Calumet, Inc. (CLMT) Q1 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Calumet Inc. First Quarter 2026 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Kompa, Investor Relations. Please go ahead.

Thanks, Andrea. Good morning, everyone, and thank you for joining our first quarter 2026 earnings call. With me on today's call are Todd Borgmann, CEO; David Lunin, EVP and Chief Financial Officer; Bruce Fleming, EVP, Montana Renewables and Corporate Development; and Scott Obermeier, President, Specialties. You may now download the slides that accompany the remarks made on today's conference call, which can be accessed in the IR section of our website at calumet.com. Also, a webcast replay of this call will be available on our site within a few hours. Turning to the presentation. On Slide 2, you can find our cautionary statements. I'd like to remind everyone that during this call, we may provide various forward-looking statements. Please refer to our press release that was issued this morning as well as our latest filings with the SEC for a list of factors that may affect our actual results and cause them to differ from our expectations. As we turn to Slide 3, I'll now pass the call to Todd.

Thanks, John. Good morning, and welcome to Calumet's First Quarter 2026 Earnings Call. The beginning of this year has certainly been an eventful and strategically pivotal period for Calumet. Late in the quarter, we saw the renewable fuels market take a major step forward following EPA's long-awaited Set 2 RVO announcement, and we entered one of the strongest margin environments we've seen across both traditional and renewable energy markets. Further, we brought down Montana Renewables for a turnaround in MaxSAF 150 expansion in early March and successfully commenced operations in early May. While these developments did not fully benefit first quarter financial results due to previously disclosed downtime at Shreveport and the planned expansion work in Montana, Calumet is exceptionally well positioned to capture these tailwinds, further accelerate deleveraging and continue our long-term growth and value creation strategy, which we'll discuss further in this call before David takes us through the quarter. Let's turn to Slide 4 and begin with the outlook for our Specialties business. First, as we've seen historically, Calumet's integrated business is robust and performs throughout the business cycle, and is particularly well positioned for the current market with commodity spreads growing sharply due to global disruptions. We make fuels the co-product of our specialty production process. Typically, when cracks are lower, strong and stable specialty margins carry the day. When crack spreads are high as they are now, we're fully exposed to that upside. Long term, the Specialties business will take advantage of positive commodity environments to strategically deploy excess cash flow into specialties growth. Right now, it creates an accelerated deleveraging opportunity and also opens the door to target low-risk, high-return growth opportunities. The recent volatility has also reminded us of the capability of our Specialties commercial excellence engine. In March, crude oil prices increased over 50% in the 2-week period and have moved further from there. Our commercial team rapidly executed on over 20 price increases across our product lines to counter the cost escalation, and our customers understand the uniqueness of this current environment. While we have some sales contracts tied to previous month pricing and further downstream and Performance Brands, we see a bit more lag. The fact that our SPS specialties business was able to demonstrate $54 a barrel margins this past quarter despite the rapid cost inflation is a testament to the nimbleness of this team, and the outlook improves on that with the increases now in. The other pillar of commercial excellence is providing an exceptional customer experience. And despite the craziness in this market, Calumet's team went to great lengths to ensure our customers were as well serviced as evenly possible in this remarkable time. That didn't come without a bit of short-term financial costs, but our specialties enterprise is built on delivering a world-class customer experience. Further, let's hit on what's going on in the broader specialties market. We all know that roughly 20% of the world's daily crude oil comes through the Strait of Hormuz by now. But what's less publicized is that about 10% of the global base oil supply does as well. Probably more importantly, a disproportionate amount of the world's LOOP crudes, as we call them, come from the Middle East. These are grades that have particularly good specialty qualities and yields and are purchased around the world, particularly in Asia. At Calumet, our crude supply is largely domestic and readily available. Further, we always value the fact that we're a fully integrated, fully dedicated producer of specialty products, which provides stable and quality control despite the market condition. And in strong commodity markets like this one, it also carries an even higher-than-normal economic benefit. Nonintegrated suppliers purchase intermediates like VGO or fuels like diesel and jet as specialty feedstocks to produce lubes and solvents. We're able to make these end products from crude oil, which means we capture the intermediate value of the distillate intermediates embedded in the product price. Further, we just completed 2 successful planned turnarounds at our Cotton Valley and Princeton facilities in April, and we're running at max volumes across the board to capture the current opportunity. Let's turn to Slide 5. Making nearly as