Calumet Specialty Products Partners, L.P. Reports Fourth Quarter and Annual 2013 Results

INDIANAPOLIS, Feb. 27, 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 fourth quarter ended December 31, 2013 of
$15.5 million, or $(0.27) per diluted unit, compared to net income of $45.7
million, or $0.73 per diluted unit for the same quarter in 2012. Fourth quarter
2013 results include $2.8 million of noncash unrealized derivative gains
compared to $7.5 million of noncash unrealized derivative gains in the prior
year period. For the full year 2013, the Partnership reported net income of $3.5
million, or $(0.17) per diluted unit, on Adjusted EBITDA (as defined below in
the section of this press release titled “Non-GAAP Financial Measures”) of
$241.5 million. Adjusted EBITDA was $53.2 million for the fourth quarter 2013,
as compared to $91.3 million in the prior year period.

The Partnership’s financial performance during the fourth quarter 2013 was
adversely impacted by a significant year over year decline in gross profit
contribution from both the Specialty Products and Fuel Products segments. Gross
profit of the Specialty Products segment was impacted by a combination of
factors, including profit margins returning to normalized levels when compared
to the elevated margins achieved during the prior year period and higher
operating costs, partially offset by higher sales volumes, primarily solvents
and waxes. Gross profit of the Fuel Products segment was impacted by a
combination of factors, including a year over year decline in benchmark refined
product margins partially offset by improved results from derivative instrument
settlements, lower planned utilization at the Shreveport refinery, and a year
over year increase in operating costs related to compliance with the U.S.
Renewable Fuels Standard.

Distributable Cash Flow (“DCF”) (as defined below in the section of this press
release titled “Non-GAAP Financial Measures”) for the fourth quarter 2013 was
$10.6 million, compared to $54.5 million in the prior year period. For the full
year 2013, DCF was $18.5 million, compared to $281.1 million in 2012. DCF for
the fourth quarter and the full year 2013 was negatively impacted by a
year-over-year decline in Adjusted EBITDA driven primarily by lower gross
profit, an increase in planned maintenance capital expenditures and turnaround
costs and higher interest expense.

Management Commentary

“Although our full year results were impacted by planned facility-wide
maintenance turnarounds at our Superior and Montana refineries during 2013, the
Partnership is poised for improved profitability entering 2014,” stated Bill
Grube, Vice Chairman and Chief Executive Officer. “Last year, we announced more
than $500 million in high-return organic growth projects slated for completion
between now and 2016, we acquired the San Antonio refinery, the Bel-Ray Company
and crude oil logistics assets, we broke ground on our greenfield North Dakota
refinery joint venture, and we successfully completed a series of successful
financing efforts to support these projects.”

“In December 2013, we successfully completed a 3,000 bpd expansion of the crude
unit at our San Antonio refinery, in addition to a gasoline blending project
that allows us to blend up to 5,000 bpd of finished gasoline,” continued Grube.
“Once the Karnes North Pipeline System comes onstream later this year, the San
Antonio refinery will begin receiving Eagle Ford crude oil at its Elmendorf
terminal by pipeline, a move which we expect to lower our feedstock
transportation costs to the refinery.”

“With the completion of major turnarounds at several of our largest fuels
refineries during 2013, we estimate turnaround-related spending should decline
on a year over year basis by 70% during 2014,” continued Grube. “Importantly,
our next plant-wide turnarounds at our Superior, Montana and San Antonio
refineries are currently scheduled for 2018.”

“In recent months, we have taken steps to expand the distribution of our premium
asphalt products into new Northeast and Mid-continent markets,” continued Grube.
“We are currently evaluating potential locations in Idaho and the surrounding
region where we could potentially build one or more asphalt distribution
terminals that, beginning in the first quarter of 2016, would be used to sell
incremental asphalt production resulting from our Montana refinery expansion
project.”

“We expect the 20,000 bpd Dakota Prairie refinery to begin start-up late in the
fourth quarter of 2014,” continued Grube. “We anticipate contributions from this
refinery, together with contributions from our Montana refinery expansion,
Missouri esters plant expansion and other growth projects, will result in
significant Adjusted EBITDA uplift for the Partnership during the next 36
months.”

