Good day, and welcome to the Calumet, Inc. First Quarter 2025 Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to John Kompa, Investor Relations for Calumet. Please go ahead.

Thanks, Debbie. Good morning, everyone, and thank you for joining our call today. With me on today’s call are Todd Borgmann, CEO; David Lunin, EVP and Chief Financial Officer; Bruce Fleming, EVP, Montana Renewables and Corporate Development; and Scott Obermeier, EVP Specialties. You may now download the slides that accompany the remarks made on today’s conference call, which can be accessed in the Investor Relations section of our website at calumet.com. Also, a webcast replay of this call will be available on our site within a few hours. Turning to the presentation, on slide two, you can find our cautionary statements. I’d like to remind everyone that during this call, we may provide various forward-looking statements. Please refer to our press release that was issued this morning, as well as our latest filings with the SEC for a list of factors that may affect our actual results and cause them to differ from our expectations. As we turn to slide three, I’ll now pass the call to Todd.

All right, thanks, John. Good morning, and welcome to our first quarterly earnings call of 2025. We’re a little over four months into what has already been an action-packed year. Calumet began 2025 by closing and funding our DOE loan, the first of its kind under the Trump administration. This transaction strengthens Montana Renewables’ balance sheet and ensures the stability of the business, even during difficult markets, just like the one we saw in the first quarter. We also completed the accretive sale of our Royal Purple industrial business. And, this morning launched a $150 million partial call of our 2026 notes as we execute our deleveraging strategy. Further, we’re also progressing additional strategic activity, which we won’t fully detail today for obvious reasons. But we will update on a breakthrough in our expectations around the Montana Renewables MaxSAF project, as we now expect to reach our next milestone of 150 million gallons of SAF capacity, dramatically more cheaply and quickly than originally expected. This project adds immense value to our near-term outlook, as the renewable diesel industry awaits regulatory clarity, which we view as the critical open item to a partial monetization of Montana Renewables, which is Calumet’s final deleveraging step. Before diving into those details, I’d like to take a moment to step back and frame the broader macroeconomic environment and its impact on Calumet. Despite the prevalence of widespread headlines regarding potential recession, we’re not seeing real signs of recession within our business. One example is the first quarter marked one of the highest specialty sales volume periods in company history, during what’s typically a slow season. That being said, with broad economic nervousness in the market, we went back and dusted off our COVID-era specialties playbook, which was effective during that global slowdown, which was arguably much more dramatic for our industry than what most are expecting now. What we see is the attributes underpinning our company’s resilience that allowed us to generate positive free cash flow back then continue to be enforced today, and largely in improved fashion. The resilience of our specialty business is anchored by our integrated asset base, our approach to commercial excellence, and a continuing improvement in our operational reliability and cost control. Let’s look deeper into specialties on slide four. Calumet’s flexibility and financial resilience is underpinned by a few pillars. First, we serve over 3,000 customers with nearly 2,000 products globally, spanning markets from consumer staples and pharmaceuticals to seasonal applications like road paving. This allows us to dynamically shift our product placement as markets evolve. Second, we operate our specialties assets as a network, not standalone sites, which provides unparalleled flexibility due to the complementary nature and proximity of our largest facilities. We constantly manage make versus buy decisions, adjust feedstock slates, and optimize operations to match market needs. These core strengths allow consistent performance across cycles, and while we have the ability to sell overseas, and we do so from time to time, tariffs are not expected to materially impact us as our operations are domestic, and the great majority of our sales fall within the U.S. or under U.S. MCA. To see the power of Calumet's commercial approach, we need to go no further than recent performance brand results. Since transitioning to a unified specialty business two years ago, our performance brand segment has delivered robust volume growth, and EBITDA on this segment has more than doubled. We've seen this success within our Trufield brand in particular. In 2024, Trufield contributed roughly one-third of our segment EBITDA, as full-year volumes grew over 20%, a trend that continues into the first quarter. Growth drivers include a successful marketing strategy targeting first responders and large-volume users, increasing shelf space at major retailers, including recent entry into Walmart, and on a more macro level, long-term growth within the outdoor power equipment segment. Trufield has roughly a 65% market share in its space, but the space as a whole is not that well known, which we are changing rapidly. This is a key to continued growth in this brand, as we have proven that once customers become aware of Trufield, the likelihood of repeat loyal purchasing is extremely high. On the operational front, our cost reduction initiatives are delivering results. Last quarter, I mentioned that we continue to fortify our operations and expect to take over $20 million in operating costs out of the business this year, and in the first quarter, we saw this. While the winter season always seems to pose a few challenges across northwest Louisiana and the railways and the Rockies, total system operating costs were reduced by nearly $5 per barrel versus the first quarter of last year, or just over $22 million, which is after accounting for the roughly $4 million increase in the cost of natural gas. As we know, much of this improvement has come at Montana Renewables, as we've reduced costs dramatically with innovations around producing less water for disposal and increasing our reliability. But it's worth noting the improvement in our specialty business as well, where we saw our operating costs improve by roughly $1.50 a barrel in the first