many headlines as the fossil energy market this past quarter was the EPA Set 2 RVO released in March, which has reset the outlook for the biofuels industry and the Montana Renewables. While this has felt like a new market environment given the past 2 years under the Set 1 rule, what we're actually seeing is the EPA applying the same tested and stable dynamic used historically that supports strong stable margins in this business. Many will remember the error in the 2023 Set 1 ruling was due to the EPA assuming feedstock would not be readily available. With that now corrected, after American farmers proved their right to challenge and produce the necessary feeds, the EPA resumed applying the methodology it's used for over a decade. In this, they evaluate prior year's biofuel capacity and increase the mandate to incentivize continued utilization growth. We see this dynamic displayed through the 3 graphics on this slide. Starting on the bottom left hand of the slide, we're reminded that this industry has seen steady $2 a gallon index margins consistently for years, which is historically what has been required for the industry's biodiesel capacity to run. When biodiesel was not required during Set 1, this dynamic was broken, and we saw industry utilization at roughly 50%. MRL was able to break even in that environment, which demonstrated our unique position, but we're much more excited about this current market for both our business and the industry. Taking a look at the industry supply stack in the chart on the top right here, we see how efficient this market is as well. Post ruling, margins have rapidly increased to create incentive for all biomass-based diesel production to come back online. We also see the Set 2 RVO actually requires the industry to operate at higher than historically demonstrated utilization levels to meet it. And our view is there are 3 ways that industry can fill this gap. First, the EPA understood there were carryforward RINs available from the small refinery exemptions announced last year. These carryforwards can satisfy most of the supply-demand gap in 2026, but they aren't nearly enough to settle 2027. Second, imports can fill the gap despite being disadvantaged to domestic biodiesel given they don't qualify for the PTC. The third is that this policy incentivizes industry to continue its utilization improvement journey. This journey certainly stalled over the past 3 years, but the administration knows that refineries typically run at slightly higher utilization levels and our industry in its early stages can also continue to improve. Efficiency improvement reduces the cost of biofuels, adds more reliable domestic energy and incentivizes the growth of more domestic agriculture, all while improving air quality. These results are right down the fairway for the current administration and also we expect to be supported in a bipartisan fashion as they always have been. We believe the industry is up for this challenge. And while very high sustained utilization certainly won't happen overnight, especially given the level of damage done over the Set 1 days, it can happen over time. The third chart on this page is a little closer look at historic biomass-based diesel production levels in relation to the RVO on a monthly basis. The difference in production and demand call results in a build or draw on RIN bank. Again, we see how rapidly industry utilization plummeted during Set 1, and we also see how it's increased with today's more promising future, albeit with a long way to go to meet the Set 2 levels. In addition to a renewed outlook for renewable diesel, we also just commenced operations post our MaxSAF 150 expansion, which was a major step for Montana Renewables. Let's turn to Slide 6 and further discuss this step in SAF's role in domestic energy growth. We've often discussed the promise of SAF and Montana Renewables' ability to capture the SAF premium given its first-mover marketing experience. Now that we started up our plant post the expansion, we turn our focus to producing increased SAF volumes. Through the initial operating period, we'll continue to condition the catalyst, complete a performance validation and deliberately and steadily ramp production to ensure consistent product quality for our existing customers and for our new customers to integrate into their supply chains over the next few months. In addition to the internal focus on the expansion and the industry's response to the RVO, we've seen the current market conditions highlight a lasting dynamic in jet fuel, and we think it's important to note. The Iranian war is certainly an extreme moment in energy, but there's a natural experiment here in the event, and we've seen the industry is not equipped to meet a sustained increase in jet demand. Expected jet fuel demand has been growing and is expected to grow faster than all other liquid fuels combined is important. The number of refineries are decreasing, not increasing, and refineries don't just make jet, thus as gas demand slows, the jet shortage grows. SAF can be made at much higher yields and much more intentionally than traditional jet. And SAF receives the additional benefit of environmental energy credits and farmers are rewarded for growing more domestic feedstocks. With an increase in SAF and the RVO, we can make more biofuels to supplement traditional energy, we generate environmental credits and American farmers grow more and make more money to sell us the feed. It's an extremely efficient and circular system with dramatic positive impact to our country, and Montana Renewables is in a perfect position to support this opportunity. With that, I'll turn the call to David.

