NASDAQ:CLMT Calumet Specialty Products Partners Q2 2023 Earnings Report $11.25 +0.56 (+5.24%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$10.97 -0.28 (-2.49%) As of 05/2/2025 04:56 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Calumet Specialty Products Partners EPS ResultsActual EPS-$0.19Consensus EPS -$0.07Beat/MissMissed by -$0.12One Year Ago EPSN/ACalumet Specialty Products Partners Revenue ResultsActual Revenue$1.02 billionExpected Revenue$1.09 billionBeat/MissMissed by -$74.95 millionYoY Revenue GrowthN/ACalumet Specialty Products Partners Announcement DetailsQuarterQ2 2023Date8/4/2023TimeN/AConference Call DateFriday, August 4, 2023Conference Call Time9:00AM ETUpcoming EarningsCalumet Specialty Products Partners' Q1 2025 earnings is scheduled for Friday, May 9, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Calumet Specialty Products Partners Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 4, 2023 ShareLink copied to clipboard.There are 12 speakers on the call. Operator00:00:00Good day, and welcome to the Calumet Specialty Products Partners Second Quarter 2023 Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference over to Brad McMurray, Investor Relations. Operator00:00:36Please go ahead, sir. Speaker 100:00:39Good morning. Thank you for joining us today for our Q2 call. With me on today's call are Todd Borgman, CEO Vince Venargo, CFO Bruce Fleming, EVP, Montana Renewables and Corporate Development Scott Obermeyer, EVP, Specialties and Mark Long, EVP, Sustainable Products and Strategy. You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the Investor Relations section of our website At www.calumetspecialty.com. Also, a webcast replay of this call will be available on our site within a few hours. Speaker 100:01:12Turning to the presentation on Slide 2, you'll find our cautionary statements. I'd like to remind everyone that during this call, we may provide various forward looking statements. Please refer to the partnership's 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 expectations. I'll now pass the call to Todd. Todd? Speaker 200:01:34Thanks, Brad, and welcome to Calumet's 2nd quarter 2023 earnings call. This was a quarter of many strategic achievements. Most crucially, all elements of Montana Renewables, the RD unit, the renewable hydrogen plant The next generation pretreater met or outperformed expectations. Further, our sustainable aviation fuel project came online, Catapulting us from nowhere to the largest SaaS producer in North America. At the corporate level, we continue the process of improving our balance sheet by Successfully issuing unsecured debt, which will eliminate our secured notes. Speaker 200:02:08Our specialties business continued with excellent commercial execution, While asset operations overcame a series of tornadoes and extreme weather that limited production, ultimately, we generated $7,700,000 of adjusted EBITDA for the quarter, which is a decrease of $10,000,000 from the prior period. Our Northwest Louisiana team spent much of the last quarter the last half of the quarter recovering from weather driven power disruptions. While doing so, we elected to pull forward maintenance and at this point, we have no meaningful planned downtime for the remainder of 2023 And we enter the Q3 running our assets at full rates. At the halfway point of our 3 year plan to fortify operations, Our assets continue to demonstrate an improved ability to recover quickly when challenges arise, and we're also adding redundancy to further prevent or lessen the impacts of external events on our business. Commercially, we're executing across all of Calumet with a focus on the customer. Speaker 200:03:08Montana Renewables has pointed half of our sales volume to Canada and seamlessly stepped into the SAF market. Our specialties Suite's team continues to capture value from our unique and integrated value chain and our supply chain and planning teams spent the last half of the quarter ensuring customer needs were met as we navigated around the weather and maintenance. Further, it's nice to see a return to a more normal environment performance brands as input costs have stabilized. This is a business that we can grow and we're seeing strong signs of that in our industrial business. Our branded products are well positioned to meet the industry's growing demand For high performing and energy efficient solutions, whether it be Belray products servicing the global mining industry or our new biodegradable biomax products being utilized in the global marine market. Speaker 200:03:53The 2nd quarter also saw the completion and full startup of Montanari Nobles, And the team settled into the new operation nicely. As we stepped into this new business, it was essential that we quickly proved out the core operating pillars, which we're ensuring the RDU and hydrogen plant for ANIT plant rights, proving our new and leading pretreater technology, demonstrating catalyst performance and meeting SaaS specifications. We've demonstrated all of these core concepts. As expected, we encountered a few blips as the team quickly scaled the learning curve and our commissioning experience feels like minor teething problems relative to the industry experience. MRL's operation is intricate, including a closed recycle and our net zero hydrogen production and serial number 1 of the next generation feedstock pretreater technology. Speaker 200:04:40As our operators learned the intricacies of this new operation, they quickly got the plant running consistently at the planned 12,000 barrels a day by quarter with the subsequently commissioned pretreater following the same upward trajectory. We took our Board of Directors to visit the plant earlier this week And we're all once again impressed with the quality and knowledge of our local Montana team and leadership. Naturally, we're in a period of rapid learning as we dig deeper into the operation and understand the true ability of our units. 1 quarter end, we both developed some new understanding and confirmed a few of our core 1st and most importantly, we've proven our technology works and our team can operate this facility at expected levels. We are making on spec product right out of the gate and even some of our customers were surprised at how quickly we came online. Speaker 200:05:31We monitor our catalysts closely It's performing as planned, even as we introduced higher amounts of feed that we treated ourselves. Further, the capacity creep has already started. As you might remember, we don't know the maximum capacity of our RDU as we never filled the unit in Fossil Service, so its true capacity has not yet been tested. Just a few months in, our team has already demonstrated the RDU's ability to run over 13,000 barrels a day. Next, we're pleased with the decision we made to install the pretreater with ARA technology. Speaker 200:06:04The amount of feedstock flexibility this unit opens is tremendous, Over previous quarters, we spent a lot of time talking about the need for a pre cheater in this business, And we're quickly seeing the field of renewable diesel producers naturally separated into those that have pretreatment ability and those that don't. Last quarter, I mentioned that the difference between treated and untreated feed cost was $0.80 a gallon. Right now, the pretreater advantage is roughly $1 a gallon. At these levels, the ability to process untreated feed is even more important than location for the time being. Fundamentally, the next generation technology allows us to lose 4% less feed than a standard treater. Speaker 200:06:47At current feedstock prices, That's roughly a 20¢ a gallon advantage. With these data points, we expect the ARA technology will allow us to maintain a structural advantage even within the camp of competitors that do have free treat. We also are learning how different feeds are handled. They run at various speeds, Cause filter changes at different intervals and differ in the amount of time it takes to unload a railcar. These are common items to work through, which will allow us to We're optimizing the drawdown of our previous market purchases of treated feed and we continue to ramp up the pretreated rates as we gained comfort with the new technology. Speaker 200:07:27Further, we have confirmed that location is as important as we thought. We've seen generic industry margins tightening recently, especially for the treated feeds on the golf. This temporary dynamic has occurred before When markets rebalanced from a short term disruption. While we fully expect it to normalize quickly, our relative location advantage provides flexibility allows us to pivot rapidly in a changing environment. This is true on both the feed and product side of our business. Speaker 200:07:55On the feed side, the location advantage is magnified by our next generation pre trigger that we just discussed. In fact, we just placed our first order for Camelina, which will arrive in the next couple of weeks. Camelina is in its very early stages, but given its indigenous to Montana, extremely low CI It does not compete with food. This cover crop presents tremendous upside to Montana Renewables. On the product side, 50% of our existing RD is now Selling in Canada, as we see our early theory playing out that our products will migrate to the spot of optimal logistic advantage. Speaker 200:08:30As the largest single market, California is often a reference point for renewable fuels in our industry. But with Canada sharing a land border with Montana, we fully Our products to all land in premium locations. Next up, the level of interest in SAF is even bigger than we expected And industry seems to quickly be aligning that SaaS is the best, fastest and most practical path to airline decarbonization. With the SaaS market currently being a fully voluntary market, it's been interesting to see the wide range of views that exist on how this material will price long term. For us, Shell has been a great partner so far, and we're pleased with the value they're bringing to the table in these early days. Speaker 200:09:12As Montana Renewables looks forward to the MAX SAF expansion, we continue to be enthusiastic. We expect to be in a position to share some early numbers on And we believe that with MAX SAF, we can more than double our current EBITDA run rate in 2025. The MAXAF project leverages our early mover advantage, and we could sell all of the product we could make into California, Oregon, Washington, Canada, even Illinois and Minnesota with the new state staff credits. And finally, we're already exploring renewable naphtha and diesel fractions, the use is in our solvents business. We've seen early successes with other sustainable product lines And adding another example of unique and advantaged integration to our specialty platform is exciting as we continue to look for ways to leverage our newly found renewables expertise across our enterprise. Speaker 200:10:13With that, I'll turn the call over to Vince to take us through the quarterly results. Vince? Speaker 300:10:18Thank you, Todd. Before we move forward, let's pause on Slide 4 to take a closer look at 2 new brands we recently added to our SBS portfolio. Titan 0 is our carbon neutral wax product and PENclear is an all natural product Developed to supplement our Panerico Beauty Care line. Moving to Slide 5, our FPS business Generated $61,000,000 of adjusted EBITDA during the quarter. Our production volumes were