Calumet, Inc. /DE (CLMT)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The historical unaudited condensed consolidated financial statements included in this Quarterly Report reflect all of the assets, liabilities and results of operations of Calumet, Inc. (“Calumet,” the “Company,” “we,” “our,” or “us”). The following discussion analyzes the financial condition and results of operations of the Company for the three and six months ended June 30, 2026. Stockholders should read the following discussion and analysis of our financial condition and results of operations in conjunction with our 2025 Annual Report and our historical unaudited condensed consolidated financial statements and notes included elsewhere in this Quarterly Report.

Overview

We manufacture, formulate and market a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. We are headquartered in Indianapolis, Indiana and operate twelve facilities throughout North America.

Our operations are managed using the following reportable segments: Specialty Products and Solutions; Performance Brands; and Montana/Renewables. For additional information, see Note 10 — “Segments and Related Information” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements.” In our Specialty Products and Solutions segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products. In our Performance Brands segment, we blend, package and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our Montana/Renewables segment is comprised of two facilities located in Great Falls, Montana — renewable fuels and specialty asphalt. At our renewable fuels facility, we process a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha that are distributed into renewable markets in the western half of North America. At our specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets.

Recent Developments

Continued Debt Reduction

On July 15, 2026, the Company's wholly owned subsidiaries, Calumet Specialty Products Partners, L.P. (the "Partnership") and Calumet Finance Corp. (together with the Partnership, the "Issuers"), redeemed all of the outstanding $100.0 million 9.75% Senior Notes due 2028 that were originally issued in January 2025 (the "2028 Mirror Notes"), at a cash redemption price of 102.438% of the principal amount, plus accrued and unpaid interest up to but not including the redemption date.

In addition, on July 31, 2026, we completed early termination of our Montana terminal asset financing arrangement for approximately $15.5 million. The Company remains focused on strong operations and continued use of cash from operations to pay down debt in future periods.

Exercise of Warrants Issued in Corporate Conversion

During the three months ended June 30, 2026, all 2,000,000 outstanding warrants issued in connection with the Company's July 2024 C-Corp conversion were exercised. As a result, the Company reclassified approximately $7.8 million from warrant equity to common stock and additional paid-in capital. As of June 30, 2026, no warrants to purchase common stock of Calumet, Inc. remain outstanding.

Montana/Renewables MaxSAF® 150 Update

Our MaxSAF® 150 expansion at Montana renewables was completed successfully during the second quarter. The Montana/Renewables segment Adjusted EBITDA with Tax Attributes was $26.6 million in the second quarter of 2026. For Montana Renewables, the impact from the planned downtime in April and May associated with the MaxSAF® 150 expansion and turnaround resulted in an estimated loss of approximately 450,000 barrels of production.

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Crack Spread Swaps Sales and Purchase Contracts

As of July 31, 2026, we had the following notional contracts related to outstanding crack spread swap contracts, which are derivative instruments not designated as hedges. Periodically, the Company may enter into an offsetting position to effectively close out its exposure under an existing contract as it approaches expiration.

See Note 7 — “Derivatives” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements” for additional information related to the Company’s derivatives.

Update Regarding Renewable Volume Obligation

On March 27, 2026, EPA announced a final rule to establish required Renewable Fuel Standard Volumes and percentage standards for 2026 and 2027, which sets the highest renewable fuel volumes in the history of the program. The EPA’s updated Renewable Volume Obligations (“RVOs”) establish total demand of 26.81 billion RINs and 27.02 billion RINs for 2026 and 2027, respectively, providing a historic level of annualized support for the biofuels industry. The 2026 and 2027 volumes include some earlier renewable fuel volumes previously waived through small refinery exemptions (“SREs”) across the 2023–2025 compliance periods. These actions are expected to improve biobased diesel industry margins and industry utilization, and attract currently idled higher-cost biodiesel producers to re-enter the market in order to meet mandated demand. The RVO framework is aligned with a broader national focus on domestic energy security. The EPA has also proposed that beginning in 2028, foreign source renewable fuels and feedstocks will receive only half the RFS compliance value of American-made products, materially enhancing the competitive position of domestic producers. Against this favorable regulatory backdrop, MRL’s strategic location and proximity to domestic customers and suppliers position the company for strong performance in the second half of 2026, continued momentum into 2027, and a sustained long-term competitive advantage.

