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Calumet, Inc. /DE (CLMT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered mixed results: sales of $949.5M, gross profit of $83.6M, and Adjusted EBITDA of $56.6M; net loss narrowed to $40.7M (EPS −$0.47), benefiting from insurance proceeds and Renewables momentum despite fuels headwinds and a planned turnaround .
  • Segments: Specialty Products & Solutions (SPS) decelerated on negative crack spreads (Adj. EBITDA $43.4M vs $75.6M YoY), Performance Brands improved on 15% volume growth (Adj. EBITDA $16.3M), and Montana/Renewables turned positive (Adj. EBITDA $10.9M vs −$25.8M YoY) with SAF run-rate and cost progress .
  • Strategic catalysts: first DOE loan draw ($782M) recapitalized Montana Renewables (defers ~$80M annual cash debt service during construction; 15-year UST+3/8% rate) and sets the stage for MaxSAF capacity expansion; announced $110M sale of Royal Purple industrial business to delever .
  • 2025 focus: deleveraging and cash flow growth at MRL; management indicated potential ~$200M call of 2026 notes in May, termination of ATM program, and exploring pari-secured debt or monetization of MRL when market/regulatory clarity improves .

What Went Well and What Went Wrong

  • What Went Well
    • Renewables momentum: MR Adj. EBITDA turned positive ($10.9M) and Q4 included ~$20M insurance proceeds; SAF shipments resumed in Jan after BTC→PTC change; costs reduced to ~$0.70/gal by Dec and expected to hold in 2025 .
    • DOE funding de-risked balance sheet: $782M draw; defers principal/interest until MaxSAF commissioning; reduces cash debt service by ~$80M/year during construction; supports MaxSAF capacity to ~300M gal SAF by 2028 (half online by 2026) .
    • Performance Brands execution: 15% YoY volume growth; Adj. EBITDA $16.3M vs $6.1M YoY; management plans to recapture most of Royal Purple industrial EBITDA via efficiencies over ~2 years after the divestiture .
  • What Went Wrong
    • SPS margin compression: SPS Adj. EBITDA fell to $43.4M (vs $75.6M YoY) with negative crack spreads and weaker fuels; specialty margins held mid-cycle (~$60/bbl) but commodity environment weighed on results .
    • Fuel/asphalt headwinds: Montana asphalt/fuels impacted by seasonal and structural crack softness; Q4 turnaround reduced production ~1/3 of the quarter and delayed December SAF sales due to credit timing .
    • Higher interest and leverage: Q4 interest expense $61.4M; total liabilities rose to $3.224B; equity deficit widened, underscoring deleveraging urgency despite DOE relief .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Sales ($USD Millions)$976.5 $1,100.4 $949.5
Gross Profit ($USD Millions)$22.1 $4.9 $83.6
Operating Income (Loss) ($USD Millions)$(13.9) $(57.1) $22.7
Net Income (Loss) ($USD Millions)$(48.0) $(100.6) $(40.7)
Basic EPS ($USD)$(0.59) $(1.18) $(0.47)
Adjusted EBITDA ($USD Millions)$39.7 $49.8 $56.6
Change vs Prior QuarterAmount
Sales QoQ−$150.9M (Q4’24 − Q3’24)
Adjusted EBITDA QoQ+$6.8M (Q4’24 − Q3’24)
EPS QoQ+$0.71 (−$0.47 vs −$1.18)
Change vs Prior YearAmount
Sales YoY−$27.0M (Q4’24 − Q4’23)
Adjusted EBITDA YoY+$16.9M (Q4’24 − Q4’23)
EPS YoY+$0.12 (−$0.47 vs −$0.59)

Segment breakdown (Adj. EBITDA):

Segment Adj. EBITDA ($USD Millions)Q4 2023Q3 2024Q4 2024
Specialty Products & Solutions$75.6 $42.6 $43.4
Performance Brands$6.1 $13.6 $16.3
Montana/Renewables$(25.8) $12.7 $10.9
Corporate (Adj. EBITDA)$(16.2) $(19.1) $(14.0)

KPIs:

KPIQ2 2024Q3 2024Q4 2024
Total Sales Volume (bpd)90,242 92,275 85,882
Renewable Fuels Production (bpd)11,797 11,488 7,865
Performance Brands Volume Growth (YoY)+30% +19% +15%
SAF Production/Run-rate~7M gal produced (quarter) New SAF record (not quantified) 50M gal annualized run-rate achieved in Dec; shipments resumed Jan
Renewables Cost per Gallonn/aImproving trajectory ~$0.70/gal fully loaded by Dec; target mid-$0.40s site cost in 2025