“We anticipate a strong year ahead for packaged and synthetic specialty
products, driven in part by the highly anticipated launch of our Royal Purple
brand of high-performance synthetic lubricants into more than 2,400 Wal-Mart
stores nationally,” noted Grube. “With the recent acquisition of Bel-Ray, we
intend to further expand the international sales of our packaged and synthetic
specialty products.”

“We remain committed to maintaining a distribution policy that provides for
consistent distributions to our unitholders,” stated Grube. “In January, we
announced a quarterly cash distribution of $0.685 per unit, or $2.74 per unit on
an annualized basis, for the quarter ended December 31, 2013 on all of our
outstanding limited partner units.”

Recent Performance Highlights

— Completed a $350 million offering of 7.625% senior unsecured notes due
2022. On November 21, 2013, Calumet priced $350 million of 7.625% senior
unsecured notes due 2022. The offering was upsized to $350 million from
the original offering size of $225 million. The Partnership intends to
use the net proceeds from the private placement for general partnership
purposes, including funding previously announced organic growth projects
and acquisitions. In conjunction with the offering, Calumet repurchased
approximately $100 million of outstanding 9.375% senior unsecured notes
due 2019 in privately negotiated transactions.
— Acquired Bel-Ray Company. On December 10, 2013, Calumet acquired Bel-Ray
Company, LLC, a manufacturer and global distributor of high-performance
lubricants and greases. Bel-Ray manufacturers and distributes a wide
array of high-end specialty lubricants and greases to both domestic and
international markets through its industrial, mining and powersports
product lines. Bel-Ray joins an existing portfolio of market-leading
specialty products brands that include Calumet’s line of Royal Purple
line of high performance synthetic lubricants and the Penreco line of
FDA-registered food grade specialty products. Bel-Ray’s New Jersey-based
manufacturing plant provides Calumet with an East Coast facility capable
of serving both domestic and export markets, a strategic asset that will
assist the Partnership in growing its specialty products footprint in
international markets.
— Completed San Antonio crude unit expansion and gasoline blending
projects. During December 2013, Calumet completed a 3,000 bpd expansion
of the refinery’s crude unit to 17,500 bpd of total capacity and a
gasoline blending project allowing the facility to blend up to 5,000 bpd
of finished gasoline.
— Significantly expanded distribution of asphalt products into new East
Coast and Mid-Continent markets. On January 27, 2014, Calumet announced
a multi-year asphalt supply and marketing agreement with All-States
Asphalt, Inc. (“All-States”). This agreement represents an opportunity
to expand the distribution of the Partnership’s premium asphalt products
into New York state and surrounding markets. Historically, asphalt sales
from Calumet’s Northern refineries, including the Superior and Montana
refineries, have been routed to customers in Mid-Continent and Western
markets. Through this agreement, the Partnership seeks to supply volumes
of asphalt to previously untapped markets throughout the Northeast.
Substantially all of the asphalt products sold through All-States will
be to retail customers. Separately, on February 4, 2014, Calumet
announced a multi-year agreement effective January 1, 2014 with Frontier
Terminals, LLC to lease a 348,000 barrel liquid asphalt distribution
terminal in Muskogee, Oklahoma (“Muskogee Terminal”). During the first
quarter 2014, Calumet will begin marketing its asphalt products to
customers in Arkansas, Missouri, Kansas and Oklahoma through the
Muskogee Terminal.
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 $500-550
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 from 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 estimates that 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 that the annualized incremental Adjusted EBITDA resulting from
this project will be in the range of approximately $130 million to $140
million.
— Dakota Prairie (North Dakota) Refinery Project. Calumet, together with
its 50/50 joint venture partner, MDU Resources, Inc., 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 $35 million to $45 million, which
represents 50% of the projected annual Adjusted EBITDA of the joint
venture.
— 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, refrigerant 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 Guidance

— 2014 Capital Spending Forecast. For the full year 2014, the Partnership
anticipates total capital expenditures of $340 million to $385 million.
Approximately $270 million 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 million to $60
million in replacement and enviromental capital expenditures and
approximately $20 million to $25 million allocated to 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, will be in the range of 90-95 million RINs for the full
year 2014.
Partnership Liquidity

On December 31, 2013, Calumet had availability under its revolving credit
facility of $472.4 million, based on a $567.6 million borrowing base, $95.2
million in outstanding standby letters of credit and no outstanding borrowings.
In addition, Calumet had $121.1 million of cash on hand as of December 31, 2013.
Calumet believes it will continue to have ample liquidity from cash on hand,
sufficient cash flow from operations and borrowing capacity to meet its
financial commitments, minimum quarterly distributions to unitholders, debt
service obligations, contingencies and anticipated capital expenditures.

