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Calumet Specialty Products Partners, L.P. Reports Third Quarter 2012 Results

October 31, 2012

INDIANAPOLIS, Oct. 31, 2012 /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, 2012 of $42.4 million compared to $19.6 million for the same quarter in 2011. These results include $22.1 million of noncash unrealized derivative losses as compared to $20.3 million of noncash unrealized derivative losses in the third quarter of 2011. For the nine months ended September 30, 2012, Calumet reported net income of $160.0 million compared to $16.2 million for the same period in 2011. These results for 2012 include $11.3 million of noncash unrealized derivative losses as compared to both $23.9 million of noncash unrealized derivative losses and $14.4 million of noncash debt extinguishment costs for the nine months ended September 30, 2011.

Earnings before interest expense, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA (as defined below in the section of this press release titled “Non-GAAP Financial Measures”) were $91.4 million and $121.4 million, respectively, for the quarter ended September 30, 2012 as compared to $47.1 million and $70.5 million, respectively, for the same quarter in 2011. Distributable Cash Flow (as defined below in the section of this press release titled “Non-GAAP Financial Measures”) for the third quarter of 2012 was $92.5 million compared to $50.5 million for the same quarter in 2011. The increase in Adjusted EBITDA quarter over quarter was primarily due to a $61.8 million increase in gross profit partially offset by a $6.3 million increase in realized derivative losses, and an increase in selling and transportation expense. See the section of this press release titled “Non-GAAP Financial Measures” and the included tables for a 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 U.S. generally accepted accounting principles (“GAAP”) measures.

“Our third quarter results were driven by strength in our fuel products segment and the addition of Royal Purple to our specialty products segment. We continued to benefit from widened crack spreads from Canadian heavy and Bakken crude oil differentials to NYMEX WTI in the third quarter. We are also pleased to add the Montana Refining employees and business to Calumet starting in the fourth quarter,” said Bill Grube, Calumet’s Chief Executive Officer. “The acquisition of the Great Falls, Montana refinery further strengthens our niche refining portfolio and increases our access to Canadian heavy crude oil,” said Grube.

Net income reported for quarter ended September 30, 2012 increased $22.8 million quarter over quarter primarily due to a $61.8 million increase in gross profit, as discussed below, partially offset by a $6.3 million increase in realized derivative losses, a $12.2 million increase in selling expenses ($6.3 million of which is noncash amortization expense), an $11.7 million increase in interest expense and a $4.7 million increase in transportation expense.

Gross profit by segment for the three and nine months ended September 30, 2012 and 2011 are as follows:

                  For the Three Months Ended         For the Nine Months Ended
                         September 30,                     September 30,
                         -------------                     -------------
                     2012               2011     2012                       2011
                     ----               ----     ----                       ----
                 (Dollars in thousands, except per   (Dollars in thousands, except per
                          barrel data)                      barrel data)

    Specialty
     products               $90,575                    $87,789                         $245,662 $193,988
    Fuel
     products      67,831                        8,812          125,796                      42
                   ------                        -----          -------                     ---
    Total gross
     profit (1)            $158,406                    $96,601                         $371,458 $194,030
                           ========                    =======                         ======== ========

    Specialty
     products
     gross
     profit per
     barrel                  $24.37                     $31.32                           $23.10   $23.52
                             ======                     ======                           ======   ======
    Fuel
     products
     gross
     profit per
     barrel
     (including
     hedging
     activities)             $13.11                      $3.01                            $8.15    $0.01
                             ======                      =====                            =====    =====
    Fuel
     products
     gross
     profit per
     barrel
     (excluding
     hedging
     activities)             $21.15                     $15.19                           $17.07   $10.26
                             ======                     ======                           ======   ======
    (1) We define specialty products
     and fuel products gross profit
     as sales less the cost of crude
     oil and other feedstocks and
     other production-related
     expenses, the most significant
     portion of which include labor,
     plant fuel, utilities, contract
     services, maintenance,
     depreciation and processing
     materials.

The increase in specialty products segment gross profit of $2.8 million quarter over quarter was due primarily to a 32.6% increase in sales volume and lower operating costs, mainly repairs and maintenance, partially offset by a 7.2% decrease in the average selling price per barrel. Excluding incremental volumes from the Superior, Missouri, TruSouth and Royal Purple acquisitions, which reduced the average selling price per barrel due to increased asphalt sales, the specialty products average sales price per barrel decreased 4.7% due to weaker demand in the third quarter of 2012 for lubricating oils and our sales volume decreased 5.0% quarter over quarter.

