Calumet, Inc

Good morning, everyone, and welcome to the Calumet Inc.' 's second quarter 2024 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to John Compa, Investor Relations for Calumet. Sir, please go ahead.

Thanks, Alan. Good morning, everyone. Thank you for joining us today for our second quarter 2024 earnings call. With me on today's call are Todd Borgman, CEO, David Lunin, EVP and Chief Financial Officer, Bruce Fleming, EVP, Montana Renewables and Corporate Development, and Scott Obermeyer, EVP of Specialties. You may now download the slides that accompany the remarks made on today's conference call. These can be accessed on 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 the 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. With that, I'll now pass the call to Todd.

Thank you, John, and welcome to the first earnings call of our new Calumet, Inc. Since our last call, 99% of our voting unit holders elected to convert Calumet Specialty Products Partners, LP, to a C Corporation. And on July 10th, Calumet, Inc. commenced trading on a NASDAQ. Thank you to all of our former unit holders and current shareholders for your support. And one last thanks to the former General Partner and Conflicts Committee for a thorough and thoughtful process. Now to the second quarter. Let's turn to slide three. Calumet generated $66.8 million of adjusted EBITDA in the second quarter. Before we dive into the numbers, I'd like to touch on Calumet's overall strategy and the substantial progress our team has made since our last discussion. The most important element of our strategy is safe and reliable operations. In the second quarter, we achieved the highest company-wide production levels that have been seen since we brought down our former Montana plant a few years ago to begin the renewables conversion. Specifically, the Montana renewables team achieved record throughput in SAF production and our specialties business saw the highest quarterly sales volumes in over five years. Pivoting to our broader strategy, we have three primary objectives, all of which were executed against this past quarter. Let's turn to the next slide. First, we continue to demonstrate the uniqueness of our specialties business. Commodity markets were not helpful in the second quarter, but this business continues to prove that its market optionality, product flexibility, and advantage integration allow it to succeed in any environment. Our commercial organization and customer commitment continue to be a core differentiator, and we saw that in Q2 as record specialty production volumes were placed into the right markets. Providing a world-class customer experience matters here, and I know Scott, who's on the call with me, would love to answer any questions about how we maximize the customer experience and a tremendous feedback that we received from our customers. A little over a year ago, we began the process of carefully studying the connection points between our performance brands and SPS segments. And where it made sense, we more closely began integrating them through our commercial excellence engine. In the second quarter, we saw 30% growth in volumes in performance brands, much of which is in the industrial markets where we can leverage our system most effectively. Let's flip to slide five. Our second strategic objective is to execute operationally at Montana Renewables and demonstrate through our geographic advantage, feedstock and customer access, and focus on sustainable aviation fuel that we have built a best-in-class renewables business. In the second quarter, we achieved operational records across the board. We ran at planned production levels. Our pre-tutor allowed us to choose from a full slate of feeds. We produced roughly 7 million gallons of SAF, and we continue to see our costs becoming more efficient as reliability and utilization increase. For the second quarter, the team delivered significant operating unit cost reductions, and we're well on track to achieve our op cost objective of 70 cents per gallon by the end of this year. Last, commercial flexibility remains a key advantage, and roughly 40% of our product is SAF or finding its way into Canada. As we demonstrate steady state operations, Montana Renewables contributed over $7 million of adjusted EBITDA in the second quarter, despite the trough margin conditions that the renewable industry faces. Let me take a minute to address today's trough industry margin conditions. Many others have recently weighed in on the expected timing of renewable diesel margin recovery, and we too are optimistic that our industry has multiple positive catalysts ahead, some of which are occurring already. On the supply side, These include declining ag commodities prices, incremental biodiesel capacity closure, reduction of imports, RD capacity cannibalized into SAF, and even renewable diesel capacity reversed back to crude oil service. On the demand side, notable catalysts include CARB LCFS acceleration, additional LCFS geographies opting in, growing state and global mandates and incentives, legislative response on behalf of the ag sector, and the EPA increasing its non-ethanol RVO. From a timing perspective, the change to the producer's tax credit at year end is expected to reduce imports as they become disadvantaged by $1 per gallon. Today, these imports are flowing at roughly 1 billion gallons annually. And we note bipartisan support and we remain optimistic that the EPA will correct the RVO rather than forcing additional capacity to close and delay the energy transition. It's hard to predict exactly how these will play out in the very near term, especially during an election season, but Montana Renewables continues to differentiate itself, focus on competitive advantage, generate positive EBITDA even during the trough, and when these changes take hold, we'll be positioned to capture the upside. Looking ahead, SAF continues to be a focal point and an advantage for Montana Renewables. Our SAF production continues to increase. We produced nearly 7 million gallons in the second quarter, and MRL currently has 30 million gallons per year of contracted SAF sales. We look forward to the next steps of SAF for Montana Renewables, which will be the MAC-SAF expansion as a culmination of the DOE process. Given the advanced nature of this process and the magnitude of it to Calumet's strategy to launch MAC-SAF and replace expensive project financings at Montana Renewables, we're going to limit our comments on a DOE process today. The DOE has been an extremely thoughtful and professional group to work with throughout, and we're excited to get started on the next steps of building on Montana Renewable's first mover advantage and fortifying our country's vision as a global SAP leader. Turning to slide six, we see the third leg of our corporate strategy is progressing a host of corporate initiatives targeted at driving shareholder value. The first item on this list is the successful execution of our corporate conversion in the second quarter. We're excited about the future of the C-Corp, the benefit of passive indices adding Calumet, and institutional investors being able to invest in a company at this paramount time as we complete our transformation. The first significant passive index adds come in September as the S&P and CRSP indices rebalance, and this process should replicate itself over the coming year. Further, we received news of our most recent successful step in the small refinery exemption litigation, in which the Washington, D.C. District Court deemed the EPA's denial of the SRE as arbitrary and capricious. As a small business critical to the communities in which we exist, who produces fuels as a byproduct to lower the total cost of goods on our specialty products we make on purpose, we're pleased to see the courts continue to protect the intent of the Clean Air Act and the small refinery exemption. With that, I'll turn the call to David to take us through the quarterly financials. David?