INDIANAPOLIS, Nov. 2, 2011 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," the "Company," "Calumet," "we," "our" or "us") reported net income for the quarter ended September 30, 2011 of $19.6 million compared to net income of $21.2 million for the same quarter in 2010. These results include $20.3 million of noncash unrealized derivative losses and $2.1 million of acquisition expenses related to the Superior Acquisition as compared to $1.9 million of noncash unrealized derivative gains in the third quarter of 2010. For the nine months ended September 30, 2011, Calumet reported net income of $16.2 million compared to net income of $7.2 million for the same period in 2010. These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $23.9 million of noncash unrealized derivative losses as compared to $13.8 million of noncash unrealized derivative losses for the same period in 2010.

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below) were $47.1 million and $70.5 million, respectively, for the quarter ended September 30, 2011 as compared to $44.0 million and $44.0 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below) for the quarter ended September 30, 2011 was $50.5 million compared to $30.9 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to a $34.5 million increase in gross profit, discussed below. See the section of this press 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 these measures and reconciliations of such measures to the comparable GAAP measures.

"We are pleased to add the Superior refinery employees and assets from Murphy Oil Corporation and are working diligently on the integration. We are also pleased with our record results for the third quarter, noting improvements in both our specialty products and fuel products segments. We continue to focus on strong operations to meet demand for our specialty products and to better benefit from current fuel products crack spreads," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "As a result of these improvements in our operations and our outlook, we raised our quarterly distribution to $0.50 per unit for the third quarter of 2011," said Grube.

Net income reported for the quarter decreased $1.6 million quarter over quarter due primarily to increased selling, general and administrative expenses of $6.7 million (including $2.1 million of acquisition expenses related to the Superior Acquisition), increased interest expense of $4.8 million and increased noncash unrealized derivative losses of $22.3 million, which may or may not be realized in the future as the derivatives are settled, partially offset by a $34.5 million increase in gross profit.

Gross profit by segment for the three and nine months ended September 30, 2011 and 2010 is as follows:

The increase in specialty products segment gross profit of $26.9 million quarter over quarter was due primarily to a 30.5% increase in the average selling price per barrel, partially offset by a 23.4% increase in the average cost of crude oil per barrel, a 5.2% decrease in sales volume and higher operating costs, primarily repairs and maintenance.

The increase in fuel products segment gross profit of $7.6 million quarter over quarter was due primarily to a 13.8% increase in sales volume and a 43.8% increase in the average selling price per barrel (excluding the impact of realized hedging losses), partially offset by increased realized losses on derivatives of $38.9 million in our fuel products hedging program, a 25.1% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.

The increase in specialty products segment gross profit of $63.3 million for the nine months ended September 30, 2011 compared to the same period in 2010 was due primarily to a 4.5% increase in sales volume and a 25.7% increase in the average selling price per barrel, partially offset by a 28.3% increase in the average cost of crude oil per barrel and higher operating costs, primarily repair and maintenance.

The decrease in fuel products segment gross profit of $12.7 million for the nine months ended September 30, 2011 compared to the same period in 2010 was due primarily to increased realized losses on derivatives of $94.0 million in our fuel products hedging program, a 29.5% increase in the cost of crude oil per barrel and increased production of by-products, partially offset by a 9.2% increase in sales volume and a 40.9% increase in the average selling price per barrel, excluding the impact of realized hedging losses. During the second quarter of 2011, our fuel products hedged volumes, combined with lower refinery run rates, resulted in our diesel and jet fuel sales volumes being approximately 100% hedged at approximately $12.00 per barrel, preventing us from realizing the benefit of increased market crack spreads for these products. By-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in run rates at the Shreveport refinery.

Superior Acquisition

On September 30, 2011, we completed the acquisition of the Superior, Wisconsin refinery and associated operating assets and inventories and related business of Murphy Oil Corporation (the "Superior Acquisition") for aggregate consideration of approximately $411.1 million, excluding certain customary post-closing purchase price adjustments. The Superior refinery produces gasoline, diesel, asphalt and specialty petroleum products that are marketed primarily in the Midwest region of the U.S., including the surrounding border states, and Canada. The Superior Acquisition was financed by a combination of (i) net proceeds of $193.6 million from our September 2011 public offering of common units, (ii) net proceeds of $180.3 million from the September 2011 private placement of 9⅜% senior notes due May 1, 2019 and (iii) borrowings under our revolving credit facility.

