Calumet, Inc. /DE

Calumet, Inc. (CLMT) operates as a manufacturer, formulator, and marketer of diversified specialty branded products and renewable fuels across consumer-facing and industrial markets, headquartered in Indianapolis, Indiana, with twelve facilities in North America. The company's business model is structured around three reportable segments: Specialty Products and Solutions, Performance Brands, and Montana/Renewables, along with a Corporate segment for unallocated general and administrative expenses. Revenue generation is primarily from the sale of specialized products and renewable fuels, with a mix of recurring and transactional income driven by stable customer relationships and long lead-time product development. The company serves a broad customer base, selling over 1,900 specialty and fuels products to approximately 2,400 customers in fiscal year 2025 ¹⁰⁵. No single customer accounted for more than 10% of consolidated sales for the three years ended December 31, 2025, 2024, and 2023 ¹⁰⁶.

The Specialty Products and Solutions segment manufactures and markets a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products, primarily as raw material components for consumer-facing and industrial products ¹⁰⁰. This segment accounted for approximately 63.7% of consolidated sales in 2025, totaling $2,633.0 million ¹⁰¹. Gross profit for this segment was $265.7 million ¹⁰², representing 10.1% of its sales ¹⁰³, and $11.46 per barrel ¹⁰⁴. Key facilities include the Shreveport, Cotton Valley, Princeton, Karns City, Dickinson, and Missouri facilities, which collectively produce a diverse range of specialty products including naphthenic and paraffinic lubricating oils, solvents, waxes, white oils, and petrolatums ¹⁰⁷.

The Performance Brands segment focuses on blending, packaging, and marketing high-performance products under its Royal Purple, Bel-Ray, and TruFuel brands ¹⁰⁰. This segment contributed $311.0 million to consolidated sales in 2025 ¹⁰⁸, representing 7.5% of total sales ¹⁰⁹. The segment reported a gross profit of $78.2 million ¹¹⁰, or 25.1% of its sales ¹¹¹, and $132.32 per barrel ¹¹². The Royal Purple facility in Porter, Texas, and Calumet Packaging facility in Shreveport, Louisiana, are key assets in this segment ¹¹³. On February 28, 2025, the company announced the sale of assets related to the industrial portion of its Royal Purple® business for $110.0 million ¹¹⁴, receiving cash proceeds of $96.9 million at closing on December 31, 2025 ¹¹⁵, and recording a $55.8 million gain on sale ¹¹⁶.

The Montana/Renewables segment is comprised of two facilities: a renewable fuels facility and a specialty asphalt facility. The Montana Renewables facility processes geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel (SAF), and renewable naphtha for distribution in western North America ¹⁰⁰. This segment generated $1,193.1 million in sales in 2025 ¹¹⁷, accounting for 28.8% of consolidated sales ¹¹⁸. The segment reported a gross loss of $98.2 million ¹¹⁹, or (8.2)% of its sales ¹²⁰, and $(10.63) per barrel ¹²¹. The Montana specialty asphalt facility processes Canadian crude oil into conventional gasoline, diesel, jet fuel, and specialty grades of asphalt ¹⁰⁰. In 2022, a significant portion of the Montana specialty asphalt facility was converted into the Montana Renewables Facility, which has a permitted throughput capacity of 15,000 bpd ¹²² for renewable feedstocks ¹²³.

For the fiscal year ended December 31, 2025, Calumet reported total sales of $4,137.1 million ¹²⁴, a decrease of 1.2% from $4,189.4 million in 2024 ¹²⁵. Gross profit increased by 6.5% to $245.7 million ¹²⁶ from $230.8 million in 2024 ¹²⁷, with a gross margin of 5.9% ¹²⁸. Operating income was $108.7 million ¹²⁹, compared to $8.1 million in 2024 ¹³⁰. The company reported a net loss of $33.8 million ¹³¹, an improvement from a net loss of $222.0 million in 2024 ¹³². Basic and diluted EPS was $(0.39) ¹³³. Cash provided by operating activities was $108.9 million ¹³⁴, compared to cash used in operating activities of $46.4 million in 2024 ¹³⁵. As of December 31, 2025, cash and cash equivalents were $125.1 million ¹³⁶, restricted cash was $80.0 million ¹³⁷, and total liquidity was $447.6 million ¹³⁸, including $242.5 million of availability under revolving credit facilities ¹³⁹. Total debt was $2,233.5 million ¹⁴⁰, with a current portion of long-term debt of $156.2 million ¹⁴¹.

