INDIANAPOLIS, Feb. 15, 2012 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," the "Company," "Calumet," "we," "our" or "us") reported net income for the quarter ended December 31, 2011 of $26.9 million compared to net income of $9.5 million for the same quarter in 2010. These results include $13.5 million of noncash unrealized derivative gains as compared to $2.0 million of noncash unrealized derivative losses in the fourth quarter of 2010. For the year ended December 31, 2011, Calumet reported net income of $43.0 million compared to net income of $16.7 million in 2010. Fiscal year 2011 results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $10.4 million of noncash unrealized derivative losses as compared to $15.8 million of noncash unrealized derivative losses in 2010.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below in the section of this press release titled "Non-GAAP Financial Measures") were $64.6 million and $65.0 million, respectively, for the quarter ended December 31, 2011 as compared to $33.6 million and $42.2 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below in the section of this press release titled "Non-GAAP Financial Measures") for the quarter ended December 31, 2011 was $33.1 million compared to $31.0 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to a $24.8 million increase in gross profit, discussed below, partially offset by decreased realized gains, a $2.7 million increase in transportation expense and a $3.4 million increase in selling, general and administrative expenses. 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 U.S. generally accepted accounting principles ("GAAP") measures.
"Having completed our first quarter since our acquisition of the Superior refinery and as a result of its successful integration and contribution to our results, we increased our quarterly distribution to $0.53 per unit, a $0.03 increase from the prior quarter. We continue to focus on our operations to meet demand for our specialty products and to better benefit from current fuel products crack spreads that to date have widened again in the first quarter of 2012," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "Also, in early January we completed two strategic, niche acquisitions we believe will enhance our specialty products offerings over time," said Grube.
Net income reported for quarter ended December 31, 2011 increased $17.4 million quarter over quarter due primarily to a $24.8 million increase in gross profit, as discussed below, and a $15.5 million increase in noncash unrealized derivative gains, which may or may not be realized in the future as the derivatives are settled, partially offset by a $10.2 million increase in interest expense, a $3.4 million increase in selling, general and administrative expenses and a $2.7 million increase in transportation expense.
Gross profit by segment for the three months and year ended December 31, 2011 and 2010 is as follows:
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
(Dollars in thousands, except per barrel data)
Specialty
products $64,659 $56,710 $258,648 $187,416
Fuel
products 15,441 (1,362) 15,482 11,333
------ ------ ------ ------
Total
gross
profit
(1) $80,100 $55,348 $274,130 $198,749
======= ======= ======== ========
Specialty
products
gross
profit
per
barrel $21.22 $19.75 $22.90 $17.41
====== ====== ====== ======
Fuel
products
gross
profit
per
barrel $3.02 $(0.55) $1.21 $1.19
===== ====== ===== =====
(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 $7.9 million quarter over quarter was due primarily to a 13.4% increase in the average selling price per barrel, partially offset by a 20.8% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.
The increase in fuel products segment gross profit of $16.8 million quarter over quarter was due primarily to a 106.8% increase in sales volume primarily due to incremental volumes from the Superior acquisition, a 21.6% increase in the average selling price per barrel (excluding the impact of realized hedging losses reflected in sales), partially offset by a 16.0% increase in the average cost of crude oil per barrel, increased realized losses on derivatives of $23.3 million in our fuel products hedging program and higher operating costs, primarily repairs and maintenance.
The increase in specialty products segment gross profit of $71.2 million year over year was due primarily to a 22.3% increase in the average selling price per barrel, partially offset by a 26.1% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.
The increase in fuel products segment gross profit of $4.1 million year over year was due primarily to a 34.4% increase in sales volume as a result of the Superior acquisition and a 34.8% increase in the average selling price per barrel (excluding the impact of realized hedging losses reflected in sales), partially offset by a 25.8% increase in the average cost of crude oil per barrel, increased realized losses on derivatives of $117.3 million in our fuel products hedging program and higher operating costs, primarily repairs and maintenance. Additionally, 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.
Quarterly Distribution
On January 23, 2012, the Company declared a quarterly cash distribution of $0.53 per unit on all outstanding units, or $28.2 million for the fourth quarter of 2011. The distribution was paid on February 14, 2012 to unitholders of record as of the close of business on February 3, 2012. This quarterly distribution represents an increase of 6.0% over the third quarter of 2011. Annual distributions of $2.00 per unit in 2011 represent an increase of 8.7% year over year.
Operations Summary
The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased fuel product blendstocks such as ethanol and biodiesel in our fuel products segment.
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
Sales volume (bpd): 2011 2010 2011 2010
---- ---- ---- ----
Specialty products 33,120 31,217 30,948 29,496
Fuel products 55,533 26,847 35,186 26,172
------ ------ ------ ------
Total (1) 88,653 58,064 66,134 55,668
Total feedstock runs (2) 95,308 56,500 69,295 55,957
Facility production: (3)
Specialty products:
Lubricating oils 14,751 14,966 14,427 13,697
Solvents 9,887 9,666 10,508 9,347
Waxes 1,373 1,408 1,269 1,220
Fuels 667 1,132 556 1,050
Asphalt and other by-
products 14,336 7,673 10,090 6,907
------ ----- ------ -----
Total 41,014 34,845 36,850 32,221
------ ------ ------ ------
Fuel products:
Gasoline 24,532 8,991 13,409 8,754
Diesel 23,102 11,417 14,721 10,800
Jet fuel 4,597 4,110 4,520 5,004
Heavy fuels and other 3,503 379 1,409 535
----- --- ----- ---
Total 55,734 24,897 34,059 25,093
------ ------ ------ ------
Total facility
production (3) 96,748 59,742 70,909 57,314
====== ====== ====== ======
____________
(1) Total sales volume includes sales from the production at our
facilities and certain third-party facilities pursuant to supply
and/or processing agreements and sales of inventories. Total sales
volume excludes the sale of purchased fuel product blendstocks such
as ethanol and biodiesel in our fuel products segment sales. The
increase in total sales volume in 2011 compared to 2010 is due
primarily to incremental sales of fuel products subsequent to the
Superior acquisition on September 30, 2011, as well as our decision
to increase crude oil run rates at our facilities overall during
2011 because of the favorable economics of running additional
barrels.
