,152


30,215


28,916

Fuel products

31,873


28,011


28,331


25,945

Total  (1)

62,337


60,163


58,546


54,861









Total feedstock runs (2)

63,567


61,678


60,529


55,774

Facility production: (3)








Specialty products:








Lubricating oils

15,017


14,707


14,316


13,268

Solvents

10,963


10,715


10,717


9,240

Waxes

1,434


1,307


1,234


1,157

Fuels

491


942


519


1,023

Asphalt and other by-products

8,984


8,079


8,660


6,649

Total

36,889


35,750


35,446


31,337

Fuel products:








Gasoline

9,741


8,538


9,660


8,674

Diesel

13,470


11,883


11,896


10,592

Jet fuel

4,872


5,336


4,495


5,306

By-products

492


735


704


586

Total

28,575


26,492


26,755


25,158

Total facility production (3)

65,464


62,242


62,201


56,495

____________


(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 at certain third-party facilities pursuant to supply and/or processing agreements. The increase in the total feedstock runs for the three months ended September 30, 2011 compared to the same quarter in 2010 is due primarily to the decision to increase crude oil run rates at our facilities because of favorable economics of running additional barrels. The increase in feedstock runs for the nine months ended September 30, 2011 compared to the same period in 2010 is due primarily to the decision to increase crude oil run rates at our facilities because of favorable economics of running additional barrels and the failure of an environmental operating unit at our Shreveport refinery which impacted run rates in the 2010 period.  This increase is partially offset by the impact of the approximately three week shutdown during May and June 2011 of the ExxonMobil crude oil pipeline serving our Shreveport refinery resulting from the Mississippi River flooding occurring during this period.


(3)  Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks at our facilities and at certain third-party facilities, pursuant to supply and/or processing agreements, including such agreements with LyondellBasell. The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstock and production of finished products and volume loss. The increase in production in the three and nine months ended September 30, 2011 compared to the same periods in 2010 is due primarily to higher throughput rates at our Shreveport refinery period over period as discussed above in footnote 2 of this table.




Revolving Credit Facility Capacity

As of September 30, 2011, in conjunction with the Superior Acquisition, Calumet fully exercised the $300.0 million expansion option under its revolving credit facility to increase the maximum availability of credit under the revolving credit facility from $550.0 million to $850.0 million, subject to borrowing base limitations. On September 30, 2011, Calumet had availability under its revolving credit facility of $271.5 million, based on a $535.5 million borrowing base, $208.0 million in outstanding standby letters of credit, and outstanding borrowings of $56.0 million. Calumet believes 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.

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 and waxes 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 six facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania and southeastern Texas.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, November 2, 2011, to discuss the financial and operational results for the third quarter of 2011. Anyone interested in listening to the presentation may call 866-700-6979 and enter passcode 98945363. For international callers, the dial-in number is 617-213-8836 and the passcode is 98945363.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 20383912. International callers can access the replay by calling 617-801-6888 and entering passcode 20383912. The replay will be available beginning Wednesday, November 2, 2011, at approximately 4:00 p.m. until Wednesday, November 16, 2011.

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 may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "may," "intend," "believe," "expect," "anticipate," "estimate," "continue" 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: 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 debt instruments; 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 ability to access sufficient crude oil supply through 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; fluctuations in the debt and equity markets; accidents or other unscheduled shutdowns; our ability to successfully integrate the Superior Acquisition 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.  Other factors described herein, or factors that are unknown or unpredictable, could also have a material adverse effect on future results.  Our forward looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward looking statement.  All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing.  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.

All subsequent written and oral forward-looking statements concerning Calumet, Murphy Oil Corporation, the Superior Acquisition or other related matters, and attributable to Calumet or Murphy Oil Corporation or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.  Calumet undertakes 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 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 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 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 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; (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; (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 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 and our investors to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash that are presented in this release have been updated to reflect the calculation of "Consolidated Cash Flow" contained in the indenture governing our 9⅜% senior notes due May 1, 2019 that were issued in April and September 2011 (the "2019 Notes").  We are required to report Consolidated Cash Flow to the holders of the 2019 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 release for prior periods have been updated to reflect the use of the new calculations.  

