Q4 2025 Calumet Inc Earnings Call

February 27, 2026

Operator: Good day, everyone, and welcome to the Calumet Inc. Q4 and fiscal year 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star and then 1 on your telephone keypads. To withdraw your questions, you may press Star and 2. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to John Kompa, Investor Relations. Sir, please go ahead.

Speaker #2: Should you need assistance, please send to a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker #2: To ask a question, you may press star and then one on your telephone keypads. To withdraw your questions, you may press star and then two.

Speaker #2: There's also a note: today's event is being recorded. At this time, I'd like to turn the conference call over to John Kompa, Investor Relations.

Speaker #2: Sir, please go ahead. Thanks, Jamie. Good morning, everyone. Thank you for joining our call today. With me on today's call are Todd Boardman, CEO; David Lunin, EVP and Chief Financial Officer; Bruce Fleming, EVP Montana Renewables and Corporate Development; and Scott Obermeyer, President Specialties.

John Kompa: Thanks, Jamie. Good morning, everyone. Thank you for joining our call today. With me on today's call are Todd Borgmann, CEO; David Lunin, EVP and Chief Financial Officer; Bruce Fleming, EVP, Montana Renewables and Corporate Development; and Scott Obermeier, President, Specialties. You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the Investor Relations section of our website at calumet.com. Also, a webcast replay of this call will be available on our site within a few hours. Turning to the presentation, on slide 2, you can find our cautionary statements. I'd like to remind everyone that during this call, we may provide various forward-looking statements.

Speaker #2: You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the Investor Relations section of our website at calumet.com.

Speaker #2: Also, webcasts replay this call will be available on our site within a few hours. Turning to the presentation on slide two, you can find our cautionary statements.

Speaker #2: 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 finds with the SEC.

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. As we turn to slide 3, I'll now pass the call to Todd.

Speaker #2: 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, I'll now pass the call to Todd.

Speaker #3: Thanks, John. Good morning and welcome to Calumet's fourth quarter 2025 earnings call. 2025 was a defining high-impact year here at Calumet. We began the year with a credible plan and large potential amidst deep market uncertainty.

Todd Borgmann: Thanks, John. Good morning, welcome to Calumet's Q4 2025 Earnings Call. 2025 was a defining, high-impact year here at Calumet. We began the year with a credible plan and large potential amidst deep market uncertainty. Throughout the year, risk was aggressively managed, and execution of our strategy turned Calumet's potential to actualize results. We opened the year with a mandate to demonstrate critical strategic objectives. First, we needed to demonstrate that our Specialties business would consistently generate durable free cash flow amidst large market uncertainty. Second, Montana Renewables needed to prove standalone financial resilience and a structural advantage. Third, needed to receive the transformative DOE loan at Montana Renewables, and last, accomplish material deleveraging of the balance sheet. As we reflect on 2025 today, I believe Calumet achieved each of these strategic milestones.

Speaker #3: Throughout the year, risk was aggressively managed, and execution of our strategy turned Calumet's potential to actualized results. We opened the year with a mandate to demonstrate critical strategic objectives.

Speaker #3: First, we needed to demonstrate that our specialties business would consistently generate durable free cash flow amidst large market uncertainty. Second, Montana Renewables needed to prove standalone financial resilience and a structural advantage.

Speaker #3: Third, we needed to receive the transformative DOE loan at Montana Renewables, and last, accomplish material de-leveraging of the balance sheet. As we reflect on 2025 today, I believe Calumet achieved each of these strategic milestones.

Speaker #3: Over the course of the year, we reduced financial risk, expanded our structural earnings power, and repositioned Calumet for long-term value creation. Let me walk you through some of the highlights, and we'll start with the balance sheet.

Todd Borgmann: Over the course of the year, we reduced financial risk, expanded our structural earnings power, and repositioned Calumet for long-term value creation. Let me walk you through some of the highlights, and we'll start with the balance sheet. We ended 2024 with restricted group leverage standing above 8x. We faced near-term maturities and elevated cash interest costs. Montana Renewables was awaiting DOE funding, and the broad equity markets were hesitant to engage with fundamental value plays like ours. Today, that picture is very different. For full year 2025, we delivered $293 million of Adjusted EBITDA with tax attributes, nearly a 30% increase year-over-year. We reduced restricted debt by more than $220 million. Net recourse leverage improved from 8.2x to 4.9x.

Speaker #3: We ended 2024 with restricted group leverage standing above eight times. We faced near-term maturities and elevated cash interest costs. Montana Renewables was awaiting DOE funding, and broad equity markets were hesitant to engage with fundamental value plays like ours.

Speaker #3: Today, that picture is very different. The full year 2025, we delivered $293 million of adjusted EBITDA with tax attributes, nearly a 30% increase year over year.

Speaker #3: We reduced restricted debt by more than $220 million. Net recourse leverage improved from 8.2 times to 4.9 times. We eliminated our 2026 and 2027 debt maturities, and Montana Renewables successfully closed its DOE loan, removing roughly $80 million of annual cash debt service while also proving its leadership position in this industry.

Todd Borgmann: We eliminated our 2026 and 2027 debt maturities. Montana Renewables successfully closed its DOE loan, removing roughly $80 million of annual cash debt service, while also improving its leadership position in this industry. The outcome was a fundamental shift in financial durability. This outcome was driven by structural improvements. Across the system, we dramatically reduced costs and drove increased reliability. Fixed costs were down over $40 million. Water treatment costs at Montana Renewables were down over $20 million, as were our crude transportation costs in the specialties business, while greatly enhancing feed flexibility and our ability to dial in specific specialty products for our customers. As a result of improved reliability and fewer repairs, capital spending was also reduced by roughly $20 million.

Speaker #3: The outcome was a fundamental shift in financial durability and this outcome was driven by structural improvements. Across the system, we dramatically reduced costs and drove increased reliability.

Speaker #3: Fixed costs were down over $40 million. Water treatment costs at Montana Renewables were down over $20 million. As were our crew transportation costs, and especially the business, while greatly enhancing feed flexibility and our ability to dial in specific specialty products for our customers.

Speaker #3: And as a result of improved reliability and fewer repairs, capital spending was also reduced by roughly $20 million. At the same time, our ops team increased production by roughly 1.3 million barrels on the year.

Todd Borgmann: At the same time, our ops team increased production by roughly 1.3 million barrels on the year. Results like this come from an entire organization working towards a common goal. I thank our employees for accepting the challenge to responsibly attack costs, which includes our 900-plus teammates in the field, our ops excellence team, which is relatively small, but pound for pound exceptional, our finance team that made a step change in partnering with our sites and making information readily available. More broadly, everyone who leaned into owning and accomplishing this company-changing priority. Looking ahead, we believe there's more opportunity on both costing and reliability.

Speaker #3: Results like this come from entire organization working towards a common goal, and I thank our employees for accepting the challenge to responsibly attack costs which includes our 900-plus teammates in the field, our ops excellence team which is relatively small but compound for pound exceptional, our finance team that made a step change in partnering with our sites and making information readily available, and more broadly, everyone who leaned into owning and accomplishing this company-changing priority.

Speaker #3: Looking ahead, we believe there's more opportunity on both costing and reliability. Our company has been operating the current asset base for a little over three years, and during each of these, our team has delivered stronger production, and lower operating costs, and we expect for that to continue in 2026, despite what's going to be a very heavy turnaround year.

Todd Borgmann: Our company's been operating the current asset base for a little over three years. During each of these, our team has delivered stronger production and lower operating costs. We expect for that to continue in 2026, despite what's going to be a very heavy turnaround year. Let's turn to slide 4. The operational improvements we just discussed are more than just volume and costs. Layering that capability on top of our leading commercial platform, which has been built out over decades, provides our sales team more volume and flexibility to support customers. We produced record levels of product in our Specialty Products and Solutions segment in 2025. Our commercial engine more than kept up as we sustained material margins above historic norms, despite softer macro conditions in the broader specialty chemicals industry.