(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 quarter over
quarter is due primarily to incremental feedstock runs from the
acquisition of the Superior refinery on September 30, 2011, as well
as the decision to increase feedstock runs at our facilities overall
because of favorable economics of running additional barrels.
The increase in total feedstock runs in 2011 compared to 2010 is due
primarily to incremental feedstock runs from the acquisition of the
Superior refinery on September 30, 2011, our decision to increase
feedstock run rates at our facilities overall during 2011 because of
the favorable economics of running additional barrels and the
failure of an environmental operating unit at our Shreveport
refinery during the first quarter of 2010 which impacted run rates
in 2010, 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 the 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
total facility production quarter over quarter is due primarily to
incremental feedstock runs from the acquisition of the Superior
refinery on September 30, 2011, as well as higher feedstock runs at
our facilities overall period over period, as discussed above in
footnote 2 of this table.
The increase in total facility production in 2011 over 2010 is due
primarily to incremental feedstock runs from the acquisition of the
Superior refinery on September 30, 2011 and increased feedstock runs
at our facilities overall, as discussed above in footnote 2 of this
table.
Revolving Credit Facility Capacity
On December 31, 2011, Calumet had availability under its revolving credit facility of $340.8 million, based on a $570.8 million borrowing base, $230.0 million in outstanding standby letters of credit, and no outstanding borrowings. Calumet believes it will continue to have sufficient cash flow from operations and borrowing capacity to meet its financial commitments, minimum quarterly distributions to unitholders, debt service obligations, contingencies and anticipated capital expenditures.
Recent Acquisitions
Hercules Synthetic Lubricants Business
On January 3, 2012, we completed the acquisition of an aviation and refrigerant lubricants business (a polyolester based synthetic lubricants business) from Hercules Incorporated, a subsidiary of Ashland, Inc. for aggregate consideration of approximately $19.6 million, excluding certain customary post-closing purchase price adjustments. The acquisition includes a manufacturing facility located in Louisiana, Missouri.
TruSouth Oil
On January 6, 2012, we completed the acquisition of all of the outstanding membership interests of TruSouth Oil, LLC, a specialty petroleum packaging and distribution company and related party, located in Shreveport, Louisiana for aggregate consideration of approximately $25.5 million.
About the Partnership
Calumet is a master limited partnership and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customized lubricating oils, solvents, waxes and asphalt used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel. Calumet is based in Indianapolis, Indiana and has eight facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania, southeastern Texas and eastern Missouri.
A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, February 15, 2012, to discuss the financial and operational results for the fourth quarter of 2011. Anyone interested in listening to the presentation may call 800-659-2032 and enter passcode 16915381. For international callers, the dial-in number is 617-614-2712 and the passcode is 16915381.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 32659009. International callers can access the replay by calling 617-801-6888 and entering passcode 32659009. The replay will be available beginning Wednesday, February 15, 2012, at approximately 3:00 p.m. until Wednesday, February 29, 2012.
The information contained in this press release is available on Calumet's website at http://www.calumetspecialty.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements and information in this press release concerning results for the three months and year ended December 31, 2011 may constitute "forward-looking statements." The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: the overall demand for specialty hydrocarbon products, fuels and other refined products; our ability to produce specialty products and fuels that meet our customers' unique and precise specifications; the impact of fluctuations and rapid increases or decreases in crude oil and crack spread prices, including the resulting impact on our liquidity; the results of our hedging and other risk management activities; our ability to comply with financial covenants contained in our debt instruments; the availability of, and our ability to consummate, acquisition or combination opportunities and the impact of any completed acquisitions; labor relations; our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets, businesses or third-party product supply and processing relationships; our ability to timely and effectively integrate the operations of recently acquired businesses or assets, particularly those in new geographic areas or in new lines of business; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of our credit ratings and ability to receive open credit lines from our suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; our ability to access sufficient crude oil supply through long-term or month-to-month evergreen contracts and on the spot market; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations, including guidance related to the Dodd-Frank Wall Street Reform and Consumer Protection Act; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; our ability to access the debt and equity markets; accidents or other unscheduled shutdowns; and general economic, market or business conditions.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
We include in this press release the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net income and 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 and support our indebtedness;
-- our operating performance and return on capital as compared to those of
other companies in our industry, without regard to financing or capital
structure; and
-- the viability of acquisitions and capital expenditure projects and the
overall rates of return on alternative investment opportunities.
We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay distributions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.
We define EBITDA for any period as net income (loss) plus interest expense (including debt issuance and extinguishment costs), income taxes and depreciation and amortization.
We define "Adjusted EBITDA" for any period as: (1) net income (loss) plus (2)(a) interest expense; (b) income taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) realized gains under derivative instruments excluded from the determination of net income (loss); (f) non-cash equity based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income (loss); (g) debt refinancing fees, premiums and penalties and (h) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; minus (3)(a) unrealized gains from mark to market accounting for hedging activities; (b) realized losses under derivative instruments excluded from the determination of net income (loss) 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 press release for prior periods have been updated to reflect the use of the new calculations. Please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for additional details regarding the covenants governing our debt instruments.
EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA and Distributable Cash Flow, management recognizes and considers the limitations of these measurements. EBITDA, Adjusted EBITDA and Distributable Cash Flow do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA and Distributable Cash Flow are only three of the measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA and Distributable Cash Flow in the same manner. The following tables present a reconciliation of both net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow, and Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
For the Three Months
Ended For the Year Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
Sales $1,018,133 $596,210 $3,134,923 $2,190,752
Cost of sales 938,033 540,862 2,860,793 1,992,003
------- ------- --------- ---------
Gross profit 80,100 55,348 274,130 198,749
Operating costs and expenses:
Selling, general and
administrative 15,693 12,330 50,836 35,224
Transportation 24,725 22,011 94,187 85,471
Taxes other than income taxes 1,415 1,170 5,661 4,601
Insurance recoveries - - (8,698) -
Other 5,071 590 6,852 1,963
----- --- ----- -----
Operating income 33,196 19,247 125,292 71,490
------ ------ ------- ------
Other income (expense):
Interest expense (18,145) (7,992) (48,747) (30,497)
Debt extinguishment costs - - (15,130) -
Realized gain (loss) on
derivative instruments (2,111) 443 (7,909) (7,704)
Unrealized gain (loss) on
derivative instruments 13,493 (2,008) (10,383) (15,843)
Other 694 23 842 (147)
--- --- --- ----
Total other expense (6,069) (9,534) (81,327) (54,191)
------ ------ ------- -------
Net income before income taxes 27,127 9,713 43,965 17,299
Income tax expense 255 259 929 598
--- --- --- ---
Net income $26,872 $9,454 $43,036 $16,701
======= ====== ======= =======
Allocation of net income:
Net income $26,872 $9,454 $43,036 $16,701
Less:
General partner's interest in
net income 538 189 861 334
General partner's incentive
distribution rights 282 - 322 -
--- --- --- ---
Net income attributable to
limited partners $26,052 $9,265 $41,853 $16,367
======= ====== ======= =======
Weighted average limited
partner units outstanding -
basic 51,544 35,342 42,554 35,335
====== ====== ====== ======
Weighted average limited
partner units outstanding
-diluted 51,544 35,361 42,554 35,351
====== ====== ====== ======
Limited partners' interest
basic and diluted net income
per unit $0.50 $0.26 $0.98 $0.46
===== ===== ===== =====
Cash distributions declared
per limited partner unit $0.53 $0.47 $2.00 $1.84
===== ===== ===== =====
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December December
31, 31,
2011 2010
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $64 $37
Accounts receivable, net 212,065 157,961
Inventories 497,740 147,110
Derivative assets 58,502 -
Prepaid expenses and other
current assets 8,179 1,909
Deposits 2,094 2,094
----- -----
Total current assets 778,644 309,111
Property, plant and equipment,
net 842,101 612,433
Goodwill 48,335 48,335
Other intangible assets, net 22,675 29,666
Other noncurrent assets, net 40,303 17,127
------ ------
Total assets $1,732,058 $1,016,672
========== ==========
LIABILITIES AND PARTNERS'
CAPITAL
Current liabilities:
Accounts payable $313,326 $174,715
Accrued salaries, wages and
benefits 13,481 7,559
Taxes payable 13,068 7,174
Other current liabilities 4,600 16,605
Current portion of long-term
debt 551 4,844
Derivative liabilities 43,581 32,814
------ ------
Total current liabilities 388,607 243,711
Pension and postretirement
benefit obligations 26,957 9,168
Other long-term liabilities 1,055 1,083
Long-term debt, less current
portion 586,539 364,431
------- -------
Total liabilities 1,003,158 618,393
Commitments and contingencies
Partners' capital:
Partners' capital 690,373 425,898
Accumulated other
comprehensive income (loss) 38,527 (27,619)
------ -------
Total partners' capital 728,900 398,279
------- -------
Total liabilities and
partners' capital $1,732,058 $1,016,672
========== ==========
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
December 31,
------------
2011 2010
---- ----
Operating activities (Unaudited)
Net income $43,036 $16,701
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 63,009 60,287
Amortization of turnaround costs 11,384 10,006
Non-cash interest expense 3,728 3,864
Provision for doubtful accounts 380 74
Non-cash debt extinguishment costs 14,401 -
Unrealized loss on derivative
instruments 10,383 15,843
Loss on disposal of fixed assets 1,525 239
Non-cash equity based compensation 4,895 1,540
Other non-cash activities 74 142
Changes in assets and liabilities:
Accounts receivable (54,484) (35,267)
Inventories (167,028) (9,860)
Prepaid expenses and other current
assets (425) (98)
Derivative activity 11,742 2,990
Turnaround costs (14,052) (10,684)
Deposits - 4,767
Other assets (426) (2,006)
Accounts payable 138,611 64,739
Accrued salaries, wages and benefits 4,066 1,189
Taxes payable 5,894 (377)
Other liabilities (12,033) 10,463
Pension and postretirement benefit
obligations (902) (409)
---- ----
Net cash provided by operating
activities 63,778 134,143
Investing activities
Additions to property, plant and
equipment (49,478) (35,001)
Proceeds from insurance recoveries -
equipment 1,942 -
Superior acquisition (413,173) -
Proceeds from sale of equipment 285 242
--- ---
Net cash used in investing activities (460,424) (34,759)
Financing activities
Proceeds from borrowings - revolving
credit agreement 1,598,680 1,015,485
Repayments of borrowings - revolving
credit agreement (1,609,512) (1,044,553)
Repayments of borrowings - term loan
credit agreement (367,385) (3,850)
Payments on capital lease obligations (1,069) (1,302)
Proceeds from public offerings of
common units, net 294,702 793
Proceeds from 2019 senior notes
offerings 586,000 -
Debt issuance costs (27,666) -
Contributions from Calumet GP, LLC 6,286 18
Common units repurchased for vested
phantom unit grants (620) (248)
Distributions to partners (82,743) (65,739)
------- -------
Net cash provided by (used in)
financing activities 396,673 (99,396)
------- -------
Net increase (decrease) in cash and
cash equivalents 27 (12)
Cash and cash equivalents at beginning
of period 37 49
--- ---
Cash and cash equivalents at end of
period $64 $37
=== ===
Supplemental disclosure of cash flow
information
Interest paid, net of capitalized
interest $37,856 $26,389
======= =======
Income taxes paid $568 $188
==== ====
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,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Reconciliation of Net Income
to EBITDA, Adjusted EBITDA
and Distributable Cash Flow: (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income $26,872 $9,454 $43,036 $16,701
Add:
Interest expense 18,145 7,992 48,747 30,497
Debt extinguishment costs - - 15,130 -
Depreciation and amortization 19,365 15,877 63,009 60,287
Income tax expense 255 259 929 598
--- --- --- ---
EBITDA $64,637 $33,582 $170,851 $108,083
------- ------- -------- --------
Add:
Unrealized (gain) loss on
derivatives $(13,493) $2,008 $10,383 $15,843
Realized gain on derivatives,
not included in net income 6,630 2,142 10,996 2,990
Amortization of turnaround
costs 3,096 3,367 11,384 10,006
Non-cash equity based
compensation and other non-
cash items 4,108 1,098 7,406 1,540
----- ----- ----- -----
Adjusted EBITDA $64,978 $42,197 $211,020 $138,462
------- ------- -------- --------
Less:
Replacement capital
expenditures (1) $9,658 $2,252 $23,862 $24,345
Cash interest expense (2) 16,780 7,007 45,019 26,633
Turnaround costs 5,203 1,643 14,052 10,684
Income tax expense 255 259 929 598
--- --- --- ---
Distributable Cash Flow $33,082 $31,036 $127,158 $76,202
======= ======= ======== =======
(1) Replacement capital expenditures are defined as those capital
expenditures which do not increase operating capacity or reduce operating
costs and exclude turnaround costs.
