Calumet Specialty Products Partners, L.P. Reports First Quarter 2014 Results

INDIANAPOLIS, May 8, 2014 /PRNewswire/ — Calumet Specialty Products Partners,
L.P. (NASDAQ: CLMT) (the “Partnership,” the “Company,” “Calumet,” “we,” “our” or
“us”), a leading independent producer of specialty hydrocarbon and fuel
products, reported a net loss for the first quarter ended March 31, 2014 of
$49.8 million, or $0.76 per diluted unit, compared to net income of $46.0
million, or $0.66 per diluted unit, in the first quarter 2013. Excluding the
impact of $89.6 million in non-recurring debt extinguishment costs, Adjusted Net
Income in the first quarter 2014 was $39.8 million, or $0.50 per diluted unit.
First quarter 2014 results include $24.6 million in non-cash unrealized
derivative gains, compared to $24.5 million in the prior year period.

Calumet generated Adjusted EBITDA (as defined below in the section of this press
release titled “Non-GAAP Financial Measures”) of $82.7 million during the first
quarter 2014 versus $53.2 million during the fourth quarter 2013 and $80.0
million in the prior-year period. Within the Specialty Products segment, gross
profit increased nearly 16% during the first quarter 2014 versus the prior year
period as increased sales of Calumet’s packaged and synthetic products, a
category inclusive of the Royal Purple®, Bel-Ray®, Quantum® and TruFuel® premium
brands, contributed to an improved product mix. Within the Fuel Products
segment, a significant year-over-year decline in benchmark refined product
margins was partially offset by strong seasonal demand for gasoline and diesel
at each of the Partnership’s major fuels refineries, which operated at elevated
rates during the first quarter 2014 compared to the prior year quarter.

Distributable Cash Flow (“DCF”) (as defined below in the section of this press
release titled “Non-GAAP Financial Measures”) for the first quarter 2014 was
$49.4 million, compared to $26.4 million in the prior year period. The
year-over-year increase in DCF was driven primarily by an increase in Adjusted
EBITDA, a decline in turnaround costs and a decline in replacement and
environmental capital expenditures. We define the Distribution Coverage Ratio
(“DCR”), a non-GAAP financial measure, for any period as DCF divided by
distributions to partners. The DCR was 0.94x for the first quarter 2014,
compared to 0.51x for the first quarter 2013.

Management Commentary

“Broad-based contributions from our Specialty Products segment resulted in
record first quarter Adjusted EBITDA,” stated Bill Grube, Vice Chairman and
Chief Executive Officer. “Distributable cash flow nearly doubled on a
year-over-year basis to nearly $50 million, while distribution coverage
approached 1.0x during the first quarter 2014. Our current annualized cash
distribution stands at $2.74 per unit, representing an attractive distribution
yield of more than 9%, at our current unit price.”

“In March, we completed our largest and most successful senior unsecured notes
offering in Partnership history,” continued Grube. “This heavily subscribed $900
million notes offering, which priced at a coupon of 6.50%, allowed us to redeem
$500 million of higher interest bearing notes, funded an accretive specialty
products acquisition and provided additional liquidity to support our ongoing
slate of organic growth projects. As of March 31, 2014, we had $714 million in
combined cash and availability under our revolving credit facility to help
support the ongoing growth of the business.”

“On March 31, 2014, we acquired Anchor Drilling Fluids, a leading independent
supplier of specialty products to the oilfield services industry,” continued
Grube. “We paid approximately 7.5x estimated full-year 2013 EBITDA for Anchor –
an attractive multiple for a business that grew EBITDA by more than an estimated
20% last year. Anchor’s base of more than 250 blue chip E&P customers, coupled
with its extensive network of logistics and distribution centers situated near
each of the major, active domestic resource plays provides us with a unique
opportunity to cross-sell our existing portfolio oilfield-focused products while
also enabling the Partnership to expand its relationships with potential crude
oil suppliers at the wellhead.”

