Q1 2025 Calumet Inc Earnings Call

Speaker Change: [music].

Operator: Good day and welcome to the Calumet, Inc. first quarter 2025 conference. All participants will be in 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, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded.

Good day and welcome to the Calumet, Inc. First quarter 2025 conference call.

All participants will be in 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 Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.

John Kompa: I would now like to turn the conference over to John Kompa, Investor Relations for Calumet. Please go ahead.

John: I would now like to turn the conference over to John <unk> Investor Relations for Calumet. Please go ahead.

John Kompa: Thanks, Debbie. Good morning, everyone, and thanks for joining our call today.

Speaker Change: Thank you Debbie good morning, everyone and thank you for joining our call today.

John Kompa: With me on today's call are Todd Gordman, CEO, David Lunin, EVP and Chief Financial Officer, Bruce Fleming, EVP, Montana Renewables and Corporate Development, and Scott Obermeier, EVP Specialist.

With me on today's call are Todd Boardman, CEO, David Looney, EVP and Chief Financial Officer.

Speaker Change: Well, I mean, EVP general renewables and corporate development and Scott Obermeier EVP specialties.

John Kompa: You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the best relations section of our website at calumet.gov. Also, a webcast replay of this column will be available on our site within a few hours.

Speaker Change: Now don't download the slides that accompany the remarks made on today's conference call, which.

Speaker Change: Which can be accessed in the Investor Relations section of our website.

Got it.

Speaker Change: Also a webcast replay this call will be available on our site that few hours.

John Kompa: Turning to the presentation, on slide two, you can find our cautionary statements. I'd like to remind everyone that during this call, we may provide various overlooking statements.

Speaker Change: Turning to the presentation on slide two you can find our cautionary statements I'd like to remind everyone that during this call. We may provide various forward looking statements. Please refer to our 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 as we turn to slide three.

John Kompa: Please refer to our 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 Kompa: As we turn to slide three, I'll now pass the call to Tom. All right. Thanks, John.

Tom: I'll now pass the call to Tom.

Todd Gordman: Good morning and welcome to our first quarterly earnings call of 2025. We're a little over four months into what has already been an action-packed year. Calumet began 2025 by closing and funding our DOE loan, the first of its kind under the Trump administration. This transaction strengthens Montana Renewable's balance sheet and ensures stability of the business, even during difficult markets, just like the one we saw in the first quarter. We also completed the accretive sale of our Royal Purple Industrial Business and this morning launched a $150 million dollar partial call of our 2026 notes as we execute our deleveraging strategy.

Tom: Hey, John Good morning, and welcome to our first quarterly earnings call of 2025.

John Investor: We're a little over four months into what is already been an action packed year.

John Investor: Carrying that began in 2025 by closing and funding our daily volume the first of its kind under the Trump administration.

John Investor: This transaction strengthened Montana renewable balance sheet and ensure stability of the business even during difficult market just like the one we saw in the first quarter.

John Investor: We also completed the accretive sale of our Royal Purple Industrial business, and this morning launched a $150 million dollar partial call of our 2026 notes as we execute our deleveraging strategy.

Todd Gordman: Further, we're also progressing additional strategic activity, which we won't fully detail today for obvious reasons, but we will update on a breakthrough in our expectations around the Montana Renewables MAX SAP project, as we now expect to reach our next milestone of 150 million gallons of SAP capacity dramatically more cheaply and quickly than originally expected. This project adds immense value to our near-term outlook as the renewable diesel industry awaits regulatory clarity, which we view as the critical open item to a partial monetization of Montana Renewables, which is Calumet's final deleveraging step.

John Investor: This project got the men's value to our near term outlook as the renewable diesel industry awaits regulatory clarity, which we view as the critical open item. So partial monetization in my opinion, which is calumet spinal deleveraging step.

Todd Gordman: Before diving into those details, I'd like to take a moment to step back and frame the broader macroeconomic environment and its impact on China. Despite the prevalence of widespread headlines regarding potential recession, we're not seeing real signs of recession within our business. One example is the first quarter marked one of the highest specialty sales volume periods in company history, during what's typically a slow season nonetheless. That being said, with broad economic nervousness in the market, we went back and dusted off our COVID-era specialties playbook, which was effective during that global slowdown, which was arguably much more dramatic for our industry than what most are expecting now.

John Investor: Before diving into those details I'd like to take a moment to step back and frame the broader macroeconomic environment and its impact on guidance.

Alright, the prevalence of widespread headlines regarding potential recession, we're not seeing real signs of a recession within our business.

John Investor: One example is the first quarter marked one of the highest specialty sales volume periods in company history. During what is typically a slow season Nonetheless.

John Investor: That being said with broad economic nervousness in the market, we went back and dusted off October there, especially playbook, which was effective during that global slowdown, which is arguably much more dramatic for industry than what most are expecting now.

Todd Gordman: What we see is the attributes underpinning our company's resilience that allowed us to generate positive free cash flow back then, continue to be in force today, and largely in improved fashion. The resilience of our specialty business is anchored by our integrated asset base, our approach to commercial excellence, and a continuing improvement in our operational reliability and cost control.

John Investor: What we see as the attributes underpinning our company's resilience that allowed us to generate positive free cash flow back then continued to be enforced today and largely an improved fashion.

John Investor: The resilience of our specialty business is anchored by our integrated asset base, our approach to commercial excellence and a continuing improvement in our operational reliability and cost control.

Todd Gordman: Let's look deeper into specialties on slide four. Guiding my flexibility and financial resilience is underpinned by a few pillars. First, we serve over 3,000 customers with nearly 2,000 products globally, spanning in markets from consumer staples and pharmaceuticals to seasonal applications like road paving. This allows us to dynamically shift our product placement as markets evolve. Second, we operate our specialties assets as a network, not standalone sites, which provides unparalleled flexibility due to the complementary nature and near proximity of our largest facilities. We constantly manage make-versus-buy decisions, adjust feedstock choice, and optimize operations to match market needs.

John Investor: Let's look deeper into specialties on slide four.

John Investor: Julian my flexibility and financial resilience is underpinned by a few pillars.

Speaker Change: We serve over 3000 customers with nearly 2000 products globally, expanding end market for consumer Staples and pharmaceuticals, the seasonal applications like data.

This allows us to dynamically shift our product placement as markets evolve.

Speaker Change: Second we operate our specialties assets as a network now standalone sites, which provides unparalleled flexibility due to the complementary nature and in near proximity of our largest facilities.

Speaker Change: We constantly manage make versus buy decisions adjust feedstocks voice and <unk>.

Speaker Change: Optimize operations to match market needs.

Todd Gordman: Third, our commercial engine overlays this unique, flexible system to capture advantage throughout the value chain. This commercial flexibility is a key financial advantage, but the real core of our specialty business is our customer-centric approach, which we see in our world-class NPS scores. Our product offering, willingness and ability to provide bespoke solutions, and deep technical service team combine to deliver a customer experience that's been a time at Hallmark for decades. These core strengths allow consistent performance across economic cycles. And while we have the ability to sell overseas, and we do so from time to time, tariffs are not expected to materially impact us as our operations are domestic and the great majority of our sales fall within the U.S.

Speaker Change: Third our commercial engine overlays this unique flexible system to capture advantage throughout the value chain.

Speaker Change: This commercial flexibility is a key financial advantage.

Speaker Change: Four of our specialty business is our customer centric approach, which we see in our world class NPS scores.

Speaker Change: Our product offering willingness and ability to provide bespoke solutions and deep technical service team combined deliver a customer experience that's been a China hallmark for decades.

Speaker Change: These core strengths allow consistent performance across economic cycles, and while we have the ability to sell overseas. We do so from time to time parents are not expected to materially impact.

Speaker Change: As our operations are domestic and the great majority of our sales well within the U S are under U S. MCA.

Todd Gordman: or under USMCA.

Todd Gordman: To see the power of Calumet's commercial approach, we need to go no further than recent performance brand results. Since transitioning to a unified specialty business two years ago, our performance brand segment has delivered robust volume growth, and EBITDA on this segment is more than double. We've seen this success within our two-peel brand in particular. In 2024, TruFuel contributed roughly one-third of our segment EBITDA, as full-year volumes grew over 20%, a trend that continues into the first quarter. Growth drivers include a successful marketing strategy targeting first responders and large-volume users, increasing shelf space at the major retailers, including a recent entry into Walmart, and on a more macro level, long-term growth within the outdoor power equipment segment.

Speaker Change: They see the power of Jive commercial approach, we need to go no further than recent performance brands' results.

Speaker Change: Since transitioning to a unified specialty business two years ago.

Speaker Change: Performance brand segment has delivered robust volume growth in EBITDA in this segment has more than doubled.

Speaker Change: We've seen the success within our <unk> brand in particular.

Speaker Change: In 2024 groups you will contribute roughly one third of our segment EBITDA as full year volumes grew over 20% a trend that continues into the first quarter.

Speaker Change: Growth drivers include a successful marketing strategy targeting first responders in March volume users increase.

Speaker Change: Increasing shelf space at the major retails retailers, including our recent entry into Walmart.

Speaker Change: And on a more macro level long term growth within the outdoor power equipment segment.

Todd Gordman: Truefuel has roughly a 65% market share in its space, but the space as a whole is not that well-known, which we are changing rapidly. This is a key to continued growth for this brand, as we have proven that once customers become aware of TruFuel, the likelihood of repeat oil purchasing is off the chart. On the operational front, our cost reduction initiatives are delivering results. Last quarter I mentioned that we continue to fortify our operations and expect to take over 20 million dollars of operating costs out of the business this year and in the first quarter we saw Well, winter season always seems to pose a few challenges across northwest Louisiana and the railways in the Rockies.

Speaker Change: <unk> has roughly a 65% market share in that space, but the space as a whole is not that well known which we are changing rapidly.

Speaker Change: This is a key to continued growth in this brand as we have proven that once customers become aware of the likelihood of repeat loyal purchasing is off the charts.