The increase in fuel products segment gross profit of $59.0 million quarter over quarter was due primarily to an 76.4% increase in sales volume, mostly as a result of the Superior acquisition, a 5.9% decrease in the average cost of crude oil per barrel and a 0.7% increase in the average sales price per barrel (excluding the impact of realized hedging losses reflected in sales), partially offset by increased realized losses on derivatives of $7.4 million. Due to the extremely volatile nature of the pricing differentials between NYMEX WTI and Canadian heavy and Bakken crude oils during 2012, our NYMEX WTI crude oil swap contracts entered into to hedge the purchase of crude oil at our Superior refinery as part of our crack spread hedging program were no longer closely correlated and we were required, under U.S. GAAP, to discontinue hedge accounting on these derivatives as of January 1, 2012. Effective April 1, 2012, we also voluntarily discontinued hedge accounting for our fuel products swap contracts entered into to hedge fuel products sales at our Superior refinery. Primarily as a result of discontinuing hedge accounting on these derivative instruments, we recorded a loss of $10.2 million to realized gain (loss) on derivative instruments in the unaudited condensed consolidated statements of operations for the three months ended September 30, 2012. Total loss on settled derivative instruments reflected in gross profit, as discussed above, and realized gain (loss) on derivative instruments was $51.9 million for the third quarter of 2012, an increased loss of $13.8 million quarter over quarter.

The increase in specialty products segment gross profit of $51.7 million for the nine months ended September 30, 2012 compared to the same period in 2011 was due primarily to a 28.9% increase in sales volume and lower operating costs, mainly repairs and maintenance, partially offset by a 0.4% decrease in the average selling price. Excluding incremental volumes from the Superior, Missouri, TruSouth and Royal Purple acquisitions, which reduced the average selling price per barrel due to increased asphalt sales, the specialty products average sales price per barrel increased 3.1% compared to same period in 2011.

The increase in fuel products segment gross profit of $125.8 million for the nine months ended September 30, 2012 compared to the same period in 2011 was due primarily to a 99.5% increase in sales volume, mostly as a result of the Superior Acquisition, a 0.9% increase in the average sales price per barrel (excluding the impact of those realized hedging losses reflected in sales) and a 5.5% decrease in the average cost of crude oil per barrel partially offset by increased realized losses on derivatives of $57.2 million. Due to the extremely volatile nature of the pricing differentials between NYMEX WTI and Canadian heavy and Bakken crude oils during 2012, our NYMEX WTI crude oil swap contracts entered into to hedge the purchase of crude oil at our Superior refinery as part of our crack spread hedging program were no longer closely correlated and we were required, under U.S. GAAP, to discontinue hedge accounting on these derivatives as of January 1, 2012. Effective April 1, 2012, we also voluntarily discontinued hedge accounting for our fuel products swap contracts entered into to hedge fuel products sales at our Superior refinery. Primarily as a result of discontinuing hedge accounting on these derivative instruments, we recorded a gain of $20.5 million to realized gain (loss) on derivative instruments in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2012. Total loss on settled derivative instruments reflected in gross profit, as discussed above, and realized gain (loss) on derivative instruments was $117.3 million for the nine months ended September 30, 2012, an increased loss of $30.9 million period over period.

Quarterly Distribution

On October 16, 2012, the Company declared a quarterly cash distribution of $0.62 per unit on all outstanding units or $38.2 million for the quarter ended September 30, 2012. The distribution will be paid on November 14, 2012 to unitholders of record as of the close of business on November 2, 2012. This quarterly distribution represents an increase of 5.1% over the second quarter of 2012 and a 24.0% increase from the third 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 and the sale of purchased fuel product blendstocks such as ethanol and biodiesel in our fuel products segment.

