CLMT

Good day, and welcome to the Calumet, Inc. first quarter 2026 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. 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. 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 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 two, you can find our cautionary statements. I'd like to remind everyone that during this call we may provide various forward-looking statements.

Please refer to our press release that was issued this morning as well as our latest filings with the SEC for a list of factors that may affect our actual results and cause them to differ from our expectations. As we turn to slide three, I'll now pass the call to Todd.

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, and 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. 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 fuels 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 Specialty business will take advantage of positive commodity environments to strategically deploy excess cash flow into Specialty's 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 Specialty's commercial excellence engine. In March, crude oil prices increased over 50% in a two-week period, and it moved further from there. 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.

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 Specialty's 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. 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 cost, our Specialty's enterprise is built on delivering a world-class customer experience. Further, let's hit on what's going on in the broader Specialty's market.

We all know that roughly 20% of the world's daily crude oil comes through the Strait of Hormuz by now. 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. They're purchased around the world, particularly in Asia. 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. 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 five. 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 and 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 feeds, 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. We see this dynamic displayed through the three graphics on this slide. 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, which is historically what has been required for the industry's 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 a 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. 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 three 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, 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. 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 re-refineries typically run at slightly higher utilization levels, and our industry in its early stages can also continue to improve. 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 be expected 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. 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 six 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. 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 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. Expecting jet fuel demand has been growing and is expected to grow faster than all other liquid fuels combined is important. The number of refineries are decreasing, not increasing. 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. SAF receives the additional benefit of environmental energy credits, and 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 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. Montana Renewables is in the perfect position to support this opportunity. With that, I'll turn the call to David.

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. 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.

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/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, and I appreciate the team managing through this complex situation safely and urgently. 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. 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 specialty margins. In that year, the company generated over $400 million in adjusted EBITDA. Our integrated business allows us to produce fuel and take advantage of the attractive high-margin fuel environment. Using current strips, the 2026 full year two-one-one is over $42 per barrel, nearly double what we saw on average over 2025.

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 the second quarter. These price increases, plus the elevated fuel margin environment, position us well for what we believe will be a strong second quarter where we expect to generate additional cash flow during this attractive margin environment.

To add to that, and 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 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 of the two-one-one crack using Argus or CBOT for the gasoline leg of the hedge. Note that CBOT trades at a $3-$4 discount to Gulf Coast 87.

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, and those cost us around $6 million in 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. 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.

Turning to slide eight in Performance Brands, we also have continued to benefit from our commercial excellence strategy in this segment at 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 60-90 days to fully reflect the increases compared to the less than one-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 of 2025 financials when we owned that portion of the business and not included in the current period following the divestiture in March.

Last March. 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, and we posted another monthly volume record in April. Customers continue to place a premium on the value of our engineered fuels, our innovative packaging options, and overall product reliability and convenience. Turning to slide nine at 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.

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 4-5 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-$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.

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 that recovery was already in process prior to the extremely constructive RVO announcement in March from the current administration. 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. 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 million-$50 million of annual EBITDA range in a normal environment, and we look forward to the opportunity at hand as these stronger margin environment. Let me now turn the call back to Todd for his concluding remarks.

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 two 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 tenfold. Our strategy is focused on creating shareholder value, and we're always 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. Andrea?

Our first question will come from Amit Dayal of H.C. Wainwright. Please go ahead.

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?

Hey, Amit, it's Todd. Thanks for the question. You know, it's, I'd say we spoke a lot about the market today. There's not a single element in the market in either Renewables or Specialty or kind of more broadly fuels that I'd point to and say has 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. 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 of months. Other than that, we feel like we're positioned pretty well and really looking forward to the opportunity the market's offering.

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-$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?

Yeah, 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 three years now. As we step into these, you know, we're gonna 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.

I'd just add a little bit of that. You know, on average, these are typically two, three 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 six 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 3 credits, et cetera. Pretty bullish on the outlook there and our ability to continue growing our marketing.

Good to hear, guys. That's all I have. I'll step back in queue. Thank you so much.

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

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, and 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.

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. 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 the 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.

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 it will 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 try and take it one step at a time here, but hope to be able to talk about our acceleration plan and next steps pretty soon.

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 U.S., 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?

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 incent 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. 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.

Okay. Thanks for the color. That's all I have.

