Calumet Specialty Products Partners(CLMT) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2025, the company delivered $293 million of adjusted EBITDA with tax attributes, nearly a 30% increase year-over-year [5] - Restricted debt was reduced by more than $220 million, and net recourse leverage improved from 8.2x to 4.9x [5] - The company eliminated its 2026 and 2027 debt maturities, significantly improving its financial durability [6] Business Line Data and Key Metrics Changes - The Specialty Products and Solutions segment generated $88.5 million in adjusted EBITDA for the quarter and $291.8 million for the full year, reflecting strong commercial excellence initiatives [16] - Montana Renewables segment had an adjusted EBIT of -$5.4 million for Q4 and positive $31.3 million for the full year, despite challenging market conditions [19] - The Performance Brands segment achieved adjusted EBIT of $5.4 million for the quarter and $47.9 million for the full year, marking the third consecutive year of growth [18] Market Data and Key Metrics Changes - Operating costs at Montana Renewables averaged $0.41 per gallon in the second half of the year, a 60% improvement over two years ago [10] - Specialty sales volumes exceeded 20,000 barrels per day during every quarter of the year, indicating strong market demand [9] - The regulatory environment for biofuels is improving, with expectations for a stronger Renewable Volume Obligation (RVO) to enhance industry utilization and margins [12] Company Strategy and Development Direction - The company aims to execute the MaxSAF 150 project safely, on time, and on budget, while continuing to improve cost levels and leverage its early mover advantage in Sustainable Aviation Fuel (SAF) [23] - The focus remains on driving durable free cash flow and enhancing deleveraging while expanding specialties and executing the MaxSAF 150 strategy [23] - The company is committed to operational excellence and anticipates further opportunities for earnings expansion through reliability gains and customer-focused growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate regulatory uncertainties and emphasized the importance of being a low-cost provider [27] - The outlook for the renewable diesel market is cautiously optimistic, with expectations for a thoughtful ramp-up in production as the RVO is clarified [36] - Management highlighted the importance of maintaining operational efficiency and cost discipline to sustain margins in a volatile market [22] Other Important Information - The company plans capital expenditures of $115 million to $145 million for 2026, primarily due to a heavy turnaround year [15] - The Montana Asphalt segment is expected to continue producing in the $30 million to $50 million EBIT range, supported by improved asphalt margins [21] Q&A Session Summary Question: Can you talk about the macro setup and operational level at MaxSAF? - Management acknowledged regulatory uncertainty but emphasized their position as a low-cost provider and the durability added by the MaxSAF project [27][29] Question: What are your views on the RINs market and utilization? - Management noted that the industry is currently running at variable margins and that the return of idle plants will depend on the RVO [33][36] Question: When should we expect capacity ramp-up at full scale for MaxSAF? - Management indicated that they expect to ramp up to the 120-150 million gallon run rate in the second half of the year following the turnaround [44] Question: How does feedstock pricing impact SAF contracts? - Management explained that they have successfully linked feedstock pricing to contracts and have access to a broad range of feedstocks [48] Question: What is enabling the Specialty margin to sustain higher levels? - Management attributed the strong specialty margins to commercial excellence initiatives and improving production reliability [54]