                        Three Months Ended       Nine Months Ended
                           September 30,           September 30,
                        ------------------      -----------------
                           2012        2011        2012             2011
                           ----        ----        ----             ----
    Sales volume:             (bpd)                      (bpd)
    Specialty products   40,392             30,464                38,807 30,215
    Fuel products        56,228             31,873                56,310 28,331
                         ------             ------                ------ ------
    Total  (1)           96,620             62,337                95,117 58,546

    Total feedstock
     runs (2)            95,708             63,567                95,079 60,529
    Facility
     production: (3)
    Specialty products:
    Lubricating oils     14,966             15,017                14,773 14,316
    Solvents              9,066             10,963                 9,445 10,717
    Waxes                 1,294              1,434                 1,268  1,234
    Packaged and
     synthetic
     specialty products
     (4)                  1,584                  -                 1,342      -
    Fuels                   531                491                   630    519
    Asphalt and other
     by-products         12,805              8,984                13,729  8,660
                         ------              -----                ------  -----
    Total                40,246             36,889                41,187 35,446
                                            ------

    Fuel products:
    Gasoline             23,565              9,741                23,018  9,660
    Diesel               21,625             13,470                21,641 11,896
    Jet fuel              4,481              4,872                 4,321  4,495
    Heavy fuel oils and
     other                3,406                492                 3,373    704
                          -----                ---                 -----    ---
    Total                53,077             28,575                52,353 26,755
                         ------             ------                ------ ------
    Total facility
     production (3)      93,323             65,464                93,540 62,201
                         ======             ======                ====== ======

____________

    (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 in our fuel
     products segment sales. The
     increase in total sales volume for
     the three and nine months ended
     September 30, 2012 compared to the
     same periods in 2011 is due
     primarily to incremental sales of
     fuel products, asphalt and
     packaged and synthetic specialty
     products from the Superior,
     Missouri, TruSouth and Royal
     Purple acquisitions.

    (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 the total feedstock
     runs for the three and nine months
     ended September 30, 2012 compared
     to the same periods in 2011 is due
     primarily to incremental feedstock
     runs from the Superior refinery,
     partially offset by decreased run
     rates at our Shreveport refinery
     during 2012 due to the April 28,
     2012 shutdown of the ExxonMobil
     pipeline serving this refinery for
     a portion of its crude oil
     requirements.

    (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, including such
     agreements with LyondellBasell.
     The difference between total
     facility production and total
     feedstock runs is primarily a
     result of the time lag between the
     input of feedstock and production
     of finished products and volume
     loss. The increase in total
     facility production for three and
     nine months ended September 30,
     2012 compared to the same periods
     in 2011 is due primarily to the
     operational items discussed above
     in footnote 2 of this table.

    (4)     Represents packaged and
     synthetic specialty products at
     the Royal Purple, TruSouth and
     Missouri facilities.

Derivatives Summary

The following table summarizes the derivative activity reflected in our unaudited condensed consolidated statements of operations and unaudited condensed statement of cash flows for the three and nine months end September 30, 2012 and 2011.

                                                   Three Months Ended September 30, Nine Months Ended September 30,
                                                   -------------------------------- -------------------------------
                                                                2012                   2011                2012        2011
                                                                ----                   ----                ----        ----
                                                           (In thousands)                    (In thousands)
    Derivative loss reflected in sales                                 $(49,572)                       $(61,125)             $(180,227) $(165,801)
    Derivative gain reflected in cost of sales                 7,806                 26,775              42,430      85,209
                                                               -----                 ------              ------      ------
    Derivative loss reflected in gross profit                          $(41,766)                       $(34,350)             $(137,797)  $(80,592)

    Realized gain (loss) on derivative instruments                     $(10,156)                        $(3,814)               $20,486    $(5,798)
    Unrealized loss on derivative instruments                (22,101)               (20,335)            (11,337)    (23,876)
    Derivative loss reflected in interest expense                  -                      -                   -        (702)
                                                                 ---                    ---                 ---        ----
    Total derivative loss on unaudited condensed
     consolidated statements of operations                             $(74,023)                       $(58,499)             $(128,648) $(110,968)
                                                                       ========                        ========              =========  =========
    Total loss on derivatives settlements                              $(50,429)                       $(38,939)             $(116,408)  $(82,727)
                                                                       ========                        ========              =========   ========