roughly in line with the Q1. Speaker 300:10:50And as Todd mentioned, In June, our Northwest Louisiana plants were impacted by severe weather. Tornadoes and hurricane force winds We estimate that the events cost approximately $20,000,000 in profitability. We use the unplanned downtime To pull some turnaround work forward, further, we successfully completed a planned turnaround at our Cotton Valley facility. I can say that as of July 1, we were back to full operations across the entire Northwest Louisiana region. The margin environment continues to be constructive for both fuels and specialties here in the 3rd quarter. Speaker 300:11:38While we have seen and expected a reversion from all time highs we experienced late last year, margins are well above mid cycle averages And we expect that to remain. Our material margin for the quarter averaged $0.77 And $10.21 per barrel for fuel. We continue to be optimistic about the fundamentals of our SPS business And our expectations are constructive for the rest of the year. Moving to Slide 7, our Performance Brands business had another solid quarter, Generating $12,200,000 of adjusted EBITDA, we continue to see price stability in the marketplace. Our production volumes were up quarter over quarter and we saw significant demand in both the industrial lines and from TrueFuel, Our most direct retail offer. Speaker 300:12:32The 2nd quarter trends to be the the second quarter tends to be the best demand quarter For TrueFuel, as both the spring weather and planting seasons coincide, and we were pleased to see strong demand within that channel. We have highlighted 2 of our other products on the slide as well. We have mentioned Bio Max before As a high performance biodegradable maritime solution that is now also being applied across other industries, The line continues to show real promise in its early stages as more and more customers interact with it. And our Bell Ray brands, which are particularly well known for performance in mining applications, have seen tremendous growth Year over year, our industrial demand is up 35% year to date, and this is a segment of the business that we expect big things from As the world prioritizes high performance and power efficiency, especially in some of the leading megatrends like mining, food and energy. Speaker 400:13:36Moving to Speaker 300:13:36our Montana business, you could see on Slide 9 that we generated $12,600,000 of adjusted EBITDA in the quarter. For the legacy asphalt plant, we operated at full capacity of nearly 12,000 barrels per day of production. We entered this year's asphalt paving season during the Q2, which was our first opportunity to utilize The recently constructed polymer modified asphalt or PMA plant. This unique and high quality asphalt It's being praised in the marketplace and we are very pleased with the early sales. The second quarter was also an important one for Montana Renewables. Speaker 300:14:19During the quarter, we bought our feedstock pretreater online, shipped our first staff volumes And ramped up rates of both our RDU and pretreater. Average production for the quarter was a little over 7,000 barrels per day As our team quickly learned the plant and with plant operations derisked, we were able to end the quarter producing over 12,000 barrels per day. During the quarter, we also announced an exclusive agreement to sell 100 percent of our SAF to Shell, who is also one of our 3 renewable diesel We are excited at the staff opportunity that is ahead of us. We are running off the last of our treated renewable feedstocks And expect to rotate to a slate of primarily untreated feed. These are cheaper feedstocks that will allow us to capture the full earnings horsepower of Montana Renewables. Speaker 300:15:14To discuss our strategy for Montana in more detail, I'll now turn the call back over to Todd. Speaker 200:15:21Thanks, Vince. Our priorities and next steps are clear. We entered the Q3 operating well across the board. In specialties, we have some inventory to rebuild, but otherwise they're planning on a strong second half. At Montana Renewables, we'll continue to process what's left of our trade and safety stock And maximize pretreat throughput. Speaker 200:15:40For the quarter, we've implemented a 1,000,000 barrel challenge at the site for both our legacy and renewable businesses. And through the end of July, we're tracking ahead on both. Our plan and intention is to demonstrate in the Q3 that Montana Renewables sits atop the stack a competitively advantaged renewable diesel and sap producers. Looking forward a bit more, internal process design work for our MAX Sap expansion has already started, And we expect to make a final investment decision near the end of this year. Zooming out, our strategy remains unchanged. Speaker 200:16:12We're committed to completing the deleveraging of Calumet, unlocking value and increasing trading volume for our unitholders. Our Department of Energy loan process continues and we remain hopeful and confident that we will receive positive news that enables us to go forward with the mass staff expansion That would take Montana Renewables from North America's largest SAP producer to one of the world's largest SAP producers. And last, We continue to expect the potential monetization of Montana Renewables to complete the deleveraging of Calumet. For some time, we've discussed the possibility of a Montana Renewables IPO, private monetization or even both. Naturally, this has created a flurry of interest in the advisor community And even potential investors, and we continue to receive clear feedback that Montana Renewables is a differentiated business with transformational value potential to Calumet, well in excess of the entire company's current enterprise value. Speaker 200:17:07As always, we'll continue to execute against our stated strategic plan And we'll also continue to actively explore All Pass to best unlock the extreme unitholder value that we believe exists within County Met. With that, I'll hand the call back to the operator for questions. Operator? Operator00:17:25We will now begin the question and answer session. Please go ahead. Speaker 500:17:48Yes. Thank you and good morning. Lots to hit Pierre, but I guess really let's dive into MRL first, maybe a little more clarity on how some of the Advantage Feedstocks at room 3, you mentioned some learning curve issues with that. Is there one that's worked a little better or is priced a little better, Has come up with a better yield? Just sort of curious any more you can offer there? Speaker 600:18:19Hey, Roger, it's Bruce. Good morning. Excuse me. Yes. A couple of things as you think about the optimization. Speaker 600:18:30The feedstocks do have different yields, but that's mostly in the split between diesel and SAF. The total distillate yields are substantially Similar across feeds. So the pricing is interesting because there's rotation among classes. Tallo can get an advantage and then corn oil can come in on top of it for a while. So we've got a pretty good supply and trading function, Trying to follow those rotations and we're able to do that more quickly than an average competitor because we're quite close to the sources. Speaker 600:19:08Yes, most of our feeds are days to maybe 2 weeks away. And so we shift gears pretty quickly. Speaker 500:19:17Yes, that's helpful. And then the other question I have for you, since we are all attuned to California, the CFS and the other things that drive us to see RD sales in the U. S, what Specifically, do you see in Canada's setup that makes it competitive from either an RD or a SaaS Standpoint? Speaker 600:19:43Higher price. Speaker 500:19:46That's an easy answer. All right. Well, that's my two questions. I'll Operator00:19:57And our next question will come from Amit Mehro with H. C. Wainwright. Please go ahead. Speaker 700:20:03Thank you. Good morning, everyone. Just staying on the feedstock topic, you mentioned Camelina. Could you give us any color on cost advantages Camelina presents for you guys and whether this is a seasonal feedstock option for you or can it be available through the year? Speaker 600:20:27Amit, the best way to think about that is that Commercial quantities of Camelina are actually not in the market yet. So this is experimentation. We were fortunate to pick up opportunistically some Camelina oil. We really like it. It's in the low 20s Carbon intensity, CI, and dramatically better than vegetable oils and it grows in our latitude. Speaker 600:20:55So what we imagine is going to happen is that now that this is a cash crop, there will be more and more of it. There is some Crushing activity now and that's simply going to speed up. So if you look at some of our public information, We're forecasting commercial availability to us out in 2025, 'twenty six that shows up in some of our charts. The economics of it, I wouldn't read too much into this because it is an experimentation phase, but This is competitive with untreated feeds. So that's going to be quite a good margin, albeit a small volume. Speaker 700:21:41Understood. Got it. So this is a little bit more of a longer term development effort for you guys. Got it. Speaker 600:21:48Yes. We're just to be clear, we're not doing the development. There are 4 developers in Montana now. They're backed by Global majors. I mean, this is very visible. Speaker 600:22:02And so it will happen. We're just speculating on how fast. So as I said, We put commercial availability to us about 2 years out. Speaker 700:22:12Okay. Thank you for that. Then on the topic of deleveraging, Do you think going into the second half of Carnegie Pre, you could begin some deleveraging efforts this from cash flows or will you wait for some sort of monetization event to Undertake sort of that part of the strategy. Speaker 200:22:37Yes. Amit, this is Todd. I think we're certainly going to generate positive cash flow in the second half of year with Montana Renewables now running fully, construction over, so on and so forth. So absolutely, there'll be we would expect cash flow to be available. That being said, I think the major big bang deleveraging event, It's still going to be tied to monetization. Speaker 200:23:01There'd certainly be the option to delever over time with Operating cash flow. With MRL on and our specialties business operating as well as it has over the past couple of years, we'd expect that to be an But I think we've been pretty clear that we want to complete the deleveraging of Calumet as quickly as possible. Have been talking about it for a while here. We want to get back to growing the business and the most logical path is Minority monetization of Montana Renewables. Speaker 700:23:35Understood. Thank you, guys. That's all I have. Operator00:23:40And our next question will come from Manav Gupta with UBS. Please go ahead. Speaker 400:23:46Good morning, guys. My question to you here is, can you help us understand your SaaS strategy? How much are you producing right now? Once you do expand, if you do, then how much SAF could you produce? And then just a quick follow-up is, how much more do you actually Expect to make on an EBITDA per gallon basis in SaaS versus RD. Speaker 400:24:08So if you think you can make 140 In RB, can you actually make $250,000,000 in SAPS? And I'll turn it over after that. Thank you. Speaker 600:24:17Hi, Manav. It's Bruce. Good morning. If I take those in reverse order, we've got an undisclosed commercial