quarter, anchored by a roughly $5 million quarterly reduction in year-over-year fixed costs and an 8% increase in production volume. Strong day-to-day execution combined with the competitively advantaged position of our Montana Renewables business and ultra-resilient specialties business allow us to expect positive cash flow across the economic cycle, which we saw during COVID and expect to replicate again here in 2025, especially with the cost of MRL's old capital structure now removed. Let's turn to slide 5, where we discussed renewable market dynamics. First, Montana Renewables generated $2.4 million of adjusted EBITDA, including the PTCs in the first quarter. Dave will talk more about this and our plan with PPCs momentarily, but in a post-DOE world, Montana Renewables' ability to generate positive EBITDA tax attributes, even in the lowest index margin we've ever seen, is representative of our competitive position. During the first quarter, we saw major decreases in D4 RIN generation as the PTC rolled into place, imports stopped, and biodiesel saw a dramatic shutdown. As the RVO is reset and the biomass-based diesel required to meet that demand moves to the right, we'd expect index margins to adjust accordingly as the shutdown of biodiesel will need to be incentivized to restart. This, of course, is not a change to our long-term expectation, but it took the large cash losses associated with the PTC change to force the biodiesel industry and some renewable diesel to shut down, and hopefully we'll be seeing actions in the not-too-distant future that encourage these agricultural businesses to restart as new crush plants have been invested in and seeds ordered, assuming the renewable fuels growth trend will continue. On the right side of this slide, we see Q1 biomass-based diesel production undershot the RVO by about 230 million gallons. How could it be that we under-ran the compliance level by roughly 1 billion gallons on an annualized basis, and at the same time we just saw a record low index margin quarter? We believe the answer to that lies in the overproduction in 2024, and it's a temporary dynamic. This chart shows that just as the industry overran the RVO implied demand in the first quarter of last year, they underran it in the first quarter this year. This D4 RIN carryforward can provide a temporary shock absorber to a RIN production deficit, but as the carryforward credits are used up, we expect normal dynamics to reset. Of course, RVO clarity should help normalize the market as well, which the whole industry looks forward to. And at Montana Renewables, we also expect to be adding more SAF just as global mandates step up in early 2026. In other words, it's tough out there right now, but underlying market fundamentals provide a lot of reasons for optimism as we look forward. Next, let's turn to slide six and discuss MaxSAF, or maybe more specifically, a major improvement along the road to our ultimate MaxSAF journey, which we're calling MaxSAF 150. As we know, SAF is a central component of MRL strategy. We were among the early entrants in this space, launching SAF to market in late 2023 with Shell as our offtake partner. And while renewable diesel margins have been challenging since the RVO misstep, SAF margins have remained stable and attractive. This early market continues to show great promise, with the introduction of global mandates complementing an already growing base of voluntary demands. Our grand project calls for 300 million gallons of SAF capacity to be reached, and there's no change to that. We previously spoke about our expectation to bring 150 million of those gallons online in late 2026 for a capital cost of $150 million to $250 million. Our operations team has rapidly advanced our understanding of the potential of our assets and our SAF production technology. As a result, our project expectations, which were already promising, have improved markedly. Rather than needing to wait on our Gulf Coast reactor to be shipped across the country and stood up with other new build assets, we can enhance our existing MRL reactor and some other supporting assets already in Montana to bring on 120 million to 150 million gallons of SAF in early 2026 for $20 million to $30 million of capital. Given this is predominantly catalyst work and configuration of existing assets, the smaller capital would primarily be back-loaded after 2025 and early 2026. This improvement will increase SAF yields from its current 2,000 barrels a day to an 8,000 to 10,000 barrel a day range, and we also expect a minor increase in total renewable throughput. After we improve our yields through this first step in our sequential project, we're optimistic that our experience will continue to allow us to manage through the remaining project more quickly and economically as well. But for now, we're focused on achieving the maximum amount of SAF for the minimum amount of capital as quickly as possible, and our marketing team continues to be encouraged by the demand we're seeing for these increased volumes. Increased sales volumes take on three different timelines. First, we currently have our 30 million gallons of annual capacity being sold daily. Next, we demonstrate a 50 million gallon SAF capacity, and our ops team is gaining experience achieving that rateably. With the combination of this rateable production and the winter rail constraints behind us, we expect to start selling 50 million gallons of SAF this summer. And third, with the breakthrough around MaxSAF 150, we'll also be marketing that additional material soon, which could be sold directly or tied to a monetization event as discussed in the past. We remain flexible in our approach and encouraged by the market response. In fact, as the SAF market evolves, we've even been approached about SAF fee credits. With this approach, the Tier 1 and Tier 3 credits we generate are marketed to end users through a book-and-claim approach, and a SAF supplier retains the other environmental credits like the RIN and the PTC, just like through our existing renewable diesel and SAF contracts. The benefit of this, in a world of global mandates, is it allows suppliers to separate the SAF credit from the physical transaction to minimize logistics costs for end customers. It's not surprising that the resulting economic to Montana Renewables with the book-and-claim approach provide the same premium expectation of $1 to $2 a gallon premium relative to renewable diesel that we've discussed previously, and we continue to see that range in the market. With that, I'll turn the call over to David.