Speaker #3: Let's turn to slide four. The operational improvements we just discussed are more than just volume and costs. Layering that capability on top of our leading commercial platform, which has been built out over decades, provides our sales team more volume and flexibility to support customers.

Speaker #3: We produced record levels of product in our specialty products and solutions segment in 2025, and our commercial engine more than kept up as we sustained material margins above historic norms, despite softer macro conditions in the broader specialty chemicals industry.

Speaker #3: Our team places material successfully to new homes, consistently, especially sales volumes exceeded $20,000 barrels per day during every quarter of the year. We continue to result in this business reflect years of investment, commercial excellence, culture and talent, integration of performance brands, targeted reliability and mixed improvement initiatives, and disciplined capital deployment.

Todd Borgmann: Our team placed this material successfully to new homes consistently, as specialty sales volumes exceeded 20,000 barrels per day during every quarter of the year. The continued results in this business reflect years of investment, commercial excellence, culture and talent, integration of Performance Brands, targeted reliability and mixed improvement initiatives, and disciplined capital deployment. Our integrated asset network and ability to dynamically shift production into the highest value markets continues to be an advantage, and our extremely high customer experience scores are the result of a differentiated passion for customers, which is a core Calumet value. Turning to slide 5, we see that Montana Renewables also enters 2026 in a much different position than a year ago.

Speaker #3: Our integrated asset network and ability to dynamically shift production into the highest value markets continues to be an advantage, and our extremely high customer experience scores are the result of a differentiated passion for customers, which is a core Calumet value.

Speaker #3: Turning to slide five, we see that Montana Renewables also enters 2026 in a much different position than a year ago. Throughout last year, we reached a new level of operational reliability and cost competitiveness.

Todd Borgmann: Throughout last year, we reached a new level of operational reliability and cost competitiveness, demonstrating a financial leadership position in one of the most compressed Renewable Diesel margin environments on record. Operating costs averaged $0.41 per gallon in the second half of the year, a 60% improvement over two years ago. Further, we monetized more than $90 million of Production Tax Credits, which was essentially everything we made, and we are pleased to see the 45Z regulations progress in early 2026. On a strategic front, two quarters ago, we announced our streamlined MaxSAF 150 expansion would be bringing 120 to 150 million gallons of annual SAF capacity online at a fraction of the originally contemplated cost.

Speaker #3: Demonstrating a financial leadership position in one of the most compressed renewable diesel margin environments on record. Operating costs averaged $41 per gallon in the second half of the year, a 60% improvement over two years ago.

Speaker #3: And further, we monetized more than $90 million of production tax credits which was essentially everything we made, and we are pleased to see the $45 deregulations progressed in early 2026.

Speaker #3: On a strategic front, two quarters ago, we announced our streamlined MACSAF 150 expansion would be bringing $120 to $150 million gallons of annual SAF capacity online at a fraction of the originally contemplated cost.

Speaker #3: And last quarter, we mentioned that roughly $100 million gallons of new SAF contracts at $1 to $2 per gallon premium over renewable diesel were in final review with the DOE.

Todd Borgmann: In last quarter, we mentioned that roughly 100 million gallons of new SAF contracts at $1 to $2 per gallon premium over Renewable Diesel, were in final review with the DOE. These contracts are now complete, with more in process that will lay in to support our volume ramp. These contracts are all multiyear, and they include increased take-or-pay volumes from existing customers, new physical SPK offtakers, and blended SAF offtakes, combined with contracts for Scope 1 and Scope 3 credits through book and claim, which opens up premium renewable markets globally that complement the strong local markets we serve in Illinois, Minnesota, the Rockies, Canada, the Pacific Northwest, and California.

Speaker #3: These contracts are now complete with more in process that will lay into support our volume ramp. These contracts are all multi-year, and they include increased take-or-pay volumes from existing customers, new physical SPK off-takers, and blended SAF off-takes combined with contracts for scope one and scope three credits through book and claim.

Speaker #3: Which opens up premium renewable markets globally that complement the strong local markets we serve in Illinois, Minnesota, the Rockies, Canada, the Pacific Northwest, and California.

Speaker #3: Montana Renewables will begin its turnaround in MACSAF 150 project next week, and remain down through late April, at which point we'll rebuild inventories and begin ramping up SAF production and serving these new customers.

Todd Borgmann: Montana Renewables will begin its turnaround in MaxSAF 150 project next week and remain down through late April, at which point we'll rebuild inventories and begin ramping up SAF production and serving these new customers. The regulatory environment for biofuels also continues to improve. I mentioned the 45Z rules are now clarified and out for final comment. With plenty of press, the new Renewable Volume Obligation is expected imminently. We anticipate that a stronger RVO will improve industry utilization and margin improvement, as idle facilities are expected to be required to restart to meet increased mandates. Restarting production to meet demand volume is a very different and much improved market dynamic than one where companies are hanging on at variable costs while waiting for the rules to shift.

Speaker #3: The regulatory environment for biofuels also continues to improve. I mentioned the $45Z rules are now clarified and out for final comment. Further, and with plenty of press, the new Renewable Volume Obligation is expected imminently.

Speaker #3: We anticipate that a stronger RVO will improve industry utilization and margin improvement, as idle facilities are expected to be required to restart to meet increased mandates.

Speaker #3: Restarting production to meet demand volume is a very different and much improved market dynamic than one where companies are hanging on at variable costs while waiting for the rules to shift.

Speaker #3: In fact, we've already seen improvement in the index margin, both on the back of this expectation and the 2024 ring carry-forward overhang drifting into history.

Todd Borgmann: In fact, we've already seen improvement in the index margin on both the back of this expectation and the 2024 RIN carryforward overhang drifting into history. An increased base level of industry RD margins would be a welcome change for all. At Montana Renewables, we're excited to stack on top of that the added margin from increased assets as we complete our project in the Q2. With that, I'll turn the call over to David.

Speaker #3: An increased base level of industry R&D margins would be a welcome change for all, and at Montana Renewables, we're excited to stack on top of that the added margin from increased SAF as we complete our project in the second quarter.

Speaker #3: With that, I'll turn the call over to David.

Speaker #4: Thanks, Todd. Turning to slide six, overall, our quarter and full year results were strong both financially and strategically. We generated $69.3 million of adjusted EBITDA with tax attributes in the quarter, and $293.3 million for the full year 2025.

David Lunin: Thanks, Todd. Turning to slide 6. Overall, our quarter and full year results were strong, both financially and strategically. We generated $69.3 million of Adjusted EBITDA with tax attributes in the quarter and $293.3 million for the full year 2025. Each segment contributed meaningfully to our financial results. We saw continued momentum and record production, both in our SPS segment and Montana Renewables, as well as continued outperformance and growth in our Performance Brands segment. Our strong earnings results during the quarter also allowed us to reduce restricted group indebtedness by nearly $80 million, in addition to the $220 million that was reduced for the full year 2025.

Speaker #4: Each segment contributed meaningfully to our financial results, we saw continued momentum and record production both in our SDS segment and Montana Renewables, as well as continued outperformance and growth in our performance brand segment.

Speaker #4: Our strong earnings results during the quarter also allowed us to reduce restricted group indebtedness by nearly $80 million, in addition to the $220 million that was reduced for the full year 2025.

Speaker #4: Before I get into more details, I wanted to highlight our planned capital expenditures for 2026, as we are forecasting total CAPEX of $115 million to $145 million for all of Calumet, of which $70 million to $90 million is in the restricted group.

