Good day, and welcome to the Calumet, Inc. First Quarter 2025 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Kompa, Investor Relations for Calumet. Please go ahead.

Thanks, Debbie. Good morning, everyone, and thank you for joining our call today. With me on today’s call are Todd Borgmann, CEO; David Lunin, EVP and Chief Financial Officer; Bruce Fleming, EVP, Montana Renewables and Corporate Development; and Scott Obermeier, EVP Specialties. 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 calumet.com. Also, a webcast replay of this call will be available on our site within a few hours. Turning to the presentation, on slide two, you can find our cautionary statements. I’d like to remind everyone that during this call, we may provide various forward-looking statements. Please refer to our press release that was issued this morning, as well as our latest filings with the SEC for a list of factors that may affect our actual results and cause them to differ from our expectations. As we turn to slide three, I’ll now pass the call to Todd.

All right, thanks, John. Good morning, and welcome to our first quarterly earnings call of 2025. We’re a little over four months into what has already been an action-packed year. Calumet began 2025 by closing and funding our DOE loan, the first of its kind under the Trump administration. This transaction strengthens Montana Renewables’ balance sheet and ensures stability of the business, even during difficult markets, just like the one we saw in the first quarter. We also completed the accretive sale of our Royal Purple industrial business. And, this morning launched a $150 million partial call of our 2026 notes as we execute our deleveraging strategy. Further, we’re also progressing additional strategic activity, which we won’t fully detail today for obvious reasons. But we will update on a breakthrough in our expectations around the Montana Renewables MaxSAF project, as we now expect to reach our next milestone of 150 million gallons of SAF capacity, dramatically more cheaply and quickly than originally expected. This project adds immense value to our near-term outlook, as the renewable diesel industry awaits regulatory clarity, which we view as the critical open item to a partial monetization of Montana Renewables, which is Calumet’s final deleveraging step. Before diving into those details, I’d like to take a moment to step back and frame the broader macroeconomic environment and its impact on Calumet. Despite the prevalence of widespread headlines regarding potential recession, we’re not seeing real signs of recession within our business. One example is the first quarter marked one of the highest specialty sales volume periods in company history, during what’s typically a slow season nonetheless. That being said, with broad economic nervousness in the market, we went back and dusted off our COVID-era specialties playbook, which was effective during that global slowdown, which was arguably…

Thanks, Todd. I'll review our financials by segment, the drivers of our strong first quarter results, and the underlying strengths of our growth platform going forward. First on slide seven, I wanted to remind investors of the thinking behind our changes to adjusted EBITDA this quarter. As we mentioned on our last earnings call, and you see in our first quarter reported financials, we've updated how we report to better reflect the true cash generation capability of our business. We've made two important changes. The first is to add back the RINs incurrence. RINs incurrence relates to blending obligation for fuel producers. Calumet is a small refinery and has always received the Small Refinery Exemption, or SRE, up until the EPA's issuance of a blanket SRE denial. Calumet has never made a cash payment for RINs and continues to be successful in the federal reports, having been successful in both the Fifth Circuit and the D.C. Circuit regarding our Small Refinery Exemption petition this past year. Given the set of facts, along with our goal of presenting investors the most clear and accurate representation of the cash generation capability of the business, this change was made to start the year. The second change relates to the changeover from the Blender's Tax Credit to the Production Tax Credit in the renewables industry. Instead of the previously cash-paid $1 a gallon for the Blender's Tax Credit, starting in 2025, we now generate a PTC based on the CI score of the produced gallon. Current legislation contemplates a tax credit that can reduce taxable income, or in Montana Renewables' case, be sold back to the market for cash. Given Montana Renewables' low CI feedstock advantage and SAF position, its PTC is relatively large, representing roughly $20 million for all of Montana Renewables in…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Yes, good morning, team -- Todd and team. I just want to start off on the regulatory environment and some of the adjustments that you’ve made to the way that you’re showing EBITDA to show the production tax credit. It does show you guys have confidence that there will be a change over from a BTC to a PTC. So, just talk about the regulatory environment that you see on the go-forward as it relates to those tax credits, why you believe that's the right way for the market to value the earnings power of your company as well?