Speaker Change: On the operational front, our cost reduction initiatives are delivering results.

Speaker Change: Last quarter I mentioned that we continue to fortify our operations and expect to take over $20 million of operating cost out of the business. This year and in the first quarter. We saw this.

Speaker Change: While winter season always seems to pose a few challenges across northwest, Louisiana, and the railways and the Rockies.

Todd Gordman: Total system operating costs were reduced by nearly $5 per barrel versus the first quarter of last year, or just over $22 million, which is after accounting for the roughly $4 million increase in the cost of natural gas. As we know, much of this improvement has come at Montana Renewables, as we've reduced costs dramatically with innovations around producing less water for disposal and increasing our reliability. But it's worth noting the improvement in our specialty business as well where we saw our operating costs improved by roughly $1.50 a barrel in the first quarter, anchored by a roughly $5 million quarterly reduction in year-over-year fixed costs and an 8% increase in production volume.

Speaker Change: Total system operating costs were reduced by nearly $5 per barrel versus the first quarter of last year or just over $22 million, which is after accounting for roughly $4 million increase in the cost of natural gas.

Speaker Change: As we know a bunch of this improvement is current Montana renewables as we've reduced costs dramatically with innovations around producing less water for disposal and increasing reliability.

Speaker Change: But it's worth noting the improvement our specialty business as well, where we saw our operating cost improved by roughly $1 50, a barrel in the first quarter anchored by roughly $5 billion quarterly reduction in year over year fixed costs, and an 8% increase in production volume.

Todd Gordman: Strong day-to-day execution, combined with the competitively advantaged position of our Montana Renewables business and ultra-resilient specialties business, allow us to expect positive cash flow across the economic cycle, which we saw during COVID and expect to replicate again here in 2025, especially with the cost of MRL's old capital structure now removed.

Speaker Change: Strong day to day execution combined with a competitively advantaged position of our Montana renewables business and also a resilient specialties business allow us to expect positive cash flow across the economic cycle, which we saw during COVID-19 and expect to replicate again here in 2025, especially with a positive <unk> capital structure.

Speaker Change: Yes.

Todd Gordman: Let's turn to slide five, where we discuss renewable market dynamics. First, Montana Renewables generated $2.4 million of majesty, including the PTCs in the first quarter. Dave will talk more about this and our plan with PTCs momentarily, but in a post-DOE world, Montana Renewables' ability to generate positive EBITDA tax attributes, even in the lowest index margin we've ever seen, is representative of our competitive position, which we see in the supply stack on the left-hand side of this slide. You'll see we've updated the stack for 2025 production, where we've added new production that's come online and reduced others who have departed.

Let's turn to slide five.

Speaker Change: When you discussed the renewables market dynamics.

Speaker Change: First of all Peter renewables generated $2.4 million of adjusted EBITDA, including the PTC in the first quarter.

Speaker Change: David will talk more about this in our planning with PTC momentarily.

Post <unk> World on January <unk> ability to generate positive EBIT dollar tax attributes even in the lowest index margin. We've ever seen is representative of our competitive position, which we see in the supply stack.

Speaker Change: Gen side of this slide.

Speaker Change: You'll see we've updated the stack for 25 production, where we've added new production Thats come on line reduced others, who have departed.

Todd Gordman: You'll see the implied biomass based diesel annual demand from the current RVO is about 4.5 billion gallons, which includes 3.5 billion gallons from the D4 mandate and about 1 billion gallons of D6 mandates that are not able to be met, so D4s are used to fill the obligation. During the first quarter, we saw major decreases in D4 REN generation as the PTC rolled into place, imports stopped, and biodiesel saw a dramatic shutdown. As the RVO is reset and the biomass-based diesel required to meet that demand moves to the right, we'd expect index margins to adjust accordingly as shutdown biodiesel will need to be incentivized to restart.

Speaker Change: You'll see the implied biomass based diesel annual demand from the current RVO is about $4 5 billion gallons, which includes $3 5 billion gallons for the need for Monday, and about 1 billion gallons. A day six mandates that are not able to be met siddique boards are used to fill the obligation.

Speaker Change: During the first quarter, we saw a major decreases in deepwater and generation as the PTC roll into place import stop and biodiesel saw dramatic shutdown.

Speaker Change: As the RVO is reset and the biomass based diesel required to meet that demand moves to the right. We would expect index margins to adjust accordingly, and shutdown biodiesel will need to be incentivized to restart.

Todd Gordman: This, of course, is not a change to our long-term expectation, but it took the large cash losses associated with the PTC change to force the biodiesel industry and some renewable diesel to shut down. And hopefully we'll be seeing actions in the not-too-distant future that encourage these ag businesses to restart as new crush plants have been invested in and seed ordered, assuming that the On the right side of this slide, we see Q1 biomass-based diesel production undershot the RVO by about 230 million gallons. How could it be that we underran the compliance level by roughly 1 billion gallons on an annualized basis and at the same time we just saw a record low index margin quarter?

Speaker Change: This supports is not a change to our long term expectation, but it took the large cash losses associated with the PTC changed the forced the biodiesel industry and some renewable diesel they shut down and hopefully we'll be seeing actions in a not too distant future that encourage these AG businesses to restart as new crush plants have been invested in.

Speaker Change: Seed order assuming that the renewable fuels.

Speaker Change: The trend will continue.

Speaker Change: On the right side of this slide we see Q1 biomass based diesel production undershot, the RVO by about 230 million gallons.

Speaker Change: How can it be that we underwrite and the compliance level by roughly 1 billion gallons on an annualized basis at the same time, we just saw a record low index margin quarter.

Todd Gordman: We believe the answer to that lies in the overproduction in 2024, and it's a temporary dynamic. This chart shows that just as industry overran the RVO implied demand in the first quarter, I apologize, underran the RVO implied demand in the first quarter, last year industry overran it. This D4 RIN carry-forward can provide a temporary shock absorber to a RIN production deficit, but as the carry-forward credits are used up, we expect normal dynamics to reset. Of course, our view of clarity should help normalize the market as well, which the whole industry looks forward to. And at Montana Renewables, we also expect to be adding more SAP, just as global mandates step up in early 2020.

Speaker Change: We believe the answer to that lies in the overproduction in 2024, and it's a temporary dynamic.

Speaker Change: This chart shows that just as industry overran the RVO implied demand.

Speaker Change: In the first quarter I apologize underwriting the RV on solid demand in the first quarter last year industry overran.

Speaker Change: This deepwater any carry forward can provide a temporary shock absorber to a RIN production deficit.

Speaker Change: Is the carryforward credits are used up.

Speaker Change: Normal dynamics Theresa.

Speaker Change: Of course, RVO clarity should help normalize the market as well, which the whole industry looks forward to Montana renewables. We also expect to be adding more staff just a global mandate step up in early 2020.

Todd Gordman: In other words, it's tough out there right now, but underlying market fundamentals provide a lot of reasons for optimism as we look forward.

In other words, it's tough out there right now, but underlying market fundamentals provide a lot of reasons for optimism as we look forward.

Todd Gordman: Next, let's turn to slide six and discuss MACSAP, or maybe more specifically, a major improvement along the road to our ultimate MACSAP journey, which we're calling MACSAP 150. As we know, SAP is a central component of MRL strategy. We were among the early entrants in this space, launching SAF to market in late 2023 with Shell as our off-take partner. And while renewable diesel margins have been challenging since the RVO messed up, SAF margins have remained stable and attractive. This early market continues to show great promise with the introduction of global mandates complementing an already growing base of voluntary demand.

Speaker Change: Next let's turn to slide six and discuss Max asked or maybe more specifically a major improvement along the road for ultimate Max App journey, which we're calling backstop 150.

Speaker Change: As we know SaaS is essential component of MRO strategy.

Speaker Change: We were among the early entrants in this space launching its aftermarket late 2023 with shell as our offtake partner and while renewable diesel margins have been challenging since the RV L. Messed up SaaS margins have remained stable and attractive.

Speaker Change: There's certainly market continues to show great promise with the introduction of global mandates complementing and already growing base of voluntary demand.

Todd Gordman: Our grand project calls for 300 million gallons of sap capacity to be reached, and there's no change to that. We previously spoke about our expectation to bring 150 million of those gallons online in late 2026 for a capital cost of $150 to $250 million. Our operations team has rapidly advanced our understanding of the potential of our assets and our SAP production technology. As a result, our project expectations, which were already promising, have improved markedly. Rather than needing to wait on our Gulf Coast reactor to be shipped across the country and stood up with other new-build assets, we can enhance our existing MRL reactor and some other supporting assets already in Montana to bring on 120 million to 150 million gallons of SAF in early 2026 for $20 to $30 million of capital.

Speaker Change: Our grain project calls for 300 million gallons of SaaS capacity to be reached and there is no change to that.

Speaker Change: We previously spoke about our expectation to bring $150 million of those gallons online in late 2026 for a capital cost of $150 million to $250 million.

Speaker Change: Our operations team has rapidly advanced our understanding of the potential of our assets and our staff production technology.

Speaker Change: As a result, our project expectations, which were already promising have improved markedly.

Speaker Change: Rather than needing to wait on our Gulf coast reactor to be shipped across the country and stood up with other newbuild assets, we can enhance our existing MRO reactor and some other supporting assets already in Montana to bring on $120 million to 150 million gallons of SaaS in early 2020 sets for $20 million to $30 million of capital.

Todd Gordman: Given this is predominantly catalyst work and configuration of existing assets, the smaller capital would primarily be back after 2025 and early 2026. This improvement will increase staff yields from its current 2,000 barrels a day to an 8,000 to 10,000 barrel a day range, and we also expect a minor increase in total renewable throughput. After we improve our yields through this first step in our sequential project, we're optimistic that our experience will continue to allow us to manage through the remaining project more quickly and economically as well. But for now, we're focused on achieving the maximum amount of staff for the minimum amount of capital as quickly as possible, and our marketing team continues to be encouraged by the demand we're seeing for these increased volumes.