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 (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)



For the Three Months Ended


For the Nine Months Ended


September 30,


September 30,


2011


2010


2011


2010









Sales

$

777,780


$

595,273


$

2,116,790


$

1,594,542

Cost of sales

681,179


533,167


1,922,760


1,451,141

Gross profit

96,601


62,106


194,030


143,401

Operating costs and expenses:








Selling, general and administrative

14,148


7,403


35,143


22,894

Transportation

23,696


23,258


69,462


63,460

Taxes other than income taxes

1,683


1,308


4,246


3,431

Insurance recoveries



(8,698)


Other

543


565


1,781


1,373

Operating income

56,531


29,572


92,096


52,243

Other income (expense):








Interest expense

(12,577)


(7,794)


(30,602)


(22,505)

Debt extinguishment costs



(15,130)


Realized loss on derivative instruments

(3,814)


(2,288)


(5,798)


(8,147)

Unrealized gain (loss) on derivative instruments

(20,335)


1,931


(23,876)


(13,835)

Other

45


(121)


148


(170)

Total other expense

(36,681)


(8,272)


(75,258)


(44,657)

Net income before income taxes

19,850


21,300


16,838


7,586

Income tax expense

236


79


674


339

Net income

$

19,614


$

21,221


$

16,164


$

7,247

Allocation of net income:








Net income

$

19,614


$

21,221


$

16,164


$

7,247

Less:








General partner's interest in net income

392


424


323


145

General partner's incentive distribution rights

40



40


Net income attributable to limited partners

$

19,182


$

20,797


$

15,801


$

7,102

Weighted average limited partner units outstanding — basic

41,828


35,337


39,352


35,332

Weighted average limited partner units outstanding —diluted


41,837



35,352



39,368



35,351

Limited partners' interest basic and diluted net income per unit

$

0.46


$

0.59


$

0.40


$

0.20

Cash distributions declared per limited partner  unit

$

0.50


$

0.46


$

1.47


$

1.37




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)



September 30, 2011


December 31, 2010


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

66


$

37

Accounts receivable:




Trade

198,888


157,185

Other

34,106


776


232,994


157,961

Inventories

446,506


147,110

Prepaid expenses and other current assets

4,547


1,909

Deposits

2,520


2,094

Total current assets

686,633


309,111

Property, plant and equipment, net

843,111


612,433

Goodwill

48,335


48,335

Other intangible assets, net

24,423


29,666

Other noncurrent assets, net

39,094


17,127

Total assets

$

1,641,596


$

1,016,672

LIABILITIES AND PARTNERS' CAPITAL




Current liabilities:




Accounts payable

$

232,589


$

146,730

Accounts payable — related party

1,488


27,985

Accrued salaries, wages and benefits

11,888


7,559

Taxes payable

8,850


7,174

Other current liabilities

7,544


16,605

Current portion of long-term debt

749


4,844

Derivative liabilities

160,861


32,814

Total current liabilities

423,969


243,711

Pension and postretirement benefit obligations

25,349


9,168

Other long-term liabilities

1,062


1,083

Long-term debt, less current portion

642,293


364,431

Total liabilities

1,092,673


618,393

Commitments and contingencies




Partners' capital:




Limited partners' interest (50,779,778 units and 35,279,778 units issued and outstanding at September 30, 2011 and December 31, 2010, respectively)

652,229


407,773

General partner's interest

23,373


18,125

Accumulated other comprehensive loss

(126,679)


(27,619)

Total partners' capital

548,923


398,279

Total liabilities and partners' capital

$

1,641,596


$

1,016,672




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



For the Nine Months Ended


September 30,


2011


2010

Operating activities




Net income

$

16,164


$

7,247

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




Depreciation and amortization

43,644


44,410

Amortization of turnaround costs

8,288


6,639

Non-cash interest expense

2,363


2,879

Non-cash debt extinguishment costs

14,401


Provision for doubtful accounts

255


74

Unrealized loss on derivative instruments

23,876


13,835

Other non-cash activities

1,830


1,467

Changes in assets and liabilities:




Accounts receivable

(44,714)


(42,004)

Inventories

(109,787)


(12,964)

Prepaid expenses and other current assets

(1,926)


(1,103)

Derivative activity

4,928


849

Turnaround costs

(8,849)


(9,041)

Other assets

(197)


Deposits

(426)


4,767

Accounts payable

54,916


68,995

Accrued salaries, wages and benefits

2,917


(419)

Taxes payable

1,676


769

Other liabilities

(9,082)


1,492

Pension and postretirement benefit obligations

(836)


(190)

Net cash provided by (used in) operating activities

(559)


87,702

Investing activities




Additions to property, plant and equipment

(30,667)


(27,310)

Proceeds from insurance claim - equipment

1,942


Superior Acquisition, including a $30,574 receivable from seller

(441,626)


Proceeds from sale of equipment

219


201

Net cash used in investing activities

(470,132)


(27,109)

Financing activities




Proceeds from borrowings — revolving credit agreement

1,152,898


745,722

Repayments of borrowings — revolving credit agreement

(1,107,730)


(753,749)

Repayments of borrowings — term loan credit agreement

(367,385)


(2,888)

Payments on capital lease obligations

(802)


(1,023)

Proceeds from issuance of common units, net

281,870


793

Proceeds from 2019 senior notes offerings

586,000


Debt issuance costs

(23,140)


Contributions from Calumet GP, LLC

6,011


18

Common units repurchased for vested phantom unit grants

(620)


(248)

Distributions to partners

(56,382)


(49,179)

Net cash provided by (used in) financing activities

470,720


(60,554)

