Calumet, Inc

Good morning, and welcome to the Calumet Inc. Third Quarter 2025 Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to John Compa, Investor Relations for Calumet. Please go ahead.

Thanks, Chloe. Good morning, everyone. Thanks for joining our call today. With me on today's call are Todd Borgman, CEO, David Lunen, EVP and Chief Financial Officer, Bruce Fleming, EVP Montana Renewables and Corporate Development, and Scott Oldmeyer, EVP of Specialties. You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the IR section of our website at countymed.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 Securities and Exchange Commission, for a list of factors that may affect our results and cause them to differ from our expectations. As we turn to slide three, I'll now pass the call to Todd.

Thanks, John, and welcome to Calumet's third quarter 2025 earnings call. This past quarter was a strong one, both financially and strategically. TIDEMAT generated $92.5 million of adjusted EBITDA with tax attributes, and strategically, we're hitting the key milestones laid out earlier this year. At Montana Renewables, we remain on schedule for our max half expansion in the first half of 2026. And our staff marketing plan is pacing well ahead of schedule, as the team has roughly 100 million gallons of post-expansion volumes placed through contracts which are fully complete for the final review step within our DOE process. Across Calumet, our cost and reliability initiatives are outperforming expectations, and our commercial organization continues to sell growing production into stable high-margin accounts. Let me dig deeper into these themes, starting with costs, before turning it over to David for the financials. In the third quarter, China removed another $24 million of operating costs from the system versus the same quarter last year. Quite frankly, operations improved rapidly throughout 2024, so much so that while we expected year-over-year progress to continue, we did expect a little tapering in the second half. Instead, the rate of savings accelerated this past quarter, which is a testament to the ops talent we have throughout the country and their willingness to take this initiative head-on. Year-to-date, operating costs are $60 million lower versus last year, and we've mapped out a couple more years worth of ops excellence opportunities to continue moving the ball forward from here. Deeply connected to costs, and just as important, is reliability, which has advanced as well. Year-to-date production is up nearly 600,000 barrels versus last year, much of which is in our specialties business. On a unit basis, the combination of cost and reliability initiatives have reduced operating costs by $3.37 a barrel throughout the system. Specifically to our specialty products and solutions segment, the third quarter marked a record production quarter. And despite softness reported across much of the broader specialty chemicals world over the past year, our commercial team again sold over 20,000 barrels a day at margins well above $60 per barrel, while also rebuilding some inventory following the Shreveport turnaround. We also saw strong fuel performance on both the margin and volume front. This reinforces the core advantage of Calumet's integrated model. Specialties provide stable, strong, and growing baseline earnings, while fuels deliver more variable upside. Today, that excess cash flow is being used to reduce debt. Over time, it will fund further specialty growth. Last in specialties, I'd be remiss to not note continued growth in our performance brand segments. Year-to-date EBITDA is up versus last year, despite divesting the Royal Purple industrial business earlier in 2025. We've implemented our top-tier commercial excellence program across our brands and leveraged our deep specialties footprint, which is yielding tremendous results. Further, TruFuel is on track for another record EBITDA year, even in a year that's been void of major Gulf Coast weather events, as the brand continues to grow its position as a channel leader and is benefiting from capturing space at over 4,000 new Walmart stores. Let's go to slide four and dig a little deeper into Montana renewables. During the quarter, we saw more key regulatory signals towards the industry recovery, and specifically to MRL, we continue to fortify the advantage we have in all margin environments with great logistics costs and product myths. While the future is bright, the industry continued to see weakness in renewable diesel margins. In fact, during the third quarter, realized margins across the industry were actually a bit lower than even the normal index margin formula would suggest, as the feedstock physical basis widened out, which means feedstocks were about 20 cents a gallon more expensive than a traditional CBOT marker would suggest across the industry. We've seen this revert back during October, and we're back to the more normal environment where CBOT index margin is the correct industry signal. On an industry level, biomass-based diesel production remains cut back at roughly 60% utilization. 2025 industry production volumes seem to be stabilizing just above 350 million gallons a month, which on an annualized basis is right for the currently roughly 4.5 billion gallon implied RVO, which is made up of about 3.5 billion gallons of D4 RVO, plus roughly a billion gallons of short-pole and other REN classes, which are ultimately covered by D4 RENs. Separately, the carry forward of 2024 RENs, which will expire shortly, creates temporary length in the D4 REN market. Against this backdrop of low industry utilization, we continue to see shutdowns occurring in industry. We look forward to an environment where biomass-based diesel demand increases through a stronger RVO. Further, the regulators appear to be bullish on reallocation of the small refinery exemptions, which would add to the RVO. These steps are expected to increase demand to the point where idle facilities would need to restart to meet the mandated demand. These restart decisions mean biodiesel producers need to be convinced they can confidently cover fixed costs. If not, the rent will need to go higher or feedstock lower than set. This is a stark contrast to the past two years where we've seen massive shutdowns, but also many hanging on at the margin and barely covering variable costs with the expectation of an improved future environment. Of course, in