Thanks, Todd. I'll review our financials by segment, the drivers of our strong first quarter results, and the underlying strengths of our growth platform going forward. First on slide seven, I wanted to remind investors of the thinking behind our changes to adjusted EBITDA this quarter. As we mentioned on our last earnings call, and you see in our first quarter reported financials, we've updated how we report to better reflect the true cash generation capability of our business. We've made two important changes. The first is to add back the RINs incurrence. RINs incurrence relates to blending obligation for fuel producers. Calumet is a small refinery and has always received the Small Refinery Exemption, or SRE, up until the EPA's issuance of a blanket SRE denial. Calumet has never made a cash payment for RINs and continues to be successful in the federal reports, having been successful in both the Fifth Circuit and the D.C. Circuit regarding our Small Refinery Exemption petition this past year. Given the set of facts, along with our goal of presenting investors the clearest and most accurate representation of the cash generation capability of the business, this change was made to start the year. The second change relates to the transition from the Blender's Tax Credit to the Production Tax Credit in the renewables industry. Instead of the previously cash-paid $1 a gallon for the Blender's Tax Credit, starting in 2025, we now generate a PTC based on the CI score of the produced gallon. Current legislation contemplates a tax credit that can reduce taxable income, or in Montana Renewables' case, be sold back to the market for cash. Given Montana Renewables' low CI feedstock advantage and SAF position, its PTC is relatively large, representing roughly $20 million for all of Montana Renewables in the first quarter, or roughly $16.9 million on Calumet's 87% equity portion. The new non-GAAP metric of adjusted EBITDA plus tax attributes adds back this tax credit. As Todd said, our plan is to sell the PTCs as we don't yet have taxable income to offset. Thus, we'll report EBITDA with tax attributes that includes the PTCs generated in a month rather than a hyper-volatile metric that would match the quarterly sales timing of PTCs and reflect the steady value generation of the business. Turning to slide eight, before we go through the segment results, I wanted to highlight what a transformative quarter we've had on the balance sheet with several exciting developments. First, earlier this quarter, after a temporary delay, we received the initial Tranche 1 funding under the DOE loan. We used the funds from the loan to, in part, take out expensive debt and get repaid from DOE for eligible project costs. The result has been transformative as we've reduced annual cash flow from debt service by approximately $80 million per year and positioned ourselves to have cost-efficient funding to complete our MaxSAF expansion. Coupled with the exciting news that Todd shared earlier about a cheaper, quicker path to the first step in MaxSAF, we couldn't be more excited about the business. Second, we completed the sale of the industrial portion of our Royal Purple business, which brought in roughly $100 million of cash proceeds at an attractive, accretive multiple, while at the same time streamlining our performance brand business. The focus on playing where we have integration with our SPS business allows us to grow volumes and take out costs efficiently. That trend will continue. Finally, we called today the $150 million of outstanding 2026 notes, slightly less than mentioned last quarter, reflecting the recent volatility we've seen across markets. We ended the first quarter with $347 million of liquidity in our restricted business. Expect to generate strong cash flow in Q2 and to recoup some of the larger working capital swings we saw in the first quarter and plan to deploy the remainder of the call as the commodity markets that drive our underlying working capital instrument settles. As we mentioned earlier, we also have some additional strategic activity in the hopper, which we'll share in the future. The ultimate sale of a portion of Montana Renewables remains as a finer pillar in our deleveraging story. Certainly, the market hasn't helped us out there with headwinds on index margins, but as operators, we have positioned the business with operating leverage to take advantage once the market recovers. We’ve demonstrated reliable operations, reduced our costs and fixed the balance sheet to eliminate high-cost third-party interest. With the RVO guidance hopefully on the horizon and a cheaper, faster path to more SAF, we've never been more excited and more well positioned.

