Significant items to report are as follows:
-- Reported net income of $41.8 million and Adjusted EBITDA of $48.0 million for the three months ended June 30, 2008.
-- Shreveport refinery expansion project operational in May 2008.
-- Declared a distribution of $0.45 per unit on all outstanding units for the second quarter of 2008.
INDIANAPOLIS, Aug. 5 /PRNewswire-FirstCall/ -- Calumet Specialty Products
Partners, L.P. (Nasdaq: CLMT) (the 'Partnership' or 'Calumet') reported net
income for the three months ended June 30, 2008 of $41.8 million compared to
net income of $37.4 million for the same period in 2007. Earnings before
interest expense, taxes, depreciation and amortization ('EBITDA') and Adjusted
EBITDA (as defined by the Partnership's credit agreements) were $65.5 million
and $48.0 million, respectively, for the three months ended June 30, 2008 as
compared to $42.5 million and $43.5 million, respectively, for the comparable
periods in 2007. Distributable Cash Flow for the three months ended June 30,
2008 was $36.9 million as compared to $37.9 million for the same period in
2007. (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 such measures and
reconciliations of such measures to the comparable GAAP measures.)
Net income for the six months ended June 30, 2008 was $38.4 million
compared to net income of $65.6 million for the same period in 2007. EBITDA
and Adjusted EBITDA were $77.8 million and $62.9 million, respectively, for
the six months ended June 30, 2008 as compared to $75.3 million and $75.9
million, respectively, for the same period in 2007. Distributable Cash Flow
for the six months ended June 30, 2008 was $50.1 million as compared to $66.2
million for the same period in 2007. (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
such measures and reconciliations of such measures to the comparable GAAP
measures.)
The Partnership's performance for the three months ended June 30, 2008 as
compared to the same period in the prior year was significantly impacted by
increased gross profit in our fuels segment, offset by lower gross profit in
our specialty products segment. The increase in fuel products segment gross
profit was primarily due to increased volume and LIFO gains resulting from the
liquidation of lower cost inventory layers which lowered cost of sales.
Specialty products gross profit decreased period over period primarily due to
result of the rising cost of crude oil outpacing increases in selling prices
partially offset by LIFO gains resulting from the liquidation of lower cost
inventory layers which lowered cost of sales. In total, the Partnership
recognized increased LIFO inventory gains of approximately $59.8 million as
compared to the same period in the prior year as part of the implementation of
a working capital reduction initiative. The Partnership's performance was also
positively affected by increased unrealized gains on certain crude collar oil
derivative instruments not designated as hedges and a one-time gain of $5.8
million on the lease of mineral rights on the real property at our Shreveport
and Princeton refineries to an unaffiliated third party which have been
accounted for as a sale. These increases were partially offset by increased
interest expense due primarily to higher debt levels from financing both the
Penreco acquisition, which closed in January 2008, as well as the completion
of the Shreveport refinery expansion project, which was operational in May
2008.
Total Specialty Products segment sales volume for the second quarter of
2008 was 30,088 barrels per day as compared to 24,692 barrels per day for the
same period in the prior year, an increase of 5,396 barrels per day or 21.9%,
primarily due to incremental sales volume associated with our Karns City and
Dickinson facilities acquired in the purchase of Penreco in January 2008.
Total Fuel Products segment sales volume for the second quarter of 2008
was 30,264 barrels per day as compared to 25,044 barrels per day in the same
period for the prior year, an increase of 5,220 barrels per day, or 20.8%,
primarily due to higher fuels production, primarily diesel, subsequent to the
completion of the Shreveport refinery expansion project.
Gross profit by segment for the second quarter of 2008 for specialty
products and fuel products was $21.5 million and $39.4 million, respectively,
compared to $40.6 million and $19.9 million, respectively, for the same period
in 2007.