Speaker Change: Given this is predominantly catalysts working configuration of existing assets the smaller capital would primarily be back half of 'twenty five 'twenty six.

Speaker Change: This improvement will increase that yield from its current 2000 barrels a day to an eight to 10000 barrel a day range and we also expect a minor increase in tunnel renewable throughput throughput.

Speaker Change: After we improve our yields through this first step in our sequential project.

Speaker Change: Optimistic that our experience will continue to allow us to manage through the remaining project more quickly and economically as well, but for now we're focused on achieving the maximum amount of staff for the minimum amount of capital as quickly as possible.

Speaker Change: Marketing team continues to be encouraged by the demand we're seeing for these increased volumes.

Todd Gordman: Increased sales volumes take on three different timelines. First, we currently have our 30 million gallon of annual capacity being filled daily. Next, we demonstrate a 50 million gallon SAF capacity, and our Ops team is gaining experience achieving that rate. With the combination of this variable production and the winter rail constraints behind us, we expect to start selling 50 million gallons of SAF this summer. And third, with the breakthrough around Max Sap 150, we'll also be marketing that additional material soon, which could be sold directly or tied to a monetization event as discussed in the past.

Speaker Change: Increased sales volumes take on three different timelines FERC.

Speaker Change: First we currently have a 30 million gallon of annual capacity being built daily.

Speaker Change: Next we demonstrated a 50 million gallon south capacity and our ops team is gaining experience achieving that ratably.

Speaker Change: But the combination of the stable production and a winter rail constraints behind us we expect to start selling 50 million gallons of SaaS. This summer.

Speaker Change: And third with the breakthrough around Max F. 150 will also be marketing that additional materials soon which could be sold directly or tied to a monetization event as discussed in the past.

Todd Gordman: We remain flexible in our approach and encouraged by the market response. In fact, as the SAF market evolves, we've even been approached about SAFC credit. With this approach, the Tier 1 and Tier 3 credits we generate are marketed to end-users through a book-and-claim approach, and a SAP supplier retains the other environmental credits, like the REN and the PTC, just like through our existing renewable diesel and SAP contracts. The benefit of this, in a world of global mandates, is it allows suppliers to separate the SAP credit from the physical transaction to minimize logistics costs for end customers.

Speaker Change: We remain flexible in our approach and encouraged by the market response and factors as that market evolves, we've even been approached about SaaS fee credits.

Speaker Change: But this approach at tier one and tier three credits, we generate our market at the end users through above your claim approach and SaaS supplier retains the other environmental credits like the ran and the PTC just like through our existing renewable diesel and SaaS contracts.

Speaker Change: The benefit of this in a world of global mandates is it allows supplier to separate the SAP credit from the physical transactions to minimize logistics costs for end customers.

Todd Gordman: It's not surprising that the resulting economics to Montana renewables with the book-and-claim approach provide the same premium expectation of $1 to $2 a gallon premium relative to renewable diesel that we've discussed previously, and we continue to see that range in the market.

Speaker Change: It's not surprising that the resulting economics to Montana renewables with the booking client approach, providing the same premium expectation of one to $2 a gallon premium relative to renewable diesel that we've discussed previously and we continue to see that range in the market.

David Lunin: With that, I'll turn the call over to David. Thanks, Todd.

David: With that I'll turn the call over to David David.

David David: Thanks, Todd I'll review, our financials by segment the drivers of our strong.

David Lunin: I'll review our financials by segment, the drivers of our strong first quarter results, and the underlying strengths of our growth platform going forward. First on slide seven, I wanted to remind investors of the thinking behind our changes to adjusted EBITDA this quarter. As we mentioned on our last earnings call, and you see in our first quarter reported financials, we've updated how we report to better reflect the true cash generation capability of our business.

First quarter results and the underlying strength of our growth platform going forward.

David David: First on slide seven I wanted to remind investors of the thinking behind our changes to adjusted EBITDA This quarter.

David David: As we mentioned on our last earnings call and you'd see at our first quarter reported financials. We've updated how we report to better reflect the true cash generation capability of our business.

David Lunin: We've made two important changes. The first is to add back the rays and currents. Rins and currants relates to blending obligation for fuel producers. Calumet is a small refinery and has always received the small refinery exemption or SASRE up until the EPA's issuance of a blanket SRE denial. Calumet has never made a cash payment for RINs and continues to be successful in the federal courts, having been successful in both the Fifth Circuit and the D.C. Circuit regarding our small refinery exemption petition this past year. Given the set of facts, along with our goal of presenting investors the most clear and accurate representation of the cash generation capability of the business, this change was made to start the year.

David David: We've made two important changes.

The first is to add back the raise encouraged.

David David: Rens incurrence relates to blending obligations for fuel producers Calumet has a small refinery and has always received the small refinery exemption or S. A S. Sorry up until the epa's issuance of a blanket SRA denial.

David David: Calumet has never made a cash payment for range and continues to be successful in the federal courts.

Being be successful at both the fifth circuit in the D. C circuit regarding our small refinery exemption petition this past year.

David David: Given the set of facts, along with our goal of presenting investors. The most clear and accurate representation of the cash generation capability of the business. This change was made to start the year.

David Lunin: The second change relates to the changeover from the blenders tax credit to the production tax credit in the renewables. Instead of the previously cash paid $1 a gallon for the blenders tax credit starting in 2025, we now generate a PTC based on the CI score of the produced gallon. Current legislation contemplates a tax credit that can reduce taxable income, or in Montana Renewables' case, be sold back to the market for cash. Given Montana Renewable's low CI feedstock advantage and SAF position, its PTT is relatively large, representing roughly $20 million for all of Montana Renewables in the first quarter, or roughly $16.9 million on Calumet's 87% equity portion.

David David: The second change relates to the changeover for the blenders tax credit to the production tax credit and the renewables industry.

David David: Instead of the previous Lee cash paid one dollar a gallon blenders tax credit starting in 2020 by being able to generate the P. T C based on the Ci score of the produced gallons.

David David: Current legislation contemplates a tax credit that can reduce taxable income or in Montana renewables case, he sold back to the market for cash.

David David: Given Montana renewables low Ci feedstock advantage and SaaS position. It's P. E is relatively large representing roughly $20 million for all of us have renewables in the first quarter or roughly $16 $9 billion on Calumet, 87% equity portion.

David Lunin: The new non-gap metric of adjusted EBITDA plus tax attributes adds back this tax credit. As Todd said, our plan is to sell the PTCs as we don't yet have taxable income to offset. Thus, we'll report an EBITDA with tax attributes that includes the PTCs generated in a month rather than a hyper-volatile metric that would match the quarterly sales timing of PTCs and reflect the steady value generation of the business. As laws change and the situation matures, the need for this metric may as well, but for now, we want to provide a metric to clearly track the value generation of MRL and to properly compare year-over-year to a period in which the BTC existed as the BTC was included in adjusted EBITDA unlike the PTC.

David David: The new non-GAAP metric of adjusted EBITDA, plus tack that adds back the tax credit.

David David: As Todd said, our plan is to sell the PTC as we don't yet have taxable income to offset that.

David David: Thus, we will report an EBIT with tax attributes that includes the P fees generated in a month rather than a hyper volatile metric that went back to the quarterly sales timing of P. G fees.

David David: And reflect the steady value generation of the business.

As long as change in the situation matures, Denise and this metric may as well, but for now we wanted to provide a metrics clearly track the value generation of Enbrel and it properly compare year over year to a period in which the BTC existed as the BTC was included in adjusted EBITDA. Unlike the PTC.

David Lunin: According to slide 8, before we go through the segment results, I wanted to highlight what a transformative order we've had on the balance sheet with several exciting developments.

David David: Turning to slide eight before we go through the segment results I wanted to highlight what a transformative order we've had on the balance sheet with several exciting developments.

David Lunin: First, earlier this quarter, after a temporary delay, we received the initial Tranche One funding under the DOE loan. We use the funds from the loan to in part take out expensive debt and get repaid from DOE for eligible project costs. The result has been transformative as we've reduced annual cash flow from debt service by approximately $80 million per year and positioned ourselves to have cost-efficient funding to complete our max-sap expansion.

David David: First earlier this quarter after a temporary delay we received the initial tranche one funding under the deal alone.

David David: We use the funds from the loan to in part take out expensive debt and get repaid for D. O E for eligible project costs.

David David: The result has been transformative ethylene produced annual cash flow from debt service by approximately $80 billion per year and positioned ourselves to have cost efficient funding to complete our back staff expansion.

David Lunin: Coupled with the exciting news that Todd shared earlier about a cheaper, quicker path to the first step in MaxApp, we couldn't be more excited about the business.

David David: Coupled with the exciting news the Taj here earlier about it cheaper quicker path to the first step it back that you couldn't be more excited about the business.

David Lunin: Second, we completed the sale of the industrial portion of our Royal Purple business, which brought in roughly $100 million of cash proceeds at an attractive, accretive multiple, while at the same time streamlining our performance brands business. The focus on playing where we have integration with our SPS business allows us to grow volumes and take out costs efficiently, that trend will continue.

David David: Second we completed the sale of the industrial portion of our Royal Purple business, which brought in roughly a $100 million of cash proceeds at an attractive accretive multiple while at the same time streamlining our performance brands business.

David David: The focus on playing where we have integration with our Sps business pay allows us to grow volumes and take out costs efficiently that trend will continue.

David Lunin: Finally, we called today the $150 million of outstanding 2026 notes, slightly less than mentioned last quarter, reflects the recent volatility we've seen across markets. We ended the first quarter with $347 million of liquidity in our restricted business, expect to generate strong cash flow in Q2, and to recoup some of the larger working capital swings we saw in the first quarter, and plan to deploy the remainder of the call as the commodity markets that drive our underlying working capital instruments settle.

David David: Finally, we called today, the $150 million of outstanding 2026th dose slightly less and mentioned last quarter.