Thanks, Todd. Let's get into our results. As Todd mentioned, the first quarter was a transformational quarter for the business as well as strategically. In terms of financial results, the company generated $50.1 million of adjusted EBITDA with tax attributes, slightly down from the $55 million generated in the first quarter of 2025. Despite the extraordinary margin environment for both of our businesses, we didn't fully capture the opportunity the market provided due to a previously disclosed operational event in Shreveport, which was ultimately resolved and the plant is now fully operational. Late in the quarter, organic chlorides were discovered in our crude stream, which caused a loss of about 750,000 barrels of production. Organic chlorides are a serious risk if not identified and managed appropriately. They're an inorganic contaminant not naturally found in crude oil, which appears in the naphtha fraction of the feed used to produce gasoline. Our industry has seen serious consequences when these are carelessly blended into crude because they cause rapid erosion of steel and our Shreveport team noticed the corrosion, identified the cause and acted swiftly to manage the risk of placing the directly impacted naphtha processing equipment and examining the entire facility at caution. The event, which cost us over $30 million of lost opportunity given the elevated margins at the end of the quarter is now behind us. The plant is running about 50,000 barrels per day, has done so most of April, and I appreciate the team managing through this complex situation safely and urgently. Turning to Slide 7 and our Specialty Products & Solutions segment. Our underlying business remains strong. We generated $44.3 million of adjusted EBITDA during the period compared to $56 million generated in Q1 2025. We believe that the unique elements of our business model, integrated assets that provide optionality combined with commercial excellence to capture value are well suited for periods of extreme volatility like we are in today. As a comparison, today's business environment is similar to 2022 when we saw similarly elevated crack spreads and specialty margin. In that year, the company generated over $400 million of adjusted EBITDA. Our integrated business allows us to produce fuel and take advantage of the attractive high-margin fuel environment. Using current strips, the 2026 full year 2:1:1 is over $42 per barrel, nearly double what we saw on average over 2025. In addition, our Specialties business, we've now posted the sixth consecutive quarter of sales volume exceeding 20,000 barrels per day. This was accomplished despite the outage of Shreveport, which primarily impacted our fuels business. Specialty margins during the period were temporarily compressed due to the extreme spike in crude oil price. The commercial team acted quickly pushing through numerous price increases to offset the impact of rising feedstock costs. We put in place more than 20 price increases to date and anticipate seeing the future benefit of this in the second quarter. These price increases put the elevated fuel margin environment position us well for what we will be -- what we believe will be a strong second quarter where we expect to generate additional cash flow during this attractive margin environment. To add to that and to fortify our ability to achieve our deleveraging targets, we've entered into crack spread hedges for portions of 2026 and 2027 fuels production. Currently, we have in place approximately -- hedges for approximately 10,000 barrels per day or around 25% of our fuel production on a 2:1:1 crack spread. We entered into a portion of these 2026 hedges at around $22 per barrel of the 2:1:1 crack using A grade or CBOB for the gasoline leg of the hedge. Note that CBOB trades at a $3 to $4 discount to Gulf Coast 87. Those hedges position us -- those hedge positions were put in place at an attractive historical levels even before the large run-up driven by the conflict in the Middle East, and those cost us around $6 million of realized hedge losses during the period. The next tranche, which was added recently was 10,000 barrels of production for 2027 at levels closer to $27 a barrel also on a CBOB basis. Now how these hedges end up is a function of what happens from here in the Middle East. For us, it's about making sure we deliver on our strategic objectives, which is generating strong cash flows to accelerate deleveraging and derisking a portion of our fuels production at these extraordinarily high margins. This puts us in a place to support that goal while also leaving plenty of room for upside of our remaining fuels production. Turning to Slide 8 in Performance Brands. We also continue to benefit from our commercial excellence strategy in this segment and a truly premium brand in TRUFUEL. We reported $12.6 million of adjusted EBITDA. The results were partially impacted by margin compression and the normal price lag associated with a more retail-oriented customer base. While we have been also implementing price action, this branded space takes about 60 to 90 days to fully reflect the increases compared to the less than 1-month lag in our SPS business. Taking a closer look at adjusted EBITDA on a like-for-like comparison basis, we've seen continued growth. As a reminder, the results of Royal Purple Industrial business are reflected in the first quarter of 2025 financials when we own that portion of the business and not included in the current period following the divestiture in March. Last March, our commercial and operational teams in less than a year have successfully offset the lost EBITDA associated with Royal Purple industrial business through disciplined cost controls, growth of our trusted brands and our strong customer relationships. We announced that our TRUFUEL business in February had posted record monthly results and that momentum continued throughout the entire quarter as we posted record sales volume, and we posted another monthly volume record in April. Customers continue to place a premium on the value of our engineered fuels, our innovative packaging option and overall product reliability and convenience. Turning to Slide 9 and our Montana/Renewables segment. Adjusted EBITDA with tax attributes was $10.2 million for the quarter compared to $3.3 million in Q1 2025. Renewables EBITDA with tax attributes on a Calumet-owned 87% basis was $8.8 million. As Todd mentioned, we've delivered the MaxSAF 150 expansion on time and on budget. With our new capacity, we are stepping into a market with significant tailwinds from a transformational product mix shift between renewable diesel and SAF that will deliver a four to fivefold increase in SAF volumes on an annual run rate basis. The business is incredibly well positioned as we ramp up production with the new RVO and a diversified portfolio of customers with a contractual SAF premium of $1 to $2 per gallon over renewable diesel, all of which is underpinned by our industry-leading low cost structure. As these dynamics further take hold, our renewables business is at a positive inflection point, and we leverage the strategic investments we've made in the business over the last several years with an expectation of meaningful cash flow generation. As Todd mentioned, following the 2023 RVO and trough-like margins, the industry managed through but no further than the RINs pricing in 2026 to see that, that recovery was already in process prior to the extremely constructive RVO announcement in March from the current administration. Finally, capital expenditure during the quarter within MRL was approximately $15 million and funded entirely by cash within MRL on the balance sheet. Before leaving this segment, our Montana asphalt results were in line with the prior year as first quarter 2026 reflected typical seasonality and price lag impacts in our wholesale asphalt business. We are moving into a seasonally stronger period in Q2 as well as an extremely supportive crack environment for fuels also in this segment. As we routinely said, we expect the site to produce $30 million to $50 million of annual EBITDA range in a normal environment, and we look forward to the opportunity at hand in today's stronger market environment. Let me now turn the call back to Todd for his concluding remarks.

