Q1 2026 Calumet Earnings Call

May 8, 2026

Operator 1: Good day, and welcome to the Calumet, Inc. First Quarter 2026 Conference Call. I would now like to turn the conference over to John Kompa, Investor Relations. Please go ahead.

Operator: Good day, and welcome to the Calumet, Inc. First Quarter 2026 Conference Call. I would now like to turn the conference over to John Kompa, Investor Relations. Please go ahead.

Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone.

Speaker #2: To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Kompa, Investor Relations.

John Kompa: Thanks, Andrea. Good morning, everyone, and thank you for joining our Q1 2026 earnings call. 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 IR 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.

John Kompa: Thanks, Andrea. Good morning, everyone, and thank you for joining our first quarter 2026 earnings call. With me on today's call are Todd Borgmann, Chief Executive Officer, David Lunin, Executive Vice President and Chief Financial Officer, Bruce Fleming, Executive VP, 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 IR 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: Please go ahead. Thanks, Andrea. Good morning, everyone, and thank you for joining our first quarter 2026 earnings call. With me on today's call are Todd Borgman, CEO; David Lunin, EVP and Chief Financial Officer; Louis Kompa, EVP, Montana Renewables and Corporate Development; and Scott Obermeyer, President Specialties.

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

Speaker #2: Also, a webcast replay of 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 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: 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 will now pass the call to Todd.

Speaker #2: As we turn to slide three, I'll now pass the call to Todd.

Todd Borgmann: Thanks, John. Good morning, and welcome to Calumet's Q1 2026 earnings call. The beginning of this year has certainly been an eventful and strategically pivotal period for Calumet. Late in the quarter, we saw the renewable fuels market take a major step forward following EPA's long-awaited Set 2 RVO announcement. We entered one of the strongest margin environments we've seen across both traditional and renewable energy markets. Further, we brought down Montana Renewables for a turnaround in MaxSAF 150 expansion in early March and successfully commenced operations in early May. While these developments did not fully benefit Q1 financial results due to previously disclosed downtime at Shreveport and planned expansion work in Montana, Calumet's exceptionally well-positioned to capture these tailwinds, further accelerate deleveraging, and continue our long-term growth and value creation strategy, which we'll discuss further in this call before David takes us through the quarter.

Todd Borgmann: Thanks, John. Good morning, and welcome to Calumet's first quarter 2026 earnings call. The beginning of this year has certainly been an eventful and strategically pivotal period for Calumet. Late in the quarter, we saw the renewable fuels market take a major step forward following EPA's long-awaited Set 2 RVO announcement. We entered one of the strongest margin environments we've seen across both traditional and renewable energy markets. Further, we brought down Montana Renewables for a turnaround in MaxSAF 150 expansion in early March and successfully commenced operations in early May. While these developments did not fully benefit first quarter financial results due to previously disclosed downtime at Shreveport and planned expansion work in Montana, Calumet's exceptionally well-positioned to capture these tailwinds, further accelerate deleveraging, and continue our long-term growth and value creation strategy, which we'll discuss further in this call before David takes us through the quarter.

Speaker #3: Thanks, John. Good morning and welcome to Calumet's first quarter 2026 earnings call. The beginning of this year has certainly been an eventful and strategically pivotal period for Calumet.

Speaker #3: Late in the quarter, we saw the renewable fuels market take a major step forward, following EPA's long-awaited set to RVO announcement, and we entered one of the strongest margin environments we've seen across both traditional and renewable energy markets.

Speaker #3: Further, we brought down Montana Renewables for a turnaround and maxed out 150 expansion in early March, and successfully commenced operations in early May. While these developments did not fully benefit first quarter financial results, due to previously disclosed downtime at Shreveport and a planned expansion work in Montana, Calumet's exceptionally well-positioned to capture these tailwinds further accelerate de-leveraging and continue our long-term growth and value creation strategy, which we'll discuss further in this call before David takes us through the quarter.

Todd Borgmann: Let's turn to slide four and begin with the outlook for our Specialties business. First, as we've seen historically, Calumet's integrated business is robust and performs throughout the business cycle, and is particularly well-positioned for the current market, with commodity spreads growing sharply due to global disruptions. We make yields the co-product of our specialty production process. Typically, when cracks are lower, strong and stable specialty margins carry the day. When crack spreads are high, as they are now, we're fully exposed to that upside. Long term, the Specialties business will take advantage of positive commodity environments to strategically deploy excess cash flow into specialties growth. Right now, it creates an accelerated deleveraging opportunity and also opens the door to targeted low-risk, high-return growth opportunities. The recent volatility has also reminded us of the capability of our specialties commercial excellence engine.

Speaker #3: Let's turn to slide four and begin with the outlook for our specialties business. First, as we've seen historically, Calumet's integrated business is robust and performs throughout the business cycle.

Speaker #3: And it's particularly well-positioned for the current market, with commodity spreads growing sharply due to global disruptions. We make fuels as a co-product of our specialty production process.

Speaker #3: Typically, when cracks are lower, strong and stable specialty margins carry the day. When crack spreads are high, as they are now, we're fully exposed to that upside.

Speaker #3: Long-term, the specialties business will take advantage of positive commodity environments to strategically deploy excess cash flow into specialties growth. Right now, it creates an accelerated de-leveraging opportunity and also opens the door to targeted low-risk, high-return growth opportunities.

Speaker #3: The recent volatility has also reminded us of the capability of our specialties commercial excellence engine. In March, crude oil prices increased over 50% in the two-week period, and it moved further from there.

Todd Borgmann: In March, crude oil prices increased over 50% in a 2-week period. It moved further from there. Our commercial team rapidly executed on over 20 price increases across our product lines to counter the cost escalation. Our customers understand the uniqueness of this current environment. While we have some sales contracts tied to previous month pricing and further downstream in Performance Brands, we see a bit more lag. The fact that our SPS specialties business was able to demonstrate $54 a barrel margins this past quarter despite the rapid cost inflation is a testament to the nimbleness of this team. The outlook improves on that with the increases now in. The other pillar of commercial excellence is providing an exceptional customer experience.

Speaker #3: Our commercial team rapidly executed on over 20 price increases across our product lines to counter the cost escalation, and our customers understand the uniqueness of this current environment.

Speaker #3: While we have some sales contracts tied to previous month pricing and further downstream and performance brands, we see a bit more lag, the fact that our SPS specialties business was able to demonstrate 54-a-barrel margins this past quarter despite the rapid cost inflation is a testament to the nimbleness of this team.

Speaker #3: And the outlook improves on that with the increases now in. The other pillar of commercial excellence is providing an exceptional customer experience. And despite the craziness in this market, Calumet's team went to great lengths to ensure our customers were as well-serviced as humanly possible in this remarkable time.

Todd Borgmann: Despite the craziness in this market, Calumet's team went to great lengths to ensure our customers were as well-serviced as humanly possible in this remarkable time. That didn't come without a bit of short-term financial costs, but our specialties enterprise is built on delivering a world-class customer experience. Further, let's hit on what's going on in the broader specialties market. We all know that roughly 20% of the world's daily crude oil comes through the Strait of Hormuz by now, but what's less publicized is that about 10% of the global base oil supply does as well. Probably more importantly, a disproportionate amount of the world's lube crudes, as we call them, come from the Middle East. These are grades that have particularly good specialty qualities and yields and are purchased around the world, particularly in Asia.

Speaker #3: That didn't come without a bit of short-term financial cost, but our specialties enterprise is built on delivering a world-class customer experience. Further, let's hit on what's going on in the broader specialties market.

Speaker #3: We all know that roughly 20% of the world's daily crude oil comes through the Strait of Hormuz by now. But what's less publicized is that about 10% of the global base oil supply does as well.

Speaker #3: Probably more importantly, a disproportionate amount of the world's lube crudes, as we call them, come from the Middle East. These are grades that have particularly good specialty qualities and yields and are purchased around the world, particularly in Asia.

Todd Borgmann: At Calumet, our crude supply is largely domestic and readily available. Further, we always value the fact that we're a fully integrated, fully dedicated producer of specialty products, which provides stable and quality control despite the market condition. In strong commodity markets like this one, it also carries an even higher than normal economic benefit. Non-integrated suppliers purchase intermediates like VGO or fuels like diesel and jet as specialty feedstocks to produce lubes and solvents. We're able to make these end products from crude oil, which means we capture the intermediate value of the distillate and intermediates embedded in the product price. Further, we just completed two successful planned turnarounds at our Cotton Valley and Princeton facilities in April, and we're running at max volumes across the board to capture the current opportunity. Let's turn to slide 5.

Speaker #3: At Calumet, our crude supply is largely domestic and readily available. Further, we always value the fact that we're a fully integrated, fully dedicated producer of specialty products, which provides stable and quality-controlled despite the market conditions, and it's strong commodity markets like this one; it also carries an even higher-than-normal economic benefit.