David David: Flex the recent volatility we've seen across markets.

David David: We ended the first quarter with 347 billion of liquidity in our restricted business expect to generate strong cash flow in Q2 and to recoup some of the larger working capital swings. We saw in the first quarter and plan to deploy the remainder of the pole as the commodity markets that drive our underlying underlying working capital instruments.

David Lunin: As we mentioned earlier, we also have some additional strategic activity in the hopper, which we'll share in the future. The ultimate sale of a portion of Montana Renewables remains as a finer pillar in our deleveraging story. Certainly, the market hasn't helped us out there with headwinds on index margins, but as operators, we have positioned the business with operating leverage to take advantage once the market recovers. We've demonstrated reliable operations, reduced our costs, and fixed the balance sheet to eliminate high-cost third-party interest.

David David: Yes.

David David: As we mentioned earlier, we also have some additional strategic activity in the hopper, which hold shares in future.

David David: The ultimate sale of a portion of Montana renewables remains a finer pillar in our deleveraging story.

David David: Certainly the market has helped us out there with headwinds on index margins.

David David: But as the operators be positioning the business with operating leverage to take advantage once the market recovers.

David David: Dennis Street, and reliable operations reduced our costs and fixed the balance sheet to eliminate high cost third party interests with the RVO guidance, hopefully as the Verizon and a cheaper faster pads more SaaS, we've never been more excited more well positioned.

David Lunin: With the RVO guidance, hopefully on the horizon, and a cheaper, faster path to more staff, we've never been more excited, more welcome. Turning to slide 9, our specialty product segment generated $56.3 million of adjusted EBITDA during the quarter under our new definition. We continue to see strong volumes, particularly among our specialty product lines, reflecting our commercial excellence program. In fact, this is one of the highest orders on record for SBS volumes at approximately 23,000 barrels per day. As Todd mentioned, first quarter 2025 results were slightly impacted by a full fuels unit turnaround and short freezing challenges in January, something that we've seen routinely the past two winters in northwest Louisiana.

David David: Turning to slide nine our specialty products segment generated $56 3 million of adjusted EBITDA during the quarter under our new definition.

David David: We continue to see strong volumes, particularly among our specialty product lines, reflecting our commercial excellence program. In fact this is one of the highest quarters on record for SBS volumes at approximately 23000 barrels per day.

Speaker Change: As Todd mentioned first quarter 'twenty splay five results were slightly impacted by our food fuels unit turnaround in short freezing challenges in January something that we've seen routinely the past few winters in northwest Louisiana.

David Lunin: However, we've made fortifying investments, which has limited the impact. Our operational improvement trend continues as we drove year-over-year off-cost improvements of $1.41 per barrel on top of our 9% increase in year-over-year production volumes, despite a reformer turnaround during the quarter.

David David: However, we've made fortifying investments, which has limited the impact.

David David: Our operational improvement trend continues as we drove year over year op cost improvements of $1 41 per barrel on top of our 9% increase in year over year year over year production volumes. Despite of all four of our turnaround during the quarter.

David Lunin: We have some turnaround activities scheduled to begin in June on some specialties equipment, which will impact our results next quarter. Even with higher volume and a little cost headwind earlier in the quarter, margins came in just below our $60 per barrel mid-cycle level. And looking forward, we continue to expect to operate at that mid-cycle margin level, even amidst an industry backdrop that is well below mid-cycle. Taking a longer view, you can see we're still well below well above 20,000 barrels per day from our 2020 to 2024 range, as we remain focused on maximizing our customer and application diversity, as well as the incremental value earned through our integrated network.

David David: Yes turnaround activity scheduled to begin in June subspecialties equipment, which will impact our results next quarter.

David David: Even with higher volume and a little cost headwinds earlier order margins came in just below our $60 per barrel mid cycle level and looking forward. We continue to expect to operate at that mid cycle margin level, even amidst an industry backdrop that is well below mid cycle.

David David: Yeah.

David David: Taking a longer view you can see we are still well below well above 20000 barrels per day from our 'twenty 'twenty to 'twenty four range as we remain focused on maximizing our customer and application diversity as well as the incremental value burn through our integrated networks.

David Lunin: Finally, we've all seen the various headlines regarding potential tariffs, but we do not believe they are impactful to our specialties business considering our US-based manufacturing footprint, customer base, product diversity, and dealing all of our sales and feedstocks being domestic or protected by USMCA.

David David: Finally, we've all seen the various headlines regarding potential tariffs, but we do not believe they are impactful to our specialties business, considering our manufacturer a U S based manufacturing footprint customer base price diversity and nearly all of our sales in feedstocks being domestic or protected by U S. MCA.

David Lunin: Moving to slide 10 in our performance brand segment, we posted strong quarterly results of $15.8 million, reflecting strong volume growth and continued commercial improvements in the business. While some of our brands are more integrated than others, we're seeing growth throughout the business and are really proud of the progress our team has made, both in volume growth and capturing supply chain efficiency.

David David: Moving to slide 10, and our performance brands segment, we posted strong quarterly results of $15 8 million, reflecting strong volume growth and continued commercial improvements in the business.

David David: While some of our brands are more integrated and others, where see growth throughout the business and I'm really proud of progress. Our team has made both in volume growth and capturing supply chain efficiencies.

David Lunin: As previously disclosed, we completed the sale of the industrial portion of Royal Purple, which is completed at roughly 10 times EBITDA multiple. We continue to believe that through the operational and supply chain efficiencies this transaction unleashes, we'll be able to recapture the majority of the EBITDA we've sold over the next two years. Note, we closed the transaction on March 31st, so the results reflect a full quarter's contribution of Royal Purple Industrial.

David David: As previously disclosed we completed the sale of the industrial portion of Royal Purple, which is the bleed. It at roughly 10 times EBITDA multiple we continue to believe that through the operational and supply chain efficiencies. This transaction leases will be able to recapture the majority of the EBIT will be sold over the next two years.

David David: Nope, we closed the transaction on March 31st So the results reflect the full quarter's contribution of Royal Purple industrial.

David Lunin: Moving to slide 11, our Montana slash renewables segment adjusted with tax attributes, adjusted even with tax attributes, generated $3.3 million in the first quarter compared to a negative $13.4 million in the prior year period. The renewables business on its own drove adjusted EBITDA with tax attributes of $2.1 million attributable to the 87% ownership position of Calumet. The primary driver of the improvement was the tremendous cost savings we've driven in the business and improvements in operations. You can see in the lower right-hand side of the renewable slide. We've reduced op costs in SG&A down from well north of a dollar to below our $0.70 per gallon target.

David David: Moving to slide 11, our Montana slats renewable segment adjusted with tax attributes adjusted EBIT with tax it should be generated $3 3 billion in the first quarter compared to a negative $13 4 million in the prior year period.

David David: The renewables business on its own drove adjusted EBIT with tax attributes of $2 1 million attributable to the 87%.

David David: Ownership position of Calumet.

David David: The primary driver of the improvement was the tremendous cost savings, we've driven in the business and improvements in operations you can see in the lower right hand side of the renewable slide.

David David: We've reduced <unk> cost and SG&A down from well north of $1 two below our 70 cents per gallon target.

David Lunin: Focusing just on op-ops, we're at $0.50 a gallon. This represents our sixth consecutive quarter of operational cost improvement trend, excluding the turnaround in the fourth quarter of 2024. We also saw renewable volumes increase from the comparative Q1 period. At 10.3 thousand barrels per day, we're below our targeted range. That was driven by congestion on the railroad, which caused delay to getting feed to the plant coming out of the fourth quarter turnaround last year.

David David: Focusing just on op costs were at 50 cents a gallon.

David David: This represents our sixth consecutive quarter of operational and cost improvement trends, excluding the turnaround in the fourth quarter of 2024.

David David: We also saw renewable volumes increase from the comparative Q1 period.

David David: At 10.3 thousand barrels per day were below our targeted range.

David David: That was driven by congestion on the railroad, which caused delays in getting each of the players coming out of the fourth port turnaround last year.

David Lunin: Looking ahead, Operations is able to reduce our previously demonstrated $50 million of staff capacity on a routable basis, and we're now ramped up marketing efforts. We expect to increase SAP sales in late Q2 2025. And on the tariff front, Montana slash Renewables expects no impact. While imported used cooking oil being excluded from the ability to generate a PCC was news in the industry, Montana Renewables doesn't use this feedstock.

David David: Looking ahead operations to be able to peruse. Our previously demonstrated 50 millions of SaaS capacity on a ratable basis, and we're now ramped up marketing efforts, we expect to increase staff sales in late Q2 2025 and.

David David: And on the tariff front, while it has less renewables expects no impact.

David David: Used cooking oil being excluded from the ability to generate a PTC was used in the industry a tad of renewables doesn't use this feedstock.

David Lunin: On the Montana asphalt side, we drove a $9.1 million year-over-year improvement. We talk a lot about cost improvements at MRL, but we've also been hard at work taking costs out of the asphalt side of the business, which contribute to a much improved Q1 versus what we saw last year. We also experienced better wholesale asphalts and local fuel premiums in the market during the quarter, and we look forward to opening up the retail asphalt rack later this quarter.

David David: On the Montana asphalt side, we drove a 9.1 billion year over year improvement you talked a lot about cost improvements in morale, but we've also been hard at work taking costs out of the asphalt side of the business, which contributes to a much improved Q1 versus what we saw last year.

David David: We also experienced better wholesale asphalt and local fuel premiums.

David David: Market during the quarter and we look forward to opening up the retail asphalt rack later this quarter.

Operator: With that, I'll turn the call back to the operator for questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two.

David David: With that I'll turn the call back to the operator for questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two at.

Operator: At this time, we will pause momentarily to assemble our roster.