“During the first quarter 2014, we grew sales volumes and realized improved
pricing on our packaged and synthetic products, when compared to the year-ago
period,” continued Grube. “Sales volumes of Royal Purple, Bel-Ray and TruFuel
products all increased on a year-over-year basis during the first quarter. Early
indications are that our introduction of Royal Purple products to the Wal-Mart
store network has been very successful, with sales tracking ahead of our
forecasts. Once the rollout is completed, at least 2,400 Wal-Mart Stores will be
carrying our Royal Purple products, with select products planned for sale in
more than 3,000 locations.”

“The San Antonio refinery operated at record production rates during the first
quarter 2014,” continued Grube. “With the completion of the crude oil unit
expansion in December 2013, increased finished gasoline blending capabilities
and the pending completion of the TexStar Midstream pipeline by mid-year 2014,
we anticipate San Antonio has the potential to contribute meaningful Adjusted
EBITDA to our overall business in future periods.”

“Our slate of multi-year organic growth projects remain on schedule,” continued
Grube. “The 20,000 bpd Dakota Prairie refinery is scheduled to begin start-up
during the fourth quarter of 2014. Our engineering partner, Ventech, has
constructed the refinery in modular phases which are being delivered to the
construction site in Dickinson, North Dakota. The Missouri esters plant
expansion is scheduled for completion during the second quarter of 2015, while
the Montana refinery expansion project remains set for completion by the first
quarter of 2016.”

“We remain committed to maintaining a distribution policy that provides for
consistent cash distributions to our unitholders,” stated Grube. “In April, we
announced a quarterly cash distribution of $0.685 per unit for the quarter ended
March 31, 2014 on all of our outstanding limited partner units.”

Recent Performance Highlights

— Completed a $900 million offering of 6.50% senior unsecured notes due
April 2021. On March 26, 2014, Calumet priced $900 million of 6.50%
senior notes due 2021. The Partnership used a portion of the net
proceeds from the private placement to fund the approximately $237
million purchase price of its previously announced acquisition of ADF
Holdings, Inc., the parent company of Anchor Drilling Fluids USA, Inc.,
related transaction expenses and the redemption of all $500 million
aggregate principal amount outstanding of its 9.375% senior unsecured
notes due 2019. Remaining funds will be used for general partnership
purposes, including planned capital expenditures.
— Acquired Anchor Drilling Fluids USA, Inc. On March 31, 2014, Calumet
completed the acquisition of Anchor Drilling Fluids USA, Inc. on a
debt-free basis for total cash consideration of approximately $237
million. Anchor develops custom formulations and innovative solutions
based on unique customer and well specifications. Through its extensive
line of drilling and completion fluids, Anchor delivers solutions that
reduce drilling and completion time, help to control reservoir formation
pressures and maximize oil and gas production, contributing to improved
well economics for end-users. This transaction positions Calumet as one
of the leading suppliers of drilling fluids to the domestic E&P
industry, a sector that continues to enjoy rapid growth due to advances
in drilling technology and increased exploration activity in identified
and emerging unconventional resource plays. The addition of Anchor to
Calumet’s asset portfolio will also serve to increase the Partnership’s
specialty products sales with a business that has historically generated
consistent cash flow with limited ongoing capital investment. For the
year ended December 31, 2012, Anchor generated EBITDA of approximately
$26.3 million. The Partnership currently anticipates that Anchor will
report a year-over-year increase in EBITDA of approximately 20% for the
full-year 2013.
— Launched Royal Purple branded products into Wal-Mart Stores. Beginning
in April 2014, Calumet began the launch of Royal Purple branded products
to the Wal-Mart store network. Initial feedback on the launch has been
very positive, with certain Royal Purple products selling into more than
3,000 Wal-Mart locations.
— Operated the San Antonio Refinery at record production rates during the
first quarter 2014. The San Antonio refinery reported record throughputs
during the first quarter 2014, following the completion of a crude unit
expansion project in December 2013. Total production volumes from the
refinery increased more than 10% during the first quarter when compared
to the prior-year period.
Organic Growth Projects Update

Beginning in 2013, the Partnership initiated a series of organic growth
projects, the last of which is expected to be completed by the first quarter
2016. Collectively, these projects are estimated to cost approximately $500 to
$550 million and are expected to return approximately $200 million in annualized
Adjusted EBITDA upon completion. Below is a current list of the remaining growth
projects slated for completion during the next three years:

