Nov. 4, 2009 (PR Newswire) -- INDIANAPOLIS, Nov. 4 /PRNewswire-FirstCall/ -- Calumet Specialty Products Partners, L.P. (Nasdaq: CLMT) (the "Partnership" or "Calumet") reported net income for the quarter ended September 30, 2009 of $4.0 million compared to net loss of $12.5 million for the quarter ended September 30, 2008. For the nine months ended September 30, 2009, net income was $53.6 million compared to net income of $25.9 million for the nine months ended September 30, 2008. Calumet reported net cash provided by operating activities of $110.6 million for the nine months ended September 30, 2009 as compared to $75.7 million for the same period in 2008.
Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined by the Partnership's credit agreements) were $27.7 million and $42.5 million, respectively, for the quarter ended September 30, 2009 as compared to $13.6 million and $51.6 million, respectively, for the third quarter of 2008. Distributable Cash Flow for the quarter ended September 30, 2009 was $30.2 million as compared to $41.3 million for third quarter of 2008. The $9.0 million decrease in Adjusted EBITDA quarter over quarter was primarily due to a reduction in gross profit in our specialty products segment offset by lower realized derivative losses of $16.7 million in 2009 as compared to 2008 due to significant declines in crude oil prices in 2008. (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 increase in net income of $16.5 million from the third quarter of 2008 was primarily due to decreased derivative losses of $43.1 million ($26.4 million of which represents non-cash derivative losses), decreased selling, general and administrative expenses of $4.6 million, and decreased interest expense of $2.4 million. Partially offsetting these increases in net income was lower gross profit of $35.8 million. Gross profit by segment was as follows:
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
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2009 2008 2009 2008
---- ---- ---- ----
(In millions)
Gross profit by
segment:
Specialty products $33.5 $66.1 $114.1 $109.9
Fuel products 7.7 10.9 24.4 62.8
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Total gross profit $41.2 $77.0 $138.5 $172.7
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Specialty products segment gross profit quarter over quarter was primarily impacted by lower overall specialty product selling prices in relation to crude oil prices compared to the 2008 quarter due to lower demand resulting from the economic downturn. In addition, specialty products segment gross profit was negatively impacted by lower sales volumes in lubricating oils, solvents and waxes due to economic conditions impacting product demand. The decrease in fuel products segment gross profit quarter over quarter was due primarily to decreasing selling prices as compared to the average cost of crude oil as fuel products crack spreads declined significantly quarter over quarter. These losses were partially offset by increased gains on derivatives recorded in gross profit of $17.5 million and lower cost of sales of $10.3 million resulting from the liquidation of lower cost inventory layers in 2009.
"The continued economic weakness during the third quarter and decline in fuel products crack spreads weighed negatively on our results. We continue to work on controlling costs, executing our hedging strategies and completing small, short-term payback projects to improve our results," said Bill Grube, Calumet's CEO and President.
Quarterly Distribution
On October 20, 2009, the Partnership declared a quarterly cash distribution of $0.45 per unit for the quarter ended September 30, 2009 on all outstanding units. The distribution will be paid on November 13, 2009 to unitholders of record as of the close of business on November 3, 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 Ended Nine Months Ended
September 30, September 30,
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2009 2008 2009 2008
---- ---- ---- ----
Sales volume (bpd):
Specialty products 26,108 28,467 25,579 30,215
Fuel products 32,522 28,587 31,718 28,723
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Total (1) 58,630 57,054 57,297 58,938
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Total feedstock runs (bpd)
(2)(3) 59,949 57,263 61,069 57,985
Facility production (bpd):
Specialty products:
Lubricating oils 13,118 13,257 11,481 13,108
Solvents 7,923 7,779 7,868 8,489
Waxes 1,274 1,518 1,082 1,851
Fuels 941 1,141 811 1,157
Asphalt and other
by-products 7,667 6,691 7,694 6,872
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Total 30,923 30,386 28,936 31,477
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Fuel products:
Gasoline 9,144 8,394 9,841 8,636
Diesel 12,079 10,548 12,662 10,580
Jet fuel 7,328 6,613 7,184 6,089
By-products 562 271 529 344
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Total 29,113 25,826 30,216 25,649
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Total facility production (3) 60,036 56,212 59,152 57,126
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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 increase
in feedstock runs for the three months ended September 30, 2009 as
compared to the same period in 2008 is primarily due to increased run
rates at the Shreveport refinery due to increased operational
efficiencies.
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 September 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 September 30, 2009, we had availability on our revolving credit facility of $89.5 million, based on a $200.6 million borrowing base, $41.9 million in outstanding standby letters of credit, and borrowings of $69.1 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, November 4, 2009, to discuss the financial and operational results for the third quarter of 2009. Anyone interested in listening to the presentation may call 866-272-9941 and enter passcode 65132315. For international callers, the dial-in number is 617-213-8895 and the passcode is 65132315.
The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 58473570. International callers can access the replay by calling 617-801-6888 and entering passcode 58473570. The replay will be available beginning Wednesday, November 4, 2009, at approximately 4:00 p.m. until Wednesday, November 18, 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.