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

Neil Mehta: The first question comes from Neil Mehta with Goldman Sachs. Please go ahead. Yeah, good morning, team, Todd and team. Just want to start off on the regulatory environment and some of the adjustments that you've made to the way that you're showing to show the production tax credit does show you guys have confidence that there will be a change over from a BTC to a PTC. So just talk about the regulatory environment that you see on the go forward as it relates to those tax credits, why you believe that's the right way for the market to value the earnings power of your company as well.

Speaker Change: The first question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: Yeah. Good morning team, Todd and team just want to start off on the regulatory environment.

Neil Mehta: Some of the adjustments that you've made to the way that youre showing EBITDA to show the production tax credit does show.

Neil Mehta: You guys have confidence that that there will be a changeover from the BTC to a PTP. So you just talk about that the regulatory environment that you see on.

Neil Mehta: On the go forward as it relates to those tax credits why you believe that's the right way for the market to.

Neil Mehta: The value the earnings power of your company as well.

Todd Gordman: Hey, Neil, it's Todd. How are you? Thanks for the question.

Speaker Change: Hey, good outside how are you.

Speaker Change: Thanks for the question, let me start here on just kind of the P. T C N V T C.

Todd Gordman: Let me start here on just kind of the PTC and BTC, and I'll give it back to Bruce for a little bit more color into the regulatory environment. But I actually think your question regarding the, you know, the comparable state of, you know, EBITDA on a BTC world and PTC world, and even how it could potentially go back to a BTC world, if you read some of the rumors, kind of impact our decision to move forward on this adjusted EBITDA plus tax attributes basis in Montana and Nobles. Because if you think about where we were last year, you know, the dollar gallon BTC tax credit, was in Adjusted EBITDA.

Speaker Change: And then I'll give it back to Bruce for a little bit more color into the regulatory environment, but I actually think your question regarding the yeah.

Speaker Change: The comparable stayed of.

Speaker Change: EBITDA in our BTC World N P T seaworld and even how it could potentially go back to a V. D zero, if you read some of the rumors.

Speaker Change: Kind of impact our decision to move forward on this adjusted EBITDA plus tax attribute spaces and in Montana renewables, because if you think about where we were last year.

Speaker Change: The the dollar a gallon BTC tax credit.

Speaker Change: <unk> adjusted EBITDA. So so all we've done now as we've said the P T C credit, which obviously impacts.

Todd Gordman: So all we've done now is we've said the PTC credit, which obviously impacts industry index margin, is also now added back to Adjusted EBITDA so that when we look at a year-over-year comparison period of a BTC environment to a PTC environment, we get an apples-to-apples comparison. And if there was a change back or other regulatory changes, then this metric would continue to work because we'd be able to compare, you know, again, BTC world to PTC world kind of lines up here. So that was actually in the forefront of our mind as we thought about the right way to show the PTC.

Speaker Change: Industry Index margin is also now added back to adjust.

Speaker Change: Adjusted EBITDA, so that when we look at a year over year comparison period.

Speaker Change: A D T C environment to a P. D C environment, we get an apples to apples comparison and if there was a change back.

Speaker Change: Or are other regulatory changes.

Speaker Change: And this metric one would continue to work because we'd be able to compare it again.

Speaker Change: B G seaworld the P G seaworld kind of lines up.

Speaker Change: Yeah, so that was actually that.

Speaker Change: The forefront of our mind as we thought about the right way to show the P. D C. The other thing I'd say on the.

Todd Gordman: The other thing I'd say on the as just an EBITDA plus tax attributes is we're a seller of the PTCs, a lot of folks use them, we don't. And so if you didn't make this adjustment, you would have a very, very choppy EBITDA stream, it just wouldn't really demonstrate or help investors visualize the earnings power of this business. Because you would only be recognizing the EBITDA in periods that you sell them. So that's kind of the way we're doing it right now. Ultimately, we expect to capture the value of the PTC as we sell them.

Speaker Change: Adjusted EBITDA plus tax attributes, it's worth seller of the P. T six.

Speaker Change: A lot of folks use them.

Speaker Change: We don't and so so if he didn't make this adjustment you would have a very very choppy.

Speaker Change: EBITDA stream that just wouldn't really demonstrate or help investors visualize the earnings power of this business.

Speaker Change: Because you would only be recognizing the EBITDA in the periods that you sell it. So so that's kind of the way we're doing it right now ultimately we expect to.

Speaker Change: To capture the value of the P. D C. As we sell them. It just doesn't happen on a day to day ratable basis. As you know these are typically quarterly sales. So anyways, probably a long winded way to answer your question maybe back to Bruce for any color on regulatory.

Todd Gordman: It just doesn't happen on a day-to-day rateable basis. As you know, these are typically quarterly sales.

Todd Gordman: So anyways, probably a long-winded way to answer your question.

Bruce Fleming: Maybe back to Bruce for any color on regulatory. And now...

Neil Mehta: Hey, Neal.

Bruce Fleming: So I think the way you asked that sounded like, do we think the regime has cut over it? It definitely has. You know, that's the law that was in the IRA legislation.

Speaker Change: So I think the way you asked that sounded like do we do we think the regime has got over it it definitely as you know that's the law that was in the I R. A legislation there.

Neil Mehta: There's some. question when the detailed rules are going to come through under which Taxpayers can enter this income tax credit on their returns, but as Todd said, we'll be selling them, so, you know, we feel good about trying to help our investors understand the cash flow potential of the business by accounting for it in this manner. That's very helpful, guys, and we'll look for more regulatory clarity.

Neil Mehta: There is some.

Neil Mehta: Question when the detailed rules are going to come through under which.

Neil Mehta: Taxpayers can enter this income tax credit on their returns, but as Todd said, we'll be selling them. So we feel good about.

Neil Mehta: Tried to help our investors understand the cash flow potential of the business by accounting for it in this matter.

Neil Mehta: That's very helpful guys.

Neil Mehta: Yeah, we'll look for more regulatory clarity.

Neil Mehta: The follow-up is just around the balance sheet. I know you guys talked about how to continue to drive your leverage to your target levels. It's been a huge focus of the credit community.

Neil Mehta: The follow up is just just around the balance sheet.

Neil Mehta: I know you guys talked about.

Neil Mehta: Hum.

Neil Mehta: We continue to drive your leverage to your target levels and it's been a huge focus of the credit community, where we've seen a big uptick in interest around the credit side.

Neil Mehta: UpTick, and Interest around the credit, so just help the market get comfortable around liquidity, balance sheet, things are tracking, and steps that you are taking to really shore up the strength of that balance sheet in a volatile market.

Neil Mehta: The market get comfortable around liquidity balance sheet things are tracking and steps that you are taking to to really shore up the strength of that balance sheet in a in a volatile macro.

Neil Mehta: Yeah.

David Lunin: Yeah.

David Lunin: Hi Neil, it's David. I think we feel very good about the liquidity and where we're at. We finished the quarter with around $340 million in liquidity. We also called $150 million of the bonds. I think as we think about the DOE loan and that removing $80 million of interest and amortization from cash flow, we really positioned the business well. Another lever is kind of a sale of the royal purple business, which has helped support liquidity. I think as we look forward, we probably pulled a little bit less than we had talked about. Just given the macro volatility, we saw some working capital outflows in the quarter.

Neil Mehta: Yeah.

Neil Mehta: Hi, Neal it's David.

Neil Mehta: I think we feel very good about the liquidity and where we're at.

Neil Mehta: We finished the quarter with around $340 million liquidity, we also call the head of $150 billion of the of the bonds.

Neil Mehta: I think as we think about the D O E loan.

Neil Mehta: And that removing $80 billion of interest and amortization from from cash flow, we've really positioned the business well.

Neil Mehta: Other lever is kind of a sale of the ball for both peripheral business, which has helped support liquidity.

Neil Mehta: I think as we as we look forward.

Neil Mehta: Probably pulled a little bit less than we had talked about.

Neil Mehta: Just given the macro volatility we saw some working capital outflows in the quarter.

Todd Gordman: And so we've just been a little bit conservative currently, but we feel really good about where we're at. Obviously, the ability to make more SAF quicker, sooner, and cheaper makes us feel even more confident about where the balance sheet and where the business is today.

Neil Mehta: So we've just been a little bit conservative currently, but we feel really good about where we're at.

Neil Mehta: Obviously, the ability to make more SaaS quicker sooner and cheaper makes us feel even more confident about where the balance sheet, where the businesses today.

Todd Gordman: Yeah, Neil, this is Todd. I'll add a little bit. You know, obviously, our ultimate leverage goal is reaching $800 million of restricted debt. And that comes with, you know, the ultimate monetization of Montana Renewables. So, David just hit on this, the faster, cheaper MaxF150. It's a really nice next step to that. Let's see if we get some RVO news in the near future. There seems to be some real optimism around that. We'd expect that to bring some associated margin recovery. And, you know, at that point, I think, really, those are the remaining boxes necessary for that to become a real option.

Neil Mehta: Yeah Neal this is Pat I'll add a little bit obviously.

Neil Mehta: Our ultimate leverage goals is reaching $800 million of restricted debt and that comes with that.

Neil Mehta: The ultimate monetization of Montana renewable cell.

Neil Mehta: I would just say it on head on this the faster cheaper Max F. 150 is a really nice next step to that.

Neil Mehta: Let's see if we get some RV O news in the near future there seems to be some some real optimism around that.

Neil Mehta: We'd expect that to bring some associated margin recovery and that's why I think really we.

Neil Mehta: Those are the remaining boxes necessary for that to become a real option. So again don't expect that as a you know 2025, even obviously there are a few things that need to happen and in some of its regulatory but we're gaining quite a bit of confidence that.

Todd Gordman: So, again, don't expect that as a, you know, 2025 event. Obviously, there are a few things that need to happen, and some of it's regulatory. But we're getting quite a bit of confidence that what we're seeing right now in the market, kind of from a fundamental basis, is setting us up to have a, you know, pretty attractive transaction there, and hopefully, not too distant future. Is that $800 million target, could you see that as a 26 event then? Yeah, yeah, we'd like to take so again, I mean, we're just We need it to de-risk our operations.

