prices across all of our STS businesses. In other words, a good problem to have and not a sign of collection or credit issues. We've captured attractive margins across base soils, solvents, and RICO, and fuels. We also saw roughly $20 million of build at MRL as the business ramped up and built inventory and accounts receivable following the completion of our expansion project. With Montana Renewables now back operating consistently at higher rates, that bill should come down. All of these actions are concrete steps towards deleveraging. In July, we called $100 million of our 2028 mirror notes and also retired our sale lease back at the truck rack at CMR. Given our strong business performance and outlook for the rest of the year, we expect to continue at this accelerated pace. Taken together, we see this quarter as a continuation of the operational momentum we've built with a few timing-related working capital items that we expect to normalize and a continued unwavering focus on completing our debt reduction.

With that, let me walk through the performance by segment.

Turning to specialty products and solutions, adjusted EBITDA of $161.7 million, more than double that of the prior year. The strong results came from both sides of the integrated model. The more than 20 specialty price increases our commercial team pushed through during the first quarter's spike reached full realization with Shreveport running clean all quarter. Further, we started the quarter with turnarounds at Princeton and Cotton Valley, both of which were completed on time and on budget. We have no turnaround scheduled for the third quarter, and Shreveport will do its turnaround in the fourth quarter. This quarter also marked our seventh consecutive quarter of specialty sales volume above 20,000 barrels per day, and more importantly, a record specialty production quarter. Year-to-date in 2026, our specialties volume has increased over 5% from the high milestone achieved last year in 2025. As we've highlighted in the past, our integrated business allows us to produce fuels and take advantage of the attractive high-margin fuel environment. The price increases that we've already implemented, plus the elevated fuel margin environment, continue to position us well for what we believe will be a strong second half of 2026. Turning to performance brands, adjusted EBITDA was $6.3 million, down about $6.2 million versus the prior year. This is timing, not demand. Volumes were up 18% in the quarter. Input costs spiked before our pricing actions caught up, and as we discussed last quarter, our retail-oriented customer base carries a typical 60- to 90-day lag before price increases flow through to margin. It's also worth remembering that all of our businesses are on a LIFO accounting, so the rapid cost inflation flowed straight into the quarter's cost of goods rather than being smooth the way a typical FIFO finished product business would report it. That was a $7 million headwind for PV during the quarter. As pricing action catches up and the inventory effect reverses, we expect the segment to recover. And frankly, this quarter is evidence that the same input cost move squeezing performance brands is what's benefiting the rest of Calumet. With STS production 35 times greater than performance brands, it's a condition we'll gladly accept. Looking ahead to the third quarter, we continue to remain vigilant on the pricing front with select actions going forward. In our Montana slash renewables segment, Todd covered Montana Renewables' performance with $17 million of adjusted EBITDA with tax attributes, despite the site being down all of April and half of May. With roughly $40 million of lost opportunity between the MACSAP expansion and turnaround, as well as the powder outage, index margins are strong, approximately $2.60 per gallon, and rising today. So we are excited, as we've ever been, to have MRL meaningfully contributing, and we expect the third quarter to be meaningfully higher as we show a full quarter of production and earnings. strategically we were pleased to complete the first step of our max f-150 expansion on time and stepping into the market that is extremely positive for both renewable diesel and sass our industry-leading low-cost structure and geographic advantage continues to underpin montana renewables competitive advantage in the industry on the refining side cmr generated 12.2 million have adjusted EBITDA, up about $10.9 million sequentially, as the margin environment is well known. Asphalt margins lagged early in the quarter as rapid cruise escalation squeezed asphalt margins. Pricing has caught up, and the third quarter is peak asphalt season. So as Todd noted, CMR is set up for an outsized run between now and the November downtime. In closing, let me reiterate, we entered the second half of 2026 with real momentum. The specialties environment is carrying forward. The third quarter is turnaround free and Montana Renewables is ramping into strong index margins with the staff share of our slate growing. Our priorities are simple. Run safely, reliably, and full to capture this market. Finish the DOE modification and lay out the complete expansion, funding, and site reconfigured details, which we expect to do well before our next earnings call, and continue deleveraging ahead of schedule while begin deploying capital into high return growth with discipline. Thank you for your time today. And with that, I'll turn the call back to the operator for questions.