Gross Profit Comparison of Quarters Ended December 31, 2013 and December 31,
2012

During the fourth quarter 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 December 31, 2013 and 2012
are as follows:

For the
Three
Months
Ended

December
31,
———

2013 2012
—- —-

(Dollars in
millions,
except per
barrel
data)

Specialty products $79.1 $88.4

Fuel products 33.4 53.3
—- —-

Total gross profit $112.5 $141.7
====== ====

Specialty products
gross profit per
barrel $34.45 $39.48
====== ====

Fuel products gross
profit per barrel
(including hedging
activities) $4.31 $7.21
===== =====

Fuel products gross
profit per barrel
(excluding hedging
activities) $3.81 $9.70
===== =====

Specialty Products

Specialty products gross profit decreased 10.5%, or $9.3 million, in the fourth
quarter 2013, compared to the fourth quarter 2012. The year over year decline
was primarily attributable to profit margins in 2013 returning to normalized
levels when compared to the elevated margins achieved during the prior year
period and higher operating costs, partially offset by higher sales volumes,
primarily solvents and waxes.

Fuel Products

Fuel products segment gross profit decreased 37.3%, or $19.9 million, in the
fourth quarter 2013 compared to the fourth quarter 2012. The year over year
decline was primarily attributable to significantly lower fuel products margins,
lower planned utilization at the Shreveport refinery in the fourth quarter 2013
and an increase in operating costs, primarily RFS compliance costs (e.g., costs
to purchase RINs), partially offset by improved results on derivative instrument
settlements.

Operations Summary

The following table sets forth unaudited information about Calumet’s operations.
Facility production volume differs from sales volume due to changes in
inventories and the sale of purchased fuel product blendstocks such as ethanol
and biodiesel in the fuel products segment. The tables include the results of
operations at the Missouri facility commencing January 3, 2012, TruSouth
facility commencing January 6, 2012, Royal Purple facility commencing July 3,
2012, Montana refinery commencing October 1, 2012, San Antonio refinery
commencing January 2, 2013 and Bel-Ray facility commencing December 10, 2013.

Three Months Ended December 31, Year Ended December 31,
——————————- ———————–

2013 2012 2013 2012
—- —- —- —-

(bpd) (bpd)

Total sales volume (1) 109,098 104,685 116,477 97,789

Total feedstock runs (2) 103,565 105,107 110,237 97,600

Facility production: (3)

Specialty products:

Lubricating oils 13,247 13,787 13,247 14,524

Solvents 8,859 8,995 8,759 9,332

Waxes 1,800 1,314 1,443 1,280

Packaged and synthetic specialty products (4) 1,175 1,379 1,934 1,351

Other 2,319 3,081 2,192 3,084

Total 27,400 28,556 27,575 29,571
—— —— ——

Fuel products:

Gasoline 29,757 28,495 29,374 24,394

Diesel 25,837 24,810 26,015 22,438

Jet fuel 2,162 4,341 4,105 4,325

Asphalt, heavy fuel oils and other 17,852 17,818 19,976 15,444
—— —— —— ——

Total 75,608 75,464 79,470 66,601
—— —— —— ——

Total facility production (3) 103,008 104,020 107,045 96,172
======= ======= ======= ======

(1) Total sales volume includes sales from the production at our facilities and
certain third-party facilities pursuant to supply and/or processing agreements,
and sales of inventories. Total sales volume 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 quarter over quarter is due primarily to
incremental sales of fuel products from the San Antonio Acquisition, partially
offset by decreased sales at the Shreveport refinery as a result of lower
production.

The increase in total sales volume in 2013 compared to 2012 is due primarily to
incremental sales of fuel products, asphalt and packaged and synthetic specialty
products resulting from the Royal Purple, Montana and San Antonio Acquisitions,
partially offset by decreased sales of lubricating oils, asphalt and fuel
products from the Shreveport and Superior refineries.