Speaker #3: Non-integrated suppliers purchase intermediates like BGO or fuels like diesel and jet as specialty feedstocks to produce lubes and solvents. We're able to make these end products from crude oil, which means we capture the intermediate value of the distillate and intermediates embedded in the product price.

Speaker #3: Further, we just completed two successful planned turnarounds at our Cotton Valley and Princeton facilities in April, and we're running at max volumes across the board to capture the current opportunity.

Speaker #3: Let's turn to slide five. Making nearly as many headlines as the fossil energy market this past quarter was the EPA's set to RVO release in March, which has reset the outlook for the biofuels industry in Montana Renewables.

Todd Borgmann: Making nearly as many headlines as the fossil energy market this past quarter was the EPA's Set 2 RVO release in March, which has reset the outlook for the biofuels industry in Montana Renewables. Well, this is spelled like a new market environment given the past two years under the Set 1 rule. What we're actually seeing is the EPA applying the same tested and stable dynamic used historically that supports strong, stable margins in this business. Many will remember the error in the 2023 Set 1 ruling was due to the EPA assuming feedstock would not be readily available. With that now corrected, after American farmers proved they'll rise to the challenge and produce the necessary feedstocks, the EPA resumed applying the methodology it's used for over a decade. In this, they evaluate prior year's biofuel capacity and increase the mandate to incentivize continued utilization growth.

Speaker #3: While this has felt like a new market environment given the past two years under the set one rule, what we're actually seeing is the EPA applying the same tested and stable dynamic used historically that supports strong, stable margins in this business.

Speaker #3: Many will remember the era in the 2023 set one ruling was due to the EPA assuming feedstock would not be readily available. With that now corrected, after American farmers proved they'll rise to the challenge and produce the necessary feeds, the EPA resumed applying the methodology it's used for over a decade.

Speaker #3: In this, they evaluate prior years' biofuel capacity and increase the mandate to incentivize continued utilization growth. We see this dynamic displayed through the three graphics on this slide.

Todd Borgmann: We see this dynamic displayed through the three graphics on this slide. Starting on the bottom left-hand of the slide, we're reminded this industry has seen steady $2 a gallon index margins consistently for years, which is historically what has been required for the industry biodiesel capacity to run. When biodiesel was not required during Set 1, this dynamic was broken, and we saw industry utilization at roughly 50%. MRL was able to break even in that environment, which demonstrated our unique position, but we're much more excited about this current market for both our business and the industry. Taking a look at the industry supply stack in the chart on the top right here, we see how efficient this market is as well. Post-ruling, margins have rapidly increased to create an incentive for all biomass-based diesel production to come back online.

Speaker #3: Starting on the bottom left hand of the slide, we're reminded that this industry has seen steady, $2 a gallon index margins consistently for years.

Speaker #3: Which has historically what has been required for the industry's biodiesel capacity to run. When biodiesel was not required during set one, this dynamic was broken, and we saw industry utilization at roughly 50%.

Speaker #3: MRL was able to break even in that environment, which demonstrated our unique position. But we're much more excited about this current market for both our business and the industry.

Speaker #3: Taking a look at the industry's supply stack in a chart on the top right here, we see how efficient this market is as well.

Speaker #3: Post-ruling, margins have rapidly increased to create an incentive for all biomass-based diesel production to come back online. We also see the set two RVO actually requires the industry to operate at utilization levels to meet it.

Todd Borgmann: We also see the Set 2 RVO actually requires the industry to operate at higher than historically demonstrated utilization levels to meet it. Our view is there are 3 ways that industry can fill this gap. First, the EPA understood there were carry forward RINs available from the small refinery exemptions announced last year. These carry forwards can satisfy most of the supply and demand gap in 2026. There aren't nearly enough to settle 2027. Second, imports can fill the gap despite being disadvantaged to domestic biodiesel, given they don't qualify for the PTC. The third is that this policy incentivizes industry to continue its utilization improvement journey. This journey certainly stalled over the past 3 years. The administration knows that refineries typically run at slightly higher utilization levels. Our industry in its early stages can also continue to improve.

Speaker #3: In our view, as there are three ways that industry can fill this gap. First, the EPA understood there were carry-forward rents available from the small refinery exemptions announced last year.

Speaker #3: These carry-forwards can satisfy most of the supply-demand gap in 2026, but there aren't nearly enough to settle 2027. Second, imports can fill the gap despite being disadvantaged to domestic biodiesel, given they don't qualify for the PTC.

Speaker #3: The third is that this policy incentivizes industry to continue its utilization improvement journey. This journey certainly stalled over the past three years. But the administration knows that refineries typically run at slightly higher utilization levels and our industry and its early stages can also continue to improve.

Todd Borgmann: Efficiency improvement reduces the cost of biofuels, adds more reliable domestic energy, and incentivizes the growth of more domestic agriculture, all while improving air quality. These results are right down the fairway for the current administration and also we expect to be supported in a bipartisan fashion as they always have been. We believe the industry is up for this challenge, and while very high sustained utilization certainly won't happen overnight, especially given the level of damage done over the Set 1 days, it can happen over time. The third chart on this page is a little closer look at historic biomass-based diesel production levels in relation to the RVO on a monthly basis. The difference in production and demand call results in a build or draw on the RIN bank.

Speaker #3: Efficiency improvement reduces the cost of biofuels and adds more reliable domestic energy and incentivizes the growth of more domestic agriculture, all while improving air quality.

Speaker #3: These results are right down the fairway for the current administration, and also be expected to be supported in a bipartisan fashion as they always have been.

Speaker #3: We believe the industry is up for this challenge, and while very high sustained utilization certainly won't happen overnight—especially given the level of damage done over the set-one days—it can happen over time.

Speaker #3: The third chart on this page is a little closer look at historic biomass-based diesel production levels in relation to the RVO on a monthly basis.

Speaker #3: The difference in production and demand call results in a build or draw on the rent bank. Again, we see how rapidly industry utilization plummeted during set one and we also see how it's increased with today's more promising future, albeit with a long way to go to meet the set two levels.

Todd Borgmann: Again, we see how rapidly industry utilization plummeted during Set 1, and we also see how it's increased with today's more promising future, albeit with a long way to go to meet the Set 2 levels. In addition to a renewed outlook for renewable diesel, we also just commenced operations post our MaxSAF 150 expansion, which was a major step for Montana Renewables. Let's turn to slide 6 and further discuss this step and SAF's role in domestic energy growth. We've often discussed the promise of SAF and Montana Renewables' ability to capture the SAF premium given its first mover marketing experience. Now that we've started up our plant post the expansion, we turn our focus to producing increased SAF volumes.

Speaker #3: In addition to a renewed outlook for renewable diesel, we also just commenced operations post our max SAF 150 expansion, which was a major step for Montana Renewables.

Speaker #3: Let's turn to slide six and further discuss this step in SAF's role in domestic energy growth. We've often discussed the promise of SAF and Montana Renewables' ability to capture the SAF premium, given its first mover marketing experience.

Speaker #3: Now that we've started up our plant post the expansion, we turn our focus to producing increased SAF volumes. Through the initial operating period, we'll continue to condition the catalyst, complete a performance validation, and deliberately and steadily ramp production to ensure consistent product quality for our existing customers and for our new customers to integrate into their supply chains over the next few months.

Todd Borgmann: Through the initial operating period, we'll continue to condition the catalyst, complete a performance validation, and deliberately and steadily ramp production to ensure consistent product quality for our existing customers and for our new customers to integrate into their supply chains over the next few months. In addition to the internal focus on the expansion and the industry's response to the RVO, we've seen the current market conditions highlight a lasting dynamic in jet fuel that we think it's important to note. The Iran war is certainly an extreme moment in energy. There's a natural experiment buried in the event. We've seen that industry is not equipped to meet a sustained increase in jet demand. The fact that jet fuel demand has been growing and is expected to grow faster than all other liquid fuels combined is important.

Speaker #3: In addition to the internal focus on the expansion, and the industry's response to the RVO, we've seen the current market conditions highlight a lasting dynamic in jet fuel that we think it's important to note.

Speaker #3: The Iranian war is certainly an extreme moment in energy. But there's a natural experiment buried in the event, and we've seen that industry is not equipped to meet a sustained increase in jet demand.

Speaker #3: The fact that jet fuel demand has been growing and is expected to grow faster than all other liquid fuels combined is important. The number of refineries or decreasing, not increasing.

Todd Borgmann: The number of refineries are decreasing, not increasing. Refineries don't just make jet. As gas demand slows, the jet shortage grows. SAF can be made at much higher yields and much more intentionally than traditional jet. SAF receives the additional benefit of Renewable Energy Credits. Farmers are rewarded for growing more domestic feedstocks. With an increase in SAF in the RVO, we can make more biofuels to supplement traditional energy, we generate Renewable Energy Credits. American farmers grow more and make more money to sell us the feed. It's an extremely efficient and circular system with dramatic positive impact to our country. Montana Renewables is in the perfect position to support this opportunity. With that, I'll turn the call to David.

