Q1 2024 Calumet Specialty Products Partners LP Earnings Call

Operator: Good morning everyone, and welcome to the Calumet Specialty Products Partners LP first quarter 2024 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on the telephone keypad. To withdraw your question, you may press star and 2. Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to John Compa, Investor Relations for Calumet. Sir, please go ahead.

Good morning, everyone and welcome to the Calumet specialty products partners L. P first quarter 'twenty 'twenty four results conference call.

All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May press Star and then one on the telephone keypad to withdraw your question you May Press Star two.

Please also note today's event is being recorded.

At this time I'd like to turn the floor over to John <unk> Investor Relations for Calumet, Sir. Please go ahead.

John Compa: Good morning. Thank you, Jamie. And thank you for joining us today for our first quarter 2024 earnings call. With me on today's call are Todd Borgmann, CEO; David Lunin, CFO; Bruce Fleming, EVP, Montana Renewables and Corporate Development; and Scott Obermeier, EVP, Specialty. You may download the slides that accompany remarks made on today's conference call, which can be accessed in the investor relations section of our website at Calumet.com. Also, a webcast replay of this call will be available on our site within a few hours. According to the presentation on slides two and three, you can find our cautionary statements and tax disclosures.

John: Good morning, Thank you Jamie and thank you for joining us today for our first quarter 2024 earnings call with me on today's call are Todd Boardman CEO, David Looney CFO, Bruce Fleming, EVP, Montana, renewables and corporate development and Scott Obermeier Edp specialties, you may download you may now download the slides that accompany the remarks made on today's conference.

John: Call, which can be accessed in the Investor Relations section of our website.

John: Calumet Dot Com also a webcast replay of this call will be available on our site within a few hours.

John: Turning to the presentation on slide two and three.

John: You can find our cautionary statements and tax disclosures I'd like to remind everyone that during this call. We may provide various forward looking statements. Please refer to the partnership's press release that was issued this morning as well as our latest filings with the SEC for a list of factors that may affect our actual results and cause them to differ from our expectations.

John Compa: I'd like to remind everyone that during this call, we may provide various forward-looking statements. Please refer to the partnership's press release that was issued this morning, as well as our latest filings with the SEC, for a list of factors that may affect our actual results and cause them to differ from our expectations. With that, I'll now pass the call to Todd.

John: I'll now pass the call to Todd.

Todd Borgmann: Thanks, Sean, and welcome to Calumet's first quarter 2024 earnings call. We have a number of items to discuss today as we enter what we expect to be a spring and summer full of strategic value-creating catalysts here at Calumet. Let's turn to slide four, and I'll start with an update on our C-Corp conversion. In short, the conversion remains on track, and we're optimistic that we'll complete the process in the next 60 days.

Todd Boardman: Thanks, John and welcome to Calumet is first quarter 2024 earnings call.

Todd Boardman: The number of items to discuss today as we enter what we expect could be a spring and summer fall of strategic value, creating catalysts here at Calumet.

Todd Boardman: Let's turn to slide four and I'll start with an update on our C Corp conversion.

Todd Boardman: In short the conversion remains on track and we are optimistic that we'll complete the process in the next 60 days.

Todd Borgmann: This process has moved quickly, and I'm thankful to the General Partner, the Conflicts Committee, employees, attorneys, and everyone else involved for a thorough negotiation and efficient process today. During the first quarter, we announced the completion of the conversion agreement. We filed the S-IV with the SEC, and upon final feedback, we'll distribute the proxy and schedule an investor vote.

Todd Boardman: This process is moving quickly and I'm thankful to the general partner conflicts Committee employees attorneys and everyone else involved for a thorough negotiation inefficient process today.

Todd Boardman: During the first quarter, we announced the completion of the conversion agreement we filed the S. Four with the SEC and upon final feedback will distribute the proxy and scheduled investor but.

Todd Borgmann: We continue to be optimistic about the opportunity this conversion provides for Calumet and our unit holders. Our current shareholder base is comprised of our general partner, insiders, a small group of loyal and significant deep value investors, and a broad set of retail investors. It's a good stable investor base, but it lacks large institutional investors and passive index funds.

Todd Boardman: We continue to be optimistic about the opportunity. This conversion provides for Calumet our unit holders.

Todd Boardman: Our current shareholder base is comprised of our general partner insiders, a small group of loyal and significant deep value investors and a broad set of retail investors. It's a good stable investor base, but it lacks large institutional investors and passive index funds.

Todd Borgmann: Passive investment strategies now make up over 50% of the public equity market, yet they own almost zero Calumet, as most indices can't hold MLPs by charter. From a pure technical trading lens, this conversion is arguably one of the most important strategic steps the company's ever taken. Since we initially announced the conversion, we've seen an increase in our average daily trading volume of a little over 20%. However, trading volumes are still quite illiquid compared to most publicly traded companies.

Todd Boardman: Passive investment strategies now make up over 50% of the public equity market yeah. They own almost zero, China is most indices can't hold mlps by charter.

Todd Boardman: From a pure technical trading lens. This conversion is arguably one of the most important strategic steps the company has ever taken.

Todd Boardman: Since we initially announced the conversion we've seen an increase in our average daily trading volume of a little over 20%, but trading volumes are still quite illiquid compared to most publicly traded companies and this conversion is a major milestone in removing that burden.

Todd Borgmann: And this conversion is a major milestone in removing that burden. For example, Calumet C Corp peers typically have 20 to 30% of their shares outstanding held by passive indices. And again, we have almost none.

Todd Boardman: For example, Calumet C Corp peers, typically have 20% to 30% of their shares outstanding held by passive indices and again, we have almost none.

Todd Borgmann: The ability to add significant demand to the investment investor pool is exciting in itself, but we think it's compounded with the fact that Calumet presents a compelling opportunity to larger active institutional investors. We've been on the road talking to this group since our announcement, and like I mentioned with passive indices, our MLP status puts most of this group practically off-limits. Of course, this all changes post-conversion.

Todd Boardman: The ability to add significant demand to the investment investor pool is exciting in itself, but we think it's compounded with the fact that Calumet presents a compelling opportunity to larger active institutional investors.

Todd Boardman: We've been on the road talking to this group since our announcement and like I mentioned with passive indices are MLP status, but most of this group practically off limits of course this all changes post conversion.

Todd Borgmann: The next near-term priority is taking the last step in demonstrating the competitively-advantaged position of Montana Renewables. With the construction behind us, our startup here in the rear view, and all the expensive feed processed, we believe financial demonstration of the top tier position that Montana Renewables holds is the next step in capturing the value of MRL for our unit holders. Third, we're deep into the DOE loan process, which we hope will unlock our MaxApp expansion soon.

Todd Boardman: The next near term priority is taking the last step in demonstrating the competitively advantaged position of Montana renewables.

Todd Boardman: What's your construction behind us our startup year in the rearview and all the expensive feed processed we believe financial demonstration of the top tier position that Montana renewables holds as the next step in capturing the value of tomorrow for our unit holders.

Todd Boardman: Third we're deep into the <unk> process, which we hope will unlock our Max have expansion soon and.

Todd Borgmann: And last, we continue to demonstrate the uniqueness and wide moat that exists in our specialties business. I'll hit on each of these items further, but let's first move to results on slide five. In the first quarter, we generated $21.6 million of adjusted EBITDA.

Todd Boardman: And last we continue to demonstrate the uniqueness and widen out that exists in our specialties business.

Todd Boardman: I'll hit on each of these items further, but let's first move to results on slide five.

Todd Boardman: In the first quarter, we generated $21 $6 million of adjusted EBITDA.

Todd Borgmann: We had previously communicated that the quarter was marked by a ramp-up and inventory drawdown at Montana Renewables and a successful turnaround at Shreveport, both of which impacted results within our expectations. The one negative surprise was the magnitude of the seasonal weakness experienced in the northern Rockies, as both gasoline and asphalt realizations were lower than normal. Every year, the Montana Retail Asphalt Racks close for the winter, and our asphalt sales mix shifts to 100% wholesale.

Todd Boardman: We had previously communicated that the quarter was marked by a rate ramp up an inventory drawdown at Montana renewables and a successful turnaround at Shreveport.

Todd Boardman: Most of which impacted our results within our expectations.

Todd Boardman: The one negative to expectations was the magnitude of the seasonal weakness experienced in the northern Rockies as both gasoline and asphalt realizations were lower than normal.

Todd Boardman: Every year, the Montana retail asphalt racks closed for the winter and our asphalt sales mix shifts to 100% wholesale.

Todd Borgmann: This past winter, that occurred as normal, but a huge increase in WCS costs created a major price lag. As we sit here today, we're seeing retail asphalt sales start to pick back up as the paving season, supported by our polymer modified asphalt plant, will be full steam ahead in June like normal. Let's turn to slide 6 and talk about Montana Renewable. On past calls, we talked about the significant milestones MRL has accomplished as it turned from an idea into a leading SAF and renewable diesel business in a few short years. The next milestone is demonstrating a clean financial quarter. As we talk today, we've been operating for five months since the December restart.

Todd Boardman: This past winter that occurred as normal, but a huge increase in WCS costs created a major price lag.

Todd Boardman: As we sit here today, we're seeing retail asphalt sales start to pick back up as the paving season supported by our polymer modified asphalt plant will be full steam ahead and Jim like normal.

Todd Borgmann: Each month has improved sequentially as we've ramped up rates, increased SAF production, reduced our feedstock carbon intensity, and worked through the old expensive feed. A primary advantage point for Montana Renewables is our access to a host of feeds and ability to utilize our leading pretreatment technology to switch quickly to whatever market opportunities exist, which simply was not an option when our tanks were full. We expect industry feedstocks to price at CI parity over time, at least in the clearinghouse on the Gulf Coast. But, as we have often discussed, the various feed classes, including tallow, corn oil, and vegetable oil, rotate among themselves, and we can take advantage of that.

Todd Boardman: Let's turn to slide six and talk Montana renewables.

Todd Boardman: In past calls we've talked about the significant milestones and morale has accomplished is it turned from an idea into a leading SaaS and renewable diesel business in a few short years.

