Calumet Specialty Products Partners' Management Announces Agreement To Acquire Royal Purple (Transcript)

Calumet Specialty Products Partners, L.P. (CLMT)

Agreement to Acquire Royal Purple Conference Call

June 8, 2012 9:00 a.m. ET

Executives

Jennifer Straumins - President and Chief Operating Officer

Pat Murray - Chief Financial Officer

Analysts

Cory Garcia - Raymond James

Aaron Whiteman - Appaloosa Management

Eric Seeve - GoldenTree

Peter Madsen - Drakkar Capital

Randy Rochman - West Family Investments

Presentation

Operator

Good day, ladies and gentlemen and welcome to the Calumet Specialty Products Partners, L.P. Announces Agreement to Acquire Royal Purple Conference Call. My name is Pam and I will be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to Ms. Jennifer Straumins, President and Chief Operating Officer. Please proceed.

Jennifer Straumins

Thank you, operator. Good morning and welcome to the Calumet Specialty Products Partners’ investors call to discuss the Royal Purple acquisition. During this call Calumet Specialty Products Partners will be referred to as the partnership or Calumet. Also joining me on this call is 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, such statements are based on the beliefs of the management as well as assumptions made by them and in each case based on the information currently available to them. Although our management believes the expectations reflected in such forward-looking statements are reasonable, neither the partnership, it’s general partner, nor our management can provide any assurance that such expectations will prove to be correct. Please refer to the partnership’s press release that was issued on June 6, as well as our latest filings with the Securities and Exchange Commission for a list of factors that may affect our actual results and could cause them to differ from our forward-looking statements made on this call. Additionally, please refer to the investor relations section of our website for the slides associated with this presentation.

I would like to now turn to those slides and talk a little bit about where Calumet is and the rationale for this acquisition, and talk a little bit about the company itself. Royal Purple is a privately held company and a very recognizable brand name in its space and Calumet is very excited to be doing this acquisition. Calumet is a leading producer of specialty products. We own and operate 8 facilities and 6 terminals throughout the U.S. And this is a great asset to add to our asset base. We currently produce products such as naphthenic and paraffinic base oils and process oils, aliphatic and isoparaffinic solvents, USP and technical white oils, pharmaceutical and technical grade petrolatums, natural petroleum sulfonates, hydrocarbon gels and polyol-based synthetic lubricants.

Calumet was started back in 1990 and was taken public in 2006 by the two founding families. The families of the Chairman and CEO still control approximately 32% of our limited partner interest in Calumet and own 100% of the general partner. Calumet currently produces over 1500 specialty products which are sold to 2700 different customers. These are very special applications with very long approval processes and the ability to pass through feedstock price changes to our customers in timely manner. Our customers who purchase our products use them as raw material components for industrial consumer and automotive products.

Calumet currently employs approximately 900 people throughout the U.S. and with this acquisition that will push us over 1000 people that will be employed by Calumet throughout the United States. We currently own and operate 8 facilities and have an aggregate throughout capacity of 135,000 barrels a day of crude. We have total storage capacity across all our facilities of over 10 million barrels of both crude and finished products.

Our management team has been together for a significant period of time and on average each member of the management team has over 25 years of industry experience. And you can see on the slide five, the Calumet milestones of growth. Calumet has been very active in the acquisition space over the last couple of -- over the last year or so. We were able -- our business strategy is really to take advantage of majors leading the space or small, privately companies deciding that they want to move on and do something else. And we have been able to buy refineries off of ConocoPhillips, off of Pennzoil, and most recently also Murphy Oil when these chose to leave the refining space.

This Royal Purple acquisition, as I mentioned, was a privately held company started back in 1986 by three gentlemen who have been very involved in the business and have done a phenomenal job of growing it over the last 25 years. This acquisition will join two acquisitions that we have done so far in 2012. In January we acquired a polyol/ester synthetic lubricant from Ashland based in St. Louis, Missouri. And also a packaging facility called TruSouth that’s based outside of Shreveport in Louisiana. Really all three of these businesses will integrate very nicely with each other. There are lot of synergies between the three. Calumet also is a current supplier to Royal Purple, so there are some synergies with that as well.

We plan on growing both the packaging part of the business as well as the feedstock part of the business as we expand the synthetic-ester production out of St. Louis. Our growth strategy has been and will continue to be to acquire niche assets that, again, major oil companies no longer desire to have. We strive to acquire assets that support the stability of cash flows, and this Royal Purple acquisition will do just that. They have had very very stable and growing cash flows over the whole time that they have been in existence. We also look to provide geographic diversification and the Superior refinery acquisition is a great example of that.

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