(Source: PRNewswire-FirstCall)
INDIANAPOLIS, Aug. 5 /PRNewswire-FirstCall/ -- Calumet Specialty Products Partners, L.P. (the "Partnership" or "Calumet") reported a net loss for the quarter ended June 30, 2009 of $26.0 million compared to net income of $41.8 million for the quarter ended June 30, 2008. For the six months ended June 30, 2009, net income was $49.7 million compared to net income of $38.4 million for the six months ended June 30, 2008.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined by the Partnership's credit agreements) were $(1.9) million and $26.6 million, respectively, for the quarter ended June 30, 2009 as compared to $65.5 million and $48.0 million, respectively, for the second quarter of 2008. Distributable Cash Flow for the quarter ended June 30, 2009 was $14.3 million as compared to $36.9 million for second quarter of 2008. The $21.3 million decrease in Adjusted EBITDA quarter over quarter is primarily due to a reduction in gross profit in our fuels segment, further discussed below. (See the section of this 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 measures and reconciliations of such measures to the comparable GAAP measures.)
The decrease in net income of $67.8 million from the second quarter of 2008 was primarily due to a decrease in gross profit of $42.5 million and increased non-cash derivative losses of $31.0 million. Gross profit (loss) by segment is as follows:
For the Three For the Six Months Ended Months Ended June 30, June 30, ------------- ------------ 2009 2008 2009 2008 ---- ---- ---- ---- (Dollars in millions) Gross profit (loss) by segment: Specialty products $20.7 $21.5 $80.5 $43.8 Fuel products (2.3) 39.4 16.8 51.9 ----- ----- ----- ----- Total gross profit $18.4 $60.9 $97.3 $95.7 ===== ===== ===== =====
Specialty products segment gross profit quarter over quarter was primarily impacted by reduced LIFO inventory gains of $50.2 million resulting from the liquidation of lower cost inventory layers in 2008 as well as lower sales volumes in lubricating oils, solvents and waxes due to economic conditions impacting product demand. This reduction in specialty products segment gross profit was positively impacted by significant improvements in overall specialty product selling prices in relation to crude oil prices from the 2008 quarter. The decrease in our fuel products segment gross profit quarter over quarter was due primarily to lower overall fuel products crack spreads and reduced LIFO inventory gains of $10.0 million from the liquidation of lower cost inventory layers in 2008, partially offset by increased sales volume resulting from higher throughput rates at the Shreveport refinery and increased gains on derivatives of $9.7 million.
"The significant increase in crude oil prices and continued weakness in product demand resulted in a second quarter that was very challenging for all refiners, including Calumet. This has caused us to focus even more on placing specialty products in higher value applications and markets, developing additional specialty products, and controlling operating costs," said Bill Grube, Calumet's CEO and President.
Quarterly Distribution
On July 20, 2009, the Partnership declared a quarterly cash distribution of $0.45 per unit for the quarter ended June 30, 2009 on all outstanding units. The distribution will be paid on August 14, 2009 to unitholders of record as of the close of business on August 4, 2009.
Operations Summary
The following table sets forth unaudited information about our combined operations. Production volume differs from sales volume due to changes in inventory.
Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Sales volume (bpd): Specialty products sales volume 26,033 30,110 25,315 31,099 Fuel products sales volume 32,769 30,264 31,309 28,791 ------ ------ ------ ------ Total (1) 58,802 60,374 56,624 59,890 Total feedstock runs (bpd)(2)(3) 60,076 60,702 61,639 58,350 Facility production (bpd): Specialty products: Lubricating oils 9,659 12,943 10,649 13,032 Solvents 7,417 8,813 7,840 8,847 Waxes 870 1,983 985 2,019 Fuels 821 843 744 1,165 Asphalt and other by-products 7,680 7,171 7,708 6,965 ------ ------ ------ ------ Total 26,447 31,753 27,926 32,028 ------ ------ ------ ------ Fuel products: Gasoline 9,322 8,304 10,195 8,758 Diesel 13,164 12,826 12,958 10,597 Jet fuel 6,878 5,752 7,111 5,825 By-products 748 559 512 381 ------ ------ ------ ------ Total 30,112 27,441 30,776 25,561 ------ ------ ------ ------ Total facility production (3) 56,559 59,194 58,702 57,589 ====== ====== ====== ====== (1) Total sales volume includes sales from the production of our facilities and certain third-party facilities pursuant to supply and/or processing agreements, and sales of inventories. (2) Total feedstock runs represents the barrels per day of crude oil and other feedstocks processed at our facilities and certain third- party facilities pursuant to supply and/or processing agreements. The decrease in feedstock runs for the three months ended June 30, 2009 is primarily due to decreases in feedstock run rates in the second quarter of 2009 at all facilities except the Shreveport refinery due to lower overall demand for specialty products. The Shreveport refinery feedstock run rates increased due to the completion of the refinery expansion project in May 2008. (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 certain third-party facilities pursuant to supply and/or processing agreements. The difference between total 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. Credit Agreement Covenant Compliance
Compliance with the financial covenants pursuant to our credit agreements is measured quarterly based upon performance over the most recent four fiscal quarters, and as of June 30, 2009, we continued to be in compliance with all financial covenants under our credit agreements.
While assurances cannot be made regarding our future compliance with these covenants and being cognizant of the general uncertain economic environment, we believe that we will continue to maintain compliance with such financial covenants.
Revolving Credit Facility Capacity
On June 30, 2009, we had availability on our revolving credit facility of $73.0 million, based on a $203.9 million borrowing base, $35.1 million in outstanding standby letters of credit, and outstanding borrowings of $95.8 million. We believe that we have sufficient cash flow from operations and borrowing capacity to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. However, we are subject to business and operational risks that could materially adversely affect our cash flows. A material decrease in our cash flow from operations or a significant, sustained decline in crude oil prices would likely produce a corollary material adverse effect on our borrowing capacity under our revolving credit facility and potentially our ability to comply with the covenants under our credit facilities. Substantial declines in crude oil prices, if sustained, may materially diminish our borrowing base, which is based in part on the value of our crude oil inventory, which could result in a material reduction in our borrowing capacity under our revolving credit facility. A significant increase in crude oil prices, if sustained, would likely result in increased working capital funded by borrowings under our revolving credit facility.
About the Partnership
The Partnership is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products.
The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.
A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, August 5, 2009, to discuss the financial and operational results for the second quarter of 2009. Anyone interested in listening to the presentation may call 866-700-6067 and enter passcode 12813905. For international callers, the dial-in number is 617-213-8834 and the passcode is 12813905.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 36197648. International callers can access the replay by calling 617-801-6888 and entering passcode 36197648. The replay will be available beginning Wednesday, August 5, 2009, at approximately 4:00 p.m. until Wednesday, August 19, 2009.
The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com/ .
Cautionary Statement Regarding Forward-Looking Statements
Some of the information in this release may contain forward-looking statements. These statements can be identified by the use of forward-looking terminology including "may," "believe," "expect," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other "forward-looking" information. These forward-looking statements involve risks and uncertainties that are difficult to predict and may be beyond our control. These risks and uncertainties 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 and decreases in crude oil and crack spread prices, including the impact on our liquidity; the results of the Partnership's hedging and risk management activities; the availability of, and the Partnership's ability to consummate, acquisition or combination opportunities; labor relations; the ability of the Partnership to comply with the financial covenants contained in its credit facilities; the Partnership's access to capital to fund acquisitions and its ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets or businesses; environmental liabilities or events that are not covered by an indemnity; insurance or existing reserves; maintenance of the Partnership's credit ratings and ability to receive open credit from its suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; fluctuations in the debt and equity markets; and general economic, market or business conditions. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in this release as well as the Partnership's most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, which could cause the Partnership's actual results to differ materially from those contained in any forward-looking statement.
