Good day, ladies and gentlemen. And welcome to the Third Quarter 2014 Calumet Specialty Products Partners LP Earnings Conference Call. My name is Glenn, and I will be your event manager for today. At this time, all participants are in listen-only mode. And later, we will facilitate 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 your host for today, Mr. Noel Ryan, Vice President of Investor Relations. Please proceed.

Thank you, Glenn. Good afternoon. And welcome to the Calumet Specialty Products Partners third quarter 2014 results conference call. We appreciate you joining us today. Leading today’s call are Jennifer Straumins, our EVP of Strategy and Development; and Pat Murray, our EVP and Chief Financial Officer. At the conclusion of our prepared remarks we will open the call for questions. Before we proceed, allow me to remind everyone that during the course of this call, we may provide various forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. And 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 the expectations will prove to be correct. Please refer to the 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 factors that may affect our actual results and could cause them to differ from our forward-looking statements made on this call. As a reminder, you may download a PDF of the presentation slides that will accompany the remarks made on today’s conference call, as indicated in the press release we issued this morning. You may now access these slides in the Investor Relations section of our website at calumetspecialty.com. With that, I’d like to hand the call over to Jennifer.

Thank you, Noel. Good afternoon to all of you joining us on today’s call. Please turn your attention to slide three of the slide deck for a high level overview of our third quarter results. Calumet generated adjusted EBITDA of $107.5 million during the third quarter, compared to $38.3 million in the prior year period. From an EBITDA perspective, the third quarter was our strongest quarter in more than two years. Incidentally, it also represents the first full quarter in more than a year-and-a-half where we didn’t have any meaningful planned maintenance at one of our major production facilities. Our largest fuels refineries including Superior, Montana, San Antonio and Shreveport refineries, all operated at or above historical rates during the third quarter, each having completed extended plant turnarounds during 2013 and 2014. Importantly, our third quarter financial performance proved out our standing thesis that Calumet’s core existing businesses are more than capable of generating sufficient EBITDA to cover our quarterly cash distributions even before accounting for significant EBITDA contributions we expect from a slate of organic growth projects that are scheduled for completion during the next 15 months. To that end, Calumet’s distribution coverage ratio is nearly 1.4 times for the third quarter 2014 and was 0.7 times through the first nine months of the year. Our Specialty Products segment performed well during the third quarter, due to contributions from our recently acquired oil field services businesses and increased plant reliability. Within our Fuel Products segment solid demand for gasoline and jet fuel, coupled with the sharp decline in the average cost of crude oil per barrel helps us to support favorable fuel refining economics. Please turn to slide four. We have more than 50,000 investors in Calumet and a bevy of talented sell-side analysts covering us. However, as with…

Thank you, Jennifer. Let’s all turn our attention to slide 10 for a discussion of adjusted EBITDA. We believe the non-GAAP measure of adjusted EBITDA is an important financial performance measure for the partnership. Adjusted EBITDA is defined under our financing instruments increased by $69.2 million to $107.5 million in the third quarter of 2014 versus the prior year period. As indicated on this slide, the primary drivers of the year-over-year increase included increased contributions from our Fuel and Specialty Products segments including contributions from recent acquisitions such as that of Anchor and SOS. Notably, results from operations during the third quarter of 2013 were impacted by one month long planned outage at our Montana refinery whereas no such maintenance occurred in the third quarter of 2014. We encourage investors to review the section of our earnings press release found on our website entitled, Non-GAAP Financial Measures and the attached the tables for discussions and definitions of EBITDA, adjusted EBITDA and distributable cash flow, financial measures and reconciliations of these non-GAAP measures to the comparable GAAP measures. Turning to slide 11, fuels refining economics improved slightly in the third quarter versus the prior year period. The benchmark Gulf Coast 2/1/1 crack spread averaged $19 a barrel during the third quarter 2014 compared to $17 a barrel in the same period of 2013. Year-over-year growth in the 2/1/1 crack spread was driven primarily by a significant increase in the gasoline crack, which was partially offset by a marginal drop in the ultra-low sulfur diesel crack. Crude oil price differentials remained volatile throughout the quarter, although the spread of Bakken and Bow River grades of crude oil against WTI both widened in the third quarter versus the year ago period. Now turning to slide 12, as we look to sources and uses…

(Operator Instructions) And your first question comes from the line of Richard Roberts with Howard Weil. Please proceed.

Hey. Good afternoon, folks and congrats on the good quarter here. A couple questions on Shreveport, maybe. For one, have you guys identified any specific issues that were, sort of, driving some of the liability issues previously that you were able to change here with the very good rates in 3Q?

Yes. A lot of the issues at the Shreveport Refinery started with the three events that we experienced in January of 2014. We did extensive turnaround planning through the first half of the year prior to the shutdown. And we did significant amount of work on some of the vacuum towers that we have inside the facility, that not only increased reliability, but it improved product quality that we’re making of our new products there.

