Calumet Q1 Earnings Call Highlights

Key Points

• Calumet suffered an operational hit when organic chlorides in its crude stream forced the Shreveport plant offline, costing roughly 750,000 barrels of production and an estimated $30M+ of lost opportunity; management says repairs and added sampling are complete and the plant has been running ~50,000 bpd.
• The MaxSAF 150 expansion at Montana Renewables was completed on time and on budget, positioning the business for a projected 4–5x annual increase in SAF volumes and benefiting from an improved EPA Set 2 RVO backdrop and evergreen SAF contracts with ~$1–2/gal premiums.
• On finance, Calumet has hedges covering ~10,000 bpd (~25% of fuels) at crack spreads placed around ~$22–$27/boe (causing a ~$6M realized loss this quarter), raised a $150M tack-on for balance-sheet flexibility, and says working-cap pressures from the crude spike are mostly unwinding as it pursues deleveraging and eventual monetization of Montana Renewables.

Calumet NASDAQ: CLMT executives told investors the company entered 2026 facing unusually strong margin conditions across both traditional fuels and renewable fuels, but first-quarter results did not fully reflect those tailwinds due to downtime at its Shreveport facility and planned work at Montana Renewables.

On the company’s first-quarter 2026 earnings call, CEO Todd Borgmann described the period as “eventful and strategically pivotal,” pointing to the U.S. Environmental Protection Agency’s long-awaited Set 2 renewable volume obligation (RVO) announcement late in the quarter, as well as a strong commodity margin backdrop. Borgmann said Montana Renewables was taken down for a turnaround tied to its MaxSAF 150 expansion in early March and “successfully commenced operations in early May.”

First-quarter EBITDA and the Shreveport disruption

EVP and CFO David Lunin reported Calumet generated $50.1 million of adjusted EBITDA with tax attributes, slightly below the $55.0 million posted in the first quarter of 2025. Lunin said the company “didn’t fully capture the opportunity the market provided” due to the Shreveport incident and Montana expansion work.

Lunin said that late in the quarter, organic chlorides were discovered in Calumet’s crude stream, contributing to a loss of about 750,000 barrels of production. He described organic chlorides as a serious risk, noting industry consequences when they are blended into crude because they can cause rapid erosion of steel. Lunin said the Shreveport team identified corrosion, traced the cause, and acted quickly by taking impacted equipment out of service and inspecting the facility.

He estimated the event cost the company over $30 million of lost opportunity given the elevated margins late in the quarter. Lunin said the issue is now “behind us,” and the plant has been running about 50,000 barrels per day through most of April.

Later, responding to analyst questions, Borgmann said no further work is needed at the facility and that Calumet “inspected the facility thoroughly” and made repairs conservatively, including replacing “a big chunk” of the naphtha train. He added the company installed additional sampling and quality-monitoring redundancy to reduce the risk of recurrence, while continuing to investigate how the chlorides entered the supply chain.

Specialty Products and Solutions: price actions amid volatility

In the Specialty Products and Solutions (SPS) segment, Lunin reported $44.3 million of adjusted EBITDA, down from $56.0 million in the year-ago quarter. Both Borgmann and Lunin emphasized Calumet’s integrated model and commercial response capabilities in a volatile environment, with Borgmann noting that in March crude oil prices increased more than 50% in a two-week period.

Borgmann said Calumet’s commercial team executed more than 20 price increases across product lines to counter cost escalation. Lunin said specialty margins were “temporarily compressed” by the crude spike, but the pricing actions were implemented quickly and the company expected to see benefits in the second quarter.

Lunin also noted the company posted its sixth consecutive quarter with specialty sales volumes exceeding 20,000 barrels per day, despite the Shreveport outage largely affecting fuels production. Borgmann said Calumet completed two planned turnarounds at its Cotton Valley and Princeton facilities in April and was “running at max volumes across the board” to capture current market conditions.

On the broader specialty market, Borgmann highlighted Middle East-related supply-chain sensitivity, saying that while roughly 20% of global crude volumes pass through the Strait of Hormuz, about 10% of global base oil supply does as well, along with a disproportionate share of “lube crudes.” He said Calumet’s crude supply is largely domestic and that fully integrated production provides an economic advantage when competitors must buy intermediates such as VGO or refined fuels as specialty feedstocks.

Performance Brands: TruFuel momentum and price lag

For Performance Brands, Lunin reported $12.6 million of adjusted EBITDA. He said results were partially impacted by margin compression and the normal pricing lag typical of a retail-oriented customer base, estimating a 60–90 day period for price actions to be reflected, compared with less than a month in SPS.

