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Calumet Specialty Products Partners LP Message Board

  • jaime9_2000 jaime9_2000 Nov 8, 2012 6:10 PM Flag

    Regarding CLMT's coverage ratio

    As delighted as I am with the distributions I've received, it occurs to me that CLMT has actually been VERY conservative. Here's my calculations:

    Yahoo shows that there are 57.74M shares outstanding. Multiplying that by the $.62 per share totals $35.79M to be paid out. The distributable cash flow last qtr. was $92.5M. So, the coverage ratio was about 2.58. That is very, very high. I recall a couple years ago mgmt stated that they hoped to keep the ratio in the 1.3 to 1.5 range. Heck, they could've distributed a $1 per share this quarter and still been close to a 1.5 ratio.

    What am I missing?

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    • Agree, the research reports I read say the same

      • 1 Reply to gebertx
      • One thing in the earning CC that came out is CLMT stated that the refining profits were unusually high , due to two things crack spreads higher and they are buying the Bauken oil for quite a bit less than WTO which is lower than Brent crude. the shreeveport refinery used to use some brent imported oil but now does not. this high earning from the price differential will go away over time as other refiners do the same.

        also with the dividend where it is any more raises and they are into the "incentive threshold" which means the parent will be getting 40-50% of any dividend increases

    • Jaime: You are spot on. You are missing NOTHING. CLMT appears to be a company that emulates a large family-run PRIVATE enterprise which is conservative in its actions, treats investment as if it is their own $$ that are being put in jeopardy, doesn't need large payouts to keep officers and directors happy and "in-the-fold", and which has mostly patient "partners" (that's us).

      And, because they now have considerable debt incurred by purchases of add-on companies at what appears to be the right time in the business cycle, they want to be certain that there's a cushion there for an unforeseen period when revenues or profits are not that rosy due to external circumstances beyond their control (e.g. as when oil prices might rise...I am aware that they hedge... or when sales might fall due to a slowing, rather than growing, economy). It's a viewpoint that is rarely seen among modern American enterprises, which typically respond to analysts' pressure, large public shareholders' whims, mutual funds' suggestions, etc. all of which need that instant return (or manipulation) to make their books look good. Add to that those flaks to make their performance SEEM outsized, and a cadre of "trade-a-second" short-term public speculators, rather than a stable of long-term investors.

      I allow that I may be wrong about all this but I have been here for a while and, so far, I am pleased with their ever-improving results and what appear to be strong and "stick to your knitting" acquisitions. I note that Disney's recent purchase won't be accretive to earnings until 2015. That's a bit longer than CLMT's recent acquisitions.

      Good luck to the longs.

      Sentiment: Buy

    • Jaime: You are spot on. You are missing NOTHING. CLMT appears to be a company that emulates a large family-run PRIVATE enterprise which is conservative in its actions, treats investment as if it is their own $$ that are being put in jeopardy, doesn't need large payouts to keep officers and directors happy and "in-the-fold", and which has mostly patient "partners" (that's us).

      And, because they now have considerable debt incurred by purchases of add-on companies at what appears to be the right time in the business cycle, they want to be certain that there's a cushion there for an unforeseen period when revenues or profits are not that rosy due to external circumstances beyond their control (e.g. as when oil prices might rise...I am aware that they hedge... or when sales might fall due to a slowing, rather than growing, economy). It's a viewpoint that is rarely seen among modern American enterprises, which typically respond to analysts' pressure, large public shareholders' whims, mutual funds' suggestions, etc. all of which need that instant return (or manipulation) to make their books look good. Add to that those flaks to make their performance SEEM outsized, and a cadre of "trade-a-second" short-term public speculators, rather than a stable of long-term investors.

      I allow that I may be wrong about all this but I have been here for a while and, so far, I am pleased with their ever-improving results and what appear to be strong and "stick to your knitting" acquisitions. I note that Disney's recent purchase won't be accretive to earnings until 2015. That's a bit longer than CLMT's recent acquisitions.

      Good luck to the longs.

      Sentiment: Buy

 
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