Neil Mehta: What we're seeing right now in the market from a fundamental basis is setting us up to <unk>.

Neil Mehta: Pretty attractive.

Neil Mehta:

Neil Mehta: Transaction, there and hopefully not too distant future.

Is that $800 million target could you see that as a 26 events.

Neil Mehta: Yeah, Yeah, we'd like to take so again I mean, we're just.

Neil Mehta: We needed to de risk our operations, we needed to get the deal we funded those are done.

Todd Gordman: We need it to get the DOE funded. Those are done. You know, let's get some clarity on the RVO. With that, we'll demonstrate the earnings potential of Montana Renewables with an additional 100 million gallons of SAF. I think we'll be able to step up those earnings quite meaningfully. And with that, you know, you should be in a pretty good position because we think that we're going to get that additional SAF volume early in 2026. So we're certainly looking at 2026 as a, you know, likely and hopeful transaction time for us there on Montana Renewables.

Neil Mehta: Let's get some clarity on the RVO.

Neil Mehta: With that will demonstrate the earnings potential of Montana renewables with an additional 100 million gallons of staff I think we'll be able to step up those earnings quite meaningfully.

Neil Mehta: And with that.

Neil Mehta: Should be in a pretty good position, because we think that we're going to get that.

Neil Mehta: That additional SaaS volume early in 2026. So so we're certainly looking at 2026 is a.

Neil Mehta: Likely it helpful transaction time or obtain renewables.

Neil Mehta: Thank you, Tad.

Pat: Thank you Pat.

Pat: Thank you.

Amit Dayal: The next question comes from Amit Dayal with H.C. Wainwright. Please go ahead. Thank you. Good morning, everyone. Just with respect to You know, the higher SAS volumes that you're expecting to achieve in 2026, you know, it's lower capex than expected, I guess, previously. You know, I'm just trying to get a sense of whether there was already equipment that was put in place that is no longer being used, and if that can be applied to, you know, further expand volumes, the press release was not very clear, at least to me on that front. If you could clarify how all of this is being sort of achieved.

Speaker Change: The next question comes from Amit Dayal with H C. Wainwright. Please go ahead.

Speaker Change: Thank you and good morning, everyone. This with respect to.

Speaker Change: The.

Soft volumes.

Speaker Change: Are you expecting to achieve ingredient six you know.

Speaker Change: Ooh capex than expected I guess previously.

Speaker Change: I'm just trying to get a sense of whether there was already equipment that was put in place that is no longer being used and if that can be applied to further expand Williams.

Speaker Change: The press release was not a week at least to me on that front. If you could clarify how all of this is being sort of achieved.

Bruce Fleming: Hi Amit, this is Bruce. Yeah, let me let me take a stab at it. The existing asset, the hydrocracker that we converted back in 2021 and 22 has more capability for more theft output. And we've You know, we've got that lined out and demonstrated. So we're simply going to take advantage of that in the market now. And Todd covered that. We'll call that the 50 million gallons a year. To get more out, we've got a very, very modest constraint removal around our heat and material balance, which we think will cost 20 to 30 million dollars.

Bruce: Hi, Amit this is Bruce Yeah, Let me, let me take a stab at it.

Speaker Change: Yes.

Speaker Change: The existing asset the hydro cracker that we converted back in 2020, one and 'twenty two.

<unk> has more capability for more SaaS out good lease.

Speaker Change: Yeah, we've got that lined out and demonstrated so we're simply going to take advantage of that in the market now and Todd covered that won't call that the 50 million gallons a year.

Speaker Change: To get more out we've got a very very modest constraint removal around our heating material balance.

Speaker Change:

Speaker Change: We think well costs $20 million to $30 million, obviously, we've got a a.

Bruce Fleming: Obviously, we've got a more precise engineering estimate and we've got the AFE in place for that. So that's a go. The latest capacity of the existing unit was known, and we have always signaled walking these volumes forward. So we're simply giving you an update that it's going to be sooner and it's going to be lower capital. So we're pretty happy with that. The marketing team is actively engaged in signing up the placement of those gallons. And we look forward to keeping you posted on how that unfolds.

Speaker Change: So I said generic estimate and we've got the a F.

Speaker Change: Our in place for that so that's a go.

Speaker Change:

Speaker Change: The the.

Speaker Change: The latest capacity at the existing unit was no limit.

Speaker Change: We have always signaled walking these volumes forward so.

Speaker Change: We're simply giving you an update that it's gonna be sooner and it's gonna be lower capital. So we're pretty happy with that.

Speaker Change: Marketing team is actively engaged in signing up the placement of those gallons.

Speaker Change: We look forward to keeping you posted on how that unfolds.

Bruce Fleming: Mr. Bruce, and then as you execute on this, is that when you start collecting on the remaining funds from the DOE? Yeah, what you're referring to, we organized, and this is a public document of course, but we organized the partnership with the DOE to catch up to what had already been done, and that's called Trunch One. David mentioned that we received that money in the middle of the first quarter. The balance of the loan proceeds are available, and we call that Trunch Two in the documents. That's a construction draw facility. So as we meet the conditions precedent, we will just continually tap that money over the next three to four years as we finish the full build out and get to the end state of 300 million gallons of sap.

Speaker Change: And this will boost and then as you execute on this is that when you start collecting on the remaining.

Speaker Change: Funds from the Dewey.

Yeah, it'd be what you're referring to we reorganized Mississippi a public document of course, but we organized the partnership was the D O N E.

Speaker Change: To catch up to what has already been done and that's called tranche one.

Speaker Change: David mentioned that we received that money.

Speaker Change: In the middle of the first quarter.

Speaker Change: The balance of the loan proceeds are available.

Speaker Change: When we called that tranche, two and the documents that the construction draw facility.

Speaker Change: So as we made the conditions precedent, we will we will just continually tap that money over the next three to four years as we as we finish the full build out and get to the end state of 300 million gallons itself.

Amit Dayal: Okay, understood. Look, that timeline is helpful. Thank you so much, Bruce. That's all I have, guys.

Speaker Change: Okay understood.

Speaker Change: My name is I'm from any stores this fall.

Speaker Change: Okay. So I'll take my other questions offline.

Amit Dayal: Thank you, Amit.

Neil Mehta: Thank you Amit.

Jason Gabelman: The next question is from Jason Gabelman. with P.D.

Speaker Change: The next question is from Jason Gabe woman.

Jason Gabelman: Cowan, please go ahead. Hey, good morning. Thanks for taking my questions. I wanted to go back to the PTC, because I just want to clarify, one, the amount you actually booked in the quarter. Did you book the full amount that you're saying you could have received, or did you book something less than that $17 million in the quarter? And the $17 million's kind of indicative of what you would have been able to book if the rule was in place in time, because that $0.49 per gallon is higher than, or sorry, the $0.40 per gallon is higher than what we've heard some peers book.

Speaker Change: With T D. Cowen. Please go ahead.

Speaker Change: Hey, good morning, Thanks for taking my questions.

Speaker Change: I wanted to go back to the P. T C cause I I just want to clarify one the amount you actually booked in the quarter did.

Speaker Change: Did you book the full amount that you're saying you could have received or did you book.

Speaker Change: Something less than that $17 million in the quarter and the 17 million to kind of.

Speaker Change: Indicative of what you would've.

Speaker Change: <unk> been able to book if the rule was in place in time, because we've you know that that 49 cents per gallon in <unk> is higher than or sorry. The <unk> 40 per gallon is higher than what we've heard.

Speaker Change: Some peers are bulk and then going forward given the changes in feedstock and lower canola oil runs do you expect the amount we were able to book under the P. T C to move higher.

David Lunin: And then going forward, given the changes in feedstock and lower canola oil runs, do you expect the amount you're able to book under the PTC to move higher? Yeah.

David Lunin: So, Jason, David here, just a couple of thoughts. So, the 19 or 19, 20 million that we booked, that's kind of the full value of the PCC that we generated during the quarter. The higher number just reflects more staff production, I expect, relative to your expectations, which is, you know, we obviously produce a lot more staff that gets more credit from the PCC. So, that 20 million is the full value. When we talk about the 16.8, that's just reflective of Calumet's 87% share of Montana Renewables. That's booked also at 100% of the notional value. I think when we ultimately monetize that, they'll be sold at a slight discount.

David David: Yeah, So Jason David here.

Speaker Change: Couple of thoughts soaps.

Speaker Change: The 19th or 90 $28 million that we booked.

That's kind of the full value of the PTC that we generated during the quarter.

Speaker Change: Is the higher number just reflects more SaaS production I expect relative to your expectations, which is yeah. We obviously produce a lot more SaaS that gets more credit from the the P. C.

Speaker Change: So that $20 million of all value when we talk about the 16.8, that's just reflective of.

Speaker Change: Kelly beds are 87% share of <unk> 10 of renewables.

Speaker Change: That's booked also at a 100% of the notional value I think what we ultimately monetize that there'll be sold at a slight discount.

David Lunin: You know, I think the market's around 95-ish percent, give or take. and we'll true that up when we ultimately sell it.

Speaker Change: The market is around 95 ish percent give or take.

Speaker Change:

Speaker Change: And we'll true that up what we ultimately sold salad.

Jason Gabelman: Got it.

Jason Gabelman: And then thoughts on the amount you'll be able to book, so we're just assuming a more optimized speech toxelate. Well, I think we're always going to move our feedstock to the highest margin, whether that margin comes through PTC or cheaper feedstock prices. We think feedstock probably moves to their CI parity over time. And so whether we're collecting the value through sales or through monetized PTC, I think there's some level of indifference there for us. It's all about where do we move to the highest margin feedstock. Okay, got it.

Speaker Change: Got it and then thoughts on the amount you'll be able to book going forward yes.

Assuming a more optimized feedstock slate.

Speaker Change: Well.

Speaker Change: You know I think we're always going to move our feedstock to the highest margin whether that margin comes through P. T C or cheaper feedstock prices we think.