Revolving Credit Facility Capacity

On September 30, 2012, Calumet had availability under its revolving credit facility of $477.8 million, based on a $658.5 million borrowing base and $180.7 million in outstanding standby letters of credit. Calumet believes it will continue to 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, 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 ten facilities located in northwest Louisiana, northwest Wisconsin, northern Montana, western Pennsylvania, southeastern Texas and eastern Missouri.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, October 31, 2012, to discuss the financial and operational results for the third quarter of 2012. Anyone interested in listening to the presentation may call 866-543-6408 and enter passcode 22754984. For international callers, the dial-in number is 617-213-8899 and the passcode is 22754984.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 95789452. International callers can access the replay by calling 617-801-6888 and entering passcode 95789452. The replay will be available beginning Wednesday, October 31, 2012, at approximately 3:00 p.m. ET (2:00 p.m. CT) until Wednesday, November 7, 2012.

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 and nine months ended September 30, 2012 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: 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; 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 2011 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 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 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”) and the indenture governing our 9 5/8% senior notes due August 1, 2020 that were issued in June 2012 (the “2020 Notes”). We are required to report Consolidated Cash Flow to our holders of the 2019 Notes and 2020 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 2011 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, 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 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 thousands, except per unit data)

                                                                                               For the Three Months Ended                  For the Nine Months Ended
                                                                                                      September 30,                              September 30,
                                                                                                      -------------                              -------------
                                                                                                    2012                   2011       2012                         2011
                                                                                                    ----                   ----       ----                         ----
                                                                                                     (Unaudited)                            (Unaudited)
    Sales                                                                                                 $1,179,818              $777,780                               $3,436,400 $2,116,790
    Cost of sales                                                                              1,021,412                681,179  3,064,942                    1,922,760
                                                                                               ---------                -------  ---------                    ---------
    Gross profit                                                                                 158,406                 96,601    371,458                      194,030
    Operating costs and expenses:
    Selling                                                                                       15,002                  2,809     26,668                        8,220
    General and administrative                                                                    12,810                 11,339     41,333                       26,923
    Transportation                                                                                28,404                 23,696     80,903                       69,462
    Taxes other than income taxes                                                                  1,723                  1,683      5,371                        4,246
    Insurance recoveries                                                                               -                      -          -                       (8,698)
    Other                                                                                          1,613                    543      4,856                        1,781
                                                                                                   -----                    ---      -----                        -----
    Operating income                                                                              98,854                 56,531    212,327                       92,096
                                                                                                  ------                 ------    -------                       ------
    Other income (expense):
    Interest expense                                                                             (24,271)               (12,577)   (61,247)                     (30,602)
    Debt extinguishment costs                                                                          -                      -          -                      (15,130)
    Realized gain (loss) on derivative instruments                                               (10,156)                (3,814)    20,486                       (5,798)
    Unrealized loss on derivative instruments                                                    (22,101)               (20,335)   (11,337)                     (23,876)
    Other                                                                                            268                     45        382                          148
                                                                                                     ---                    ---        ---                          ---
    Total other expense                                                                          (56,260)               (36,681)   (51,716)                     (75,258)
                                                                                                 -------                -------    -------                      -------
    Net income before income taxes                                                                42,594                 19,850    160,611                       16,838
    Income tax expense                                                                               178                    236        610                          674
                                                                                                     ---                    ---        ---                          ---
    Net income                                                                                               $42,416               $19,614                                 $160,001    $16,164
                                                                                                             =======               =======                                 ========    =======
    Allocation of net income:
    Net income                                                                                               $42,416               $19,614                                 $160,001    $16,164
    Less:
    General partner's interest in net income                                                         848                    392      3,200                          323
    General partner's incentive distribution rights                                                1,637                     40      3,256                           40
    Nonvested share based payments                                                                   262                      -        947                            -
                                                                                                     ---                    ---        ---                          ---
    Net income available to limited partners                                                                 $39,669               $19,182                                 $152,598    $15,801
                                                                                                             =======               =======                                 ========    =======
    Weighted average limited partner units outstanding:
    Basic                                                                                         57,746                 41,828     54,827                       39,352
                                                                                                  ======                 ======     ======                       ======
    Diluted                                                                                       57,826                 41,837     54,867                       39,368
                                                                                                  ======                 ======     ======                       ======
    Limited partners' interest basic and diluted net income per unit                                           $0.69                 $0.46                                    $2.78      $0.40
                                                                                                               =====                 =====                                    =====      =====
    Cash distributions declared per limited partner unit                                                       $0.59                 $0.50                                    $1.68      $1.45
                                                                                                               =====                 =====                                    =====      =====