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

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? Can you remind us of MRL's relative advantage and feedstock flexibility in navigating these costs? Thanks.

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 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 on percentages versus an industry index.

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?

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. 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, but it feels a lot like 2022, where 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. On Specialties side, 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. 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 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.

That's great. Thanks.

Yeah.

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

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

Hey, Gregg. Yeah, 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, and fuel margins are a tad higher than 2022.

If you blend those together, then 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 really to generate some excess cash flow and accelerate our de-leveraging plan.

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

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 products. You know, 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, 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.

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?

No.

What's the risk of something happening again?

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. 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.

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 a month now.

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 that's still the plan right now?

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 MaxSAF 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.

Great. I appreciate the time, guys.

Yeah. Thank you.

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

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? Then in this type of margin environment, since the asset's been running, what type of margin are you seeing coming out of it?

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 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 design that's probably maybe four 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.

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?

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. 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.

Got it. Thanks for that answer. Then 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 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?

Yeah. Yeah. 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 the prices that are getting passed through at a premium to, you know, crude just roll into our AR.

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 hat, 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.

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.

All right. That's great. Thanks. That's all my questions.

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

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.

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

Good day, everyone, and welcome to the Calumet, Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To withdraw your questions, you may press star and 2. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to John Kompa, Investor Relations. Sir, please go ahead.

Thanks, Jamie. Good morning, everyone. Thank you for joining our call today. With me on today's call are Todd Borgmann, CEO; David A. 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. The slides can be accessed in the Investor Relations section of our website at calumet.com. Also, a webcast replay of this call will be available on our site within a few hours. Turning to the presentation, on slide two, you can find our cautionary statements. I would like to remind everyone that during this call, we may provide various forward-looking statements. Please refer to our press release that was issued this morning as well as our latest filings with the SEC for a list of factors that may affect our actual results and cause them to differ from our expectations. As we turn to slide three, I will now pass the call to Todd.