We believe the Superior Acquisition provides greater scale, geographic diversity and development potential our refining business, as our current total refining throughput capacity has increased by approximately 50% to 135,000 barrels per day.

Quarterly Distribution

On October 11, 2011, the Company declared a quarterly cash distribution of $0.50 per unit on all outstanding units, or $26.3 million for the third quarter of 2011. The distribution will be paid on November 14, 2011 to unitholders of record as of the close of business on November 4, 2011. This quarterly distribution of $0.50 equates to $2.00 per unit, or approximately $105.3 million on an annualized basis, and represents an increase of $0.005 per unit from the second quarter of 2011.

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.

Revolving Credit Facility Capacity

As of September 30, 2011, in conjunction with the Superior Acquisition, Calumet fully exercised the $300.0 million expansion option under its revolving credit facility to increase the maximum availability of credit under the revolving credit facility from $550.0 million to $850.0 million, subject to borrowing base limitations. On September 30, 2011, Calumet had availability under its revolving credit facility of $271.5 million, based on a $535.5 million borrowing base, $208.0 million in outstanding standby letters of credit, and outstanding borrowings of $56.0 million. Calumet believes it will have 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.

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 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 six facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania and southeastern Texas.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, November 2, 2011, to discuss the financial and operational results for the third quarter of 2011. Anyone interested in listening to the presentation may call 866-700-6979 and enter passcode 98945363. For international callers, the dial-in number is 617-213-8836 and the passcode is 98945363.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 20383912. International callers can access the replay by calling 617-801-6888 and entering passcode 20383912. The replay will be available beginning Wednesday, November 2, 2011, at approximately 4:00 p.m. until Wednesday, November 16, 2011.

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 may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "may," "intend," "believe," "expect," "anticipate," "estimate," "continue" 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 revenues 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 actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: 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 the Partnership's hedging and other risk management activities; the ability of the Partnership to comply with the financial covenants contained in its debt instruments; the availability of, and the Partnership's ability to consummate, acquisition or combination opportunities; labor relations; the Partnership's access to capital to fund expansions, acquisitions and its working capital needs and its 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; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of the Partnership's credit ratings and ability to receive open credit from its suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; the ability to access sufficient crude oil supply through 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; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; fluctuations in the debt and equity markets; accidents or other unscheduled shutdowns; our ability to successfully integrate the Superior Acquisition and general economic, market or business conditions. Other factors that could cause our actual results to differ from our projected results are described in our filings with the Securities and Exchange Commission, 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 hereof. Other factors described herein, or factors that are unknown or unpredictable, could also have a material adverse effect on future results. Our forward looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward looking statement. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. 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.

All subsequent written and oral forward-looking statements concerning Calumet, Murphy Oil Corporation, the Superior Acquisition or other related matters, and attributable to Calumet or Murphy Oil Corporation or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Calumet undertakes 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 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 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 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 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; (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; (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 and (c) other non-recurring expenses and unrealized items that reduced net income 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 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 and our investors to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash that are presented in this release have been updated to reflect the calculation of "Consolidated Cash Flow" contained in the indenture governing our 9⅜% senior notes due May 1, 2019 that were issued in April and September 2011 (the "2019 Notes"). We are required to report Consolidated Cash Flow to the holders of the 2019 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 release for prior periods have been updated to reflect the use of the new calculations.

EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, operating income, net cash provided by 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 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.

Fuel Products Segment

The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel and gasoline swaps as of September 30, 2011, all of which are designated as cash flow hedges.

At September 30, 2011, Calumet had the following put options related to jet fuel crack spreads in its fuel products segment, none of which are designated as cash flow hedges.

Specialty Products Segment

At September 30, 2011 Calumet did not have any derivatives outstanding related to crude oil purchases in its specialty products segment.

Fuel Products Segment Derivative Instruments Entered into Subsequent to September 30, 2011

The following table provides a summary of Calumet's implied crack spreads for the crude oil, diesel and gasoline swaps that were entered into subsequent to September 30, 2011 in conjunction with the Superior Acquisition, all of which are designated as cash flow hedges.

CONTACT: Jennifer Straumins, +1-317-328-5660, jennifer.straumins@calumetspecialty.com