— Great Falls, Montana Refinery Expansion Project. Calumet continues to
make progress on a project designed to double production capacity at its
Montana refinery by 10,000 to 20,000 bpd. As part of the project, the
Partnership will install a new 20,000 bpd crude unit and a 25,000 bpd
hydrocracker. The Partnership continues to estimate this project will be
completed during the first quarter of 2016. The estimated total cost of
the expansion project is approximately $400 million. The Partnership
estimates the annualized incremental Adjusted EBITDA resulting from this
project will be in the range of approximately $130 to $140 million.
— Dakota Prairie (North Dakota) Refinery Project. Calumet, together with
its 50/50 joint venture partner, MDU Resources, Inc.(“MDU”), continues
to make steady progress on the construction of a 20,000 bpd diesel
refinery located in Dickinson, North Dakota. The refinery, which is
expected to be completely supplied with locally sourced Bakken crude
oil, is expected to commence operations during the fourth quarter 2014.
The Partnership estimates that the annualized incremental Adjusted
EBITDA resulting from this project will be approximately $35 million to
$45 million.
— Missouri Esters Plant Expansion Project. Calumet continues to make
progress on a project that is expected to double esters production
capacity at its Missouri esters plant from 35 to 75 million pounds per
year. Esters are a key base stock used in the aviation, refrigeration
and automotive lubricants markets. The Partnership anticipates
completion of the project during the second quarter 2015. The estimated
total cost of the expansion project is approximately $40 million. The
Partnership estimates that the annualized incremental Adjusted EBITDA
resulting from this project will be approximately $10 million.
Financial and Operational Guidance

— 2014 capital spending forecast. For the full year 2014, the Partnership
anticipates total capital expenditures of $340 to $385 million.
Approximately $270 to $300 million of the total 2014 capital spending
plan is allocated toward organic growth projects. The 2014 capital
spending plan also includes an estimated $50 to $60 million in
replacement and environmental capital expenditures and approximately $20
to $25 million in turnaround costs.
— Estimated 2014 RFS compliance (“RINs”) impact. In conjunction with the
Partnership’s ongoing compliance with the U.S. Renewable Fuels Standard
(“RFS”), Calumet will purchase blending credits referred to as Renewable
Identification Numbers (“RINs”). The Partnership records its outstanding
RINs obligation as a balance sheet liability. This liability is
marked-to-market on a quarterly basis to reflect the market price of
RINs on the last day of each quarter. The Partnership expects its gross
estimated annual RINs obligation, which includes RINs that are required
to be secured through either blending or through the purchase of RINs in
the open market, to be in the range of 90 to 95 million RINs for the
full year 2014. During the first quarter 2014, Calumet incurred RFS
compliance costs of $7.9 million, compared to $11.8 million in the first
quarter 2013.
— TexStar Midstream pipeline update. In November 2013, Calumet entered
into a definitive agreement with TexStar Midstream Logistics, L.P. under
which TexStar will construct, own and operate a 30,000 barrel per day
crude oil pipeline system that will supply significant volumes of Eagle
Ford crude oil to Calumet’s San Antonio, Texas refinery. Under the terms
of the 15-year agreement, TexStar has committed to install and operate
the Karnes North Pipeline System (“KNPS”), an 8-inch, 50-mile pipeline
that will transport crude oil from Karnes City, Texas – a major center
of oil production in the Eagle Ford shale formation – to Calumet’s
Elmendorf, Texas terminal, a key supply hub for Calumet’s San Antonio
refinery. The San Antonio refinery expects to receive deliveries of at
least 10,000 bpd of crude oil through the KNPS-Elmendorf terminal supply
route once the line comes into service. Construction of the KNPS is
slated for completion by June 2014.
— Upcoming scheduled maintenance. The Shreveport refinery began
approximately two weeks of planned maintenance beginning on April 28,
2014. The primary focus of the scheduled maintenance involves completion
of upgrades to the flare system, inspection work on select units and a
change of catalyst on the lube oil hydrotreater.
Partnership Liquidity

On March 31, 2014, Calumet had availability under its revolving credit facility
of approximately $533 million, based on a $705 million borrowing base, $172
million in outstanding standby letters of credit and no outstanding borrowings.
In addition, Calumet had approximately $180 million of cash on hand as of March
31, 2014. Calumet believes it will continue to have ample liquidity from cash on
hand, 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.