David Lunin: Before I get into more details, I wanted to highlight our planned capital expenditures for 2026, as we are forecasting total CapEx of $115 to 145 million for all of Calumet, of which $70 to 90 million is in the restricted group. This is $30 to 40 million higher than normal, primarily due to a heavy turnaround year, which is scheduled maintenance at Shreveport, Cotton Valley, Princeton, Karns City, and Great Falls. Despite this, we expect total company production to increase year-over-year on the reliability improvements implemented over the past few years.

Speaker #4: This is $30 to $40 million higher than normal, primarily due to a heavy turnaround year, which is scheduled maintenance at Shreveport, Cotton Valley, Princeton, Carne City, and Great Falls.

Speaker #4: Despite this, we expect total company production to increase year over year, based on the reliability improvements implemented over the past few years. Looking at our Specialty Products and Solutions segment on slide seven, both our quarterly and full-year results reflected the continued benefits of our commercial excellence initiatives, totaling $88.5 million for the quarter and $291.8 million for the full year.

David Lunin: Looking at our Specialty Products and Solutions segment on Slide 7, both our quarterly and full year results reflected the continued benefits of our commercial excellence initiatives and totaled $88.5 million for the quarter and $291.8 million for the full year. The team continues to leverage the inherent optionality in our manufacturing network to place volumes where they can generate the most value while serving our diversified customer base. In fact, more than 50% of our customers buy more than one product line from Calumet, and many are long-term customers because of our unique ability to meet their product specifications. Both our quarter and full year reflect a favorable product mix, and even with certain specialty markets demonstrating some softness, our sales team has continued to place our products at over $60 a barrel margin.

Speaker #4: The team continues to leverage the inherent optionality in our manufacturing network to place volumes where they can generate the most value while serving our diversified customer base.

Speaker #4: In fact, more than 50% of our customers buy more than one product line from Calumet, and many are long-term customers because of our unique ability to meet their product specifications.

Speaker #4: Both our quarter and full year reflect a favorable product mix, and even with certain specialty markets demonstrating some softness, our sales team has continued to place our products at over $60 per barrel margin.

Speaker #4: The benefits of our past reliability investments can also be seen in our strong operations, as we've had five consecutive quarters of specialty volume greater than 20,000 barrels per day.

David Lunin: The benefits of our past reliability investments can also be seen in our strong operations, as we've had five consecutive quarters of specialty volume greater than 20,000 barrels per day. It was also the second consecutive quarter of record production. With our cost reduction initiatives and increased production, our fixed cost per barrel declined by over $1 per barrel versus the prior year period. Finally, our steady production environment again enabled the capture of stronger crack environment as fuel margins increased significantly year-over-year, which we view as upside to our integrated model. As I mentioned last Q, I mean, we gained access to a new crude oil supply chain earlier this year, including the ability to target specific segregated or blended crudes in Cushing and further north in the DJ Basin, and at the same time, reduce our pipeline tab.

Speaker #4: It was also the second consecutive quarter of record production. With our cost reduction initiatives and increased production, our fixed cost per barrel declined by over $1 per barrel versus the prior year period.

Speaker #4: Finally, our steady production environment again enabled the capture of stronger crack environment as fuel margins increased significantly year over year, which we view as upside to our integrated model.

Speaker #4: As I mentioned last quarter, we gained access to a new crude oil supply chain earlier this year, including the ability to target specific segregated or blended crudes and cushing and further north in the DJ basin, and at the same time reduce our pipeline tariff.

Speaker #4: In 2025, this improvement drove about $19 million decrease in transportation costs and provides even further ability to dial in our assets and feed to a specific use.

David Lunin: In 2025, this improvement drove about $19 million decrease in transportation costs and provides even further ability to dial in our assets and feed to a specific use. In our Performance Brands segment on Slide 8, we also saw the benefit of our commercial excellence initiatives, strong and growing brands, and integration capabilities. Adjusted EBIT was $5.4 million for the quarter and $47.9 million for the full year 2025. Keep in mind that fiscal year 2024 includes a full year of Royal Purple industrial results and that the Royal Purple industrial business was sold at the end of Q1 2025. Adjusting for the divestiture and insurance proceeds received, 2025 was the third consecutive year of growth in the segment as we offset the lost contribution from RPI through growth and cost reduction.

Speaker #4: In our performance brand segment on slide eight, we also saw the benefit of our commercial excellence initiatives, strong and growing brands, and integration capabilities.

Speaker #4: Adjusted EBITDA was 5.4 million for the quarter and 47.9 million for the full year 2025. Keep in mind that fiscal year 2024 includes a full year of royal purple industrial results, and that the royal purple industrial business was sold at the end of Q1 2025.

Speaker #4: Adjusting for the divestiture and insurance proceeds received, 2025 was the third consecutive year of growth in the segment as we offset the lost contribution from RPI through growth and cost reduction.

Speaker #4: One of our standout product lines is once again our true fuel business, which posted another record year. This ready-to-use fuel engineered for outdoor power equipment is available for four-cycle and two-cycle engines, and the product continues to resonate with consumers and first responders considering its proven ability to protect small engines from the corrosive nature of ethanol, while ensuring peak performance of the equipment.

David Lunin: One of our standout product lines is once again our TruFuel business, which posted another record year. This ready-to-use fuel, engineered for outdoor power equipment, is available for four-cycle and two-cycle engines, and the product continues to resonate with both consumers and first responders, considering its proven ability to protect small engines from the corrosive nature of ethanol while ensuring peak performance of the equipment. Moving to Slide 9, our Montana Renewables segment, Q4 2025 Adjusted EBITDA with tax attributes was -$5.4 million and $31.3 million for the full year 2025. On the MRL side, the company worked through trough renewable fuel industry conditions for most of the year, and was also, the quarter was burdened with disproportionate transaction costs related to the $65 million of PTCs that we sold during the quarter.

Speaker #4: Moving to slide nine, our Montana/Renewables segment, fourth quarter 2025 adjusted EBITDA with tax attributes was -5.4 million and positive 31.3 million for the full year 2025.

Speaker #4: On the MRL side, the company worked through trough renewable fuel industry conditions for most of the year, and was also the quarter was burdened with disproportionate transaction costs related to the $65 million of PTCs that we sold during the quarter.

Speaker #4: We expect to monetize our production tax credits more rapidly, as the market is now normalized. On a full-year 2025 basis, adjusted EBITDA with tax attributes for MRL was nearly break-even, even as margins remained compressed by the low 2025 RVO, offset by our significant cost reduction efforts.

David Lunin: We expect to monetize our Production Tax Credits more ratably as the market is now normalized. On a full year 2025 basis, Adjusted EBITDA with tax attributes for MRL was nearly break even as margins remained compressed by the low 2025 RVO, offset by our significant cost reduction efforts. Notably, the full year results do not reflect an additional $8.4 million of 2025 generated PTCs, which occurred after final regulations were posted after quarter end. Our MaxSAF 150 plans remain unchanged. We are set to begin the project as we head into March and combine the required changes to our kit with a turnaround.

Speaker #4: Notably, the full-year results do not reflect an additional 8.4 million of 2025-generated PTCs, which occurred after final regulations were posted following quarter end.

Speaker #4: Our max F-150 plans remain unchanged, and we are set to begin the project as we head into March and combine the required changes to our kit with a turnaround.

Speaker #4: We expect to complete the expansion in the second quarter and then steadily ramp volumes moving into the third quarter to meet new customer contracts, including the notable agreement we announced recently with World Energy.