Speaker #3: And refineries don't just make jet. Thus, as gas demand slows, the jet shortage grows. SAF can be made at much higher yields and much more intentionally than traditional jet.

Speaker #3: And SAF receives the additional benefit of environmental energy credits and farmers are rewarded for growing more domestic feedstocks. With an increase in SAF and the RVO, we can make more biofuels to supplement traditional energy.

Speaker #3: We generate environmental credits, and American farmers grow more and make more money to sell us the feed. It's an extremely efficient and circular system with dramatic positive impact to our country.

Speaker #3: And Montana Renewables is in the perfect position to support this opportunity. With that, I'll turn the call to David.

David Lunin: Thanks, Todd. Let's get into our results. As Todd mentioned, Q1 was a transformational quarter for the business as well as strategically. In terms of financial results, the company generated $50.1 million of adjusted EBITDA with tax attributes slightly down from the $55 million generated in Q1 2025. Despite the extraordinary margin environment for both of our businesses, we didn't fully capture the opportunity the market provided due to a previously disclosed operational event in Shreveport, which was ultimately resolved, and the plant is now fully operational. Late in the quarter, organic chlorides were discovered in our crude stream, which caused a loss of about 750,000 barrels of production. Organic chlorides are a serious risk if not identified and managed appropriately.

David Lunin: Thanks, Todd. Let's get into our results. As Todd mentioned, first quarter was a transformational quarter for the business as well as strategically. In terms of financial results, the company generated $50.1 million of adjusted EBITDA with tax attributes slightly down from the $55 million generated in first quarter 2025. Despite the extraordinary margin environment for both of our businesses, we didn't fully capture the opportunity the market provided due to a previously disclosed operational event in Shreveport, which was ultimately resolved, and the plant is now fully operational. Late in the quarter, organic chlorides were discovered in our crude stream, which caused a loss of about 750,000 barrels of production. Organic chlorides are a serious risk if not identified and managed appropriately.

Speaker #1: Thanks, Todd. Let's get into our results. As Todd mentioned, the first quarter was a transformational quarter for the business as well as strategically. In terms of financial results, the company generated $50.1 million of adjusted EBITDA with tax attributes slightly down from the $55 million generated in the first quarter of 2025.

Speaker #1: Despite the extraordinary margin environment for both of our businesses, we didn't fully capture the opportunity the market provided due to a previously disclosed operational event in Shreveport, which was ultimately resolved and the plan is now fully operational.

Speaker #1: Late in the quarter, organic chlorides were discovered in our crude stream, which caused a loss of about $750,000 barrels of production. Organic chlorides are a serious risk if not identified and managed appropriately.

David Lunin: They're an inorganic contaminant not naturally found in crude oil, which appears in the naphtha fraction of a feed used to produce gasoline. Our industry has seen serious consequences when these are carelessly blended into crude because they cause rapid erosion of steel and/or Shreveport team noticed the corrosion, identified the cause, and acted swiftly to manage the risk of placing the directly impacted naphtha processing equipment and examining the entire facility as a caution. The event, which cost us over $30 million of lost opportunity, given the elevated margins at the end of the quarter, is now behind us. The plant is running about 50,000 barrels per day, has done so most of April. I appreciate the team managing through this complex situation safely and urgently. Turning to slide 7 in our Specialty Products and Solutions segment, our underlying business remains strong.

Speaker #1: They're an inorganic contaminant not naturally found in crude oil, which appears in the naphtha fraction of the feed used to produce gasoline. Our industry has seen serious consequences when these are carelessly blended into crude because they cause rapid erosion of steel, and our Shreveport team noticed the corrosion, identified the cause, and acted swiftly to manage the risk by placing the directly impacted naphtha processing equipment at caution and examining the entire facility.

Speaker #1: The event, which cost us over $30 million of lost opportunity, given the elevated margins at the end of the quarter, is now behind us.

Speaker #1: The plan is running about $50,000 barrels per day, has done so most of April, and I appreciate the team managing through this complex situation safely and urgently.

Speaker #1: Turning to slide seven and our Specialty Products and Solutions segment, our underlying business remains strong. We generated $44.3 million of adjusted EBITDA during the period, compared to $56 million generated in Q1 2025.

David Lunin: We generated $44.3 million of adjusted EBITDA during the period compared to $56 million generated in Q1 2025. We believe that the unique elements of our business model, integrated assets that provide optionality combined with commercial excellence to capture value, are well suited for periods of extreme volatility like we are in today. As a comparison, today's business environment is similar to 2022 when we saw similarly elevated crack spreads and Specialties margin. In that year, the company generated over $400 million of adjusted EBITDA. Our integrated business allows us to produce fuels and take advantage of the attractive high-margin fuel environment. Using current strips, the 2026 full year 2-1-1 is over $42 per barrel, nearly double what we saw on average over 2025.

David Lunin: We generated $44.3 million of adjusted EBITDA during the period compared to $56 million generated in first quarter 2025. We believe that the unique elements of our business model, integrated assets that provide optionality combined with commercial excellence to capture value, are well suited for periods of extreme volatility like we are in today. As a comparison, today's business environment is similar to 2022 when we saw similarly elevated crack spreads and Specialties margin. In that year, the company generated over $400 million of adjusted EBITDA. Our integrated business allows us to produce fuels and take advantage of the attractive high-margin fuel environment. Using current strips, the 2026 full year 2-1-1 is over $42 per barrel, nearly double what we saw on average over 2025.

Speaker #1: We believe that the unique elements of our business model—integrated assets that provide optionality, combined with commercial excellence to capture value—are well-suited for periods of extreme volatility like we are in today.

Speaker #1: As a comparison today's business environment is similar to 2022 when we saw similarly elevated crack spreads and specialty margin. In that year, the company generated over $400 million of adjusted EBITDA.

Speaker #1: Our integrated business allows us to produce fuels and take advantage of the attractive, high-margin fuel environment. Using current strips, the 2026 full-year 211 is over $42 per barrel, nearly double what we saw on average over 2025.

David Lunin: In addition, our Specialties business, we've now posted the sixth consecutive quarter of sales volume exceeding 20,000 barrels per day. This was accomplished despite the outage at Shreveport, which primarily impacted our fuels business. Specialty margins during the period were temporarily compressed due to the extreme spike in crude oil price. The commercial team acted quickly, pushing through numerous price increases to offset the impact of rising feedstock costs. We've put in place more than 20 price increases to date and anticipate seeing the future benefit of this in Q2. These price increases, plus the elevated fuel margin environment, position us well for what we believe will be a strong Q2 where we expect to generate additional cash flow during this attractive margin environment.

Speaker #1: In addition, our specialty business, we've now posted the sixth consecutive quarter of sales volume exceeding $20,000 barrels per day. This was accomplished despite the outage at Shreveport, which primarily impacted our fuels business.

Speaker #1: Specialty margins during the period were temporarily compressed due to the extreme spike in crude oil price. The commercial team acted quickly, pushing through numerous price increases to offset the impact of rising feedstock costs.

Speaker #1: We put in place more than 20 price increases to date in anticipate seeing the future benefit of this in the second quarter. These price increases, plus the elevated fuel margin environment, position us well for what we will be what we believe will be a strong second quarter where we expect to generate additional cash flow during this attractive margin environment.

David Lunin: To add to that, to fortify our ability to achieve our deleveraging targets, we've entered into crack spread hedges for portions of 2026 and 2027 fuels production. Currently, we have in place hedges for approximately 10,000 barrels per day, or around 25% of our fuels production on the 2-1-1 crack spread. We entered into a portion of these 2026 hedges at around $22 per barrel above the 2-1-1 crack using F Grade or CBOT for the gasoline leg of the hedge. Note that CBOT trades at a $3 to $4 discount to Gulf Coast 87.

Speaker #1: To add to that, and to fortify our ability to achieve our de-leveraging targets, we've entered into crack spread hedges for portions of 2026 and 2027 fuels production.

Speaker #1: Currently, we have in place approximately hedges for approximately $10,000 barrels per day, or around $25% of our fuels production, on a 211 crack spread.

Speaker #1: We entered into a portion of these 2026 hedges at around $22 per barrel of the 211 crack using A-grade or CBOB for the gasoline leg of the hedge.

Speaker #1: Note that CBOB trades at a $3 to $4 discount to Gulf Coast 87. Those hedges position us—those hedge positions were put in place at attractive historical levels even before the large run-up driven by the conflict in the Middle East.