                                               CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                                             (In thousands)

                                                  September 30, 2012               December 31, 2011
                                                  ------------------               -----------------
                                                      (Unaudited)
                                 ASSETS
    Current assets:
    Cash and cash equivalents                                            $190,538                                     $64
    Accounts receivable, net                                 264,141                                   212,065
    Inventories                                              494,112                                   497,740
    Derivative assets                                              -                                    58,502
    Prepaid expenses and other
     current assets                                           10,315                                     8,179
    Deposits                                                   3,949                                     2,094
                                                               -----                                     -----
    Total current assets                                     963,055                                   778,644
    Property, plant and
     equipment, net                                          863,364                                   842,101
    Goodwill                                                 161,150                                    48,335
    Other intangible assets, net                             203,752                                    22,675
    Other noncurrent assets, net                              47,840                                    40,303
                                                              ------                                    ------
    Total assets                                                       $2,239,161                              $1,732,058
                                                                       ==========                              ==========
                    LIABILITIES AND PARTNERS' CAPITAL
    Current liabilities:
    Accounts payable                                                     $336,034                                $302,826
    Accrued interest payable                                  30,843                                    10,500
    Accrued salaries, wages and
     benefits                                                 19,507                                    13,481
    Taxes payable                                             16,710                                    13,068
    Other current liabilities                                  9,202                                     4,600
    Current portion of long-term
     debt                                                        783                                       551
    Derivative liabilities                                    95,802                                    43,581
                                                              ------                                    ------
    Total current liabilities                                508,881                                   388,607
    Pension and postretirement
     benefit obligations                                      18,315                                    26,957
    Other long-term liabilities                                1,132                                     1,055
    Long-term debt, less current
     portion                                                 862,513                                   586,539
                                                             -------                                   -------
    Total liabilities                                      1,390,841                                 1,003,158
    Commitments and contingencies
    Partners' capital:
    Partners' capital                                        906,998                                   690,373
    Accumulated other
     comprehensive income (loss)                             (58,678)                                   38,527
                                                             -------                                    ------
    Total partners' capital                                  848,320                                   728,900
                                                             -------                                   -------
    Total liabilities and
     partners' capital                                                 $2,239,161                              $1,732,058
                                                                       ==========                              ==========

                                  CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (In thousands)

                                                      For the Nine Months Ended
                                                            September 30,
                                                            -------------
                                                                2012                    2011
                                                                ----                    ----
    Operating activities                                   (Unaudited)
    Net income                                                         $160,001               $16,164
    Adjustments to reconcile net income to net
     cash provided by (used in) operating
     activities:
    Depreciation and amortization                             63,828                  43,644
    Amortization of turnaround
     costs                                                    10,315                   8,288
    Non-cash interest expense                                  4,409                   2,363
    Non-cash debt extinguishment
     costs                                                         -                  14,401
    Provision for doubtful
     accounts                                                    296                     255
    Unrealized loss on derivative
     instruments                                              11,337                  23,876
    Non-cash equity based
     compensation                                              5,108                   3,298
    Other non-cash activities                                  1,100                  (1,468)
    Changes in assets and liabilities:
    Accounts receivable                                      (32,370)                (44,714)
    Inventories                                               33,678                (109,787)
    Prepaid expenses and other
     current assets                                           (1,628)                 (1,926)
    Derivative activity                                          904                   4,928
    Turnaround costs                                         (14,141)                 (8,849)
    Deposits                                                  (1,842)                   (426)
    Other assets                                                   -                    (197)
    Accounts payable                                          26,845                  32,158
    Accrued interest payable                                  20,343                  22,758
    Accrued salaries, wages and
     benefits                                                  2,327                   2,917
    Taxes payable                                              3,444                   1,676
    Other liabilities                                          2,851                  (9,082)
    Pension and postretirement
     benefit obligations                                      (7,365)                   (836)
                                                              ------                    ----
    Net cash provided by (used in)
     operating activities                                    289,440                    (559)
    Investing activities
    Additions to property, plant
     and equipment                                           (36,735)                (30,667)
    Proceeds from insurance
     recoveries -equipment                                         -                   1,942
    Cash paid for acquisitions,
     net of cash acquired                                   (379,048)               (441,626)
    Proceeds from sale of
     property, plant and equipment                             1,960                     219
                                                               -----                     ---
    Net cash used in investing
     activities                                             (413,823)               (470,132)
    Financing activities
    Proceeds from borrowings -
     revolving credit facility                             1,147,778               1,152,898
    Repayments of borrowings -
     revolving credit facility                            (1,147,753)            (1,107,730)
    Repayments of borrowings -
     term loan credit facility                                     -                (367,385)
    Payments on capital lease
     obligations                                              (1,179)                   (802)
    Proceeds from public offerings
     of common units, net                                    146,558                 281,870
    Proceeds from senior notes
     offerings                                               270,187                 586,000
    Debt issuance costs                                       (7,542)                (23,140)
    Contributions from Calumet GP,
     LLC                                                       3,122                   6,011
    Units repurchased for phantom
     unit grants                                              (2,110)                   (620)
    Distributions to partners                                (94,204)                (56,382)
                                                             -------                 -------
    Net cash provided by financing
     activities                                              314,857                 470,720
                                                             -------                 -------
    Net increase in cash and cash
     equivalents                                             190,474                      29
    Cash and cash equivalents at
     beginning of period                                          64                      37
                                                                 ---                     ---
    Cash and cash equivalents at
     end of period                                                     $190,538                   $66
                                                                       ========                   ===