Hey, Neil. It's Todd. How are you? Thanks for the question. Let me start here on just kind of the PTC and BTC. And, I’ll give it back to Bruce for a little bit more color into the regulatory environment. But, I actually think your question regarding the comparable state of EBITDA on a BTC world and PTC world, and even how it could potentially go back to a BTC world if you read some of the rumors, kind of impact our decision to move forward on this adjusted EBITDA plus tax attributes basis in Montana Renewables, because if you think about where we were last year, the dollar a gallon BTC tax credit was in adjusted EBITDA. So, all we’ve done now is we said the PTC credit, which obviously impacts industry index margin, is also now added back to adjusted EBITDA. So, that when we look at a year-over-year comparison period of a BTC environment to a PTC environment, we get an apples-to-apples comparison. And if there was a change back or other regulatory changes, then this metric would continue to work because we’d be able to compare, again, BTC world to PTC world kind of lines up here. So, that was actually in the forefront of our mind as we thought about the right way to show the PTC. The other thing I’d say on the adjusted EBITDA plus tax attributes is we’re a seller of the PTCs. A lot of folks use them. We don't. And so, if you didn’t make this adjustment, you would have a very, very choppy EBITDA stream that just wouldn’t really demonstrate or help investors visualize the earnings power of this business, because you would only be recognizing the EBITDA in the periods that you sell them. So, that’s kind of the way we’re doing it right now. Ultimately, we expect to capture the value of the PTC as we sell them. It just doesn’t happen on a day-to-day rateable basis, as you know. These are typically quarterly sales. So, anyways, probably a long-winded way to answer your question. Moving back to Bruce for any color on regulatory.

Hey, Neil. So, I think the way you asked that sounded like, do we think the regime has cut over? It definitely has. That’s the law, that was in the IRA legislation. There’s some question when the detailed rules are going to come through under which taxpayers can enter this income tax credit on their returns. But, as Todd said, we’ll be selling them. So, we feel good about trying to help our investors understand the cash flow potential of the business by accounting for it in this manner.

That's very helpful, guys, and yes, we'll look for more regulatory clarity. The follow-up is just around balance sheet. I know you guys talked about, should we continue to drive your leverage to your target levels? It's been a huge focus in the credit community where we've seen a big uptick in interest around the credit. So, just to help the market get comfortable around liquidity, balance sheet, things are tracking, and steps that you are taking to really shore up the strength of that balance sheet in a volatile macro.

Yes. Hi, Neil. It's David. I think we feel very good about the liquidity and where we're at. We finished the quarter with around $340 million in liquidity. We also called the kind of $150 million of the bonds. I think as we think about the DOE loan and that removing $80 million of interest and amortization from cash flow, we really positioned the business well. Another lever is kind of the sale of the Royal Purple business, which has helped support liquidity. I think as we look forward, we probably sold a little bit less than we had talked about. Just given the macro volatility, we saw some working capital outflows in the quarter. And so, we've just been a little bit conservative currently, but we feel really good about where we're at. Obviously, the ability to make more SAF quicker, sooner, and cheaper makes us feel even more confident about kind of where the balance sheet and where the business is today.

Yes. Neil, this is Todd. I'll add a little bit. Obviously our ultimate leverage goal is reaching $800 million of restricted debt, and that comes with the ultimate monetization of Montana Renewables. So, David just hit on this, the faster, cheaper MaxSAF 150 is a really nice next step to that. Let's see if we get some RVO news in the near future. There seems to be some real optimism around that. We'd expect that to bring some associated margin recovery. And at that point, I think really we've -- those are the remaining boxes necessary for that to become a real option. So, again, don't expect that as a 2025 event. Obviously, there are a few things that need to happen, and some of it's regulatory. But we're getting quite a bit of confidence that what we're seeing right now in the market kind of from a fundamental basis is setting us up to have a pretty attractive transaction there, and hopefully not too distant future.