'Historically high crude oil prices have continued to pose significant
challenges for Calumet during the quarter. We have implemented multiple
rounds of specialty product price increases to customers during this volatile
period. We expect the recent reduction or termination of production of certain
specialty products by other major suppliers will have a favorable impact on
Calumet placing additional specialty products volumes in the market from our
Shreveport refinery expansion project,' said Bill Grube, Calumet's CEO and
President. 'The completion of the Shreveport refinery expansion project in
May 2008, the continued integration of Penreco, our increased hedging of
specialty products input prices and working capital reductions, all which were
our previously announced second quarter initiatives, had a positive impact on
our results. That being said, this remains a very difficult operating
environment for all refiners, including Calumet. While we outline in this
release and will discuss on our earnings conference call the continued actions
we are taking to mitigate the adverse impact of this environment on our
operating results, we can provide no assurances as to the timing or magnitude
of continued improvement in our operating results and, to the extent we
experience continued rapid escalation of crude oil prices, our operating
results could be adversely affected,' said Mr. Grube.
Shreveport Refinery Expansion Project Operational
As of May 2008, the Shreveport refinery expansion project was operational.
We invested approximately $147.7 million in capital expenditures at the
Shreveport refinery in the six months ended June 30, 2008, of which $115.5
million relates to the Shreveport refinery expansion project. From December
31, 2005 through June 30, 2008, the Partnership has invested approximately
$473.1 million in the Shreveport refinery, of which $369.9 million relates to
the Shreveport refinery expansion project.
The Shreveport expansion project has increased this refinery's throughput
capacity from 42,000 bpd to 60,000 bpd. For the three months ended June 30,
2008, the Shreveport refinery had total feedstock runs of 41,000 bpd, which
represents an increase of approximately 6,000 bpd from the first quarter of
2008. As part of this project, we have enhanced the Shreveport refinery's
ability to process sour crude oil. As of June 30, 2008, we are processing
approximately 13,000 bpd of sour crude oil at the Shreveport refinery. In
certain operating scenarios, we expect we will be able to increase sour crude
oil throughput rates up to approximately 25,000 bpd. The total cost of the
Shreveport refinery expansion project is approximately $375.0 million, an
increase of $25.0 million from our previous estimate. This increase is
primarily due to increased construction labor costs to avoid further delays in
the project's completion. The $375.0 million aggregate cost estimate of the
expansion project significantly exceeds the Partnership's original estimate.
Further, we have invested $32.2 million in the six months ended June 30,
2008 in existing operations at our Shreveport refinery for projects to improve
efficiency, de-bottleneck certain operating units and for new product
development. These expenditures are anticipated to enhance and improve our
product mix and operating cost leverage, but will not significantly increase
the feedstock throughput capacity of the refinery. We anticipate an
additional $5.0 million will be incurred over the next year related to these
projects.
Other Strategic Initiatives
Increased Crude Oil Price Hedging for Specialty Products Segment
We remain committed to an active hedging program to manage commodity price
risk in both our specialty products and fuel products segments. Due to the
current volatility in the crude oil price environment and the impact such
volatility has had on our short-term cash flows while our product pricing is
adjusted, we have implemented modifications to our hedging strategy to
increase the overall portion of input prices for specialty products we have
hedged. Specifically, we are targeting to hedge crude oil prices for up to
75% of our specialty products production. We continue to believe that a
shorter-term time horizon of hedging crude oil purchases for 3 to 9 months
forward for the specialty products segment is appropriate given our ability to
increase specialty products prices within this timeframe. During the second
quarter of 2008, we added approximately 3,000,000 barrels of crude oil collar
derivative instruments, including hedges out to the second quarter of 2009.
Our outstanding hedge positions are listed at the end of this press release.
Working Capital Reduction
We have successfully implemented strategies to minimize inventory levels
across all of our facilities to reduce working capital needs, especially given
the impact of increased crude oil prices on inventories. As an example,
effective May 1, 2008, Calumet entered into a crude oil supply agreement with
an affiliate of our general partner to purchase crude oil used at our
Princeton refinery on a just-in-time basis which has significantly reduced
crude oil inventory historically maintained for this facility by approximately
200,000 barrels. We will continue to execute this working capital strategy
during the third quarter of 2008 to potentially make further reductions in
inventory. During the second quarter of 2008, we reduced our overall inventory
levels by approximately 600,000 barrels, or approximately 30.0%, from
inventory levels as of March 31, 2008.