Year-over-year, Specialty Products and Solutions segment sales decreased by $156.3 million ¹⁴², or 5.6% ¹⁴³, primarily due to lower crude oil prices, partially offset by improved operational reliability and higher throughput volumes ¹⁴⁴. Gross profit for this segment increased by $76.7 million ¹⁴⁵, or 40.6% ¹⁴⁶, driven by strengthened commodity margins for fuels products, lower crude prices, and improved asset reliability ¹⁴⁷. Montana/Renewables segment sales increased by $128.2 million ¹⁴⁸, or 12.0% ¹⁴⁹, due to improved operational reliability and higher renewable fuels product prices ¹⁵⁰. However, the segment's gross loss increased by $44.7 million ¹⁵¹, or 83.6% ¹⁵², primarily due to the unfavorable impact of the regulatory change from the BTC to CFPC, which shifted the tax credit benefit from gross profit to income tax expense ¹⁵³. Performance Brands segment sales decreased by $24.2 million ¹⁵⁴, or 7.2% ¹⁵⁵, mainly due to the divestiture of the Royal Purple Industrial business ¹⁵⁶. Gross profit for Performance Brands decreased by $17.1 million ¹⁵⁷, or 17.9% ¹⁵⁸, also primarily due to the divestiture, with the prior year including $5.8 million of non-recurring insurance proceeds ¹⁵⁹.

During 2025, Calumet completed several significant operational developments. The company achieved an annual production record in its Specialty Products and Solutions segment ¹⁶⁰. At the Montana Renewables facility, the MaxSAF™ expansion project is expected to deliver 120 to 150 million gallons of annualized SAF production by the second quarter of 2026 ¹⁶¹, with an expected cost of $20.0 million to $30.0 million ¹⁶². Infrastructure upgrades at the Shreveport facility continued, including projects to harden assets against severe weather and a new pipeline connection for crude supply flexibility ¹⁶³. The company also announced the sale of the industrial portion of its Royal Purple® business for $110.0 million ¹⁶⁴, receiving $96.9 million in cash proceeds ¹⁶⁵ and recording a $55.8 million gain ¹⁶⁶. On January 10, 2025, Montana Renewables LLC (MRL) and the U.S. Department of Energy (DOE) executed a Loan Guarantee Agreement for a $1.44 billion guaranteed loan facility ¹⁶⁷, with the first tranche of approximately $781.8 million disbursed on February 18, 2025 ¹⁶⁸. These proceeds were used to repurchase equipment, repay outstanding loans under the MRL Term Loan Credit Agreement ($83.8 million ¹⁶⁹) and MRL Revolving Credit Agreement ($26.7 million ¹⁷⁰), and repay obligations under the MRL Supply and Offtake Agreement ($32.5 million ¹⁷¹).

Management anticipates the current attractive specialty product margin environment and improved commodity margins for fuels and asphalt to persist into the first quarter of 2026 ¹⁷². Demand for products in the Specialties Products and Solutions and Performance Brands segments is expected to remain strong compared to historical averages, benefiting from the company's fully integrated specialty business ¹⁷³.

In the Montana/Renewables segment, management maintains an outlook of strong demand for renewable fuel products ¹⁷⁴. This demand is expected to be driven by increased federal policy focus on domestic fuel production, expansion of corporate decarbonization targets (especially in global aviation), strategic alignment with the agricultural industry for renewable feedstocks, broad sustainability initiatives, and governmental mandates and incentives in North America and globally ¹⁷⁵. The company believes its first-mover advantage in the renewable fuels market positions it as a key producer for potential offtake partners to achieve their decarbonization goals ¹⁷⁶. The MaxSAF™ expansion project is expected to deliver 120 to 150 million gallons of annualized SAF production by the second quarter of 2026 ¹⁷⁷.

The Montana specialty asphalt facility, while impacted by narrower WCS-WTI spreads in Q4 2025, is beginning to see marginal benefits from widening heavy crude oil spreads due to recent market and geopolitical events ¹⁷⁸. Its strategic location and logistical capabilities are expected to continue serving long-standing customers in the regional market ¹⁷⁹.

The company is forecasting total capital expenditures of approximately $130.0 million to $160.0 million in 2026 ¹⁸⁰. These expenditures are primarily allocated to maintenance and reliability projects and capital expenditures associated with the MaxSAF™ project ¹⁸¹. Capital expenditure requirements for the MaxSAF™ project are anticipated to be funded by MRL, an unrestricted subsidiary, through cash flows from operations, cash on hand, and borrowings under the DOE Facility ¹⁸². Capital expenditure requirements for the restricted subsidiaries group are expected to be met primarily through cash flows from operations, cash on hand, and available borrowings under the revolving credit facility ¹⁸³.