Speaker Change: Feedstock probably moves to there.

Speaker Change: Ci parity over time.

And so whether we're collecting the value through sales or through the monetize PTC I think theres some level of a difference there for us it's all about where do we move it into the highest margin.

Speaker Change: Feedstock.

Speaker Change: Okay got it and then my follow up is just the adjustment lower on the SAP expansion Capex, which you.

Jason Gabelman: And then my follow-up is just the adjustment lower on the SAP expansion, CapEx, which, you know, frees up more capital under the, or more cash under the DOE Phase 2 loan.

Speaker Change: You know frees up more capital under the or or more cash under the D. O. We faced two loan can can you talk about other.

Bruce Fleming: Can you talk about other uses of that cash? Will it, does it increase the amount of debt you're able to pay down on intercompany loans or are there other potential uses for that capital that can improve the cap structure?

Speaker Change: Uses of that cash will it does it increase the amount of debt you're able to pay down on intercompany loans or are there other potential uses.

Speaker Change: For that capital that can improve the cap structure.

Bruce Fleming: This is Bruce, I'll start with the capital part. So the DOE loan, the government will loan money against permitted uses, eligible spending. Broadly, you should think of that as capital improvements and not working capital. That's one of the reasons you've heard us talk about a Paris-Pissou debt facility. The operational income statement is where the vendors, all of the vendors, including Calumet, which has provided services under an MSA agreement, get paid. So that's not the loan, that's the income statement. Does that help? Yeah, it does. Thanks.

Speaker Change: This is Bruce I'll I'll start with the the capital part so that the Doa alone the government will loan money gets permitted use as eligible spending.

Speaker Change: Broadly you should think of that as capital improvements are not working capital.

Speaker Change: That's one of the raised since you've heard us talk about a parry pursue that facility.

Speaker Change:

Speaker Change: The.

Speaker Change: The operational income statement is where it would be.

Speaker Change: Vendors all of the vendors, including Calumet, which has provided services under an MSA agreement get paid so that's not the law, let's see that's the income statement does that help.

Yeah. It does thanks, if I could just sneak one other and maybe you know you put out a mid cycle EBITDA number of 240.

Jason Gabelman: If I could just sneak one other in maybe. You know, you put out a mid-cycle EBITDA number of 240. This quarter, I think, annualized is about $140 million for that base business. Can you just talk about the gaps between what you believe is mid-cycle and what 1Q results showed, especially given the strong performance in the specialty side of things? I've been getting... General Jason, you know, you're really just talking about kind of Q1 winter, right? So, so when we talk about the restricted mid-cycle, you know, business, we're talking about, you know, fuels in the, in the summer, you're talking about asphalt in the summer.

Speaker Change: This quarter I think annualized is about $140 million for that base business.

Speaker Change: Could you just talk about the the gaps between what you believe is mid cycle and in what <unk> results.

Speaker Change: <unk>, especially given the strong performance in the specialty side of things.

Speaker Change: I think in <unk>.

Speaker Change: General, Jason you're really just talking about kind of Q1 winter alright. So so when we talk about the restricted mid cycle.

Speaker Change: Yeah business, we're talking about you know fuels in the summer Youre talking about asphalt in the summer. So so I wouldn't expect that you know it.

Todd Gordman: So, so I wouldn't expect that, you know, you should look at kind of the, the certainly wouldn't be expecting 2025 EBITDA to be, you know, Q1 times four. We're looking forward to Q2 and Q3 is pretty strong. You know, earnings environments from what we're seeing in the market right now. Got it. Great. I appreciate all the answers.

Speaker Change: You should look at.

Speaker Change: Canada.

Speaker Change: It certainly wouldn't be expecting 2025 EBITDA to be.

Speaker Change: Q1 times for where we're looking at Ford.

Speaker Change: Q2, and Q3 is pretty strong.

Speaker Change:

Speaker Change: Earnings environment from what we're seeing in the market right now.

Speaker Change: Got it great appreciate all the answers.

Gregg Brody: All right, thank you. The next question is from Gregg Brody with Bank of America. Please go ahead. Hey, good morning, guys. You mentioned strategic alternatives you were looking at and you said you couldn't go into much detail. Maybe just... What can you tell us about what you're thinking about there and is that potentially to reduce more debt or is that for something else? No, that would be to reduce more debt, Gregg. It's time. We've said for a long time that we're willing to sell assets that aren't core or integrated into the business, as long as they bring an accretive value.

Speaker Change: Alright. Thanks.

Gregg Brody: The next question is from Gregg Brody with Bank of America. Please go ahead.

Gregg Brody: Hey, good morning, guys.

Speaker Change:

Speaker Change: You mentioned strategic alternatives you were working on it and you said you couldn't go into much detail, maybe just instead of one.

Speaker Change: What can you tell us about what you are thinking about there or is that or is that a is that the country.

Speaker Change: Which is to reduce worked out or is that for something else.

Speaker Change: No that would be to reduce more that Greg it's Todd.

Speaker Change: We said for a long time that the ore.

Speaker Change: You know willing to sell.

Speaker Change: The Orange you.

Speaker Change: You know core are integrated into the business.

Speaker Change: As long as they bring an accretive value and we've had interests there are people heard that and I'm. So.

Todd Gordman: And we've had interest there. People have heard that. And so I'd throw that out there as one. I think last quarter, we talked about a number of other things. But yeah, you should be thinking of any cash that comes into Calumet, the use of that is debt paid on. That's our number one priority, all the way up until we ultimately monetize Montana Renewables and achieve our restricted debt target of $800 million. And you're not putting a goalpost here to give us a sense of how big that can be? at x-monetizing some MRO, either through a loan or sale, which I think is pushed out right now.

Speaker Change: So I'd throw that out there is one I think last quarter, we talked about.

Speaker Change: A number of other things, but yeah, you should be thinking of any cash that that comes into Calumet.

Speaker Change: The use of that is is debt pay down and that's our number one priority.

Speaker Change: All the way up until we ultimately monetize Montana renewables and achieve our.

Restricted debt target of 800 million Bucks so.

Speaker Change: And you're not you're not putting of co post here to give us a sense of how big that can be.

Speaker Change: X X amount of causing some.

Speaker Change: Our morale either through or we're so it's sort of epic.

Speaker Change: Right.

Todd Gordman: I think it's the same buckets that we had talked about before, certainly more than sits ahead of us for the 2026 notes. As we look at our debt reduction strategy, our goal is not to just inch by the 26s or anything like that. We're out looking at ways that we can bring in additional cash to knock out the 26s, start to dig into the 27s, and like I said, ultimately set us up for the Montana Renewable Sale. You know, like we talked about a little earlier, if that ultimately can happen in 2026, then that would be great.

Speaker Change: No I think it's the same same buckets that we had talked about before.

Speaker Change: You know certainly certainly more than you know sits ahead of us for the 2026 notes.

Speaker Change: Looking at our debt reduction strategy. Our goal is not to you know just finished by the 26 is or anything like that where we're out looking at ways that we can.

Speaker Change: You know bring in additional cash to knock out in 26 is starting to dig into the 20 Sevens and like I said ultimately set us up for the Montana renewable sellers and if.

Speaker Change: You know like we talked about a little earlier if that ultimately can happen. In 2026, then then that would be great, but we'll let the market guide us on that.

Todd Gordman: But we'll let the markets guide us on that. To have it. And I think Dave said he expected some working capital benefit in the second quarter. Maybe you could just try to understand how large that can be. And just in general, should we think about any way... How should we think about you potentially reducing 26s going forward? Any guidance or will it be an end-of-quarter decision? Yeah, I think the, well, I don't know that it'll be an end of quarter decision. I think what David was saying was, you know, there was a lot of movement.

Speaker Change: Got it and I think I think Dave said he expected some working capital benefit in the second quarter.

Speaker Change: Maybe you could just trying to understand how large that can be in this and just in general.

Speaker Change: Should we think about it.

Speaker Change: I mean, how should we think about you potentially reducing 26 is going forward is.

Speaker Change: Any guidance or will it be a court.

Speaker Change: Quarter decision.

Speaker Change: Yeah, I think the well I don't know that it'll be an end of quarter decision I think what David was saying was.

Speaker Change: There was a lot of movement, we saw we saw commodities all over the place during the quarter. You know, we've got 3 million barrels of inventory in the system. When you were seeing 10 15 dollar moves in and crack spreads and crude crude you know you can see that fluctuate $50 million to $60 million throughout the throughout the quarter. So so that was kind of the.

Todd Gordman: We saw commodities all over the place during the quarter. You know, we've got 3 million barrels of inventory in the system when you're seeing 10, 15 dollar moves and crack spreads in crude. You know, you can see that fluctuate 50, 60 million dollars throughout the quarter. So that was kind of the volatility range that he was talking about there, you know, as well as we want to get some PTCs just sold, right? So now with the quarter under our belt there, you know, we're moving that forward. And then just a little bit more economic certainty about where we're at.

Speaker Change: The the volatility range that he was talking about there as.

Speaker Change: As well as we wanted to get some some ptc's just sold right. So so now with a quarter under our belt there.

Speaker Change: We're moving that forward.

Speaker Change: And then just a little bit more economic certainty about about where we're at but those are kind of the three things we're watching here.

Bruce Fleming: But those are kind of the three things we're watching here in the near term future. And then we'll just go ahead and use the rest of the proceeds to make the next step down into 26 calls. And after that, we're looking at cash flow generation from the business and, you know, potential strategic activity as talked about earlier. Got it. And then just just to follow up on the DOE loan, I'm You mentioned in the presentation about having to go back to the loan office to qualify your changes in the expansion. Does that mean that you're not necessarily going to access that facility in the interim?

Speaker Change: Here in the near term future and then we'll just go ahead and use the the rest of the proceeds to make the next.

Speaker Change: And that step down in the 26 calls and after that we're looking at cash flow generation from the business and I'm you know potential strategic activity has talked about earlier.