We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press start and then two. Our first question comes from Connor Fitzpatrick with Bank of America. Please go ahead.

Hi, everybody. Thanks for taking my question. Across the energy sector, there have been pretty divergent outcomes as a result of the Iran war. Refined product crack spreads are around record levels and the strip declines only gradually into the future as capacity would struggle to rebuild inventories. Petrochemicals margins have normalized more rapidly, mostly as a result of crude and feedstock prices and availability normalizing as well. Base oil cracks are extremely high and have remained high, but I wanted to get your perspective on how durable high base oil cracks will be. Damage tends to interrupt operations only for a couple of months at a time at the fuel refinery level, but undercapacity slows inventory rebuild. Is there kind of a similar story playing out for specialties and base oils, and how much of global margin gains in base oils are just the pass-through of feed costs like VGO?

Yeah, this is Scott. Let me start with, you know, I think right now across the whole portfolio, and I'll get into base oils here in a second, but I think across our whole portfolio, I'd say, you know, we're certainly firing on all cylinders, as touched on in the script. Production's been great. Execution's been great, et cetera. And we think about the fuel craft market being a stork. Specialties, again, across our whole portfolio, we're doing really well. So feel good about that. We think, you know, in this current environment, it's not just a short-term situation. There's been a lot of structural impacts, if you will, that will take months, months and months to sort of stabilize. So we don't view the overall market as just a short-term situation. So our outlook in the coming months is that I think results will be similar to how they were here in Q2. Just to touch a little bit further on base oils, and maybe it will be helpful if I zoom out, It was touched by Todd in the script. But, you know, so CaliMet produces Group 1 and Group 2 base oils. A lot of the early headlines with the Iran war was on Group 3, Middle East capacity and refineries being taken offline, et cetera. That has had some impact on Group 1 and Group 2 as customers and companies look to formulate up Group 1 and Group 2. So the demand's been really strong to try to replace some of the gap in Group 3. In addition, you have some of the larger global, I'll call it more commodity refineries that make base oils as well that have been diverting to distillate due to the historic crap spread. And the third piece on base oils that we see going on, in fact, there was more reports this week of Russian refineries that were impacted by drone strikes from Ukraine. So there's a significant amount of capacity that just in the past couple of months has been taken offline. So long story short, you know, I think overall and also specifically for base oils, you know, we view the market as being tight, and we expect that to continue certainly into the coming months here through 2026. Thanks.

And I guess a follow-up is capital structure has improved by over $100 million, and MRL run rate operations should accelerate that further going forward, at least in the near term, along with specialties margins in surplus. So in the event that you're deleveraging targets are achieved organically soon, does that change your approach to MRL regarding monetization or other options? Hey, Tonics, Todd.

It's a good question. I think the answer is no, not long-term. You know, we still expect that separating monetizing Montana renewables is the right long-term path for this business. I'd say what has changed, and you pointed this out in your question, is we no longer have to do it as a prerequisite to grow our specialties business, which I think is critical. Our business cash flow allows us to pay down debt much more quickly than we ever planned. So we're looking at MRL monetization purely through the lens of shareholder value optimization, which is exactly where you want to be when approaching a potential transaction of that size with the value creation potential that it has.

Great. Thanks for taking my question. That's great color.

Thank you. And the next question comes from Amit Dale with HC Wainwright. Please go ahead.

Thank you. Good morning, guys. Amazing results. Congratulations on the execution. For 3Q26, you know, what is your confidence level to see sort of the full benefits of MRL come through? I know it's been start and stop, you know, over the last two years, roughly. But, you know, for Q26 and maybe for, you know, the second half of this year, can we expect, you know, the full contribution from MRL to come through?