premium Above renewable diesel, that is very sufficient to incent SAF recovery. The volume part is we've contracted 30,000,000 gallons per year. Speaker 600:24:43That's a percentage of our yield, kind of 12% to 15%. The expansion case, the licensers tell us we can go to full conversion 100% staff. We think there will be an optimization short of that. So we are tentatively advertising 230,000,000 gallons of SAF Capacity post installation of our yield flexibility project. Speaker 400:25:13Thank you. Operator00:25:22Our next question here will come from Jason Gabelman with T. B. Cowen. Please go ahead. Speaker 800:25:28Hey, good morning. Thanks for taking my questions. I wanted to ask about the monetization strategy and efforts going on. And specifically, Todd mentioned A couple of things at the end that you're receiving indications that the value of MRL Is higher than the value of the current enterprise value of the company. So I was wondering if you could just elaborate on that a bit. Speaker 800:26:00How do you translate that into actual value for shareholders? And what does that process look like over the next few months? And then tied to that, considerations for converting To a C Corp, do you see that as a necessary step in unlocking the value? Thanks. Speaker 200:26:22Let's have Bruce start with kind of MRL valuation and then I'll pile on if that's all right with kind of the last question. Speaker 600:26:31Sure. Good morning, Jason. It's Bruce. The MREL valuation is reasonably clear. The energy transition companies, The public peer companies are trading in an enterprise value to EBITDA multiple that's visible. Speaker 600:26:46We expect to lay in with That at a minimum, if not get a premium for the competitive advantages that we've got due to location, due to the advanced Pre Treater Technology and due to the fact that we're now North America's largest SaaS producer. So when you put all that together, That's the public valuation signal that we would expect to target. I'll tell you that the bulge bracket banks we're talking to Have no concern about some kind of an overhang from the parent, which I think is part of what you were getting at. And so we're simply going to stand it up and it looks like it's going to be a pretty straightforward process. How long that takes and the condition of the capital markets will obviously give us a shot at Positioning our timing, but from here in early August, we're presumably Targeting 1st part of next year for closing and funds realization. Speaker 200:27:49Yes. And I think Just to pile on a little bit, we know there's intrinsic value in Calumet, right? Bruce just talked about some of the value that we'd We can look at comps in the marketplace. We can look at a number of points to triangulate into what Montana Renewables is worth. And we've talked about unlocking that through IPO or monetization. Speaker 200:28:11Primarily, we think MRL would be very liquid As a publicly traded company and that would certainly help Calumet. We've also said we're exploring optimal paths Like we always do, natural time for all stakeholders, I guess, Jason, is to look at the full strategy would be when we're talking about selling or spinning some of it to create new entity. So could something with the structure be one of those options? Sure. I mean, I guess everything's an option. Speaker 200:28:38Everyone involved is rational economic creatures and We all want what's best for Calumet. So I guess I'd just say the entire strategy is complex. It takes time. And what we do from here With this large amount of value sitting in Montana Renewables is arguably the most important decision in the history of Calumet. So getting that That's right. Speaker 200:28:58It's the most important thing and we're going to prioritize that over rushing down a particular path. We'll be talking with the market. We'll be seeking input. And at the end of the day, there's a heck of a lot of value here. So we're focused on unlocking that and we'll go from there. Speaker 200:29:14Got Speaker 800:29:16it. Thanks. I appreciate the comments. And then my follow-up just on the margin outlook and specifically Related to RIN prices, following the EPA's decision on the renewable volume obligations '23 to 'twenty five, I think there's a decent amount of concern that RIN prices are going to be volatile next year as the industry brings on New renewable diesel capacity, I know you Calumet has a view of kind of a stable margin for renewable diesel over the medium term. But do you anticipate some elevated bounce of volatility in the renewable diesel margin next year Due to a potential RIN oversupply and how do you think the market kind of evolves through that? Speaker 800:30:03Thanks. Speaker 600:30:06Sure, Jason. It's Bruce again. The individual components of the industry margin index that we Couple of things that are talked about last. California is clearly going to accelerate their LCFS reduction profile, so that goes on the credit side. And The more SAF we pull out of the renewable diesel pool, the shorter it is. Speaker 600:30:42So there's an interaction there. And then the final comment, I don't see a lot of analytics that recognize that Canada is part of our trading market, but it is. And not to be flip, but I'm not sure I care where California goes because we're not going there. Speaker 800:30:59Got it. And just to elaborate on that last point, could you sell Percent of your product into Canada while kind of sustaining the current margin profile? Speaker 600:31:10We could. That would potentially not be optimal distribution. But I'm on record for the last 2 years as saying our physicals shouldn't fall more than 100 miles from Puget Sound. If you look that up, that means we hit Oregon, Washington, British Columbia and now all of Federal Canada. So we're pretty excited about the fact that there are small rule differences, normal seasonal patterns and a lot of trading volatility. Speaker 600:31:42I was a West Coast operator for 12 years before I came to Calumet. There is a lot going on out there. And because of our geographic Proximity, we're close in, in time and we can take advantage of that. So I think the fact that Federal Canada Broad and addressable diesel market equal to the PADD V volumes, probably ought to get more attention. Operator00:32:18And our next question will be a follow-up from Roger Read with Wells Fargo. Please go ahead. Speaker 500:32:25Yes, thanks. Good morning again. And maybe just turn off of MRL a little bit here and talk about the other Core parts of the business. Obviously, the weather issues had an impact. Q2 sounds like that's pretty well worked Out of the system by the time we get to Q3. Speaker 500:32:43But I was just curious as you look at the overall sort of supply demand that's been in here, we've had a lot of Supply chain issues throughout the industry, just how things are shaking out and how should we think about a normal market because it's And what, 3 years since we've seen a normal market, I think. Speaker 900:33:04Well, Roger, this is Scott. I think a few comments here. I think he hit the nail on the head when he said it. It feels like we're more of a normal market now after a couple Highly volatile years, and we agree with that assessment. We feel like our business right now is about as normalized as what it's been over the past few years. Speaker 900:33:25As we look at sort of what I would say Roger is additional context here, sort of the headline summary of our view of the market right now, we do see some moderating demand And some of the normalizing margins going on at that macro level, but we remain bullish overall with We've got, as you know, Roger, a diverse portfolio of specialty products, the great base of customers and our unique integrated business Model that continues to be strengthened. Just some final color commentary, Roger, as we look at the business through, I'll say, Three lenses, our Performance Brands business, our SPS Fuels business and the SPS Specialties business. On the Performance Brands, we've been commenting for the past couple of years where we felt like a normal market would be for the business And we're in it now. The demand on the retail side is a little soft. But as mentioned in the call, our Industrial business is very strong right now. Speaker 900:34:29Margins are, I'll say, normalized within the business. And so we've got A pretty good outlook going forward on the Performance Brands piece. On the Fuels piece, Roger, overall, tough 2nd quarter as fuel cracks, the 2.11 came down $9 although that spiked back up here as we start Q3. But overall, I think inventory is relatively short and we've got a constructive outlook within the fuels business moving forward. And the last piece I would just say on Specialty SPS, this business we see continuing to perform very well. Speaker 900:35:05We've done a lot of work over the past few years to really And so we feel really good about where we're at. Yes, the margins are normalizing a little bit, but we're still Talking $75, $80 a barrel type of margins, when I think 3, 4, 5 years ago, that number was more in the 30s. So feel really good about where we're at within our specialty business. Speaker 500:35:31Okay. Thanks for that. I guess I was a little surprised to hear industrial demand Strong and retail demand soft. It seems like all the other data points we see at macro level would imply the opposite of that, but good to hear. One other question to follow-up on. Speaker 500:35:47The base oil markets were pretty oversupplied We call it 2015 to at least 2020. That seems to have improved. I'm just curious as you think about Group 1, 2 and 3 on the base oil front, have we seen demand increase or we've seen supply go down? Just What's helped out on that side of the margin ledger? Speaker 900:36:14Roger, Scott again. Let me start with a comment on the retail and the industrial, just to comment on that. On the retail market, I think consistent with what's going on out there, there's a lot of, I'll call it de risking by the big box retailers. The consumer market has been strong on the service Frans, I think a lot of the retail market has been de risking inventory. It's led to some choppy demand on the retail side. Speaker 900:36:41The industrial side for our Performance Brands and the question around how we've seen a strong, I think Todd or Vince alluded to in the Earnings statements for the call, a lot of our products are put in the high value markets. So we've got a great brand and great products that go into mining, as an example, that go into environmentally friendly Marine lubricants that go into the energy transition market are high value products are experiencing great demand, great growth Because of the uniqueness of all versus just more of a commoditized industrial play. Now Roger, And this last question on the base oils, a few thoughts. It's mostly on the production side. So I'll call it less supply on the Group 1 over the past 5 years than what there was. Speaker 900:37:34We like our Group 1s. It's a niche product. We try to stay out of the commoditized PCMO markets and focus more on the high value applications group 1, group 2. So less supply there and there's been some global trade disconnects past couple of years on the Group 3 as well. Speaker 500:37:56Appreciate the clarifications. Thank you. Speaker 900:37:59Thank you. Operator00:38:02And our next question will be a follow-up from Amit Dayal with