David Lunin: Those hedge positions were put in place at an attractive historical levels even before the large run-up driven by the conflict in the Middle East, and those cost us around $6 million of realized hedge losses during the period. The next tranche, which was added recently, was 10,000 barrels of production for 2027 at levels closer to $27 a barrel, also on a CBOT basis. Now, how these hedges end up is a function of what happens from here in the Middle East. For us, it's about making sure we deliver on our strategic objective, which is generating strong cash flows to accelerate deleveraging and de-risking a portion of our fuels productions at these extraordinarily high margins. This puts us in a place to support that goal while also leaving plenty of room for upside of our remaining fuels production.

Speaker #1: And those cost us around $6 million of realized hedge losses during the period. The next tranche, which was added recently, was $10,000 barrels of production for 2027 at levels closer to $27 a barrel also, on a CBOB basis.

Speaker #1: Now, how these hedges end up is a function of what happens from here in the Middle East. For us, it's about making sure we deliver on our strategic objective, which is generating strong cash flows to accelerate de-leveraging and de-risking a portion of our fuels production at these extraordinarily high margins this puts us in a place to support that goal while also leaving plenty of room for upside of our remaining fuels production.

David Lunin: Turning to slide 8 in Performance Brands, we also continue to benefit from our commercial excellence strategy in this segment and a truly premium brand in TRUFUEL. We reported $12.6 million of adjusted EBITDA. The results were partially impacted by margin compression and the normal price lag associated with a more retail-oriented customer base. While we have been also implementing price action, this branded space takes about 60 to 90 days to fully reflect the increases compared to the less than 1-month lag in our SPS business. Taking a closer look at adjusted EBITDA on a like-for-like comparison basis, we've seen continued growth. As a reminder, the results of Royal Purple Industrial business are reflected in the Q1 2025 financials when we owned that portion of the business and not included in the current period following the divestiture in March. Last March.

David Lunin: Turning to slide 8 in Performance Brands, we also continue to benefit from our commercial excellence strategy in this segment and a truly premium brand in TRUFUEL. We reported $12.6 million of adjusted EBITDA. The results were partially impacted by margin compression and the normal price lag associated with a more retail-oriented customer base. While we have been also implementing price action, this branded space takes about 60 to 90 days to fully reflect the increases compared to the less than 1-month lag in our SPS business. Taking a closer look at adjusted EBITDA on a like-for-like comparison basis, we've seen continued growth. As a reminder, the results of Royal Purple Industrial business are reflected in the first quarter 2025 financials when we owned that portion of the business and not included in the current period following the divestiture in March. Last March.

Speaker #1: Turning to slide eight and performance brands, we also have continued to benefit from our commercial excellence strategy in this segment. And a truly premium brand in True Fuel.

Speaker #1: We reported $12.6 million of adjusted EBITDA. The results were partially impacted by margin compression and the normal price lag associated with a more retail-oriented customer base.

Speaker #1: While we have been also implementing price action, this branded space takes about 60 to 90 days to fully reflect the increases compared to the less than one-month lag in our STS business.

Speaker #1: Taking a closer look at adjusted EBITDA on a like-for-like comparison basis, we've seen continued growth. As a reminder, the results of Royal Purple Industrial Business are reflected in the first quarter of 2025 financials when we owned that portion of the business and not included in the current period following the divestiture in March.

David Lunin: Our commercial and operational teams in less than a year have successfully offset the loss EBITDA associated with Royal Purple Industrial business through disciplined cost controls, growth of our trusted brands, and our strong customer relationships. We announced that our TRUFUEL business in February had posted record monthly results. That momentum continued throughout the entire quarter as we posted record sales volume. We posted another monthly volume record in April. Customers continue to place a premium on the value of our engineered fuels, our innovative packaging option, and overall product reliability and convenience. Turning to Slide 9, in our Montana Renewables segment, adjusted EBITDA with tax attributes was $10.2 million for the quarter compared to $3.3 million in Q1 2025. Renewables EBITDA with tax attributes on a Calumet-owned 87% basis was $8.8 million.

David Lunin: Our commercial and operational teams in less than a year have successfully offset the loss EBITDA associated with Royal Purple Industrial business through disciplined cost controls, growth of our trusted brands, and our strong customer relationships. We announced that our TRUFUEL business in February had posted record monthly results. That momentum continued throughout the entire quarter as we posted record sales volume. We posted another monthly volume record in April. Customers continue to place a premium on the value of our engineered fuels, our innovative packaging option, and overall product reliability and convenience. Turning to Slide 9, in our Montana Renewables segment, adjusted EBITDA with tax attributes was $10.2 million for the quarter compared to $3.3 million in first quarter 2025. Renewables EBITDA with tax attributes on a Calumet-owned 87% basis was $8.8 million.

Speaker #1: Last March, our commercial and operational teams in less than a year have successfully offset the lost EBITDA associated with Royal Purple Industrial Business through disciplined cost controls, growth of our trusted brands, and our strong customer relationships.

Speaker #1: We announced that our True Fuel business in February had posted record monthly results, and that momentum continued throughout the entire quarter as we posted record sales volume and we posted another monthly volume record in April.

Speaker #1: Customers continue to place a premium on the value of our engineered fuels our innovative packaging option and overall product reliability and convenience. Turning to slide nine and our Montana's slash renewables segment, adjusted EBITDA with tax attributes was $10.2 million for the quarter, compared to $3.3 million in Q1 2025.

Speaker #1: Renewables EBITDA with tax attributes on a Calumet-owned 87% basis was $8.8 million. As Todd mentioned, we've delivered the max SAF 150 expansion on time and on budget.

David Lunin: As Todd mentioned, we've delivered the MaxSAF 150 expansion on time and on budget. With our new capacity, we are stepping into a market with significant tailwinds from a transformational product mix shift between renewable diesel and SAF that will deliver a four to five-fold increase in SAF volumes on an annual run rate basis. The business is incredibly well-positioned as we ramp up production with the new RVO and a diversified portfolio of customers with a contractual SAF premium of $1 to $2 per gallon over renewable diesel, all of which is underpinned by our industry-leading low-cost structure. As these dynamics further take hold, our renewables business is at a positive inflection point, and we leverage the strategic investments we've made in the business over the last several years with an expectation of meaningful cash flow generation.

Speaker #1: With our new capacity, we are stepping into a market with significant tailwinds from a transformational product makeshift between renewable diesel and SAF that will deliver a four to five-fold increase in SAF volumes on an annual run rate basis.

Speaker #1: The business is incredibly well positioned as we ramp up production with the new RVO and a diversified portfolio of customers with a contractual SAF premium of $1 to $2 per gallon of renewable diesel.

Speaker #1: All of which is underpinned by our industry-leading low-cost structure. As these dynamics further take hold, our renewables business is at a positive inflection point, and we leverage the strategic investments we've made in the business over the last several years with an expectation of meaningful cash flow generation.

David Lunin: As Todd mentioned, following the 2023 RVO and trough-like margins the industry managed through, look no further than the RINs pricing in 2026 to see that recovery was already in process prior to the extremely constructive RVO announcement in March from the current administration. Capital expenditure during the quarter within MRL was approximately $15 million and funded entirely by cash within MRL on the balance sheet. Before leaving this segment, our Montana asphalt results were in line with the prior year as Q1 2026 reflected typical seasonality and price lag impacts in our wholesale asphalt business. We are moving into a seasonally stronger period in Q2, as well as an extremely supportive crack environment for fuels also in this segment.

David Lunin: As Todd mentioned, following the 2023 RVO and trough-like margins the industry managed through, look no further than the RINs pricing in 2026 to see that recovery was already in process prior to the extremely constructive RVO announcement in March from the current administration. Capital expenditure during the quarter within MRL was approximately $15 million and funded entirely by cash within MRL on the balance sheet. Before leaving this segment, our Montana asphalt results were in line with the prior year as first quarter 2026 reflected typical seasonality and price lag impacts in our wholesale asphalt business. We are moving into a seasonally stronger period in Q2, as well as an extremely supportive crack environment for fuels also in this segment.

Speaker #1: As Todd mentioned, following the 2023 RVO and trough-like margins, the industry-managed through with no further than the RINS pricing in 2026 to see that that recovery was already in process prior to the extremely constructive RVO announcement in March from the current administration.

Speaker #1: Finally, capital expenditure during the quarter within MRL was approximately $15 million and funded entirely by cash within MRL on the balance sheet. Before leaving this segment, our Montana Asphalt results were in line with the prior year as first quarter 2026 reflected typical seasonality and price lag impacts in our wholesale asphalt business.

Speaker #1: We are moving into a seasonally stronger period in Q2, as well as an extremely supportive crack environment for fuels also in this segment. As we've routinely said, we expect the site to produce 30 to 50 million of annual EBITDA range in a normal environment, and we look forward to the opportunity at hand in today's stronger margin environment.

David Lunin: As we've routinely said, we expect the site to produce $30 to 50 million of annual EBITDA range in a normal environment. We look forward to the opportunity at hand it stays a stronger margin environment. Let me now turn the call back to Todd for his concluding remarks.

Speaker #1: Let me now turn the call back to Todd for his concluding remarks.