Turning to slide nine, our Specialty Products segment generated $56.3 million of adjusted EBITDA during the quarter under our new definition. We continue to see strong volumes particularly among our specialty product lines reflecting our commercial excellence program. In fact, this is one of the highest quarters on record for SPS volumes at approximately 23,000 barrels per day. As Todd mentioned, first quarter 2025 results were slightly impacted by a full fuels unit turnaround and short freezing challenges in January, something that we've seen routinely in the past two winters in Northwest Louisiana. However, we've made fortifying investments which has limited the impact. Our operational improvement trend continues as we drove year-over-year operational cost improvements of $1.41 per barrel on top of our 9% increase in year-over-year production volumes despite a reformer turnaround during the quarter.

We have some turnaround activity scheduled to begin in June on some specialties equipment, which will impact our results next quarter. Even with higher volume and a little cost headwind earlier in the quarter, margins came in just below our $60 per barrel mid-cycle level and looking forward we continue to expect to operate at that mid-cycle margin level even amidst an industry backdrop that is well below mid-cycle. Taking a longer view, you can see we're still well above 20,000 barrels per day from our 2020 to 2024 range as we remain focused on maximizing our customer and application diversity as well as the incremental value earned through our integrated network. Finally, we've all seen the various headlines regarding potential tariffs, but we do not believe they are impactful to our specialties business considering our U.S. based manufacturing footprint, customer base, product diversity and dealing with all of our sales and feedstocks being domestic or protected by USMCA.

Moving to slide 10 and our Performance Brands segment, we posted strong quarterly results of $15.8 million reflecting strong volume growth and continued commercial improvements in the business. While some of our brands are more integrated than others, we're seeing growth throughout the business and are really proud of the progress our team has made both in volume growth and capturing supply chain efficiencies. As previously disclosed, we completed the sale of the industrial portion of Royal Purple, which was completed at roughly a 10 times EBITDA multiple. We continue to believe that through the operational and supply chain efficiencies this transaction unleashes we'll be able to recapture the majority of the EBITDA we've sold over the next two years. Note, we closed the transaction on March 31, so the results reflect the full quarter's contribution of Royal Purple Industrial.