Todd Boardman: The next milestone is demonstrating a clean financial quarter.

Todd Boardman: As we talk today, we've been operating for five months since the December restart.

Todd Boardman: Each month has improved sequentially as we've ramped up rates increase that production reduced our feedstock carbon intensity and worked through the old expensive feet.

Todd Boardman: The primary advantage point for Montana renewables is our access to a host of feeds and ability to utilize our leading pre treatment technology to switch quickly to whatever market opportunities exist, which simply was not an option when our tanks are full.

Todd Boardman: We expect industry feedstocks to price at Ci parity over time at least in declaring house on the Gulf coast, but as we have often discussed the various speed classes, including Palo corn oil and vegetable oil rotate among themselves and we can take advantage of that.

Todd Borgmann: This optimization value is driven by a short local supply chain, and it started to help again in March, as demonstrated by moving back into the black financially. And it's now unconstrained, as we have cleared the backlog of inventory built in the second half of last year. Of course, the current question outstanding for all participants in our space is the market environment, which we track using the index for renewable diesel margins made from soybean oil.

Todd Boardman: This optimization value is driven by a short local supply chain and it's starting to help again in March as demonstrated by moving back into the black financially and its now unconstrained as we've cleared the backlog of inventory built in the second half of last year.

Todd Boardman: Of course, the current question outstanding for all participants in our space as the market environment, which we tracked using the index for renewable diesel margins made from soybean oil.

Todd Borgmann: This index has become the standard industry benchmark in RD. A couple weeks ago, we hosted Analyst Day in Great Falls, and industry outlook was a primary topic of the conversation. In fact, the slides and script from that event are on our website for anyone who'd like to go deeper.

Todd Boardman: This index has become the standard industry benchmark and Rd.

Todd Boardman: A couple of weeks ago, we hosted an analyst day in Great Falls and industry outlook was the primary topic of the conversation.

Todd Boardman: The slides and script from that event or on our website for anyone who would like to go deeper.

Todd Borgmann: Sitting on slide six and looking at the right-hand chart, we show the renewable diesel industry capacity as a supply stack based on total net cost, and we overlay the normal index margin across the top. This pipeline margin is a regime that's governed industry margins historically, at least until September of last year. In its normal regime, renewable diesel players expect to see a fairly steady index margin, around $2 a gallon. We've talked about this in the past, so I won't go too deeply into it here.

Todd Boardman: Staying on slide six and looking at the right hand chart, we show the renewable diesel industry capacity as the supply stack based on total net cost and we overlay the normal index margin across the top.

Todd Boardman: This top line margin is there a gene that's governed the industry margins historically at least until September of last year.

Todd Boardman: And it's normal regime renewable diesel players expect to see a fairly steady index margin around $2 a gallon.

Todd Boardman: <unk> talked about this in the past so I won't go too deeply into it here, but the premise is that the incremental competitor sets the market price.

Todd Borgmann: But the premise is that the incremental competitor sets the market price. We specifically think that the incremental player is the group of small-scale biodiesel plants that use soybean oil. And this group typically requires an index margin of about $2 per gallon to be cash flow positive. However, for the last two quarters, the industry has observed a lower index margin of around $1 per gallon. Although we expect that to be a temporary condition, it is already doing lasting damage to farmers, biodiesel producers, and even some renewable diesel producers. How did this happen?

Todd Boardman: We specifically think that the incremental player. It's a group of small scale biodiesel plants that run soybean oil and his group typically requires an index margins of about $2 per gallon to be cash flow positive.

Todd Boardman: However for the last few quarters industry has observed a lower index margin of around $1 per gallon.

Todd Boardman: Although we expect that to be a temporary condition. It is already doing lasting damage to farmers biodiesel and even some renewable diesel producers.

How did this happen historically EPA has set the RVO to incentivize all forms of renewable energy and raise the annually to capture any increase in renewable supply.

Todd Borgmann: Historically, EPA has set the RVO to incentivize all forms of renewable energy and raised it annually to capture any increase in renewable supply. In that normal regime, all elements of the margin equation—the LCFS, carb diesel, the BTC, REN, and the price of soybean oil—must interact in a way that incentivizes the incremental player to produce, or else the mandated renewable volumes will not be achieved. In contrast to this, EPA is set at 2023 to 2025 RVO at a level that's substantially below the industry's production capacity.

Todd Boardman: And that normal regime, all elements of the margin equation L. CFS carve diesel the V. T C ran and the price of soybean all must interact in a way that incentivizes the incremental player to produce or else. The mandated renewable volumes will not be achieved.

Todd Boardman: In contrast to this EPA has set the 2023 to 2025 RVO at a level that is substantially below the industry production capacity.

Todd Borgmann: For example, the industry's capacity is well above 6 billion gallons per year, but the EPA RBO was set at an implied level of 4.5 billion gallons. This challenges all biomass-based diesel producers, and we're seeing both biodiesel and renewable diesel producers being forced to close and reduce rates. Many have said that the level was set this way because it was difficult to predict the reliability of startups in this new industry, and questions existed about the ability to source feedstock.

Todd Boardman: For example, the industry's capacity as well about 6 billion gallons per year, but the EPA RVO is set at an implied level of $4 5 billion gallons.

Todd Boardman: These challenges all biomass based diesel producers and we're seeing both biodiesel and renewable diesel producers being forced to close or reduce rates.

Todd Boardman: Many of you said that the level of set this way because it was difficult to predict reliability of startups in this new industry and questions existed about the ability to source feedstock.

Todd Borgmann: With most of the large startups either now up or coming up this year, and the feedstock situation clarified, we think that it's logical to revert to the now proven and normal methodology of including all production capacity in the RVO. After all, the original statutory demand for renewable fuels was to have reached 35 billion gallons per year by 2022, and the country has fallen well short of that plan, as we're just over halfway there. In fact, closure and rate reduction announcements made so far this year have the industry moving backward, not forward.

With most of the large startups, either now or coming up this year and the feedstock situation clarified when you think that it is logical to revert to the now proven that normal methodology.

Todd Boardman: All production capacity in the RVO.

Todd Boardman: After all the original statutory demand for renewable fuels was to have reached 35 billion gallons per year by 2022, and the country has fallen well short of that plan as we're just over halfway there in <unk>.

Todd Boardman: Fact closure and rate reduction announcements made so far this year have the industry moving backwards not forwards.

Todd Borgmann: We need every drop of renewable fuel production capacity available, plus a lot more, to ultimately achieve our objective. In short, the EPA should increase the RVO. Regardless of the index margin, competitive advantage depends on the total cost structure.

Todd Boardman: We need every drop of renewable fuels production capacity available plus a lot more to ultimately achieve our objectives.

Sure the EPA should increase the RVO.

Todd Boardman: Regardless of index margin competitive advantage depends on total cost structure.

Todd Borgmann: The index margin will lift or lower all boats. The competitive advantage in this space is driven by access to a free treater, advantaged logistics costs, economies of scale, a flexible feed slate, product yield, specifically SAF, and access to the right-end market. On a P&L, these items all come together to represent everything between the industry's soybean index margin and EBITDA.

Todd Boardman: Index margin will lift or lower all boats, but competitive advantage in this space is driven by access to a pretty treater advantaged logistics costs economies of scale are flexible feed flight product deal, specifically SaaS and access to the right end markets.

Todd Boardman: On the P&L. These items all met together to represent everything between the industry soybean index margin and EBITDA.

Todd Borgmann: In other words, the break-even level to the Soybean Index is a function of a company's operating costs, SGA, logistics costs, and relative yield and CI differences to the Soybean Index. Right now, we believe this break-even EBITDA level is about 85 cents a gallon for Montana Renewables, which we think is best in class. Ultimately, we think our cost will be closer to $0.65 a gallon as we continue to gain efficiencies, which is the gist of our original guidance of $1.35 a gallon of adjustability under the normal regime of a $2 per gallon index margin.

Todd Boardman: In other words, the breakeven level for the soybean index is a function of the company's operating costs SGA logistics costs and relative yelled in Ci differences to the soybean index.

Todd Boardman: Right now we believe this breakeven EBITDA level is about 85 cents a gallon for Montana renewables, which we think is best in class.

Todd Boardman: Ultimately, we think our cost will be closer to 65 cents a gallon as we continue to gain efficiencies, which is the jest of our original guidance of $1 35, a gallon of adjusted EBITDA and a normal regime of a $2 per gallon index margin.

Todd Borgmann: As I mentioned earlier, we do expect this normal regime to return, but that will require the RVO to be adjusted to incentivize the energy transition as it has historically. The next catalyst for Calumet, we'll stay in the MRL category, is our MaxSaf expansion. Of course, this is directly tied to the DOE loan process, which is in the late stages and continues to progress well. We're going to refrain from sharing too much more on this project until we get to the finish line with DOE, but we're incredibly excited about it. Staff is a tremendous opportunity for the world, for our industry.

Todd Boardman: As I mentioned earlier, we do expect this normal regime to return, but that will require the RVO to be adjusted to incentivize the energy transition as it has historically.

Todd Boardman: The next catalyst for Calumet will stay in the MRM category is our Max staff expansion.

Todd Boardman: Of course, this isn't directly tied to the daily loan process, which is in the late stages and continues to progress well.

Todd Boardman: We're going to refrain from sharing too much more on this project until we get to the finish line with D O E. But we're incredibly excited about it.

Todd Boardman: SaaS is a tremendous opportunity for the world for our industry.

Todd Borgmann: It's the only proven way to materially reduce emissions in the hard-to-evade airline sector, and it's an area that is brand new and creates meaningful upside. Just recently, the UK issued a SAF mandate starting in 2026 and growing from there. Japan, Singapore, and India have also issued mandates, but are in the late stages.

Todd Boardman: It's the only proven way to materially reduce submissions and the harder they airline sector and it's an airline and its an area that is brand new and creates meaningful upside.

Todd Boardman: Just recently, the UK issued a SaaS mandate, starting in 2026 and growing from there.

Todd Boardman: Japan, Singapore and India are also issued mandates are in late stages in.