Todd Borgmann: Thanks, David. Before I turn the call back to our operator for questions, I wanted to remind those joining that we have filed our proxy materials and the voting window is open. For all shareholders listening, we appreciate your support. It's almost 2 years since our conversion from an MLP. We set out to create a stock with much higher liquidity and a broader investor base. Over the past few years, we appreciate the new investors that have joined us as our daily trading volume has increased over 10-fold. Our strategy is focused on creating shareholder value. Roy is available to our investors to further discuss our proxy materials and our business strategy. Thank you for joining us today. I'll turn the call back to Andrea for questions. Andrea?

Speaker #2: Thanks, David. And before I turn the call back to our operator for questions, I wanted to remind those joining that we have filed our proxy materials and the voting window is open.

Speaker #2: For all shareholders listening, we appreciate your support. It's almost two years since our conversion from an MLP. We set out to create a stock with much higher liquidity and a broader investor base, and over the past few years, we appreciate the new investors that have joined us as our daily trading volume has increased over tenfold.

Speaker #2: Our strategy is focused on creating shareholder value, and Roy is available to our investors to further discuss our proxy materials and our business strategy. Thank you for joining us today, and I'll turn the call back to Andrea for questions.

Operator 2: We will now begin our question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time you wish your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. Our first question will come from Amit Dayal of H.C. Wainwright. Please go ahead.

Operator: We will now begin our question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time you wish your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. Our first question will come from Amit Dayal of H.C. Wainwright. Please go ahead.

Speaker #2: Andrea.

Speaker #3: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #3: If at any time you wish your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster.

Speaker #3: And our first question will come from Amit Dayal of HC Wainwright. Please go ahead.

Amit Dayal: Thank you. Good morning, everyone. Thank you for taking my questions. The story seems to be in a really good place, guys. You know, the demand and pricing environment is pretty solid. I'm just trying to get a sense of the risks. Are these primarily coming from, you know, the cost and input side of things or new supply coming online? Can you share any sort of drivers where, you know, we should be paying attention to that may, you know, provide any sort of unexpected surprises, I guess, in terms of, you know, how the setup is right now?

Speaker #4: Thank you. Good morning, everyone. Thank you for taking my questions. So, the story seems to be in a really good place, guys. The demand and pricing environment is pretty solid.

Speaker #4: So, I'm just trying to get a sense of the risks. Are these primarily coming from the cost and input side of things, or new supply coming online?

Speaker #4: Can you share any sort of drivers where we should be paying attention to that may provide any sort of unexpected surprises, I guess, in terms of how the setup is right now?

Todd Borgmann: Hey, Amit, it's Todd. Thanks for the question. You know, it's, I'd say that we spoke a lot about the market today. There's not a single element in the market, in either renewables or specialties or kind of more broadly fuels that I'd point to and say, as any singular risk that, you know, is keeping us up at night. I think the market's in really good shape. We talked about the reasons why, you know, especially markets supported, you know, by disruptions globally and is just a normal, strong, stable market in any environment.

Speaker #2: Hey, Amit, it's Todd. Thanks for the question. I'd say the we spoke a lot about the market today, and there's not a single element in the market in either renewables or specialties or kind of more broadly fuels, that I'd point to and say has any singular risks that is keeping us up at night.

Speaker #2: I think the markets are in really good shape. We talked about the reasons why, especially markets supported by disruptions globally, and it's just a normal, strong, stable market.

Todd Borgmann: I'd say if there's anything, we just acknowledgment that it's very volatile out there, and there's still a meaningful conflict going on, and we could see pretty massive volatility. We've seen how quickly these markets can move. As we sit here today, I think we have a lot of confidence in our commercial team to react accordingly no matter what happens. They've proven that. You know, price increases are in on the specialty side, so we feel pretty comfortable with where we're at. We'll see a little bit of, you know, margin tightening in Performance Brands while we kind of play through the lag there for the next couple months. Other than that, we feel like we're positioned pretty well and really looking forward to the opportunity the market's offering.

Speaker #2: And in any environment, I'd say if there's anything, it's just acknowledgment that it's very volatile out there. And there's still a meaningful conflict going on, and we could see pretty massive volatility.

Speaker #2: We've seen how quickly these markets can move. But as we sit here today, I think we have a lot of confidence in our commercial team to react accordingly, no matter what happens.

Speaker #2: They've proven that. And price increases are in on especially side. So we feel pretty comfortable with where we're at. We'll see a little bit of margin tightening and performance brands while we kind of play through the lag there for the next couple of months.

Speaker #2: But other than that, we feel like we're positioned pretty well and really looking forward to the opportunity the market's offering.

Amit Dayal: Thank you, Todd. Just next one for me is on the SAF side of the story. You know, your SAF contracts where you are getting the $1 to $2 premiums, you know, how long are these in place for? Do you think when these renew, you'll be able to get similar or better terms?

Speaker #4: Thank you, Todd. Just next one for me is on the SAF side of the story. Your SAF contracts where you are getting the $1 to $2 premiums, how long are these in place for?

Speaker #4: And then do you think when these renew, you'll be able to get similar or better terms?

Bruce Fleming: Hey, Amit, it's Bruce. Thank you for the question. The term contracts are evergreens. The notice periods, you know, we have a distribution of those at this point because we've been selling SAF for 3 years now. As we step into these, you know, we're going to kind of have different notice period dates. What I could tell you is the ones that roll have renewed within that guidance range. The new ones are a portfolio of, you know, kind of various next notice dates going forward. You know, they stay with us as evergreen relationships.

Speaker #2: Amit, it's Bruce. Thank you for the question. So, the term contracts are evergreens. The notice periods—we have a distribution of those at this point because we’ve been selling SAF for three years now.

Speaker #2: And as we step into these, we're going to kind of have different notice period dates. But what I can tell you is the ones that enroll have renewed.

Speaker #2: Within that guidance range, the new ones are a portfolio of kind of various next notice dates going forward. And then they stay with us as evergreen relationships.

Todd Borgmann: I just add a little bit of that. You know, on average, these are typically 2, 3 year type evergreens. As Bruce stated, so far they've all continued to roll forward. As far as the margin environment ability to renew, we feel quite comfortable with where those have been. As we've rolled forward contracts historically, we've certainly not had a problem, you know, re-upping them and adding additional supply as we've been doing here recently over the last 6 months or so. We haven't seen any setback in margins. We think that the underlying fundamental support is there, given all of the, you know, demand for the Renewable Energy Credits, the underlying scope credits, et cetera.

Speaker #2: And I'd just add a little bit about on average, these are typically two, three-year type evergreens. But as Bruce stated, so far they've all continued to roll forward.

Speaker #2: And as far as the margin environment, ability to renew, we feel quite comfortable with where those have been as we've rolled forward contracts historically.

Speaker #2: We've certainly not had a problem re-upping them and adding additional supply as we've been doing here recently over the last six months or so.

Speaker #2: We haven't seen any setback in margins. We think that the underlying fundamental support is there, given all of the demand for the renewable energy credits, the underlying scope credits, etc.

Todd Borgmann: pretty bullish on the outlook there and our ability to continue growing our marketing.

Speaker #2: So pretty bullish on the outlook there and our ability to continue growing our marketing.

Amit Dayal: Good to hear, guys. That's all I have. I will step back and queue. Thank you so much.

Speaker #4: Good to hear, guys. That's all I have. I'll step back into. Thank you so much.

Operator 2: The next question comes from Conor Fitzpatrick of Bank of America. Please go ahead.

Operator: The next question comes from Conor Fitzpatrick of Bank of America. Please go ahead.

Speaker #3: The next question comes from Connor Fitzpatrick of Bank of America. Please go ahead.

Conor Fitzpatrick: Good morning, everybody. Thanks for taking my question. I wanted to dig a bit into maybe an update or a refresh on the second phase of SAF capacity expansion. You know, it's still a ways away, and it could maybe take a more modular form, but I was wondering if there was just any update on CapEx build parameters, engineering. Obviously the contracts coming in for this first phase are pretty bullish, pretty supportive of continued demand. Sounds like there's still the opportunity there to expand at a similar profitability to the first phase.

Speaker #2: Good morning, everybody. Thanks for taking my question. I wanted to dig a bit into maybe an update or a refresh on the second phase of SAF capacity expansion.

Speaker #2: It's still a ways away. And it could maybe take a more modular form. But I was wondering if there was just any update on CapEx, build parameters, engineering, and obviously the contract coming in for this first phase.

Speaker #2: Are pretty bullish, pretty supportive of continued demand sounds like there's still the opportunity there to expand at a similar profitability to the first phase.

Todd Borgmann: Hey, Conor. Thanks for the question. It's Todd. yeah, look, we've been focused on the current phase. Obviously, we're just now commencing operations, so it's very exciting with where we're at. We wanna stay focused there. We've got our team kind of head down, operating, focused on that operations. At the same time, we do have an independent project team that's certainly looking at kind of next phase of a modular opportunity. It's probably a little bit too early to get ahead of ourselves on announcing that. We hope to be able to talk more specifically to that soon.