H. C. Wainwright. Please go ahead. Speaker 700:38:08Thank you. Just following up on your comments about The Montana IPO, did you say you are targeting early next year as a potential window To undertake this, I just wanted to see if that is sort of the timeline we should be thinking about? Speaker 200:38:31Yes. Amit, it's Todd. We've said that in the past and continue to think that that's reasonable. Obviously, no commitments. We've got to get through the process, get the feedback and kind of make a final decision. Speaker 200:38:48But what we want to do is be ready. A lot of this is going to be driven by the market and we want to be there when the market is open And if that's early next year, then great. And if it takes longer than that, then so be it. But we want to be there to kind of be opportunistically ready When an opportunity presents itself. Speaker 700:39:10So should we think about 3Q as a very sort of important quarter for the renewables business where you want to demonstrate the capability of this operation to Speaker 600:39:19support that outcome? Speaker 200:39:22Yes. I mean, I think you bet. I think our focus has been on the Q3 for a while. We've had a number of milestones at Montana Renewables. First, we had to finance it, then we had to construct it, then we had to prove that it all worked, derisk Technology, improve the operations. Speaker 200:39:36I think we've done all of that and the very last milestone is prove it through a set of audited financials, which We've been saying for a while, we think that we'll do in the Q3 and that continues to be our intention. Speaker 700:39:50Okay. Thank you so much. Appreciate it. Speaker 600:39:54Thank you. Operator00:39:57And our next Speaker 800:40:07Are you planning on splitting out results for MRL for 3Q, just given it's an important quarter and it sounds like you want to provide more And then just a couple other operational questions on MRL. Are you running all untreated feed at this point? And do you expect to be in that EBITDA guidance range that you've previously provided? Thanks. Speaker 200:40:32I'll take the I'll start it off here, see if Bruce wants to jump in. But yes, it's been our intention to split out Montana Renewables when we reach We reached steady state and like we said, we expect that to be Q3. As far as all untreated feed, I don't think we're at 100 percent untreated feed, we're certainly ramping up, very comfortable with where we've been. The guidance that we've given of $1.25 to $1.45 per gallon Obviously, it's on untreated feed. So as we ramp up and work through The safety stock that we bought in prior periods of treated feed, the blended average EBITDA won't quite be that high. Speaker 200:41:13But we're focused on long term about 0.2 $5 to $1.45 And we're seeing that pretty much now when we look at it on an untreated basis, right, Bruce? Yes. We remain comfortable with our guidance. Speaker 600:41:28Remember that these California indicators that everybody likes to focus on Are not that good a capture of our better position. So between Amit's question a second ago and yours, We're committed to proving this in the Q3. And whether or not we're ready to carve out the audited financials, that's up to Vince, but We'll absolutely be doing a special look. So you'll get a clear transparent sense of how that works for us. Speaker 800:42:03Great. Thanks. Operator00:42:15Our next question will come from Gregg Brody with Bank of America. Please go ahead. Speaker 1000:42:22Hey, good morning, guys. Speaker 600:42:23Hey, Gregg. Speaker 1000:42:25Congrats on getting the facility, the renewable facility running As you have. My question is more about your optionality here, with in terms of So is there some limitations to how does this impact the way you're thinking about monetizing MRL, because you're an MLP and is there some limit to how much cash you can take in? Maybe you could give us a little sense of that. And then also there any update on timing specifically around IPO that we should be thinking about? Speaker 200:43:02Yes. I think The limitation you may be thinking about is around qualifying income. So sale of Montana Renewables Through an IPO or otherwise, it could be qualifying income. I think there are different points of views on that. So if that's where you're going, that's a possibility. Speaker 200:43:22Certainly, the plan always has been to make Montana Renewables At a certain point in time, the right point in time. So, if that's a step in the process, then so be it. Like I said earlier, I think we have a number of options there as far as sequencing and how we go about that. But we don't see Any major, major road stops and monetizing Montana Renewables from our current position? Speaker 1000:43:58Too much because there's tax consequences for your credit unit holders. Speaker 200:44:02Great. Speaker 1000:44:06And then maybe just timing on the IPO as part of that Speaker 200:44:13Yes, I think that's what we're trying to hit on earlier. We've said around Q1, we'd like to be ready. We could probably be ready late this year, but unlikely that the best market is going to be over the holiday season. So, Our plan right now is to get ready and see what opportunity the market provides us. And if it's early in the year, then we'd be able to Take advantage of that opportunity. Speaker 1000:44:44And then just moving on to the MAX SAF opportunity, you said you're going to make a decision by the end of the year. Can you help us think about the capital requirements for that? How you fund it? How does the DOE funding potentially fit into that? And maybe An update there as to what's happening with that. Speaker 600:45:02Sure, Greg. This is Bruce. I'll take that. The Ultimate throughput potential of our hardware is the first thing to hold in mind. And we're not Sure what the upper bound is because in fossil service, we never filled that unit. Speaker 600:45:21We're already Substantially above its initial engineering design from when we put it up. So we will find The engineering basis and then we'll stretch it. Our estimates are that's where we get the 18,000 barrel a day throughput number that you've heard us talk about. Optionally, we can install yield flexibility so that that 18,000 barrels a day can have a mix like the current mix or Rotate to all the way or almost all the way Saffield. And that's an incremental capital, incremental return decision That we would expect to execute in the field at the same time. Speaker 600:46:05So there's 2 decisions, we'd like to just do one project and have one outage to tie it in. That's what's being sorted this year. And by the end of the year, we expect to Have that clarified. Capital is obviously contingent on whether or not we add the yield flexibility. So we've Floated some super notional ranges in the couple of $100,000,000 source of funds for that. Speaker 600:46:33DOE is very interested. Cash flow from operations is also sufficient. But if we fund it that way, We're interacting with the corporate strategy that Todd covered earlier. So by the end of this year, in summary, we'll have our capital pinned down, we'll have our Investment basis agreed and we'll have DOE as a source of funds that is the mainline Operator00:47:15And our next This question will come from Justin Jenkins with Raymond James. Please go ahead. Speaker 1100:47:21Great. Thanks. Sorry, guys. I've just got a couple of modeling questions. I think over the past few quarters, we've seen a pretty big working capital build. Speaker 1100:47:30I assume a lot of that's just related to Montana Renewables Inventory, but just the progression here maybe going forward on how that unwinds or doesn't? Speaker 200:47:43Yes, I think you're right. As we've ramped up Montana Renewables, obviously, we've built inventory. We'd expect that to normalize Over time, this is expensive feedstock. It's expensive product. So, it adds up in a hurry I'm kind of on the working capital front. Speaker 200:48:01And as we've been building the front end of that supply chain, naturally we see that. And then over time, As revenues come in to offset it, we'll see normalization. Speaker 1100:48:14Perfect. Thanks. And I guess second question is on maybe managing the RINs Liability here in the context of recent EPA decisions and obviously in the context of you guys producing a lot more RINs here with RD production, Just how we should think about that liability going forward? Speaker 600:48:34This is Bruce, Justin. Good morning. I think The key is that the obligated parties, which are the downsized Calumet, Montana refinery, Which we're referring to as a specialty asphalt refinery now has got a much, much smaller RIN liability footprint. Shreveport remains about the same, but we're simply not very prominent on the RINs landscape. The entire Activity around about 29 legal challenges It's going to give you the answer and you're going to find out the same time we do as the courts rule on these things. Speaker 600:49:18So I think I'll leave it at that. Operator00:49:29And our next question will be a follow-up from Gregg Brody with Bank of America. Please go ahead. Speaker 1000:49:35Hey, guys. I got cut off there. Just Is there a timing on the DOE that we should expect in terms of having an answer, but maybe you could talk a little bit about how that process is going? Speaker 600:49:48Greg, it's Bruce. The timing is going to be up to them, but I'll tell you that we announced we were admitted into The second part of their application process, the diligence is going well. We have a weekly standing meeting And the step in front of us would be the conditional loan commitment that could really come at any time. Again, that's their business and their workload, but we're optimistic that we will Have that cornerstone of our strategic balance sheet planning in place this year. Speaker 1000:50:30And that's helpful. And then just my last one. When you raised the bond deal in June, you talked about Tendering for bonds and actually redeeming the rest of the 24s at some point. Curious how you're thinking about that? Is that something we should expect near term? Speaker 1000:50:48Are you preserving some optionality there as you think about cash for other uses right now? Speaker 200:50:56Yes. No, we're actually surprised more didn't come through during the tender and we'll go ahead and move forward Like we said, and call those bonds here in the near future. That's fully the plan. Operator00:51:17And this will conclude our question and answer session. Speaker 200:51:20I'd like Operator00:51:21to turn the conference back over to Brad McMurray for any closing remarks. Yes. Thanks, Speaker 100:51:28Joe. On behalf of management team here in the room and all of us here at Calumet, we appreciate your time and interest in joining the call this morning. Thank you for your ongoing interest in Calumet. And with that, have a great weekend, everybody.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCalumet Specialty Products Partners Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Calumet Specialty Products Partners Earnings HeadlinesCalumet Specialty Products Partners (NASDAQ:CLMT) Reaches New 1-Year Low on Analyst DowngradeMay 2 at 2:27 AM | americanbankingnews.comCalumet: Debt Relief Or Just Delaying The Inevitable?April 29, 2025 | seekingalpha.