Gross Profit Comparison of Quarters Ended March 31, 2014 and 2013

The Partnership reclassified the reporting of asphalt sold from its Shreveport,
Superior and Montana refineries from its Specialty Products segment to its Fuel
Products segment. This reporting change does not impact the Company’s
consolidated financial results from prior periods. Segment gross profit for the
prior period has been restated and is consistent with the current year
presentation.

Gross profit by segment for the three months ended March 31, 2014 and 2013 are
as follows:

Three Months Ended March 31,
—————————-

2014 2013
—- —-

(Dollars in millions, except per barrel
data)

Specialty products $98.2 $84.8

Fuel products 26.6 49.6
—- —-

Total gross profit $124.8 $134.4
====== ======

Specialty products gross profit per barrel $42.22 $32.49
====== ======

Fuel products gross profit per barrel (including hedging activities) $3.23 $6.66
===== =====

Fuel products gross profit per barrel (excluding hedging activities) $3.66 $8.25
===== =====

Specialty Products

Specialty Products segment gross profit increased 15.8%, or $13.4 million, in
the first quarter 2014 compared to the prior year period. The increase in
segment gross profit was due primarily to increased average selling prices per
barrel sold as a result of improved product mix and gross profit contribution
attributable to acquisitions, partially offset by lower sales volume and higher
operating costs.

Fuel Products

Fuel Products segment gross profit decreased 46.4%, or $23.0 million, in the
first quarter 2014 compared to the prior year period. The decrease was due
primarily to narrowing refined product margins resulting from a higher cost of
crude oil, coupled with lower average selling prices on light products, such as
gasoline and diesel fuel, and higher natural gas costs. These decreases were
partially offset by decreased realized losses on derivatives of $8.3 million
during the first quarter 2014 when compared to the prior year period.

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,
biodiesel and the resale of crude oil in the Fuel Products segment. The table
includes the results of operations at our San Antonio refinery commencing
January 2, 2013, Bel-Ray facility commencing December 10, 2013 and United
Petroleum assets commencing February 28, 2014.

Three Months Ended March
31,
————————-

2014 2013
—- —-

(bpd)

Total sales volume (1) 117,478 111,789

Total feedstock runs (2) 118,359 110,465

Facility production: (3)

Specialty products:

Lubricating oils 10,617 12,127

Solvents 8,595 8,561

Waxes 1,321 1,234

Packaged and synthetic specialty
products (4) 1,554 1,950

Other 2,507 3,077
—– —–

Total 24,594 26,949
——

Fuel products:

Gasoline 32,987 29,881

Diesel 26,795 23,843

Jet fuel 4,428 4,794

Asphalt, heavy fuels and other 22,368 22,518
—— ——

Total 86,578 81,036
—— ——

Total facility production (3) 111,172 107,985
======= =======

____________

(1) Total sales volume includes
sales from the production at
our facilities and certain
third-party facilities
pursuant to supply and/or
processing agreements, sales of
inventories and the resale of
crude oil to third party
customers. Total sales volume
includes the sale of purchased
fuel product blendstocks, such
as ethanol and biodiesel, as
components of finished fuel
products in our Fuel Products
segment sales.

The increase in total sales
volume for the three months
ended March 31, 2014 compared
to the same period in 2013 is
due primarily to increased fuel
products sales volume,
partially offset by decreased
sales of lubricating oils.

(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 total feedstock
runs for the three months ended
March 31, 2014 compared to the
same period in 2013 is due
primarily to decreased
feedstock runs at the Superior
refinery in 2013 as a result of
preparation for the April 2013
turnaround and incremental
feedstock runs in 2014 as a
result of the San Antonio crude
oil unit expansion completed in
December 2013.

(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.
The difference between total
facility production and total
feedstock runs is primarily a
result of the time lag between
the input of feedstocks and
production of finished products
and volume loss.