Speaker #5: Hey, Connor. Thanks for the question. It's Todd. Yeah, we've been focused on the current phase, obviously. We're just now commencing operations, so very excited with where we're at.

Speaker #5: We want to stay focused there. So we've got our team kind of head down operating focused on that operation. At the same time, we do have an independent project team that's certainly looking at kind of the next phase of a modular opportunity.

Speaker #5: It's probably a little bit too early to get ahead of ourselves on announcing that. We hope to be able to talk more specifically to that soon.

Todd Borgmann: I think in the past we've said, Let us get a chance to get up, get through this commissioning ramp up here over the next couple of months, and we'll certainly be out and looking forward to doing so in the not too distant future to talk about what's next and how the follow-up steps can play. To your point, you know, we certainly are bullish about the opportunity to continue to expand. We think the opportunity is there, it's readily available and we're not seeing any, you know, demand gaps that would hinder that. We're just gonna kind of take it one step at a time here but hope to be able to talk about our acceleration plan and next steps pretty soon.

Speaker #5: I think in the past, we've said let us get a chance to get up, get through this commissioning, ramp up here over the next couple of months.

Speaker #5: And we'll certainly be out and looking forward to doing so in the not-too-distant future to talk about what's next and how the follow-up steps can play.

Speaker #5: But to your point, we certainly are bullish about the opportunity to continue to expand. We think the opportunity is there. It's readily available. And we're not seeing any demand gaps that would hinder that.

Speaker #5: So we're just going to kind of take it one step at a time here. But hope to be able to talk about our acceleration plan and next steps pretty soon.

Conor Fitzpatrick: Great. Thank you. I guess a follow-up is, it looks like there are maybe still some impediments to biodiesel capacity ramping to full or peak rates again. I think there are various reasons to do with physically operating, such as feed cost basis in the Midwest, you know, diesel pricing and biodiesel pricing specifically in different regions of the US, ability to have the actual cash inflow from 45Z credits soon enough to incentivize production. I was just wondering, you know, how far are we maybe from biodiesel producers, the marginal ones that will be needed to supply the market, until profitability so that they can ramp up fully?

Speaker #2: Great. Thank you. And I guess a follow-up is it looks like there are maybe still some impediments to biodiesel capacity ramping to full or peak rates again.

Speaker #2: reasons to do with physically operating such as feed cost basis in the Midwest. Diesel pricing and biodiesel pricing specifically in different regions of the US, ability to have the actual cash inflow from 45Z credits soon enough to incentivize production.

Speaker #2: So I was just wondering how far are we maybe from biodiesel producers the marginal ones that will be needed to supply the market until profitability so that they can ramp up fully?

Bruce Fleming: Hey, Conor. Bruce. Yeah, I think that was a good frame of what some of the issues and drivers are. There's two fundamental-

Bruce Fleming: Hey, Conor. Bruce. Yeah, I think that was a good frame of what some of the issues and drivers are. There's two fundamental questions you asked, what about their volume and what about the economics that follow from that? Our supply stack says we're solidly back into a market environment where the prices are gonna have to accept the small biodiesel guys, the independent ones. Remember, some of them are running. Everybody's got their own specific, unique situation. That's why those stacked cost bars have a range to them. The question on volume is how fast and how many? Have these been permanently abandoned? You know, history shows us that it's kinda, I call it ghost capacity, but it can come back faster than you think unless somebody just gave up and removed it. We're gonna find that out.

Speaker #5: Hey, Connor, Bruce. So yeah, I think you've got that was a good frame of what some of the issues and drivers are. There's two fundamental questions you asked.

Bruce Fleming: Questions you asked, what about their volume and what about the economics that follow from that? Our supply stack says we're solidly back into a market environment where the prices are gonna have to accept the small biodiesel guys, the independent ones. Remember, some of them are running. Everybody's got their own specific, unique situation. That's why those stacked cost bars have a range to them. The question on volume is how fast and how many? Have these been permanently abandoned? You know, history shows us that it's kinda, I call it ghost capacity, but it can come back faster than you think unless somebody just gave up and removed it. We're gonna find that out.

Speaker #5: What about their volume and what about the economics that follow from that? So our supply stack says we're solidly back into a market environment where the prices are going to have to accept the small biodiesel guys, the independent ones.

Speaker #5: And remember some of them are running. Everybody's got their own specific unique situation. That's why those stacked cost bars have arranged to them and the question on volume is how fast and how many.

Speaker #5: So have these been permanently abandoned? And history shows us that it's kind of I call it ghost capacity, but it can come back faster than you think unless somebody just gave up and removed it.

Bruce Fleming: You know, a lot of the analysts are calling for getting back into the 90% utilization range of biodiesel capacity by, you know, towards the end of this year.

Speaker #5: And we're going to find that out. But a lot of the analysts are calling for getting back into the 90% utilization range of biodiesel capacity by towards the end of this year.

Conor Fitzpatrick: Okay. Thanks, thanks for the color. That's all I have.

Speaker #2: Okay. Thanks for the caller. That's all I have.

Operator 2: The next question comes from Josiah Knight of Goldman Sachs. Please go ahead.

Operator: The next question comes from Josiah Knight of Goldman Sachs. Please go ahead.

Speaker #3: The next question comes from Josiah Knight of Goldman Sachs. Please go ahead.

Josiah Knight: Hey, team. Good morning. Thank you for taking our question. Maybe on the feedstock side of the equation for MRL, how much pressure are you seeing? Can you remind us of MRL's relative advantage and feedstock flexibility in navigating these costs? Thanks.

Speaker #2: Hey, team. Good morning. Thanks for taking our question. Maybe on the feedstock side of the equation for MRL, how much pressure are you seeing?

Speaker #2: And then, can you remind us of MRL's relative advantage and feedstock flexibility in navigating these costs? Thanks.

Bruce Fleming: Hey, Josiah, it's Bruce. Thank you for the question. We have essentially unlimited feedstock flexibility. We set it up that way on purpose, you know, the pre-treater capability is what allows us to follow the market dynamics and pricing volatility. We're, we're pretty aggressive at our monthly re-optimization. You know, we exist in the middle of the feedstock long area, so there's never been a question of any kind of physical shortage, and we seem to do better on optimization and re-optimization when we look at our capture percentages versus an industry index.

Speaker #5: Hey, Josiah. It's Bruce. Thank you for the question. We have essentially unlimited feedstock flexibility. We set it up that way on purpose, and the pre-treater capability is what allows us to follow the market dynamics and pricing volatility.

Speaker #5: So we're pretty aggressive at our monthly reoptimization. We exist in the middle of a feedstock long area. So there's never been a question of any kind of physical shortage.

Speaker #5: And we seem to do better on optimization and reoptimization when we look at our capture percentages versus an industry index.

Josiah Knight: Got it. That's helpful. The follow-up, maybe on the base business, how are you thinking about the earnings outlook in the near and medium term, especially given some of the recent volatility for commodity prices?

Speaker #2: Got it. That's helpful. And then the follow-up, maybe on the base business, how are you thinking about the earnings outlook in the near and medium term, especially given some of the recent volatility for commodity prices?

Todd Borgmann: Hey, Josiah. Look, I think, you know, as we talked about during the script period earlier, we're pretty confident in the outlook. Obviously the fuel margin is, you know, incredibly positive right now. There's pretty meaningful supply disruption. We don't think this is something that just, you know, returns in a very short period of time. It's obviously not something that lasts forever. It feels a lot like 2022, where you kinda just see the shock that we're seeing in the market and you look at inventories out there and they're depleted not only here, but really throughout the globe. On Specialty side, you know, we've talked a lot about our ability to push price increases through rapidly.

Speaker #5: Hey, Josiah, it's Todd. Look, I think, as we talked about during the script period earlier, we're pretty confident in the outlook. Obviously, the fuel margin is incredibly positive right now.

Speaker #5: There's pretty meaningful supply disruption. We don't think this is something that just returns in a very short period of time. It's obviously not something that lasts forever.

Speaker #5: But it feels a lot like 2022. When you kind of just see the shock that we're seeing in the market and you look at inventories out there and they're depleted not only here, but really throughout the globe.

Speaker #5: And especially we've talked a lot about our ability to push price increases through rapidly. Commercial team did over 20 of them in a very short period across the product line.

Todd Borgmann: commercial team did over 20 of them in a very short period of across the product line. You know, at current costs, we're quite bullish on the outlook for both fuels and Specialties. Obviously, we could see increased volatility from here, and if we do, then we've demonstrated that we can react accordingly and we'll do that. I think big picture, the market's pretty constructive on a margin outlook basis, no matter where you look. You know, our Specialties business is, has a domestic supply chain and access to feedstock, and you just can't say that on a global basis right now. You know, we'll continue to serve the market.