Okay. Great. Thanks, Jennifer. I guess, sticking on Shreveport, at the Analyst Day you talked quite a bit about looking at some strategic alternatives for the asset including a JV or a sale. I would assume if you want to sell the asset, it would be nice to have a couple quarters of good results before you try and do that. But then, if it’s running well, then maybe it makes sense to keep it in the portfolio. So I guess, I’m wondering, does it just not make sense strategically to have Shreveport within the mix, or was it more an issue of trying to get rid of a problem child? I guess, how would you look at the asset if you were to sort of fix things and keep it running well for a while?

Well, nothing that I don’t know that I -- Shreveport is certainly not been without its operational issues. But to call it a problem child is maybe a little harsh. The Shreveport Refinery is -- it’s very integral to the Calumet story. It provides feedstocks to Cotton Valley and our branded and package business as well as our petrolatums and white oil business. It also takes these intermediates from several of our facilities and processes them into fuel products. And while, each of these facilities can operate on a stand-alone basis, having Shreveport as part of our mix certainly makes operations a lot easier. We are looking at several projects that we can do at that facility to further upgrade our products and make a higher play of specialty products. The asset was never actively on the market.

We’ll leave it at that. I mean, is there anything else, Richard?

Sorry. Just got cut off there for a second. And maybe one more, on the Logistics MLP, I came up at the Analyst Day and then I think the comment was it will be discussed at the Board Meeting in September. I’m just curious if you can provide any update on, sort of, what you are thinking around strategically on that side?

Sure. We’re continuing to explore every opportunity. That being said, we anticipate taking the next couple of quarters to finish the growth projects and figure out what’s best from a corporate structure standpoint. So, at this point in time, there are no active plans to move forward in 2014 with that project.

Understood. Thanks very much.

Your next question comes from the line of Roger Read with Wells Fargo. Please proceed.

Hi. Good afternoon.

Good afternoon. How are you?

Well, last -- almost our last conference call of the season, so we are pretty excited here. Quick questions for you all. Along the lines of specialty oils, base oil pricing, there’s been some stories out in the press of other companies in this business starting to cut. I know some of that is due to lower oil prices starting to filter their way into the system but we’ve also seen some capacity increases out there. I was wondering if you could give us any sort of feel for where we are on that, what that might mean for margins, maybe not so much in the fourth quarter. But certainly in the first half of next year and how that juxtaposes with your commentary about a much stronger second half of ‘14?

To date in 2014, we have seen paraffinic base oil margins perform at or above budgeted levels and at or above historic levels. That being said, Pascagoula, Chevron’s Pascagoula facility has come on line with additional Group II base oils whose products are in the market today. Falling crude oil prices has slowed down the export markets because when you put several hundred thousand gallons of oil on a boat that won’t get some place for six weeks in the falling crude market environment, people want some price protection. And quite honestly, Calumet is not a big enough producer of base oils to have to participate in these markets right now. We are still able to place all of our volume domestically with historical long-term ratable customers that we have very strong relationships with. We are looking forward to the first half of the year. We think we will see some drop in margin on the paraffinic side. Keeping in mind, paraffin based oils are just a small part of our overall Specialty Products portfolio. So we do not anticipate the impact of any of those margin decreases to be substantially material.

So no filter, no flow through to any other products at this point?

No.

Okay. Thanks. And then, I’ll let somebody else hit you later on the projects. But my other question is you look at the RINs -- so indicated to me and reading the press release you expect to gain in the fourth quarter. Just wondering if you could give us an idea at least maybe, if not the gain, the cash expected and the reason I’m asking is last year the average RINs price was just over $0.40, for the year average and this year we are at about $0.45. So, I’m not really anticipating a significant gain but I was wondering if we look at the number of RINs and kind of took that price, we would be looking at cash somewhere in the $15 million to $20 million range when you sell, is that a reasonable assumption?

That’s a reasonable assumption.

All right. Thank you.

Your next question comes from the line of Cory Garcia with Raymond James. Please proceed.

Good afternoon, everyone. One quick question. I guess, we’ve noticed some particular tightness in the benchmark, Western Canadian heavy differential market and obviously some of that is due to Flanagan lines and so forth. Just curious to hear your thoughts regarding the overall dynamics there, how that’s change going forward? And even if you guys have any real color on how your Bow River is making its way into the refinery gate and if those differentials are maybe holding a little more historic levels versus what we are seeing more tight today?

In October, we did see some weakness in the Bow River differentials. Like, you said, directly related to the Flanagan line fill. We’ve seen some of those numbers come -- improve as we move into November, December and we would expect to see Bow River and WCS move back towards historical levels as we move into 2015.

Okay. So there’s no big difference between what we’re looking to benchmark, we’re looking at just sort of modeling into your refineries?