The increase in total facility
production for the three months
ended March 31, 2014 compared
to the same period in 2013 is
due primarily to the
operational items discussed
above in footnote 2 of this
table.

(4) Represents production of
packaged and synthetic
specialty products at our Royal
Purple, Bel-Ray, Calumet
Packaging and Missouri
facilities.

Derivatives Summary

The following table summarizes the derivative activity reflected in the
unaudited consolidated statements of operations and unaudited condensed
consolidated statements of cash flows for the three months ended March 31, 2014
and 2013.

Three Months Ended March 31,
—————————-

2014 2013
—- —-

(In millions)

Derivative loss reflected
in sales $(13.1) $(7.6)

Derivative gain (loss)
reflected in cost of
sales 9.2 (4.0)
— —-

Derivative losses
reflected in gross profit $(3.9) $(11.6)

Realized gain (loss) on
derivative instruments $6.6 $(8.6)

Unrealized gain on
derivative instruments 24.6 24.5

Derivative gain reflected
in interest expense 0.3 –

Total derivative gain
reflected in the
unaudited condensed
consolidated $27.6 $4.3

statements of operations

Total gain (loss) on
commodity derivative
settlements $4.2 $(21.5)
==== ======

About the Partnership

Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) is a master limited
partnership and a leading independent producer of high quality, specialty
hydrocarbon products in North America. Calumet processes crude oil and other
feedstocks into customized lubricating oils, solvents and waxes used in
consumer, industrial and automotive products. Calumet also produces fuel
products including gasoline, diesel and jet fuel. Calumet is based in
Indianapolis, Indiana and has thirteen facilities located in northwest
Louisiana, northwest Wisconsin, northern Montana, western Pennsylvania, Texas,
New Jersey and Oklahoma.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday,
May 7, 2014, to discuss the financial and operational results for the first
quarter of 2014. Anyone interested in listening to the presentation may call
877-546-5020 and enter passcode 39489540.

The telephonic replay of the conference call is available in the United States
by calling 888-286-8010 and entering passcode 46371768. The replay will be
available beginning Wednesday, May 7, 2014, at approximately 5:00 p.m. ET until
Wednesday, May 14, 2014. A webcast of the earnings call and accompanying
presentation slides will be available on the Partnership’s website at
http://www.calumetspecialty.com.

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 ended March 31, 2014 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 sales 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 our actual results to differ from our historical experience and our
present expectations or projections. Known material 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; the
costs of complying with the Renewable Fuel Standard, including the prices paid
for RINs; 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 they are made. 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 , Distributable Cash Flow and Adjusted Net Income, and provide
reconciliations of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Adjusted
Net Income to net income (loss) and net cash provided by (used in) operating
activities, our most directly comparable financial performance and liquidity
measures calculated and presented in accordance with GAAP.

EBITDA, Adjusted EBITDA , Distributable Cash Flow and Adjusted Net Income 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 (loss) 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 and environmental 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, our investors and
analysts to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash Flow that are
presented in this release have been updated to reflect the calculation of
“Consolidated Cash Flow” contained in the indenture governing our 9.625% senior
notes due August 1, 2020 that were issued in June 2012 (the “2020 Notes”) , the
indenture governing our 7.625% senior notes due January 15, 2022 that were
issued in November 2013 (the “2022 Notes”) and the indenture governing our 6.50%
senior notes due April 15, 2021 that were issued in March 2014 (the “2021
Notes”). We are required to report Consolidated Cash Flow to our holders of the
2021 Notes, 2020 Notes and 2022 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 2013 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, 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 (loss) 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 millions, except per unit and unit data)

Three Months Ended March 31,
—————————-

2014 2013
—- —-

Sales $1,341.0 $1,318.6

Cost of sales 1,216.2 1,184.2
——- ——-

Gross profit 124.8 134.4

Operating costs and
expenses:

Selling 19.0 15.9

General and
administrative 25.9 25.1

Transportation 40.4 35.4

Taxes other
than income
taxes 2.1 3.0

Other 2.1 0.6
— —

Operating
income 35.3 54.4
—- —-

Other income (expense):

Interest
expense (26.2) (24.8)