Todd Borgmann: And the United States Grand Theft Challenge calls for 3 billion gallons by 2030 and 35 billion gallons by 2050. Not only is this a new world of opportunity for SAF, but the SAF supply also impacts renewable diesel balances and margin outload. To illustrate that, simply reference the RD Supply Stack chart mentioned earlier. Add another 3 billion gallons to the existing RVL implied demand, and you'll see that if the Grand Theft challenge is met by conversion of renewable diesel plants, which is the only demonstrated proven option, we're once again in a scenario where demand, including all existing biodiesel, can't be met by current supply.

Todd Boardman: In the United States Grand Theft Challenge calls for 3 billion gallons by 2030, and 35 billion gallons by 2050.

Not only is this a new world of opportunity for SaaS. The SaaS supply also impacts the renewable diesel balances and margin outlook.

Todd Boardman: Illustrate that simply referenced the Rd supply stack chart mentioned earlier add another 3 billion gallons to the existing RV, all implied demand and you'll see that if the grand theft challenges, Matt by conversion of renewable diesel plant, which is the only demonstrated proven option.

Todd Boardman: Once again in the scenario where demand, including all existing biodiesel can't be met by current supply.

Todd Borgmann: Needless to say, not only is SAF a tremendous advantage for us right now, but it's also an opportunity that will transform the underlying fundamentals of renewable diesel in a positive way as industry volumes grow. Let's transition back to specialties for a minute, and then I'll hand the call to David.

Todd Boardman: Needless to say not only a SaaS a tremendous advantage for US right. Now. It's also an opportunity that will transform the underlying fundamentals of renewable diesel in a positive way as industry volumes grow.

Todd Boardman: Let's transition back to specialties for a minute and then I'll hand, the call to David.

Todd Borgmann: At our recent analyst day, we opened with more info on specialties than we've provided in some time, and the feedback was that while we've all been focused on the new Montana Renewables, we haven't spent as much time talking about the rock-solid specialties business we have at Calumet and the growth that the team has delivered over the past few years. We've mentioned before that our specialties business has seen five straight years of margin growth, which is a major accomplishment.

David Lunin: At our recent analyst day, we opened with more info on specialties and we provided in some time and the feedback was that while we've all been focused on our new Montana renewables. We haven't spent as much time talking about the rock solid specialties business, we havent Calumet and the growth that the team has delivered over the past five years the past few years.

David Lunin: We've mentioned before that our specialties business had seen five straight years of margin growth, which is a major accomplishment.

Todd Borgmann: This has been a combination of a data-driven approach to commercial excellence, an asset base and market reach that's incredibly agile, a culture of innovation, and a differentiated appreciation and service for customers. It's these things that allow us to both weather storms, as we saw during COVID, and capture the upside of the extremely strong markets we've seen over the past couple years. The current market is in between these two extremes. Back during peak margin times, we highlighted that the increase in specialty margins from the historic $40 per barrel range was about half market and half a function of our commercial focus. I think especially margins have bounced between $60 and $70 a barrel over the past few quarters.

This has been a combination of a data driven approach to commercial excellence and asset base and market reached its incredibly agile.

David Lunin: Culture of innovation, and a differentiated depreciation and service those customers.

David Lunin: But these things that allow us to both weather storms as we saw during COVID-19 and capture the upside of the extremely strong markets. We've seen over the past couple of years.

David Lunin: Current markets in between these two extremes.

David Lunin: Back during peak margin times, we highlighted that the increase in specialty margin from the historic $40 per barrel range was about half market and have a function of our commercial focus.

David Lunin: Especially margins it bounce between $60 $70 a barrel over the past few quarters, we're seeing that in a more mid cycle environment. This expectation was appropriate.

Todd Borgmann: We're seeing that in a more mid-cycle environment, this expectation was appropriate. The other thing we've mentioned in the past is investment and reliability. We've made meaningful progress over the past couple of years and still have room to go, as we recently entered the third year of the plan. In the first quarter, we saw an example that we expect to see more of as we continue to fortify our operations. For the past three years, we've had winter storms that have paralyzed not only our Louisiana facilities but a lot of Gulf Coast infrastructure.

David Lunin: The other thing we've mentioned in the past is the investment in reliability.

David Lunin: We've made meaningful progress over the past couple of years and still have room to go as we recently entered the third year of the plan.

David Lunin: In the first quarter. We saw an example that we expect to see more of as we continue to fortify our operations.

David Lunin: Two of the past three years, we've had winter storms that are paralyzed not only our Louisiana facilities, but a lot of Gulf coast infrastructure is.

Todd Borgmann: This past winter, we had a similar event, and while we experienced a few days of downtime, lessons learned and improvements made allowed the plant to restart in days, as opposed to having an event that would impact us much further. With that, I'll turn the call over to David. Thanks, Todd.

David Lunin: This past winter, we had a similar is that.

David Lunin: And while we experienced a few days few days of downtime lessons learned and improvements made allowed the plant to restart and days as opposed to have any event that would impact us much further with that I'll turn the call over to David.

David: Thanks Todd.

David: Turning to slide seven our STS business generated $41 8 million of adjusted EBIT during the quarter.

David Lunin: $41.8 million of adjusted EBITDA during the quarter.

David Lunin: As mentioned, we successfully completed our planned turnaround in Shreveport on time and on budget, and we've seen a string of successful turnarounds here, which continues to give us confidence in our ability to execute on our capital plan. The turnaround took us offline for approximately seven days, and while back at the beginning of the year, we didn't expect to see much of an impact on the financials from this, we went into the turnaround with a little lower inventory than originally planned. So it did cost us between $200,000 and $300,000 in barrels of sales. On the commercial side, our team continues to deliver.

David: As mentioned, we successfully completed our planned turnaround in Shreveport on time and on budget and we've seen that string of successful turnarounds here, which continues to give us confidence in our ability to execute on our capital plan.

David: The turnaround took us offline for approximately seven days and while back in the beginning of the year, we didn't expect to see much of an impact to the financials from this.

David: And to the turnaround with a little lower inventory than originally planned. So it did cost us between 200000 and 300000 barrels of sales.

David: On the commercial side our team continues to deliver we saw crude price increased $8 per barrel during the quarter the related lag as the majority of the decrease we saw in specialties material margin for the quarter.

David Lunin: We saw crude oil prices increase $8 per barrel during the quarter. The related lag is the majority of the decrease we saw in specialties material margin for the quarter. Price increases have now been passed through. The crude oil price increase also impacted asphalt margin in addition to a seasonally weak winter. Moving to slide eight, our performance brand segment generated $13.4 million of adjusted revenue.

David: Price increases have now been pass through.

David: The crude price increase also impacted asphalt margin in addition to a seasonally weak winter.

David: Okay.

David: Moving to slide eight.

David: Our performance brands segment generated $13 4 million of adjusted EBITDA for the quarter.

David Lunin: $18.4 million of adjusted EBITDA for the quarter. In this segment, we drove year-over-year volume growth of approximately 13%, reflecting excellent execution by our commercial team.

David: In this segment, we drove year over year volume growth of approximately 13% reflects the reflecting excellent execution by our commercial team.

David Lunin: Our first quarter 2023 adjusted EBITDA also increased by approximately 17.5% or $2 million year-over-year when considering that the prior period reflected a $5 million insurance benefit. With the business on solid footing today, we remain focused on continuing to grow our core industrial business lines, particularly in mining, power, and marine applications. We also continue to remain excited at the opportunities we see as we view the specialties business as one whole business.

David: Our first quarter 2023, adjusted EBITDA also increased by approximately 17, 5% or $2 million year over year, but considering that the prior period reflected a $5 million insurance benefit.

David: With the business on solid footing today, we remain focused on continuing to grow our core industrial business lines, particularly in mining power and marine applications.

David: We also continue to remain excited at the opportunities we see as we view the specialties business as one whole business as the two as opposed to individual segments.

David Lunin: As opposed to two individual segments.

David Lunin: Both SPS and Performance Brands have benefited from leveraging

David: Both Sps and performance brands have benefited from leveraging the.

David Lunin: and the great commercial options that exist in these businesses.

David: And grain commercial options that exist in these businesses.

David Lunin: Turning to slide nine, our Montana business, we recorded a loss of $14.5 million in adjusted EBITDA for the quarter. We've talked about the old expensive feed and how full inventory tanks block the ability to optimize feeds for some time now, so I won't rehash that here. Progressing through the old feed during the quarter, along with making sequential month over month improvements in essentially every facet of the operation, allowed us to close the quarter with positive adjusted EBITDA in March at MRL, and halfway through the second quarter, operations are holding strong. It's no surprise that industry index margins aren't

David: Turning to slide nine our Montana business, we recorded a loss of $14 5 million of adjusted EBITDA for the quarter.

David: We've talked about the old expensive feed and how full inventory tanks block the ability to upload optimize speeds for some time now so I won't rehash that here.

Progressing through the old feed during the quarter, along with making sequential month over month improvements in essentially every facet of the operation allowed us to close the quarter with positive adjusted EBITDA in March at MRO.

David: And halfway through the second quarter operations are holding strong.

David: It's no surprise that industry index margins isn't helping any of us in our D. At the moment.

David Lunin: helping any of us in RD at the moment. But we do continue to expect a clean quarter in Q2 and are focused on continuing.

David: But we do continue to expect a clean quarter in Q2 and are focused on continuing to demonstrate the competitive advantages we have in this business.

David Lunin: Thank you. We are focused on continuing to demonstrate the competitive advantages we have in VISTAs. While we do that, we'll wait for industry margins to recover. We continue to believe that industry margins should improve as higher-cost producers shut down or cut that rate, the new LCFS level solidifies, and ultimately the industry starts to gain information on new RVO levels that take into account the new production that's been added to the industry. As these steps occur, we expect industry margins to regain fundamental support levels and ultimately rise to the historical approximately $2 a gallon level that we've seen persist steadily.

David: While we do that well wait for industry margins to recover we continue to believe that industry margins should improve as higher cost producers shut down or cut that great.

The new L CFS level solidify and.

And ultimately the industry starts to gain information on new RVO level, taking into account the new production that's been added to the industry.

