Calumet, Inc. /DE Q4 FY25 earnings call CLMT

Calumet achieved significant strategic milestones in 2025, including delivering $293.3 million of adjusted EBITDA with tax attributes, a nearly 30% increase year-over-year. The company reduced restricted debt by over $220 million, improving net recourse leverage from 8.2x to 4.9x. Additionally, Montana Renewables successfully closed its DOE loan, which removed approximately $80 million of annual cash debt service and eliminated 2026 and 2027 debt maturities.

The company dramatically reduced costs and improved reliability across its operations. Fixed costs were down over $40 million, water treatment costs at Montana Renewables decreased by over $20 million, and crude transportation costs in the Specialties business were reduced by $19 million in 2025. Capital spending was also reduced by roughly $20 million due to improved reliability, while production increased by approximately 1.3 million barrels on the year.

The SPS segment demonstrated continued momentum, producing record levels of product in 2025. The commercial engine sustained material margins above historic norms, exceeding $60 per barrel, despite softer macro conditions. Sales volumes consistently surpassed 20,000 barrels per day for five consecutive quarters, reflecting investments in commercial excellence, talent, and disciplined capital deployment. Fixed cost per barrel declined by over $1 versus the prior year period.

Montana Renewables achieved a new level of operational reliability and cost competitiveness, with operating costs averaging $0.41 per gallon in the second half of 2025, a 60% improvement over two years ago. The MaxSAF 150 expansion is set to bring 120 million to 150 million gallons of annual SAF capacity online. New multi-year SAF contracts, including with World Energy and Shell, have been secured at a $1 to $2 per gallon premium over renewable diesel.

The regulatory environment for biofuels continues to improve, with clarified 45Z rules and an imminent Renewable Volume Obligation (RVO). Management anticipates a stronger RVO will enhance industry utilization and margins, as idle facilities will be required to restart to meet increased mandates. This is expected to create a more constructive market dynamic, benefiting companies like Calumet that are already operating efficiently.

Calumet is entering 2026 with a focus on executing its MaxSAF 150 project safely, on time, and on budget in Q2, continuing to improve cost levels, and leveraging its early-mover advantage in SAF. Despite a heavy turnaround year with CapEx of $115 million to $145 million, the company expects total production to increase. Capital allocation priorities remain disciplined, emphasizing durable free cash flow, enhanced deleveraging, and strategic growth.