Debt
extinguishment
costs (89.6) –

Realized gain
(loss) on
derivative
instruments 6.6 (8.6)

Unrealized
gain on
derivative
instruments 24.6 24.5

Other (0.3) 0.7
—- —

Total other
expense (84.9) (8.2)
—– —-

Net income
(loss)
before
income taxes (49.6) 46.2

Income tax
expense 0.2 0.2
— —

Net income
(loss) $(49.8) $46.0
====== =====

Allocation of net income
(loss):

Net income
(loss) $(49.8) $46.0

Less:

General
partner’s
interest in
net income
(loss) (1.0) 0.9

General
partner’s
incentive
distribution
rights 3.8 3.2

Non-vested
share based
payments – 0.2
— —

Net income
(loss)
available to
limited
partners $(52.6) $41.7
====== =====

Weighted average limited
partner units outstanding:

Basic 69,622,884 62,831,155
========== ==========

Diluted 69,622,884 63,017,869
========== ==========

Limited
partners’
interest
basic net
income
(loss) per
unit $(0.76) $0.67
====== =====

Limited
partners’
interest
diluted net
income
(loss) per
unit $(0.76) $0.66
====== =====

Cash
distributions
declared per
limited
partner unit $0.685 $0.65
====== =====

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

March 31, 2014 December 31, 2013
————– —————–

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents $179.6 $121.1

Accounts receivable, net 394.5 263.3

Inventories 675.9 567.4

Derivative assets 17.2 –

Prepaid expenses and other
current assets 16.7 18.9

Deposits 0.5 3.7
— —

Total current assets 1,284.4 974.4

Property, plant and equipment,
net 1,221.6 1,160.4

Investment in unconsolidated
affiliates 51.7 33.4

Goodwill 272.5 207.0

Other intangible assets, net 284.6 212.9

Other noncurrent assets, net 102.8 100.0
—– —–

Total assets $3,217.6 $2,688.1
======== ========

LIABILITIES AND PARTNERS’ CAPITAL

Current liabilities:

Accounts payable $566.2 $355.8

Accrued interest payable 15.1 22.5

Accrued salaries, wages and
benefits 18.1 14.0

Other taxes payable 17.9 18.4

Other current liabilities 35.9 36.2

Current portion of long-term
debt 0.4 0.4

Derivative liabilities 4.2 54.8
— —-

Total current liabilities 657.8 502.1

Deferred income tax liability 25.3 –

Pension and postretirement
benefit obligations 11.5 11.7

Other long-term liabilities 1.0 1.1

Long-term debt, less current
portion 1,518.4 1,110.4
——- ——-

Total liabilities 2,214.0 1,625.3

Commitments and contingencies

Partners’ capital:

Partners’ capital 1,010.3 1,116.2

Accumulated other
comprehensive loss (6.7) (53.4)
—- —–

Total partners’ capital 1,003.6 1,062.8
——- ——-

Total liabilities and
partners’ capital $3,217.6 $2,688.1
======== ========

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Three Months Ended March 31,
—————————-

2014 2013
—- —-

Operating activities

Net income (loss) $(49.8) $46.0

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

Depreciation and
amortization 30.2 29.3

Amortization of
turnaround costs 5.8 2.6

Non-cash interest
expense 1.9 1.7

Non-cash debt
extinguishment costs 18.7 –

Provision for
doubtful accounts 0.6 0.3

Unrealized gain on
derivative
instruments (24.6) (24.5)

Non-cash equity
based compensation 3.0 2.9

Other non-cash
activities 1.1 0.6

Changes in assets and
liabilities:

Accounts receivable (54.1) (85.9)

Inventories (51.3) (51.4)

Prepaid expenses and
other current assets 2.6 (7.1)

Derivative activity 1.5 (1.3)

Turnaround costs (3.0) (13.9)

Deposits 3.2 5.4

Accounts payable 163.2 82.6

Accrued interest
payable (7.4) 5.3

Accrued salaries,
wages and benefits 0.3 (2.7)

Accrued income taxes
payable – (27.6)

Other taxes payable (1.7) (0.7)