David: As these steps occur we expect industry margins to regain fundamental support levels and ultimately a rate rise to the historical approximately $2 a gallon level that we've seen persist steadily for years.

David: Turning to our TMR business, the first quarter started out with an extremely soft local gasoline and asphalt market in Montana.

David Lunin: The soft local gasoline and asphalt market in Montana. In fact, while we don't break out Montana Renewables and CMR businesses just yet, I can say that of the approximately $14.5 million negative EBIT in Montana and Renewables segment, the vast majority of the loss came from the legacy CMR business in Q1. Historically, Montana's asphalt plant is the most seasonal of our assets as it's highly dependent on wholesale, asphalt, and local gas demand.

David: In fact, while we don't break out Montana renewables and CMO businesses, just yet I can say that of the approximately 14 and a half million dollar negative EBIT in Montana and renewable segment. The vast majority of the loss came from the legacy <unk> business in Q1.

Historically, Montana asphalt plant is the most seasonal of our assets as its highly dependent on wholesale asphalt and local guest demand.

David Lunin: While we typically expect around breakeven results in Q1 that then historically improve as we gear up for the local paving season and spring and then accelerates in the summer, the first quarter was tougher than normal. However, wholesale asset asphalt margins are always less than retail. Q1 impact was exacerbated by a rapid run-up at WCS price-age, which further compressed margins. Production was also reduced due to a minor maintenance issue, and results were negatively impacted by a four million utility surcharge that stemmed from a number of negative 30 degree days and lower in January.

David: While we typically expect around breakeven results in Q1.

David: Then historically improve as we gear up for the local paving season in spring and then accelerates in the summer that first quarter was tougher than normal.

David: While wholesale asset asphalt margins are always less than retail Q1 impact was exacerbated by a rapid run up in WCS prices, which further compressed margins.

David: Production was also reduced due a minor due to minor maintenance issue in results were negatively impacted by a 4 million utility surcharge that stemmed from a number of negative 30 degree days and lower in January.

David Lunin: In closing, let's move to slide 10.

Speaker Change: In closing, let's move to slide 10.

David Lunin: We highlight a number of key catalysts in what we expect to be a transformative year for Calumet that are intended to spur our

Speaker Change: We've highlighted a number of key catalysts and what we expect to be a transformative year for Calumet. There are intended to support our strategy of maximizing value for unit holders.

David Lunin: are intended to support our strategy of maximizing value for unit holders. First, our C-Corp conversion remains on track to close mid-year. As we've said before, we believe our story is an interesting one for investors of all types, and we're excited to prove the ability for a broader set of investors to be able to invest in the Calumet story. Plus, this conversion allows index inclusion, which will help support broader demand for our equity.

Speaker Change: First our C Corp conversion remains on track to close mid year.

Speaker Change: As we said before we believe our story is an interesting one for invest for all investors and we're excited to prove the ability for a broader set are set to be able to invest in the Calumet story.

Speaker Change: Plus this can very easily allows.

Speaker Change: Index inclusion, which will help support water demand for our equity.

David Lunin: We are extremely focused on also demonstrating the competitive advantage of our Montana renewables business driven by our superior logistics advantage and location. Again, we saw consistent improvements throughout the quarter across all relevant metrics, production, sales, cost, staff, and continue to make improvements into Q2. As Todd stated, our work continues on securing a DOE loan, which supports the final investment decision on our Max SAF expansion project. Discussions are active and progressing. Finally, we remain committed to reducing our debt levels, and we repaid 50 million of our 2025 notes earlier in April. We believe we have a number of levers to continue to use over time, including

Speaker Change: We are extremely focused on them also demonstrating the competitive advantage of our Montana renewables business driven by our superior logistics advantage and location.

Speaker Change: Again, we saw consistent improvement throughout the quarter across all relevant metrics production sales cost fast and continue to make improvements into Q2.

Speaker Change: As Todd stated our work continues on securing a deal alone which supports the final investment decision on our Max South expansion project.

Speaker Change: Discussions are active and advancing.

Speaker Change: Finally, we remain committed to reducing our debt levels and we repaid $50 million of our 2025 notes earlier in April we believe we have a number of levers to continue to delever over time, including cash generation of our proven specialties business that.

David Lunin: The potential monetization of MRL, a portion of MRL, or upside...

Speaker Change: The potential monetization of MRO portion of that morale or upside potential from MRO anticipated cash generation.

David Lunin: or upside potential from MRL's anticipated cash generation.

Speaker Change: Operator that concludes our prepared remarks, we'd now like to open the line for questions.

Speaker Change: If you can remind our callers of the instructions. Thank you.

Operator: Ladies and gentlemen, at this time, we will now begin the question and answer session. Once again, to ask a question, you may press star and then 1 on the telephone keypad. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality.

Operator: Operator, that concludes our prepared remarks. We'd now like to open the line for questions, if you can remind the caller of those instructions. Thank you. Ladies and gentlemen,

Speaker Change: Ladies and gentlemen at this time, we will now begin the question and answer session.

Speaker Change: Once again to ask a question you May press Star and then one using your telephone keypad.

Speaker Change: We're using a speaker phone we do ask that you. Please pick up your handset before pressing the keys to ensure the best sound quality.

Operator: To withdraw your questions, you may press star and 2. At this time, we'll pause momentarily to assemble the roster. And our first question today comes from Roger Read from Wells Fargo. Please go ahead with your question. Yeah, thank you. Good morning, and good to talk to you all again.

Speaker Change: So withdraw your question you May press Star two.

Speaker Change: At this time, we will pause momentarily to assemble the roster.

Speaker Change: And our first question today comes from Roger read from Wells Fargo. Please go ahead with your question.

Roger David Read: Yeah. Thank you good morning, and could you talk to you all again.

Roger David Read: I guess I'd like to dig in just a little deeper. Todd, you mentioned five months. You know, now you've been running... MRL Well, and you know getting through the disadvantaged feedstock. Can you just kind of give us a little more detail on maybe that process of disadvantaged to advantaged feedstock and then just a kind of a quick little synopsis of how the hydrogen unit's working, since that was part of the challenge that led to the shutdown last fall? Yeah, you bet, Roger. And thanks for the question and for calling in again. I'll start, and then we'll jump to Bruce.

Roger David Read: I guess I'd like to dig in just a little deeper Todd you mentioned five months now you've been running.

Speaker Change: M R L well.

Roger: And getting through the disadvantage feedstock can you just kind of give us a little more detail on maybe that process.

Roger: Disadvantage to advantage feedstock and then just a kind of a quick little synopsis of how the hydrogen units working since that was part of the.

Roger: The challenge.

Roger: Chip will shut down last fall.

Speaker Change: Yeah, you bet Roger and.

Speaker Change: Thanks for the question and calling in again I'll start and then we'll jump to Bruce.

Todd Borgmann: I think the primary advantage of just working through the old feedstock is twofold. One, obviously, it was more expensive. You know, we've seen prices drop rapidly over the last six months since the RVO was set. Rents have led the price down, and we've seen feedstocks follow. So having tanks full of just inventory bought at previous times and contracts that were rolled from those environments was a major headwind for us, and we're glad to have that behind us.

Speaker Change: I think the primary advantage on and just working through the old feedstock is it's twofold. One obviously it was more expensive we've seen prices drop rapidly over the last six months since the RVO was a.

Bruce A. Fleming: Rents the rents have led to price down and we've seen the.

Bruce A. Fleming: Stocks fall out so so having painful of just inventory border at birth that previous times and contracts that were rolled from from those environments was a major headwind for us and we're glad to have that behind us.

Todd Borgmann: I think the second impact is our primary advantage or one of our primary advantages in Montana Renewables is to be able to switch very rapidly and take advantage of, you know, more discounted feeds, lower C.I. feeds, you name it, feeds with higher SAT fields.

Bruce A. Fleming: I don't think the second impact is our primary advantage of one of our primary advantages in Montana renewables is to be able to switch very rapidly and take advantage of.

Speaker Change: Yeah, more discounted feeds lowered CIC you name it.

Speaker Change: With higher SaaS fields.

Todd Borgmann: And had we had that ability to switch, you know, in the fourth quarter and the first quarter, results would have been dramatically different than what we saw. And we saw some of that start to open back up in March. You know, if you were to look at our feed runs, the feed slate, what you'd see is that we primarily had to run vegetable oil purchase last year throughout the winter, just because that's what we had contracted for, and that's what we had in our tanks.

Had we had that ability to switch.

Speaker Change: Fourth quarter and the first quarter results would have been dramatically different than what we saw and we saw some of that starting to open back up in March. If you were to look at our feeds our feed runs the feed slate what you'd see is we primarily had there on vegetable oil purchased last year throughout the winter just because that's what we had.

Speaker Change: Tracked it and that's what we had in our tanks and as we worked through that we had some flexibility to add more talent to the mix and the like so happy to have that behind us and we have that full full ability available to us going forward into Q2 and as far as the hydrogen plant. It's been running well you know we started back up in December.

Todd Borgmann: And as we worked through that, we had some flexibility to add more tallow to the mix and the like. So, happy to have that behind us, and we have that full ability available to us going forward into Q2. As far as the hydrogen plant is concerned, it's been running well. You know, we started it back up in December. Obviously, not everything's perfect. We're still pretty early in the operation, but.

Speaker Change: <unk>.

Speaker Change: Obviously, not everything is perfect, but we're still pretty early in the operation but.

Todd Borgmann: All being said, we've improved every single month. And if you saw the press release and the investor deck we put up this morning, you know, in April, we were at full run rates, you know, we were essentially 12,000 barrels a day, very happy with our sap fields progressing. And like I said, have that ability to switch food feeds and maintain our advantage. So all in all, pretty happy with where we've been and where we sit at the current time.

Speaker Change: All being said we've improved every single month and if he saw the some of the press release and in the Investor deck, We put out this morning.

In April we're at full run rates you know, we ran a essentially 12000 barrels a day very happy with our SaaS deals progressing and like I said have that ability to put switched food feed and maintain our advantage. So all in all pretty pretty happy with where we've been and where we sit at the current time I'm not Bruce.