Moving to slide 11, our Montana/Renewable segment adjusted with tax attributes generated $3.3 million in the first quarter compared to a negative $13.4 million in the prior year period. The Renewables business on its own drove adjusted EBITDA with tax attributes of $2.1 million attributable to the 87% ownership position of Calumet. The primary driver of the improvement was the tremendous cost savings we've driven in the business and improvements in operations. You can see in the lower right hand side of the renewable slide, we've reduced operational costs and SG&A down from well north of a dollar to below our $0.70 per gallon target. Focusing just on operational costs, we're at $0.50 a gallon. This represents our sixth consecutive quarter of operational cost improvement, excluding the turnaround in the fourth quarter of 2024. We also saw renewable volumes increase from the comparative Q1 period.

At 10,300 barrels per day we were below our targeted range. That was driven by congestion on the railroad which caused delays in getting heat to the plant coming out of the fourth quarter turnaround last year. Looking ahead, operations is able to produce our previously demonstrated 50 million gallons of SAF capacity on a ratable basis and we're now ramped up marketing efforts. We expect to increase SAF sales in late Q2 2025. And on the tariff front, Montana Renewables expects no impact. While imported used cooking oil being excluded from the ability to generate a PTC was news in the industry, Montana Renewables doesn’t use this feedstock. On the Montana asphalt side, we drove a $9.1 million year-over-year improvement. We talk a lot about cost improvements at MRL. But, we’ve also been hard at work taking costs out of the asphalt side of the business, which contributed to a much improved Q1 versus what we saw last year. We also experienced better wholesale asphalt and local fuel premiums in the market during the quarter. And, we look forward to opening up the retail asphalt rack later this quarter. With that, I’ll turn the call back to the operator for questions.

We will now begin the question-and-answer session. The first question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Good morning, Todd and team. I want to begin by discussing the regulatory environment and the adjustments you've made in how you present EBITDA concerning the production tax credit. This indicates your confidence in a transition from a Business Tax Credit to a Production Tax Credit. Can you elaborate on the regulatory landscape moving forward regarding these tax credits and explain why you think this approach is appropriate for assessing the earnings potential of your company?

Hey, Neil. It's Todd. How are you? Thanks for the question. Let me start here on just kind of the PTC and BTC. And, I’ll give it back to Bruce for a little bit more color into the regulatory environment. But, I actually think your question regarding the comparable state of EBITDA on a BTC world and PTC world and even how it could potentially go back to a BTC world if you read some of the rumors kind of impact our decision to move forward on this adjusted EBITDA plus tax attributes basis in Montana Renewables because if you think about where we were last year, the dollar a gallon BTC tax credit was in adjusted EBITDA. So, all we’ve done now is we said the PTC credit, which obviously impacts industry index margin, is now also added back to adjusted EBITDA. So that when we look at a year-over-year comparison period from a BTC environment to a PTC environment, we get an apples-to-apples comparison. And if there was a change back or other regulatory changes, then this metric would continue to work because we’d be able to compare, again, BTC world to PTC world kind of lines up here. So, that was actually in the forefront of our mind as we thought about the right way to show the PTC. The other thing I’d say on the adjusted EBITDA plus tax attributes is we’re a seller of the PTCs. A lot of folks use them. We don't. And so, if you didn’t make this adjustment, you would have a very, very choppy EBITDA stream that just wouldn’t really demonstrate or help investors visualize the earnings power of this business, because you would be recognizing only the EBITDA in the periods that you sell them. So, that’s kind of the way we’re doing it right now. Ultimately, we expect to capture the value of the PTC as we sell them. It just doesn’t happen on a day-to-day rateable basis, as you know. These are typically quarterly sales. So, anyways, probably a long-winded way to answer your question. Moving back to Bruce for any color on regulatory.

Hey, Neil. So, I think the way you asked that sounded like, do we think the regime has cut over? It definitely has. That’s the law, and that was in the IRA legislation. There’s some question about when the detailed rules are going to come through under which taxpayers can enter this income tax credit on their returns. But, as Todd said, we’ll be selling them. So, we feel good about trying to help our investors understand the cash flow potential of the business by accounting for it in this manner.

That's very helpful, guys, and yes, we'll look for more regulatory clarity. The follow-up is just around the balance sheet. I know you guys talked about, should we continue to drive your leverage to your target levels? It's been a huge focus in the credit community where we've seen a big uptick in interest around the credit. So, just to help the market get comfortable around liquidity, balance sheet, things are tracking, and steps that you are taking to really shore up the strength of that balance sheet in a volatile macro.