Speaker Change: Got it and then just just a follow up on the Doa alone.

Speaker Change: Hum.

Speaker Change: Hugh you mentioned in the presentation about having to go back to a remote office to qualify your changes and in the expansion.

Speaker Change: Does that mean that you're not necessarily going to access that facility.

Speaker Change: In the interim is is they're basically cutting or take place.

Bruce Fleming: Is there basically no spending going to take place? As a result, this helped us think through how that process works. And where are you actually?

Speaker Change: As a result of just help us think through like how that process works.

Speaker Change: And where are you where you are right.

Bruce Fleming: It's Bruce. Yeah, let me start. Just one subtle thing, Bruce. Have you actually accessed that fund, that tranche at all at this point? And I'm sorry to interrupt, I'll let you explain. You know, I want to I want to reset the premise of your question. We we did not say we have to requalify anything. We said that stuff that was in the plan is going to be done sooner and cheaper. So you don't need to go back to DOE. Well, we go to the DOE every time we want to draw. from the lone facility for the purpose of construction in the field.

Bruce: It's Bruce.

Speaker Change: Let me start with this.

Speaker Change: It's one thing for us.

Speaker Change: Have you actually ask access that fund duck that tranche at all at this point.

Speaker Change: I started telling you how about you.

Speaker Change: Yeah I Wanna.

Speaker Change: I wanted to reset the premise of your question. We are we did not say we have to requalify anything.

Speaker Change: We said that stuff that was in the plan is gonna be done sooner and cheaper.

Speaker Change: So you don't need to go that way is really for them.

Speaker Change: Well, we go we go to the D. O every time, we want to draw.

Speaker Change: From the loan facility for the purpose of construction in the field.

Bruce Fleming: The only thing that's changed here is an enormously positive development, which is less spending and more SAF sooner. You know, this is hugely credit accretive to the to the lone underwriter. Yeah, we, I completely understand how advantageous it is to drop 200 million of CapEx. What I'm, what I'm trying to understand is, do you have access to the fund today? Um, and are there any, any constraints? So, and are you using? So, again, it's a public document. The conditions, precedent. to proceed with. The second phase of the loan, the tranche two, are differentiated, and they require engineering advance to a certain, you know, a definitional level, etc.

Speaker Change: The only thing that's changed here is an enormously positive.

Speaker Change: Which is less spending and more SaaS.

Speaker Change: Sooner.

Speaker Change: You know this is hugely credit accretive to the to the loan underwriter.

Speaker Change: Yeah, we I completely understand how advantages to drop 200 might have capex, what I'm, what I'm trying to understand is does.

Speaker Change: You have access to the fun today and other areas.

Speaker Change: Sure.

Speaker Change: Right so.

Speaker Change: Are you using it.

Speaker Change: So.

Speaker Change: Again, it's a public document.

Speaker Change: Conditions precedents.

Speaker Change: To proceed with.

Speaker Change: The second phase of the law and that drops to our differentiated.

Speaker Change: They require engineering to advance to a certain.

Speaker Change: No.

Speaker Change: A definition of level et cetera, So that's all underway.

Bruce Fleming: So, you know, that's all underway. We're talking regularly to the engineering and technical people, both in the DOE and in their third party advisor. And, you know, as Todd said, the spending that we envision here, this, this interim accelerated step of 20 or $30 million is back at loaded later this year. So we're not drawing it to give you a did we ever intend to at this point in the process. So that'll be coming up in, you know, six months from now. That's great. And you don't, you don't see any issue accessing it. The reason why I asked was just PIMP Press reports.

Speaker Change: We're talking regularly to the engineering and technical people both in the D O and then there.

Speaker Change: Third party adviser.

Speaker Change: And.

Speaker Change: As Todd said, the spending that we envision here or is this a interim accelerated step of 20 or $30 million is back end loaded later this year. So.

Speaker Change: Not drawing it to give you a direct answer nor did we ever intend to at this point in the process, so that'll be coming up in the six months from now.

Speaker Change: That's great and you don't you don't see any issue accessing the reason why I ask just compress reports.

Bruce Fleming: That's just, and I appreciate that your fund is different. Your funding may be different. PIMP Press reports that the government's looking at not allowing people to get access to their loans. I think yours was fully approved. I don't think that applies to you. I'm just, I'm just trying to confirm that. Yeah, so Gregg, I may have sort of misinterpreted the thrust of your question. So if what you're saying is, is the government going to give us the money when we ask for it? The answer is yes, they are. Remember how we got here. You know, we've been talking to the DOE for three years before they issued the first tranche.

Speaker Change: That's.

Speaker Change: And I appreciate that your fund is different you know frankly may be different from press reports.

Speaker Change: Governments working at not allowing people to get access to New Orleans, I think yours was totally approved so don't think of the parts here I'm just I'm just trying to confirm that figure is.

Yeah, So so Greg I.

Speaker Change: Sorta misinterpreted the thrust of your question. So if what you're saying is is the government going to give us the money what we ask for it. The answer is yes. They are remember how we got here.

Speaker Change: We've said that we've.

Speaker Change: <unk> been talking to the daily for three years before they issued the first tranche two of those years, where you are.

Bruce Fleming: Two of those years were, you know, high quality technical diligence on a really complicated undertaking here that was in SERPs. So this was not your, you know, your father's Oldsmobile. And Just because of an accident of timing, we straddled an administration change. We fully supported, we said so at the time, the pause that the incoming administration put on this to review and reconfirm, and it didn't take them very long, three or four weeks if memory serves. And so this is actually a loan that was approved by the Trump administration. Great.

Speaker Change: Hi.

Speaker Change: Hi quality technical villages at a really complicated undertaking here that was getting served so this was not your you know your father's Oldsmobile and.

Speaker Change: Just because of an accident of timing.

Speaker Change: Straddled the administration change, we fully supported and we said so at the time.

Speaker Change: Is that the incoming administration put on this to reveal.

Speaker Change: And reconfirm it but it didn't take them very long.

Speaker Change: Three or four weeks if memory serves and so this is actually a loan that was approved by the Trump administration.

Bruce Fleming: One last question before I finish this up. I know we'll get this with the queue. Can you just tell us what the intercompany payables are from MRL to...

Speaker Change: Great.

Peter Sicher: One last question Peter Sicher sets up I never looked at this with good to see.

Speaker Change: You just tell us what the intercompany hub.

Peter Sicher: Company payables are from high morale to too.

David Lunin: to Calumet and can you also just clarify the additional equity investment that you had to make? Did that add to that amount or did it increase? Yeah, so David's pulling up the numbers.

Peter Sicher: Calumet and can you also just clarify if the additional equity investments that you have to make did that add to that amount or two.

Peter Sicher: Uh huh.

Peter Sicher: Yeah, So David it's pulling up the numbers as he does that I mean, let me set of definition.

Bruce Fleming: As he does that, let me set a definition. So there is a junior term loan in place between Calumet and MRL. We put that in place back around the time of the Warburg investment, so three, four years ago.

Peter Sicher: So there is a junior term loan in place between Calumet morale would put that in place back around the time of the Warburg.

Peter Sicher: Investment so three four years ago that as an inter company.

David Lunin: That is an intercompany payable because it is a term loan and I think I'm going to set that aside and treat your question as what about the operational interface where we have a master services agreement, MSA, and there are some monthly payables that flow under that agreement. That amount came down sharply as part of the tranche one funding. The current balance, if we have it here, I'm looking at David. Yeah, I mean, the current balance came down materially during the quarter. I'm pulling up the actual number.

Peter Sicher: Pay it all because it is a term loan at let's say amount of set that aside and treat your question as well.

Peter Sicher: What about the the operational interface, where we have a master service agreement MSA or there are some.

Peter Sicher: It's mostly payables that slow under that agreement.

Peter Sicher: That amount came down sharply as part of the tranche one funding.

Peter Sicher: The.

David David: The current balance if the if we have it here and look at it David.

Peter Sicher: Yeah.

Peter Sicher: Current balance came down.

Peter Sicher: Materially.

Peter Sicher: During the quarter.

Peter Sicher: Pulling up the actual numbers.

David Lunin: If you actually look at, in slide 16 on the earnings presentation deck, we've actually added the intercompany line to show how that totally impacts, you know, the company's total recourse debt. And then we show the intercompany, and then we show the amount of debt adjusted for the intercompany. So there was $375 million of intercompany. And to Bruce's point, that's, you know, a number of different things. But as a whole, Montana Renewables owes Calumet $375 million. That's down from $540 million at the end of the year. And if I see that number now, so that looks like the 150 you put in added to that.

Peter Sicher: Looking at Slide 16 on the earnings presentation deck, we've actually added the intercompany line.

Peter Sicher: To show how that totally impacts.

Peter Sicher: You know that the company's total recourse debt and then we show the intercompany and then we show the amount of debt adjusted for the intercompany. So there was $375 million of our company and to Bruce's point that's.

Peter Sicher: A number of different things, but as a whole our Montana renewables Calumet $375 million, that's down from $540 million at the end of the year.

Peter Sicher: And then if I see that number now so it looks like the 150, you put in and added to that number.

David Lunin: That number definitely includes the term loan, yeah, the junior term loan.

Peter Sicher: That number definitely includes the term loan yeah, Yeah junior term loan.

Gregg Brody: Thanks guys, I appreciate it. Thanks, Gregg.

Peter Sicher: Great. Thanks, guys I appreciate it all the time.

Speaker Change: Thanks, Craig.

Operator: This concludes the question and answer session.

John Investor: This concludes the question and answer session I will turn the conference back over to John compound for any closing remarks.

John Kompa: I will turn the conference back over to John Kompa for any closing remarks.

John Kompa: Thanks, Debbie. And thanks, everyone, for joining our call today. Certainly appreciate your interest in Calumet.

John Investor: Thanks, Debbie and thanks to everyone for joining our call today certainly appreciate your interest in Calumet have a great day. Thank you.

Operator: Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded.

John Investor: Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.