Calumet, Inc. /DE Q3 FY2024 earnings call

• Commercial Transformation: Focused on customer partnership, data-driven processes, and integrated asset base to drive specialty strategy. - C-Corp Conversion: Led to increased passive investor demand and nearly tenfold increase in average daily trading volume. - DOE Loan: Secured a $1.44 billion conditional commitment for Montana Renewables' max-out expansion, with details on loan tranches and equity requirements. - Operational Improvements: Enhanced asset reliability, strong SAF production in renewables, and ongoing turnaround at MRL to optimize operations.

Specialty Products and Solutions: Generated $42.6 million of adjusted EBITDA in Q3, a ~10% increase Y/Y. Margins in the 60 to 70 per barrel range, with strong production volumes. Performance Brands: Posted 19% period-over-period volume growth, with YTD volume up 21% Y/Y. Montana/Renewable: Montana asphalt faced commodity headwinds but saw improving sequential results. Renewables contributed adjusted EBITDA of $7 million (100% consolidated), $6 million attributable to Calumet's ownership. SAF production increased to ~2,500 barrels/day in Q3 from 1,700 in Q2, with 10 million gallons produced in Q3.

• DOE loan expected to close and fund Montana Renewables' max-out expansion, with tranche one funding to clean up balance sheet and tranche two for go-forward spend. - Continued focus on deleveraging through initiatives like the exchange offer. - Outlook for SAF production ramp-up and margin management as operations are optimized.

• Uncertainty around feedstock price fluctuations impacting margins. - Policy changes affecting tax credits (e.g., 45Z) and small refinery exemptions, with ongoing litigations. - Market volatility and seasonality impacts on business performance.

Q: Roger Read asks about milestones and potential delays in the DOE loan.

A: Bruce Fleming discusses the reactor timeline and project control, stating the project is within control and the reactor move is manageable.

Q: Jason Gabelman inquires about DOE loan use and 45Z credit.

A: Todd Borgmann explains loan proceeds will clean up the balance sheet and fund MRL, while Bruce Fleming discusses 45Z credit expectations and tax credit application.

Q: Gregg Brody asks about deleveraging.

A: Todd Borgmann talks about the exchange offer and capital allocation for deleveraging.

Q: Saumya Jain asks about EBITDA margin and CapEx.

A: Todd Borgmann provides margin and CapEx outlook, stating margins were in line with prior quarters and CapEx range remains unchanged.

Q: Amit Dayal asks about MR adjusted EBITDA and equity raise.

A: Todd Borgmann discusses EBITDA contrasts and equity plans, noting the existing owners of Montana Renewables will provide the $150 million equity.

Q: Jason Gabelman asks about small refinery exemptions.

A: Bruce Fleming talks about ongoing litigations and court outcomes, stating the company is winning and not concerned about the future of the program.