Thanks, John. Good morning, and welcome to Calumet’s fourth quarter 2025 earnings call. 2025 is a defining, high-impact year here at Calumet. We began the year with a credible plan and large potential amidst deep market uncertainty. Throughout the year, risk was aggressively managed and execution of our strategy turned Calumet’s potential to actualized results. We opened the year with a mandate to demonstrate critical strategic objectives. First, we needed to demonstrate that our Specialties business would consistently generate durable free cash flow amidst large market uncertainty. Second, Montana Renewables needed to prove stand-alone financial resilience and a structural advantage. Third, we needed to receive the transformative DOE loan at Montana Renewables. And last, accomplish material deleveraging of the balance sheet. As we reflect on 2025 today, I believe Calumet achieved each of these strategic milestones. Over the course of the year, we reduced financial risk, expanded our structural earnings power, and repositioned Calumet for long-term value creation. Let me walk you through some of the highlights, and we will start with the balance sheet. We ended 2024 with restricted group leverage standing above 8x. We faced near-term maturities and elevated cash interest costs. Montana Renewables was awaiting DOE funding and the broad equity markets were hesitant to engage with fundamental value plays like ours. Today, that picture is very different. For full year 2025, we delivered $293 million of adjusted EBITDA with tax attributes, nearly a 30% increase year over year. We reduced restricted debt by more than $220 million. Net recourse leverage improved from 8.2x to 4.9x. We eliminated our 2026 and 2027 debt maturities, and Montana Renewables successfully closed its DOE loan, removing roughly $80 million of annual cash debt service while also improving its leadership position in this industry. The outcome was a fundamental shift in financial durability. This outcome was driven by structural improvements. Across the system, we dramatically reduced costs and drove increased reliability. Fixed costs were down over $40 million. Water treatment costs at Montana Renewables were down over $20 million, as were our crude transportation costs in the Specialty business, greatly enhancing feed flexibility and our ability to dial in specific specialty products for our customers. And as a result of improved reliability and fewer repairs, capital spending was also reduced by roughly $20 million. At the same time, our ops team increased production by roughly 1.3 million barrels on the year. Results like this come from an entire organization working towards a common goal. And I thank our employees for accepting the challenge to responsibly attack costs, including our 900-plus teammates in the field; our ops excellence team, which is relatively small but pound-for-pound exceptional; our finance team that made a step change in partnering with our sites and making information readily available; and more broadly, everyone who leaned in to owning and accomplishing this company-changing priority. Looking ahead, I believe there is more opportunity on both cost and reliability. Our company has been operating the current asset base for a little over three years, and during each of these, our team has delivered stronger production and lower operating costs. We expect that to continue in 2026, despite what is going to be a very heavy turnaround year. Let us turn to slide four. The operational improvements we just discussed are more than just volume and costs. Layering that capability on top of our leading commercial platform that has been built out over decades provides our sales team more volume and flexibility to support customers. We produced record levels of product in our Specialty Products and Solutions segment in 2025, and our commercial engine more than kept up, as we sustained material margins above historic norms despite softer macro conditions in the broader specialty chemicals industry. Our team places material successfully to new homes consistently. Specialty sales volumes exceeded 20,000 barrels per day during every quarter of the year. The continued results in this business reflect years of investment, commercial excellence, culture and talent, integration of Performance Brands, targeted reliability and mix improvement initiatives, and disciplined capital deployment. Our integrated asset network and ability to dynamically shift production into the highest value markets continues to be an advantage. And our extremely high customer experience scores are the result of a differentiated passion for customers, which is a core Calumet value. Turning to slide five, we see that Montana Renewables also enters 2026 in a much different position than a year ago. Throughout last year, we reached a new level of operational reliability and cost competitiveness, demonstrating a financial leadership position in one of the most compressed renewable diesel margin environments on record. Operating costs averaged $0.41 per gallon in the second half of the year, a 60% improvement over two years ago. Further, we monetized more than $90 million of production tax credits, which was essentially everything we made, and we are pleased to see the 45Z regulations progress in early 2026. On a strategic front, two quarters ago, we announced our streamlined MaxSAF 150 expansion would be bringing 120 to 150 million gallons of annual SAF capacity online at a fraction of the originally contemplated cost. In last quarter’s remarks, we mentioned roughly 100 million gallons of new SAF contracts at $1 to $2 per gallon premium over renewable diesel in final review with the DOE. These contracts are now complete, with more in process that will lay in to support our volume ramp. These contracts are all multiyear and they include increased take-or-pay volumes from existing customers, new physical SPK off-takers, book-and-claim, and blended SAF off-takes combined with contracts for scope 1 and scope 3 credits, which opens up premium renewable markets globally that complement the strong local markets we serve in Illinois, Minnesota, the Rockies, Canada, the Pacific Northwest, and California. Montana Renewables will begin its turnaround and MaxSAF 150 project next week and remain down through late April, at which point we will rebuild inventories and begin ramping up SAF production and serving these new customers. The regulatory environment for biofuels also continues to improve. I mentioned the 45Z rules are now clarified out for final comment. Further, and with plenty of press, the new Renewable Volume Obligation is expected imminently. We anticipate that a stronger RVO will improve industry utilization and margin improvement as idle facilities are expected to be required to restart to meet increased mandates. Restarting production to meet demand volume is a very different and much improved market dynamic than one where companies are hanging on at variable costs while waiting for the rules to shift. In fact, we have already seen improvement in the index margin on both the back of this expectation and the 2024 RIN carry-forward overhang drifting into history. An increased base level of industry RD margins would be a welcome change for all. At Montana Renewables, we are excited to stack on top of that the added margin from increased SAF as we complete our project in the second quarter. With that, I will turn the call over to David. Thanks, Todd. Turning to slide six.