David Lunin: We expect to complete the expansion in Q2 and then steadily ramp volumes moving into Q3 to meet new customer contracts, including the notable agreement we announced recently with World Energy, previously announced contract with FEG, and an increase in offtake with Shell, amongst others. Finally, on the Montana Asphalt side, both the Q4 and fiscal year results improved on the strength of improved asphalt margins and cost reduction initiatives following years of site reconfiguration. Further, we are seeing a widening of the WCS differential into 2026. With the site back at reasonable cost level and more normalized WCS, we expect the site to continue producing in the $30 to $50 million of EBITDA range we've discussed routinely. Let me now turn the call back to Todd for his concluding remarks.

Speaker #4: Previously announced contract with FEG and an increase in offtake with Shell, amongst others. Finally, on the Montana asphalt side, both the fourth quarter and fiscal year results improved on the strength of improved asphalt margins and cost reduction initiatives following years of site reconfiguration.

Speaker #4: Further, we are seeing a widening of the WCS differential into 2026, with the site back at reasonable cost level and more normalized WCS. We expect the site to continue producing in the 30 to 50 million dollars of EBITDA range we've discussed routinely.

Speaker #4: Let me now turn the call back to Todd for his concluding remarks.

Speaker #1: Thanks, David. We're entering 2026 with the same high level of energy and excitement of a year ago. But with a much improved underlying fundamental.

Todd Borgmann: Thanks, David Lunin. We're entering 2026 with the same high level of energy and excitement of a year ago, with a much improved underlying fundamental. In Specialties, we expect the cost discipline embedded over the past two years to be durable, along with our continued commercial leadership position. While 2025 was another step change in operational excellence, we believe further opportunity remains to expand earnings through incremental reliability gains and customer-focused growth. In addition to that, David Lunin mentioned a heavy turnaround year, I'll highlight that turnaround excellence is the next step in our evolution. Our operations team has been planning these for some time, During these events, we're making critical improvements that will underpin the next step change in operational performance. At Montana Renewables, our objectives are clear. First, execute MaxSAF 150 safely, on time and on budget in Q2.

Speaker #1: In specialties, we expect the cost discipline embedded over the past two years to be durable, along with our continued commercial leadership position. While 2025 was another step change in operational excellence, we believe further opportunity remains to expand earnings through incremental reliability gains in customer-focused growth.

Speaker #1: In addition to that, David mentioned a heavy turnaround year, and I'll highlight that turnaround excellence is the next step in our evolution. Our operations team has been planning these for some time, and during these events we're making critical improvements that will underpin the next step change in operational performance.

Speaker #1: At Montana Renewables, our objectives are clear. First, execute max F-150 safely on time and on budget in the second quarter. Second, continue improving our already strong cost levels.

Todd Borgmann: Second, continue improving our already strong cost levels. Third, continue to leverage our early mover advantage in SAF as we grow. We expect that accomplishing these will drive a step change financial improvement, even in past trough market conditions, and will be increasingly exciting if the market's growing assumptions surrounding an improved RVO play out as expected. Last, on the back of these key items, we'll continue to evaluate strategic pathways that unlock long-term value as the platform demonstrates sustained performance. Across Calumet, our capital allocation priorities remain disciplined and consistent. We expect to continue to drive durable free cash flow that underpins enhanced deleveraging. We plan to grow both our specialties, widening our competitive moat, and execute on our MaxSAF 150 strategy at Montana Renewables, and we plan to execute this strategy and continually develop it with an eye towards midterm shareholder value creation.

Speaker #1: And third, continue to leverage our early mover advantage in SAF as we grow. We expect that accomplishing these will drive a step-change financial improvement, even in past trough market conditions, and will be increasingly exciting if the market's growing assumptions surrounding an improved RVO play out as expected.

Speaker #1: Lastly, on the back of these key items, we'll continue to evaluate strategic pathways and unlock long-term value as the platform demonstrates sustained performance. Across Calumet, our capital allocation priorities remain disciplined and consistent.

Speaker #1: We expect to continue to drive durable free cash flow that underpins enhanced e-leveraging. We plan to grow both our specialties widening our competitive moat and execute on our max F-150 strategy at Montana Renewables.

Speaker #1: And we plan to execute this strategy and continually develop it with an eye towards midterm shareholder value creation. With that, thank you for your time today, and I'll turn the back call to the turn the call back to the operator and see if we have any questions.

Todd Borgmann: With that, thank you for your time today, and I'll turn the call back to the Operator and see if we have any questions. Operator?

Speaker #1: Operator?

Speaker #2: And, ladies and gentlemen, we will begin the question and answer session. To ask a question, you may press star and then one on your telephone keypads.

Operator: Ladies and gentlemen, we will begin that question-and-answer session. To ask a question, you may press star and 1 on your telephone keypads. If you are using a speakerphone, we do ask you please pick up your handset before pressing the keys to ensure the best sound quality. If at any time your question has been addressed, and you would like to withdraw your question, you may press star and 2. Once again, that is star and 1 to join the question queue. Our first question today comes from Alexa Petrick from Goldman Sachs. Please go ahead with your question.

Speaker #2: If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. If at any time your question has been addressed and you would like to withdraw your question, you may press star and two.

Speaker #2: Once again, that is star and then one to join the question queue. Our first question today comes from Alexa Petrich from Goldman Sachs. Please go ahead with your question.

Speaker #3: Hey, good morning, team, and thank you for taking our question. We wanted to ask—two parts, maybe. First, can you talk about the macro setup from here?

Alexa Petrick: Hey, good morning, team, and thank you for taking our question. We wanted to ask two parts, maybe. First, can you talk about the macro setup from here? There are still, you know, some regulatory uncertainties, but we got a bit of an update yesterday. From there, talk about what you're doing at an operational level. What are the gaining items at MaxSAF, and what should we expect from here?

Speaker #3: There is still some regulatory uncertainties, but we got a bit of an update yesterday. And then from there, talk about what you're doing at an operational level.

Speaker #3: What are the gating items at Max F, and what should we expect from here?

Speaker #4: Oh, hey, Alexa. It's Chris. Look, the regulatory uncertainty—a lot of us call it—is just a feature of the landscape. The global energy transition is a regulated market.

David Lunin: Oh, hey, Alexa, it's Bruce. Look, the regulatory uncertainty is, a lot of us call it, is just a feature of the landscape. You know, the global energy transition is a regulated market, but it's collective governments, many governments acting, you know, directionally. You know, we feel like that's a very robust framework. We also feel like it adds the equivalent of a lot of margin volatility, on top of kind of the base energy. With that said, you know, if you want to survive in that environment, be a low-cost provider, be well-positioned, be able to shift gears quickly, and we think we are all three.

Bruce Fleming: Oh, hey, Alexa, it's Bruce. Look, the regulatory uncertainty is, a lot of us call it, is just a feature of the landscape. You know, the global energy transition is a regulated market, but it's collective governments, many governments acting, you know, directionally. You know, we feel like that's a very robust framework. We also feel like it adds the equivalent of a lot of margin volatility, on top of kind of the base energy. With that said, you know, if you want to survive in that environment, be a low-cost provider, be well-positioned, be able to shift gears quickly, and we think we are all three.

Speaker #4: But it's collective governments—many, many governments—acting directionally. And we feel like that's a very robust framework. We also feel like it adds the equivalent of a lot of margin volatility.

Speaker #4: On top of kind of the base energy. So with that said, if you want to survive in that environment, be low-cost provider, be well-positioned, be able to shift gears quickly.

Speaker #4: And we think we are all three.

Speaker #1: And Alexa, Todd, maybe I'll pile on a little bit. One of the things that we think is so important and exciting about our max F project at Montana Renewables is it adds an element of just durability on top of the already margin volatility that Bruce mentioned.