(2) Total feedstock runs represent the barrels per day of crude oil and other
feedstocks processed at Calumet’s facilities and at certain third-party
facilities pursuant to supply and/or processing agreements.

The decrease in total feedstock runs quarter over quarter is due primarily
decreased production at the Shreveport refinery as a result of lowered planned
utilization, partially offset by incremental feedstock runs resulting from the
San Antonio Acquisition.

The increase in total feedstock runs in 2013 compared to 2012 is due primarily
to incremental feedstock runs resulting from the Royal Purple, Montana and San
Antonio Acquisitions, partially offset by reduced run rates at our Shreveport
refinery due to unscheduled downtime associated with various operational
reliability issues and planned turnaround activity at the Shreveport and
Superior refineries during 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 increases in total facility production in 2013 over 2012, as well as quarter
over quarter, are 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 condensed consolidated
statements of cash flows for the three months and years ended December 31, 2013
and 2012.

Three Months Ended December 31, Year Ended
December
31,
——————————- ———–

2013 2012 2013 2012
—- —- —- —-

(In millions) (In
millions)

Derivative loss reflected in sales $(1.7) $(25.6) $(3.1) $(205.8)

Derivative gain reflected in cost of sales 6.6 9.3 3.6 51.7
— — — —-

Derivative gain (loss) reflected in gross profit $4.9 $(16.3) $0.5 $(154.1)

Realized gain (loss) on derivative instruments $(10.1) $(11.0) $(4.7) $9.5

Unrealized gain (loss) on derivative instruments 2.8 7.5 25.7 (3.8)

Total derivative gain (loss) reflected in the unaudited consolidated statements of
operations $(2.4) $(19.8) $21.5 $(148.4)
===== ====== ===== ======

Total loss on derivatives settlements $(10.0) $(33.3) $(6.0) $(149.7)
====== ====== ==== ======

About the Partnership

Calumet is a master limited partnership and is a leading independent producer of
high-quality, specialty hydrocarbon products in North America. Calumet processes
crude oil and other feedstocks into customized lubricating oils, solvents, waxes
and asphalt used in consumer, industrial and automotive products. Calumet also
produces fuel products including gasoline, diesel and jet fuel. Calumet is based
in Indianapolis, Indiana and has twelve facilities located in northwest
Louisiana, northwest Wisconsin, northern Montana, western Pennsylvania, Texas,
New Jersey and eastern Missouri.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday,
February 19, 2014, to discuss the financial and operational results for the
fourth quarter of 2013. Anyone interested in listening to the presentation may
call 866-825-1709 and enter passcode 47639379.

The telephonic replay of the conference call is available in the United States
by calling 888-286-8010 and entering passcode 80484862. The replay will be
available beginning Wednesday, February 19, 2014, at approximately 5:00 p.m. ET
until Wednesday, March 5, 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 and year ended December 31, 2013 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 and Distributable Cash Flow, and provide reconciliations of
EBITDA, Adjusted EBITDA and Distributable Cash Flow 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 and Distributable Cash Flow are used as supplemental
financial measures by our management and by external users of our financial
statements such as investors, commercial banks, research analysts and others, to
assess:

— the financial performance of our assets without regard to financing
methods, capital structure or historical cost basis;
— the ability of our assets to generate cash sufficient to pay interest
costs and support our indebtedness;
— our operating performance and return on capital as compared to those of
other companies in our industry, without regard to financing or capital
structure; and
— the viability of acquisitions and capital expenditure projects and the
overall rates of return on alternative investment opportunities.
We believe that these non-GAAP measures are useful to analysts and investors as
they exclude transactions not related to our core cash operating activities and
provide metrics to analyze our ability to pay distributions. We believe that
excluding these transactions allows investors to meaningfully trend and analyze
the performance of our core cash operations.

We define “EBITDA” for any period as net income (loss) plus interest expense
(including debt issuance and extinguishment costs), income taxes and
depreciation and amortization.