Operating Cost Reductions
We continue to implement operating cost reductions related to several
areas including maintenance and utility costs.
Credit Agreement Covenant Compliance
As previously disclosed, the Partnership has experienced recent adverse
financial conditions primarily associated with historically high crude oil
costs, which have negatively affected specialty products gross profit. Also
contributing to these adverse financial conditions have been the significant
cost overruns and delays in the startup of the Shreveport refinery expansion
project. Compliance with the financial covenants pursuant to the
Partnership's credit agreements is tested quarterly and, as of June 30, 2008,
the Company was in compliance with all financial covenants. Our ability to
maintain compliance with these financial covenants in the quarter ended June
30, 2008 was substantially assisted by both reductions in our inventory
levels, which resulted in LIFO inventory gains, and a one-time benefit from
the sale of mineral rights on the real property at our Shreveport and
Princeton refineries to an unaffiliated third party. As previously described,
the Partnership is taking steps to ensure that it continues to meet the
requirements of its credit agreements and currently forecasts that it will be
in compliance in future periods.
While assurances cannot be made regarding our future compliance with these
covenants, the Partnership anticipates that our product pricing strategies,
completion of the Shreveport refinery expansion project, continued integration
of the Penreco acquisition and the other strategic initiatives previously
described will allow us to maintain compliance with such financial covenants
and improve the Partnership's Adjusted EBITDA and distributable cash flows.
Failure to achieve our anticipated results may result in a breach of
certain of the financial covenants contained in our credit agreements. If this
occurs, we will enter into discussions with our lenders to either modify the
terms of the existing credit facilities or obtain waivers of non-compliance
with such covenants in the event the Partnership fails to comply with a
financial covenant. There can be no assurances of the timing of the receipt of
any such modification or waiver, the term or costs associated therewith or our
ultimate ability to obtain the relief sought. The Partnership's failure to
obtain a waiver of non-compliance with certain of the financial covenants or
otherwise amend the credit facilities would constitute an event of default
under its credit facilities and would permit the lenders to pursue remedies.
These remedies could include acceleration of maturity under our credit
facilities and limitation or elimination of the Partnership's ability to make
distributions to its unitholders.
Quarterly Distribution
As announced on July 15, 2008, the Partnership declared a quarterly cash
distribution of $0.45 per unit on all outstanding units for the three months
ended June 30, 2008. The distribution will be paid on August 14, 2008 to
unitholders of record as of the close of business on August 4, 2008.
The following table sets forth unaudited information about our combined
refinery operations. Refining production volume differs from sales volume due
to changes in inventory.
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2008 2007 2008 2007
Sales volume (bpd): -------- -------- -------- --------
Specialty products
sales volume 30,088 24,692 31,088 23,862
Fuel products sales
volume 30,264 25,044 28,791 22,724
-------- -------- -------- --------
Total (1) 60,352 49,736 59,879 46,586
Total feedstock runs
(bpd)(2)(3) 60,702 49,488 58,350 47,465
Facility production
(bpd):
Specialty products:
Lubricating oils 12,943 11,495 13,032 10,795
Solvents 8,813 4,994 8,847 5,095
Waxes 1,983 1,337 2,019 1,121
Fuels 843 2,022 1,165 2,080
Asphalt and other
by-products 7,171 6,723 6,965 5,885
-------- -------- -------- --------
Total 31,753 26,571 32,028 24,976
-------- -------- -------- --------
Fuel products:
Gasoline 8,304 6,660 8,758 7,245
Diesel 12,826 5,433 10,597 5,281
Jet fuel 5,752 7,962 5,825 7,563
By-products 559 2,255 381 1,724
-------- -------- -------- --------
Total 27,441 22,310 25,561 21,813
-------- -------- -------- --------
Total facility
production (3) 59,194 48,881 57,589 46,789
======== ======== ======== ========
(1) Total sales volume includes sales from the production of our
facilities, sales of purchased products and sales of inventories. The
increase in sales volume for the three and six months ended June 30, 2008
compared to the same period in the prior year was primarily due to volume
associated with our Karns City and Dickinson facilities, which were
acquired as a result of the Penreco acquisition on January 3, 2008.
