Calumet (NASDAQ:CLMT) executives used the company’s fourth-quarter and full-year fiscal 2025 earnings call to highlight what CEO Todd Borgmann described as a “defining high impact year,” pointing to improved profitability, lower leverage, and the closing of a U.S. Department of Energy (DOE) loan at Montana Renewables as key strategic achievements.
Management said 2025 milestones included higher EBITDA and meaningful deleveraging
Borgmann said the company entered 2025 with four objectives: demonstrate durable free cash flow from the specialties business, prove Montana Renewables’ standalone resilience and structural advantage, secure the DOE loan at Montana Renewables, and materially delever the balance sheet. He said Calumet achieved each of these.
A major contributor to the company’s financial flexibility, management said, was Montana Renewables’ successful closing of its DOE loan, which Borgmann said removed roughly $80 million of annual cash debt service.
Cost reductions, reliability gains, and higher production were highlighted across the system
Borgmann attributed improved financial durability to “structural improvements” across the system, including cost reductions and increased reliability. He cited:
- Fixed costs down more than $40 million
- Water treatment costs at Montana Renewables down more than $20 million
- Crude transportation costs in the specialties business down more than $20 million
- Capital spending reduced by roughly $20 million due to fewer repairs and improved reliability
- Production up about 1.3 million barrels year over year
Looking ahead, Borgmann said the company expects additional opportunity in costing and reliability in 2026, even with what he described as a heavy turnaround year.
Specialty Products and Solutions posted record production and sustained strong margins
Executives repeatedly emphasized continued strength in the Specialty Products and Solutions (SPS) segment. Borgmann said Calumet produced record levels of product in SPS during 2025 and sustained material margins above historic norms despite softer macro conditions in the broader specialty chemicals industry.
Chief Financial Officer David Lunin said SPS adjusted EBITDA totaled $88.5 million in the fourth quarter and $291.8 million for the full year. He said the company continued to place products at over $60 per barrel margin and delivered five consecutive quarters with specialty volumes above 20,000 barrels per day, with the fourth quarter representing a second consecutive quarter of record production.
Lunin also pointed to lower unit costs, saying fixed cost per barrel declined by more than $1 per barrel versus the prior-year period. He said improved steady production allowed the company to capture stronger fuel cracks as fuel margins increased significantly year over year, which management framed as upside from its integrated model.
Lunin noted a new crude oil supply chain added earlier in the year, including access to segregated or blended crudes in Cushing and the DJ Basin and a reduced pipeline “tab.” He said that improvement drove about a $19 million decrease in transportation costs in 2025.
In the Q&A, President of Specialties Scott Obermeier credited sustained specialty strength to years of commercial excellence initiatives, integration and optionality across the manufacturing network, and improving production reliability. He said the team expects strong performance to continue, while noting a short-term headwind early in 2026 from crude oil runoff.
Montana Renewables focused on SAF expansion, contract coverage, and policy tailwinds
Management discussed Montana Renewables’ progress on operating costs, tax credit monetization, and a sustainable aviation fuel (SAF) expansion plan known as MaxSAF 150.
Borgmann said 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. He added that the company monetized more than $90 million of Production Tax Credits (PTCs), and management said it was encouraged by progress on Section 45Z regulations in early 2026.
Lunin reported Montana Renewables adjusted EBIT with tax attributes was negative $5.4 million in the fourth quarter and positive $31.3 million for the full year. He said the quarter was burdened by disproportionate transaction costs related to the $65 million of PTCs sold during the quarter, and that Calumet expects to monetize PTCs more ratably now that the market is normalized. Lunin also noted full-year results did not reflect an additional $8.4 million of 2025-generated PTCs that occurred after final regulations were posted after quarter end.
On MaxSAF 150, Borgmann reiterated the project is expected to add 120–150 million gallons of annual SAF capacity at a fraction of the originally contemplated cost. He said roughly 100 million gallons of new SAF contracts at a $1–$2 per gallon premium over renewable diesel had been in final review with the DOE last quarter, and said those contracts are now complete, with additional contracts in process. Management described the contract set as multi-year and spanning increased take-or-pay volumes from existing customers, new physical SPK offtakers, blended SAF offtakes, and book-and-claim arrangements for Scope One and Scope Three credits.
Borgmann said Montana Renewables would begin its turnaround and MaxSAF 150 project the following week and remain down through late April, after which the company expects to rebuild inventories and ramp SAF production. In Q&A, he said the company does not expect to reach the full 120–150 million gallon run rate immediately in May, but indicated it expects to be at that level in the second half of the year.
On policy, Borgmann said the renewable volume obligation (RVO) was expected imminently and that management anticipates a stronger RVO could improve industry utilization and margins. In Q&A, Bruce Fleming, EVP of Montana Renewables and Corporate Development, said the industry has been running at variable margin, with higher-cost facilities closing. He said “ghost capacity” could return, but management expects restarts to wait for RVO clarity and to occur thoughtfully rather than immediately.
Fleming also said the company captures more than 100% of the renewable diesel index margin due to its ability to “shift gears quickly,” while noting the fourth quarter reached what he called the lowest renewable diesel index margin ever recorded. Executives said they viewed improved RVO expectations as supportive for margins, and also emphasized the incremental margin opportunity from SAF volumes under multi-year contracts.
2026 plans include elevated maintenance spending and continued focus on free cash flow
Lunin said Calumet expects total 2026 capital expenditures of $115 million to $145 million, including $70 million to $90 million in the restricted group. He said this is $30 million to $40 million higher than normal due to a heavy turnaround year, with scheduled maintenance at Shreveport, Cotton Valley, Princeton, Karns City, and Great Falls. Despite the higher maintenance load, he said the company expects total production to increase year over year due to reliability improvements implemented over the past few years.
Borgmann said Calumet plans to maintain disciplined capital allocation priorities, targeting durable free cash flow to support additional deleveraging, while continuing to grow specialties and execute the MaxSAF 150 strategy at Montana Renewables.
About Calumet (NASDAQ:CLMT)
Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) is an independent provider of high-value, essential product solutions derived from both petroleum and renewable feedstocks. The company operates an integrated network of manufacturing plants, blending terminals and storage facilities across North America, delivering customized products and technical services to industrial, automotive, consumer and agricultural end markets. By leveraging its scale and technical expertise, Calumet tailors supply chain and formulation solutions to meet stringent regulatory and performance requirements.
Calumet’s product portfolio includes specialty lubricants and base oils for high-performance applications; process oils and waxes for food-grade, cosmetic and packaging uses; industrial solvents and cleaning solutions; and fuel additives designed to optimize engine performance and emissions.