Net increase in cash and cash equivalents

29


39

Cash and cash equivalents at beginning of period

37


49

Cash and cash equivalents at end of period

$

66


$

88

Supplemental disclosure of cash flow information




Interest paid

$

13,381


$

19,635

Income taxes paid

$

548


$

138




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

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

(In thousands)



Three Months Ended


Nine Months Ended


September 30,


September 30,


2011


2010


2011


2010

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
















Net income

$

19,614


$

21,221


$

16,164


$

7,247

Add:








Interest expense

12,577


7,794


30,602


22,505

Debt extinguishment costs



15,130


Depreciation and amortization

14,680


14,908


43,644


44,410

Income tax expense

236


79


674


339

EBITDA

$

47,107


$

44,002


$

106,214


$

74,501

Add:








Unrealized (gain) loss on derivatives

$

20,335


$

(1,931)


$

23,876


$

13,835

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

(771)


(594)


4,366


848

Amortization of turnaround costs

2,542


2,539


8,288


6,639

Non-cash equity based compensation

1,335


(10)


3,298


442

Adjusted EBITDA

$

70,548


$

44,006


$

146,042


$

96,265

Less:








Replacement capital expenditures (1)

$

6,608


$

5,751


$

14,204


$

22,093

Cash interest expense (2)

11,869


6,821


28,239


19,626

Turnaround costs

1,348


493


8,849


9,041

Income tax expense

236


79


674


339

Distributable Cash Flow

$

50,487


$

30,862


$

94,076


$

45,166


(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.

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

(In thousands)



Nine Months Ended


September 30,


2011


2010

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




Distributable Cash Flow

$  94,076


$  45,166

Add:




Replacement capital expenditures (1)

14,204


22,093

Cash interest expense (2)

28,239


19,626

Turnaround costs

8,849


9,041

Income tax expense

674


339

Adjusted EBITDA

$  146,042


$  96,265

Less:




Unrealized loss on derivative instruments

23,876


13,835

Realized gain on derivatives, not included in net income

4,366


848

Amortization of turnaround costs

8,288


6,639

Non-cash equity based compensation

3,298


442

EBITDA

$  106,214


$  74,501

Add:




Unrealized loss on derivative instruments

23,876


13,835

Cash interest expense (2)

(28,239)


(19,626)

Non-cash equity based compensation

3,298


442

Amortization of turnaround costs

8,288


6,639

Income tax expense

(674)


(339)

Provision for doubtful accounts

255


74

Debt extinguishment costs

(729)


Changes in assets and liabilities:




Accounts receivable

(44,714)


(42,004)

Inventories

(109,787)


(12,964)

Other current assets

(2,352)


3,664

Turnaround costs

(8,849)


(9,041)

Derivative activity

4,928


849

Other assets

(197)


Accounts payable

54,916


68,995

Other liabilities

(4,489)


1,842

Other, including changes in noncurrent assets and liabilities

(2,304)


835

Net cash provided by (used in) operating activities

$  (559)


$  87,702


(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 September 30, 2011



Fuel Products Segment

The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel and gasoline swaps as of September 30, 2011, all of which are designated as cash flow hedges.



Crude Oil and Fuel Products Swap Contracts by Expiration Dates



Barrels




BPD



Implied Crack

Spread ($/Bbl)

Fourth Quarter 2011

1,334,000


14,500


$  12.16

Calendar Year 2012

5,626,000


15,372


13.27

Calendar Year 2013

3,690,000


10,110


24.95

Calendar Year 2014

1,000,000


2,740


25.01

Totals

11,650,000





Average price





$    17.85




At September 30, 2011, Calumet had the following put options related to jet fuel crack spreads in its fuel products segment, none of which are designated as cash flow hedges.


Jet Fuel Put Option Crack Spread Contracts by Expiration Dates



Barrels




BPD


Average

Sold Put

($/Bbl)


Average

Bought Put

($/Bbl)

Fourth Quarter 2011

184,000


2,000


$  4.75


$  7.00

Totals

184,000







Average price





$  4.75


$  7.00





Specialty Products Segment

At September 30, 2011 Calumet did not have any derivatives outstanding related to crude oil purchases in its specialty products segment.  

Fuel Products Segment Derivative Instruments Entered into Subsequent to September 30, 2011

The following table provides a summary of Calumet's implied crack spreads for the crude oil, diesel and gasoline swaps that were entered into subsequent to September 30, 2011 in conjunction with the Superior Acquisition, all of which are designated as cash flow hedges.



Crude Oil and Fuel Products Swap Contracts by Expiration Dates



Barrels




BPD



Implied Crack

Spread ($/Bbl)

Fourth Quarter 2011

552,000


6,000


$  23.72

Calendar Year 2012

5,490,000


15,000


23.39

Totals

6,042,000





Average price





$    23.42




SOURCE Calumet Specialty Products Partners, L.P.

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

Web Site: http://www.calumetspecialty.com