Other liabilities (0.6) 5.3

Pension and
postretirement
benefit obligations – (0.7)
— —-

Net cash provided by
(used in) operating
activities 39.6 (33.8)

Investing activities

Additions to
property, plant and
equipment (46.3) (21.1)

Cash paid for
acquisitions, net of
cash acquired (247.0) (117.7)

Investment in
unconsolidated
affiliates (16.0) (9.2)

Proceeds from sale of
property, plant and
equipment – –

Net cash used in
investing activities (309.3) (148.0)

Financing activities

Proceeds from
borrowings –
revolving credit
facility 6.5 607.8

Repayments of
borrowings –
revolving credit
facility (6.5) (578.6)

Repayments of
borrowings -senior
notes (500.0) –

Payments on capital
lease obligations (0.3) (0.2)

Proceeds from other
financing
obligations – 3.5

Proceeds from senior
note offering 900.0 –

Debt issuance costs (15.9) –

Proceeds from public
offering of common
units, net – 175.5

Contribution from
Calumet GP, LLC – 3.7

Common units
repurchased for
phantom unit grants (2.1) (7.1)

Cash settlement of
unit based
compensation phantom
units (0.9) –

Distributions to
partners (52.6) (44.5)
—– —–

Net cash provided by
financing activities 328.2 160.1
—– —–

Net increase
(decrease) in cash
and cash equivalents 58.5 (21.7)

Cash and cash
equivalents at
beginning of period 121.1 32.2
—– —-

Cash and cash
equivalents at end
of period $179.6 $10.5
====== =====

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW

(In millions)

Three Months Ended March 31,
—————————-

2014 2013
—- —-

Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA (Unaudited)

and Distributable Cash Flow:

Net income (loss) $(49.8) $46.0

Add:

Interest expense 26.2 24.8

Debt extinguishment costs 89.6 –

Depreciation and amortization 30.2 29.3

Income tax expense 0.2 0.2
— —

EBITDA $96.4 $100.3
—– ——

Add:

Unrealized gain on derivatives (24.6) (24.5)

Realized gain (loss) on derivatives, not included in net income (loss) 1.5 (1.3)

Amortization of turnaround costs 5.8 2.6

Non-cash equity based compensation and other non-cash items 3.6 2.9
— —

Adjusted EBITDA $82.7 $80.0
—– —–

Less:

Replacement and environmental capital expenditures (1) 5.8 16.4

Cash interest expense (2) 24.3 23.1

Turnaround costs 3.0 13.9

Income tax expense 0.2 0.2
— —

Distributable Cash Flow $49.4 $26.4
===== =====

__________________

(1) Replacement capital expenditures are
defined as those capital expenditures
which do not increase operating
capacity or reduce operating costs and
exclude turnaround costs.
Environmental capital expenditures
include asset additions to meet or
exceed environmental and operating
regulations.

(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 (USED IN) OPERATING ACTIVITIES

(In millions)

Three Months Ended March 31,

2014 2013
—- —-

Reconciliation of Distributable Cash Flow, Adjusted EBITDA and (Unaudited)

EBITDA to Net cash provided by (used in) operating activities:

Distributable Cash Flow $49.4 $26.4

Add:

Replacement and environmental capital expenditures (1) 5.8 16.4

Cash interest expense (2) 24.3 23.1

Turnaround costs 3.0 13.9

Income tax expense 0.2 0.2
— —

Adjusted EBITDA $82.7 $80.0
===== =====

Less:

Unrealized gain on derivative instruments (24.6) (24.5)

Realized gain (loss) on derivatives, not included in net income (loss) 1.5 (1.3)

Amortization of turnaround costs 5.8 2.6

Non-cash equity based compensation and other non-cash items 3.6 2.9
— —

EBITDA $96.4 $100.3
===== ======

Add:

Unrealized gain on derivative instruments (24.6) (24.5)

Cash interest expense (2) (24.3) (23.1)

Non-cash equity based compensation 3.6 2.9

Amortization of turnaround costs 5.8 2.6

Income tax expense (0.2) (0.2)

Provision for doubtful accounts 0.6 0.3

Debt extinguishment costs (70.9) –

Changes in assets and liabilities:

Accounts receivable (54.1) (85.9)