Speaker #5: So at current cost, we're quite bullish on the outlook for both fuels and specialties. Obviously, we could see increased volatility from here and if we do, then we've demonstrated that we can react accordingly and we'll do that.

Speaker #5: But I think big picture, the market's pretty constructive. On a margin outlook basis, no matter where you look, especially as business is has a domestic supply chain and access to feedstock and you just can't say that on a global basis right now.

Speaker #5: So we'll continue to serve the market.

Josiah Knight: That's great. Thanks.

Bruce Fleming: Yeah.

Speaker #2: That's great. Thanks.

Operator 2: The next question comes from Gregg Brody of Bank of America. Please go ahead.

Operator: The next question comes from Gregg Brody of Bank of America. Please go ahead.

Speaker #3: The next question comes from Greg Brody of Bank of America. Please go ahead.

Gregg Brody: Good morning, guys. Excuse me. You referenced 2022 as how to think about maybe specialty material margins and the environment you're in. Those margins got up to the $90 range during that period. You've mentioned you'd be able to pass price through. Is that the type of environment we're in right now or is it gonna take maybe do we have more steps we need to go to get there in terms of price increases?

Speaker #4: Good morning, guys. Excuse me. You referenced '22 as a how to think about maybe specialty material margins and the environment you're in. Those margins got up to the 90-dollar range during that period.

Speaker #4: And you mentioned you'd be able to put through you'd be able to pass price through. Is that the type of environment we're in right now, or is it going to take do we have more steps we need to go to get there in terms of price increases?

Todd Borgmann: Hey, Greg. I don't think right now we would look and say we're at $90 specialty margins going forward. I think when we talk about 2022, you're looking at just kind of analogies to the, to the whole demand period. You know, increasing crude costs create a little bit of lag in the specialties business. I think back in 2022, we were able to overcome that in a hurry. We've done the same here. We'll see what happens, right, with volatility in the back half of the year here, but feel pretty good about where we're at. As we sit here right now, I'd say specialty margins are a tad lower than 2022, fuel margins are a tad higher than 2022.

Speaker #5: Hey, Greg. I don't think right now we would look and say we're at 90-dollar specialty margins going forward. I think when we talk about 2022, you're looking at kind of analogies to the whole demand period.

Speaker #5: Increasing crude costs create a little bit of lag, and especially as business. I think back in 2022, we were able to overcome that in a hurry.

Speaker #5: We've done the same here. We'll see what happens, right? With volatility in the back half of the year here. But feel pretty good about where we're at.

Speaker #5: So, as we sit here right now, I'd say specialty margins are a tad lower than 2022, and fuel margins are a tad higher than 2022.

Todd Borgmann: If you blend those together, it's probably a good period. We're not trying to, you know, draw too tight of an analogy here. We're just saying the market feels pretty similar, where supply shocks are going to, you know, drive margins that are sustained for a period of time and provide the ability to really generate some excess cash flow and accelerate our de-leveraging plan.

Speaker #5: And if you blend those together, then it's probably a good period. But we're not trying to draw too tight of an analogy here. We're just saying the market feels pretty similar, where supply shocks are going to drive margins that are sustained for a period of time.

Speaker #5: And provide the ability to really generate some excess cash flow and accelerate our de-leveraging plan.

Gregg Brody: That's helpful. Are you seeing any response from the consumer, as a result of the price spikes?

Speaker #2: That's helpful. Are you seeing any response from the consumer as a result of the price spikes?

Todd Borgmann: We really haven't right now as far as demand. Obviously everybody, you know, is getting their arms around these rapid cost increases. I think where we sit right now, there's such supply disruption throughout the space that consumers need our product. You know, this isn't something A lot of our products go into consumer necessities and staples and not things that have massive price elasticity. We don't expect this to be something where we're seeing dramatic demand declines, et cetera. You know, we even saw record growth period at some of the downstream, you know, Performance Brands. We talked about a TRUFUEL record, et cetera. We've seen consumer demand continue to stay strong throughout the space, you know.

Speaker #5: The we really haven't. Right now, as far as demand. Obviously, everybody is getting their arms around these rapid cost increases. But I think where we sit right now, there's just such supply disruption throughout the space that consumers need our product.

Speaker #5: This isn't something a lot of our products go into—consumer necessities and staples, and not things that have massive price elasticity. So we don't expect this to be something where we're seeing dramatic demand declines, etc.

Speaker #5: We even saw record growth period at some of the downstream performance brands. We talked about a true fuel record, etc. So we've seen consumer demand continue to stay strong throughout the space.

Todd Borgmann: How long that continues is, you know, probably a function of just general consumer sentiment and market volatility. As it sits right now, I think we're pretty positive on the outlook.

Speaker #5: How long that continues is probably a function of just general consumer sentiment and market volatility. But as it sits right now, I think we're pretty positive on the outlook.

Gregg Brody: You just shifting to the organic chlorides issue, which is in the past. Is there any remedies you have to make to the facility to fix any damage that was done at some point or just going forward?

Speaker #2: And you just shifting to the organic horrides issue, which is in the it seems like it's in the past. Is there any remedies you have to make to the facility to for to fix any damage that was done at some point, or just going forward, what's the risk or something again?

Todd Borgmann: No

Gregg Brody: what's the risk of something?

Todd Borgmann: No.

Gregg Brody: happening again?

Todd Borgmann: No. There's a good question. There's no further work needed at the facility. We took the event extremely seriously. We inspected the facility thoroughly. We made quite a few repairs at the time, and I'd say in a very conservative fashion. We weren't taking any risks with the situation. We took a big chunk of our naphtha train out of service and replaced it. We've installed quite a bit of redundancy in the sampling and quality monitoring throughout the system just to ensure that this can't happen again. You know, what typically happens in these types of scenarios throughout industry is chlorides, and a small amount of them can do a lot of harm, sneak in with crude supply and bypass the upfront QC checks.

Speaker #5: No, there's a it's a good question. There's no further work needed at the facility. We took the event extremely seriously. We inspected the facility thoroughly.

Speaker #5: We made quite a few repairs at the time. And I'd say in a very conservative fashion. We weren't taking any risks with the situation.

Speaker #5: We took a big chunk of our NAFTA train out of service. And replaced it. And we've installed quite a bit of redundancy in the sampling and quality monitoring throughout the system just to ensure that this can't happen again.

Speaker #5: What typically happens in these types of scenarios throughout industry is fluorides in a small amount of them can do a lot of harm. Sneak in with crude supply and bypass the upfront QC checks.

Todd Borgmann: I think that's what happened here. We're still, you know, fully investigating the deal. If we can figure out what happened, we'd certainly be very aggressive with, you know, any culprit that created that. As far as the current go forward position, the facility's operating really well. There's no sustained damage. We aggressively attacked any repairs that needed to be made, and we've been up and running really strong for over 1 month now.

Speaker #5: And I think that's what happened here. We're still fully investigating the deal to see if we can figure out what happened. There's certainly—we'd certainly be very aggressive with any culprit that created that.

Speaker #5: But as far as the current go-forward position, the facility is operating really, really well. There's no sustained damage. We aggressively attacked any repairs that needed to be made.

Speaker #5: And we've been up and running really strong for over a month now.

Gregg Brody: Got it. Just to shift into the deleveraging plan, you know, you highlighted that you'll use cash to deleverage. You're clearly set up for a windfall here from both the restricted group assets and MRL. Does that change the way you're thinking about potentially monetizing MRL to pay down debt at restricted group? Or is that still the plan right now?

Speaker #2: Got it. And just to shift into the de-leveraging plan, you highlighted that you’ll use cash to de-leverage. Does you clearly set up for a windfall here from both the restricted group assets and the MRL?

Speaker #2: Does that change the way you're thinking about potentially monetizing MRL to pay down debt at the restricted group? Or is that still the plan right now?

Todd Borgmann: No, I'd say the plan still remains as it has been. You know, ultimately, we think that Montana Renewables is going to present an opportunity to monetize at some point. We're well on track to accomplish that. Obviously, this recent RVO was a major step in the right direction. No game plan changes there. We think the next step here is just showcasing what the earnings power of this business is with both Max SAF project that's up and running and in a really positive RVO market. That's what we're focused on here for the foreseeable future, next quarter or two, and we'll go from there.

Speaker #5: No, I'd say the plan still remains as it has been. Ultimately, we think that Montana Renewables is going to present an opportunity to monetize at some point.

Speaker #5: We're well on track to accomplish that. Obviously, this recent RVO was a major step in the right direction. So no game plan changes there.

Speaker #5: We think the next step here is just showcasing what the earnings power of this business is with both Max STaR project that's up and running and a really positive RVO market.

Speaker #5: So that's what we're focused on here for the foreseeable future, next quarter or two. And we'll go from there.