Lunin also pointed to progress following the divestiture of the Royal Purple industrial business (which was included in first-quarter 2025 results but not in the current period). He said commercial and operational teams “successfully offset” the lost EBITDA in under a year through cost controls, growth of trusted brands, and customer relationships.

He added that TruFuel posted record monthly results in February, that momentum continued throughout the first quarter with record sales volume, and the company posted another monthly volume record in April.

Montana Renewables: MaxSAF 150 start-up and improved RVO outlook

Calumet’s Montana Renewables segment generated $10.2 million of adjusted EBITDA with tax attributes, up from $3.3 million a year earlier, Lunin said. On an 87% Calumet-owned basis, renewables EBITDA with tax attributes was $8.8 million.

Lunin said the company delivered the MaxSAF 150 expansion on time and on budget and said the new capacity positions the business for a “transformational product mix shift” between renewable diesel and sustainable aviation fuel (SAF). He said the shift is expected to deliver a 4 to 5-fold increase in SAF volumes on an annual run-rate basis.

Management tied the opportunity to both policy and commercial structures. Borgmann said the EPA’s Set 2 RVO announcement reset the outlook after what he called the “Set 1” period, when the industry experienced reduced utilization. He said the agency’s updated approach is based on a historical methodology that evaluates prior-year capacity and increases mandates to incentivize utilization growth.

In Q&A, EVP of Montana Renewables and Corporate Development Bruce Fleming said Calumet’s SAF contracts are structured as evergreens with a distribution of notice periods, reflecting three years of SAF sales. He said contracts that have rolled “have renewed within” the company’s guidance range. Borgmann added that, on average, these are “typically 2, 3 year type evergreens” and that the company has not had problems renewing contracts or adding supply. Lunin said the SAF portfolio includes customers with a contractual premium of $1 to $2 per gallon over renewable diesel.

Discussing biodiesel industry utilization, Fleming said margins are “solidly back into a market environment where the prices are gonna have to incent the small biodiesel guys,” adding that some capacity may return faster than expected unless it has been permanently removed. He noted analysts have been calling for a return toward 90% utilization by the end of the year.

Fleming also said Montana Renewables has “essentially unlimited feedstock flexibility,” enabled by pre-treater capability and monthly re-optimization, and said the company is located in a feedstock long area without questions of physical shortage.

Hedging, liquidity, and deleveraging priorities

Lunin said Calumet entered crack spread hedges for portions of 2026 and 2027 fuels production to support cash flow and deleveraging goals. He said the company has hedges for approximately 10,000 barrels per day, or about 25% of fuels production, on the 2-1-1 crack spread. He noted some 2026 hedges were placed around $22 per barrel (with the gasoline leg using Argus or CBOT) and resulted in about $6 million of realized hedge losses in the quarter. He said an additional tranche for 2027 was added at levels closer to $27 per barrel on a CBOT basis.

On liquidity and working capital, Lunin said the run-up in crude prices affected inventory and accounts receivable, creating a working-capital draw that was exacerbated by the Shreveport downtime. He said the company was already seeing “almost a total unwind” of that in April, with some continuing into May.

Lunin also referenced a $150 million “tack on” completed earlier in the year, describing it as a way to potentially pay down some 2028 debt when call protection steps down in July, while also providing balance during the crude price spike. He said the company would reevaluate market conditions closer to July.

Borgmann told analysts the company’s broader deleveraging and value-creation strategy remains intact, including a plan to eventually monetize Montana Renewables. He said the next step is “showcasing what the earnings power of this business is” with the MaxSAF project operating and in a more supportive RVO market.

About Calumet NASDAQ: CLMT

Calumet Specialty Products Partners, L.P. NASDAQ: CLMT is an independent provider of high-value, essential product solutions derived from both petroleum and renewable feedstocks. The company operates an integrated network of manufacturing plants, blending terminals and storage facilities across North America, delivering customized products and technical services to industrial, automotive, consumer and agricultural end markets. By leveraging its scale and technical expertise, Calumet tailors supply chain and formulation solutions to meet stringent regulatory and performance requirements.

Calumet's product portfolio includes specialty lubricants and base oils for high-performance applications; process oils and waxes for food-grade, cosmetic and packaging uses; industrial solvents and cleaning solutions; and fuel additives designed to optimize engine performance and emissions.

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