(2) Represents consolidated interest expense less non-cash interest
expense.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF DISTRIBUTABLE CASH FLOW, ADJUSTED EBITDA AND
EBITDA TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(In thousands)
Year Ended
December 31,
------------
2011 2010
---- ----
Reconciliation of Distributable Cash
Flow, Adjusted EBITDA and EBITDA to
net cash provided by operating
activities: (Unaudited) (Unaudited)
Distributable Cash Flow $127,158 $76,202
Add:
Replacement capital expenditures (1) 23,862 24,345
Cash interest expense (2) 45,019 26,633
Turnaround costs 14,052 10,684
Income tax expense 929 598
--- ---
Adjusted EBITDA $211,020 $138,462
======== ========
Less:
Unrealized loss on derivative
instruments 10,383 15,843
Realized gain on derivatives, not
included in net income 10,996 2,990
Amortization of turnaround costs 11,384 10,006
Non-cash equity based compensation
and other non-cash items 7,406 1,540
----- -----
EBITDA $170,851 $108,083
======== ========
Add:
Unrealized loss on derivative
instruments 10,383 15,843
Cash interest expense (2) (45,019) (26,633)
Non-cash equity based compensation 4,895 1,540
Amortization of turnaround costs 11,384 10,006
Income tax expense (929) (598)
Provision for doubtful accounts 380 74
Debt extinguishment costs (729) -
Changes in assets and liabilities:
Accounts receivable (54,484) (35,267)
Inventories (167,028) (9,860)
Other current assets (425) 4,669
Turnaround costs (14,052) (10,684)
Derivative activity 11,742 2,990
Other noncurrent assets (426) (2,006)
Accounts payable 138,611 64,739
Other liabilities (2,073) 11,275
Other, including changes in
noncurrent liabilities 697 (28)
--- ---
Net cash provided by operating
activities $63,778 $134,143
======= ========
(1) Replacement capital expenditures are defined as those
capital expenditures which do not increase operating capacity
or reduce operating costs and exclude turnaround costs.
(2) Represents consolidated interest expense less non-cash
interest expense.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
COMMODITY DERIVATIVE INSTRUMENTS
As of December 31, 2011
Fuel Products Segment
The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel, jet and gasoline swaps as of December 31, 2011, all of which are designated as cash flow hedges.
Crude Oil and Fuel Products Swap Contracts by Implied
Expiration Dates Crack
--------------------------------------------- -------
Spread
Barrels BPD ($/Bbl)
------- --- -------
First Quarter 2012 2,866,500 31,500 $17.46
Second Quarter 2012 2,775,500 30,500 18.39
Third Quarter 2012 2,852,000 31,000 18.12
Fourth Quarter 2012 2,622,000 28,500 19.20
Calendar Year 2013 4,420,000 12,110 24.18
Calendar Year 2014 1,000,000 2,740 25.01
--------- -----
Totals 16,536,000
Average price $20.26
Specialty Products Segment
The following table provides a summary of Calumet's derivatives for its natural gas purchases as of December 31, 2011, none of which are designated as cash flow hedges.
Natural Gas Contracts by Expiration Dates
-----------------------------------------
MMBtu $/MMBtu
----- -------
First Quarter 2012 1,200,000 $3.90
Second Quarter 2012 1,200,000 3.93
Third Quarter 2012 1,200,000 4.03
Fourth Quarter 2012 600,000 4.08
------- ----
Totals 4,200,000
Average price $3.97
SOURCE Calumet Specialty Products Partners, L.P.
SOURCE: Calumet Specialty Products Partners, L.P.
PR Newswire
INDIANAPOLIS, Feb. 15, 2012
INDIANAPOLIS, Feb. 15, 2012 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," the "Company," "Calumet," "we," "our" or "us") reported net income for the quarter ended December 31, 2011 of $26.9 million compared to net income of $9.5 million for the same quarter in 2010. These results include $13.5 million of noncash unrealized derivative gains as compared to $2.0 million of noncash unrealized derivative losses in the fourth quarter of 2010. For the year ended December 31, 2011, Calumet reported net income of $43.0 million compared to net income of $16.7 million in 2010. Fiscal year 2011 results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $10.4 million of noncash unrealized derivative losses as compared to $15.8 million of noncash unrealized derivative losses in 2010.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below in the section of this press release titled "Non-GAAP Financial Measures") were $64.6 million and $65.0 million, respectively, for the quarter ended December 31, 2011 as compared to $33.6 million and $42.2 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below in the section of this press release titled "Non-GAAP Financial Measures") for the quarter ended December 31, 2011 was $33.1 million compared to $31.0 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to a $24.8 million increase in gross profit, discussed below, partially offset by decreased realized gains, a $2.7 million increase in transportation expense and a $3.4 million increase in selling, general and administrative expenses. 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 U.S. generally accepted accounting principles ("GAAP") measures.