Thanks, David. And before I turn the call back to our operator for questions, I wanted to remind those joining that we have filed our proxy materials and the voting window is open. For all shareholders listening, we appreciate your support. It's almost 2 years since our conversion from an MLP. We set out to create a stock with much higher liquidity and a broader investor base, and over the past few years, we appreciate the new investors that have joined us as our daily trading volume has increased over tenfold. Our strategy is focused on creating shareholder value, and we're always available to our investors to further discuss our proxy materials and our business strategy. Thank you for joining us today, and I'll turn the call back to Andrea for questions. Andrea?

[Operator Instructions] Our first question will come from Amit Dayal of H.C. Wainwright.

So the story seems to be in a really good place, guys. The demand and pricing environment is pretty solid. So I'm just trying to get a sense of the risks, are these primarily coming from the cost and input side of things or new supply coming online? Can you share any sort of drivers where we should be paying attention to that may provide any sort of unexpected surprises, I guess, in terms of how the setup is right now?

Amit, it's Todd. Thanks for the question. It's -- I'd say that we spoke a lot about the market today, and there's not a single element in the market in either renewables or specialties or kind of more broadly fuels that I'd point to and say has any singular risk that is keeping us up at night. I think the market is in really good shape. We talked about the reasons why, specialty markets supported by disruptions globally and it is just a normal strong, stable market in any environment. I'd say if there's anything, it's just acknowledgment that it's very volatile out there. And there's still a meaningful conflict going on, and we could see pretty massive volatility. We've seen how quickly these markets can move. But as we sit here today, I think we have a lot of confidence in our commercial team to react accordingly no matter what happens. They've proven that. And price increases are in on the specialty side, so we feel pretty comfortable with where we're at. We'll see a little bit of margin tightening in Performance Brands while we kind of play through the lag there for the next couple of months. But other than that, we feel like we're positioned pretty well and really looking forward to the opportunity the market is offering.