Overall, our quarter and full year results were strong both financially and strategically. We generated $69.3 million of adjusted EBITDA with tax attributes in the quarter and $293.3 million for the full year 2025. Each segment contributed meaningfully to our financial results. We saw continued momentum and record production both in our SPS segment and Montana Renewables, as well as continued outperformance and growth in our Performance Brands segment. Our strong earnings results during the quarter also allowed us to reduce restricted group indebtedness by nearly $80 million in addition to the $220 million that was reduced for the full year 2025. Before I get into more details, I wanted to highlight our planned capital expenditures for 2026. We are forecasting total CapEx of $115 million to $145 million for all of Calumet, of which $70 million to $90 million is in the restricted group. This is $30 million to $40 million higher than normal, primarily due to a heavy turnaround year, which is scheduled maintenance at Shreveport, Cotton Valley, Princeton, Karnes City, and Great Falls. Despite this, we expect total company production to increase year over year on the reliability improvements implemented over the past few years. Looking at our Specialty Products and Solutions segment on slide seven, both our quarterly and full year results reflected the continued benefits of our commercial excellence initiatives and totaled $88.5 million for the quarter and $291.8 million for the full year. The team continues to leverage the inherent optionality in our manufacturing network to place volumes where they can generate the most value while serving our diversified customer base. In fact, more than 50% of our customers buy more than one product line from Calumet, and many are long-term customers because of our unique ability to meet their product specifications. Both our quarter and full year reflect a favorable product mix. Even with certain specialty markets demonstrating some softness, our sales team has continued to place our products at over $60 per barrel margin. The benefits of our past reliability investments can also be seen in our strong operations, as we have had five consecutive quarters of specialty volume greater than 20,000 barrels per day. It was also the second consecutive quarter of record production. With our cost reduction initiatives and increased production, our fixed cost per barrel declined by over $1 per barrel versus the prior-year period. Finally, our steady production environment again enabled us to capture a stronger crack environment as fuel margins increased significantly year over year, which we view as upside to our integrated model. As I mentioned last quarter, we gained access to a new crude oil chain earlier this year, including the ability to target specific segregated or blended crudes in Cushing and further north in the DJ Basin, and at the same time, reduce our pipeline count. In 2025, this improvement drove about a $19 million decrease in transportation costs and provides even further ability to dial in our assets and feed to a specific use. In our Performance Brands segment on slide eight, we also saw the benefit of our commercial excellence initiatives, strong and growing brands, and integration capabilities. Adjusted EBITDA was $5.4 million for the quarter and $47.9 million for the full year 2025. Keep in mind that fiscal year 2024 includes a full year of Royal Purple Industrial results and that the Royal Purple Industrial business was sold in 2025. Adjusting for the divestiture and insurance proceeds received, 2025 was the third consecutive year of growth in the segment as we offset the lost contribution from RPI through growth and cost reduction. One of our standout product lines is once again our TruFuel business, which posted another record year. This ready-to-use fuel engineered for outdoor power equipment is available for four-cycle and two-cycle engines, and the product continues to resonate with consumers and first responders considering its proven ability to protect small engines from the corrosive nature of ethanol while ensuring peak performance of the equipment. Moving to slide nine, our Montana Renewables fourth quarter 2025 adjusted EBITDA with tax attributes was negative $5.4 million and positive $31.3 million for the full year 2025. On the MRL side, the company worked through trough renewable fuel industry conditions for most of the year and also the quarter was burdened with disproportionate transaction costs related to the $65 million of PTCs that we sold during the quarter. We expect to monetize our production tax credits more ratably as the market is now normalized. On a full year 2025 basis, adjusted EBITDA with tax attributes for MRL was nearly breakeven even as margins remained compressed by the low 2025 RVO, offset by our significant cost reduction efforts. Notably, the full year results do not reflect an additional $8.4 million of 2025-generated PTCs, which occurred after final regulations were posted after quarter end. Our MaxSAF 150 plans remain unchanged, and we are set to begin the project as we head into March and combine the required changes to our kit with a turnaround. We expect to complete the expansion in the second quarter and then steadily ramp volumes moving into the third quarter to meet new customer contracts, including the notable agreement we announced recently with World Energy, the previously announced contract with EPIC, and an increase in offtake with Shell, amongst others. Finally, on the Montana Asphalt side, both the fourth quarter and fiscal year results improved on the strength of improved asphalt margins and cost reduction initiatives following years of site reconfiguration. Further, we are seeing a widening of the WCS differential into 2026. With the site back at a reasonable cost level and more normalized WCS, we expect the site to continue producing in the $30 million to $50 million of EBITDA range we have discussed routinely. Let me now turn the call back to Todd for his concluding remarks.

