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Calumet Specialty Products Partners LP Message Board

  • wcsg122 wcsg122 Sep 30, 2013 7:27 PM Flag

    Sept 30 2013 Company Presentation


    Check out the company presentation on their website. Within the presentation, they present a comparison of crude differentials, RINs and capital projects, etc. As one will be able to see, Q3 crude differentials were all improved over Q2 and for LLS, Bakken, and WCS, Q3 differentials were better than Q1. As far as RIN expense, the Avg for July was $1.17 declining to $.79 for August, and to $.61 for September. The Q2 conference call estimated RIN expense for the 2nd half of 2013 would range from $1.20 to $1.30/gallon. Both of these variables have improved significantly in Q3. More recently, the spread on WCS appeared to be a discount to WTI around $30 on the CME.

    With completion of the Superior turnaround in Q2, and improvement in the refining margins, EBITDA should exceed $100 million for Q3. In addition, the reduction of the turnaround costs for Superior over Montana should be an improvement of about $20MM. Thus, the company should have a positive coverage ratio of the distribution in Q3, and Q4 is looking even better with the trend in margins since Q2. Lastly, the above analysis did not include the 15 to 20 cent/gallon price increase implemented by Specialty Products side that will inevitably result in improved segment margins.

    Looking longer term, the company completed secondaries to complete several major expansion initiatives. While this causes some interim strain on the distribution coverage ratio, the projects are expected to generate over $220M in additional EBITDA over the next 2 years. As the presentations show, the company expects terrific return on capital from these projects and should provide for long-term capital appreciation and distribution growth. Once we get through the political wrangling, this stock will be fine. GL

    Sentiment: Strong Buy

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    • Very nice analysis and summary of the investor deck, 122. Thanks so much for sharing your perspective!

      Sentiment: Buy

    • Doesn't the fact that the crack spread narrowed by 13 negate the fact that crude differentials have improved? Unless I've got this wrong, all crack spreads are narrower (maybe WCS is flat) and with 62% of their production in gulf coast, I don't see any improvement. RINs are the same as in Q2 and margins look lower so maybe their net income is flat at best. You'll get an extra 20mm from turnaround but not enough to cover the 47+mn in distributions...don't forget GP is getting 50% of any marginal profits now....they still will be funding dist + capex + recent acquisition with debt....if spreads don't improve, their leverage will be over 4 before the benefit of the new projects kick in which will cause problems hence we will see more shares - i also see GP converting their IDR to common or a buyout...

    • I should have added that the current projects add over 50% EBITDA growth over 2012 EBITDA of $405MM in just two years. So not only do you get a great yield, you can expect strong capital appreciation as this projects come on line. The San Antonio refinery upgrades are expected to begin contributing in Q4 2013.

      • 3 Replies to wcsg122
      • One more thing, the new projects are projected to add $220MM to $260MM in annual EBITDA after coming on line, or in full, before 2016. Using a 15% capitalization rate on $220M is $1.5 billion, and the current market cap is only $1.9 Billion. There is plenty of opportunity for capital appreciation coming, and this seems like a great price to pick up some shares if you haven't already and get paid a great return while you wait. Thanks all and GL.

      • Excellent job on bringing the board up to date on CLMT, WC, also CLMT for their updates to the website, wish we could have seen work being done on the new refinery, if this does not make the sell to new investors, then they just need to find something else to invest in. CLMT held its ground today & hopefully if not for our Government all will be on the up & up. I have been & will continue to be a long time holder of CLMT, LORD Willing!

        Sentiment: Buy

      • Thanks for the info!
        I did note that they took out the graph highlighting increasing distributions from their previous slides.
        At least based on the slides all does not seem lost as some on here like to scream.

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