Todd Borgmann: I don't know, Bruce. Yeah, I think that was pretty thorough. I'll just add that the mechanical availability of the site has been great. The fact that we had an unplanned reduction to half the rate last August, which is, of course, behind us, but that backed up about 650,000 barrels of incoming feed pointed at us by rail during that period. So we had to spin down the rail cars per day rate, and then you had to unwind that and spin it back up. Those are not instantaneous moves like they are with pipeline networks.

Speaker Change: Yeah, I think that was pretty thorough I'll just add the.

Speaker Change: Mechanical availability if the site has been great.

Bruce A. Fleming: Okay, I appreciate that.

The fact that we had an unplanned.

Bruce A. Fleming: Duction to halfway last August which is of course behind us, but that backed up about 650000 barrels of incoming feed pointed at us by rail during that period.

Bruce A. Fleming: So we had to spin down.

Bruce A. Fleming: The railcars per day range, and then you had to unwind that and spread it back up those are not instantaneous move like they are with pipeline networks.

Speaker Change: Okay I appreciate that the other question I have and recognizing the startup issues with MRI all the seasonal factors, what's the expectation we should have for cash flow generation.

Roger David Read: The other question I have, in recognizing the startup issues with MRL, and the seasonal factors, what's the expectation we should have for cash flow generation?

Roger David Read: Bringing down probably working capital as we look here at the summer months, just kind of thinking of the broader cash flow and free cash flow expectations.

Speaker Change: Bringing down probably working capital as we look here in the summer months, just kind of thinking about the broader cash flow and free cash flow expectations.

Bruce A. Fleming: Well, Roger, first of all, I would say, first of all, it's positive. You know, you are recognizing that we built inventory, which cost us cash last year. And then I basically just said, we're pulling it, which is correct. I think we're going to hit a normalized level, though, or have already hit a normalized level, with the completion of pushing the old, you know, the old feed out. That's the old feed quality, the old feed price, and the old feed volumes, right?

Speaker Change: Well, Roger you're supposed to get I would say first of all it's positive.

Speaker Change: You know you are you are recognizing that we built inventory, which caused this cash last year.

Speaker Change: Basically just said, we're pulling it which is correct.

Speaker Change: I think we're going to hit a normalized level of ore or have had a normalized level.

Speaker Change: With the completion of pushing the old.

The old feed out that's the old feed quality of the old feed price annual peak volumes right.

Speaker Change: So you know I don't I don't think looking forward, we're planning to have a working capital moving.

Bruce A. Fleming: So, you know, I don't, I don't think looking forward, we're planning to have working capital moving. Yeah, no, I appreciate that, Bruce. I guess I was even meaning more for the broader corporation. Okay, apologies. I gave you the MRL answer.

Speaker Change: Yeah, No I appreciate that Bruce I guess that was even meaning more for the for the broader Corporation.

Okay apologies I gave you the emeril answer I'll get that.

David Lunin: I'll get David to pile in, and I think, maybe I'll just pile on here. I think the same is true for the whole organization, right? Most of the working capital buildup that was absorbed in Q1 was in Montana Renewables. It was a function of the old feed, higher than normal inventory levels, more expensive than we're seeing in the current market. And we had to pay for those feedstocks as they came in.

Speaker Change: The pilot and I think maybe I'll just pile on here I think I think the same is true for for the whole organization right.

Speaker Change: Most of the working capital build out that that was absorbed in Q1.

Speaker Change: Wasn't Montana renewables it was a function of the old feed higher than normal inventory levels more extensive than we're seeing in the current market and we had to pay for those feedstocks.

Speaker Change: As they came in so so that's normalized we also seen rates increase pretty dramatically and as rates increase sequentially. As we talked about you know you have to replace those feedstocks and you're buying more ahead and and all of that so like Barry said I think we'll see a little bit of a working capital swing we had.

David Lunin: So, that's normalized. But we also have seen rates increase pretty dramatically. And as rates increase sequentially, as we talked about, you have to replace those feedstocks, and you're buying more ahead and all that. So, like Bruce said, I think we'll see a little bit of a working capital swing. We had too much on the balance sheet in Q1. We'll see a little bit of that come back in Q2. And we think reaching a normalized level going forward after that.

Speaker Change: Too much on the balance sheet in Q1, we'll see a little bit of that come back in Q2, and then we think reaching reached a normalized level going forward after that.

Samaya Jane: Sounds great. Thanks, guys. Thanks, Roger. Our next question comes from Samaya Jane from UBS. Please go ahead with your question.

Speaker Change: That's great. Thanks, guys.

Speaker Change: Thanks Roger.

Speaker Change: Our next question comes from semi Jain from UBS. Please go ahead with your question.

Sameer S. Joshi: Hey, good morning.

Sameer S. Joshi: Hum.

Sameer S. Joshi: And libraries.

Sameer S. Joshi: Montana and teaching foreign Furthermore, in general and how you collect more mechanical.

Sameer S. Joshi: Yeah.

Bruce A. Fleming: Hey Salman, it's Bruce. I heard...

Sameer S. Joshi: Hey, Sam Asbury as I heard them.

Bruce A. Fleming: Most of that, you were asking about Montana leverage and that reduction. Yeah, I'm going to I'm going to let David and Todd tackle the corporate level and that positioning within the unrestricted subsidiary. The, you know, the leverage is really going to be a function of the market margin. And Todd discussed how that is artificially low due to some EPA actions, and you know we're expecting that to normalize. There's a lot of speculation in the industry about how fast it normalizes, and I don't think we have a better crystal ball than others, but we expect all of this to be cleared out by the end of this year in terms of reversion to a normal market condition for renewables.

Sameer S. Joshi: Most of that you were asking about Montana leverage and debt reduction.

Sameer S. Joshi: Yeah.

Speaker Change: I'm going to let.

Speaker Change: David and pallet tackle the corporate level debt positioning.

Speaker Change: Within the unrestricted subsidiary.

Speaker Change: The.

Speaker Change: The leverage is really going to be a function of the market.

Speaker Change: <unk> margin and Todd discussed how that is artificially low due to some EPA actions.

Speaker Change: We're expecting that to normalize.

Speaker Change: There's a lot of speculation in the industry about how fast it normalizes and I don't think we have a better crystal ball than.

Speaker Change: Others, but we expect all of this has cleared out by the end of this year in terms of reversion to a normal market condition for for renewables then for fossil the on the on the specialty asphalt side two Q3 Q.

Bruce A. Fleming: Then for fossil fuels, on the specialty asphalt side, 2Q and 3Q are normally most of the cash flow contribution for the year. This is a much more strongly seasonal market than prevailing U.S. averages, so you know we're expecting that the sum of all of those things is little uncertain as to timing, but it's certainly normalized by late fall.

Normally most of the cash.

Speaker Change: Cash flow contribution for the year. This is a much more strongly seasonal market ban.

Speaker Change: And U S averages so we're.

Speaker Change: We're expecting that the sum of all of those things is a little uncertain as to timing, but is certainly normalize by late fall.

Speaker Change: Yeah.

David Lunin: Samaya, if I can, you asked me about leverage and indebtedness at MRL specifically. I don't think that there's any plan to add debt there, and any kind of change to that capital structure will be a coincidence with kind of a DOE loan, and so not, I wouldn't expect anything there and can't give guidance to anything that we may be doing as those kinds of conversations are ongoing. So be patient with us there, but no expectation to take on any kind of incremental debt there unless it's related to a DOE loan and a MaxApp expansion. And then, at a broader level, Calumet focused on deleveraging. And so, you know, any cash from operations.

Speaker Change: Yeah.

Speaker Change: If I can so you asked I think about leverage in and indebtedness at MRO specifically.

Speaker Change: I don't think there's any plan to add debt, there and any kind of change to that capital structure will be a coincidence with kind of a deal alone.

Speaker Change: So not I wouldn't expect anything there and cant give guidance to anything that we may be doing with those kind of conversations are ongoing.

Speaker Change: So we baked in with us there, but no expectation to.

Speaker Change: Take on kind of incremental debt there.

Speaker Change: Unless it's related to a deal alone.

Speaker Change: The next afternoon back staff expansion and then at a broader level the Italian that focused on deleveraging and so any cash from operations will be used to pay down debt at the parent and that that's how we think about the deleveraging strategy for the consumer.

David Lunin: will be used to pay down debt at the parent company. And that's how we think about the deleveraging strategy for the consolidated group as well.

David Lunin: the consolidated group, as well as monetization from Montana Renewables when the time's right.

Speaker Change: Consolidated group as well as monetization from from Montana renewables when the Time's right.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Gregg William Brody: Our next question comes from Gregg Brody from Bank of America. Please go ahead with your question.

Speaker Change: Our next question comes from Gregg Brody from Bank of America. Please go ahead with your question.

Bruce A. Fleming: Good morning guys. Just, I'm just going to ask, I don't know what you can say because you said you couldn't say too much, but the expansion project, is there anything you can tell us about the potential size? I think you also talked about at some point breaking out results for MRL. Is that something we should expect next quarter?

Good morning, guys.

Great.

Speaker Change: Just.

Gregg William Brody: Just can I ask I don't know what you can say.

Gregg William Brody: You said, you can't say too much but the expansion.

Gregg William Brody: <unk> project is there is there much you can tell us there about the potential size.

Gregg William Brody: I think you also talked about at some point breakout results for for MRO is that something we should expect next quarter.

Bruce A. Fleming: Hey Gregg, it's Bruce. I'll start and then, in terms of breaking out the results, I'll pass that question on to you. On the MAX SAF, we've used an external placeholder of 18,000 barrels a day for a number of years now. We're very comfortable with that being at the floor or low end of what's going to be delivered. So I think, you know, we don't probably need to reguide that this morning, but I'm super comfortable with that 18,000 that's been out there for a while.

Hey, Greg It's Bruce I'll start and then in terms of breaking out the results I'll I'll pass that question, but.

Gregg William Brody: On the Max that we have.

Bruce A. Fleming: We've used that external.

Bruce A. Fleming: I saw her of 18.

Bruce A. Fleming: 18000 barrels a day for a number of years now.