Inventories (51.3) (51.4)

Other current assets 5.8 (1.7)

Turnaround costs (3.0) (13.9)

Derivative activity 1.5 (1.3)

Other assets – –

Accounts payable 163.2 82.6

Accrued interest payable (7.4) 5.3

Accrued income taxes payable – (27.6)

Other current liabilities (2.0) 1.9

Other, including changes in noncurrent liabilities 0.5 (0.1)
— —-

Net cash provided by (used in) operating activities $39.6 $(33.8)
===== ======

_________________

(1) Replacement capital expenditures are
defined as those capital
expenditures which do not increase
operating capacity or reduce
operating costs and exclude
turnaround costs. Environmental
capital expenditures include asset
additions to meet or exceed
environmental and operating
regulations.

(2) Represents consolidated interest
expense less non-cash interest
expense.

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME

(In millions, except per unit and unit data)

Three Months Ended March 31,
—————————-

2014 2013
—- —-

(Unaudited)

Net income (loss) $(49.8) $46.0

Debt extinguishment
costs 89.6 –
—- —

Adjusted net income $39.8 $46.0
===== =====

Allocation of adjusted net
income:

Adjusted net income $39.8 $46.0

Less:

General partner’s
interest in
adjusted net
income 0.8 0.9

General partner’s
incentive
distribution
rights 3.8 3.2

Non-vested share
based payments 0.1 0.2

Adjusted net income
available to
limited partners $35.1 $41.7
===== =====

Weighted average limited
partner units outstanding:

Basic 69,622,884 62,831,155
========== ==========

Diluted 69,702,987 63,017,869
========== ==========

Limited partners’
interest basic
adjusted net
income per unit $0.50 $0.67
===== =====

Limited partners’
interest diluted
adjusted net
income per unit $0.50 $0.66
===== =====

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

COMMODITY DERIVATIVE INSTRUMENTS

As of March 31, 2014

Fuel Products Segment

The following table provides a summary of the implied crack spreads for Calumet’s crude oil and diesel fuel swaps on a combined basis as of March 31, 2014 in the Company’s Fuel Products segment:

Crude Oil and Diesel Swap Contracts by Expiration Dates Barrels BPD Implied Crack
Spread ($/Bbl)
——————————————————- ——- — ————–

Second Quarter 2014 1,137,500 12,500 $27.47

Third Quarter 2014 1,472,000 16,000 27.63

Fourth Quarter 2014 1,426,000 15,500 27.59

Calendar Year 2015 5,785,500 15,851 26.59

Calendar Year 2016 1,830,000 5,000 27.27
——— —–

Totals 11,651,000

Average price $27.03

The following table provides a summary of the implied crack spreads for Calumet’s crude oil and jet fuel swaps on a combined basis as of March 31, 2014 in the Company’s Fuel Products segment:

Crude Oil and Jet Swap Contracts by Expiration Dates Barrels BPD Implied Crack
Spread ($/Bbl)
—————————————————- ——- — ————–

Second Quarter 2014 273,000 3,000 $25.33

Third Quarter 2014 276,000 3,000 24.83

Fourth Quarter 2014 276,000 3,000 24.30

Calendar Year 2015 957,500 2,623 28.10
——- —–

Totals 1,782,500

Average price $26.58

The following table provides a summary of the implied crack spreads for Calumet’s crude oil and gasoline swaps on a combined basis as of March 31, 2014 in the Company’s Fuel Products segment:

Crude Oil and Gasoline Swap Contracts by Expiration Dates Barrels BPD Implied Crack
Spread ($/Bbl)
——————————————————— ——- — ————–

Second Quarter 2014 1,638,000 18,000 $15.82

Third Quarter 2014 1,610,000 17,500 13.99

Fourth Quarter 2014 460,000 5,000 11.82

Calendar Year 2015 45,500 125 19.00
—— —–

Totals 3,753,500

Average price $14.58

SOURCE Calumet Specialty Products Partners, L.P.

Leave a Reply


Fatal error: Call to undefined function show_subscription_checkbox() in /home3/steer/public_html/indianapressreleases.com/wp-content/themes/comfy/comments.php on line 95