We define “Adjusted EBITDA” for any period as: (1) net income (loss) plus; (2)
(a) interest expense, (b) income taxes, (c) depreciation and amortization, (d)
unrealized losses from mark to market accounting for hedging activities, (e)
realized gains under derivative instruments excluded from the determination of
net income (loss), (f) non-cash equity based compensation expense and other
non-cash items (excluding items such as accruals of cash expenses in a future
period or amortization of a prepaid cash expense) that were deducted in
computing net income (loss), (g) debt refinancing fees, premiums and penalties
and (h) all extraordinary, unusual or non-recurring items of gain or loss, or
revenue or expense; minus (3)(a) unrealized gains from mark to market accounting
for hedging activities, (b) realized losses under derivative instruments
excluded from the determination of net income (loss) and (c) other non-recurring
expenses and unrealized items that reduced net income (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 indentures governing our 9 3/8% senior
notes due May 1, 2019 that were issued in April and September 2011 (the “2019
Notes”), the indenture governing our 9 5/8% senior notes due August 1, 2020 that
were issued in June 2012 (the “2020 Notes”) and the indenture governing our 7
5/8% senior notes due January 15, 2022 that were issued in November 2013 (the
“2022 Notes”). We are required to report Consolidated Cash Flow to our holders
of the 2019 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 2012 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 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 CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per unit data)

For the Three
Months Ended Year Ended

December 31, December 31,
———— ————

2013 2012 2013 2012
—- —- —- —-

(Unaudited) (Unaudited)

Sales $1,243.1 $1,220.9 $5,421.4 $4,657.3

Cost of sales 1,130.6 1,079.2 5,011.4 4,144.1
——- ——- ——- ——-

Gross profit 112.5 141.7 410.0 513.2

Operating costs and expenses:

Selling 15.9 14.9 62.6 41.6

General and administrative 22.2 19.6 82.1 60.9

Transportation 38.6 27.0 142.7 107.9

Taxes other than income taxes 4.5 3.7 14.2 9.1

Other 2.4 2.9 16.8 7.8
— — —- —

Operating income 28.9 73.6 91.6 285.9
—- —- —- —–

Other income (expense):

Interest expense (23.1) (24.4) (96.8) (85.6)

Debt extinguishment costs (14.6) – (14.6) –

Realized gain (loss) on derivative instruments (10.1) (11.0) (4.7) 9.5

Unrealized gain (loss) on derivative instruments 2.8 7.5 25.7 (3.8)

Other 0.5 0.2 2.7 0.5
— — — —

Total other expense (44.5) (27.7) (87.7) (79.4)
—– —– —– —–

Income before income taxes (15.6) 45.9 3.9 206.5

Income tax expense (benefit) (0.1) 0.2 0.4 0.8
—- — — —

Net income (loss) $(15.5) $45.7 $3.5 $205.7
====== ===== ==== ======

Allocation of net income (loss):

Net income (loss) $(15.5) $45.7 $3.5 $205.7

Less:

General partner’s interest in net income (loss) (0.3) 0.9 0.1 4.1

General partner’s incentive distribution rights 3.8 2.2 14.7 5.5

Non-vested share based payments – 0.2 0.2 1.1
— — — —

Net income (loss) available to limited partners $(19.0) $42.4 $(11.5) $195.0
====== ===== ====== ======

Weighted average limited partner units outstanding:

Basic 69,635,865 57,745,881 67,938,784 55,559,183
========== ========== ========== ==========

Diluted 69,635,865 57,898,207 67,938,784 55,676,741
========== ========== ========== ==========

Limited partners’ interest basic net income (loss) per unit $(0.27) $0.73 $(0.17) $3.51
====== ===== ====== =====

Limited partners’ interest diluted net income (loss) per unit $(0.27) $0.73 $(0.17) $3.50
====== ===== ====== =====

Cash distributions declared per limited partner unit $0.685 $0.62 $2.70 $2.30
====== ===== ===== =====

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

December 31, December 31,
2013 2012
———— ————

(Unaudited)

ASSETS

Current assets:

Cash and cash
equivalents $121.1 $32.2

Accounts
receivable, net 263.3 226.8

Inventories 567.4 553.6

Derivative assets – 3.1

Prepaid expenses
and other
current assets 18.9 10.3

Deposits 3.7 7.9
— —

Total current
assets 974.4 833.9

Property, plant
and equipment,
net 1,160.4 986.9

Investment in
unconsolidated
affiliate 33.4 1.9

Goodwill 207.0 187.0

Other intangible
assets, net 212.9 197.1

Other noncurrent
assets, net 100.0 46.2
—– —-

Total assets $2,688.1 $2,253.0
======== ========

LIABILITIES AND PARTNERS’
CAPITAL

Current liabilities:

Accounts payable $355.8 $332.6

Accrued interest
payable 22.5 23.5

Accrued salaries,
wages and
benefits 14.0 20.1

Accrued income
taxes payable – 27.6

Other taxes
payable 18.4 13.7

Other current
liabilities 36.2 9.1

Current portion
of long-term
debt 0.4 0.8

Derivative
liabilities 54.8 48.0
—- —-

Total current
liabilities 502.1 475.4

Pension and
postretirement
benefit
obligations 11.7 24.0

Other long-term
liabilities 1.1 1.1

Long-term debt,
less current
portion 1,110.4 862.7
——- —–

Total liabilities 1,625.3 1,363.2

Commitments and contingencies

Partners’ capital:

Partners’ capital 1,116.2 915.3

Accumulated other
comprehensive
loss (53.4) (25.5)
—– —–

Total partners’
capital 1,062.8 889.8
——- —–

Total liabilities
and partners’
capital $2,688.1 $2,253.0
======== ========

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Year Ended

December 31,
————

2013 2012
—- —-

Operating activities (Unaudited)

Net income $3.5 $205.7

Adjustments to reconcile net income to net
cash provided by operating activities:

Depreciation and amortization 117.8 91.6

Amortization of turnaround costs 15.9 13.4

Non-cash interest expense 7.0 6.1

Non-cash debt extinguishment
costs 3.4 –

Provision for doubtful accounts 0.1 –

Unrealized (gain) loss on
derivative instruments (25.7) 3.8

Loss on disposal of fixed assets 15.2 2.5

Non-cash equity based
compensation 4.8 6.5

Other non-cash activities 0.6 1.1

Changes in assets and liabilities:

Accounts receivable (32.3) 34.6

Inventories 14.3 17.9

Prepaid expenses and other
current assets 2.6 21.7

Derivative activity (1.8) (5.0)

Turnaround costs (68.6) (14.9)

Deposits 4.2 (5.9)

Other assets (0.1) (4.0)

Accounts payable 6.8 11.1

Accrued interest payable (1.0) 13.0

Accrued salaries, wages and
benefits (7.1) 1.0

Accrued income taxes payable (27.6) (16.1)

Other taxes payable 3.0 0.9

Other liabilities 6.8 2.7

Pension and postretirement
benefit obligations (2.7) (7.6)
—- —-

Net cash provided by operating
activities 39.1 380.1

Investing activities

Additions to property, plant and
equipment (160.8) (57.0)

Investment in unconsolidated
affiliate (31.8) –

Cash paid for acquisitions, net
of cash acquired (177.7) (569.2)

Proceeds from sale of property,
plant and equipment – 2.0
— —

Net cash used in investing
activities (370.3) (624.2)

Financing activities

Proceeds from borrowings –
revolving credit facility 865.6 1,558.3

Repayments of borrowings –
revolving credit facility (865.6) (1,558.3)

Repayments of borrowings –
senior notes (100.0) –

Repayments of borrowings –
acquisition debt assumed (11.9) –

Payments on capital lease
obligations (1.1) (1.5)

Proceeds from other financing
obligations 3.5 –

Proceeds from public offerings
of common units, net 392.5 146.6

Proceeds from senior notes
offerings 344.7 270.2

Debt issuance costs (7.3) (7.7)

Contributions from Calumet GP,
LLC 8.4 3.1

Common units repurchased and
taxes paid for phantom unit
grants (7.1) (2.1)

Distributions to partners (201.6) (132.4)
—— ——

Net cash provided by financing
activities 420.1 276.2
—– —–

Net increase in cash and cash
equivalents 88.9 32.1

Cash and cash equivalents at
beginning of year 32.2 0.1
—- —

Cash and cash equivalents at end
of year $121.1 $32.2
====== =====

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

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

(In millions)