Management explicitly flagged several structural headwinds and execution risks. The company is currently unable to fully utilize the clean fuel production tax credits (CFPCs) it generates, such as the $102.5 million generated in 2025 ¹⁸⁴, and intends to sell all of them in the secondary market ¹⁸⁵. This exposes the company to fluctuations in CFPC market prices and the potential unavailability of third parties willing to purchase them, which could materially affect financial results ¹⁸⁶. The company also remains subject to compliance costs under the Renewable Fuel Standard (RFS) program, with a gross RINs Obligation of approximately 65 million RINs annually ¹⁸⁷. While the EPA granted full or partial small refinery exemptions (SREs) for program years through 2024 in August 2025 ¹⁸⁸, the 2025 petition is still pending ¹⁸⁹, and the price of RINs remains subject to extreme volatility ¹⁹⁰. A $1.00 increase in RINs price is expected to have a negative impact of approximately $65.0 million per year on Net income (loss) ¹⁹¹. The company is also exposed to risks from potential changes in government subsidies, incentives, and mandates for renewable and low-carbon fuels, which could materially and adversely impact results of operations and financial condition ¹⁹².

Geographic, regulatory, and macro factors identified as constraints include the ongoing conflicts in Ukraine, Venezuela, and the Middle East, which contribute to general economic and political instability ¹⁹³. The current administration's intent to roll back environmental regulations, such as the elimination of the Obama-era 2009 Greenhouse Gas (GHG) Endangerment Finding and subsequent federal GHG emission standards for vehicles and engines ¹⁹⁴, could prompt stricter state and local regulations ¹⁹⁵. Additionally, the company's substantial indebtedness of approximately $2.3 billion as of December 31, 2025 ¹⁹⁶, including $815.4 million at MRL (non-recourse to the parent company) ¹⁹⁷, could impair its ability to obtain additional financing or affect flexibility in business planning ¹⁹⁸.

Calumet faces material risks including its dependence on supply and demand fundamentals, which are susceptible to macroeconomic factors such as inflationary pressures, interest rate increases, and geopolitical conflicts like those in Ukraine, Venezuela, and the Middle East ¹⁹⁹. Commodity price volatility, particularly in crude oil and renewable feedstocks, can significantly impact margins, and hedging activities may not fully mitigate this exposure ²⁰⁰. Decreases in inventory and product prices could reduce the borrowing base under its revolving credit facility, impacting liquidity and the ability to post cash collateral for derivative instruments ²⁰¹. The company relies on key suppliers and third-party pipelines for transportation, and their unavailability could reduce revenues ²⁰². Volatility in natural gas and utility prices, which constituted approximately 14.0% of total operating expenses in 2025 ²⁰³, can decrease earnings ²⁰⁴. Operational hazards at facilities, including fires and explosions, pose significant liability risks, and insurance coverage may be inadequate ²⁰⁵. The company has substantial indebtedness of $2.3 billion as of December 31, 2025 ²⁰⁶, with covenants that restrict business and financing activities, and a failure to comply could lead to acceleration of debt ²⁰⁷. Capital projects, such as the MaxSAF™ expansion, are subject to delays and cost increases from unpredictable factors ²⁰⁸. Environmental and occupational health and safety laws impose stringent compliance costs and liabilities, with potential for significant remediation expenses ²⁰⁹. The availability and cost of Renewable Identification Numbers (RINs) and the outcome of litigation related to Small Refinery Exemptions (SREs) pose a material risk, with a $1.00 increase in RINs price expected to negatively impact Net income (loss) by approximately $65.0 million per year ²¹⁰. Changes in government subsidies, incentives, and mandates for renewable fuels could materially impact the Montana Renewables segment ²¹¹. Cybersecurity risks, including potential breaches and evolving threats, could damage reputation, lead to litigation, and disrupt business operations ²¹². The use of AI tools also presents risks of inaccurate results, regulatory non-compliance, and competitive disadvantage ²¹³.

Management's message to shareholders emphasizes improving operations, enhancing profitability, and focusing on positive and growing cash flows. They highlight the benefit from strong and reliable operations in the fourth quarter of 2025, achieving a new production record in the Specialty Products and Solutions segment ²¹⁴. At Montana Renewables, management notes meeting or outperforming operational cost targets and successfully monetizing Section 45Z Clean Fuel Production Tax Credits (CFPCs) ²¹⁵. This enhanced operational performance is attributed to capital investments made over the past few years to improve asset reliability ²¹⁶. Management expects the attractive specialty product margin environment and improved commodity margins for fuels and asphalt to continue into the first quarter of 2026 ²¹⁷. They project strong long-term demand for renewable fuel products, driven by federal policy, corporate decarbonization targets, and sustainability initiatives ²¹⁸. The company is forecasting total capital expenditures of approximately $130.0 million to $160.0 million in 2026 ²¹⁹, primarily for maintenance, reliability, and the MaxSAF™ project ²²⁰. Management's strategic priorities include enhancing profitability of existing assets, concentrating on positive and growing cash flows, developing and expanding customer relationships, and a disciplined approach to strategic and complementary acquisitions ²²¹. They explicitly state an intention to reduce leverage over time and maintain a capital structure that facilitates competitive access to capital markets ²²².