Second Quarter 2026 Update

Outlook and Trends

We believe the business is positioned to deliver outsize performance, supported by fundamentally tighter global market conditions across refined fuels and specialty products. Our diversified customer base, resilient specialty portfolio, and multi-year capital investments into enhanced operational reliability position us to capitalize on the current margin environment. Global refined product markets have tightened materially in response to conflict in the Middle East. Benchmark crack spreads are reaching record levels amid the overlapping impacts of idled or offline Middle Eastern and Russian refining capacity and historically low U.S. refined product inventory levels. Because substantially all of our crude supply is sourced from North America, our supply chain is comparatively insulated from the seaborne disruptions affecting global markets. Similar dynamics are at play within our specialty products portfolio. With a significant portion of global Group III base oils supply trapped within the Persian gulf or having been removed from the market, we are experiencing increased demand as consumers substitute into Group I and Group II base oils where possible. The durability and magnitude of these conditions remain uncertain, and depend significantly on the recovery of shipping flows through the Strait of Hormuz.

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At Montana Renewables, we continue to meet or outperform our operational cost targets prior to the start of our MaxSAF® 150 expansion and turnaround that began in early March, while demonstrating success in monetizing Section 45Z Clean Fuel Production Tax Credits (“CFPCs”). The MaxSAF® 150 expansion and turnaround was successfully completed in approximately 48 days and the facility resumed production in the second quarter of 2026. Our overall enhanced operational performance is a direct result of our focus on operational excellence since we completed commissioning in 2023.

Specialty Products and Solutions results improved significantly in the second quarter as compared to both the prior quarter and prior year, following the temporary compression experienced in the first quarter, as previously implemented price increases reached full realization and crude oil prices declined. Our fuels and asphalt business also benefited from the resolution of the temporary Shreveport production issues that impacted the first quarter, further improving commodity margins. Margins in our Performance Brands segment remained compressed, as ongoing supply constraints in global specialty Group III base oil and synthetic feedstock markets kept input costs elevated despite lower crude oil prices. Demand for our products in these businesses remained strong and we continue to leverage the benefits of our fully integrated specialty business in this market. We expect the current margin environment for both specialty products and fuel-based products to continue to be volatile, and above historical industry margins in the near-term due to the Iran conflict impacting global feedstocks.

In our Montana/Renewables segment, we believe long-term demand for renewable fuel products will continue to grow supported by Federal, State, Provincial and local governmental mandates and incentives that have been enacted or announced in North America and globally. Collectively, these policies focus on domestic fuel security, strategic alignment with the agricultural industry as a source of renewable feedstocks, sustainability initiatives, transportation fuel cleanliness including ongoing reduction in particulates, and expansion of both voluntary and mandatory corporate decarbonization targets, particularly for hard-to-abate sectors including the global aviation industry. We believe that our advantage as a first-mover in sustainable aviation fuels market positions us as a preferred supplier to our potential offtake partners’ SAF strategies. The start-up of our MaxSAF® 150 project allows us to shift our renewable product mix toward more SAF production which has historically realized higher pricing relative to renewable diesel, and we expect this change in product mix to support improved margin realizations immediately and long-term. The margins experienced late in the second quarter of 2026 after the completion of the project referenced above are significantly above the prior year and have continued early on in the third quarter of 2026.

Contingencies

For a summary of litigation and other contingencies, refer to Note 4 — “Commitments and Contingencies” under Part I, Item 1 “Financial Statements — Notes to Unaudited Condensed Consolidated Financial Statements.” Based on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued, which may result from these contingencies, will have a material adverse effect on our liquidity, financial condition or results of operations.

Financial Results

We reported net loss of $95.9 million in the second quarter 2026 versus a net loss of $147.9 million in the second quarter 2025. Net loss in the second quarter of 2026 was significantly im

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The historical consolidated financial statements included in this Annual Report reflect all of the assets, liabilities and results of operations of Calumet, Inc. and its consolidated subsidiaries (“Calumet,” the “Company,” “we,” “our,” or “us”). The following discussion analyzes the financial condition and results of operations of the Company for the years ended  December 31, 2025, 2024, and 2023, respectively. Stockholders should read the following discussion and analysis of the financial condition and results of operations of the Company in conjunction with the historical consolidated financial statements and notes included elsewhere in this Annual Report.

