Calumet Specialty CEO Discusses Q3 2010 Results – Earnings Call Transcript
Calumet Specialty Products Partners, L.P. (
)
Q3 2010 Earnings Call Transcript
November 3, 2010 1:00 pm ET
Executives
Jennifer Straumins – EVP and COO
Pat Murray – VP, CFO and Secretary
Bill Grube – President and CEO
Analysts
Darren Horowitz – Raymond James
Will Merritt [ph] – Gulf Stream Asset Management
Presentation
Operator
Compare to:
Previous Statements by CLMT
»
Calumet Specialty Products Partners LP Q2 2010 Earnings Call Transcript
»
Calumet Specialty Products Partners, L.P. Q1 2010 Earnings Call Transcript
»
Calumet Specialty Products Partners, L.P. Q4 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the third quarter 2010 Calumet Specialty Products earnings conference call. My name is Yvette and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of the conference.
I would now like to turn the call over to your host, Ms. Jennifer Straumins, Executive Vice President. Please proceed.
Jennifer Straumins
Thank you, Operator. Good afternoon and welcome to the Calumet Specialty Products Partners Investors Call to discuss our third quarter 2010 financial results.
During this call, Calumet Specialty Products Partners will be referred to as the Partnership or Calumet. Also participating in this call will be Bill Grube, our President and CEO; and Pat Murray, our CFO.
Following the presentation, we will hold the line open for a question-and-answer session. During the course of this call, we will make various forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such statements are based on the beliefs of our management, as well as assumptions made by them and in each case based on the information currently available to them.
Although, our management believes that the expectations reflected in such forward-looking statements are reasonable, neither the Partnership its general partner nor our management can provide any assurances that such expectation will prove to be correct.
Please refer to our Partnership’s press release that was issued this morning as well as our latest filings with the Securities and Exchange Commission for a list of all the factors that may affect our actual results that could cause them to differ from our forward-looking statements made on this call.
We are very pleased with our results for the third quarter. Our production levels and growth process have continued to improve each quarter this year and we continue to focus on increased run rates to meet higher demand levels for our specialty products.
We also have been continuing on our fuels product and crude oil hedging programs. We expect these programs will continue to help protect us against rapid changes in pricing levels for both fuels products and crude oil.
Finally, as announced on October 13, 2010, the Partnership declared a quarterly cash distribution of $0.46 per unit for the quarter ended September 30, 2010 on all outstanding units.
The distribution will be paid on November 12, 2010 to unitholders of record at the close of business on November 2. The distribution represents an increase of $0.05 per unit from the second quarter 2010.
I will now turn the call over to Pat Murray to review our financial results.
Pat Murray
Thanks, Jennifer. Net income for the third quarter of 2010 was $21.2 million compared to net income of $4 million for the same period in the prior year. These results include non-cash unrealized derivative gains of $1.9 million and losses of $4.5 million for the quarters ended September 30, 2010 and 2009, respectively, which may or may not be realized in the future as these derivatives are settled.
The $17.2 million improvement in net income quarter-over-quarter was due primarily to an increase of $21 million in gross profit partially offset by increased realized derivative losses of $6.3 million and higher transportation expense of $4.7 million due to increased sales volume.
We believe the non-GAAP measures of EBITDA, adjusted EBITDA and distributable cash flow are important financial performance measures for the Partnership.
EBITDA and adjusted EBITDA as defined by our credit agreements were $44.1 million and $40.9 million, respectively, for the third quarter of 2010 as compared to $27.7 million and $42.5 million, respectively, for the same period in 2009. The Partnership’s distributable cash flow for the quarter ended September 30, 2010 was $28.6 million as compared to $30.2 million for the same period in 2009.
The slight decrease in adjusted EBITDA quarter-over-quarter is primarily due to increased realized losses on derivatives and increased transportation expense, partially offset by higher gross profit.
We encourage investors to review the section of the earnings press release found on our Web site entitled non-GAAP Financial Measures and the attached tables for discussion and definitions of EBITDA, adjusted EBITDA and distributable cash flow financial measures and reconciliations of these non-GAAP measures to the comparable GAAP measures.
Gross profit by segment for the third quarter for specialty products and fuel products was $60.9 million and $1.2 million, respectively, compared to $33.5 million and $7.6 million, respectively, for the same period last year.
The increase of $27.4 million in specialty products segment gross profit quarter-over-quarter was primarily due to an increase of 19.7% in the average selling price per barrel while the average cost of crude oil per barrel increased by only 12.6%.
Also, specialty products sales volumes increased 23.1% due primarily to improvements in overall specialty products demand as a result of improved economic conditions and the addition of sales volumes under our specialty products agreements with LyondellBasell which we entered into during the fourth quarter of 2009.
Read the rest of this transcript for free on seekingalpha.com