(2) Feedstock runs represents the barrels per day of crude oil and other
feedstocks processed at our facilities. The increase in feedstock runs for
the three and six months ended June 30, 2008 compared to the same period
in the prior year was due to the completion of the Shreveport refinery
expansion project as well as feedstock runs associated with the Karns City
and Dickinson facilities, which we acquired as part of the Penreco
acquisition on January 3, 2008.
(3) Total refinery production represents the barrels per day of specialty
products and fuel products yielded from processing crude oil and other
feedstocks at our facilities. The difference between total refinery
production and total feedstock runs is primarily a result of the time lag
between the input of feedstock and production of end products and volume
loss.
About the Company
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 1:30 p.m. ET (12:30 p.m. CT) Wednesday,
August 6, 2008, to discuss the financial and operational results for the
second quarter of 2008. Anyone interested in listening to the presentation may
call 866-383-7989 and enter passcode 37403592. For international callers, the
dial-in number is 617-597-5328 and the passcode is 37403592.
The telephonic replay is available in the United States by calling 888-
286-8010 and entering passcode 92226577. International callers can access the
replay by calling 617-801-6888 and entering passcode 92226577. The replay will
be available beginning Wednesday, August 6, 2008, at approximately 3:30 p.m.
until Wednesday, August 20, 2008.
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 volatility of refining margins; risks associated with our Shreveport
expansion project; difficulties in successfully integrating Penreco; the
impact of crude oil price fluctuations; the success of the Partnership's
hedging and other risk management activities; the availability of, and the
Partnership's ability to consummate, acquisition or combination opportunities;
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 rating 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, counter
parties; the impact of current and future laws, rulings and governmental
regulations; shortages or cost increases of power supplies, natural gas,
materials or labor; weather interference with business operations or project
construction; 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 Forms 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. The
statements regarding (i) the Shreveport expansion project's expected costs and
the resulting increases in throughput and production levels and (ii) the
future benefits of the Penreco acquisition, as well as other matters discussed
in this news release that are not purely historical data, are forward-looking
statements.
Non-GAAP Financial Measures
We include in this release the non-GAAP financial measures of EBITDA,
Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of
net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow and (in the
case of EBITDA and Adjusted EBITDA) to cash flow from operating activities,
our most directly comparable financial performance and liquidity measures
calculated and presented in accordance with GAAP.
EBITDA and Adjusted EBITDA 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 define EBITDA as net income plus interest expense (including debt
extinguishment costs), taxes and depreciation and amortization. We define
Adjusted EBITDA to be Consolidated EBITDA as defined in our credit facility
agreements. Consistent with that definition, Adjusted EBITDA, for any period,
equals: (1) net income plus (2)(a) interest expense; (b) taxes; (c)
depreciation and amortization; (d) unrealized losses from mark to market
accounting for derivative activities; (e) unrealized items decreasing net
income (including the non-cash impact of restructuring; decommissioning and
asset impairments in the periods presented); (f) other non-recurring expenses
reducing net income which do not represent a cash item for such period; and
(g) all non-recurring restructuring charges associated with the Penreco
acquisition minus (3)(a) tax credits; (b) unrealized items increasing net
income (including the non-cash impact of restructuring, decommissioning and
asset impairments in the periods presented); (c) unrealized gains from mark to
market accounting for derivative activities; and (d) other non-cash recurring
expenses and unrealized items that reduced net income for a prior period, but
represent a cash item in the current period. We are required to report
Adjusted EBITDA to our lenders under our credit facilities and it is used to
determine our compliance with the consolidated leverage test thereunder.