Todd Borgmann: Alexa, it's Todd. Maybe I'll pile on a little bit. One of the things that we think is so important and exciting about our MaxSAF project at Montana Renewables is it adds an element of, you know, just durability on top of the already margin volatility that Bruce mentioned. You can kind of think about it a lot like our specialties business relative to fuels. In the other half of Calumet. You know, we have contracted volumes with meaningful margin in them, that even if we kind of rewind the clock to last year, we're generating pretty meaningful free cash flow at Montana Renewables with the addition of the SAF volume and the contracts that we have.

Speaker #1: So you can kind of think about it a lot like our specialties business relative to fuels. And the other half of Calumet. So we have contracted volumes with meaningful margin in them.

Speaker #1: That even if we kind of rewind the clock to last year, we're generating pretty meaningful free cash flow at Montana Renewables with the addition of the SAF volume and the contracts that we have.

Speaker #1: So like Bruce said, then you get to layer on the improvements that we're expecting from the RVO. And it creates a really nice dynamic.

Todd Borgmann: You know, like Bruce said, then you get to layer on the improvements that we're expecting from the RVO, and it creates a really nice dynamic. There's kind of the risk reward, I'd say both sides of that coin are really improved with the SAF project. Thanks for the question.

Speaker #1: But there's kind of the risk-reward, I'd say both sides of that coin are really improved with the SAF project. So thanks for the question.

Speaker #3: Thank you. That's very helpful. Sounds like a good setup. I'll turn it back.

Alexa Petrick: Thank you. That's very helpful. Sounds like a good setup. I'll turn it back.

Speaker #2: Our next question comes from Connor Fitzpatrick from Bank of America. Please go ahead with your question.

Operator: Our next question comes from Conor Fitzpatrick from Bank of America. Please go ahead with your question.

Speaker #5: Good morning, everybody. It looks like we're in the phase of the rinse market and demand step-up progressing, where we should sometime soon begin to see producers ramp utilization.

Conor Fitzpatrick: Good morning, everybody. It looks like we're in the phase of the RINs market and demand step up progressing, where we should, you know, sometime soon begin to see producers ramp utilization. I think one way to glean that is from moves in feed prices, and they've gone up, but a lot of that is raw soybean cost pass through through the crush spread. I was just wondering, you know, there's not been a lot of press releases of idled plants coming back online. There's not a ton of evidence of utilization coming back within the overall market. I was wondering if your views are similar or different. It's particularly important to, you know, our views of the cost of producing RINs at 2026 demand levels.

Speaker #5: And I think one way to glean that is from moves in feed prices, and they've gone up, but a lot of that is raw soybean cost pass-through through the crush spread.

Speaker #5: So I was just wondering, there's not been a lot of press releases of idle plants coming back online. There's not a ton of evidence of utilization coming back.

Speaker #5: Within the overall market, I was wondering if your views are similar or different as it relates to—and it's particularly important to—our views of the cost of producing RINs at 2026 demand levels.

Speaker #1: Hey, Connor. It's Bruce. Thank you for the question. Let me answer with a concept of timescale. So, we think the industry is running at variable margin now.

Bruce Fleming: Hey, Conor, it's Bruce. Thank you for the question. let me answer with a concept of timescale. We think the industry is running at variable margin now. People are not covering fixed costs, and the half of the group that's in the high cost structure end have been closing. We have been running full. You gotta be tactical on where do you stand in the supply stack exactly. That ghost capacity, which exists in biodiesel plants that can come back quickly and Renewable Diesel plants that are online and can speed up, that's available, but it's not gonna be called into the market until we see the RVO come out. We're all waiting for that.

Speaker #1: People are not covering fixed costs. And the half of the group that's in the high-cost structure end have been closing. We have been running full.

Speaker #1: So you got to be tactical on where do you stand in the supply stack exactly. So that ghost capacity which exists in biodiesel plants that can come back quickly and renewable diesel plants that are online and can speed up, that's available, but it's not going to be called into the market until we see the RVO come out.

Speaker #1: We're all waiting for that. We feel good about what we're hearing. And let's see what the facts are. Shortly, we hope.

Bruce Fleming: We feel good about what we're hearing, and, you know, let's see what the facts are shortly, we hope.

Speaker #5: Yeah. And I'd add, Connor, the it's Todd, the likelihood that people turn back on when they're covering fixed costs by a penny after some of the decisions made more broadly in industry over the past couple of years.

Todd Borgmann: Yeah, I'd add, Conor, it's the likelihood that people turn back on, you know, when they're covering fixed costs by a penny after some of the decisions made more broadly in industry over the past 2 years, we think is very favorable to the market. I talked about this kind of the last 2 quarters in the prepared comments, but like Bruce said, as we float on variable margin, you know, you don't incur. Our normal kind of supply stack doesn't govern today because people aren't making long-term rational economic decisions. They're hanging on based on expectations that they're going to recover the investments and the fixed cost losses in the near term.

Speaker #5: We think is very favorable to the market. I talked about this kind of the last couple of quarters in the prepared comments, but like Bruce said, as we float on variable margin, you don't incur.

Speaker #5: Our normal kind of supply stack doesn't govern a day because people aren't making long-term rational economic decisions. They're hanging on based on expectations. That they're going to recover the investments in the fixed cost losses in the near term.

Speaker #5: As we see people have to restart and make that decision to restart too and to cover increased demand. We don't think that they're going to do that for a penny.

Todd Borgmann: As we see people have to restart and make that decision to restart, to, and to cover increased demand, we don't think that they're gonna do that for a penny. We think that people are going to be very thoughtful and cautious, and, you know, it creates quite a constructive outlook if you, if you believe that. You know, we'll see what the final RVO is. I know there's a lot of rumors going around out there. When we do, we don't think that the industry just kind of ramps up overnight. We think it's gonna be kind of a very thoughtful volume ramp up over time that will be beneficial to those who are in it operating every day.

Speaker #5: We think that people are going to be very thoughtful and cautious, and it creates quite a constructive outlook if you believe that. So we'll see what the final RVO is.

Speaker #5: I know there's a lot of rumors going around out there. But when we do, we don't think that the industry just kind of ramps up overnight.

Speaker #5: We think it's going to be kind of a very thoughtful volume ramp-up over time that will be beneficial to those who are in it, operating every day.

Speaker #2: Thanks. That's good, Connor. And for what it's worth, if you look historically, at the changing marginal producer, back in time, that producer tends to earn like 20 to 30 cents per gallon just if you do some rough math on it.

Conor Fitzpatrick: Thanks. That's good color. For what it's worth, you know, if you look historically, at the changing marginal producer, back in time, that producer tends to earn, like, $0.20 to $0.30 per gallon, just if you do some rough math on it. Then I guess my follow-up question was, just moving parts for Q4 Montana Renewables margins. There were some, you know, market margins were pretty fluctuant, and they were up for some weeks and down for other weeks. I was wondering just, you know, how that translated into margin capture for the business and operations.

Speaker #2: And then I guess my follow-up question was, just moving parts for fourth quarter Montana Renewables margin, there were some market margins were pretty fluctuant and they were up for some weeks and down for other weeks.

Speaker #2: I was wondering just how that translated into margin capture for the business and operations.

Speaker #1: So our Connor's Bruce again. We're pretty good at shifting gears there. How our inbound and outbound supply chains are pretty short in terms of days of shipping.

Bruce Fleming: So we're, Conor, it's Bruce again. We're pretty good at shifting gears there. Our inbound and outbound supply chains are pretty short in terms of days of shipping. You know, we do track capture. We don't publish it, but I'll tell you that we capture more than 100% of the Renewable Diesel Index Margin. You know, that's because of our ability to shift gears quickly. Now, it's worth noting the Q4 managed to hit the lowest Renewable Diesel Index Margin ever recorded in the history of the world, and we're very much looking forward to the current administration restoring, you know, reasonable industry structure through the proposed RVO. We're bullish on that, I think that's gonna bring things back to historical.