Is that $800 million target? Could you see that as a 26 event, Todd?

Yes. Yes, we'd like to take -- so again, I mean, we're just -- we needed to de-risk our operations. We needed to get the DOE funded. Those are done. Let's get some clarity on the RVO. With that, we'll demonstrate the earnings potential of Montana Renewables with an additional 100 million gallons of SAF. I think we'll be able to step up those earnings quite meaningfully. And with that you should be in a pretty good position, because we think that we're going to get that additional SAF volume early in 2026. So, we're certainly looking at 2026 as a likely and hopeful transaction time for us there on Montana Renewables.

Awesome. Thank you, Todd.

Thank you.

The next question comes from Amit Dayal with H.C. Wainwright. Please go ahead.

Thank you. Good morning, everyone. Just with respect to the higher SAF volumes that we're expecting to achieve in 2026 the lower CapEx than expected, I guess, previously I'm just trying to get a sense of whether there was already equipment that was put in place that is no longer being used, and if that can be applied to further expand volumes. The preface was not very clear, at least to me on that front. If you could clarify how all of this is being sort of achieved.

Hi, Amit. This is Bruce. Yes, let me take a stab at it. The existing asset, the hydrocracker that we converted back in 2021 and '22 has more capability for more SAF output, and we've got that lined out and demonstrated, so we're simply going to take advantage of that in the market now, and Todd covered that. We'll call that the 50 million gallons a year. To get more out, we've got a very, very modest constraint removal around our heat and material balance, which we think will cost $20 million to $30 million. Obviously, we've got a more precise engineering estimate, and we've got the AFE in place for that, so that's a go. The latency capacity of the existing unit was known, and we have always signaled walking these volumes forward, so we're simply giving you an update that it's going to be sooner and it's going to be lower capital, so we're pretty happy with that. The marketing team is actively engaged in signing up the placement of those gallons, and we look forward to keeping you posted on how that unfolds.

Understood, Bruce. And then, as you execute on this, is that when you start collecting on the remaining funds from the DOE?

Yes, what you're referring to, we organized, and this is a public document, of course, but we organized the partnership with the DOE to catch up to what had already been done, and that's called Tranche 1. David mentioned that we received that money in the middle of the first quarter. The balance of the loan proceeds are available, and we call that Trance 2 in the documents. That's a construction draw facility. So, as we meet the conditions precedent, we will just continually tap that money over the next three to four years as we finish the full build-out and get to the end state of 300 million gallons of SAF.

Okay, understood. That's all I have, Bruce. I'll take another question offline.

Thank you, Amit.

The next question is from Jason Gabelman with TD Cowen. Please go ahead.

Hey, good morning. Thanks for taking my questions. I wanted to go back to the PTC because I just want to clarify, one, the amount you actually booked in the quarter. Did you book the full amount that you're saying you could have received, or did you book something less than that $17 million in the quarter, and the $17 million is kind of indicative of what you would have been able to book if the rule was in place in time? Because that $0.49 per gallon is higher than what we've heard some peers book. And then, going forward, given the changes in feedstock and lower canola oil runs, do you expect the amount you're able to book under the PTC to move higher?

Yes, so, Jason; David here. Just a couple of thoughts, so, the $19 million or $20 million that we booked, that's kind of the full value of the PTC that we generated during the quarter. The higher number just reflects more SAF production, I expect, relative to your expectations, which is we obviously produce a lot more SAF that gets more credit from the PTC. So, that $20 million is the full value. When we talk about the $16.8, that's just reflective of Calumet's 87% share of Montana Renewables. That's booked also at 100% of the notional value. I think when we ultimately monetize that, they'll be sold at a slight discount. I think the market is around 95-ish percent, give or take. And we'll true that up when we ultimately sell it.