Bruce A. Fleming: We're very comfortable with that being at the four or low end.

Bruce A. Fleming: Of what's gonna be delivered so I think we'd all probably need to re guide that this morning, but super.

Bruce A. Fleming: Super comfortable with that.

Bruce A. Fleming: That 18000, that's been out there for a while.

Bruce A. Fleming: Yeah, and I think the expectation continues to be that we'll split out Montana Renewables going forward. David mentioned in the prepared remarks a little bit about kind of the EBITDA split in the segment. Obviously, I can't give specific numbers, but the vast majority of the loss in Q1 was from the legacy Montana asphalt business during the winter, which we expect to return, and Montana Renewables should be split out separately in Q2.

Bruce A. Fleming: Yeah, I think the expectation continues to be that but we will split out Montana renewables.

Bruce A. Fleming: Going forward, David mentioned in the prepared remarks, a little bit about have the EBITDA split and.

Bruce A. Fleming: In the segment.

Bruce A. Fleming: Obviously, you can't give specific numbers, but the vast majority of loss in Q1 was from the legacy Montana asphalt business during the winter, which we expect to return.

Bruce A. Fleming: Montana renewables should be split out separately in Q2.

Gregg William Brody: Got it, and then I know no one's got to ask the RINs question yet, so I'll come in with it. I know there was some good news out of the 5th Circuit. Can you just kind of update us on what happened there and what's next?

Speaker Change: Got it and then I know no one's got to ask the Rins question, yet so I'll come out with it I know there was.

Speaker Change: Reasonable.

Speaker Change: Is that a fifth circuit can you just kind of update us.

Speaker Change: What happened there and what's what's next.

Bruce A. Fleming: Bruce, again, I will start us off and then see if anybody wants to fill in. The whole industry is still working through the EPA's total reversal, of course, on their administration of this. Those actions begin in federal district courts. Some of them have been consolidated into the D.C. circuit, but not all. Um, and so in the 10th, sorry, the 5th circuit. The 5th Circuit, which is where our Shreveport operation lies. The court ruled that EPA's reversal was not proper, it was contrary to law, and it was contrary to the administrative record, and they remanded it back to the EPA for a due effort.

Speaker Change: Bruce again, I will start us off and then.

Speaker Change: See if anybody wants to fill and so.

<unk>.

Speaker Change: The whole industry is still working through the E. P. A total reversal of course their administration of us.

Speaker Change: Those actions began in the federal district courts.

Speaker Change: Some of them have been consolidated D C circuit, but not all.

Speaker Change: And so at that.

Speaker Change: So starting the fifth circuit.

Speaker Change: <unk>, which is where our Shreveport operation lies.

The court ruled that EPA is a reversal it was not.

Speaker Change: Proper at Wisconsin law, it was country administrative record.

And they've remanded it back to the EPA for a do over so we're basically waiting to hear from E&P, how they would like to proceed.

Bruce A. Fleming: So we're basically waiting to hear from EPA on how they would like to proceed. The Montana business is in the DC circuit. It's one of the consolidated cases. Those oral arguments have been held. And we will all be awaiting a court determination. You know, our view is it's likely similar to the Fifth Circuit for the same reasons, but that would be speculating and, you know, the lawyers tell us that that's the second half, most likely, when we get the published decision in D.C. Circuit. Does that help?

Speaker Change:

Speaker Change: The Montana businesses in the D. C circuit, it's one of the consolidated cases, those oral arguments have been held and we will all be awaiting a court determination.

Speaker Change: Our view is it's likely similar to the fifth circuit for the same reasons, but that would be speculating and.

Speaker Change: You know the.

Speaker Change: The lawyers tell us that that's second half most likely when we get the published decision in the D. C circuit does that help.

Gregg William Brody: Yes, and then just the Montana decision; then it would go back to the EPA again if it went in your favor, is that correct?

Speaker Change: Yes, and then just the Montana decision then that would then it would go back to the EPA again, if it went in your favor.

Bruce A. Fleming: That's correct. Yeah, and again, you know this is not just Calumet. There are a lot of companies in the same bubble. There's actually an 11th Circuit case involving some others and so on, so you know I think the stage is reasonably set for a statesmanlike gentle guidance that kind of pulls the parties all back together, and I do note that Senator Tester and Senator Young introduced a bill to clean some of this up about a month ago.

Speaker Change: That's correct, yeah, and that's and again you know that this is not just Calumet you know theres a theres a lot of companies in the same part of it was actually in the 11 sort of get involved in some others and so on so.

Speaker Change: I think.

Speaker Change: Mr Ages reasonably set for statesmen like gentle guidance that kind of pulls the parties all back together and I do know that set of their test or instead of the army introduced a bill.

Speaker Change: And some of this up about a month ago.

Speaker Change: Yeah.

Bruce A. Fleming: And then just shifting gears to two debt questions. I know you repaid the inventory facility and the intermediary facility this quarter. Did that improve your borrowing base? Where does that stand as of today? And then just on the debt side, I've heard the answer to how you're going to address the 25s, but can you just remind us what the flexibility is to use cash from MRL to help you pay down debt there, to the extent that there is flexibility to do that.

Speaker Change: Great and then just shifting gears to <unk> questions.

Speaker Change: Just could you I know you've repaid the inventory facility. This this quarter.

Speaker Change: To me their facilities.

Did that improve your borrowing base, where does that stand as of as of today and then just on the debt side.

Speaker Change: I've heard the answer to how you're going to address the 20 fives, but can.

Speaker Change: Can you just remind us what the flexibility is to use.

Speaker Change: Cash from morale.

Speaker Change: To help you pay down debt there.

Speaker Change: To the extent there is flexibility to do that.

Gregg William Brody: Yeah, so, if you go back to last year, we actually had three inventory financing facilities, one at MRL, one at CMR, and one at Shreveport. Just, just for completeness, the one at CMR.

Speaker Change: Yeah. So so if you go back to last year, we actually had three inventory financing facilities.

Speaker Change: One at MRM L. One at CMO, our and one at Shreveport.

Speaker Change: Just just for completeness the one at <unk>, we added that inventory to the a b L.

David Lunin: M.R.

David Lunin: inventory to the ABL, and then we refinance. This was last year, the Montana facility, and then the one that we refinanced that closed in mid-January was at our Shreveport facility. It works very similar to the prior one. I'd say it probably improved

Speaker Change:

Speaker Change: And then we refinanced this is last year, the Montana facility.

Speaker Change: And then the one that we refinanced that closed in January mid January was at our Shreveport facility. It works very similar to the prior one I'd say it probably improved our liquidity.

David Lunin: Liquidity marginally, so it wasn't kind of huge, but but I

Speaker Change: Liquidity marginally so it wasn't kind of huge but but on the margin was kind of a better facility.

David Lunin: kind of huge, but on the margin, it was kind of a better facility for us. [inaudible] And then, you know, the second question: yeah, there is some ability for cash to come back to the parent. Is it a good idea?

Speaker Change: For us.

Speaker Change:

Speaker Change: And then this.

Speaker Change: The second question, Yes, there is some ability for cash to come back to the to the parent.

Speaker Change:

David Lunin: pretty clearly articulated, whether it be, you know, dividends on how we share that with our.

Speaker Change: Pretty clearly articulated.

Speaker Change: Whether it be.

Speaker Change: Dividends on how we share that with our existing our existing partner.

David Lunin: We share that with our existing partner.

Gregg William Brody: Got it. And just to clarify on the borrowing base here, what is the borrowing base today as of, what was it as of quarter end? I'm just trying to figure out what your liquidity is on that.

Speaker Change: Got it and just just to clarify on the borrowing base.

Speaker Change: What is the buyer base today as of what was it as of quarter end.

Speaker Change: Trying to figure out what your liquidity is.

Speaker Change: Yeah. So.

David Lunin: Yeah, so liquidity finished the quarter at about $212 million, the borrowing base was $564 million, but the total facility size is about $650 million, so it's well north of $200 million of available liquidity.

Speaker Change: Yeah, So liquidity finished the quarter at about a $212 million.

Speaker Change: The borrowing base was $564 million, but the total facility size is about $650 million.

Speaker Change: No.

Speaker Change: Ah well north of $200 million of available liquidity.

Gregg William Brody: Great. Thanks for the time, guys.

Speaker Change: Alright, thanks for the time guys.

Speaker Change: Thanks, Craig.

Jason Daniel Gabelman: Our next question comes from Jason Gabelman from Cowan. Please go ahead with your question.

Speaker Change: Our next question comes from Jason gave them then from Cowen. Please go ahead with your question.

Jason Daniel Gabelman: Hey, good morning. Thanks for taking my questions. I wanted to first ask about the monetization process of MRL. I think in the past, you kind of discussed it being a 2024 event. But just given some of your commentary on the near-term outlook for the renewable diesel margin environment, do you still see it being a 2024 event, or do you see a better opportunity to maybe generate more proceeds if you push the monetization out a bit? Hey Jason, it's Todd.

Jason: Yeah, Hey, good morning, Thanks for taking my questions.

Jason: I'm often the first gas on the monetization process on morale.

Jason: I think in the past you kind of discussed it being a 2024 event, but.

Jason: But just given some of your commentary on the near term outlook for the renewable diesel.

Jason: The margin environment.

Jason: Do you still see the thing of 'twenty 'twenty four event or do you see a better opportunity to maybe generate more proceeds if you if you push the monetization out of it.

Todd Borgmann: Thanks for the question. I'll start and let's see if Bruce adds anything on. Then we view it as an opportunity. You know, we've been very clear that we want to monetize a portion of Montana Renewables. It's a piece of our overall deleveraging strategy for the organization, so that remains front and center. At the same time, there's no super urgency to go do something in the near term if the market's not supportive. So what we want to do is balance, you know, kind of the risk and reward there, if you will.

Jason: Hey, Jason It's Todd Thanks for the question I'll start and let's see at Bruce at Dawn.

Todd Boardman: We view it as an opportunity we've.

Todd Boardman: You know we've been very clear that we want to monetize a portion of Montana renewables. It's a it's a piece of our overall deleveraging strategy for the organization. So that remains front and center at.