Thanks, David. We are entering 2026 with the same high level of energy and excitement as a year ago, but with a much improved underlying fundamental. In Specialties, we expect the cost discipline embedded over the past two years to be durable, along with our continued commercial leadership position. While 2025 was another step change in operational excellence, we believe further opportunity remains to expand earnings through incremental reliability gains and customer-focused growth. In addition to that, David mentioned a heavy turnaround year, and I will highlight that turnaround excellence is the next step in our evolution. Our operations team has been planning these for some time, and during these events, we are making critical improvements that will underpin the next step change in operational performance. At Montana Renewables, our objectives are clear. First, execute MaxSAF 150 safely, on time, and on budget in the second quarter. Second, continue improving our already strong cost levels. And third, continue to leverage our early-mover advantage in SAF as we grow. We expect that accomplishing these will drive a step-change financial improvement even in past trough market conditions, and will be increasingly exciting if the market’s growing assumptions surrounding an improved RVO play out as expected. Last, on the back of these key items, we will continue to evaluate strategic pathways and unlock long-term value as the platform demonstrates sustained performance. Across Calumet, our capital allocation priorities remain disciplined and consistent. We expect to continue to drive durable free cash flow that underpins enhanced deleveraging. We plan to grow both our Specialties, widening our competitive moat, and execute our MaxSAF 150 strategy at Montana Renewables. And we plan to execute this strategy and continually develop it with an eye towards mid-term shareholder value creation. With that, thank you for your time today. I will turn the call back to the operator and see if we have any questions. Operator?

Ladies and gentlemen, we will begin the question-and-answer session. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. At any time your question has been addressed, to withdraw your questions, you may press 2. Our first question today comes from Alexa Petrick from Goldman Sachs. Please go ahead with your question.

Hey. Good morning, team, and thank you for taking our question. We wanted to ask two parts, maybe. First, can you talk about the macro setup from here? There is still, you know, some uncertainties, but we got a bit of an update yesterday. And then from there, talk about what you are doing at an operational level. What are the gating items at MaxSAF? And what should we expect from here?

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

And, Alexa, it is Todd. Maybe I will pile on a little bit. One of the things that we think is so important and exciting about our MaxSAF project at Montana Renewables is that it adds an element of, you know, just durability on top of the RD margin volatility that Bruce mentioned. So you can kind of think about it a lot like our Specialties business relative to fuels in the other half of Calumet. So, you know, we have contracted volumes with meaningful margin in them that, even if we kind of rewind the clock to last year, were generating pretty meaningful free cash flow at Montana Renewables with the addition of the SAF volume and the contracts that we have. So, you know, like Bruce said, then you get to layer on the improvements that we are expecting from the RVO, and it creates a really nice dynamic. But there is kind of the risk-reward; I would say both sides of that coin are really improved with the SAF project. So thanks for the question.

Thank you. That is very helpful. Sounds like a good setup. I will turn it back.

The next question comes from Conor James Fitzpatrick from Bank of America. Please go ahead with your question.

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

Hey, Connor, it is Bruce. Thank you for the question. Let me answer with a concept of time scale. So we think the industry is running at variable margin now. People are not covering fixed costs. And the half of the group that is in the high-cost structure have been closing. We have been running full. So you have got to be tactical on where you stand in the supply stack exactly. So that ghost capacity, which exists in biodiesel plants that can come back quickly, and renewable diesel plants that are online and can speed up, that is available, but it is not going to be called into the market until we see the RVO come out. We are all waiting for that. We feel good about what we are hearing, and, you know, let us see what the facts are shortly, we hope.

Yeah, and I would add, Connor, it is Todd. The likelihood that people turn back on, you know, when they are covering fixed costs by a penny after some of the decisions made more broadly in the industry over the past couple of years, we think is very favorable to the market. And I have talked about this kind of the couple quarters in the prepared comments, but like Bruce said, as we float on variable margin, you know, you do not incur—our normal kind of supply stack does not govern today, because people are not making long-term rational economic decisions. They are hanging on based on expectations that they are going to recover the investments in the fixed-cost losses in the near term. As we see people have to restart and make that decision to restart to cover increased demand, we do not think that they are going to do that for a penny. We think that people are going to be very thoughtful and cautious and, you know, it creates quite a constructive outlook if you believe that. So, you know, we will see what the final RVO is. I know there is a lot of rumors going around out there. When we do, we do not think that the industry just kind of ramps up overnight. We think it is going to be kind of a very thoughtful volume ramp-up over time that will be beneficial to those who are in and operating every day.