Just next one for me is on the SAF side of the story. Your SAF contracts where you are getting the $1 to $2 premiums, how long are these in place for? And then do you think when these renew, you'll be able to get similar or better terms?

Amit, it's Bruce. Thank you for the question. So the term contracts are evergreens. The notice periods, we have a distribution of those at this point because we've been selling SAF for 3 years now. And as we step into these, we're going to kind of have different notice period dates. But what I can tell you is the ones that we roll have renewed within that guidance range. The new ones are a portfolio of kind of various next notice dates going forward, and then they stay with us as evergreen relationships.

And I'd just add a little bit of that. On average, these are typically 2-, 3-year type evergreens. But as Bruce stated, so far, they've all continued to roll forward. And as far as the margin environment and ability to renew, we feel quite comfortable with where those have been as we've rolled forward contracts historically, we've certainly not had a problem re-upping them and adding additional supply as we've been doing here recently over the last 6 months or so. We haven't seen any step back in margins. We think that the underlying fundamental support is there given all of the demand for the renewable energy credits, the underlying scope credits, et cetera. So pretty bullish on the outlook there and our ability to continue growing our marketing.

The next question comes from Conor Fitzpatrick of Bank of America.

I wanted to dig a bit into maybe an update or refresh on the second phase of SaaS capacity expansion. It's still a ways away, and it could maybe take a more modular form, but I was wondering if there was just any update on CapEx, build parameters, engineering. And obviously, the contracts coming in for this first phase are pretty bullish, pretty supportive of continued demand. It sounds like there's still the opportunity there to expand at a similar profitability to the first phase.

Conor, thanks for the question. It's Todd. Yes, look, we've been focused on the current phase. Obviously, we're just now commencing operations, so very excited with where we're at. We want to stay focused there. So we've got our team kind of head down operating -- focused on that operation. At the same time, we do have an independent project team that's certainly looking at the next phase of a modular opportunity. It's probably a little bit too early to get ahead of ourselves on announcing that. We hope to be able to talk more specifically to that soon. I think in the past, we've said let's get a chance to get up, get through this commissioning, ramp up here over the next couple of months, and we'll certainly be out and looking forward to doing so in the not-too-distant future to talk about what's next and how the follow-up steps can play. But to your point, we certainly are bullish about the opportunity to continue to expand. We think the opportunity is there, it's readily available, and we're not seeing any demand gaps that would hinder that. So we're just going to kind of take it one step at a time here, but hope to be able to talk about our acceleration plan and next steps pretty soon.

Great. And I guess the follow-up is, it looks like there are maybe still some impediments to biodiesel capacity ramping to full or peak rates again, and I think there are various reasons to do with physically operating such as feed cost basis in the Midwest, diesel pricing and biodiesel pricing specifically in different regions of the U.S., ability to have the actual cash inflow from 45Z credits soon enough to incentivize production. So I was just wondering how far are we maybe from biodiesel producers, the marginal ones that will be needed to supply the market until profitability so that they can ramp up fully?

Conor, it's Bruce. So yes, I think you've got -- that was a good frame of what some of the issues and drivers are. There's 2 fundamental questions you asked, what about their volume and what about the economics that follow from that. So our supply stack says we're solidly back into a market environment where the prices are going to have to incentive the small biodiesel guys, the independent ones. And remember, some of them are running -- everybody's got their own specific, unique situation. That's why those stacked cost bars have arranged to them. And the question on volume is how fast and how many, so have these been permanently abandoned? And history shows us that it's kind of -- I call it ghost capacity, but it can come back faster than you think unless somebody just gave up and removed it, and we're going to find that out. But a lot of the analysts are calling for getting back into the 90% utilization range of biodiesel capacity by towards the end of this year.

The next question comes from Josiah Knight of Goldman Sachs.

Maybe on the feedstock side of the equation for MRL, how much pressure are you seeing? And then can you remind us of MRL's relative advantage and feedstock flexibility in navigating these costs?