At the same time.

Todd Boardman: There's no.

Todd Boardman: Super urgency to go do something.

Todd Boardman: In the near term, but if the market's not supportive. So so what we want to do is balance you know kind of the.

Todd Boardman: The risk reward there if you will and you know if industry margins remain as low as they are and there's questions around the space and kind of the eyes of investors and it's we're not getting proper value for the asset and you're right. It would be silly to go out and transact in that environment.

Todd Borgmann: And, you know, if industry margins remain as low as they are, and there's questions about the space and the kind of eyes of investors, and we're not getting proper value for the asset, then you're right. It would be silly to go out and transact in that environment. That being said,

That being said.

Todd Borgmann: I think with a clean second quarter, we can prove the competitive advantage of Montana Renewables, differentiate ourselves in the space, start to see a little bit of index margin return, and as investors get more confident in not only renewable diesel but ultimately our first-mover position in SAF, you could see someone reach out and want to move sooner than that and not necessarily have to see the perfect industry margin for some amount of time. So we'll remain opportunistic on that. We're super focused on reducing debt, so we don't want to be overly greedy, but at the same time, we're focused ultimately on shareholder value. You know, we'll walk that bound. Great Thanks for that, Caller.

Todd Boardman: Okay with it with a clean second quarter are we can we can prove the competitive advantage of Montana renewables differentiate ourselves in the space start to see a little bit of a index margin return and as investors get more confident and not only renewable diesel, but ultimately our first mover position.

Todd Boardman: And in SaaS, you could see someone reach out and want to move one of move sooner than that and not necessarily have to see.

Todd Boardman: The perfect industry margin for for some amount of time. So some will remain opportunistic on that you know we're super focused on reducing debt. So we don't want to be overly greedy, but at the same time, you know we're focused on and ultimately.

Shareholder value so.

Todd Boardman: Yeah, we'll walk a balance.

Jason Daniel Gabelman: And then on, the Treasury recently released guidance around 40B, the SAF Lender's Tax Credit through 2025. Just wondering how that impacts your ability to generate value under that SAF credit. I know there were some unique carve-outs for vegetable oil-based feedstocks and you run a decent amount of canola oil at the site. All of our staff is produced from Talib.

Speaker Change: Great Thanks for that color.

Speaker Change: Then on the the Treasury recently released guidance around 40 fee.

Speaker Change:

Speaker Change: Fast blenders tax credit.

Speaker Change: Through 2025, I'm, just wondering how that impacts your ability.

Speaker Change: To generate value one of SaaS credit I know there were some usually carve outs for vegetable oil based feedstocks and you run a decent amount of canola oil.

Speaker Change: At the site.

Speaker Change: All of our staff is produced from Tallo.

Bruce A. Fleming: Okay, and under the MACSAP case, would that also be true? We can't You know, the best way to think of a max SAF is as a yield flexibility project. I want to make sure that our investors all understand this is not some giant, you know, bifurcated decision where we either have diesel or SAF. We're going to be just like a petroleum refiner; we're going to be able to toggle between those two distillate products smoothly, flexibly, and we're going to follow the markets.

Speaker Change: Okay and under the Max have case would that also be true.

Speaker Change: We can be the best way to think of the next up is the yield flexibility project.

Speaker Change: I want to make sure that our investors all understand this is not some giant you know, it's bifurcated decision, where we either have diesel or staff.

Speaker Change: We're gonna be just like the petroleum refiner, we're gonna be able to toggle between those two distillate products smoothly flexibly and we're going to follow the markets.

Bruce A. Fleming: Okay, but just to be clear, is your understanding for 40D that canola wouldn't generate much value if it was used to produce sap under the guidance from Treasury? Jason, yeah, and I don't want to be cute here, but you're making an assumption about where we sold the staff. I wouldn't make that assumption.

Speaker Change: Okay, but just to be clear is your understanding for 40, b that canola wanting generate market value. If it was used to produce half under the guidance from.

Treasury.

Speaker Change: Yeah, Jason Yeah, and I I don't want to be cute here, but youre, making an assumption on where we sold the staff.

Speaker Change: Okay, I wouldn't make that assumption.

Bruce A. Fleming: You know, the world has just set a SAF target in the very near term. Just between Singapore, the UK, and the EU, they have called for 383 million gallons a year of SAF, which doesn't exist. So, the way the trade flow is rearranged is a speculative endeavor. You know, the interest that we've got is very, very tactical. We share our border with Canada. That's Canadian canola we're talking about.

Speaker Change: You know the world is just set us off target.

Near term just between Singapore U K and the EU. They have called 383 million gallons, a year of staff, which doesn't exist.

Speaker Change: So the way the trade flows rearranges spec.

Speaker Change: Speculative endeavor.

Speaker Change: You know the interest that we've got is very very tactical we share a border with Canada, That's Canadian canola, we're talking about.

Bruce A. Fleming: In the summer, we've seen 50% of our production turn around and go back north. And the economics of that are going to have to overcome alternate dispositions. And if the world calls for more, more mandated volume blending, then SAF barrels exist. You know, there's an implication for price. So we think that there's just gonna be huge disconnects. We think there's gonna be a lot of volatility in the emerging SAF market.

Speaker Change: In the summer when you're seeing 50% of our production turn around and go back north.

Speaker Change: And the economics of that.

Speaker Change: Have to overcome alternate dispositions.

Speaker Change: You know if the world calls for more more mandated volume blend name that's F barrels exist.

Speaker Change: There's a there's an implication for price in that so we think that there's just going to be huge disconnects, we think theres going to be a lot of volatility in the emerging SaaS market. We think there's some evidence governments are competing with each other it would be the ones that get it right.

Bruce A. Fleming: We think there's some evidence governments are competing with each other to be the ones that get it. And then closer to home, you know, a state mandate like the Illinois SAF Lenders Tax Credit, that's $1.50 a gallon if you're an Illinois taxpayer and you can access it, which we can through other operations.

Speaker Change: Closer to home.

Speaker Change: State mandate like the Illinois, sorry mandate is the wrong word have.

Speaker Change: State incentives, Illinois, South blenders tax credit of $2 50, a gallon.

Speaker Change: Here in Illinois, taxpayer and you can access it which we are through through other operations. So I'm just gonna be a lot of luck feet paddling under the surface on this for some time to come.

Bruce A. Fleming: So, you know, there's going to be a lot of duck feet paddling under the surface on this for some time to come. Got it. Understood. Thanks for that, Calumet. If I could just squeeze a third quick one in on the DOE loan process. I know you're limited in what you can say, but are you still providing information to the DOE at this point about the project, or is it kind of fully in their hands in terms of making a determination? We moved into underwriting several months ago; I'm reasonably confident we announced that. And, you know, that process is substantially advanced. I think I'm going to leave it there. Okay, great. Thanks for all the answers.

Speaker Change: Got it understood. Thanks for that color and if I could just squeeze a third quick one in on the deal we loan process I know you're limited in what you can say, but have you stopped providing information to the daily at this point around the project or is it kind of fully in there.

Speaker Change: Hans in terms to make a determination.

Speaker Change: We moved into underwriting several months back I'm reasonably confident we announce that.

Speaker Change: And.

Speaker Change: That process is substantially advanced.

Speaker Change: I'm going to leave it there.

Speaker Change: Okay, great. Thanks for all the answers.

Speaker Change: Okay all right.

Jason Daniel Gabelman: Our next question comes from Neil Mehta from Goldman Sachs. Please go ahead with your question.

Speaker Change: Our next question comes from Neil Mehta from Goldman Sachs. Please go ahead with your question.

Neil Singhvi Mehta: Yeah, good morning Todd and team. I really like that slide you showed on the cost curve for renewable diesel and biodiesel, and at current prices, a lot of stuff is off that stack, and so I just love your perspective of, do you think we see industry rationalization here to help bring the market into balance if we, and we saw some evidence of that this week, but any perspective on that?

Neil Singhvi Mehta: Yeah, Good morning, Todd and team I really like that slide you showed on on the cost curve for for renewable diesel and biodiesel and at current pricing a lot of stuff is off that stack and so I'd just love your perspective do you think we see industry.

<unk> nation here to help bring the market into balance if we don't get a firming up of L. CFS and rens and we saw some evidence of that this week, but any perspective on that would be great.

Neil Singhvi Mehta: Yeah.

Bruce A. Fleming: Here, I'll start with a couple things to keep in mind. First of all, we're already seeing industry rationalization. We've had four biodiesel plant closures in the last six months. We've now amazingly got a renewable diesel producer switching back to fossil fuels. These are not regulatory responses somewhere. So the speculation is just who moves and when and how fast.

Speaker Change: Sure I'll start.

Speaker Change: Yeah, a couple of things to keep in mind. So first of all we're already seen industry rationalization.

Speaker Change: Yeah, we've had for biodiesel diesel plant closures in the last six months.

Speaker Change: We've now amazingly got a renewable diesel.

Speaker Change: Switching back to fossil.

Speaker Change: These are not.

Speaker Change: Sustainable and a couple of things that are going to happen. So we'll have more closures.

Speaker Change: We will have the EPA reset the RVO.

Speaker Change: And we're gonna have.

Speaker Change: Prices continue to collapse.

Speaker Change: If you pull a history of a marker like soybean oil price off the Chicago Board, that's fallen 50% in the last 18 months.

Speaker Change: You know these are these are going to draw a regulatory response somewhere so they the speculation is just who moves in led and how fast.

Todd Borgmann: But right now, to be clear, the EPA has set up a condition where the entire existing North American industry has to run at something like 65% of utilization. That is absolutely going to sort out the players according to this cost set. And I think what I'd add to that, Neal, is... To Bruce's point, you know, we're well below where the fundamentals would show on the supply stack. So we haven't seen shutdowns happen, you know, as quickly as we would need to kind of balance out the curve.

Speaker Change: But right now to be clear the EPA has set up a condition, where the entire existing north American industry has to run something like 65% of utilization.

Speaker Change: That is absolutely going to sort out the players according to this costs back.

Speaker Change: I think what I'd add to that Neil as.