Got it. And then, thoughts on the amount you'll be able to book going forward, just assuming a more optimized feedstock slate?

I think, we're always going to move our feedstock to the highest margin, whether that margin comes through PTC or cheaper feedstock prices. We think feedstock probably moves to their CI parity over time. And so, whether we're collecting the value through sales or through the monetized PTC, I think there's some level of indifference there for us. It's all about where do we move to the highest margin feedstock.

Okay, got it. And then, my follow-up is just the adjustment lower on the SAF expansion, CapEx, which frees up more cash under the DOE Phase 2 loan. Can you talk about other uses of that cash? Does it increase the amount of debt you're able to pay down on intercompany loans or are there other potential uses for that capital that can improve the cap structure?

This is Bruce. I'll start with the capital part. So, the DOE loan, the government will loan money against permitted uses, eligible spending. Broadly, you should think of that as capital improvements and not working capital. That's one of the reasons you've heard us talk about a pari passu debt facility. The operational income statement is where the vendors, all of the vendors, including Calumet, which has provided services under an MSA agreement, get paid. So, that's not the loan. That's the income statement. Does that help?

Yes, it does. Thanks. If I could just sneak one other in, maybe, you put out a mid-cycle EBITDA number of 240. This quarter, I think, annualized is about $140 million for that base business. Can you just talk about the gaps between what you believe is mid-cycle and what 1Q results showed, especially given the strong performance in the specialty side of things?

I think in general, Jason you're really just talking about kind of Q1 winter, right? So when we talk about the restricted mid-cycle business, we're talking about fuels in the summer. We're talking about asphalt in the summer. So, I wouldn't expect that you should look at kind of the certainly wouldn't be expecting 2025 EBITDA to be Q1 times 4. We're looking forward to Q2 and Q3 as pretty strong earnings environments from what we're seeing in the market right now.

Got it. Great. Appreciate all the answers.

All right. Thanks.

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

Hey, good morning, guys. You mentioned strategic alternatives you were looking at, and you said you couldn't go into much detail. Maybe just since no one asked, what can you tell us about what you're thinking about there? Is that potentially to reduce more debt, or is that for something else?

No, that would be to reduce more debt, Gregg. It's Todd. we've said for a long time that we're willing to sell assets that aren't core or integrated into the business as long as they bring an accretive value. And we've had interest there. People have heard that. And so, I'd throw that out there as one. I think last quarter we talked about a number of other things. But, yes, you should be thinking of any cash that comes into Calumet, the use of that is debt paid on. That's our number one priority all the way up until we ultimately monetize Montana Renewables and achieve our restricted debt target of $800 million, so.

And you're not putting a goalpost here to give us a sense of how big that can be? I think he's pushed out, right?

No, I think it's the same buckets that we had talked about before. certainly more than sits ahead of us for the 2026 notes. As we look at our debt reduction strategy, our goal is not to just inch by the 26s or anything like that. We're out looking at ways that we can bring in additional cash to knock out the 26s, start to dig into the 27s, and like I said, ultimately set us up for the Montana Renewables sale. And if like we talked about a little earlier, if that ultimately can happen in 2026, then that would be great. But we'll let the markets guide us on that.

Got it. And I think Dave said he expected some working capital benefit in the second quarter. Maybe you could just try to understand how large that can be. And just in general, should we think about any way, how should we think about you potentially reducing 26s going forward? Is there any guidance or will it be an end of quarter decision?

Yes, I think the well, I don't know that it'll be an end of quarter decision. I think what Dave was saying was there was a lot of movement. We saw we saw commodities all over the place during the quarter. We've got 3 million barrels of inventory in the system when you're seeing $10, $15 moves and crack spreads in crude. Crude you can see that fluctuate $50 million, $60 million dollars throughout the quarter. So, that was kind of the volatility range that he was talking about there as well as we want to get some PTCs just sold. Right. So, now with the quarter under our belt there we're moving that forward. And then, just a little bit more economic certainty about where we're at. But those are kind of the three things we're watching here in the near term future. And then, we'll just go ahead and use the rest of the proceeds to make the next step down into 26 calls. And after that, we're looking at cash flow generation from the business and potential strategic activity, as talked about earlier.