Yes. Hi, Neil. It's David. I think we feel very good about the liquidity and where we're at. We finished the quarter with around $340 million in liquidity. We also called the kind of $150 million of the bonds. I think as we think about the DOE loan and that removing $80 million of interest and amortization from cash flow, we really positioned the business well. Another lever is kind of the sale of the Royal Purple business, which has helped support liquidity. I think as we look forward, we probably sold a little bit less than we had talked about. Just given the macro volatility, we saw some working capital outflows in the quarter. And so, we've just been a little bit conservative currently, but we feel really good about where we're at. Obviously, the ability to make more SAF quicker, sooner, and cheaper makes us feel even more confident about kind of where the balance sheet and where the business is today.

Yes, this is Todd. I'll add a little bit. Our ultimate leverage goal is reaching $800 million of restricted debt, which is tied to the monetization of Montana Renewables. The faster, cheaper MaxSAF 150 is a significant next step toward that. We hope to receive some RVO news soon, as there's optimism surrounding it. We expect that to lead to margin recovery, which are the last elements needed for this to become a practical option. However, don't anticipate this happening in 2025, as several things still need to occur, some of which are regulatory. We're gaining confidence that current market fundamentals are positioning us for an attractive transaction in the near future.

Is that $800 million target? Could you see that as a 2026 event, Todd?

Yes, we needed to reduce risks in our operations and secure DOE funding, which we have accomplished. Now, we seek clarity on the RVO. With that, we expect to illustrate the earnings potential of Montana Renewables with an additional 100 million gallons of SAF, which should significantly enhance our earnings. We anticipate obtaining that additional SAF volume early in 2026, so we see 2026 as a promising timeline for a transaction related to Montana Renewables.

Thank you. Good morning, everyone. Just with respect to the higher SAF volumes that we're expecting to achieve in 2026 the lower CapEx than expected, I guess, previously I'm just trying to get a sense of whether there was already equipment that was put in place that is no longer being used, and if that can be applied to further expand volumes. The preface was not very clear, at least to me on that front. If you could clarify how all of this is being sort of achieved.

Hi, Amit. This is Bruce. Yes, let me take a stab at it. The existing asset, the hydrocracker that we converted back in 2021 and '22 has more capability for more SAF output, and we've got that lined out and demonstrated, so we're simply going to take advantage of that in the market now, and Todd covered that. We'll call that the 50 million gallons a year. To get more out, we've got a very, very modest constraint removal around our heat and material balance, which we think will cost $20 million to $30 million. Obviously, we've got a more precise engineering estimate, and we've got the AFE in place for that, so that's a go. The latency capacity of the existing unit was known, and we have always signaled walking these volumes forward, so we're simply giving you an update that it's going to be sooner and it's going to be lower capital, so we're pretty happy with that. The marketing team is actively engaged in signing up the placement of those gallons, and we look forward to keeping you posted on how that unfolds.

Understood, Bruce. And then, as you execute on this, is that when you start collecting on the remaining funds from the DOE?

Yes, what you're referring to, we organized, and this is a public document, of course, but we organized the partnership with the DOE to catch up to what had already been done, and that's called Tranche 1. David mentioned that we received that money in the middle of the first quarter. The balance of the loan proceeds are available, and we call that Tranche 2 in the documents. That's a construction draw facility. So, as we meet the conditions precedent, we will just continually tap that money over the next three to four years as we finish the full build-out and get to the end state of 300 million gallons of SAF.

Hey, good morning. Thanks for taking my questions. I wanted to go back to the PTC because I just want to clarify, one, the amount you actually booked in the quarter. Did you book the full amount that you're saying you could have received, or did you book something less than that $17 million in the quarter, and the $17 million is kind of indicative of what you would have been able to book if the rule was in place in time? Because that $0.49 per gallon is higher than what we've heard some peers book. And then, going forward, given the changes in feedstock and lower canola oil runs, do you expect the amount you're able to book under the PTC to move higher?