Hey, it's sad again. I'll start off and see if Bruce wants to jump in. I think the answer is absolutely yes. You know, in July, we saw earnings continue to ramp positively. Obviously, we were down April, first half of May for the max app turnaround, which you don't shed the fixed costs in that environment. So earlier we talked about probably a normalized run rate Q2 you would have thought about in a $60 million range, $17 million we did, plus a little over 40 on kind of foregone margin while we were down. So I think you extend that to what we're seeing in the Q3. We certainly expect to continue picking up on that pace in a meaningful way. So, already demonstrating really strong margins return. It's great to see that. We've been talking about it for a while. We saw the RVO change, the market's reacting as we expected. We're seeing the increased staff and the impact of that. And going forward, we expect to continue that improvement.

Thank you, Dar. And then just, you know, sort of a follow-up to that. The Gulf Coast reactor, just to clarify, could that allow you to go beyond the 200 million gallons?

Yeah, it could. It's, you know, no reason it couldn't do what, you know, it was originally scheduled to do when we talked about this project, right? So I don't want to miscommunicate that the numbers that we talked about today are the end of the road or anything like that. What we're saying is, you know, the next step in the growth process here, and really looking forward to sharing more details on this, particularly cost, et cetera, because it's just so much more capital efficient than we were planning on doing. But we're going to have the ability to increase to 17,000 barrels a day of total throughput and up to 200 million gallons of staff much more quickly, much more economically than previously planned. And then from there, sure, we have the ability to add the third reactor if we want, and we'll make that decision as time gets closer.

Understood. I'll stick back in queue. I'll take my other questions offline. Thank you so much.

Thank you. The next question comes from Josiah Knight with Goldman Sachs. Please go ahead.

Good morning, team, and thank you for taking my question. Maybe it's on the outlook for SAF more broadly. I know you just press release $30 million to the Minneapolis airport. Can you talk about the demand you're seeing from customers, you know, whether domestically or abroad, a little deeper?

Hey, Josiah, this is Bruce. Yeah, happy to do that. You know, the North American voluntary market and the European mandatory market are introducing some possible, you know, trade flows. And we've seen cargos move on the water. So there's going to be industry dynamics associated with that, but at the moment, and our best understanding from all of our customer conversations is those markets are going to remain separate and behave separately, and so we've not found the bottom of the voluntary demand. And we expect to continue to ramp sales. We've pre-positioned our production capability by the project we just installed and by the pivot of some fossil refinery assets that Todd just covered. So, you know, we're maintaining an attitude of thinking flexibly and being really good at managing the risks in a climate of external volatility.

Got it. That's helpful. And then follow-up, just on mid-cycle, I know right now it's a lot going on. Has your view of mid-cycle renewable diesel margins changed at all, or has that been the same?

It has not. I mean, I would draw everybody's attention to – we call it the supply stack. It's on slide five of the handout. You know, if you want to bring capacity back into the market, which is a bipartisan effort, You know, everybody on both sides of the aisle is in favor of domestic production, and in this case, it's the production of renewables. You're going to need cash margins that cover, you know, fully loaded costs, and that's where the market is or above. I mean, the market may be a little above at the moment, and that's consistent with the 20 years of history, which we also show in here. So, yeah, we think, you know, last year was an aberration, an error in the SAT-1 rule, and we think going forward we're going to have typical behavior. On that basis, you know, this remains a strong business for a domestic producer.

All right. That's helpful. I'll turn it back. And the next question comes from Jason Gableman with TD Cowan.

Please go ahead.

Yeah. Thanks for taking my questions. I want to ask about the reactor that you're taking from the Montana plant putting into MRL. Can you share anything around the cost of that project and then the yield that you'll lose at the conventional Montana plant?

Hey, Jason. Let's defer the talk on the extra details for just a little bit here. You know, and like I said earlier, we expect to be out with more on that soon. But I will say it's safe to say, you know, a good chunk of the EBITDA CMRs made historically will be traded for a much larger number at MRL and the massive cost savings of the project. So, you know, I'll also say that it's not like CMRs underwater or anything like that. It's somewhere in between. So, no, I'd keep it to that for now. It's important to our community. It's important to our employees. And quite frankly, it's important to Montana Renewables to continue to provide the shared benefits that MRL receives from sharing the underlying fixed costs and workforce. So, CMR is going to be a continued piece of the portfolio, but, you know, we are reconfiguring, you know, a decent chunk of it for obvious, you know, a high multiple of, you know, return at MRL.