"Having completed our first quarter since our acquisition of the Superior refinery and as a result of its successful integration and contribution to our results, we increased our quarterly distribution to $0.53 per unit, a $0.03 increase from the prior quarter. We continue to focus on our operations to meet demand for our specialty products and to better benefit from current fuel products crack spreads that to date have widened again in the first quarter of 2012," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "Also, in early January we completed two strategic, niche acquisitions we believe will enhance our specialty products offerings over time," said Grube.
Net income reported for quarter ended December 31, 2011 increased $17.4 million quarter over quarter due primarily to a $24.8 million increase in gross profit, as discussed below, and a $15.5 million increase in noncash unrealized derivative gains, which may or may not be realized in the future as the derivatives are settled, partially offset by a $10.2 million increase in interest expense, a $3.4 million increase in selling, general and administrative expenses and a $2.7 million increase in transportation expense.
Gross profit by segment for the three months and year ended December 31, 2011 and 2010 is as follows:
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
(Dollars in thousands, except per barrel data) | ||||||||||||
Specialty products | $ | 64,659 | $ | 56,710 | $ | 258,648 | $ | 187,416 | ||||
Fuel products | 15,441 | (1,362) | 15,482 | 11,333 | ||||||||
Total gross profit (1) | $ | 80,100 | $ | 55,348 | $ | 274,130 | $ | 198,749 | ||||
Specialty products gross profit per barrel | $ | 21.22 | $ | 19.75 | $ | 22.90 | $ | 17.41 | ||||
Fuel products gross profit per barrel | $ | 3.02 | $ | (0.55) | $ | 1.21 | $ | 1.19 | ||||
(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 $7.9 million quarter over quarter was due primarily to a 13.4% increase in the average selling price per barrel, partially offset by a 20.8% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.
The increase in fuel products segment gross profit of $16.8 million quarter over quarter was due primarily to a 106.8% increase in sales volume primarily due to incremental volumes from the Superior acquisition, a 21.6% increase in the average selling price per barrel (excluding the impact of realized hedging losses reflected in sales), partially offset by a 16.0% increase in the average cost of crude oil per barrel, increased realized losses on derivatives of $23.3 million in our fuel products hedging program and higher operating costs, primarily repairs and maintenance.
The increase in specialty products segment gross profit of $71.2 million year over year was due primarily to a 22.3% increase in the average selling price per barrel, partially offset by a 26.1% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.
The increase in fuel products segment gross profit of $4.1 million year over year was due primarily to a 34.4% increase in sales volume as a result of the Superior acquisition and a 34.8% increase in the average selling price per barrel (excluding the impact of realized hedging losses reflected in sales), partially offset by a 25.8% increase in the average cost of crude oil per barrel, increased realized losses on derivatives of $117.3 million in our fuel products hedging program and higher operating costs, primarily repairs and maintenance. Additionally, 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.
Quarterly Distribution
On January 23, 2012, the Company declared a quarterly cash distribution of $0.53 per unit on all outstanding units, or $28.2 million for the fourth quarter of 2011. The distribution was paid on February 14, 2012 to unitholders of record as of the close of business on February 3, 2012. This quarterly distribution represents an increase of 6.0% over the third quarter of 2011. Annual distributions of $2.00 per unit in 2011 represent an increase of 8.7% year over year.
Operations Summary
The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventories and the sale of purchased fuel product blendstocks such as ethanol and biodiesel in our fuel products segment.
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
Sales volume (bpd): | 2011 | 2010 | 2011 | 2010 | ||||
Specialty products | 33,120 | 31,217 | 30,948 | 29,496 | ||||
Fuel products | 55,533 | 26,847 | 35,186 | 26,172 | ||||
Total (1) | 88,653 | 58,064 | 66,134 | 55,668 | ||||
Total feedstock runs (2) | 95,308 | 56,500 | 69,295 | 55,957 | ||||
Facility production: (3) | ||||||||
Specialty products: | ||||||||
Lubricating oils | 14,751 | 14,966 | 14,427 | 13,697 | ||||
Solvents | 9,887 | 9,666 | 10,508 | 9,347 | ||||
Waxes | 1,373 | 1,408 | 1,269 | 1,220 | ||||
Fuels | 667 | 1,132 | 556 | 1,050 | ||||
Asphalt and other by-products | 14,336 | 7,673 | 10,090 | 6,907 | ||||
Total | 41,014 | 34,845 | 36,850 | 32,221 | ||||
Fuel products: | ||||||||
Gasoline | 24,532 | 8,991 | 13,409 | 8,754 | ||||
Diesel | 23,102 | 11,417 | 14,721 | 10,800 | ||||
Jet fuel | 4,597 | 4,110 | 4,520 | 5,004 | ||||
Heavy fuels and other | 3,503 | 379 | 1,409 | 535 | ||||
Total | 55,734 | 24,897 | 34,059 | 25,093 | ||||
Total facility production (3) | 96,748 | 59,742 | 70,909 | 57,314 | ||||
____________
(1) Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to supply and/or processing agreements and sales of inventories. Total sales volume excludes the sale of purchased fuel product blendstocks such as ethanol and biodiesel in our fuel products segment sales. The increase in total sales volume in 2011 compared to 2010 is due primarily to incremental sales of fuel products subsequent to the Superior acquisition on September 30, 2011, as well as our decision to increase crude oil run rates at our facilities overall during 2011 because of the favorable economics of running additional barrels. | |
(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 quarter over quarter is due primarily to incremental feedstock runs from the acquisition of the Superior refinery on September 30, 2011, as well as the decision to increase feedstock runs at our facilities overall because of favorable economics of running additional barrels. | |
The increase in total feedstock runs in 2011 compared to 2010 is due primarily to incremental feedstock runs from the acquisition of the Superior refinery on September 30, 2011, our decision to increase feedstock run rates at our facilities overall during 2011 because of the favorable economics of running additional barrels and the failure of an environmental operating unit at our Shreveport refinery during the first quarter of 2010 which impacted run rates in 2010, 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 the 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 total facility production quarter over quarter is due primarily to incremental feedstock runs from the acquisition of the Superior refinery on September 30, 2011, as well as higher feedstock runs at our facilities overall period over period, as discussed above in footnote 2 of this table. The increase in total facility production in 2011 over 2010 is due primarily to incremental feedstock runs from the acquisition of the Superior refinery on September 30, 2011 and increased feedstock runs at our facilities overall, as discussed above in footnote 2 of this table. | |
Revolving Credit Facility Capacity
On December 31, 2011, Calumet had availability under its revolving credit facility of $340.8 million, based on a $570.8 million borrowing base, $230.0 million in outstanding standby letters of credit, and no outstanding borrowings. Calumet believes it will continue to have sufficient cash flow from operations and borrowing capacity to meet its financial commitments, minimum quarterly distributions to unitholders, debt service obligations, contingencies and anticipated capital expenditures.