Josiah, it's Bruce. Thank you for the question. We have essentially unlimited feedstock flexibility. We set it up that way on purpose. And the pretreater capability is what allows us to follow the market dynamics and pricing volatility. So we're pretty aggressive on our monthly re-optimization. We exist in the middle of the feedstock long area. So there's never been a question of any kind of physical shortage. And we seem to do better on optimization and re-optimization when we look at our capture percentages versus an industry index.

Got it. That's helpful. And then a follow-up, maybe on the base business, how are you thinking about the earnings outlook in the near and medium term, especially given some of the recent volatility for commodity prices?

Josiah, it's Todd. Look, I think as we talked about during the script period earlier, we're pretty confident in the outlook. Obviously, the fuel margin is incredibly positive right now. There's pretty meaningful supply disruption. We don't think this is something that just returns in a very short period of time. It's obviously not something that lasts forever. But it feels a lot like 2022 when you kind of just see the shock that we're seeing in the market and you look at inventories out there, and they're depleted not only here, but really throughout the globe. And on the specialty side, we've talked a lot about our ability to push price increases through rapidly. Commercial team did over 20 of them in a very short period across the product line. So at current costs, we're quite bullish on the outlook for both fuels and specialties. Obviously, we could see increased volatility from here. And if we do, then we've demonstrated that we can react accordingly, and we'll do that. But I think big picture, the market is pretty constructive on a margin outlook basis no matter where you look. Our specialties business is -- has a domestic supply chain and access to feedstock and you just can't say that on a global basis right now. So we'll continue to serve the market.

The next question comes from Gregg Brody of Bank of America.

You referenced '22 as how to think about maybe specialty material margins and the environment you're in. Those margins got up to the $90 range during that period. And you mentioned you've been able to put through -- you've been able to pass price through. Is that the type of environment we're in right now? Or is it going to take -- do we have more steps we need to go to get there in terms of price increases?

Gregg, I don't think right now, we would look and say we're at $90 specialty margins going forward. I think when we talk about 2022, you're looking at kind of analogies to the whole demand period. Increasing crude costs create a little bit of lag in the specialty business. I think back in 2022, we were able to overcome that in a hurry. We've done the same here. We'll see what happens, right, with volatility in the back half of the year here, but feel pretty good about where we're at. So as we sit here right now, I'd say specialty margins are a tad lower than 2022 and fuel margins are a tad higher than 2022. And if you blend those together, then it's probably a good period. But we're not trying to draw too tight of an analogy here. We're just saying the market feels pretty similar where supply shocks are going to drive margins that are sustained for a period of time and provide the ability really to generate some excess cash flow and accelerate our deleveraging plan.

That's helpful. Are you seeing any response from the consumer as a result of the price spikes?

We really haven't right now as far as demand. Obviously, everybody is getting their arms around these rapid cost increases. But I think where we sit right now, there's just -- there's such supply disruption throughout the space that consumers need our product. This isn't something -- a lot of our products go into consumer necessities and staples and not things that have massive price elasticity. So we don't expect this to be something where we're seeing dramatic demand declines, et cetera. We even saw record growth period at some of the downstream performance brands. We talked about a TRUFUEL record, et cetera. So we've seen consumer demand continue to stay strong throughout the space. How long that continues is probably a function of just general consumer sentiment and market volatility. But as it sits right now, I think we're pretty positive on the outlook.

And you -- just shifting to the organic chloride issue, which is in the past. Is there any remedies you have to make to the facility to fix any damage that was done at some point or just going forward, what's the risk of something like this happening again?

No, there's a -- it's a good question. There's no further work needed at the facility. We took the event extremely seriously. We inspected the facility thoroughly. We made quite a few repairs at the time, and I'd say in a very conservative fashion. We weren't taking any risk with the situation. We took a big chunk of our naphtha train out of service and replaced it. And we've installed quite a bit of redundancy in the sampling and quality monitoring throughout the system just to ensure that this can't happen again. What typically happens in these types of scenarios throughout industry is polarized and a small amount of them can do a lot of harm, sneak in with crate supply and bypass the upfront QC checks. And I think that's what happened here. We're still fully investigating the deals. We can figure out what happened there certainly -- we'd certainly be very aggressive with any culprit that created that. But as far as the current go-forward position, the facility is operating really, really well. There's no sustained damage. We aggressively attacked any repairs that need be made, and we've been up and running really strong for over a month now.