We believe that Distributable Cash Flow provides additional information
for investors to evaluate the Partnership's ability to declare and pay
distributions to unitholders.
We define Distributable Cash Flow as Adjusted EBITDA less maintenance
capital expenditures, cash interest paid (excluding capitalized interest) and
income tax expense.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
For the Three Months Ended For The Six Months Ended
June 30, June 30,
-------------------------- -----------------------
2008 2007 2008 2007
------------ ------------ ------------ ----------
Unaudited Unaudited
Sales $671,220 $421,726 $1,265,943 $772,839
Cost of sales 610,338 361,255 1,170,227 657,333
---------- ---------- ---------- ----------
Gross profit 60,882 60,471 95,716 115,506
Operating costs and
expenses:
Selling, general and
administrative 9,419 6,435 17,671 11,834
Transportation 21,169 14,048 45,029 27,617
Taxes other than income
taxes 1,007 884 2,062 1,796
Other 341 162 564 342
---------- ---------- ---------- ----------
Operating income 28,946 38,942 30,390 73,917
---------- ---------- ---------- ----------
Other income (expense):
Interest expense (8,536) (1,113) (13,702) (2,128)
Interest income 107 569 323 1,559
Debt extinguishment
costs (373) - (898) -
Realized gain (loss) on
derivative instruments 2,526 (4,052) (351) (5,788)
Unrealized gain (loss)
on derivative
instruments 13,456 3,285 17,025 (1,492)
Gain on sale of mineral
rights 5,770 - 5,770 -
Other 63 42 18 (136)
---------- ---------- ---------- ----------
Total other income
(expense) 13,013 (1,269) 8,185 (7,985)
---------- ---------- ---------- ----------
Net income before income
taxes 41,959 37,673 38,575 65,932
Income tax expense 151 255 159 305
---------- ---------- ---------- ----------
Net income $41,808 $37,418 $38,416 $65,627
========== ========== ========== ==========
Minimum quarterly
distribution to common
unitholders (8,625) (7,365) (17,250) (14,730)
General partner's
incentive distribution
rights (10,658) (9,353) (10,658) (14,102)
General partner's
interest in net income (326) (297) (258) (594)
Common unitholders'
share of net income in
excess of minimum
quarterly distribution (9,704) (8,076) (9,704) (13,592)
---------- ---------- ---------- ----------
Subordinated unitholders'
interest in net income $12,495 $12,327 $546 $22,609
========== ========== ========== ==========
Basic and diluted net
income per limited
partner unit:
Common $0.96 $0.94 $1.41 $1.73
Subordinated $0.96 $0.94 $0.05 $1.73
Weighted average limited
partner common units
outstanding - basic 19,166 16,366 19,166 16,366
Weighted average limited
partner subordinated
units outstanding -
basic 13,066 13,066 13,066 13,066
Weighted average limited
partner common units
outstanding - diluted 19,166 16,368 19,166 16,368
Weighted average limited
partner subordinated
units outstanding -
diluted 13,066 13,066 13,066 13,066
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2008 2007
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $454 $35
Accounts receivable:
Trade 209,453 109,501
Other 1,924 4,496
----------- -----------
211,377 113,997
----------- -----------
Inventories 113,300 107,664
Prepaid expenses and other current assets 3,308 7,588
----------- -----------
Total current assets 328,439 229,284
Property, plant and equipment, net 669,353 442,882
Goodwill 48,960 -
Other intangible assets, net 55,532 2,460
Other noncurrent assets, net 11,046 4,231
----------- -----------
Total assets $1,113,330 $678,857
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $253,894 $167,977
Accrued salaries, wages and benefits 7,032 2,745
Taxes payable 8,188 6,215
Other current liabilities 6,951 4,882
Current portion of long-term debt 4,792 943
Derivative liabilities 132,328 57,503
----------- -----------
Total current liabilities 413,185 240,265
Pension and postretirement benefit obligations 4,672 -
