Calumet's Cheaper, Faster Path to 200M Gallons of SAF — and a Much Stronger Balance Sheet

Q2 adjusted EBITDA of $175M, below-4x leverage, and a novel reactor reconfiguration rewrite the MRL growth story.

CLMT · Earnings Call · 2026-08-07

The Quarter

Calumet delivered a blowout Q2, with “$175 million of adjusted EBITDA with tax attributes” — Louis Borgmann, CEO · 2026-08-07 — despite three planned turnarounds. The driver was the specialty business, where results more than doubled year-over-year, and Montana Renewables (MRL) is back online. Delegating early, Todd Borgmann framed the quarter as the payoff of years of portfolio work: the company is now generating enough cash to self-fund growth while aggressively deleveraging. Renewable Diesel margins are firming, and SAF production is ramping.

Base Oil Tailwind

The base oil market has tightened dramatically due to the Iran war and Russian refinery outages. Scott Obermeier noted, “we view the market as being tight, and we expect that to continue certainly in the coming months here through 2026.” — Scott Obermeier, President, Specialties · 2026-08-07 Calumet's integrated model — sourcing domestic crude and producing Group I/II base oils — lets it capture the full value chain while competitors struggle with intermediate availability. This is a key differentiator. Base oil is a top keyword for the company this quarter, a global theme echoed across the tape.

The Reconfiguration

The biggest strategic pivot is the new MRL expansion plan. Instead of a massive mega-project, Calumet will reconfigure existing assets at its Great Falls refinery, using a second reactor in a patent-pending "polishing service" to boost SAF yields with minimal byproducts. As Todd described,

we've identified a novel expansion. It's much cheaper, faster, lower risk and carries a much higher IRR.
Louis Borgmann, CEO · 2026-08-07

This reconfiguration is a company-unique theme, with "second reactor" and "polishing service" appearing fresh in the transcript. It allows a 60-150M gallon SAF ramp faster than previously planned, and a path to 200M gallons by 2028. The company will take a two-week outage this winter to tie in the reactor, capturing an extra $50M of conventional fuel EBITDA in the meantime.

Deleveraging and MRL

The balance sheet is improving rapidly. David Lunin said, “This quarter, we saw restricted group leverage fall below 4x, and that's before we retired 115 more debt.” — David Lunin, EVP and Chief Financial Officer · 2026-08-07 The company called $100M of notes and terminated a sale-leaseback for $115M, all funded by operating cash flow. Executive cash is being directed first toward the expansion, but the deleveraging path is now clear. Critically, Todd confirmed the motivation for an MRL monetization has changed: “We no longer have to do it as a prerequisite to grow our specialties business.” — Louis Borgmann, CEO · 2026-08-07 That reframes the company as a self-funding growth platform rather than a balance-sheet repair story. Despite still-negative effective net cash of -$2.2B, the rapid paydown and the ability to fund growth internally mark a turning point. The working capital build of $70M is deliberate — crude inventory and receivables from higher prices — and should unwind naturally. With a turnaround-free Q3 and MRL running at full rates, management expects another strong quarter. The new expansion, pending DOE approval, should be fully detailed before the next call. Calumet is no longer just a deleveraging story; it is a high-return growth story with a much stronger underpinning.