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.May 4, 2025 | Paradigm Press (Ad)Calumet, Inc. to Release First Quarter 2025 Earnings on May 9, 2025April 25, 2025 | prnewswire.comCalumet's Businesses Firing Like A Cannon, Well, Even Much Closer (Update)April 24, 2025 | seekingalpha.comCalumet, Inc. (CLMT): A Bull Case TheoryApril 14, 2025 | msn.comSee More Calumet Specialty Products Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Calumet Specialty Products Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Calumet Specialty Products Partners and other key companies, straight to your email. Email Address About Calumet Specialty Products PartnersCalumet, Inc. engages in the manufacturing, formulating, and marketing of a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. It operates through the following segments: Specialty Products & Solutions, Performance Brands, Montana/Renewables, and Corporate. The Specialty Products & Solutions segment consists of customer-focused solutions and formulations businesses, covering multiple specialty product lines, anchored by a unique integrated complex in Northwest Louisiana. The Performance Brands segment includes a fast-growing portfolio of high-quality, high performing brands. The Montana/Renewables segment is composed of a Great Falls specialty asphalt facility and Montana Renewables facility. The Corporate segment focuses on the general and administrative expenses not allocated to the Montana/Renewables, Specialty Products and Solutions, or Performance Brands segments. The company was founded in 1919 and is headquartered in Indianapolis, IN.View Calumet Specialty Products Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 12 speakers on the call. Operator00:00:00Good day, and welcome to the Calumet Specialty Products Partners Second Quarter 2023 Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference over to Brad McMurray, Investor Relations. Operator00:00:36Please go ahead, sir. Speaker 100:00:39Good morning. Thank you for joining us today for our Q2 call. With me on today's call are Todd Borgman, CEO Vince Venargo, CFO Bruce Fleming, EVP, Montana Renewables and Corporate Development Scott Obermeyer, EVP, Specialties and Mark Long, EVP, Sustainable Products and Strategy. You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the Investor Relations section of our website At www.calumetspecialty.com. Also, a webcast replay of this call will be available on our site within a few hours. Speaker 100:01:12Turning to the presentation on Slide 2, you'll find our cautionary statements. I'd like to remind everyone that during this call, we may provide various forward looking statements. Please refer to the partnership's 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 expectations. I'll now pass the call to Todd. Todd? Speaker 200:01:34Thanks, Brad, and welcome to Calumet's 2nd quarter 2023 earnings call. This was a quarter of many strategic achievements. Most crucially, all elements of Montana Renewables, the RD unit, the renewable hydrogen plant The next generation pretreater met or outperformed expectations. Further, our sustainable aviation fuel project came online, Catapulting us from nowhere to the largest SaaS producer in North America. At the corporate level, we continue the process of improving our balance sheet by Successfully issuing unsecured debt, which will eliminate our secured notes. Speaker 200:02:08Our specialties business continued with excellent commercial execution, While asset operations overcame a series of tornadoes and extreme weather that limited production, ultimately, we generated $7,700,000 of adjusted EBITDA for the quarter, which is a decrease of $10,000,000 from the prior period. Our Northwest Louisiana team spent much of the last quarter the last half of the quarter recovering from weather driven power disruptions. While doing so, we elected to pull forward maintenance and at this point, we have no meaningful planned downtime for the remainder of 2023 And we enter the Q3 running our assets at full rates. At the halfway point of our 3 year plan to fortify operations, Our assets continue to demonstrate an improved ability to recover quickly when challenges arise, and we're also adding redundancy to further prevent or lessen the impacts of external events on our business. Commercially, we're executing across all of Calumet with a focus on the customer. Speaker 200:03:08Montana Renewables has pointed half of our sales volume to Canada and seamlessly stepped into the SAF market. Our specialties Suite's team continues to capture value from our unique and integrated value chain and our supply chain and planning teams spent the last half of the quarter ensuring customer needs were met as we navigated around the weather and maintenance. Further, it's nice to see a return to a more normal environment performance brands as input costs have stabilized. This is a business that we can grow and we're seeing strong signs of that in our industrial business. Our branded products are well positioned to meet the industry's growing demand For high performing and energy efficient solutions, whether it be Belray products servicing the global mining industry or our new biodegradable biomax products being utilized in the global marine market. Speaker 200:03:53The 2nd quarter also saw the completion and full startup of Montanari Nobles, And the team settled into the new operation nicely. As we stepped into this new business, it was essential that we quickly proved out the core operating pillars, which we're ensuring the RDU and hydrogen plant for ANIT plant rights, proving our new and leading pretreater technology, demonstrating catalyst performance and meeting SaaS specifications. We've demonstrated all of these core concepts. As expected, we encountered a few blips as the team quickly scaled the learning curve and our commissioning experience feels like minor teething problems relative to the industry experience. MRL's operation is intricate, including a closed recycle and our net zero hydrogen production and serial number 1 of the next generation feedstock pretreater technology. Speaker 200:04:40As our operators learned the intricacies of this new operation, they quickly got the plant running consistently at the planned 12,000 barrels a day by quarter with the subsequently commissioned pretreater following the same upward trajectory. We took our Board of Directors to visit the plant earlier this week And we're all once again impressed with the quality and knowledge of our local Montana team and leadership. Naturally, we're in a period of rapid learning as we dig deeper into the operation and understand the true ability of our units. 1 quarter end, we both developed some new understanding and confirmed a few of our core 1st and most importantly, we've proven our technology works and our team can operate this facility at expected levels. We are making on spec product right out of the gate and even some of our customers were surprised at how quickly we came online. Speaker 200:05:31We monitor our catalysts closely It's performing as planned, even as we introduced higher amounts of feed that we treated ourselves. Further, the capacity creep has already started. As you might remember, we don't know the maximum capacity of our RDU as we never filled the unit in Fossil Service, so its true capacity has not yet been tested. Just a few months in, our team has already demonstrated the RDU's ability to run over 13,000 barrels a day. Next, we're pleased with the decision we made to install the pretreater with ARA technology. Speaker 200:06:04The amount of feedstock flexibility this unit opens is tremendous, Over previous quarters, we spent a lot of time talking about the need for a pre cheater in this business, And we're quickly seeing the field of renewable diesel producers naturally separated into those that have pretreatment ability and those that don't. Last quarter, I mentioned that the difference between treated and untreated feed cost was $0.80 a gallon. Right now, the pretreater advantage is roughly $1 a gallon. At these levels, the ability to process untreated feed is even more important than location for the time being. Fundamentally, the next generation technology allows us to lose 4% less feed than a standard treater. Speaker 200:06:47At current feedstock prices, That's roughly a 20¢ a gallon advantage. With these data points, we expect the ARA technology will allow us to maintain a structural advantage even within the camp of competitors that do have free treat. We also are learning how different feeds are handled. They run at various speeds, Cause filter changes at different intervals and differ in the amount of time it takes to unload a railcar. These are common items to work through, which will allow us to We're optimizing the drawdown of our previous market purchases of treated feed and we continue to ramp up the pretreated rates as we gained comfort with the new technology. Speaker 200:07:27Further, we have confirmed that location is as important as we thought. We've seen generic industry margins tightening recently, especially for the treated feeds on the golf. This temporary dynamic has occurred before When markets rebalanced from a short term disruption. While we fully expect it to normalize quickly, our relative location advantage provides flexibility allows us to pivot rapidly in a changing environment. This is true on both the feed and product side of our business. Speaker 200:07:55On the feed side, the location advantage is magnified by our next generation pre trigger that we just discussed. In fact, we just placed our first order for Camelina, which will arrive in the next couple of weeks. Camelina is in its very early stages, but given its indigenous to Montana, extremely low CI It does not compete with food. This cover crop presents tremendous upside to Montana Renewables. On the product side, 50% of our existing RD is now Selling in Canada, as we see our early theory playing out that our products will migrate to the spot of optimal logistic advantage. Speaker 200:08:30As the largest single market, California is often a reference point for renewable fuels in our industry. But with Canada sharing a land border with Montana, we fully Our products to all land in premium locations. Next up, the level of interest in SAF is even bigger than we expected And industry seems to quickly be aligning that SaaS is the best, fastest and most practical path to airline decarbonization. With the SaaS market currently being a fully voluntary market, it's been interesting to see the wide range of views that exist on how this material will price long term. For us, Shell has been a great partner so far, and we're pleased with the value they're bringing to the table in these early days. Speaker 200:09:12As Montana Renewables looks forward to the MAX SAF expansion, we continue to be enthusiastic. We expect to be in a position to share some early numbers on And we believe that with MAX SAF, we can more than double our current EBITDA run rate in 2025. The MAXAF project leverages our early mover advantage, and we could sell all of the product we could make into California, Oregon, Washington, Canada, even Illinois and Minnesota with the new state staff credits. And finally, we're already exploring renewable naphtha and diesel fractions, the use is in our solvents business. We've seen early successes with other sustainable product lines And adding another example of unique and advantaged integration to our specialty platform is exciting as we continue to look for ways to leverage our newly found renewables