Long-term debt, less current portion 384,835 38,948
----------- -----------
Total liabilities 802,692 279,213
Commitments and contingencies
Partners' capital:
Partners' capital 441,108 439,285
Accumulated other comprehensive loss (130,470) (39,641)
----------- -----------
Total partners' capital 310,638 399,644
----------- -----------
Total liabilities and partners' capital $1,113,330 $678,857
=========== ===========
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Six Months Ended
June 30,
-------------------------
2008 2007
--------- ----------
Unaudited
Operating activities
Net income $ 38,416 $ 65,627
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 26,193 7,454
Amortization of turnaround costs 737 1,862
Non-cash debt extinguishment costs 898 -
Unrealized (gain) loss on derivative
instruments (17,025) 1,492
Gain on sale of mineral rights (5,770) -
Other non-cash activities 1,194 47
Changes in operating assets and liabilities,
net of business acquisition:
Accounts receivable (55,896) (29,787)
Inventories 60,756 8,534
Prepaid expenses and other current assets 4,350 838
Derivative activity 1,021 101
Intangible assets (1,437) -
Other noncurrent assets 990 (4,238)
Accounts payable 56,903 31,207
Accrued salaries, wages and benefits (1,393) (1,374)
Taxes payable 1,973 873
Other current liabilities (205) (520)
--------- ----------
Net cash provided by operating activities 111,705 82,116
Investing activities
Additions to property, plant and equipment (152,547) (103,109)
Acquisition of Penreco, net of cash acquired (269,118) -
Proceeds from sale of mineral rights 6,065 -
Proceeds from disposal of property, plant
and equipment - 49
--------- ----------
Net cash used in investing activities (415,600) (103,060)
Financing activities
Proceeds from (repayments of) borrowings,
net - revolving credit facility 18,969 27
Repayments of borrowings- prior term loan
credit facility (30,099) (250)
Proceeds from borrowings - new term loan
credit facility, net 367,600 -
Debt issuance costs (9,633) -
Repayments of borrowings - new term loan
credit facility (7,990) -
Change in bank overdraft 2,121 -
Purchase of units for unit grants (115) -
Distributions to partners (36,539) (37,346)
--------- ----------
Net cash provided by (used in) financing
activities 304,314 (37,569)
--------- ----------
Net increase (decrease) in cash 419 (58,513)
Cash at beginning of period 35 80,955
--------- ----------
Cash at end of period $454 $22,442
========= ==========
Supplemental disclosure of cash flow
information
Interest paid $14,645 $4,087
========= ==========
Income taxes paid $13 $ 100
========= ==========
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA, AND DISTRIBUTABLE
CASH FLOW
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Unaudited Unaudited
Reconciliation of Net
Income to EBITDA and
Adjusted EBITDA:
Net income $41,808 $ 37,418 $38,416 $ 65,627
Add:
Interest expense and
debt extinguishment
costs 8,909 1,113 14,600 2,128
Depreciation and
amortization 14,651 3,714 24,579 7,191
Income tax expense 151 255 159 305
--------- --------- --------- ---------
EBITDA $65,519 $42,500 $77,754 $ 75,251
========= ========= ========= =========
Add:
Unrealized (gain) loss
from mark to market
accounting for
hedging activities $(18,721) $(2,214) $(18,244) $1,592
Prepaid non-recurring
expenses and accrued
non-recurring
expenses, net of cash
outlays 1,173 3,190 3,368 (898)
--------- --------- --------- ---------
Adjusted EBITDA $47,971 $ 43,476 $62,878 $75,945
========= ========= ========= =========
Less:
Maintenance capital
expenditures (1) (2,943) (4,375) (4,430) (7,536)
Cash interest
expense (2) (7,999) (984) (8,223) (1,867)
Income tax expense (151) (255) (159) (305)
--------- --------- --------- ---------
Distributable Cash Flow $ 36,878 $37,862 $ 50,066 $ 66,237
(1) Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or sales from
existing levels.