Speaker #1: And we do track capture. We don't publish it, but I'll tell you that we capture more than 100% of the renewable diesel index margin.

Speaker #1: And that's because of our ability to shift gears quickly. Now, it's worth noting the fourth quarter managed to hit the lowest renewable diesel index margin ever recorded in the history of the world.

Speaker #1: And we're very much looking forward to the current administration restoring reasonable industry structure through their proposed RVO. We're bullish on that. And I think that's going to break things back to historical.

Speaker #1: Remember that these margins were 2 to 3 dollars a gallon on an index basis just recently as three years ago. So we just need to resume that kind of environment and we're going to have an entirely different view of our success here.

Bruce Fleming: Remember that these margins were $2 to $3 a gallon on an index basis as recently as 3 years ago, you know. We just need to resume that kind of environment, and we're gonna have an entirely different view of, you know, our success here.

Speaker #2: Thanks, that's all I have. And our next question comes from Samir Joshi from HC Wainwright. Please go ahead with your question.

Jason Gabelman: Thanks. That's all I have.

Conor Fitzpatrick: Thanks. That's all I have.

Operator: Our next question comes from Sameer Joshi from H.C. Wainwright & Co. Please go ahead with your question.

Sameer Joshi: Hey, good morning. Thanks for taking my questions. This capacity expansion that I think Todd said will start next week and is likely to complete by late April, when should we see capacity ramp up at full scale? Does this bring along with it, of course, capacity expansion, but also operational savings? Like, would you be lower than 41 gallons, sorry, $0.41 per gallon?

Speaker #4: Hey, good morning. Thanks for taking my questions. So this capacity expansion that I think Todd said will start next week and is likely to complete by late April.

Speaker #4: When should we see a capacity ramp-up at full scale? And does this bring along with it, of course, capacity expansion, but also operational savings?

Speaker #4: Would you be lower than $0.41 per gallon? Sorry, $0.41 cents per gallon.

Speaker #1: Hey, Samir. It's Todd. Good questions. I think we are on—I'll start at the end. On the cost curve, we're obviously heading in the right direction and just continued to almost every quarter.

Todd Borgmann: Hey, Sameer. It's Todd. The good questions. I think we are on. I'll start at the end. On the cost curve, we're obviously heading in the right direction and just continue to, almost every quarter, see improvement over the one previous. We expect to just continue the incremental improvement there. We're gonna keep getting more efficient over time. Yes, as we increase our volume, then, you know, we'll see more unit efficiencies drop to the bottom line, as we progress. I don't think there's anything in this specific MaxSAF project that would say, "Hey, there's a major cost out." We're certainly going to be making more margins.

Speaker #1: See improvement over the one previous. So we expect to just continued incremental improvement there. We're going to keep getting more efficient over time. And yes, as we increase our volume, then we'll see more unit efficiencies drop to the bottom line.

Speaker #1: As we progress, I don't think there's anything in this specific MacSAF project that would say, 'Hey, there's a major cost out.' But we're certainly going to be making more margins.

Speaker #1: We continue to improve our costs in any regardless of the project, just in a steady state. And to the extent that we're ramping up volume, like I said, it helps kind of at the unit level on the bottom line.

Todd Borgmann: We continue to improve our costs in any, you know, regardless of the project, just in a steady state. To the extent that we're ramping up volume, like I said, it helps kind of at the unit level on the bottom line. That's, you know, probably one side of your question. I guess the other on the ramp up, look, we've previously guided to 120 to 150 million gallons annually, and that's where we expect to stay. You know, we're not naive enough to say that everything goes perfect, and we come out of this thing in May, and the very first day we're producing 150 million gallons. We also don't have too technically challenging of a turnaround.

Speaker #1: So that's probably one side of your question. I guess the other on the ramp-up, look, we've previously guided to 120 to 150 million gallons annually, and that's where we expect to stay.

Speaker #1: So we're not even up to say that everything goes perfect and we come out of this thing and May and the very first day we're producing 150 million gallons.

Speaker #1: But we also don't have too technically challenging of a turnaround. This is pretty well controlled. It's pretty well designed, and it's implementing a lot of expanding equipment that we know a lot about and isn't a major kind of risk, I'd say, like the last major project that we have going on.

Todd Borgmann: This is pretty well controlled, it's pretty well designed, and it's implementing a lot of implementing, expanding equipment that we know a lot about and isn't a major kind of risk, I'd say, like the last major project that we have going on. I think what you'll see is, coming online, we'll have a really nice, strong volume. We'll ramp up accordingly. Exactly how long it takes us to get to the, you know, 120, 150 million gallons run rate, we don't think it's gonna be too long. We'll come up in May and keep everybody up to speed on where we're doing, and think in the second half of the year that we're gonna be at that level.

Speaker #1: So I think what you'll see is coming online, we'll have a really nice strong volume. We'll ramp up accordingly. Exactly how long it takes us to get to the 120, 150 million gallons run rate.

Speaker #1: We don't think it's going to be too long. So we'll come up in May and keep everybody up to speed on where we're doing and thinking the second half of the year that we're going to be at that level.

Speaker #4: Got it. Thanks for that, Connor. And then I think you mentioned 100 million gallons of contracted. Multi-year contracts. And they are indexed at 1 to 2 dollar premium RD premium.

Sameer Joshi: Got it. Thanks for that color. I think you mentioned 100 million gallons of contracted multiyear contracts. They are indexed at $1 to 2 RD premium. Will you help us or remind us how does the feedstock pricing play into this, and how is that likely to impact pricing? I mean, profitability.

Speaker #4: Will you help us, or remind us, how does the feedstock pricing play into this? And how is that likely to impact pricing—I mean, profitability?

Speaker #1: It's Samir's first. So, it's worth noting that we're performing now under the SAF contracts, but until we deconstrain the unit during this upcoming turnaround, we can't get our rate up to where we want it.

Todd Borgmann: Hey, Sameer, it's Bruce. It's worth noting that we're performing now under the SAF contracts, but until we deconstrain the unit during this upcoming turnaround, we can't get our rate up to where we want it. We're gonna have the acceleration Todd mentioned. As we lean into that, you know, the book of business that our marketing guys have created is very interesting. We've intentionally executed contracts one by one, which are different than the other contracts. In other words, we're trying to have a portfolio that is robust to some of the dynamics we talked about with Alexa a minute ago. You know, with that in mind, I think the expectation should be that, you know, all of that feathers in.

Bruce Fleming: Hey, Sameer, it's Bruce. It's worth noting that we're performing now under the SAF contracts, but until we deconstrain the unit during this upcoming turnaround, we can't get our rate up to where we want it. We're gonna have the acceleration Todd mentioned. As we lean into that, you know, the book of business that our marketing guys have created is very interesting. We've intentionally executed contracts one by one, which are different than the other contracts. In other words, we're trying to have a portfolio that is robust to some of the dynamics we talked about with Alexa a minute ago. You know, with that in mind, I think the expectation should be that, you know, all of that feathers in.

Speaker #1: So we're going to have the acceleration Todd mentioned. So as we lean into that, the book of business that our marketing guys have created is very interesting.

Speaker #1: We've intentionally executed contracts one by one which are different than the other contracts. In other words, we're trying to have a portfolio that is robust to some of the robust to some of the dynamics we talked about with Alexa a minute ago.

Speaker #1: And with that in mind, I think the expectation should be that all of that feathers in. If we can hit the high end of the engineering ranges, then we'll get them towards the 150.