Yes, so, Jason; David here. Just a couple of thoughts, so, the $19 million or $20 million that we booked, that's kind of the full value of the PTC that we generated during the quarter. The higher number just reflects more SAF production, I expect, relative to your expectations, which is we obviously produce a lot more SAF that gets more credit from the PTC. So, that $20 million is the full value. When we talk about the $16.8, that's just reflective of Calumet's 87% share of Montana Renewables. That's booked also at 100% of the notional value. I think when we ultimately monetize that, they'll be sold at a slight discount. I think the market is around 95-ish percent, give or take. And we'll true that up when we ultimately sell it.

Got it. And then, thoughts on the amount you'll be able to book going forward, just assuming a more optimized feedstock slate?

I think, we're always going to move our feedstock to the highest margin, whether that margin comes through PTC or cheaper feedstock prices. We think feedstock probably moves to their CI parity over time. And so, whether we're collecting the value through sales or through the monetized PTC, I think there's some level of indifference there for us. It's all about where do we move to the highest margin feedstock.

Okay, got it. And then, my follow-up is just the adjustment lower on the SAF expansion CapEx, which frees up more cash under the DOE Phase 2 loan. Can you talk about other uses of that cash? Does it increase the amount of debt you're able to pay down on intercompany loans or are there other potential uses for that capital that can improve the cap structure?

This is Bruce. I'll start with the capital part. So, the DOE loan, the government will loan money against permitted uses, eligible spending. Broadly, you should think of that as capital improvements and not working capital. That's one of the reasons you've heard us talk about a pari passu debt facility. The operational income statement is where the vendors, all of the vendors, including Calumet, which has provided services under an MSA agreement, get paid. So, that's not the loan. That's the income statement. Does that help?

Yes, it does. Thanks. If I could just sneak one other in, maybe, you put out a mid-cycle EBITDA number of 240. This quarter, I think, annualized is about $140 million for that base business. Can you just talk about the gaps between what you believe is mid-cycle and what Q1 results showed, especially given the strong performance in the specialty side of things?

I think in general, Jason you're really just talking about kind of Q1 winter, right? So when we talk about the restricted mid-cycle business, we're talking about fuels in the summer. We're talking about asphalt in the summer. So, I wouldn't expect that you should look at kind of the certainly wouldn't be expecting 2025 EBITDA to be Q1 times 4. We're looking forward to Q2 and Q3 as pretty strong earnings environments from what we're seeing in the market right now.

Got it. Great. Appreciate all the answers.

All right. Thanks.

Hey, good morning, guys. You mentioned strategic alternatives you were looking at, and you said you couldn't go into much detail. Maybe just since no one asked, what can you tell us about what you're thinking about there? Is that potentially to reduce more debt, or is that for something else?

No, that would be to reduce more debt, Gregg. It's Todd. we've said for a long time that we're willing to sell assets that aren't core or integrated into the business as long as they bring an accretive value. And we've had interest there. People have heard that. And so, I'd throw that out there as one. I think last quarter we talked about a number of other things. But, yes, you should be thinking of any cash that comes into Calumet, the use of that is debt paydown. That's our number one priority all the way up until we ultimately monetize Montana Renewables and achieve our restricted debt target of $800 million, so.

And you're not putting a goalpost here to give us a sense of how big that can be? I think it's pushed out, right?

No, I think it's the same buckets that we had talked about before. certainly more than sits ahead of us for the 2026 notes. As we look at our debt reduction strategy, our goal is not to just inch by the 26s or anything like that. We're out looking at ways that we can bring in additional cash to knock out the 26s, start to dig into the 27s, and like I said, ultimately set us up for the Montana Renewables sale. And if like we talked about a little earlier, if that ultimately can happen in 2026, then that would be great. But we'll let the markets guide us on that.

Got it. And I think Dave said he expected some working capital benefit in the second quarter. Maybe you could just try to understand how large that can be. And just in general, should we think about any way, how should we think about you potentially reducing 26s going forward? Is there any guidance or will it be an end of quarter decision?