Got it. And then, just to follow up on the DOE loan, you mentioned in the presentation about having to go back to the loan office to qualify your changes in the expansion. Does that mean that you're not necessarily going to access that facility in the interim? Is there basically no spending going to take place as a result? And just help us think through how that process works. And where are you at, Bruce?

Yes, let me start.

Just one subtle thing, Bruce, have you actually accessed that fund, that tranche at all at this point? And I'm sorry to interrupt. I'll let you explain.

Yes, I want to reset the premise of your question. We did not say we have to re-qualify anything. We said that stuff that was in the plan is going to be done sooner and cheaper.

So, you don't need to go back to the DOE?

Well, we go to the DOE every time we want to draw from the loan facility for the purpose of construction in the field. The only thing that's changed here is an enormously positive development, which is less spending and more SAF sooner. This is hugely credit accretive to the loan underwriter.

Yes, I completely understand how advantageous it is to drop $200 million of CapEx. What I'm trying to understand is, do you have access to the fund today? And are there any constraints, and are you using it?

So, again, it's a public document. The conditions, precedents to proceed with the second phase of the loan, the tranche to are differentiated. They require engineering advance to a certain a definitional level, et cetera. So, that's all underway. We're talking regularly to the engineering and technical people, both in the DOE and in their third party advisor. And as Todd said, the spending that we envision here, this interim accelerated step of $20 or $30 million is back at loaded later this year. So, we're not drawing it to give you a direct answer, nor did we ever intend to at this point in the process. So, that'll be coming up in six months from now.

That's great. And you don't see any issue accessing it. The reason why I asked, just from press reports, that's just, and I appreciate that your fund is different. Your funding may be different press reports that the government is looking at not allowing people to get access to the loans. I think yours was fully approved. I don’t think that applies to you. I’m just trying to confirm that figures.

Yes. So, Greg, I may have sort of misinterpreted the thrust of your question. So, if what you’re saying is, is the government going to give us the money when we ask for it? The answer is yes, they are. Remember how we got here. We’ve been talking to the DOE for three years before they issued the first tranche. Two of those years were high quality technical diligence on a really complicated undertaking here that was in service. , :

Great. And one last question for you as I finish this up. I know we’ll get this with the queue. Can you just tell us what the intercompany payables are from MRL to Calumet? And, can you also just clarify the additional equity investment that you had to make? Did that add to that amount or did it not?

Yes. So, David is pulling up the numbers. As he does that, let me set a definition. So, there is a junior term loan in place between Calumet and MRL. We put that in place back around the time of the Warburg investment, so 3 - 4 years ago. That is an intercompany payable because it is a term loan. And I think I’m going to set that aside and treat your question as what about the operational interface where we have a master services agreement, MSA, and there are some monthly payables that flow under that agreement? That amount came down sharply as part of the tranche one funding. The current balance, if we have it here, I’m looking at David.

Yes. I mean, the current balance came down materially during the quarter. I’m pulling up the actual number.

If you actually look at slide 16 on the earnings presentation deck, we’ve actually added the intercompany line to show how that totally impacts the company’s total recourse debt. And then, we show the intercompany, and then we show the amount of debt adjusted for the intercompany. So, there was $375 million of intercompany. And to Bruce’s point, that’s a number of different things. But as a whole, Montana Renewables owes Calumet $375 million. That’s down from $540 million at the end of the year.

And I see that number now. So, that looks like the 150 you put in added to that number.

That number definitely includes the term loan, yes, the junior term loan.

All right. Thanks, guys. I appreciate all the time.

Thanks, Greg.

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

Thanks, Debbie. And thanks, everyone, for joining our call today. Certainly appreciate your interest in Calumet. Have a great day. Thank you.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.