expertise across our enterprise. Speaker 200:10:13With that, I'll turn the call over to Vince to take us through the quarterly results. Vince? Speaker 300:10:18Thank you, Todd. Before we move forward, let's pause on Slide 4 to take a closer look at 2 new brands we recently added to our SBS portfolio. Titan 0 is our carbon neutral wax product and PENclear is an all natural product Developed to supplement our Panerico Beauty Care line. Moving to Slide 5, our FPS business Generated $61,000,000 of adjusted EBITDA during the quarter. Our production volumes were roughly in line with the Q1. Speaker 300:10:50And as Todd mentioned, In June, our Northwest Louisiana plants were impacted by severe weather. Tornadoes and hurricane force winds We estimate that the events cost approximately $20,000,000 in profitability. We use the unplanned downtime To pull some turnaround work forward, further, we successfully completed a planned turnaround at our Cotton Valley facility. I can say that as of July 1, we were back to full operations across the entire Northwest Louisiana region. The margin environment continues to be constructive for both fuels and specialties here in the 3rd quarter. Speaker 300:11:38While we have seen and expected a reversion from all time highs we experienced late last year, margins are well above mid cycle averages And we expect that to remain. Our material margin for the quarter averaged $0.77 And $10.21 per barrel for fuel. We continue to be optimistic about the fundamentals of our SPS business And our expectations are constructive for the rest of the year. Moving to Slide 7, our Performance Brands business had another solid quarter, Generating $12,200,000 of adjusted EBITDA, we continue to see price stability in the marketplace. Our production volumes were up quarter over quarter and we saw significant demand in both the industrial lines and from TrueFuel, Our most direct retail offer. Speaker 300:12:32The 2nd quarter trends to be the the second quarter tends to be the best demand quarter For TrueFuel, as both the spring weather and planting seasons coincide, and we were pleased to see strong demand within that channel. We have highlighted 2 of our other products on the slide as well. We have mentioned Bio Max before As a high performance biodegradable maritime solution that is now also being applied across other industries, The line continues to show real promise in its early stages as more and more customers interact with it. And our Bell Ray brands, which are particularly well known for performance in mining applications, have seen tremendous growth Year over year, our industrial demand is up 35% year to date, and this is a segment of the business that we expect big things from As the world prioritizes high performance and power efficiency, especially in some of the leading megatrends like mining, food and energy. Speaker 400:13:36Moving to Speaker 300:13:36our Montana business, you could see on Slide 9 that we generated $12,600,000 of adjusted EBITDA in the quarter. For the legacy asphalt plant, we operated at full capacity of nearly 12,000 barrels per day of production. We entered this year's asphalt paving season during the Q2, which was our first opportunity to utilize The recently constructed polymer modified asphalt or PMA plant. This unique and high quality asphalt It's being praised in the marketplace and we are very pleased with the early sales. The second quarter was also an important one for Montana Renewables. Speaker 300:14:19During the quarter, we bought our feedstock pretreater online, shipped our first staff volumes And ramped up rates of both our RDU and pretreater. Average production for the quarter was a little over 7,000 barrels per day As our team quickly learned the plant and with plant operations derisked, we were able to end the quarter producing over 12,000 barrels per day. During the quarter, we also announced an exclusive agreement to sell 100 percent of our SAF to Shell, who is also one of our 3 renewable diesel We are excited at the staff opportunity that is ahead of us. We are running off the last of our treated renewable feedstocks And expect to rotate to a slate of primarily untreated feed. These are cheaper feedstocks that will allow us to capture the full earnings horsepower of Montana Renewables. Speaker 300:15:14To discuss our strategy for Montana in more detail, I'll now turn the call back over to Todd. Speaker 200:15:21Thanks, Vince. Our priorities and next steps are clear. We entered the Q3 operating well across the board. In specialties, we have some inventory to rebuild, but otherwise they're planning on a strong second half. At Montana Renewables, we'll continue to process what's left of our trade and safety stock And maximize pretreat throughput. Speaker 200:15:40For the quarter, we've implemented a 1,000,000 barrel challenge at the site for both our legacy and renewable businesses. And through the end of July, we're tracking ahead on both. Our plan and intention is to demonstrate in the Q3 that Montana Renewables sits atop the stack a competitively advantaged renewable diesel and sap producers. Looking forward a bit more, internal process design work for our MAX Sap expansion has already started, And we expect to make a final investment decision near the end of this year. Zooming out, our strategy remains unchanged. Speaker 200:16:12We're committed to completing the deleveraging of Calumet, unlocking value and increasing trading volume for our unitholders. Our Department of Energy loan process continues and we remain hopeful and confident that we will receive positive news that enables us to go forward with the mass staff expansion That would take Montana Renewables from North America's largest SAP producer to one of the world's largest SAP producers. And last, We continue to expect the potential monetization of Montana Renewables to complete the deleveraging of Calumet. For some time, we've discussed the possibility of a Montana Renewables IPO, private monetization or even both. Naturally, this has created a flurry of interest in the advisor community And even potential investors, and we continue to receive clear feedback that Montana Renewables is a differentiated business with transformational value potential to Calumet, well in excess of the entire company's current enterprise value. Speaker 200:17:07As always, we'll continue to execute against our stated strategic plan And we'll also continue to actively explore All Pass to best unlock the extreme unitholder value that we believe exists within County Met. With that, I'll hand the call back to the operator for questions. Operator? Operator00:17:25We will now begin the question and answer session. Please go ahead. Speaker 500:17:48Yes. Thank you and good morning. Lots to hit Pierre, but I guess really let's dive into MRL first, maybe a little more clarity on how some of the Advantage Feedstocks at room 3, you mentioned some learning curve issues with that. Is there one that's worked a little better or is priced a little better, Has come up with a better yield? Just sort of curious any more you can offer there? Speaker 600:18:19Hey, Roger, it's Bruce. Good morning. Excuse me. Yes. A couple of things as you think about the optimization. Speaker 600:18:30The feedstocks do have different yields, but that's mostly in the split between diesel and SAF. The total distillate yields are substantially Similar across feeds. So the pricing is interesting because there's rotation among classes. Tallo can get an advantage and then corn oil can come in on top of it for a while. So we've got a pretty good supply and trading function, Trying to follow those rotations and we're able to do that more quickly than an average competitor because we're quite close to the sources. Speaker 600:19:08Yes, most of our feeds are days to maybe 2 weeks away. And so we shift gears pretty quickly. Speaker 500:19:17Yes, that's helpful. And then the other question I have for you, since we are all attuned to California, the CFS and the other things that drive us to see RD sales in the U. S, what Specifically, do you see in Canada's setup that makes it competitive from either an RD or a SaaS Standpoint? Speaker 600:19:43Higher price. Speaker 500:19:46That's an easy answer. All right. Well, that's my two questions. I'll Operator00:19:57And our next question will come from Amit Mehro with H. C. Wainwright. Please go ahead. Speaker 700:20:03Thank you. Good morning, everyone. Just staying on the feedstock topic, you mentioned Camelina. Could you give us any color on cost advantages Camelina presents for you guys and whether this is a seasonal feedstock option for you or can it be available through the year? Speaker 600:20:27Amit, the best way to think about that is that Commercial quantities of Camelina are actually not in the market yet. So this is experimentation. We were fortunate to pick up opportunistically some Camelina oil. We really like it. It's in the low 20s Carbon intensity, CI, and dramatically better than vegetable oils and it grows in our latitude. Speaker 600:20:55So what we imagine is going to happen is that now that this is a cash crop, there will be more and more of it. There is some Crushing activity now and that's simply going to speed up. So if you look at some of our public information, We're forecasting commercial availability to us out in 2025, 'twenty six that shows up in some of our charts. The economics of it, I wouldn't read too much into this because it is an experimentation phase, but This is competitive with untreated feeds. So that's going to be quite a good margin, albeit a small volume. Speaker 700:21:41Understood. Got it. So this is a little bit more of a longer term development effort for you guys. Got it. Speaker 600:21:48Yes. We're just to be clear, we're not doing the development. There are 4 developers in Montana now. They're backed by Global majors. I mean, this is very visible. Speaker 600:22:02And so it will happen. We're just speculating on how fast. So as I said, We put commercial availability to us about 2 years out. Speaker 700:22:12Okay. Thank you for that. Then on the topic of deleveraging, Do you think going into the second half of Carnegie Pre, you could begin some deleveraging efforts this from cash flows or will you wait for some sort of monetization event to Undertake sort of that part of the strategy. Speaker 200:22:37Yes. Amit, this is Todd. I think we're certainly going to generate positive cash flow in the second half of year with Montana Renewables now running fully, construction over, so on and so forth. So absolutely, there'll be we would expect cash flow to be available. That being said, I think the major big bang deleveraging event, It's still going to be tied to monetization. Speaker 200:23:01There'd certainly be the option to delever over time with Operating cash flow. With MRL on and our specialties business operating as well as it has over the past couple of years, we'd expect that to be an But I think we've been pretty clear that we want to complete the deleveraging of Calumet as quickly as possible. Have been talking about it for a while here. We want to get back to growing the business and the most logical path is Minority monetization of Montana Renewables. Speaker 700:23:35Understood. Thank you, guys. That's all I have. Operator00:23:40And our next question will come from Manav Gupta with UBS. Please go ahead. Speaker 400:23:46Good morning, guys. My question to you here