Got it. And just shifting to the deleveraging plan. You highlighted that you'll use cash to deleverage. Does -- you're clearly set up for a windfall here from both the restricted group assets and MRL. Does that change the way you're thinking about potentially monetizing MRL to pay down debt at the restricted group? Or is that still the plan right now?

No, I'd say the plan still remains as it has been. Ultimately, we think that Montana Renewables is going to present an opportunity to monetize. At some point, we're well on track to accomplish that. Obviously, this recent RVO was a major step in the right direction, so no game plan changes there. We think the next step here is just showcasing what the earnings power of this business is with both MaxSAF project that's up and running and a really positive RVO market. So that's what we're focused on here for the foreseeable future, next quarter or 2, and we'll go from there.

The next question comes from Jason Gabelman of TD Cowen.

You mentioned you're in a validation process of the MaxSAF expansion right now. So can you just talk about what the steps are to get it to a steady state or if it's already at steady state? And then in this type of margin environment since the asset has been running, what type of margin are you seeing coming out of it?

Jason, it's Bruce, I'll start us and see if I touch those 3 points. Just on the last one, the renewable diesel index margin hit over $3 a gallon at the end of the quarter. We're not calling for it to stay there. If you look at our supply stack, we think the renewable diesel industry structure, the equilibrated structure should be a bit north of $2. The SAF premium overlays above that. And so just with that as a reminder of structure, that's how we've always talked about it. In terms of the operational current performance, we did restream the unit after the extended turnaround plus capital projects. Those are the modifications that we've called MaxSAF 150. We had a little bit of a sidestep on an unrelated electrical power interruption to the site, so we had to restream at a second time. With that behind us, we're finishing the ramp-up. We have a performance test design that's probably, maybe 4 weeks out. The catalyst comes with performance guarantees. We've modified the hardware, and we want to test that we've delivered the engineering expectations. And so I think we'll have more intelligence in a few weeks. But no reason, nothing that we see gives us any reason to think that we've underachieved in any way. So we're excited about the go forward.

Got it. And can you also remind me just from an OpEx standpoint, if there's any change on a unit OpEx relative to where the initial MRL was at?

So our track record of improving controllable costs, and we got down to something like $0.38 a gallon, that's a chart we published occasionally, is pretty compelling. We don't think that we have any kind of reversal on that just because we're fractionating more kerosene out of the total reactor products.

Got it. And then maybe just turning to liquidity. And we've -- there's been a lot of volatility in the market, and you've seen in some of your refining and biofuel peers, working capital derivative hedging kind of headwinds related to that commodity volatility that we've seen. Have you seen that to a large extent? Can you talk through impacts on cash flow as a result of the volatility and if you expect that to reverse over time?

Yes. So I'd just start out by saying that we kind of feel good about our liquidity position and the cash that we're kind of generating in the current environment kind of after some of the operational things that we saw at Shreveport during the quarter. We've obviously seen a big run-up in crude price. That does impact us a couple of different ways. One on the inventory cost that we need to buy. There's a little bit of a lag as we buy into the market. And then also accounts receivables. You may have seen that we were up over $100 million as kind of prices that are getting passed through at a premium to crude just roll into our AR. But there was kind of a big draw on working capital during the period from that run-up that was exacerbated by the downtime that we saw in Shreveport, and so we're already seeing kind of almost a total unwind of that. So we're already seeing it in April, and there'll be a little bit more into May. And then just to touch a little bit on the liquidity path, we did this tack on for $150 million kind of earlier in the year. We thought about that as a way to kind of at a pretty cost neutral, even at a premium kind of pay off some of our 2028 when the call protection steps down in July. And so we're looking at this current volatile environment. We don't know how long it will last, but we were in an attractive position to kind of take from the market kind of pre-reduce that debt and use that extra cash to balance kind of the spike in crude. And so as we move forward here, I think we'll still use that cash to pay down debt. We'll just re-evaluate what the market looks like closer to July when our call protection steps down and what's happening in the world.

This concludes our question-and-answer session. I would like to turn the conference back over to John Kompa for any closing remarks.

Thank you, Andrea. And on behalf of Todd and the entire management team, I'd like to thank everyone for their time today and interest in Calumet. Have a great rest of the day. Thank you.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.