Calumet, Inc

Welcome to the Calumet, Inc. First Quarter 2026 Conference Call. All participants will be in listen-only mode. If 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 note this event is being recorded. I would now like to turn the conference over to John Compa, Investor Relations. Please go ahead.

Thanks, Andrea. Good morning, everyone, and thank you for joining our first quarter 2026 earnings call. With me on today's call are Todd Borgman, CEO, David Lunin, EVP and Chief Financial Officer, who is funding EVP, Montana Renewables and Corporate Development, and Scott Obermeyer, President, 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 gallument.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 well-developed 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 Kai.

Thanks, John. Good morning, and welcome to Calumet's first quarter 2026 earnings call. The beginning of this year has certainly been an eventful and strategically pivotal period for Calumet. Late in the quarter, we saw the renewable fuels market take a major step forward, following EPA's long-awaited Step 2 RVO announcement, and we entered one of the strongest margin environments we've seen across both traditional and renewable energy markets. Further, we brought down Montana renewables for a turnaround in MACTAF 150 expansion in early March and successfully commenced operations in early May. While these developments did not fully benefit first quarter financial results due to previously disclosed downtime to Treeport and the planned expansion work in Montana, Calumet is exceptionally well positioned to capture these tailwinds, further accelerate the leveraging, and continue our long-term growth and value creation strategy, which we'll discuss further in this call before David takes us through the quarter. Let's turn to slide four and begin with the outlook for our special needs business. First, as we've seen historically, Calumet's integrated business is robust and performs throughout the business cycle, and it's particularly well-positioned for the current market, with commodity spreads growing sharply due to global disruptions. We make fuels the co-product of our specialty production process. Typically, when cracks are lower, strong and stable specialty margins carry the day. When crack spreads are high, as they are now, we're fully exposed to that upside. Long-term, the specialty business will take advantage of positive commodity environments to strategically deploy excess cash flow into specialty's growth. Right now, it creates an accelerated deleveraging opportunity and also opens the door to targeted low-risk high-return growth opportunities. The recent volatility has also reminded us of the capability of our specialty's commercial excellence engine. In March, crude oil prices increased over 50% in a two-week period and have moved further from there. Our commercial team rapidly executed on over 20 price increases across our product lines to counter the cost escalation, and our customers understand the uniqueness of this current environment. While we have some sales contracts tied to previous month pricing and further downstream in performance brands, we see a bit more lag. The fact that our SPS specialty business was able to demonstrate $54 a barrel margins this past quarter, despite the rapid cost inflation, is a testament to the nimbleness of this team. And the outlook improves on that with the increases now in. The other pillar of commercial excellence is providing an exceptional customer experience. And despite the craziness in this market, TimeNet's team went to great lengths to ensure our customers were as well-serviced as humanly possible in this remarkable time. That didn't come without a bit of short-term financial costs, but our specialties enterprise is built on delivering a world-class customer experience. Further, let's sit on what's going on in the broader specialties market. We all know that roughly 20% of the world's daily crude oil comes through the string of our views by now, but what's less publicized is that about 10% of the global base oil supply does as well. Probably more importantly, A disproportionate amount of the world's blue crudes, as we call them, come from the Middle East. These are grades that have particularly good specialty qualities and yields, and they're purchased around the world, particularly in Asia. At Calumet, our crude supply is largely domestic and readily available. Further, we always value the fact that we're a fully integrated, fully dedicated producer of specialty products, which provide stable and quality control despite the market conditions, And in strong commodity markets like this one, it also carries an even higher than normal economic benefit. Non-integrated suppliers purchase intermediates like VGO or fuels like diesel and jet as specialty feedstocks to produce libs and solids. We're able to make these end products from crude oil, which means we capture the intermediate value of the distillate intermediates embedded in the product price. Further, we just completed two successful planned turnarounds at our Cotton Valley and Princeton facilities in April, and we're running at max volumes across the board to capture the current opportunity. Let's turn to slide five. Making nearly as many headlines as the fossil energy market this past quarter was the EPA's Set 2 RVO released in March, which has reset the outlook for the biofuels industry in Montana and Global. While this is felt like a new market