Estimates vs actuals: Wall Street consensus via S&P Global was unavailable at the time of analysis; estimate comparisons are therefore not provided.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company CapEx (ex-MaxSAF)FY 2025n/a$60–$90M New
MaxSAF CapExFY 2025n/a$40–$60M (45% MRL cash flow, 55% DOE draws) New
MRL Cash Interest on IntercompanyFY 2025+n/a~$27M/year New
2026 Notes CallMay 2025n/aManagement targeting ~$200M call at step-down New
Reporting of Adjusted EBITDAFY 2025Excludes RINs add-backIntends to add-back RINs incurrence; reflect PTC value sold to third parties Methodology change
MaxSAF Capacity Ramp2026–2028Conditional commitment (Q3) ~150M gal/yr capability online in 2026; full ~300M gal SAF by 2028 Clarified timeline

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
DOE Loan / Capital StructureAdvanced DOE discussions; MLP→C-Corp conversion $782M first draw; defers ~$80M cash servicing; UST+3/8%; intercompany repayment; option for pari-secured debt De-risked; accelerates deleveraging
MaxSAF ExpansionConditional DOE commitment; staged projects Licensor selection underway; second reactor; ~150M gal capability by 2026; full by 2028 Execution progressing
SAF Market DynamicsRecord production; voluntary demand; hub development Balanced near-term; EU/UK mandates ramp; Great Lakes SAF hub pull; $1–$2/gal premium opportunity Structural tailwinds
RD Market / RINsSoftening spreads; RIN volatility January BBD production −34% YoY; imports backed out; awaiting PTC clarity; plan to add-back RINs in Adj. EBITDA Transition; margin normalization expected
Specialty OperationsRecord volumes; margin resilience Shreveport/Princeton performance; fixed costs −$1/bbl YoY; plans for further $20M fixed cost reduction Operational efficiency improving
Asset Portfolio / DivestitureNone$110M sale of Royal Purple industrial; ~10x EBITDA multiple; plan to recapture EBITDA via efficiencies Strategic deleveraging

Management Commentary

  • “The past twelve months of strategic activity at Calumet has fundamentally reset the company’s foundation… positions the company to succeed against our top priority of deleveraging the balance sheet and growing cash flows.” – CEO Todd Borgmann .
  • “With receipt of funding from the DOE in February 2025, we have completely recapitalized Montana Renewables, which eliminates approximately $80 million annually during the construction period… and sets the stage for growth through our MaxSAF expansion.” – CEO Todd Borgmann .
  • “In December, we reached our target cost level of $0.70 per gallon… we expect that number will be reduced to $0.40 a gallon this year.” – Renewables operations update .
  • “We expect… Specialty margins over $60 a barrel… even in tougher current market conditions.” – CFO David Lunin .

Q&A Highlights

  • Balance sheet and ATM: Management plans to terminate the ATM program; pathway to $800M debt reduction involves intercompany repayment (~$350M), free cash flow, asset sales, pari debt at MRL, and eventual MRL monetization when regulatory/market clarity returns .
  • DOE loan mechanics: The facility is live; subsequent draws available subject to bring-down reps; 2025 MaxSAF spend (~$50M total) back-end loaded .
  • SAF/RD policy and markets: PTC rules and BC provincial restrictions create local optimization opportunities; Calumet emphasizes feedstock agnosticism and geographic flexibility, expecting margin uplift in Canada and Great Lakes SAF hubs .
  • Royal Purple sale: ~10x EBITDA multiple; plan to recapture most divested EBITDA over ~2 years through supply chain and operational efficiencies .
  • 2026 notes: Targeting ~$200M call in May step-down; deleveraging to continue with DOE-enabled free cash flow .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable at time of retrieval; as a result, estimate comparisons and beat/miss designations are not included. We will default to S&P Global consensus for future comparisons when accessible.

Key Takeaways for Investors

  • Deleveraging accelerates: DOE recapitalization defers $80M of annual cash debt servicing, freeing capacity to call 2026 notes ($200M in May), pursue pari-secured debt at MRL, and potentially monetize MRL when BTC/PTC and RVO clarity improves .
  • Renewables inflection: Positive Adj. EBITDA at MR, with SAF run-rate and cost achievements ($0.70/gal fully loaded), positions the business for margin leverage as mandates ramp and logistics hubs mature .
  • Specialty resilience with efficiency: Despite fuels headwinds, specialty margins maintained mid-cycle and fixed cost reductions underway ($20M targeted), supporting stable cash generation into 2025 .
  • Portfolio optimization: $110M Royal Purple industrial sale at ~10x EBITDA is accretive for deleveraging; management expects to recapture most of the EBITDA via efficiencies, mitigating earnings dilution .
  • Near-term trading watch: Regulatory developments (PTC/BTC final rules, RVO reset), further DOE draws, and progress on MaxSAF licensor/engineering milestones are potential catalysts; any SAF price premium expansion would benefit MR EBITDA .
  • Reporting change: Management intends to add-back RINs to Adjusted EBITDA and reflect PTC monetization (cash sales), improving transparency of operational cash generation—watch for methodology updates in 2025 disclosures .
  • Risk monitors: Commodity crack spreads (fuels/asphalt), interest expense burden, and policy uncertainty remain headwinds; continued insurance and cost discipline provide partial offsets .