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

So we are—Connor, it is Bruce again. We are pretty good at shifting gears there. Our inbound and outbound supply chains are pretty short in terms of days of shipping. And, you know, we do track capture. We do not publish it, but I will tell you that we capture more than 100% of the renewable diesel index margin, and that is because of our ability to shift gears quickly. Now, it is worth noting the fourth quarter managed to hit the lowest renewable diesel index margin ever recorded in the history of the world. And we are very much looking forward to the current administration restoring, you know, reasonable industry structure through their proposed RVO. We are bullish on that, and I think that is going to break things back to historical. Remember that these margins were $2 to $3 a gallon on an index basis as recently as three years ago. You know? So we just need to resume that kind of environment and we are going to have an entirely different view of, you know, our success here.

Thanks. That is all I have.

Our next question comes from Samir Yoshi from C. Wainwright. Please go ahead with your question.

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

Hey, Sudhir. It is Todd. Good questions. I think we are on—on—I will start at the end. On the cost curve, we are obviously heading in the right direction and just continue to, almost every quarter, see improvement over the previous. So we expect to just continue the incremental improvement there. We are going to keep getting more efficient over time and, yes, as we increase our volume, then, you know, we will see more unit efficiencies drop to the bottom line as we progress. So I do not think there is anything in this specific MaxSAF project that would say, hey, there is a major, major cost out. But we are certainly going to be making more margins. We continue to look to improve our costs regardless of the project, just in a steady state. And to the extent that we are ramping up volume, like I said, it helps kind of at the unit level on the bottom line. So that is, you know, probably one side of your question. I guess the other on the ramp-up: We have previously guided to 120 to 150 million gallons annually, and that is where we expect to stay. So we are not naive enough to say that everything goes perfect and we come out of this thing in May and the very first day we are producing at a 150 million gallons, but we also do not have too technically challenging of a turnaround. This is pretty well controlled, it is pretty well designed, and it is implementing and expanding equipment that we know a lot about and is not a major kind of risk, I would say, like the last major project that we have going on. So I think what you will see is coming online, we will have a really nice strong volume. We will ramp up accordingly. Exactly how long it takes us to get to the, you know, 120–150 million gallons run rate, we do not think it is going to be too long. So we will come up in May and keep everybody up to speed on where we are, and I am thinking the second half of the year that we are going to be at that level.

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

Here is the merits first. So it is worth noting that we are performing now under the SAF contracts, but until we deconstrain the unit during this upcoming turnaround, we cannot get our rate up to where we want it. So we are going to have the acceleration Todd mentioned. As we lean into that, the book of business that our marketing guys have created is very interesting. We have intentionally executed contracts one by one which are different than the other contracts. In other words, we are trying to have a portfolio that is robust to some of the dynamics we talked about with Alexa a minute ago. And, you know, with that in mind, I think the expectation should be that all of that feathers in. If we can hit the high end of the engineering ranges, you know, then we will get towards the 150. And if we hit the lower end, it will be towards the 120. But the contract volume, the differential that you asked about, that is in, and we have had those folks lifting already.

And I would add a little bit more, Samir, on the feedstock you asked about. We have been pretty successful linking those to the contracts. So, again, we are in a location in Great Falls where we have access to a broad range of feedstocks, including all of the low CI ones that the SAF market typically wants. So we have been pretty successful landing those on long-term contracts as well. And we feel quite confident in our ability to both continually add offtake and volume as we ramp up, but to match that with contracts on the feed side just given kind of robustness around the number of options that we have in the region.

Sounds good. Thanks for that color. Congrats on the progress operationally and as well as deleveraging. Thank you.

Thank you.

To withdraw your questions, you may press 2. Our next question comes from Jason Daniel Gabelman from TD Cowen. Please go ahead with your question.

Yes. Hey, good morning. Thanks for taking my questions. Shifting over to the base business, the specialty margin was strong once again, above $60 a barrel. What is going on in the business that is enabling you to sustain those higher levels, and do you see that to continue to move higher over time? And then, conversely, if you could just comment on the Performance Brands weakness in the quarter.