Overview

We manufacture, formulate and market a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. We are headquartered in Indianapolis, Indiana and operate twelve facilities throughout North America.

Our operations are managed using the following reportable segments: Specialty Products and Solutions; Performance Brands; Montana/Renewables; and Corporate. For additional information, refer to Note 18 — “Segments and Related Information” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” In our Specialty Products and Solutions segment, we manufacture and market a wide variety of solvents, waxes, customized lubricating oils, white oils, petrolatums, gels, esters, and other products. Our specialty products are sold to domestic and international customers who purchase them primarily as raw material components for consumer-facing and industrial products. In our Performance Brands segment, we blend, package and market high performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our Montana/Renewables segment is comprised of two facilities — renewable fuels and specialty asphalt. At our Montana renewable fuels facility, we process a variety of geographically advantaged renewable feedstocks into renewable diesel, sustainable aviation fuel, and renewable naphtha that are distributed into renewable markets in the western half of North America. At our Montana specialty asphalt facility, we process Canadian crude oil into conventional gasoline, diesel, jet fuel and specialty grades of asphalt, with production sized to serve local markets. Our Corporate segment primarily consists of general and administrative expenses not allocated to the Specialty Products and Solutions, Performance Brands or Montana/Renewables segments.

Recent Developments

9.75% Senior Notes due 2031

On January 12, 2026, Calumet Specialty Products Partners, L.P. (the “Partnership”) and Calumet Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Issuers”), each a subsidiary of the Company, issued $405.0 million aggregate principal amount of a new series of the Issuers’ 9.75% Senior Notes due 2031 (the “2031 Notes”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The Company subsequently redeemed all of the Issuers’ outstanding 11.00% Senior Notes due 2026 (the “2026 Notes”) and all of the Issuers’ outstanding 8.125% Senior Notes due 2027 (the “2027 Notes”) on or before January 21, 2026. Refer to Note 21 — “Subsequent Events” under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information.

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Ninth Amendment to Third Amended and Restated Credit Agreement

On January 23, 2026, the Company entered into the Ninth Amendment to the Third Amended and Restated Credit Agreement (the “Ninth Amendment”). The Ninth Amendment amended the Third Amended and Restated Credit Agreement, dated as of February 23, 2018 (the “Credit Agreement”), by and among Calumet GP, LLC, Calumet Specialty Products Partners, L.P., certain subsidiaries of the Company party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. Among other changes, the Ninth Amendment modified the Credit Agreement to (i) extend the maturity date to January 23, 2031, (ii) provide for commitments of $500.0 million, subject to borrowing base limitations, (iii) revise certain covenants, representations and warranties, events of default and other terms to permit the Company or one or more of its subsidiaries to consummate one or more new inventory financing transactions, subject in each case to the Company’s satisfaction of certain customary conditions and (iv) provide for a reduction of commitments under the Credit Agreement from $500.0 million to $425.0 million if any such inventory financing transaction is consummated. Refer to Note 21 — “Subsequent Events” under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information.

Hedging Activities

During the fourth quarter of 2025, the Company entered into crack spread swaps for 10,000 barrels per day, which is approximately 25% of the Company’s expected fuels production. Refer to Note 9 — “Derivatives” under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for additional information.

2025 Update

Outlook and Trends

During the fourth quarter of 2025, our business continued to benefit from strong and reliable operations. In the fourth quarter, we achieved an operational milestone, setting a new production record in our Specialty Products and Solutions segment. At Montana Renewables, we continue to meet or outperform our operational cost targets and demonstrate success in monetizing Section 45Z Clean Fuel Production Tax Credits (“CFPCs”). This enhanced operational performance is a direct result of the capital investments we have made over the past few years on projects designed to improve asset reliability.