That’s right. Yeah, exactly.

Okay. Appreciate it. Thank you.

Your next question comes from the line of Richard Verdi with Ladenburg. Please proceed.

Hi, everyone and thank you for taking my call. An excellent, excellent quarter all the way around. So most of my questions have been addressed in some sort of manner and I’m pretty clear on everything. But I do have one question left. So in September, the Brookings Institute issued a report calling for the oil export ban to be lifted in the near-term. And I believe consensus that’s a 2017 policy change. Assuming consensus is correct and the policy change does transpire in 2017, how it is something like that -- of that nature impact Calumet? I would think all refiners want to feel the effect in some sort of fashion?

I see, as we look at that, the refiners that we have in our system that would be impacted like that. By that would be Dakota Prairie and to a lesser extent, our Superior Refinery. Our three port facilities, all three of Shreveport facilities, all run local crude barrels that would not be -- people would not contemplate exporting those barrels. So we feel like the crude oil export ban would have minor impact on our results.

I think it’s important to note that since the majority of our gross profit contribution historically has also come from the Specialty Product segment, we think that further insulates us from that impact.

Okay. All right, great. And thanks again, great quarter.

Thank you.

Your next question comes from the line of Jason Smith with Bank of America Merrill Lynch. Please proceed.

Congrats on the strong results, everyone. So thanks for the color on specialty margins quarter-to-date. Some of your peers have talked about stronger refining margins quarter-to-date too, particularly in the northern part of PADD II. So I’m just curious if you can give me, maybe an indication as to what you guys are seeing in your markets right now?

We’re seeing very strong, especially kerosene margins both at Superior and Montana. There are some planned outages of our local competitors in those areas. Exxon Billings has been down, for example. And so we are seeing very robust cracks on the diesel and kerosene side.

Got it. And maybe we’re going to just try this. Jennifer, I know you probably want to get through the capital projects first. And it’s obviously a step in the right direction to see coverage back above one time. I mean, what would you guys need to see how long would you need to see coverage above one and in order to consider coming back and increasing the distribution?

Obviously, that decision is made by our Board of Directors. Management makes recommendations. Personally, I would like to see the Montana Refinery startup before we would begin raising distribution. And that’s late 2015, early 2016 type of activity. Just to make sure that we cleared any hurdles of startup risks. Capital projects tend to go over budget in the last two months versus in the first two months. So I’d like to see successfully complete that first.

Got it. Okay, thanks. I appreciate the answers.

Your next question comes from the line of Theresa Chen with Barclays Capital. Please proceed.

Hi. Just a quick one for me. Can you give us updates on the status of the PLR for Anchor?

We don’t have an update on that.

How much of that is contributing to the incremental increase in your taxes?

Most of it. Most of it is related to Anchor.

Perfect. Thank you.

Your next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed.

Hi. Congratulations on the very strong quarter.

Thank you.

Thanks.

Just one question from me on the expansion projects, kind of touching on the point you just mentioned there as far as cost creep. Just wondering if you had any updated thoughts for us as far as how things stand with cost inflation. Are you seeing any pressure there and maybe if you could just remind us what amount of the cost are locked in at this point? That would be helpful.

Sure. We’ve not seen any -- as far as labor rates or material cost escalations, we’ve not seen any of that in any of the projects that we are in the midst of. The Dakota Prairie is due to come online very soon. We are keeping our fingers crossed that the weather remains mild out in North Dakota and anticipate that we will not -- it should not exceed that $365 million that we are currently projecting, assuming that the weather remains constant. And as far as the other projects, they all remain on budget.

Great. Thank you for the confirmation.

(Operator Instructions) And your next question comes from the line of Steve Sherowski with Goldman Sachs. Please proceed.

Hi, good afternoon. Just a quick question. I’m trying to reconcile the Specialty Products gross margin. And if I’m doing my math correctly, it looks like recent acquisitions made a larger contribution to the overall margin this quarter. I was just wondering can you break out the contribution from each of those assets? And is it a good run rate going forward if we just normalize the third quarter?

We don’t break out the acquisitions by on an acquisition-by-acquisition basis. And also third quarter -- the Anchor business is in the acquisition number and the seasonality of the Anchor business results in their third quarter being the strongest quarter of the year. So I wouldn’t be real comfortable telling you to take that and annualize it, but it’s not going to be too far off.

Okay. I mean, can you give just a relative magnitude? Is it between $20 million and $30 million or just the general range in terms of seasonality?

No. We don’t disclose that level of detail.

Okay, that’s it for me. Thank you.

We have no further questions at this time. I would now like to turn the call over to Jennifer Straumins for closing remarks.

Thank you for joining us on today’s call. Should you have any additional questions, please contact our VP of Investor Relations, Noel Ryan, at 317-328-5660.