8-K: Calumet Announces Preliminary Q4 2024 Financial Results and DOE Loan Progress

Calumet, Inc. releases preliminary Q4 2024 financial results, anticipating a net loss between $54 million and $24 million and Adjusted EBITDA between $45 million and $60 million, while also highlighting progress on the DOE loan and operational milestones.

Summary

• Calumet, Inc. announced preliminary selected financial results for the fourth quarter ended December 31, 2024.
• The company expects to report a net loss between $54 million and $24 million.
• Adjusted EBITDA is expected to be between $45 million and $60 million for the same period.
• Calumet closed a Department of Energy (DOE) loan and achieved new operational milestones.
• The Great Falls facility completed a planned turnaround in November 2024 and entered 2025 operating at a 50 million gallons per year run rate of SAF.
• The company expects capital expenditures in 2025 of $50 million to $70 million in its specialties business and $10 million to $20 million of maintenance capital at Montana Renewables before its MaxSAF project.
• MaxSAF spending is expected to be $40 million to $60 million in 2025, of which 45%, or $18 million to $27 million, is expected to be funded from MRL operating cash flow, and the remainder from the next tranche of the DOE loan.
• Net loss and Adjusted EBITDA were positively impacted by approximately $20 million of insurance proceeds from business interruption claims related to a steam drum crack in the Montana Renewables business.
• The fourth quarter saw typical seasonal impacts to the fuel and asphalt business, which are expected to continue into the first quarter of 2025.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company anticipates a net loss, the progress on the DOE loan, operational milestones, and focus on deleveraging provide a balanced outlook.

Positives

• The closing of the DOE loan provides significant financial flexibility.
• Montana Renewables achieved a 50 million gallon annualized SAF run rate and met its year-end operational cost target of $0.70/gallon.
• The specialties business saw continued exceptional production in Q4 2024.
• Insurance proceeds of approximately $20 million positively impacted net loss and Adjusted EBITDA due to a business interruption claim at Montana Renewables.
• The company expects to pay down all of its 2026 notes and reduce financing costs using the DOE loan, cash flow from earnings, and anticipated near-term capital raises.

Negatives

• Calumet anticipates a net loss between $54 million and $24 million for Q4 2024.
• The fuel and asphalt business experienced typical seasonal impacts in Q4 2024, which are expected to continue into Q1 2025.

Risks

• The preliminary financial data is unaudited and could vary materially from actual results.
• Funding of the DOE Loan Guarantee is subject to factors outside of the company's control, including administration changes in the federal government and potential legislative enactments and administrative actions.
• Each tranche of the DOE Loan Guarantee is subject to the achievement of certain milestone conditions, with no assurance of funding.
• The company's actual financial results could vary materially from the preliminary financial data.

Future Outlook

Calumet expects to pay down all of its 2026 notes, continue to de-lever the balance sheet, and reduce its financing costs. The company is targeting to increase sustainable aviation fuel (SAF) capacity to approximately 150 million gallons per year within two years and approximately 300 million gallons within three to four years.

Management Comments

• Todd Borgmann, CEO, stated that Calumet continues to make meaningful strategic progress across the board.
• Todd Borgmann, CEO, mentioned that the company enters 2025 with a clear focus on deleveraging.

Industry Context

The announcement highlights Calumet's focus on renewable fuels, particularly sustainable aviation fuel (SAF), which aligns with the growing industry trend towards sustainable energy solutions and reducing carbon emissions. The DOE loan underscores government support for renewable energy projects. Calumet's specialties business also contributes to a diversified portfolio, mitigating risks associated with the volatile fuel and asphalt market.

Comparison to Industry Standards

• Calumet's focus on SAF production aligns with companies like Neste and World Energy, which are leading producers of renewable aviation fuels.
• The targeted SAF production capacity of 150 million gallons per year within two years and 300 million gallons within three to four years is ambitious but achievable, comparable to other large-scale renewable fuel projects.
• The operational cost target of $0.70/gallon for Montana Renewables is competitive within the renewable fuels industry.
• The reliance on DOE loan guarantees is a common strategy for financing large-scale renewable energy projects, similar to projects undertaken by other companies in the sector.

Stakeholder Impact

• Shareholders will be impacted by the net loss, but may be encouraged by the progress on strategic initiatives and the potential for future growth in the renewable fuels sector.
• Employees at Montana Renewables and the specialties business may benefit from the operational milestones and continued production.
• Customers may benefit from the increased availability of sustainable aviation fuel.
• Creditors may be reassured by the company's plan to de-lever the balance sheet and pay down its 2026 notes.

Next Steps

• The company plans to pay down all of its 2026 notes.
• Calumet intends to continue de-leveraging its balance sheet.
• The company aims to reduce its financing costs.
• Calumet is targeting to increase sustainable aviation fuel (SAF) capacity to approximately 150 million gallons per year within two years and approximately 300 million gallons within three to four years.
• The company will continue to execute the MaxSAF project.

Key Dates