(2) Represents cash interest paid by the Partnership, excluding
capitalized interest.
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
RECONCILIATION OF ADJUSTED EBITDA AND EBITDA TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In thousands)
Six Months Ended
June 30,
----------------------
2008 2007
-------- --------
Unaudited
Reconciliation of Adjusted EBITDA and EBITDA
to net cash provided by operating activities:
Adjusted EBITDA $62,878 $75,945
Add:
Unrealized loss from mark to market accounting
for hedging activities 18,244 (1,592)
Prepaid non-recurring expenses and accrued
non-recurring expenses, net of cash outlays (3,368) 898
-------- --------
EBITDA $77,754 $75,251
======== ========
Add:
Interest expense and debt extinguishment
costs, net (12,925) (1,900)
Unrealized loss on derivative instruments (17,025) 1,492
Income tax expense (159) (305)
Provision for doubtful accounts 565 -
Non-cash debt extinguishment costs 898 -
Changes in assets and liabilities:
Accounts receivable (55,896) (29,787)
Inventory 60,756 8,534
Other current assets 4,350 838
Derivative activity 1,021 101
Accounts payable 56,903 31,207
Other current liabilities 375 (1,021)
Other, including changes in noncurrent assets
and liabilities (4,912) (2,294)
-------- --------
Net cash provided by operating activities $111,705 $82,116
========= =========
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
EXISTING COMMODITY DERIVATIVE INSTRUMENTS
The following table provides a summary of our derivatives and implied
crack spreads for our crude oil, diesel and gasoline swaps as of June 30,
2008:
Swap Contracts by Expiration Dates
-----------------------------------
Barrels BPD Implied Crack
Spread ($/Bbl)
---------- -------- --------------
Third Quarter 2008 2,208,000 24,000 $12.25
Fourth Quarter 2008 2,116,000 23,000 12.42
Calendar Year 2009 8,212,500 22,500 11.43
Calendar Year 2010 7,482,500 20,500 11.20
Calendar Year 2011 3,009,000 8,244 12.08
---------- --------------
Totals 23,028,000
Average price $ 11.61
The following tables provide information about our derivative instruments
related to our specialty products segment as of June 30, 2008:
Crude Oil Put/Call Spread Contracts by Expiration Dates
-------------------------------------------------------
Average Average Average Average
Lower Upper Lower Upper
Put Put Call Call
Barrels BPD ($/Bbl) ($/Bbl) ($/Bbl) ($/Bbl)
--------- ------- ------- ------- ------- --------
August 2008 62,000 2,000 74.30 84.30 94.30 104.30
September 2008 60,000 2,000 74.30 84.30 94.30 104.30
--------- ------- ------- ------- --------
Totals 122,000
Average price $ 74.30 $ 84.30 $ 94.30 $ 104.30
At June 30, 2008, the Company had the following three-way crude collar
derivatives related to crude oil purchases in its specialty products segment,
none of which are designated as hedges. As a result of these barrels not being
designated as hedges, the Company recognized $3.4 million of gains in
unrealized gain (loss) on derivative instruments in the unaudited condensed
consolidated statements of operations for the three months ended June 30,
2008.
Crude Oil Put/Call Spread Contracts by Expiration Dates
-------------------------------------------------------
Average Average Average
Sold Put Lower Call Upper Call
Barrels BPD ($/Bbl) ($/Bbl) ($/Bbl)
--------- ------- -------- --------- ----------
Third Quarter 2008 1,225,000 13,315 $ 120.83 $ 131.14 $ 139.06
Fourth Quarter 2008 276,000 3,000 $ 118.00 $ 137.33 $ 145.67
--------- -------- --------- ----------
Totals 1,501,000
Average price $ 120.31 $ 132.28 $ 140.28
At June 30, 2008, the Company had the following two-way crude collar
derivatives related to crude oil purchases in its specialty products segment,
none of which are designated as hedges. As a result of these barrels not being
designated as hedges, the Company recognized $4.3 million of gains in
unrealized gain (loss) on derivative instruments in the unaudited condensed
consolidated statements of operations for the three months ended June 30,
2008.