Gregg Brody: Great. I appreciate the time, guys.

Speaker #2: Great. I appreciate the time, guys.

Todd Borgmann: Yeah. Thank you.

Speaker #5: Yeah. Thank you.

Operator 2: The next question comes from Jason Gabelman of TD Cowen. Please go ahead.

Operator: The next question comes from Jason Gabelman of TD Cowen. Please go ahead.

Speaker #4: The next question comes from Jason Gableman of TD Cowen. Please go ahead.

Jason Gabelman: Hey, thanks for taking my questions. You mentioned you're in a validation process of the MaxSAF expansion right now. Can you just talk about what the steps are to get it to a steady state or if it's already at steady state? In this type of margin environment, since the asset's been running, what type of margin are you seeing coming out of it?

Speaker #6: Hey. Thanks for taking my questions. You mentioned your validation process of the max staff expansion. Right now, so can you just talk about what the steps are to get it to a steady state?

Speaker #6: Or if it's already at steady state, and then in this type of margin environment, since the asset's been running what type of margin have you seen coming out of it?

Todd Borgmann: Hey, Jason. Bruce, I'll start us and see if I touch those three points. Just on the last one, you know, the renewable diesel index margin hit over $3 a gallon at the end of the quarter. We're not calling for it to stay there. You know, if you look at our supply stack, we think the renewable diesel industry structure, you know, the equilibrated structure should be a bit north of $2. The SAF premium overlays above that. Just with that as a reminder of structure, that's how we've always talked about it. In terms of the operational current performance, we did restream the unit after the extended turnaround plus capital projects. Those are the modifications that we've called MaxSAF 150.

Bruce Fleming: Hey, Jason. Bruce, I'll start us and see if I touch those three points. Just on the last one, you know, the renewable diesel index margin hit over $3 a gallon at the end of the quarter. We're not calling for it to stay there. You know, if you look at our supply stack, we think the renewable diesel industry structure, you know, the equilibrated structure should be a bit north of $2. The SAF premium overlays above that. Just with that as a reminder of structure, that's how we've always talked about it. In terms of the operational current performance, we did restream the unit after the extended turnaround plus capital projects. Those are the modifications that we've called MaxSAF 150. We had a little bit of a sidestep on an unrelated.

Speaker #5: Hey, Jason. Bruce, I'll start us. And see if I touch those three points. Just on the last one, the renewable diesel index margin hit over $3 a gallon at the end of the quarter.

Speaker #5: We're not calling for it to stay there. If you look at our supply stack, we think the renewable diesel industry structure the equilibrated structure should be a bit in order to $2.

Speaker #5: The staff premium overlays above that. And so just with that as a reminder of structure, that's how we've always talked about it. In terms of the operational current performance, we did restream the unit after the extended turnaround plus capital projects.

Speaker #5: Those are the modifications that we've called max staff 150. We had a little bit of a sidestep on an unrelated electrical power interruption to the site.

Todd Borgmann: We had a little bit of a sidestep on an unrelated.

Bruce Fleming: Electrical power interruption to the site, so we had to restream it a second time. With that behind us, you know, we're finishing the ramp up. We have a performance test designed that's probably maybe 4 weeks out. You know, the catalyst comes with performance guarantees. We've modified the hardware, and we wanna test that we've delivered the engineering expectations. You know, I think we'll have more intelligence in, you know, in a few weeks. No reason, nothing that we see, gives us any reason to think that we've, you know, we've underachieved in any way. We're, you know, we're excited about the go forward.

Speaker #5: So, we had to restream it a second time. With that behind us, we're finishing the ramp-up. We have a performance test design that's probably, maybe four weeks out.

Speaker #5: The catalyst comes with performance guarantees. We've modified the hardware, and we want to test that we've delivered the engineering expectations. So, I think we'll have more intelligence in a few weeks.

Speaker #5: But no reason, nothing that we see gives us any reason to think that we've underachieved in any way. So we're excited about the go-forward.

Jason Gabelman: Got it. Can you also remind me just from an OpEx standpoint, if there's any change on unit OpEx relative to where the initial MRL was at?

Speaker #2: Got it. And can you also remind me just from an OpEx standpoint if there's any change on a unit OpEx relative to where the initial MRL was at?

Bruce Fleming: Our track record of improving controllable costs and, you know, we got down to something like $0.38 a gallon. That's a chart we publish occasionally, is pretty compelling. We don't think that we have any kind of reversal on that just because we're fractionating more kerosene out of the total reactor product.

Speaker #5: So our track record of improving controllable costs and we got down to something like 38 cents a gallon. That's a chart we published occasionally.

Speaker #5: It's pretty compelling. We don't think that we have any kind of reversal on that just because we're fractionating more kerosene out of the total reactor product.

Jason Gabelman: Got it. Thanks for that answer. Maybe just turning to liquidity, there's been a lot of volatility in the market, and you've seen in some of your refining and biofuel peers, working capital de-derivative hedging kind of headwinds, related to that commodity volatility that we've seen. Have you seen that to a large extent? Can you talk through impacts on cash flow as a result of the volatility and if you would expect that to reverse over time?

Speaker #2: Got it. Thanks for that answer. And then maybe just turning to the liquidity. And we've there's been a lot of volatility in the market.

Speaker #2: And you've seen in some of your refining and biofuel peers working capital, derivative, hedging kind of headwinds related to that commodity volatility that we've seen.

Speaker #2: Have you seen that to a large extent? Can you talk through impacts on cash flow as a result of the volatility? And if you would expect that to reverse over time?

David Lunin: So I just start out by saying that, you know, we kind of feel good about our liquidity position and the cash that we're kind of generating in the current environment, kind of after some of the operational things that we saw at Shreveport during the quarter. We've obviously seen a big run-up in crude price. That does impact us, you know, a couple of different ways. One, on the inventory cost that we need to buy. You know, there's a little bit of a lag as we buy into the market. Also accounts receivables. You may have seen that, you know, we were up over $100 billion as kind of prices that are getting passed through at a premium to, you know, crude just roll into our AR.

Speaker #5: Yeah. Yeah. So I just started out by saying that we've kind of feel good about our liquidity position. And the cash that we're kind of generating in the current environment kind of after some of the operational things that we saw in Shreveport during the quarter we've obviously seen a big run-up in crude price.

Speaker #5: That does impact us a couple of different ways. One, on the inventory cost that we need to buy. And there's a little bit of a lag as we buy into the market.

Speaker #5: And then also, accounts receivable. You may have seen that we were up over $100 million, as prices that are getting passed through at a premium to crude just roll into our AR.

David Lunin: There was kind of a big draw on working capital during the period from that run-up that was exacerbated by the downtime that we saw at Shreveport. We're already seeing kind of almost a total unwind of that. We're already seeing it in April. There'll be, you know, a little bit more, you know, into May. Just to touch a little bit, you know, on the liquidity front, you know, we did this tack on for $150 million kind of earlier in the year. You know, we thought about that as a way to kind of at a pretty cost neutral, even at a premium, kind of pay off some of our 2028s when the call protection steps down in July.

Speaker #5: But there was kind of a big draw on working capital during the period from that run-up that was exacerbated by the downtime that we saw at Shreveport.

Speaker #5: And so we're already seeing kind of almost a total unwind of that. So we're already seeing it in April, and there'll be a little bit more into May.

Speaker #5: And then just to touch a little bit on the liquidity path, we did this tack-on for $150 million kind of earlier in the year.

Speaker #5: We thought about that as a way to kind of at a pretty cost-neutral, even at a premium, kind of pay off some of our 2028s when the call protection steps out in July.

David Lunin: We're looking at this current volatile environment. You know, we don't know how long it'll last, but we were in an attractive position to kind of take from the market, you know, kind of pre-reduce that debt and use that extra cash to balance kind of the spike in crude. As we move forward here, I think we'll still use that cash to pay down debt. We'll just reevaluate, you know, what the market looks like, you know, closer to July when our call protection steps down and, you know, what's happening in the world.

Speaker #5: And so we're looking at this current volatile environment. We don't know how long it'll last. But we were in an attractive position to kind of take from the market kind of pre-reduce that debt.

Speaker #5: And use that extra cash to balance kind of the spike in crude. And so as we move forward here, I think we'll still use that cash to pay down debt.

Speaker #5: We'll just reevaluate what the market looks like closer to July when our call protection steps down. And what's happening in the world.

Jason Gabelman: All right. That's great. Thanks. That's all my questions.

Speaker #2: All right. That's great. Thanks. That's all my questions.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to John Kompa for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to John Kompa for any closing remarks.

Speaker #3: This concludes our question and answer session. I would like to turn the conference back over to John Kompa for any closing remarks.

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

Speaker #5: Thank you, Andrew. And on behalf of Todd and the entire management team, I'd like to thank everyone for their time today and interest in Calumet.

Speaker #5: Have a great rest of the day. Thank you.

Operator 2: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.