Hey, Jason. Scott here. So a few answers. You know, in terms of the strength of the specialty piece within SPS, you know, this has not just been, like, a one-quarter or one-year high performance. I think if you—you have covered us for a while, you have seen the progression over the past, you know, five years and, frankly, the transformation of the business. Todd talked about it in the prepared remarks. You know, really, at the end of the day, our commercial excellence focus and the initiatives that we have done over the years, and couple that with our integration and the optionality, has proven to be highly successful, highly durable for really almost any type of market. And then the improving production reliability as well as adding the volumes to it. So we remain, you know, really positive and constructive overall within that piece of the business. As we look heading into the early part of this year, you know, we expect our high performance to continue. Certainly, we have got some headwind early on in 2026 with the crude oil run-up, some short-term headwind. But overall, we feel really good about the business and the work that has been done in that business that is going to continue to outperform the market. I think on the Performance Brands, we are really pleased with the year. You know, we think we are essentially at a place now, Jason, where we have essentially offset—even as we said that we would do—offset the Royal Purple Industrial sale and the margin that went away with that. So feel really good about the year overall. We did see in the fourth quarter, though, as you pointed out, a lot of the customer base, retail in particular, that really destocked late in the year. So some challenges there, but we are feeling good about the start of this year and the orders that we are seeing. So we are optimistic about the ’26 results.

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

Yeah. I would say the simple answer is no. There should not be much of an impact despite turnarounds and some of the volatility going on.

Got it. And my follow-up is just going back to the SAF contracts because I think one of the items we struggle with is just the confidence around that $1 to $2 per gallon premium that you have cited. And so I was hoping you could just clarify kind of how the contracts are structured. Is it—when you talk about a premium over renewable diesel, are you indexing the contract to the renewable diesel margin including, you know, the RIN, the LCFS credit, the PTC, or is it more nuanced than that?

Hey, Jason. Bruce. I will give you a framework for that. Great question. Looking backwards, it was fully indexed. I mentioned earlier we were intentionally diversifying the contract structures. Collectively, we want them to be different. So, for example, FEG is a scope 1 and 3 emissions certificate that we pull off. So that means we take that SAF, we sell it, we get all of the credits, you know, RIN, LCFS, etc., producer’s tax credit. And on top of that, we get the certificate. So that stacks up a little differently. And, you know, I could go around the table, and as I said, each one is intentionally designed to act differently in different market conditions. We think the portfolio will be more robust and more stable to, you know, prospective regulatory changes and evolution. So with that said, you know, the guidance—we really do not want to start identifying specifics here. But the guidance has held for a long time, and one of the reasons for that is real simple. SAF is an excellent renewable diesel blend component—super high-quality properties—and it cannot go into the market below RD. It cannot. Every once in a while, I pick up some publication where somebody calculated—you know, we used to call this dry lab back in the chemistry class—somebody calculated that SAF is lower than diesel, and that is crazy. Because the operator is going to take the SAF tank, pump it into the diesel tank, and capture that arb this afternoon on the day shift. Right? So it is always more, and we are just arguing how much.

And I think if I could add just a little bit, to your question around, can we just depict that, are the underlying components similar? Like Bruce said, we are intentionally diversifying. At the same time, we are quite confident in the $1 to $2 per gallon range just because of how these contracts come together. So a little more color on that: our largest customers—now, your question around underlying the premium—if you looked at their contracts underlying the premium, it looks a lot like RD contracts plus the fixed premium on top of that. So in that group, we are quite excited to have the exposure to the upside on the RD plus a fixed premium, which you were kind of alluding to earlier. That fixed premium plays out even in scenarios—if we were going back to last year and looked at kind of trough index margin environments. And then the other thing I would say is, like Bruce highlighted on the scope 1 and scope 3 credit sales, there is a naturally quite a correlation. We want diversification. We want exposure to those markets, and I think I have said in the past, we see it a lot like our Specialties business where we can do some things that others probably do not want to when we are transacting in truckload volumes, controlling quality, and, you know, transloading and doing those types of things that require a little bit more hands-on service. So it fits us really well. That being said, there is obviously a high correlation between the value of those credits and the fixed premium that other customers are willing to pay. So it is no coincidence that as we look at both of those, they lie comfortably in the $1 to $2 per gallon range we have talked about. And I will highlight these are fixed contracts. Right? And I think that was probably part of your question. But, you know, this is not a spot gasoline rack. These are contracts. They are multiyear contracts. They have commitments to perform on both sides, and,you know, we are quite confident in the ability to capture that margin.

Great. Thanks. I appreciate all the color.

Thank you.

With that, we will be concluding today’s question-and-answer session. I would like to turn the floor back over to John Kompa for closing remarks.

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

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