Speaker Change: To Bruce's point, you know, we're well below well below where the fundamentals would show up.

Speaker Change: On the supply stock. So so we haven't seen shut downs happen.

Speaker Change: As quickly as needed as we would need to kind of balance out the curve. If you look at $4 5 billion gallons you'd say, hey that should be set you know or that volumes, Matt Bye bye large biodiesel and the current index margin is much lower than is needed to generate cash by that group one thing that we've heard quite a bit about.

Todd Borgmann: If you look at 4.5 billion gallons, you would say, hey, that should be enough. But you know, are those volumes met by large biodiesel plants? And the current index margin is much lower than is needed to generate cash by that group. One thing that we've heard quite a bit about is how hedging plays into this. You know, when you think about a crop cycle and hedges that are going summer to summer, we have a little bit of probably irrationality in day-to-day decision making, which, you know, as that rolls off, that group of people will have to make different economic decisions. And to Bruce's point on crop prices, or an equal-opposite reaction in any of the other margin elements would be needed, or else we wouldn't see

Speaker Change: Is how hedging plays into this.

Speaker Change: Think about our crop cycle and hedges that are going somewhere to summer, we have a little bit of probably irrationality and day to day decision, making which as that rolls off that group of people will have to make different economic decisions and to Bruce's point on crop.

Speaker Change: This is or an equal opposite reaction in any of the other margin elements would be needed or else. We wouldn't see we wouldn't see continued production there.

Speaker Change: Okay.

Neil Singhvi Mehta: Thank you. And Todd, I appreciate the comments at the beginning about the importance of the C-Corp conversion. I certainly agree with that view. Can you just kind of share some investor perspectives? Do you think that as you're going around and talking to folks, there's the potential for more engagement as you convert to a C-Corp? And then remind us again, what are the gain items to get there? And is mid 2024 still the best stick to following? Yeah, you bet.

Speaker Change: Okay. Thank you and Todd I appreciated the comments at the beginning about the importance of the C Corp conversion I certainly agree.

Speaker Change: With that view can you just kind of share some investor perspective, do you think that as youre going around and talking to folks there. There's the potential for more engagement as you convert to C Corp, and then remind US again, what are the gating items to get there and is it mid 2024.

Speaker Change: Still the best stick to the following year.

Todd Borgmann: Yeah, you bet. So yes, mid 2024 still the timeline. We've we've checked a lot of boxes along the process. It's been, it's been a very efficient process. You know, we've finalized or filed the S4. So we'll get the final amendment out, we'll schedule a unit holder vote.

Speaker Change: Yeah, you bet. So yes mid 2024 still the timeline.

Speaker Change: We've we've checked a lot of boxes, along the process. It's been it's been a very efficient process.

Speaker Change: We final our filed the S. Four so we will get the final amendment out we'll schedule a unit holder vote and and that's those are really the major two steps left to getting this done which is what gives us confidence the confidence that it's kind of in the near term as far as investor perspective, they've been quite high.

Todd Borgmann: And those are really the major two steps left to getting this done, which is what gives us confidence that it's Kind of in the near term, as far as investor perspective, they've been quite positive and also eye-opening as to, you know, the restriction of the MLP. If we go back, you know, we've known for some time that MLPs were out of favor. And at some point in time, this decision would be ahead of, you know, the general partner and the conflicts committee, etc.

Speaker Change: And also I opening.

Speaker Change: Two the restriction of the MLP, if we go back.

Speaker Change: We've done for some time that mlps were out of favor and then at some point in time. This decision would be ahead of.

Speaker Change: The general partner and the conflicts committee et cetera.

Todd Borgmann: I think what we probably didn't appreciate was just the amount of investors that are simply unable to invest in MLPs due to the charter. So a lot of the institutions that we've talked to have said, you know, we really like the Calumet story, have been following it generally, know that it's a catalyst-driven story, and also know that we are supportive of the two long-term fundamental businesses and growth trajectories. But we really haven't been able to invest in it.

Speaker Change: I think what we probably didn't appreciate was just the amount of investors that are simply unable to invest in mlps due to charter.

Speaker Change: So a lot of the institutions that we've talked to have said you know.

Speaker Change: We really liked the Calumet story.

Speaker Change: Ben had been following it generally know that it's a catalyst driven story and also now the that are supportive of the two long term fundamental businesses and the growth trajectories, but we really haven't been able to invest in it. So I think they're all doing work and getting deeper into the name now and there's not a magic bullet that happens on conversion day wear.

Todd Borgmann: So I think they're all doing work and getting deeper into the name now. And there's not a magic bullet that happens on conversion day where, you know, all of a sudden, they are trading liquidity, you know, quintuples or something. But we certainly do expect a combination of new institutional investors who otherwise couldn't have invested before but would like to come into the name, and the help that we'll get from just the passive indexes adding us.

Speaker Change: You know all of a sudden our trading liquidity.

Speaker Change: Chinese households, or something but we certainly do expect a combination of new institutional investors, who otherwise couldn't have investors before but we'd like to coming into the name and the.

Speaker Change: Hope that we'll get from just the passive indexes, adding us and those things are at.

Todd Borgmann: And those things have become quite big. You know, 50% of the general equity market is held under passive strategies right now, which is just an astonishing amount of money, investment dollars that Calumet doesn't have access to.

Speaker Change: It became quite a big you know 50% of the general equity market is held.

Speaker Change: Hold on their passive strategies right now, which is just an astonishing amount of.

Money investment dollars to the China doesn't have access to.

Speaker Change: Thanks Todd.

Todd Boardman: Thank you.

Amit Dayal: And our next question comes from Amit Dayal from H.C. Wainwright. Please go ahead with your question.

Todd Boardman: And our next question comes from Amit Dayal from H C. Wainwright. Please go ahead with your question.

Amit Dayal: Thank you. Good morning, everyone. With respect to, you know, the pressure on the index margins right now, there is, you know, what should we think about your utilization strategy for MRL, you know, for the near term at least?

Amit Dayal: Thank you good morning, everyone.

Amit Dayal: With respect to you know put pressure on the mix margins right. Now there is you know well how should we think about your utilization strive to use or MRI room.

Amit Dayal: For the near term at least.

Bruce A. Fleming: Hi Matt, it's Bruce. I'll simply point out that if we're the low-cost producer, we're going to run full.

Amit Dayal: Hi, Matt It's Bruce I'll.

Bruce A. Fleming: I will simply point out that if we're the low cost producer we're gonna run fault.

Amit Dayal: Okay, understood. That's what I was hoping to hear. And then, with respect to, um, you know, 2Q performance, do you see MRL continuing to be a little bit of a drag on EBITDA levels, or do you think you should see a little bit more support from MRL in the near term, at least?

Matt: Okay understood, that's what I was hoping to hear.

Matt: <unk>.

Matt: And then with respect to.

Matt: One two Q4 months.

Matt: Do you see them continuing to be a little bit of a drag on EBITDA levels or do you think you know you should see a little bit more support from models you know in the near term at least.

Todd Borgmann: We think that it's going to continue to stay in the positive, right? You know, what we saw in Q1, and we highlighted this through Positive Evita in March, was we saw, you know, continued strain in February and January from the old feed buildup, and that started to change in March and continued into April.

Matt: We think that it's going it's going to continue to.

Matt: Staying in the positive right you know what we saw in Q1 and we highlighted this to positive EBITDA. In March was we saw you know continued strain in February and January from from the <unk> build out and then that.

Matt: Started to change in March and continued into April. So we're certainly continuing to expect positive EBITDA contribution from Montana renewables like we put out at the analyst day and in reference to the supply stack. The quantum of that EBITDA is going to be a function of how the broad.

Todd Borgmann: So we're certainly continuing to expect, you know, positive EBITDA contribution from Montana Renewables. As we put out at Analyst Day in reference to the supply stack, the quantum of that EBITDA is gonna be a function of how the broader index margin improves.

Matt: Index margin improves yeah, we think that.

Todd Borgmann: Our EBITDA is largely going to be about 85 cents a gallon, you know, below the soybean index margin in the near term, and that's going to continue to improve over time. So, if we see an index margin stay where it is right now, we're certainly in positive EBITDA territory, and as it improves throughout the summer, you know, our EBITDA will go up with it. And like Bruce said, the most critical point is that we're at the right place on the stack.

Matt: Our EBITDA is largely going to be about 85 cents a gallon below the soybean index margin in the near term and that's going to continue to improve over time. So if we see an index margin.

Matt: You know stay where it is right now we're certainly in positive EBITDA territory and as it improves throughout the summer you know our EBITDA will go go with it and like Bruce said.

Matt: The most critical point is where the right place on the stacked so given that the markets lower than fundamentals should shouldn't you shouldn't suggest that it will you know the market is going to rationalize which is what markets do and ultimately the amount of EBITDA that we're generating from us as well.

Todd Borgmann: So, given that the market's lower than fundamentals should suggest that it will, you know, the market's going to rationalize, which, you know, is what markets do, and ultimately, the amount of EBITDA that we're generating from this will, will continue to increase.

Matt: Well continue to increase.

Amit Dayal: That's all I have for now. I'll take more questions offline. Thank you so much.

Matt: Understood.

Speaker Change: That's that's all awesome I don't think one of the questions on sunglass. Thank you so much.

Speaker Change: It sounds like.

John Compa: And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Jon Compa, Investor Relations for Calumet, for any closing remarks.

Speaker Change: And ladies and gentlemen, with that we'll be concluding today's question and answer session I'd like to turn the floor back over to John <unk> Investor Relations for Calumet for any closing remarks.

John Compa: Thanks, Jamie. And on behalf of the Calumet management team, I'd like to thank everyone for their time this morning and your continued interest in this company. Have a great weekend. Thank you again very much.

John: Thanks, Jamie and on behalf of the management team I'd like to thank everyone for their time. This morning, and your continued interest in this company have a great weekend. Thank you again very much.

Operator: And ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for attending today's presentation. You may now disconnect your lines.

Speaker Change: And ladies and gentlemen, with that we'll conclude today's conference call. We thank you for attending today's presentation.

Speaker Change: May now disconnect your lines.