Recent Acquisitions
Hercules Synthetic Lubricants Business
On January 3, 2012, we completed the acquisition of an aviation and refrigerant lubricants business (a polyolester based synthetic lubricants business) from Hercules Incorporated, a subsidiary of Ashland, Inc. for aggregate consideration of approximately $19.6 million, excluding certain customary post-closing purchase price adjustments. The acquisition includes a manufacturing facility located in Louisiana, Missouri.
TruSouth Oil
On January 6, 2012, we completed the acquisition of all of the outstanding membership interests of TruSouth Oil, LLC, a specialty petroleum packaging and distribution company and related party, located in Shreveport, Louisiana for aggregate consideration of approximately $25.5 million.
About the Partnership
Calumet is a master limited partnership and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customized lubricating oils, solvents, waxes and asphalt used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel. Calumet is based in Indianapolis, Indiana and has eight facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania, southeastern Texas and eastern Missouri.
A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, February 15, 2012, to discuss the financial and operational results for the fourth quarter of 2011. Anyone interested in listening to the presentation may call 800-659-2032 and enter passcode 16915381. For international callers, the dial-in number is 617-614-2712 and the passcode is 16915381.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 32659009. International callers can access the replay by calling 617-801-6888 and entering passcode 32659009. The replay will be available beginning Wednesday, February 15, 2012, at approximately 3:00 p.m. until Wednesday, February 29, 2012.
The information contained in this press release is available on Calumet's website at http://www.calumetspecialty.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements and information in this press release concerning results for the three months and year ended December 31, 2011 may constitute "forward-looking statements." The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: the overall demand for specialty hydrocarbon products, fuels and other refined products; our ability to produce specialty products and fuels that meet our customers' unique and precise specifications; the impact of fluctuations and rapid increases or decreases in crude oil and crack spread prices, including the resulting impact on our liquidity; the results of our hedging and other risk management activities; our ability to comply with financial covenants contained in our debt instruments; the availability of, and our ability to consummate, acquisition or combination opportunities and the impact of any completed acquisitions; labor relations; our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets, businesses or third-party product supply and processing relationships; our ability to timely and effectively integrate the operations of recently acquired businesses or assets, particularly those in new geographic areas or in new lines of business; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of our credit ratings and ability to receive open credit lines from our suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; our ability to access sufficient crude oil supply through long-term or month-to-month evergreen contracts and on the spot market; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations, including guidance related to the Dodd-Frank Wall Street Reform and Consumer Protection Act; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; our ability to access the debt and equity markets; accidents or other unscheduled shutdowns; and general economic, market or business conditions.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
We include in this press release the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net income and 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 and support our indebtedness;
- our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
- the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.
We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay distributions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.
We define EBITDA for any period as net income (loss) plus interest expense (including debt issuance and extinguishment costs), income taxes and depreciation and amortization.
We define "Adjusted EBITDA" for any period as: (1) net income (loss) plus (2)(a) interest expense; (b) income taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) realized gains under derivative instruments excluded from the determination of net income (loss); (f) non-cash equity based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income (loss); (g) debt refinancing fees, premiums and penalties and (h) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; minus (3)(a) unrealized gains from mark to market accounting for hedging activities; (b) realized losses under derivative instruments excluded from the determination of net income (loss) 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 press release for prior periods have been updated to reflect the use of the new calculations. Please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for additional details regarding the covenants governing our debt instruments.
EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA and Distributable Cash Flow, management recognizes and considers the limitations of these measurements. EBITDA, Adjusted EBITDA and Distributable Cash Flow do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA and Distributable Cash Flow are only three of the measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA and Distributable Cash Flow in the same manner. The following tables present a reconciliation of both net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow, and Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per unit data) | ||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Sales | $ | 1,018,133 | $ | 596,210 | $ | 3,134,923 | $ | 2,190,752 | ||||