In our Specialties Products and Solutions and Performance Brands segments, we continue to benefit from an attractive specialty product margin environment. Compared to the third quarter, our fuels and asphalt business benefitted from improved commodity margins. Demand for our products in these businesses remained strong in comparison to historical averages and we continue to leverage the benefits of our fully integrated specialty business in this market. We expect the current margin environment for both specialty products and fuel based products to continue into the first quarter of 2026.

In our Montana/Renewables segment, we maintain our outlook of strong demand for renewable fuel products. We believe long-term demand for renewable fuel products will continue to grow as a result of the increased Federal policy focus on domestic fuel production, expansion of both voluntary and mandatory corporate decarbonization targets, particularly the global aviation industry, strategic alignment with the agricultural industry as a source of renewable feedstocks, broad sustainability initiatives, and Federal, State, Provincial and local governmental mandates and incentives that have been passed or announced in North America and globally. In aviation, forecasted SAF availability falls short of the necessary emissions reductions that would be required to reach established decarbonization and/or net-zero goals, which will drive SAF pricing. We believe that our advantage as a first-mover in the renewable fuels market positions us as a key producer for potential offtake partners to help them reach their announced targets.

Our Montana specialty asphalt facility continued to be impacted by narrower than usual WCS-WTI spreads in the fourth quarter, but is beginning to experience marginal benefit from the widening of heavy crude oil spreads in response to recent market and geopolitical events. The facility remains strategically advantaged due to its local access to cost-advantaged Canadian conventional crude oil, while producing additional fuels and refined products for delivery into the regional market. Due to its strategic location and logistical capabilities, we believe that our Montana specialty asphalt facility is well-positioned to continue to serve long-standing customers in the regional market.

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As we have experienced in the past several years, our integrated business model and diversified product portfolio provides an advantaged response to changing market conditions. While we are not immune to the impacts of an economic downturn, we believe our specialty business is well positioned in periods of raw material volatility, which can negatively impact short-term margins, and a variety of economic conditions.

Contingencies

For a summary of litigation and other contingencies, read Note 6 — “Commitments and Contingencies” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” Based on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued, which may result from these contingencies, will have a material adverse effect on our liquidity, financial condition or results of operations.

Financial Results

We reported a net loss of $33.8 million in 2025, versus net loss of $222.0 million in 2024. We reported Adjusted EBITDA with Tax Attributes (as defined in Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures”) of $293.3 million in 2025, versus $229.3 million in 2024. We generated cash from operating activities of $108.9 million in 2025, versus using cash from operating activities of $46.4 million in 2024.

Read Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures” for a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes to Net income (loss), our most directly comparable financial performance measure calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”).

Specialty Products and Solutions segment Adjusted EBITDA was $291.8 million in 2025 compared to $222.5 million in the prior year. The year-over-year increase was driven by stronger commodity margins and improved operational reliability across our integrated asset base. Enhanced reliability and throughput enabled greater margin capture and higher sales volumes, contributing meaningfully to the improvement in results.

Montana/Renewables segment Adjusted EBITDA was negative $50.8 million in 2025 compared to $22.3 million in 2024. Montana/Renewables segment Adjusted EBITDA with Tax Attributes was $31.3 million in 2025 compared to $22.3 million in 2024. Compared to the prior year, Montana/Renewables segment Adjusted EBITDA with Tax Attributes was favorably impacted by improved operational reliability, as well as significant reductions in our operating costs. In our renewable fuels business, margins continued to be depressed by the current Renewable Volume Obligation’s disconnection with industry supply of biomass-based diesel. In our legacy specialty asphalt business, improvements in margin contributed $5.0 million in additional year-over-year Adjusted EBITDA with Tax Attributes, but were constrained by a tighter than usual WCS-WTI spread.

Performance Brands segment Adjusted EBITDA was $47.9 million in 2025 compared to $57.4 million in 2024. Compared to the prior year,  Results reflected the impact of the Royal Purple Industrial divestiture; however, excluding the divested business, underlying margin performance improved year-over-year, supported by stronger TruFuel results driven by stabilized input costs and resilient pricing This segment continues to strengthen its position in consumer channels.   The prior year also included $5.8 million of insurance proceeds that did not recur in 2025.

Corporate segment Adjusted EBITDA was negative $77.7 million in 2025 versus negative $72.9 million in 2024 primarily

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