is, can you help us understand your SaaS strategy? How much are you producing right now? Once you do expand, if you do, then how much SAF could you produce? And then just a quick follow-up is, how much more do you actually Expect to make on an EBITDA per gallon basis in SaaS versus RD. Speaker 400:24:08So if you think you can make 140 In RB, can you actually make $250,000,000 in SAPS? And I'll turn it over after that. Thank you. Speaker 600:24:17Hi, Manav. It's Bruce. Good morning. If I take those in reverse order, we've got an undisclosed commercial premium Above renewable diesel, that is very sufficient to incent SAF recovery. The volume part is we've contracted 30,000,000 gallons per year. Speaker 600:24:43That's a percentage of our yield, kind of 12% to 15%. The expansion case, the licensers tell us we can go to full conversion 100% staff. We think there will be an optimization short of that. So we are tentatively advertising 230,000,000 gallons of SAF Capacity post installation of our yield flexibility project. Speaker 400:25:13Thank you. Operator00:25:22Our next question here will come from Jason Gabelman with T. B. Cowen. Please go ahead. Speaker 800:25:28Hey, good morning. Thanks for taking my questions. I wanted to ask about the monetization strategy and efforts going on. And specifically, Todd mentioned A couple of things at the end that you're receiving indications that the value of MRL Is higher than the value of the current enterprise value of the company. So I was wondering if you could just elaborate on that a bit. Speaker 800:26:00How do you translate that into actual value for shareholders? And what does that process look like over the next few months? And then tied to that, considerations for converting To a C Corp, do you see that as a necessary step in unlocking the value? Thanks. Speaker 200:26:22Let's have Bruce start with kind of MRL valuation and then I'll pile on if that's all right with kind of the last question. Speaker 600:26:31Sure. Good morning, Jason. It's Bruce. The MREL valuation is reasonably clear. The energy transition companies, The public peer companies are trading in an enterprise value to EBITDA multiple that's visible. Speaker 600:26:46We expect to lay in with That at a minimum, if not get a premium for the competitive advantages that we've got due to location, due to the advanced Pre Treater Technology and due to the fact that we're now North America's largest SaaS producer. So when you put all that together, That's the public valuation signal that we would expect to target. I'll tell you that the bulge bracket banks we're talking to Have no concern about some kind of an overhang from the parent, which I think is part of what you were getting at. And so we're simply going to stand it up and it looks like it's going to be a pretty straightforward process. How long that takes and the condition of the capital markets will obviously give us a shot at Positioning our timing, but from here in early August, we're presumably Targeting 1st part of next year for closing and funds realization. Speaker 200:27:49Yes. And I think Just to pile on a little bit, we know there's intrinsic value in Calumet, right? Bruce just talked about some of the value that we'd We can look at comps in the marketplace. We can look at a number of points to triangulate into what Montana Renewables is worth. And we've talked about unlocking that through IPO or monetization. Speaker 200:28:11Primarily, we think MRL would be very liquid As a publicly traded company and that would certainly help Calumet. We've also said we're exploring optimal paths Like we always do, natural time for all stakeholders, I guess, Jason, is to look at the full strategy would be when we're talking about selling or spinning some of it to create new entity. So could something with the structure be one of those options? Sure. I mean, I guess everything's an option. Speaker 200:28:38Everyone involved is rational economic creatures and We all want what's best for Calumet. So I guess I'd just say the entire strategy is complex. It takes time. And what we do from here With this large amount of value sitting in Montana Renewables is arguably the most important decision in the history of Calumet. So getting that That's right. Speaker 200:28:58It's the most important thing and we're going to prioritize that over rushing down a particular path. We'll be talking with the market. We'll be seeking input. And at the end of the day, there's a heck of a lot of value here. So we're focused on unlocking that and we'll go from there. Speaker 200:29:14Got Speaker 800:29:16it. Thanks. I appreciate the comments. And then my follow-up just on the margin outlook and specifically Related to RIN prices, following the EPA's decision on the renewable volume obligations '23 to 'twenty five, I think there's a decent amount of concern that RIN prices are going to be volatile next year as the industry brings on New renewable diesel capacity, I know you Calumet has a view of kind of a stable margin for renewable diesel over the medium term. But do you anticipate some elevated bounce of volatility in the renewable diesel margin next year Due to a potential RIN oversupply and how do you think the market kind of evolves through that? Speaker 800:30:03Thanks. Speaker 600:30:06Sure, Jason. It's Bruce again. The individual components of the industry margin index that we Couple of things that are talked about last. California is clearly going to accelerate their LCFS reduction profile, so that goes on the credit side. And The more SAF we pull out of the renewable diesel pool, the shorter it is. Speaker 600:30:42So there's an interaction there. And then the final comment, I don't see a lot of analytics that recognize that Canada is part of our trading market, but it is. And not to be flip, but I'm not sure I care where California goes because we're not going there. Speaker 800:30:59Got it. And just to elaborate on that last point, could you sell Percent of your product into Canada while kind of sustaining the current margin profile? Speaker 600:31:10We could. That would potentially not be optimal distribution. But I'm on record for the last 2 years as saying our physicals shouldn't fall more than 100 miles from Puget Sound. If you look that up, that means we hit Oregon, Washington, British Columbia and now all of Federal Canada. So we're pretty excited about the fact that there are small rule differences, normal seasonal patterns and a lot of trading volatility. Speaker 600:31:42I was a West Coast operator for 12 years before I came to Calumet. There is a lot going on out there. And because of our geographic Proximity, we're close in, in time and we can take advantage of that. So I think the fact that Federal Canada Broad and addressable diesel market equal to the PADD V volumes, probably ought to get more attention. Operator00:32:18And our next question will be a follow-up from Roger Read with Wells Fargo. Please go ahead. Speaker 500:32:25Yes, thanks. Good morning again. And maybe just turn off of MRL a little bit here and talk about the other Core parts of the business. Obviously, the weather issues had an impact. Q2 sounds like that's pretty well worked Out of the system by the time we get to Q3. Speaker 500:32:43But I was just curious as you look at the overall sort of supply demand that's been in here, we've had a lot of Supply chain issues throughout the industry, just how things are shaking out and how should we think about a normal market because it's And what, 3 years since we've seen a normal market, I think. Speaker 900:33:04Well, Roger, this is Scott. I think a few comments here. I think he hit the nail on the head when he said it. It feels like we're more of a normal market now after a couple Highly volatile years, and we agree with that assessment. We feel like our business right now is about as normalized as what it's been over the past few years. Speaker 900:33:25As we look at sort of what I would say Roger is additional context here, sort of the headline summary of our view of the market right now, we do see some moderating demand And some of the normalizing margins going on at that macro level, but we remain bullish overall with We've got, as you know, Roger, a diverse portfolio of specialty products, the great base of customers and our unique integrated business Model that continues to be strengthened. Just some final color commentary, Roger, as we look at the business through, I'll say, Three lenses, our Performance Brands business, our SPS Fuels business and the SPS Specialties business. On the Performance Brands, we've been commenting for the past couple of years where we felt like a normal market would be for the business And we're in it now. The demand on the retail side is a little soft. But as mentioned in the call, our Industrial business is very strong right now. Speaker 900:34:29Margins are, I'll say, normalized within the business. And so we've got A pretty good outlook going forward on the Performance Brands piece. On the Fuels piece, Roger, overall, tough 2nd quarter as fuel cracks, the 2.11 came down $9 although that spiked back up here as we start Q3. But overall, I think inventory is relatively short and we've got a constructive outlook within the fuels business moving forward. And the last piece I would just say on Specialty SPS, this business we see continuing to perform very well. Speaker 900:35:05We've done a lot of work over the past few years to really And so we feel really good about where we're at. Yes, the margins are normalizing a little bit, but we're still Talking $75, $80 a barrel type of margins, when I think 3, 4, 5 years ago, that number was more in the 30s. So feel really good about where we're at within our specialty business. Speaker 500:35:31Okay. Thanks for that. I guess I was a little surprised to hear industrial demand Strong and retail demand soft. It seems like all the other data points we see at macro level would imply the opposite of that, but good to hear. One other question to follow-up on. Speaker 500:35:47The base oil markets were pretty oversupplied We call it 2015 to at least 2020. That seems to have improved. I'm just curious as you think about Group 1, 2 and 3 on the base oil front, have we seen demand increase or we've seen supply go down? Just What's helped out on that side of the margin ledger? Speaker 900:36:14Roger, Scott again. Let me start with a comment on the retail and the industrial, just to comment on that. On the retail market, I think consistent with what's going on out there, there's a lot of, I'll call it de risking by the big box retailers. The consumer market has been strong on the service Frans, I think a lot of the retail market has been de risking inventory. It's led to some choppy demand on the retail side. Speaker 900:36:41The industrial side for our Performance Brands and the question around how we've seen a strong, I think Todd or Vince alluded to in the Earnings statements for the call, a lot of our products are put in the high value markets. So we've got a great brand and great products that go into mining, as an example, that go into environmentally friendly Marine lubricants that go into the energy transition market are high value products are experiencing great demand, great growth Because of the uniqueness of all versus just more of a commoditized industrial play. Now Roger, And this last question on the base oils, a few thoughts. It's mostly on the production