Cost of sales | 938,033 | 540,862 | 2,860,793 | 1,992,003 | ||||||||
Gross profit | 80,100 | 55,348 | 274,130 | 198,749 | ||||||||
Operating costs and expenses: | ||||||||||||
Selling, general and administrative | 15,693 | 12,330 | 50,836 | 35,224 | ||||||||
Transportation | 24,725 | 22,011 | 94,187 | 85,471 | ||||||||
Taxes other than income taxes | 1,415 | 1,170 | 5,661 | 4,601 | ||||||||
Insurance recoveries | — | — | (8,698) | — | ||||||||
Other | 5,071 | 590 | 6,852 | 1,963 | ||||||||
Operating income | 33,196 | 19,247 | 125,292 | 71,490 | ||||||||
Other income (expense): | ||||||||||||
Interest expense | (18,145) | (7,992) | (48,747) | (30,497) | ||||||||
Debt extinguishment costs | — | — | (15,130) | — | ||||||||
Realized gain (loss) on derivative instruments | (2,111) | 443 | (7,909) | (7,704) | ||||||||
Unrealized gain (loss) on derivative instruments | 13,493 | (2,008) | (10,383) | (15,843) | ||||||||
Other | 694 | 23 | 842 | (147) | ||||||||
Total other expense | (6,069) | (9,534) | (81,327) | (54,191) | ||||||||
Net income before income taxes | 27,127 | 9,713 | 43,965 | 17,299 | ||||||||
Income tax expense | 255 | 259 | 929 | 598 | ||||||||
Net income | $ | 26,872 | $ | 9,454 | $ | 43,036 | $ | 16,701 | ||||
Allocation of net income: | ||||||||||||
Net income | $ | 26,872 | $ | 9,454 | $ | 43,036 | $ | 16,701 | ||||
Less: | ||||||||||||
General partner's interest in net income | 538 | 189 | 861 | 334 | ||||||||
General partner's incentive distribution rights | 282 | — | 322 | — | ||||||||
Net income attributable to limited partners | $ | 26,052 | $ | 9,265 | $ | 41,853 | $ | 16,367 | ||||
Weighted average limited partner units outstanding — basic | 51,544 | 35,342 | 42,554 | 35,335 | ||||||||
Weighted average limited partner units outstanding —diluted | 51,544 | 35,361 | 42,554 | 35,351 | ||||||||
Limited partners' interest basic and diluted net income per unit | $ | 0.50 | $ | 0.26 | $ | 0.98 | $ | 0.46 | ||||
Cash distributions declared per limited partner unit | $ | 0.53 | $ | 0.47 | $ | 2.00 | $ | 1.84 | ||||
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||||
December 31, 2011 | December 31, 2010 | ||||
(Unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 64 | $ | 37 | |
Accounts receivable, net | 212,065 | 157,961 | |||
Inventories | 497,740 | 147,110 | |||
Derivative assets | 58,502 | — | |||
Prepaid expenses and other current assets | 8,179 | 1,909 | |||
Deposits | 2,094 | 2,094 | |||
Total current assets | 778,644 | 309,111 | |||
Property, plant and equipment, net | 842,101 | 612,433 | |||
Goodwill | 48,335 | 48,335 | |||
Other intangible assets, net | 22,675 | 29,666 | |||
Other noncurrent assets, net | 40,303 | 17,127 | |||
Total assets | $ | 1,732,058 | $ | 1,016,672 | |
LIABILITIES AND PARTNERS' CAPITAL | |||||
Current liabilities: | |||||
Accounts payable | $ | 313,326 | $ | 174,715 | |
Accrued salaries, wages and benefits | 13,481 | 7,559 | |||
Taxes payable | 13,068 | 7,174 | |||
Other current liabilities | 4,600 | 16,605 | |||
Current portion of long-term debt | 551 | 4,844 | |||
Derivative liabilities | 43,581 | 32,814 | |||
Total current liabilities | 388,607 | 243,711 | |||
Pension and postretirement benefit obligations | 26,957 | 9,168 | |||
Other long-term liabilities | 1,055 | 1,083 | |||
Long-term debt, less current portion | 586,539 | 364,431 | |||
Total liabilities | 1,003,158 | 618,393 | |||
Commitments and contingencies | |||||
Partners' capital: | |||||
Partners' capital | 690,373 | 425,898 | |||
Accumulated other comprehensive income (loss) | 38,527 | (27,619) | |||
Total partners' capital | 728,900 | 398,279 | |||
Total liabilities and partners' capital | $ | 1,732,058 | $ | 1,016,672 | |
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||
For the Year Ended | ||||||
December 31, | ||||||
2011 | 2010 | |||||
Operating activities | (Unaudited) | |||||
Net income | $ | 43,036 | $ | 16,701 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 63,009 | 60,287 | ||||
Amortization of turnaround costs | 11,384 | 10,006 | ||||
Non-cash interest expense | 3,728 | 3,864 | ||||
Provision for doubtful accounts | 380 | 74 | ||||
Non-cash debt extinguishment costs | 14,401 | — | ||||
Unrealized loss on derivative instruments | 10,383 | 15,843 | ||||
Loss on disposal of fixed assets | 1,525 | 239 | ||||
Non-cash equity based compensation | 4,895 | 1,540 | ||||
Other non-cash activities | 74 | 142 | ||||
Changes in assets and liabilities: | ||||||
Accounts receivable | (54,484) | (35,267) | ||||
Inventories | (167,028) | (9,860) | ||||
Prepaid expenses and other current assets | (425) | (98) | ||||
Derivative activity | 11,742 | 2,990 | ||||
Turnaround costs | (14,052) | (10,684) | ||||
Deposits | — | 4,767 | ||||
Other assets | (426) | (2,006) | ||||
Accounts payable | 138,611 | 64,739 | ||||
Accrued salaries, wages and benefits | 4,066 | 1,189 | ||||
Taxes payable | 5,894 | (377) | ||||
Other liabilities | (12,033) | 10,463 | ||||
Pension and postretirement benefit obligations | (902) | (409) | ||||
Net cash provided by operating activities | 63,778 | 134,143 | ||||
Investing activities | ||||||
Additions to property, plant and equipment | (49,478) | (35,001) | ||||
Proceeds from insurance recoveries - equipment | 1,942 | — | ||||
Superior acquisition | (413,173) | — | ||||
Proceeds from sale of equipment | 285 | 242 | ||||
Net cash used in investing activities | (460,424) | (34,759) | ||||
Financing activities | ||||||
Proceeds from borrowings — revolving credit agreement | 1,598,680 | 1,015,485 | ||||
Repayments of borrowings — revolving credit agreement | (1,609,512) | (1,044,553) | ||||
Repayments of borrowings — term loan credit agreement | (367,385) | (3,850) | ||||