the past, we routinely saw stable margins incentivizing the small biodiesel players to run in order to fill the D4 RIN gap, and we're optimistic that when we see the finalized RVO, margins will revert positively, as they've done historically before the prior administration's 2023 RVO error. Next, during the quarter, we completed our first $25 million PTC sales, proving this method of monetizing PTCs as viable as expected. We subsequently sold another $15 million in October and continue to see our credits trending towards a more normal tax credit environment after the 45Z credit was extended through the Big Beautiful Bill. Finally, momentum continues to build as we approach the launch of our max SAF expansion in the first half of next year. During the third quarter, we completed a test run to confirm our ability to generate 120 to 150 million annual gallons of SAF. To complete this task, we slowed down the plant for about a week, which cost us a couple million dollars worth of volume, but the task was successful and confirmed our ability to meet the 120 to 150 million gallon SAF target and supplied important data that's being used in the final detailed engineering and optimization of our project. In addition to the technical work to de-rest the SAF project, the team also is tracking well ahead of plan and placing the expanded volumes. As I mentioned earlier, we have approximately 75% of our max staff expansion either contracted or within the final DOE review process as we sit here today. And we're comfortably positioned to have all of the volume placed the next time we talk. Like we mentioned last quarter, our offtake is shaping up to be a diversified slate of direct physical customers, airlines, FBOs, and scope 3 customers of varying sizes. some of which are large multinationals who you might routinely envision when you think of carbon reduction initiatives, and some of which are more boutique customers. In many ways, the SAF business highly resembles our specialty products business, where the ability to be flexible on logistics, go to market in varying ways to suit a wide range of customer needs, and sell in all types of sizes make us preferred and differentiated supplier. Unlike a large fuels business, this volume doesn't all just go in a pipe and disappear. It's a concerted sales effort, where we work with one airport at a time, one airline at a time, or one SASE credit buyer at a time. And in the supply chain, we've managed individual rail cars and trucks, carefully controlled quality, and blend the product through a deep logistical network. This is how it creates value in this business. And we at Calumet have been doing it for decades. In fact, you may have seen a press release last week where our physical truck rack opened for SASE sales in Montana. What this means is that we can sell physical barrels in truckload volumes, and in some cases to the same regional outlets we've been selling for years. We can deliver the full physical barrel and leave the credits with the customer, or pull off the scope one and scope three credits, sell those and generate the same SAF premium, and save a lot of money on logistics. Of course, we also continue to sell physical SAF barrels via rail into the West Coast, Midwest, and Canada, and we expect it to continue as a large and important piece of our business. We could sell all of our volume to either of these markets. And at the end of the day, we're optimizing across them to find the most diversified, stable, and highest net back customer base for Montana renewables. And we continue to place the volume of the SAF premium in the $1 to $2 per gallon range we've discussed historically. This SAF premium is one that's received a lot of discussion over time. We've discussed the chart on this slide before, which suggests that global supply and demand is largely balanced in 2025. And that turns to a supply deficit in 2026 as that gap grows each year as European mandates and other global mandates step up. Interestingly, early on we received questions around this outlook, which really fit into three general categories. One was, will Europe really increase their volume mandate? Two, will voluntary demand grow? And three, weren't we underestimating new supply? Let's start from the back. Our view in modeling the supply-demand balance was very conservative on voluntary demand, and therefore the base model also doesn't add new-build supply. We conservatively assume voluntary demand remained unchanged from 2024 throughout the graph, and if that's the case, we wouldn't expect new supply to come online. In reality, what's occurred is a bit more bullish. We've seen cancellations or delays of global megaprojects as they pause and observe international growth in domestic tariffs and rent policy. Also, we've seen voluntary demand growing nicely. I mentioned earlier that we've adjusted our strategy to take advantage of this as we see a real opportunity with truck and rail car quantities and staff in the voluntary markets across a broad range of airports and FBOs, and we're selling quite a few Scope 3 credits to airlines and large multinationals on a voluntary basis. In fact, Montana Renewables staff has set up on every major Scope 1 and Scope 3 registry that exists. We believe this readiness, the relationships, and the progress on logistics all equate to a meaningful early mover advantage. And we look forward to capturing this immediately upon startup of our MaxShaft 150 project. The last question I mentioned above is European demand. And I think we've seen clear signs that volume mandates are, in fact, increasing in Europe. In fact, we've seen European SAF prices increase approximately 60% over the past six months. while feedstock prices have remained essentially flat. We've even seen meaningful fines defined for participants that don't need their quotas, which have been said to be up to $2,700 per ton, or for us imperial measurement thinkers, nearly $8 a gallon. And even then, the participant doesn't shed the requirement to purchase the SAF. We believe these developments mean that the SAF premiums we're contracting will continue to be strong. And we look forward to relying on our roots as a customer-focused and service-oriented provider and parlaying that with our first mover advantage into a rapidly expanding leadership position in sustainable aviation fuel. With that, I'll turn the call over to David to take us deeper into the quarter.