Calumet Specialty Products Has Doubled in 2017

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Part 3
Calumet Specialty Products Has Doubled in 2017 PART 3 OF 7

Analyzing Calumet Specialty’s Distributable Cash Flows

Calumet’s capital expenditures

For 2017, Calumet Specialty Products Partners (CLMT) expects total capital expenditures between $110 million and $130 million. Its 2016 capital expenditures were $122 million—compared to $425 million in 2015. It was a significant reduction of 70% year-over-year. The total capital spending was $21 million for 2Q17—down more than 19% compared to the same period in 2016.

Analyzing Calumet Specialty’s Distributable Cash Flows

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According to Calumet Specialty Products Partners, its major expansion projects are over. It expects reduced capital spending in 2017, which will help improve its free cash flows.

Distributable cash flow

The above graph shows Calumet Specialty Products Partners’ total capital expenditures and distributable cash flow in the last ten quarters. The right axis shows the per unit distributions. Calumet Specialty Products Partners’ distributable cash flow was negative in 4Q16, which tends to be a seasonally weak quarter. Its distributable cash flow in 1H17 is higher compared to the same period last year. The company’s distributable cash flow rose 43% in 2Q17—compared to the same period in 2016.

Tim Go, Calumet Specialty Products Partners’ CEO, said in the company’s 2Q17 earnings release, “We remain focused on our efforts to increase operating efficiencies, grow our sales volumes and deliver new and innovating products to the marketplace, all of which will support our efforts to drive even greater value over the long-term for Calumet’s unitholders.”

These efforts should contribute to the company’s cash flows in 2017. Although the refining environment is still challenging, all three segments had improved performances in 2017.


Calumet Specialty Products Partners hasn’t paid distributions in the last six quarters due to volatility in market conditions and “to maintain an adequate level of liquidity.”

Calumet Specialty Products Partners’ peers CVR Refining (CVRR) and Alon USA Partners (ALDW) have variable distribution policies. They don’t pay a minimum quarterly distribution. Instead, their distributions vary depending on the cash generated in each quarter. CVR Refining hasn’t paid any distributions since 3Q15.

In the next part, we’ll analyze Calumet Specialty’s leverage—a key concern for investors.


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