Payments on capital lease obligations | (1,069) | (1,302) | ||||
Proceeds from public offerings of common units, net | 294,702 | 793 | ||||
Proceeds from 2019 senior notes offerings | 586,000 | — | ||||
Debt issuance costs | (27,666) | — | ||||
Contributions from Calumet GP, LLC | 6,286 | 18 | ||||
Common units repurchased for vested phantom unit grants | (620) | (248) | ||||
Distributions to partners | (82,743) | (65,739) | ||||
Net cash provided by (used in) financing activities | 396,673 | (99,396) | ||||
Net increase (decrease) in cash and cash equivalents | 27 | (12) | ||||
Cash and cash equivalents at beginning of period | 37 | 49 | ||||
Cash and cash equivalents at end of period | $ | 64 | $ | 37 | ||
Supplemental disclosure of cash flow information | ||||||
Interest paid, net of capitalized interest | $ | 37,856 | $ | 26,389 | ||
Income taxes paid | $ | 568 | $ | 188 | ||
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, | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Distributable Cash Flow: | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Net income | $ | 26,872 | $ | 9,454 | $ | 43,036 | $ | 16,701 | ||||
Add: | ||||||||||||
Interest expense | 18,145 | 7,992 | 48,747 | 30,497 | ||||||||
Debt extinguishment costs | — | — | 15,130 | — | ||||||||
Depreciation and amortization | 19,365 | 15,877 | 63,009 | 60,287 | ||||||||
Income tax expense | 255 | 259 | 929 | 598 | ||||||||
EBITDA | $ | 64,637 | $ | 33,582 | $ | 170,851 | $ | 108,083 | ||||
Add: | ||||||||||||
Unrealized (gain) loss on derivatives | $ | (13,493) | $ | 2,008 | $ | 10,383 | $ | 15,843 | ||||
Realized gain on derivatives, not included in net income | 6,630 | 2,142 | 10,996 | 2,990 | ||||||||
Amortization of turnaround costs | 3,096 | 3,367 | 11,384 | 10,006 | ||||||||
Non-cash equity based compensation and other non-cash items | 4,108 | 1,098 | 7,406 | 1,540 | ||||||||
Adjusted EBITDA | $ | 64,978 | $ | 42,197 | $ | 211,020 | $ | 138,462 | ||||
Less: | ||||||||||||
Replacement capital expenditures (1) | $ | 9,658 | $ | 2,252 | $ | 23,862 | $ | 24,345 | ||||
Cash interest expense (2) | 16,780 | 7,007 | 45,019 | 26,633 | ||||||||
Turnaround costs | 5,203 | 1,643 | 14,052 | 10,684 | ||||||||
Income tax expense | 255 | 259 | 929 | 598 | ||||||||
Distributable Cash Flow | $ | 33,082 | $ | 31,036 | $ | 127,158 | $ | 76,202 | ||||
(1) Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs. (2) Represents consolidated interest expense less non-cash interest expense. | ||||||||||||
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. RECONCILIATION OF DISTRIBUTABLE CASH FLOW, ADJUSTED EBITDA AND EBITDA TO NET CASH PROVIDED BY OPERATING ACTIVITIES (In thousands) | |||||
Year Ended | |||||
December 31, | |||||
2011 | 2010 | ||||
Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by operating activities: | (Unaudited) | (Unaudited) | |||
Distributable Cash Flow | $ 127,158 | $ 76,202 | |||
Add: | |||||
Replacement capital expenditures (1) | 23,862 | 24,345 | |||
Cash interest expense (2) | 45,019 | 26,633 | |||
Turnaround costs | 14,052 | 10,684 | |||
Income tax expense | 929 | 598 | |||
Adjusted EBITDA | $ 211,020 | $ 138,462 | |||
Less: | |||||
Unrealized loss on derivative instruments | 10,383 | 15,843 | |||
Realized gain on derivatives, not included in net income | 10,996 | 2,990 | |||
Amortization of turnaround costs | 11,384 | 10,006 | |||
Non-cash equity based compensation and other non-cash items | 7,406 | 1,540 | |||
EBITDA | $ 170,851 | $ 108,083 | |||
Add: | |||||
Unrealized loss on derivative instruments | 10,383 | 15,843 | |||
Cash interest expense (2) | (45,019) | (26,633) | |||
Non-cash equity based compensation | 4,895 | 1,540 | |||
Amortization of turnaround costs | 11,384 | 10,006 | |||
Income tax expense | (929) | (598) | |||
Provision for doubtful accounts | 380 | 74 | |||
Debt extinguishment costs | (729) | — | |||
Changes in assets and liabilities: | |||||
Accounts receivable | (54,484) | (35,267) | |||
Inventories | (167,028) | (9,860) | |||
Other current assets | (425) | 4,669 | |||
Turnaround costs | (14,052) | (10,684) | |||
Derivative activity | 11,742 | 2,990 | |||
Other noncurrent assets | (426) | (2,006) | |||
Accounts payable | 138,611 | 64,739 | |||
Other liabilities | (2,073) | 11,275 | |||
Other, including changes in noncurrent liabilities | 697 | (28) | |||
Net cash provided by operating activities | $ 63,778 | $ 134,143 | |||
(1) Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs. (2) Represents consolidated interest expense less non-cash interest expense. | |||||
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. | |
COMMODITY DERIVATIVE INSTRUMENTS | |
As of December 31, 2011 | |
Fuel Products Segment
The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel, jet and gasoline swaps as of December 31, 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) | |||
First Quarter 2012 | 2,866,500 | 31,500 | $ 17.46 | |||
Second Quarter 2012 | 2,775,500 | 30,500 | 18.39 | |||
Third Quarter 2012 | 2,852,000 | 31,000 | 18.12 | |||
Fourth Quarter 2012 | 2,622,000 | 28,500 | 19.20 | |||
Calendar Year 2013 | 4,420,000 | 12,110 | 24.18 | |||
Calendar Year 2014 | 1,000,000 | 2,740 | 25.01 | |||
Totals | 16,536,000 | |||||
Average price | $ 20.26 | |||||
Specialty Products Segment
The following table provides a summary of Calumet's derivatives for its natural gas purchases as of December 31, 2011, none of which are designated as cash flow hedges.
Natural Gas Contracts by Expiration Dates | MMBtu | $/MMBtu | |||
First Quarter 2012 | 1,200,000 | $ 3.90 | |||
Second Quarter 2012 | 1,200,000 | 3.93 | |||
Third Quarter 2012 | 1,200,000 | 4.03 | |||
Fourth Quarter 2012 | 600,000 | 4.08 | |||
Totals | 4,200,000 | ||||
Average price | $ 3.97 | ||||
SOURCE Calumet Specialty Products Partners, L.P.
CONTACT: Jennifer Straumins, +1-317-328-5660, jennifer.straumins@calumetspecialty.com
Web Site: http://www.calumetspecialty.com