Crude Oil Put/Call Spread Contracts by Expiration Dates
-------------------------------------------------------
Average Average
Sold Put Bought Call
Barrels BPD ($/Bbl) ($/Bbl)
--------- ----- --------- ----------
Fourth Quarter 2008 276,000 3,000 $ 98.85 $ 135.00
--------- --------- ----------
Totals 276,000
Average price $ 98.85 $ 135.00
At June 30, 2008, the Company had the following crude oil swap derivatives
related to crude oil purchases in its specialty products segment, all of which
are designated as hedges except for 62,000 barrels in 2008. As a result of
these barrels not being designated as hedges, the Company recognized $0.4
million of gains in unrealized gain (loss) on derivative instruments in the
unaudited condensed consolidated statements of operations for the three months
ended June 30, 2008.
Crude Oil Swap Contracts by Expiration Dates Barrels BPD ($/Bbl)
-------------------------------------------- --------- ------ ---------
108,000 1,174 $119.55
Third Quarter 2008
Fourth Quarter 2008 46,000 500 100.45
--------- ---------
Totals 154,000
Average price $113.85
At June 30, 2008, the Company had the following derivatives related to
natural gas purchases, all of which are designated as hedges except for
640,000 MMbtus. As a result of these barrels not being designated as hedges,
the Company recognized $1.7 million of gains in unrealized gain (loss) on
derivative instruments in the unaudited condensed consolidated statements of
operations for the three months ended June 30, 2008.
Natural Gas Swap Contracts by Expiration Dates MMbtu $/MMbtu
---------------------------------------------- --------- ---------
Third Quarter 2008 220,000 $ 10.38
Fourth Quarter 2008 330,000 $ 10.38
First Quarter 2009 330,000 $ 10.38
--------- ---------
Totals 880,000
Average price $ 10.38
As of July 31, 2008, we have added the following derivative instruments to
the above transactions for our specialty products segment:
The Company entered into the following three-way crude collar derivatives
related to crude oil purchases in its specialty products segment, none of
which are designated as hedges.
Crude Oil Put/Call Spread Contracts by Expiration Dates
-------------------------------------------------------
Average Average Average
Lower Put Lower Call Upper Call
Barrels BPD ($/Bbl) ($/Bbl) ($/Bbl)
--------- ------- --------- --------- ----------
August 2008 186,000 6,000 $ 127.50 $ 136.50 $ 145.17
September 2008 30,000 1,000 100.00 122.00 131.00
October 2008 186,000 6,000 107.13 125.21 134.21
November 2008 150,000 5,000 107.20 125.73 134.73
December 2008 155,000 5,000 107.20 125.73 134.73
--------- --------- --------- ----------
Totals 707,000
Average price $ 112.22 $ 128.27 $ 137.18
The Company entered into the following two-way crude collar derivatives
related to crude oil purchases in its specialty products segment, none of
which are designated as hedges.
Crude Oil Put/Call Spread Contracts by Expiration Dates
-------------------------------------------------------
Average Average
Sold Put Bought Call
Barrels BPD ($/Bbl) ($/Bbl)
--------- ----- --------- ----------
First Quarter 2009 180,000 2,000 $112.05 $ 145.00
Second Quarter 2009 91,000 1,000 111.45 145.00
--------- --------- ----------
Totals 271,000
Average price $111.85 $ 145.00
The Company entered into the following derivatives related to natural gas
purchases, all of which are designated as hedges.
Natural Gas Swap Contracts by Expiration Dates MMbtu $/MMbtu
---------------------------------------------- --------- ---------
Third Quarter 2008 100,000 $ 11.61
Fourth Quarter 2008 50,000 $ 11.61
--------- ---------
Totals 150,000
Average price $ 11.61
SOURCE Calumet Specialty Products Partners, L.P.