                                                                                                            CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                                                                                        RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA ANDDISTRIBUTABLE CASH FLOW
                                                                                                                          (In thousands)

                                                                                                      For the Three Months Ended                         For the Nine Months Ended
                                                                                                             September 30,                                     September 30,
                                                                                                             -------------                                     -------------
                                                                                                        2012                  2011                  2012                 2011
                                                                                                        ----                  ----                  ----                 ----
    Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Distributable Cash Flow:
                                                                                                            (Unaudited)                                   (Unaudited)
    Net income                                                                                                  $42,416                                    $19,614                 $160,001  $16,164
    Add:
    Interest expense                                                                                  24,271                          12,577                           61,247        30,602
    Debt extinguishment costs                                                                              -                               -                                -        15,130
    Depreciation and amortization                                                                     24,542                          14,680                           63,828        43,644
    Income tax expense                                                                                   178                             236                              610           674
                                                                                                         ---                             ---                              ---           ---
    EBITDA                                                                                                      $91,407                                    $47,107                 $285,686 $106,214
                                                                                                                -------                                    -------                 -------- --------
    Add:
    Unrealized loss on derivatives                                                                    22,101                          20,335                           11,337        23,876
    Realized gain (loss) on derivatives,                                                               1,494                            (771)                             904         4,366
    not included in net income
    Amortization of turnaround costs                                                                   3,154                           2,542                           10,315         8,288
    Non-cash equity based compensation                                                                 3,233                           1,335                            5,108         3,298
                                                                                                       -----                           -----                            -----         -----
    Adjusted EBITDA                                                                                            $121,389                                    $70,548                 $313,350 $146,042
                                                                                                               --------                                    -------                 -------- --------
    Less:
    Replacement capital expenditures (1)                                                               6,063                           6,608                           15,204        14,204
    Cash interest expense (2)                                                                         22,621                          11,869                           56,838        28,239
    Turnaround costs                                                                                       -                           1,348                           14,141         8,849
    Income tax expense                                                                                   178                             236                              610           674
                                                                                                         ---                             ---                              ---           ---
    Distributable Cash Flow                                                                                     $92,527                                    $50,487                 $226,557  $94,076
                                                                                                                =======                                    =======                 ========  =======

    (1)  Replacement capital
     expenditures are defined as
     those capital expenditures
     which do not increase operating
     capacity or reduce operating
     costs and exclude turnaround
     costs.