So, I would add to that because you asked about the mix, I think. On the fossil side, we're going to keep the asphalt rack open. We're going to keep the gasoline rack open. We're going to keep the crude run going. We're going to keep the employment. We are going to have some rearrangement in the black oils, the caffeine area. And, you know, we'll be able to get into that post some DOE activity and imminent conversation around the details.

Okay. My follow-up is kind of related to that. I mean, it's a bit surprising that you're not running at max SAF until this other reactor comes online. I think when you laid out the project, you only expected about 1,000 barrels a day of renewable NAFSA. So has the yield that you've seen on the current max SAF configuration differed from what your expectations were? And that's why, you know, you're deciding to run at higher renewable diesel until you have this other reactor. Does it have to do with when SAF contracts kick in? Just any more color would be helpful.

Yeah, you bet. I would want to say that the yields on renewable NAFTA are higher than, you know, originally expected at all. I'd say as you crank up, without the polishing service, as you crank up severity on the cracking, you know, more and more, RDE goes to NAFTA. And if we rewind the clock a few months, you know, when RD is less valuable, losing some of that in the cracking process isn't too painful, right? And when CMR margins were lower, converting that second reactor sooner wasn't much of a lost opportunity either. And I think the reality now, and fortunate for all of us, is the economics are different. So we're not incentivized to lose RD until we add the polishing reactor. And at that point in time, our yields are going to go from, I'd say, normal industry at the margin to best in class. And we're happy to push that back a few months to capture this big $50 million prize sitting in front of us at CMR. So you kind of combine all of it to figure out, you know, the step that we're taking here. But I'd say altogether, it's a really nice step. As far as the SAF contracts, there's nothing to do with kind of a ramp up or something like that that you mentioned in your – we built these things with some flexibility in the first place. We have the ability to ramp up. We have the ability to ramp down. So we'll kind of service the contracts in a way now that says, hey, we'll have 60 million gallon run rate being pushed out the door until we make that switch, get the better yields, crank up the staff, and then we'll exercise the flexibility that we have in them to continue to grow and obviously add more as well.

Got it. That's a good call. If I could just squeeze in one more, the net pay down subsequent to quarter end, was that funded by cash on hand? Did you have to draw on the – or did you have to draw on the ABL?

Hey, Jason. It's David. It's predominantly cash generated just from the earnings of the quarter.

All right. Great. I'll leave it there. Thanks.

And the next question comes from Greg Brody with Bank of America. Please go ahead.

Hey, good morning, guys. Just to stay on the question that Jason asked, can you tell us how we should think about the product yields from the max F-150 right now? how it's running beyond the SAF production?

Yeah, I think the, you know, as far as the SAF, we'll lay out all of the yields and the volumes in more detail kind of as we step through the project here and not see us in the future. But what we're saying now is we're running at about a 60 million gallon run right now. Expect that to be the optimum. Obviously, if, you know, margin dynamics change one way or the other, then we'll be flexible as always. But expect that that's the optimum now through the time when we do the reconfiguration. From there, we'll quickly ramp up. By the end of the year, I think there will be 80, 100 million gallon SAF run rate. By the spring, we'll be at 120 million to 150 million gallon range. And then we'll step through some additional steps that we'll talk about later, ultimately getting to 200 million gallons of SAF by 2028. I'd also say at the end of 2028, it's not just more SAF, it's more throughput, right, increasing from, you know, 12,000 barrels a day before. Right now we're just around 13,000 barrels a day, and we're going to increase that further to 17,000 barrels a day of total throughput. So a number of positives here as we step up in a much more capital-efficient way than we originally had discussed.

My question was on today's, the 60-plus stuff, that I'm looking at. What's the yields on the other products? Is it mostly RD, or is there greater NAFA?