For the Three Months Ended Year Ended

December 31, December
31,
———— ———

2013 2012 2013 2012
—- —- —- —-

Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA and Distributable Cash Flow: (Unaudited) (Unaudited)

Net income (loss) $(15.5) $45.7 $3.5 $205.7

Add:

Interest expense 23.1 24.4 96.8 85.6

Debt extinguishment costs 14.6 – 14.6 –

Depreciation and amortization 29.6 27.7 117.8 91.6

Income tax expense (benefit) (0.1) 0.2 0.4 0.8
—- — — —

EBITDA $51.7 $98.0 $233.1 $383.7
—– —– —- —-

Add:

Unrealized (gain) loss on derivatives (2.8) (7.5) (25.7) 3.8

Realized loss on derivatives, not included in net income (4.8) (5.9) (1.8) (5.0)

Amortization of turnaround costs 5.0 3.1 15.9 13.4

Non-cash equity based compensation and other non- 4.1 3.6 20.0 8.7

cash items

Adjusted EBITDA $53.2 $91.3 $241.5 $404.6
—– —– —- —-

Less:

Replacement and environmental capital expenditures (1) 15.7 13.1 64.2 28.3

Cash interest expense (2) 21.3 22.7 89.8 79.5

Turnaround costs 5.7 0.8 68.6 14.9

Income tax expense (benefit) (0.1) 0.2 0.4 0.8
—- — — —

Distributable Cash Flow $10.6 $54.5 $18.5 $281.1
===== ===== ===== ====

(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 OPERATING ACTIVITIES

(In millions)

Year Ended
December
31,

2013 2012
—- —-

Reconciliation of Distributable
Cash Flow, Adjusted EBITDA and
EBITDA to Net cash provided by
operating activities: (Unaudited)

Distributable Cash Flow $18.5 $281.1

Add:

Replacement and environmental
capital expenditures (1) 64.2 28.3

Cash interest expense (2) 89.8 79.5

Turnaround costs 68.6 14.9

Income tax expense 0.4 0.8
— —

Adjusted EBITDA $241.5 $404.6
==== ====

Less:

Unrealized gain (loss) on
derivative instruments (25.7) 3.8

Realized loss on derivatives,
not included in net income (1.8) (5.0)

Amortization of turnaround costs 15.9 13.4

Non-cash equity based
compensation and other non-
cash items 20.0 8.7
—- —

EBITDA $233.1 $383.7
==== ====

Add:

Unrealized gain (loss) on
derivative instruments (25.7) 3.8

Cash interest expense (2) (89.8) (79.5)

Non-cash equity based
compensation 4.8 6.5

Amortization of turnaround costs 15.9 13.4

Income tax expense (0.4) (0.8)

Provision for doubtful accounts 0.1 –

Debt extinguishment costs (11.2) –

Changes in assets and liabilities:

Accounts receivable (32.3) 34.6

Inventories 14.3 17.9

Other current assets 6.8 15.8

Turnaround costs (68.6) (14.9)

Derivative activity (1.8) (5.0)

Other noncurrent assets (0.1) (4.0)

Accounts payable 6.8 11.1

Accrued interest payable (1.0) 13.0

Accrued income taxes payable (27.6) (16.1)

Other current liabilities 2.7 4.6

Other, including changes in non-
current liabilities 13.1 (4.0)
—- —-

Net cash provided by operating
activities $39.1 $380.1
===== ====

(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.
COMMODITY DERIVATIVE INSTRUMENTS
As of December 31, 2013

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 December 31,
2013 in the Company’s fuel products segment:

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

First Quarter 2014 1,350,000 15,000 $27.15

Second Quarter 2014 1,319,500 14,500 27.63

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 13,183,000

Average price $27.07

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 December 31,
2013 in the Company’s fuel products segment:

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

First Quarter 2014 360,000 4,000 $27.86

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 775,000 2,123 27.54
——- —–

Totals 1,960,000

Average price $26.45

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 December 31,
2013 in the Company’s fuel products segment:

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

First Quarter 2014 1,575,000 17,500 $10.35

Second Quarter 2014 1,365,000 15,000 14.91

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

Fourth Quarter 2014 460,000 5,000 11.82
——- —–

Totals 5,010,000

Average price $12.90

SOURCE Calumet Specialty Products Partners, L.P.

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