INDIANAPOLIS, Feb. 16, 2011 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (Nasdaq: CLMT) (the "Partnership," "Calumet," "we," "our" or "us") reported net income for the quarter ended December 31, 2010 of $9.5 million compared to $8.2 million for the same quarter in 2009. For the year ended December 31, 2010, Calumet reported net income of $16.7 million compared to $61.8 million in 2009. These results include noncash unrealized derivative losses of $15.8 million and gains of $23.7 million for the years ended December 31, 2010 and 2009, respectively. Calumet reported net cash provided by operating activities of $134.1 million for the year ended December 31, 2010 as compared to $100.9 million in 2009.

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined by the Partnership's credit agreements) were $34.1 million and $40.8 million, respectively, for the quarter ended December 31, 2010 as compared to $32.2 million and $26.8 million, respectively, for the same quarter in 2009. Distributable Cash Flow (as defined below) for the quarter ended December 31, 2010 was $31.5 million compared to $18.4 million for the same quarter in 2009. The increase in Adjusted EBITDA quarter over quarter was due primarily to higher gross profit, discussed below, partially offset by decreased realized gains on derivatives and increased transportation expense. (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 very pleased with our results for the fourth quarter. Our specialty products production levels and gross profit significantly improved in the third and fourth quarters of 2010, with our specialty products production reaching the highest point in our history for any fourth quarter. We continue to focus on increased run rates to meet higher demand for our specialty products and to 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 and our outlook, we raised our quarterly distribution to $0.47 per unit for the fourth quarter of 2010, a $0.01 per unit increase over the prior quarter," said Grube.

The $1.3 million improvement in net income quarter over quarter was due primarily to an increase of $20.7 million in gross profit, partially offset by decreased realized derivative gains of $4.7 million and higher transportation expense of $3.8 million due to increased sales volume. These results were also impacted by an increase in noncash unrealized derivative losses of $8.1 million, which may or may not be realized in the future as the derivatives are settled.

Gross profit by segment is as follows for the three months and year ended December 31, 2010 and 2009:

The increase of $29.2 million in specialty products segment gross profit quarter over quarter was due primarily to an increase of 19.4% in the average selling price per barrel, while the average cost of crude oil per barrel increased by only 13.7%. Also, specialty products sales volume increased 20.3%, due primarily to improvements in overall specialty products demand under improved economic conditions and from the addition of sales volumes under our specialty products agreements with Houston Refining LP, a wholly owned subsidiary of LyondellBasell ("Houston Refining"), which we entered into during the fourth quarter of 2009 (the "LyondellBasell Agreements").

The decrease of $8.5 million in fuel products segment gross profit quarter over quarter was due primarily to a 12.0% decrease in fuel products sales volume as a result of lower overall throughput rates at our Shreveport refinery due to the scheduled turnaround of various fuels processing units during the fourth quarter of 2010 as well as a net $10.3 million decrease in derivative gains on our fuel products crack spread cash flow hedges. Partially offsetting this decrease was a slight improvement in crack spreads as the average selling price per barrel of our fuel products increased by 17.5%, driven by market conditions, while the average cost of crude oil per barrel increased by 14.1%.

Quarterly Distribution

On January 14, 2011, the Partnership declared a quarterly cash distribution of $0.47 per unit for the quarter ended December 31, 2010 on all outstanding units. The distribution was paid on February 14, 2011 to unitholders of record as of the close of business on February 4, 2011. This distribution represents an increase of $0.01 per unit from the third quarter of 2010.

Conversion of Subordinated Units

On February 14, 2011, we satisfied the last of the earnings and distribution tests contained in our partnership agreement for the conversion of all 13,066,000 outstanding subordinated units into common units on a one-for-one basis. The last of these requirements was met upon payment of the quarterly distribution on February 14, 2011. On February 16, 2011, all of the subordinated units converted to common units.

Operations Summary

The following table sets forth unaudited information about our combined operations. Facility production volume differs from sales volume due to changes in inventory.

Credit Agreement Covenant Compliance

Compliance with the financial covenants under Calumet's credit agreements is measured quarterly based upon performance over the most recent four fiscal quarters. As of December 31, 2010, Calumet continued to be in compliance with all financial covenants under its credit agreements.

While assurances cannot be made regarding our future compliance with these financial covenants and subject to the inherent uncertainty of the crude oil pricing environment and general economic conditions, Calumet believes that it will continue to maintain compliance with such financial covenants.

Revolving Credit Facility Capacity

On December 31, 2010, Calumet had availability under its revolving credit facility of $145.5 million, based on a $247.0 million borrowing base, $90.7 million in outstanding standby letters of credit, and outstanding borrowings of $10.8 million. Calumet believes that 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. However, Calumet is subject to business and operational risks that could materially adversely affect its cash flows. A material decrease in Calumet's cash flow from operations or a significant, sustained decline in crude oil prices would likely produce a corollary material adverse effect on Calumet's borrowing capacity under its revolving credit facility and potentially its ability to comply with the covenants under its credit facilities. Substantial declines in crude oil prices, if sustained, may materially diminish Calumet's borrowing base, which is based in part on the value of Calumet's crude oil inventory, which could result in a material reduction in Calumet's borrowing capacity under its revolving credit facility. A significant increase in crude oil prices, if sustained, would likely result in increased working capital funded by borrowings under its revolving credit facility.

About the Partnership

The Partnership is a Delaware limited partnership formed on September 27, 2005 and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products. The Partnership also has contractual arrangements with Houston Refining and other third parties which provide additional volumes of finished products for its specialty products segment.

The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, February 16, 2011, to discuss the financial and operational results for the fourth quarter of 2010. Anyone interested in listening to the presentation may call 866-783-2137 and enter passcode 53261725. For international callers, the dial-in number is 857-350-1596 and the passcode is 53261725.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 68811364. International callers can access the replay by calling 617-801-6888 and entering passcode 68811364. The replay will be available beginning Wednesday, February 16, 2011, at approximately 4:00 p.m. until Wednesday, March 2, 2011.

The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release 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 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, those summarized below: 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 credit facilities; 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 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; 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.  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 of EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide quarterly and annual reconciliations of net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow and an annual reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net cash provided by 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, support our indebtedness and meet minimum quarterly distributions;

• 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 our 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 as net income plus interest expense (including debt issuance and extinguishment costs), taxes and depreciation and amortization. We define Adjusted EBITDA to be Consolidated EBITDA as defined in our credit facilities. Consistent with that definition, Adjusted EBITDA means, for any period: (1) net income plus (2)(a) interest expense; (b) taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) unrealized items decreasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); and (f) other non-recurring expenses reducing net income which do not represent a cash item for such period; minus (3)(a) tax credits; (b) unrealized items increasing net income (including the non-cash impact of restructuring, decommissioning and asset impairments in the periods presented); (c) unrealized gains from mark to market accounting for hedging activities; and (d) 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 are required to report Adjusted EBITDA to our lenders under our credit facilities and it is used to determine our compliance with the consolidated leverage and consolidated interest coverage tests thereunder.

We define Distributable Cash Flow as Adjusted EBITDA less replacement capital expenditures, cash interest paid (excluding capitalized interest) and income tax expense. Distributable Cash Flow is used by us and our investors to analyze our ability to pay distributions.

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 operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.

CONTACT: Jennifer Straumins, Investor Relations of Calumet Specialty Products Partners, L.P., +1-317-328-5660