Yeah, no, it's mostly RD. Nothing's changed there from normal.

Bruce, you were about to say something. I cut you off.

Yeah, so let's do this chronologically. So today we've shifted some RD to SAF. We're going to continue to run that journey as we have been for a couple of years. Remember, we started at 30 million gallons with Shell back at the outset, and we've been walking that up. What Todd's giving you, and he just said it verbally, and I just want to draw your attention to the bottom of slide three. I think there's a note. We're providing additional color about the 150 and breaking that into additional tactical steps that we're taking this year through this winter in order to maximize the site's cash contribution to the corporation. So we've, you know, we've got this additional tactical color that flows from accelerating the whole program that was originally designed with the DOE. So we're, you know, we're getting more, we're getting faster, and now we're showing some additional step granularity. And, you know, we wanted that out ahead of what's expected to be a detailed discussion with a lot more color in the relatively near future.

Maybe just shifting gears, the $50 million of capital that you're talking about for specialties, Scott, congratulations, you finally got to put that to work. It's been a couple of years since you've been talking about it. I'm flashing back to being in that room in Montana where we were surprised to have you talk for most of the time we were there. So it's just, when should we expect that to start to trickle through? Is that this year or is that over time? Is it over this year or next? Does something understand how much CapEx is going up at the restricted group?

I'd say the majority of that comes through next year, right? So where we're at right now is we have a pipeline of projects that we're reviewing. You know, these are smaller projects in nature. So think of it as a portfolio optimization type things, de-bottleneckings, small expansions that have been stacking up. So, you know, there's five or six, you know, items, actually a little bit more, but five or six of size that make up that portfolio. Those are at the end of the FEL process. We're expecting to clear that, approve those in the not-too-distant future, at least most of those, right? So from there, we'd expect that, you know, the majority of that $50 million becomes part of the 2027 and 2028 capital budget that we'll announce. So we're not expecting additional CapEx out the door this year for growth. Obviously, not all of that gets spent on day one of 2026. It'll be a staged project. Some of them are things that tie in, for example, to turnarounds that are scheduled at the end of 27, et cetera. So I'd say from a cash flow, you're looking at just cash flow out the door. I don't want to give too many specifics, but maybe two-thirds plus 27, the remainder in 28.

We won't see that show up in results until 28, most likely.

That's right. It may be a little bit trickling in in the second part of 27, but as a whole, I think 28.

Okay. And then just turning to MRL, so obviously you're set up to generate a lot of cash. Should we expect a fair amount of that to go back to pay back the internal company payables to start to work that down?

We'll talk a little bit more about kind of the cash and the loan and all of that soon, so I don't want to get ahead of that. I'd expect the cash, you know, first and foremost to be going towards kind of the next steps of the project, which, like we said, are pretty capital efficient. So we'll go there first, and then the rest will accumulate. But, you know, let's go into more details when we can talk with the full deal in front of us.

Got it. And just one last one for you. Obviously, with the higher stock price and cash flow, M&A is a greater possibility than it was in the past. What's your assessment opportunity set out there, and is that something we can expect more of?

Yeah, it's certainly something that we're paying attention to. You know, we're not going to take our eye off of finishing the deleveraging, so we've said that. But we've also got some nice organic growth capex that's pretty low risk and we carry a lot of confidence in. But absolutely, we'll be watching actively the market and what's going on. And as always, if there's opportunities to create shareholder value, we're going to be all over them. You know, we'll be looking for things that, you know, carry synergy with our broader specialties network. And you could say the same thing about Montana Renewable. So I think we're in a place to, you know, really start to look at what growth looks like in this company and, you know, excited to be stepping into that, but don't want to get ahead of our skis and send the wrong message, right? We're also going to be disciplined and complete the deleveraging, and we're doing those things in parallel.

All right. Thank you for the time, guys.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to John Compa for any closing remarks.

Okay. Thank you, David. On behalf of Todd and the entire management team, I'd just like to thank everyone again for their interest in coming and have a great rest of the day. Thank you.

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