Business Context and Reporting Period
Company: Calumet, Inc. (CLMT)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 2026
Overview: Calumet manufactures, formulates, and markets specialty branded products and renewable fuels across three segments: Specialty Products and Solutions, Performance Brands, and Montana/Renewables. The company operates twelve facilities in North America.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Sales | $1,029.7 million | $993.9 million |
| Gross Profit (Loss) | $(87.5) million | $(81.4) million |
| Operating Loss | $(171.3) million | $(48.7) million |
| Net Loss | $(317.0) million | $(162.0) million |
| Diluted EPS | $(3.64) | $(1.87) |
| Adjusted EBITDA | $27.6 million | $38.1 million |
| Adjusted EBITDA with Tax Attributes | $50.1 million | $55.0 million |
| Cash Used in Operating Activities | $(86.2) million | $(29.3) million |
| Total Debt (Carrying Value) | $2,332.0 million | $2,233.5 million |
| Total Liquidity | $462.8 million | $542.7 million |
Material Changes vs. Prior Period
- Net Loss Deterioration: Net loss increased by $155.0 million year-over-year, driven primarily by non-cash charges including a $102.7 million unrealized loss on derivatives, $37.9 million in equity-based compensation, and $147.4 million in RINs-related expenses.
- Derivative Losses: The company recorded a $115.4 million loss on derivative instruments, compared to a $7.2 million loss in Q1 2025. This includes significant unrealized losses on crack spread swaps.
- Equity-Based Compensation: General and administrative expenses surged $53.9 million due to a $58.8 million increase in stock-based compensation, resulting from the remeasurement of liability awards as the company's share price rose from $19.87 to $35.90.
- Debt Restructuring: In Q1 2026, the company issued $555.0 million in 9.75% Senior Notes due 2031 to redeem all outstanding 2026 and 2027 Notes. Debt extinguishment costs were $1.7 million, significantly lower than the $47.6 million recorded in Q1 2025.
- Operational Disruptions: The Shreveport facility suspended operations for a portion of the quarter due to organic chloride contamination in feedstock tanks, resulting in an estimated loss of 750,000 barrels of production. Operations resumed in early April 2026.
Guidance, Outlook, and Risks
- Outlook: Management expects improved performance in the second half of 2026, supported by strong fuel cracks and the completion of the MaxSAF 150 expansion at the Montana Renewables facility. The company anticipates capital expenditures of $130.0 million to $160.0 million for 2026.
- Regulatory Environment: The EPA announced final Renewable Volume Obligations (RVOs) for 2026 and 2027, setting historic high volumes. This is expected to improve renewable fuel margins and support the Montana/Renewables segment.
- Risks:
- RINs Obligation: The company recorded a $140.1 million RINs loss in Q1 2026. Continued denial of Small Refinery Exemptions (SREs) or rising RIN prices could materially impact liquidity.
- Commodity Volatility: Exposure to crude oil and natural gas price fluctuations remains significant, with derivative hedging activities impacting earnings volatility.
- Operational Risks: Feedstock contamination and maintenance turnarounds (e.g., MaxSAF 150) can temporarily reduce production volumes and margins.
Investor Verification Checklist
- Derivative Exposure: Verify the extent of unrealized losses on crack spread swaps and the company's hedging strategy effectiveness against current market spreads.
- RINs Liability: Confirm the status of pending Small Refinery Exemption (SRE) petitions with the EPA and the potential cash impact of purchasing RINs if exemptions are denied.
- Shreveport Recovery: Monitor the full operational ramp-up of the Shreveport facility post-contamination and the impact on Q2 2026 production volumes.
- Liquidity Position: Assess the $462.8 million liquidity position against the $2.3 billion debt load and upcoming capital expenditure requirements for the MaxSAF project.
- Stock-Based Compensation: Evaluate the sustainability of the $37.9 million quarterly equity compensation expense and its sensitivity to future stock price volatility.