    (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)
                                              OPERATINGACTIVITIES
                                                (In thousands)

                                                      Nine Months Ended September 30,
                                                                   2012                  2011
                                                                   ----                  ----
    Reconciliation of Distributable Cash Flow,
     Adjusted EBITDA and EBITDA to net cash provided
     by (used in) operating activities:
                                                              (Unaudited)
    Distributable Cash Flow                                               $226,557                           $94,076
    Add:
    Replacement capital expenditures
     (1)                                                         15,204                14,204
    Cash interest expense (2)                                    56,838                28,239
    Turnaround costs                                             14,141                 8,849
    Income tax expense                                              610                   674
                                                                    ---                   ---
    Adjusted EBITDA                                                       $313,350                          $146,042
                                                                          ========                          ========
    Less:
    Unrealized loss on derivative
     instruments                                                 11,337                23,876
    Realized gain on derivatives,
     not included in net income                                     904                 4,366
    Amortization of turnaround costs                             10,315                 8,288
    Non-cash equity based
     compensation                                                 5,108                 3,298
                                                                  -----                 -----
    EBITDA                                                                $285,686                          $106,214
                                                                          ========                          ========
    Add:
    Unrealized loss on derivative
     instruments                                                 11,337                23,876
    Cash interest expense (2)                                   (56,838)              (28,239)
    Non-cash equity based
     compensation                                                 5,108                 3,298
    Amortization of turnaround costs                             10,315                 8,288
    Income tax expense                                             (610)                 (674)
    Provision for doubtful accounts                                 296                   255
    Debt extinguishment costs                                         -                  (729)
    Changes in assets and liabilities:
    Accounts receivable                                         (32,370)              (44,714)
    Inventories                                                  33,678             (109,787)
    Other current assets                                         (3,470)               (2,352)
    Turnaround costs                                            (14,141)               (8,849)
    Derivative activity                                             904                 4,928
    Other assets                                                      -                  (197)
    Accounts payable                                             26,845                32,158
    Other liabilities                                            28,965                18,269
    Other, including changes in
     noncurrent liabilities                                      (6,265)               (2,304)
                                                                 ------                ------
    Net cash provided by (used in)
     operating activities                                                 $289,440                             $(559)
                                                                          ========                             =====
    (1)  Replacement capital
     expenditures are defined as
     those capital expenditures
     which do not increase operating
     capacity or reduce operating
     costs and exclude turnaround
     costs.
    (2)  Represents consolidated
     interest expense less non-cash
     interest expense.

                                                        CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                                                            COMMODITY DERIVATIVE INSTRUMENTS
                                                                As of September 30, 2012

    Fuel Products Segment

    The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel, jet and gasoline swaps, as well
     as, Calumet's Canadian heavy crude oil versus NYMEX WTI crude oil basis swaps as of September 30, 2012.

    Crude Oil and                                                          Implied Crack Spread
     Fuel                                                                                           ($/Bbl)
     Products
     Swap
     Contracts by
     Expiration
     Dates                                      Barrels                 BPD
    -------------                               -------                 ---                   ---------------------
    Fourth
     Quarter 2012                               2,622,000                          28,500                                                                   $20.85
    Calendar Year
     2013                                       7,605,000                          20,836                                                           26.00
    Calendar Year
     2014                                       4,195,000                          11,493                                                           26.07
    Calendar Year
     2015                                       3,467,500                           9,500                                                           26.21
                                                ---------                                                                                           -----
    Totals                                     17,889,500
    Average price                                                                                                                                  $25.30

    The following table provides a summary of Calumet's Canadian heavy crude oil versus NYMEX WTI crude oil basis swaps as of September 30, 2012.

    Crude Oil                                    Barrels                 Average Differential to
     Basis Swap                                Purchased                                       NYMEX WTI ($/Bbl)
     Contracts by
     Expiration
     Dates                                                              BPD
    -------------                              ----------               ---                 -----------------------
    Fourth
     Quarter 2012                                 184,000                           2,000                                                                  $(23.50)
    Calendar Year
     2013                                         730,000                           2,000                                                          (23.75)
                                                  -------                                                                                          ------
    Totals                                        914,000
    Average price                                                                                                                                 $(23.70)

    Specialty Products Segment

    The following table provides a summary of Calumet's derivatives for its natural gas purchases as of September 30, 2012.

    Natural Gas Swap Contracts by Expiration
     Dates                                                           MMBtu                                  $/MMBtu
    ----------------------------------------                         -----                                  -------
    Fourth Quarter 2012                                                600,000                                                                      $4.08
                                                                       -------                                                                      -----
    Totals                                                             600,000
    Average price                                                                                                                                   $4.08

SOURCE Calumet Specialty Products Partners, L.P.


Source: PR Newswire