Todd Borgmann: If we can hit the high end of the engineering ranges, you know, we'll get them towards the 150, and if we hit the lower end, it'll be towards the 120. The contract volume, the differential that you asked about, that's saying that we've had those folks lifting already. I'd add a little bit more, Sameer, on the feedstocks you asked about. We've been pretty successful linking those to the contract. Again, we're in a location in Great Falls, where we have access to a broad range of feedstocks, including all of the low CI ones that the SAF market typically wants.

Bruce Fleming: If we can hit the high end of the engineering ranges, you know, we'll get them towards the 150, and if we hit the lower end, it'll be towards the 120. The contract volume, the differential that you asked about, that's saying that we've had those folks lifting already.

Speaker #1: And if we hit the lower end, it'll be towards the 120. But the contract volume, the differential that you asked about, that's ink. And we've had those folks lifting already.

Speaker #1: And I'd add a little bit more, Samir, on the feedstocks. You asked about we've been pretty successful linking those to the contract. So again, we're in a location in Great Falls where we have access to a broad range of feedstocks, including all of the low CI ones that the SAF market typically wants.

Todd Borgmann: I'd add a little bit more, Sameer, on the feedstocks you asked about. We've been pretty successful linking those to the contract. Again, we're in a location in Great Falls, where we have access to a broad range of feedstocks, including all of the low CI ones that the SAF market typically wants.We've been pretty successful landing those on long-term contracts as well, and feel quite confident in our ability to both continually add offtake and volume as we ramp up. To match that with contracts on the feed side, just given kind of the robustness around the number of options that we have in the region.

Speaker #1: So we've been pretty successful landing those on long-term contracts as well and feel quite confident in our ability to both continually add offtake and volume as we ramp up, but to match that with contracts on a feed site, just given kind of the robustness around our the number of options that we have in the region.

Todd Borgmann: We've been pretty successful landing those on long-term contracts as well, and feel quite confident in our ability to both continually add offtake and volume as we ramp up. To match that with contracts on the feed side, just given kind of the robustness around the number of options that we have in the region.

Speaker #4: Sounds good. Thanks for that, Connor. Congrats on the progress operationally and as well as leveraging. Thank you.

Sameer Joshi: Sounds good. Thanks for that color. Congrats on the progress operationally and as well as leveraging. Thank you.

Speaker #1: Thank you.

Todd Borgmann: Thank you.

Speaker #2: Once again, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two.

Operator: Once again, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two. Our next question comes from Jason Gabelman from TD Cowen. Please go ahead with your question.

Speaker #2: Our next question comes from Jason Gableman from TD Cowen. Please go ahead with your question.

Speaker #4: Yeah. Hey, morning. Thanks for taking my questions. Maybe shifting over to the base business, the specialty margin was strong once again, above $60 a barrel.

Jason Gabelman: Yeah. Hey, morning. Thanks for taking my questions. Maybe shifting over to the base business. The specialty margin was strong once again, above $60 a barrel. What's going on in the business that's enabling you to sustain those higher levels? Do you see that to continue to move higher over time? Then conversely, if you could just comment on the Performance Brands' weakness in the Q.

Speaker #4: What's going on in the business that's enabling you to sustain those higher levels, and do you see that continuing to move higher over time? And then conversely, if you could just comment on the performance brands’ weakness in the quarter?

Speaker #1: Hey, Jason. Scott here. So a few answers. In terms of the strength of the specialty piece within SPS, this hasn't just been like a one-quarter or one-year high performance.

Scott Obermeier: Hey, Jason, Scott here. A few answers. You know, in terms of the strength of the specialty piece within SPS, you know, this hasn't just been like a Q1 or one year high performance. I think you've covered us for a while. You've seen the progression over the past, you know, five years, frankly, the transformation of the business. Todd talked about it in the prepared remarks. You know, really, at the end of the day, our commercial excellence focus and the initiatives that we've done over the years, couple that with our integration and optionality, has proven to be highly successful, highly durable, through really almost any type of market. Then the improving production reliability as well, have added the volumes to it.

Speaker #1: I think you've covered us for a while. You've seen the progression over the past five years and frankly, the transformation of the business. Todd talked about it in the prepared remarks.

Speaker #1: Really, at the end of the day, our commercial excellence focus and the initiatives that we've done over the years, and to couple that with our integration and the optionality, has proven to be highly successful, highly durable through really almost any type of market.

Speaker #1: And then the improving production reliability as well has added to the volumes to it. So we remain really positive and constructive overall within that piece of the business.

Scott Obermeier: So we remain, you know, really positive and constructive overall within that piece of the business. As we look heading into the early part of this year, you know, we expect our high performance to continue. Certainly, we've got some headwind early on in 2026 with the crude oil run up, some short-term headwind, but overall, we feel really good about the business and the work that's been done in that business, that it's gonna continue to outperform the market. I think on the Performance Brands, we're really pleased with the year. You know, we think we're essentially at a place now, Jason, where we've essentially offset even, as we said that we would do, offset the Royal Purple industrial sale and the margin that went away with that.

Speaker #1: As we look heading into the early part of this year, we expect our high performance to continue. Certainly, we've got some headwind early on in 2026 with the crude oil run-up.

Speaker #1: Some short-term headwind, but overall, we feel really good about the business and the work that's been done in that business that is going to continue to outperform the market.

Speaker #1: I think on the performance brands, we're really pleased with the year. We think we're essentially at a place now, Jason, where we've essentially offset—even as we said that we would do—offset the Royal Purple Industrial sale and the margin that went away with that.

Speaker #1: So feel really good about the year overall. We did see in the fourth quarter, though, as you pointed out, a lot of the customer base retail in particular that really destocked late in the year.

Scott Obermeier: Feel really good about the year overall. We did see in Q4, though, as you pointed out, a lot of the customer base, retail in particular, that really destocked late in the year. Some challenges there. We're feeling good about the start of this year and the orders that we're seeing. We're optimistic about the 2026 results.

Speaker #1: So some challenges there, but we're feeling good about the start of this year and the orders that we're seeing. So we're optimistic about the 26 results.

Speaker #4: Got it. And just on the 26 outlook, you mentioned the turnarounds but you should have higher volumes despite that. Is there any impact to the margin outlook given those turnarounds and perhaps having to produce a different slate of products than you typically do?

Jason Gabelman: Got it. Just on the 2026 outlook, you mentioned the turnarounds, but, you know, you should have higher volumes despite that. Is there any impact to the margin outlook given those turnarounds and perhaps having to produce, a different slate of products than you typically do?

Speaker #1: Yeah. I would say the simple answer is no. There shouldn't be much of an impact. Despite the turnarounds and some of the volatility going on, no.

Scott Obermeier: Yeah, I would say the simple answer is no. There shouldn't be much of an impact despite turnarounds and some of the volatility going on no.

Speaker #4: Got it. Thanks. And my follow-up is just going back to the SAF contracts because I think one of the items we struggle with is just the competence around that one-to-do dollar.

Jason Gabelman: Got it. Thanks. My follow-up is just going back to the SAF contracts, because, you know, I think one of the items we struggle with is just the confidence around that $1 to $2 a gallon premium that you've cited. I was hoping you could just clarify kind of how the contracts are structured. When you talk about a premium over Renewable Diesel, are you indexing the contract to the Renewable Diesel margin, including, you know, the RIN, the LCFS credit, the PTC, or is it more nuanced than that?

Speaker #4: A gallon premium that you've cited. And so I was hoping you could just clarify kind of how the contracts are structured. Is it when you talk about a premium over renewable diesel, are you indexing the contract to the renewable diesel margin, including the RIN, the LCFS credit, the PTC, or is it more nuanced than that?

