Calumet, Inc. Q2 FY2025 earnings call

• Calumet earned $76.5 million of adjusted EBITDA in Q2 2025, with $8.3 million from Montana/Renewables.
• Specialty margins remained resilient due to product and market diversification, with specialty sales volume over 20,000 barrels a day for the third straight quarter.
• Performance Brands segment had second highest quarterly sales volume in modern form, driven by TruFuel brand.
• Cost and reliability initiatives rolled out earlier in the year tracked ahead of plan, with operating costs reduced $42 million through H1 2025 despite increased natural gas and electricity costs.
• Montana/Renewables had a busy regulatory quarter, with progress on MaxSAF expansion including catalyst purchase and engineering underway, and active SAF marketing conversations.

Calumet earned $76.5 million of adjusted EBITDA in Q2 2025. Specialty Products & Solutions segment generated $66.8 million of adjusted EBITDA during the quarter, with specialty sales volume over 20,000 barrels a day for the third consecutive quarter. Performance Brands segment posted its second highest quarterly sales volume in modern form, driven by the TruFuel brand. Montana/Renewables segment adjusted with tax attributes generated $16.3 million in Q2 2025 compared to $8.7 million in the prior year period, with Montana/Renewables specifically generating adjusted EBITDA with tax attributes of $8.3 million, and the 87% attributable portion to Calumet worth $7.2 million. Montana/Renewables also saw operational cost reductions and is on track for MaxSAF expansion to produce 120 million to 150 million gallons of annual SAF production in H2 2026 with an investment of $20 million to $30 million.

• Montana/Renewables remains on track to start up MaxSAF in H1 2026, with catalyst purchase placed and engineering underway.
• SAF marketing cycle begun, with active conversations regarding more potential volume than increased supply can meet and SAF premiums in $1 to $2 per gallon over renewable diesel range.
• Expect margin recovery in renewable diesel as regulatory outlook improves, with new RVO and PTC changes potentially supporting industry growth.
• PTC monetization efforts are in advanced stages of discussion.

• Regulatory uncertainties affecting renewable diesel margins, such as unresolved SREs and RVO levels.
• Impact of SAF PTC changes, which may reduce the value of SAF production PTCs.
• Potential impact of imported feed or products on RIN generation and market dynamics.

Q: Just wanted to ask on renewable diesel. We appreciate we're in a challenging macro right now, just given the uncertain regulatory environment. But would love your updated thoughts on what mid-cycle earnings looks like for the business? And then what do we need to see in the industry to get to more normalized earnings?

A: Alexa, it's Todd. Good question. Like you said, it's obviously a tough environment out there right now. And we think the driver of that is really just the market waiting for news on the permanent RVO and the SRE to respond plus working through that backlog of RINs that was carried forward from 2024. So I'd point to those as kind of the key drivers for recovery. We provide that chart every quarter that talks about the supply stack, the biomass-based diesel supply stack. And basically, what we see is at the proposed RVO levels, you should see D4 demand of basically 5.5 billion gallons or so, which would suggest that you need a good chunk of biodiesel to run and meet that demand. That puts you in that $1.50 to $2 a gallon index margin range. We're ways away from that right now. But really, that's the range that we've seen throughout history up until kind of the 2023 RVO change things. So at those levels, I think we put some information out in the past that says at $1.50 a gallon index margin, Montana/Renewables should be making around $140 million, $150 million a year of adjusted EBITDA with tax attributes. So I kind of point to that. And then obviously, if you increase back up to the historic $2 a gallon level, you're meaningfully higher than that. That's at our current yields. The other thing I'd point out is adding the SAF flexibility that we are really provides a meaningful kick to those margin numbers. When you're talking an extra $1 to $2 a gallon premium on an incremental 90 million to 100 million gallons or 120 million gallons of SAF, it's a pretty meaningful bump in margin, which is why we're so excited to be able to streamline this MaxSAF 150 project and move that forward. You talk about $1 a gallon plus on 100 million gallons. Obviously, that's the math. And we stack that on top of the core renewable diesel EBITDA that we just talked about.

Q: This was another quarter where OpEx per gallon was reduced in the renewables business. Cost reductions have had momentum for a while now. But I think it would help us to explain the types of improvements and changes you've made in your operations year-to-date that are driving these cost reductions?

A: Conor, it's Todd again. Thanks for the question. And you're right. It's fundamental really to our success, particularly in this tight market, what we've been able to do on costs and really establish ourselves as one of the cost leaders in the space, which stacked on top of our geographic advantage and feedstock flexibility and ability to generate SAF, we're quite excited about. Specifically, I'd say there are -- the primary improvement that we've made on cost is real minimization of water. We've spent a lot of time and effort understanding water treatment, reducing the amount of water we have to treat in general. That's been a major step down. And then with smaller amounts, you can obviously treat it more efficiently as well. In fact, we put out something not too long ago that said as part of the expansion in the future, we -- highlighting that on treatment -- on-site treatment of water is a piece of that plan, which hasn't changed. That's always been the case. So water treatment is the primary improvement. We've also just got more efficient with the operation. You learn a lot, and we came up the learning scale really quickly in Montana over the past couple of years. But we had a number of folks on site, third-party contractors, et cetera, to just help us with the learning curve over the last year. And we've had a meaningful contractor reduction on site this year. And obviously, in the numbers -- the production numbers and the cost numbers, we see that we didn't need them. So the teams just done a really spectacular job of getting up to speed, familiarizing themselves with the assets and keeping costs down.