environment given the past two years under the Set 1 rule, what we're actually seeing is the EPA applying the same tested and stable dynamics used historically that support strong, stable margins in its business. Many will remember the error in the 2023 Set 1 ruling was due to the EPA assuming seed stock would not be readily available. With that now corrected, after American farmers proved their rights to challenge and produce the necessary feeds, the EPA resumed applying the methodology it's used for over a decade. In this, they evaluate prior year's biofuel capacity and increase the mandate to incentivize continued utilization growth. We see this dynamic displayed through the three graphics on this slide. Starting on the bottom left-hand of the slide, We're reminded that this industry has seen steady $2-a-gallon index margins consistently for years, which is historically what has been required for the industry's biodiesel capacity to run. When biodiesel was not required during Set 1, this dynamic was broken, and we saw industry utilization at roughly 50%. MRL was able to break even in that environment, which demonstrated our unique position, but we're much more excited about this current market for both our business and the industry. Taking a look at the industry supply stack in the chart on the top right here, we see how efficient this market is as well. Post-ruling, margins have rapidly increased to create incentives for all biomass-based diesel production to come back online. We also see the Set 2 RVO actually requires the industry to operate at higher than historically demonstrated utilization levels to meet it. In our view, there are three ways that industry can fill this gap. First, The EPA understood there were carry-forward RINs available from the small refinery exemptions announced last year. These carry-forwards can satisfy most of the supply-demand gap in 2026, but there aren't nearly enough to settle 2027. Second, imports can fill the gap, despite being disadvantaged to domestic biodiesel, given they don't qualify for the PTC. The third is that this policy incentivizes industry to continue its utilization improvement journey. This journey certainly stalled over the past three years, but the administration knows that refineries typically run at slightly higher utilization levels, and our industry in its early stages can also continue to improve. Efficiency improvement reduces the cost of biofuels, adds more reliable domestic energy, and incentivizes the growth of more domestic agriculture, all while improving air quality. These results are right down the fairway for the current administration, and also, they expect to be supported in a bipartisan fashion, as they always have been. We believe the industry is up for this challenge. And while very high sustained utilization certainly won't happen overnight, especially given the level of damage done over the set one days, it can happen over time. The third chart on this page is a little closer look at historic biomass-based diesel production levels in relation to the RVO on a monthly basis. The difference in production and demand call results in a build or draw on a RIN bank. Again, we see how rapidly industry utilization plummeted during step one, and we also see how it's increased with today's more promising future, albeit with a long way to go to meet the set two levels. In addition to a renewed outlook for renewable diesel, we also just commenced operations post our max SAF 150 expansion, which was a major step for Montana Renewables. Let's turn to slide six and further discuss the staff and staff's role in domestic energy growth. We've often discussed the promise of SAF and Montana Renewable's ability to capture the SAF premium, given its first mover marketing experience. Now that we've started up our plant post-expansion, we turn our focus to producing increased SAF volumes. Through the initial operating period, we'll continue to condition the catalyst, complete a performance validation, and deliberately and steadily ramp production to ensure consistent product quality for our existing customers and for our new customers to integrate into their supply chains over the next few months. In addition to the internal focus on the expansion and the industry's response to the RBO, we've seen the current market conditions highlight a lasting dynamic in jet fuel, and we think it's important to note. The Iranian war is certainly an extreme moment in energy, but there's a natural experiment buried in the event, and we've seen that industry is not equipped to meet a sustained increase in jet demand. The fact that jet fuel demand has been growing and is expected to grow faster than all other liquid fuels combined is important. The number of refineries are decreasing, not increasing, and refineries don't just make jet. Thus, as gas demand slows, the jet shortage grows. SAF can be made at much higher yields and much more intentionally than traditional jet. And SAF receives the additional benefit of environmental energy credits, and farmers are rewarded for growing more domestic feedstocks. With an increase in SAF and the RVO, we can make more biofuels to supplement traditional energy, we generate environmental credits, and American farmers grow more and make more money to sell us the feed. It's an extremely efficient and circular system with dramatic positive impact to our country, and Montana Renewables is in the perfect position to support this opportunity. With that, I'll turn the call to David.