Speaker #3: Hey, Jason, Bruce. I'll give you a framework for that. So great question. Looking backwards, it was fully indexed. I mentioned earlier, we were intentionally diversifying the contract structure collectively.

Bruce Fleming: Hey, Jason, Bruce. I'll give you a framework for that. Great question. Looking backwards, it was fully indexed. I mentioned earlier, we were intentionally diversifying the contract structures collectively. We want them to be different. For example, FEG is a Scope 1 and Scope 3 emissions certificate that we pull off. That means we take that SAF, we sell it, we get all of the credits, you know, RIN, LCFS, et cetera, producer's tax credit, and on top of that, we get the certificate. That stacks up a little differently. You know, I could go around the table, as I said, each one's intentionally designed to act differently in different market conditions.

Speaker #3: We want them to be different. So, for example, FEG is a Scope 1 and 3 emissions certificate that we pull off. So that means we take that SAF, we sell it, we get all of the credits—RINs, LCFS, etc.—producer's tax credit, and on top of that, we get the certificate.

Speaker #3: So that stacks up a little differently. And I could go around the table and as I said, each one's intentionally designed to act differently in different market conditions.

Speaker #3: We think the portfolio will be more robust and more stable to prospective regulatory changes and evolution. So with that said, the guidance, we really don't want to start identifying specifics here, but the guidance is held for a long time.

Bruce Fleming: We think the portfolio will be more robust and more stable to, you know, prospective regulatory changes and evolution. With that said, you know, the guidance, we really don't want to start identifying specifics here, but the guidance has held for a long time, and one of the reasons for that is real simple. SAF is an excellent Renewable Diesel blend component, super high-quality properties, and it cannot go into the market below RD. It can't. Every once in a while, I pick up some publication where somebody calculated, you know, we used to call this dry lab back in the chemistry class. Somebody calculated that SAF is lower than diesel, and that's crazy because the operator's gonna take the SAF tank, pump it into the diesel tank, and capture that R this afternoon on the day shift, right?

Speaker #3: And one of the reasons for that is real simple. SAF is an excellent renewable diesel blend component, with super high-quality properties. And it cannot go into the market below RD.

Speaker #3: It can't. Every once in a while, I pick up some publication where somebody calculated—we used to call this dry lab back in the chemistry class.

Speaker #3: Somebody calculated that SAF is lower than diesel, and that's crazy because the operator is going to take the SAF tank, pump it into the diesel tank, and capture that R this afternoon on the day shift, right?

Speaker #3: So it's always more, and we're just arguing how much.

Bruce Fleming: It's always more, and we're just arguing how much.

Speaker #1: And I think if I can add just a little bit, the largest customer, not your question around can just fix that. Are the underlying components similar?

Scott Obermeier: I think if I could add just a little bit. The, you know, the largest customer, not your question around, can just a fixed dip, are the underlying components similar? Like Bruce said, we're intentionally diversifying. At the same time, we're quite confident in the $1 to $2 a gallon range just because of how these contracts come together. A little more color on that. You know, our largest customers are very similar to kind of what you just said. If you looked at their contracts underlying the premium, it looks a lot like RD contracts, plus the fixed premium on top of that. In that group, we're quite excited to have the exposure to the upside on the RD, plus the fixed premium, which you're kind of alluding to earlier.

Todd Borgmann: I think if I could add just a little bit. The, you know, the largest customer, not your question around, can just a fixed dip, are the underlying components similar? Like Bruce said, we're intentionally diversifying. At the same time, we're quite confident in the $1 to $2 a gallon range just because of how these contracts come together. A little more color on that. You know, our largest customers are very similar to kind of what you just said. If you looked at their contracts underlying the premium, it looks a lot like RD contracts, plus the fixed premium on top of that. In that group, we're quite excited to have the exposure to the upside on the RD, plus the fixed premium, which you're kind of alluding to earlier.

Speaker #1: Like Bruce said, we're intentionally diversifying. At the same time, we're quite confident in the $1 to $2 per gallon range just because of how these contracts come together.

Speaker #1: So, to add a little more color on that, our largest customers are very similar to kind of what you just said. If you look at their contracts, underlying the premium, it looks a lot like RD contracts, plus the fixed premium on top of that.

Speaker #1: So in that group, we're quite excited to have the exposure to the upside on the RD, plus the fixed premium, which you were kind of alluding to earlier. That fixed premium plays out even in scenarios if we rewound back to last year and looked at kind of trough index margin environments.

Scott Obermeier: That fixed premium plays out even in scenarios-.

Todd Borgmann: That fixed premium plays out even in scenarios. If we rewound back to last year and looked at, you know, kind of trough index margin environments. The other thing I'd say is, and Bruce highlighted on the Scope 1 and Scope 3 credit sales, there's a naturally quite a correlation. We want diversification, we want exposure to those markets. I think I've said in the past, we see it a lot like our Specialties business, where we can do some things that others probably don't want to when we're transacting in truckload volumes and controlling quality and, you know, transloading and doing those types of things that require a little bit more hands-on service. It fits us really well.

Todd Borgmann: ... if we rewound back to last year and looked at, you know, kind of trough index margin environments. The other thing I'd say is, and Bruce highlighted on the Scope 1 and Scope 3 credit sales, there's a naturally quite a correlation. We want diversification, we want exposure to those markets. I think I've said in the past, we see it a lot like our Specialties business, where we can do some things that others probably don't want to when we're transacting in truckload volumes and controlling quality and, you know, transloading and doing those types of things that require a little bit more hands-on service. It fits us really well.

Speaker #1: And then the other thing I'd say is, like Bruce highlighted on the scope one and scope three credit sales, there's a naturally quite a correlation.

Speaker #1: We want diversification. We want exposure to those markets, and I think I said in the past, we see it a lot like our specialties business, where we can do some things that others probably don't want to when we're transacting in truckload volumes and controlling quality and transloading and doing those types of things that require a little bit more hands-on service.

Speaker #1: So it fits us really well. That being said, there's obviously a high correlation between the value of those credits and the fixed premium that other customers are willing to pay.

Todd Borgmann: That being said, there's obviously a high correlation between the value of those credits and the fixed premium that other customers are willing to pay. It's no coincidence that as we look at both of those, they lie comfortably in the $1 to 2 gallon range that we've talked about. I'll highlight, these are fixed contracts, right? I think that was probably part of your question, but, you know, this isn't a spot gasoline rack. These are contracts. They're multiyear contracts. They have commitments to perform on both sides. You know, we're quite confident in the ability to capture that margin.

Speaker #1: So it's no coincidence that, as we look at both of those, they lie comfortably in the $1 to $2 per gallon range that we've talked about. And I'll highlight, these are fixed contracts, right?

Speaker #1: And we've, I think, that was probably part of your question. But this isn't a spot gasoline rack. These are contracts. They're multi-year contracts. They have commitments to perform on both sides.

Speaker #1: And we're quite confident in the ability to capture that margin.

Speaker #4: Right. Thanks. I appreciate all the color.

David Lunin: Great. Thanks. I appreciate all the color.

Jason Gabelman: Great. Thanks. I appreciate all the color.

Speaker #1: Thank you.

Todd Borgmann: Thank you.

Speaker #2: And with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to John Kompa for closing remarks.

Operator: With that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to John Kompa for closing remarks.

Speaker #3: Thank you, Jamie. On behalf of Todd and the entire management team, I'd like to thank everyone for their interest today in Calumet. Have a great rest of the day.

John Kompa: Thank you, Jamie. On behalf of Todd and the entire management team, I'd like to thank everyone for their interest today in Calumet. Have a great rest of the day. Thanks.

Speaker #3: Thanks.

Operator: The conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.

Q4 2025 Calumet Inc Earnings Call

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