side. So I'll call it less supply on the Group 1 over the past 5 years than what there was. Speaker 900:37:34We like our Group 1s. It's a niche product. We try to stay out of the commoditized PCMO markets and focus more on the high value applications group 1, group 2. So less supply there and there's been some global trade disconnects past couple of years on the Group 3 as well. Speaker 500:37:56Appreciate the clarifications. Thank you. Speaker 900:37:59Thank you. Operator00:38:02And our next question will be a follow-up from Amit Dayal with H. C. Wainwright. Please go ahead. Speaker 700:38:08Thank you. Just following up on your comments about The Montana IPO, did you say you are targeting early next year as a potential window To undertake this, I just wanted to see if that is sort of the timeline we should be thinking about? Speaker 200:38:31Yes. Amit, it's Todd. We've said that in the past and continue to think that that's reasonable. Obviously, no commitments. We've got to get through the process, get the feedback and kind of make a final decision. Speaker 200:38:48But what we want to do is be ready. A lot of this is going to be driven by the market and we want to be there when the market is open And if that's early next year, then great. And if it takes longer than that, then so be it. But we want to be there to kind of be opportunistically ready When an opportunity presents itself. Speaker 700:39:10So should we think about 3Q as a very sort of important quarter for the renewables business where you want to demonstrate the capability of this operation to Speaker 600:39:19support that outcome? Speaker 200:39:22Yes. I mean, I think you bet. I think our focus has been on the Q3 for a while. We've had a number of milestones at Montana Renewables. First, we had to finance it, then we had to construct it, then we had to prove that it all worked, derisk Technology, improve the operations. Speaker 200:39:36I think we've done all of that and the very last milestone is prove it through a set of audited financials, which We've been saying for a while, we think that we'll do in the Q3 and that continues to be our intention. Speaker 700:39:50Okay. Thank you so much. Appreciate it. Speaker 600:39:54Thank you. Operator00:39:57And our next Speaker 800:40:07Are you planning on splitting out results for MRL for 3Q, just given it's an important quarter and it sounds like you want to provide more And then just a couple other operational questions on MRL. Are you running all untreated feed at this point? And do you expect to be in that EBITDA guidance range that you've previously provided? Thanks. Speaker 200:40:32I'll take the I'll start it off here, see if Bruce wants to jump in. But yes, it's been our intention to split out Montana Renewables when we reach We reached steady state and like we said, we expect that to be Q3. As far as all untreated feed, I don't think we're at 100 percent untreated feed, we're certainly ramping up, very comfortable with where we've been. The guidance that we've given of $1.25 to $1.45 per gallon Obviously, it's on untreated feed. So as we ramp up and work through The safety stock that we bought in prior periods of treated feed, the blended average EBITDA won't quite be that high. Speaker 200:41:13But we're focused on long term about 0.2 $5 to $1.45 And we're seeing that pretty much now when we look at it on an untreated basis, right, Bruce? Yes. We remain comfortable with our guidance. Speaker 600:41:28Remember that these California indicators that everybody likes to focus on Are not that good a capture of our better position. So between Amit's question a second ago and yours, We're committed to proving this in the Q3. And whether or not we're ready to carve out the audited financials, that's up to Vince, but We'll absolutely be doing a special look. So you'll get a clear transparent sense of how that works for us. Speaker 800:42:03Great. Thanks. Operator00:42:15Our next question will come from Gregg Brody with Bank of America. Please go ahead. Speaker 1000:42:22Hey, good morning, guys. Speaker 600:42:23Hey, Gregg. Speaker 1000:42:25Congrats on getting the facility, the renewable facility running As you have. My question is more about your optionality here, with in terms of So is there some limitations to how does this impact the way you're thinking about monetizing MRL, because you're an MLP and is there some limit to how much cash you can take in? Maybe you could give us a little sense of that. And then also there any update on timing specifically around IPO that we should be thinking about? Speaker 200:43:02Yes. I think The limitation you may be thinking about is around qualifying income. So sale of Montana Renewables Through an IPO or otherwise, it could be qualifying income. I think there are different points of views on that. So if that's where you're going, that's a possibility. Speaker 200:43:22Certainly, the plan always has been to make Montana Renewables At a certain point in time, the right point in time. So, if that's a step in the process, then so be it. Like I said earlier, I think we have a number of options there as far as sequencing and how we go about that. But we don't see Any major, major road stops and monetizing Montana Renewables from our current position? Speaker 1000:43:58Too much because there's tax consequences for your credit unit holders. Speaker 200:44:02Great. Speaker 1000:44:06And then maybe just timing on the IPO as part of that Speaker 200:44:13Yes, I think that's what we're trying to hit on earlier. We've said around Q1, we'd like to be ready. We could probably be ready late this year, but unlikely that the best market is going to be over the holiday season. So, Our plan right now is to get ready and see what opportunity the market provides us. And if it's early in the year, then we'd be able to Take advantage of that opportunity. Speaker 1000:44:44And then just moving on to the MAX SAF opportunity, you said you're going to make a decision by the end of the year. Can you help us think about the capital requirements for that? How you fund it? How does the DOE funding potentially fit into that? And maybe An update there as to what's happening with that. Speaker 600:45:02Sure, Greg. This is Bruce. I'll take that. The Ultimate throughput potential of our hardware is the first thing to hold in mind. And we're not Sure what the upper bound is because in fossil service, we never filled that unit. Speaker 600:45:21We're already Substantially above its initial engineering design from when we put it up. So we will find The engineering basis and then we'll stretch it. Our estimates are that's where we get the 18,000 barrel a day throughput number that you've heard us talk about. Optionally, we can install yield flexibility so that that 18,000 barrels a day can have a mix like the current mix or Rotate to all the way or almost all the way Saffield. And that's an incremental capital, incremental return decision That we would expect to execute in the field at the same time. Speaker 600:46:05So there's 2 decisions, we'd like to just do one project and have one outage to tie it in. That's what's being sorted this year. And by the end of the year, we expect to Have that clarified. Capital is obviously contingent on whether or not we add the yield flexibility. So we've Floated some super notional ranges in the couple of $100,000,000 source of funds for that. Speaker 600:46:33DOE is very interested. Cash flow from operations is also sufficient. But if we fund it that way, We're interacting with the corporate strategy that Todd covered earlier. So by the end of this year, in summary, we'll have our capital pinned down, we'll have our Investment basis agreed and we'll have DOE as a source of funds that is the mainline Operator00:47:15And our next This question will come from Justin Jenkins with Raymond James. Please go ahead. Speaker 1100:47:21Great. Thanks. Sorry, guys. I've just got a couple of modeling questions. I think over the past few quarters, we've seen a pretty big working capital build. Speaker 1100:47:30I assume a lot of that's just related to Montana Renewables Inventory, but just the progression here maybe going forward on how that unwinds or doesn't? Speaker 200:47:43Yes, I think you're right. As we've ramped up Montana Renewables, obviously, we've built inventory. We'd expect that to normalize Over time, this is expensive feedstock. It's expensive product. So, it adds up in a hurry I'm kind of on the working capital front. Speaker 200:48:01And as we've been building the front end of that supply chain, naturally we see that. And then over time, As revenues come in to offset it, we'll see normalization. Speaker 1100:48:14Perfect. Thanks. And I guess second question is on maybe managing the RINs Liability here in the context of recent EPA decisions and obviously in the context of you guys producing a lot more RINs here with RD production, Just how we should think about that liability going forward? Speaker 600:48:34This is Bruce, Justin. Good morning. I think The key is that the obligated parties, which are the downsized Calumet, Montana refinery, Which we're referring to as a specialty asphalt refinery now has got a much, much smaller RIN liability footprint. Shreveport remains about the same, but we're simply not very prominent on the RINs landscape. The entire Activity around about 29 legal challenges It's going to give you the answer and you're going to find out the same time we do as the courts rule on these things. Speaker 600:49:18So I think I'll leave it at that. Operator00:49:29And our next question will be a follow-up from Gregg Brody with Bank of America. Please go ahead. Speaker 1000:49:35Hey, guys. I got cut off there. Just Is there a timing on the DOE that we should expect in terms of having an answer, but maybe you could talk a little bit about how that process is going? Speaker 600:49:48Greg, it's Bruce. The timing is going to be up to them, but I'll tell you that we announced we were admitted into The second part of their application process, the diligence is going well. We have a weekly standing meeting And the step in front of us would be the conditional loan commitment that could really come at any time. Again, that's their business and their workload, but we're optimistic that we will Have that cornerstone of our strategic balance sheet planning in place this year. Speaker 1000:50:30And that's helpful. And then just my last one. When you raised the bond deal in June, you talked about Tendering for bonds and actually redeeming the rest of the 24s at some point. Curious how you're thinking about that? Is that something we should expect near term? Speaker 1000:50:48Are you preserving some optionality there as you think about cash for other uses right now? Speaker 200:50:56Yes. No, we're actually surprised more didn't come through during the tender and we'll go ahead and move forward Like we said, and call those bonds here in the near future. That's fully the plan. Operator00:51:17And this will conclude our question and answer session. Speaker 200:51:20I'd like Operator00:51:21to turn the conference back over to Brad McMurray for any closing remarks. Yes. Thanks, Speaker 100:51:28Joe. On behalf of management team here in the room and all of us here at Calumet, we appreciate your time and interest in joining the call this morning. Thank you for your ongoing interest in Calumet. And with that, have a great weekend, everybody.Read morePowered by