Yes, I think the well, I don't know that it'll be an end of quarter decision. I think what Dave was saying was there was a lot of movement. We saw commodities all over the place during the quarter. We've got 3 million barrels of inventory in the system when you're seeing $10, $15 moves and crack spreads in crude. Crude you can see that fluctuate $50 million, $60 million throughout the quarter. So, that was kind of the volatility range that he was talking about there as well as we want to get some PTCs just sold. Right. So, now with the quarter under our belt there we're moving that forward. And then, just a little bit more economic certainty about where we're at. But those are kind of the three things we're watching here in the near term future. And then, we'll just go ahead and use the rest of the proceeds to make the next step down into 26 calls. And after that, we're looking at cash flow generation from the business and potential strategic activity, as talked about earlier.

Got it. And then, just to follow up on the DOE loan, you mentioned in the presentation about having to go back to the loan office to qualify your changes in the expansion. Does that mean that you're not necessarily going to access that facility in the interim? Is there basically no spending going to take place as a result? And just help us think through how that process works. And where are you at, Bruce?

Yes, I want to reset the premise of your question. We did not say we have to re-qualify anything. We said that stuff that was in the plan is going to be done sooner and cheaper.

So, you don't need to go back to the DOE?

Well, we go to the DOE every time we want to draw from the loan facility for the purpose of construction in the field. The only thing that's changed here is an enormously positive development, which is less spending and more SAF sooner. This is hugely credit accretive to the loan underwriter.

Yes, I completely understand how advantageous it is to drop $200 million of CapEx. What I'm trying to understand is, do you have access to the fund today? And are there any constraints, and are you using it?

So, again, it's a public document. The conditions, precedents to proceed with the second phase of the loan, the tranche 2 are differentiated. They require engineering advance to a certain definitional level, etc. So, that's all underway. We're talking regularly to the engineering and technical people, both in the DOE and in their third party advisor. And as Todd said, the spending that we envision here, this interim accelerated step of $20 or $30 million is back-loaded later this year. So, we're not drawing it to give you a direct answer, nor did we ever intend to at this point in the process. So, that'll be coming up in six months from now.

That's great. And you don't see any issue accessing it. The reason why I asked, just from press reports, that's just, and I appreciate that your fund is different. Your funding may be different press reports that the government is looking at not allowing people to get access to the loans. I think yours was fully approved. I don’t think that applies to you. I’m just trying to confirm that figures.

Yes. So, Greg, I may have sort of misinterpreted the thrust of your question. So, if what you’re saying is, is the government going to give us the money when we ask for it? The answer is yes, they are. Remember how we got here. We’ve been talking to the DOE for three years before they issued the first tranche. Two of those years were high-quality technical diligence on a really complicated undertaking here that was in service.

Great. And one last question for you as I finish this up. I know we’ll get this with the queue. Can you just tell us what the intercompany payables are from MRL to Calumet? And, can you also just clarify the additional equity investment that you had to make? Did that add to that amount or did it not?

Yes. So, David is pulling up the numbers. As he does that, let me set a definition. So, there is a junior term loan in place between Calumet and MRL. We put that in place back around the time of the Warburg investment, so 3 - 4 years ago. That is an intercompany payable because it is a term loan. And I think I’m going to set that aside and treat your question as what about the operational interface where we have a master services agreement, MSA, and there are some monthly payables that flow under that agreement? That amount came down sharply as part of the tranche one funding. The current balance, if we have it here, I’m looking at David.

Yes. I mean, the current balance came down materially during the quarter. I’m pulling up the actual number.

If you actually look at slide 16 on the earnings presentation deck, we’ve actually added the intercompany line to show how that totally impacts the company’s total recourse debt. And then, we show the intercompany, and then we show the amount of debt adjusted for the intercompany. So, there was $375 million of intercompany. And to Bruce’s point, that’s a number of different things. But as a whole, Montana Renewables owes Calumet $375 million. That’s down from $540 million at the end of the year.

And I see that number now. So, that looks like the 150 you put in added to that number.

That number definitely includes the term loan, yes, the junior term loan.

All right. Thanks, guys. I appreciate all the time.

Thanks, Greg.

Thanks, Debbie. And thanks, everyone, for joining our call today. Certainly appreciate your interest in Calumet. Have a great day. Thank you.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.